Baring Vostok Investments PCC Limited · 2020. 9. 24. · Baring Vostok Investments PCC Limited 5...

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Baring Vostok Investments PCC Limited

Annual Report and Audited Consolidated Financial Statements

for the year ended 31 December 2013

Private and

Confidential

Contents

Management and Administration………………………………………………………………………………………………………………………………………….2

Chairman's Statement…………………………………………………………………………………………………………………………………………. 3

Investment Portfolio…………………………………………………………………………………………………………………………………………. 4

Report of the Manager…………………………………………………………………………………………………………………………………………………………………………………………………5

Directors' Report………………………………………………………………………………………………………………………………………………………………………………14

Independent Auditors' Report……………………………………………………………………………………………………………………………………… 18

Consolidated Profit and Loss Account……………………………………………………………………………………………………………………………………………………………………………20

Consolidated Statement of Total Recognised Gains and Losses…………………………………………………………………………………………………………………………………………………………………..21

Consolidated Balance Sheet……………………………………………………………………………………………………………………………………………………………………………..22

Consolidated Notes to the Financial Statements……………………………………………………………………………………………………………………………………………………………………………..23

1Baring Vostok Investments PCC Limited

Report and Audited Consolidated Financial Statements


Private and

Confidential

Management and Administration

DIRECTORS: J. Dudley Fishburn, Chairman (appointed 18/02/2002)

Richard Crowder (appointed 13/11/2013)

Simon Faure (appointed 13/11/2013)

Christopher Legge (appointed 13/11/2013)

Peter Touzeau (appointed 27/10/2010)

Amb. Arthur Hartman (resigned 13/11/2013)

REGISTERED OFFICE: 1 Royal Plaza

Royal Avenue

St Peter Port

Guernsey

GY1 2HL

MANAGER: Baring Vostok Investment Managers Limited (appointed 26/09/2013)

1 Royal Plaza

Royal Avenue

St Peter Port

Guernsey

GY1 2HL

Baring Vostok Fund (GP) L.P. (resigned 26/09/2013)

1 Royal Plaza

Royal Avenue

St Peter Port

Guernsey

GY1 2HL

SECRETARY AND ADMINISTRATOR: Ipes (Guernsey) Limited

1 Royal Plaza

Royal Avenue

St Peter Port

Guernsey

GY1 2HL

INDEPENDENT AUDITORS: PricewaterhouseCoopers CI LLP

Royal Bank Place

1 Glategny Esplanade

St Peter Port

Guernsey

GY1 4ND




Private and

Confidential

Investment PortfolioAs at 31 December 2013

31 Dec 13 31 Dec 13

Cost

Directors'

ValuationUSD USD

Core

Private equity investments 76,018,152 90,086,569 Listed equity and debt holdings 17,353,592 18,564,833 Fixed deposits 5,000,000 5,000,000 Bonds and fixed income investments 8,958,565 8,651,170

Total Core 107,330,309 122,302,572

Cell

Private equity investments 21,069,835 35,211,252

Total Cell 21,069,835 35,211,252

Total Company 128,400,144 157,513,824




Private and

Confidential


5

Manager’s Report

Company Re-organisation

On July 17, 2013, at an Extraordinary General Meeting, shareholders of Baring Vostok Investments Limited gave consent for the conversion of the company to a protected cell company, Baring Vostok Investments PCC Limited. In addition, the company raised $32 million of new capital (the “Placing”), by issuing new Core Shares at a Placing Price of US$3,681 per Share, representing a 2 per cent. premium to the NAV attributed to each Core Share as at the Calculation Date of June 10, 2013 (used to cover the expenses of the Placing and ensure that the Placing was non-dilutive to such NAV). On July 18, 2013, BVIL’s Cell Shares and Core Shares commenced trading on the Channel Islands Stock Exchange Authority Limited (“CISEAL”). The “restructured” BVIL allows investors the opportunity to gain exposure to a broad portfolio of underlying private equity assets held by the Baring Vostok Private Equity Funds, one of the region’s oldest and most successful private equity fund groups. This portfolio of over 20 companies includes many of Russia and the region’s most exciting and most rapidly growing businesses in underpenetrated sectors such as internet/E-commerce (Yandex, Ozon, Avito); health care (European Medical Center, Family Doctor); software (Center for Financial Technologies, 1C); financial services (Kaspi Bank, Europlan, Tinkoff Credit Systems, Orient Express Bank), and broadband telecommunications (ER Telecom). New capital raised in the summer, coupled with realizations from underlying portfolio companies, will allow the Core to capitalize on further market developments, as it invests alongside Baring Vostok Private Equity Fund V in new deals.

Portfolios

The Core: As of 31 December 2013, BVIL’s Core Net Asset Value (“NAV Core”) per Share was $4,290, an increase of 16.5% compared to the Core Shares at the Placing Price of US$3,681 per Share at 18 July 2013. This increase in NAV was driven by the Core’s underlying portfolio growth, which averaged 24% in 2013. The Core’s underlying investments had several realizations of assets in 2013, the result of divestments in Yandex, Russia’s leading internet search engine (listed on NASDAQ) and Tinkoff Credit Systems, one of Russia’s leading credit card companies which had a successful listing of its shares on the London Stock Exchange in November. As a result, the Core has accrued cash of approximately $1.7 million for distribution to shareholders which we expect will be distributed in 2014 following one or more additional realizations.

As at 31 December 2013, approximately 70% of the Core’s assets were invested in underlying Private Equity portfolio companies. Approximately 9% was held in cash and cash equivelents, while the remainder were invested in a range of public equities and fixed income instruments. The Core’s targeted allocation of exposure to private equity assets is approximately 75%-80%, and as a result, in January 2014, the Board voted to increase the Core’s sharing percentage of new private equity deals alongside Fund V from 3% in 2013 to 5% for the calendar year 2014.

The Core currently has exposure to 24 underlying portfolio companies, comprising approximately 70% of NAV as at 31 December 2013.


6

The portfolio is well diversified among financial services, oil and gas, consumer products, telecommunications and media sectors.

CORE PE PE

NET ASSETS (31 December 2013) Portfolio Investments Portfolio Investments

Top Ten Private Equity Holdings Country Sector

1 Ozon Russia E-Commerce n.d. n.d.

2 Europlan Russia Car/Truck Leasing 13.6 10.5%

3 Yandex* Russia Internet Search 11.0 8.5%

4 Center for Financial Technologies Russia Software 10.3 7.9%

5 Kaspi Bank Kazakhstan Retail Banking 6.5 5.0%

6 Nostrum Oil & Gas* Kazakhstan Oil & Gas E&P 5.9 4.6%

7 Orient Express Bank Russia Retail Banking 3.6 2.7%

8 Etalon* Russia Residential Homebuilding 3.2 2.4%

9 ER-Telecom Russia Consumer Broadband, Cable 2.9 2.2%

10 European Medical Center Russia Health Care 2.4 1.8%

Other PE Holdings n.d. n.d.

Total PE Holdings 90.1 69.4%

Cash and Cash Equivalents 12.3 9.4%

Listed Equity Securities 18.6 14.3%

Bonds and Fixed Income Investments 8.7 6.7%

Net Current Assets/(Liabilities) 0.2 0.1%

Net assets 129.7 100.0%

Private companies valued as at December 31, 2013

*Public companies valued as at December 31, 2013 at 10% (Yandex, Etalon and Nostrum Oil & Gas) discount to market price

n.d. - not disclosed for commercial reasons

Total Valuation

$'mln

Share of Net

Assets %


7

In 2013 these companies had average revenues of $788.5 million and EBITDA of $193.1 million, with net cash of $172.5 million and grew by roughly 20-30% for the full year.

Russia’s GDP growth slowed considerably (1.4% in 2013 vs. 3.0% in 2012), but Baring Vostok’s portfolio companies grew much faster than the overall economy for three main reasons: (1) there remain significant, though less pronounced, growth opportunities in specific sectors – such as health care, software, and financial services – that remain underpenetrated and are still benefitting from a “catch up” effect as compared to more developed economies; (2) there are some sectors – internet and e-commerce, for example – where a strong secular growth trend is underway globally, including Russia; and (3) within all sectors there are, as always, opportunities for leading companies to take market share from weaker players. Several Baring Vostok portfolio companies experienced a slowdown in sales growth during the second half of 2013, but the Manager is still expecting solid revenue growth in 2014.

The Cell: Yandex, the Cell’s only asset, remained the market leader in Russia’s internet search increasing its revenues by over 30% in rouble terms and increasing market share to over 62%. The Cell took advantage of attractive market windows to continue to sell its stake in Yandex, resulting in distributions to Cell shareholders of $12.2 million in 2013. As of 31 December 2013, BVIL’s Cell Net Asset Value (“NAV Cell”) per Share was $5,640, representing a 56.3% increase compared to the Cell Shares at a Placing Price of US$3,609 per Share at 18 July 2013. The BVIL Cell holds the Company’s interest in Yandex via Baring Vostok Private Equity Fund II and does not make any new investments.

CELL

NET ASSETS (31 December 2013) Country Sector

Equity Holding

Yandex Russia Internet Search 35.0 99.5%

Cash and cash equivalents 0.4 1.2%

Net Current Assets/(Liabilities) (0.2) (0.7%)

Net assets 35.2 100.0%

Yandex valued as at December 31, 2013 at 10% discount to market price

Total

Valuation

$'mln

Share of Net

Assets %


8

Recent Investments

Although there were no new co-investment deals closed in the second half of 2013, BVIL closed its first new co-investment alongside Fund V in March 2014, with a $0.9 million investment in Tigers Realm, acoking coal mining company with assets located in the Chukotka region of Russia’s Far East.

Company Outlook and Exit Prospects

Events in Ukraine have clearly unsettled Russia’s listed equity markets and capital flight has put pressure on Russia’s currency since the beginning of the year. As always, public market valuations adjust faster than valuations of private businesses to deteriorating macro-economic conditions, but the Baring Vostok Funds have recently seen several potentially attractive private opportunities while competition for new deals has reduced significantly. With nearly $1.5 billion of undrawn capital available for new investments, we believe that Fund V and the Core are well-positioned to take advantage of current market conditions. Although opportunities for attractive exits have obviously diminished due to recent events, we still expect that the Baring Vostok funds in 2014 will be able to advantageously divest certain portfolio companies, either through public markets transactions or via trade sales to domestic Russian buyers.


9

Top 10 Private Equity Holdings Overview

Ozon

Industry: E-Commerce BVIL Cost Basis: n.d.

Location: Russia BVIL FMV: n.d.

BVCP Fund: Fund II BVIL NAV (%): n.d.

Status: Unrealized Valuation Basis: Comparables

Company Description: Founded in 1998, Ozon is the #1 online megamarket in Russia and the CIS with the opportunity to build on Ozon’s platform as leading online book seller to become the Amazon.com of Russia.

Investment Rationale: Analysts estimate that Russia’s e-commerce market should grow at a 35%. CAGR through 2015, as it increases its share of overall retail sales penetration from 1.9% today to 4.5% in 2015.

Key Developments: The company showed strong sales growth in its key categories in 2013, with books category rising by more than 20%, and the consumer goods categories (toys, sports, health & beauty, home & deco) growing by more than 50% each. Ozon.Travel, Russia’s leading online travel agency, grew its turnover by more than 100% significantly increasing its overall market share following a number of growth initiatives implemented by the management. The company continued to develop its logistics subsidiary O’Courier, which is one of the biggest e-commerce delivery platforms in Russia, and fully opened it for the delivery of 3rd party orders at the end of 2013.

Europlan Industry: Financial Services BVIL Cost Basis: $11.2 million

Location: Russia BVIL FMV: $13.6 million

BVCP Fund: Fund II BVIL NAV (%): 10.5%

Status: Unrealized Current Valuation Basis: Comparables

Company Description: Europlan is Russia’s leading automobile and truck leasing company. Since its inception, Europlan has built a high quality management team, a nationwide distribution network and sound internal business practices.

Investment Rationale: SMEs are one of the largest unbanked segments of the economy and leasing (particularly automobile leasing) appeares an effective, secure and profitable way to tap the potential of this market.

Key Developments: Europlan outperformed its 2013 budget in terms of gross interest income and net profit, which increased by 31% (year-on-year). December 2013 was a record month in terms of lease disbursements. Although there is pressure on wages for experienced sales people, the company is expanding its product mix (car loans and leasing products for individuals) to take advantage of its nationwide distribution network of car dealers and strong relationships with car manufacturers. These measures are boosting sales productivity and have enabled the company to maintain a low cost of risk and high profit margins (ROA of 4.5%).


10

Yandex Industry: Internet BVIL Cost Basis: $9.8 million


BVCP Fund: Fund III and Fund IV BVIL NAV (%): 8.5%

Status: Partially Realised Valuation Basis: NASDAQ – 10%

Company Description: Yandex is the leading internet company in Russia, operating the country’s #1 search engine.

Investment Rationale: Excellent growth prospects, attractive and scalable business model with operating leverage and best-in-class management team. Today, Yandex has over 61% market share of Russian internet search.

Key Developments: The company’s market share for internet search was 61.9% as at December 2013, vs. Google’s and Mail.ru’s of 26.5% and 8.6%, respectively. Yandex is in the world’s top five search engines by number of searches. Through December 31, 2013, Yandex generated revenues of $1,241.0 million (32% up y-o-y) and net income of $423.3 million (64% up y-o-y). In 2013, Yandex continued to improve the quality of its search by introducing personalized search and interactive snippets called “Islands”. Yandex.Market started to offer online stores a new CPA model (cost-per-action) for listing their products, which enables online buyers at Yandex.Market to complete the transaction without leaving the page. Yandex acquired KinoPoisk, the largest and most comprehensive Russian-language web-site dedicated to movies, television programs and celebrities. In December 2013, Yandex placed $600 million of 1.125% convertible senior notes due 2018 and an additional $90 million in January 2014.

Center for Financial Technologies Industry: Financial Services BVIL Cost Basis: $10.1 million

Location: Novosibirsk, Russia BVIL FMV: $10.3 million

BVCP Fund: Fund III BVIL NAV (%): 7.9%


Company Description: CFT is is a diversified technological provider for the financial services sector in Russia and CIS, specializing in banking software and payment processing. The Company has a #1 market share in core banking software, a #1 position in the money transfer business and leading positions in other segments, for instance prepaid cards.

Investment Rationale: High growth potential of underpenetrated Russian processing and banking software market. High cash flow generative core business and significant synergies between processing and software businesses. Potentially attractive acquisition target for international payment processing or payment management companies

Key Developments: The company’s banking software business enjoyed revenue growth of 15% while its processing revenue (incl. money transfer) grew by over 40%. Although competition is intensifying, CFT expects to stay ahead of its peers with new product launches in software (New CFT Bank, 2MCA platform), expansion of its money transfer business and by exploring new opportunities in other segments.


11

Kaspi Bank

Industry: Financial Services BVIL Cost Basis: $3.9 million

Location: Kazakhstan BVIL FMV: $6.5 million

BVCP Fund: Fund III BVIL NAV (%): 5.0%


Company Description: Kaspi Bank is is one of Kazakhstan’s leading retail banks and is the #1 player in consumer loans, car loans, distribution network, and payments (including the leading platform for online payments, Kaspi.kz).

Investment Rationale: The Bank is a strong platform on which to build one of the largest retail banks in Kazakhstan. Demand for banking services in Kazakhstan, especially retail services and consumer finance, is expanding rapidly due to a growing middle class and increasing levels of liquidity in the economy.

Key Developments: The company increased market share across all products last year, with 21% share in consumer loans, 11% share in retail deposits, and a customer base now exceeding 3 million. Although still primarily funded by deposits, Kaspi was able to diversify its funding in 2013 with a mixture of domestic and Eurobond issues. The recent devaluation of the Tenge creates complications for all Kazakh banks, but Kaspi is well positioned with the highest capital adequacy (tier-1 capital of 14%), the most efficient cost structure (cost-income ratio of 28%), and the highest level of profitability (ROE above 45%) in the sector.

Nostrum Oil & Gas (Zhaikmunai)

Industry: Oil & Gas BVIL Cost Basis: $4.9 million

Location: Kazakhstan BVIL FMV: $5.9 million

BVCP Fund: Fund IV BVIL NAV (%): 4.6%

Status: Unrealized Current Valuation Basis: LSE – 10%

Company Description: Nostrum Oil&Gas (formerly Zhaikmunai) is an exploration and production company which is developing the Chinarevskoye field in Kazakhstan, a mainly gas and condensate field with more than 500 million barrels of oil equivalent (BOE) reserves.

Investment Rationale: Once the field’s Gas Treatment Unit is brought online, production is expected to increase from 7,500 barrels per day (bopd) to over 25,000 bopd. The field is at a stage and size that should make it an excellent prospect for a strategic sale, although the listing of its operating subsidiary on LSE gives an alternative liquidity path if the Fund chooses to exit before a strategic sale.

Key Developments: The company showed strong operating results in 2013, increasing average daily production by 25% to 46,178 barrels of oil equivalent per day (boepd). The company had revenues of $895 million (21% up y-o-y) and EBITDA is expected to exceed $500 million for the year (vs $460 million in 2012). In addition, in 2013 the company paid over $60 million in dividends and it is currently in the process of preparing for a migration to the Main board of the LSE in 2Q14. Construction works continue on the third train of the Gas Treatment Facility , a project which is expected to be completed in 2016 and result in a doubling of the Company’s production and revenues.

https://intranet.bvcp.ru/projects/Logo/caspibank.gif


12

Orient Express Bank

Industry: Financial Services BVIL Cost Basis: $4.9 million




Company Description: One of Russia’s leading retail banks with strong market position in its home regions (Far East and Siberia).

Investment Rationale: The company has a strong balance sheet which is fully-financed by customer deposits. Despite rapid growth over the last 10 years, the Russian banking sector remains underpenetrated compared most other major economies, with bank assets of only 75% of GDP compared to an average of 300% in OECD countries. Retail banking is expected to outpace overall banking sector growth.

Key Developments: Increased consumer indebtedness coupled with tightening measures by the Central Bank of Russia led to industrywide increase in non-performing loans and resulting in a curtailment of growth. As with most other leading Russian consumer lenders, OEB’s profitability fell sharply in 2013 due to increased provisions for loan losses. The bank implemented fundamental changes to its credit approval procedures and pricing of key products, and as a result, the trend in loan losses stabilized in the second half of the year. With higher pricing gradually resulting in substantial growth in net interest income, we expect the bank to return to normal profitability in 2014. OEB continues to have one of the best deposit gathering networks among retail banks in Russia, and its capital adequacy ratio remains well above requirements of both the Russian Central Bank and Basel III.

Etalon (LenSpetSMU)

Industry: Homebuilder BVIL Cost Basis: $2.5 million



Status: Partially Realized Current Valuation Basis: LSE -10%

Company Description: A leading private residential homebuilder in St Petersburg and Northwest Russia.

Investment Rationale: Expected strong demand for good quality residential housing due to a supply deficit in Russia. Excellent management team with solid reputation and 20-year track record.

Key Developments: 13 new projects were launched and went on sale in 2013, including 1 project in Moscow, a key component of the company’s long-term growth strategy. The company delivered 468,000 m2 of Net Sellable Area for the year, an increase of 29% over 2012 and an all-time record for the Etalon Group. Despite its active land acquisitions and recent launch of new projects, Etalon has net debt of only $24 million, roughly 0.1x its annual EBITDA, making it one of the country’s least leveraged homebuilders and positioning it well for future growth.


13

ER-Telecom Industry: Telecommunications BVIL Cost Basis: $ 1.6 million




Company Description: ER-Telecom is one of the leading regional broadband internet and cable-TV operators in Russia, with a nationwide market share of 10% in broadband and 11% in Cable TV. The company has a higher share, 28% in broadband and 38% of CTV, in the cities in which it operates.

Investment Rationale: Broadband penetration – particularly in Russia’s regions – is extremely low and expected to grow rapidly over the next few years. The company is well positioned to become a dominant player in Russia’s regional broadband and cable markets given the company’s strong track record of success and market leadership positions in existing cities, very motivated and experienced management team, high level of customer service and its high-quality/high-capacity FTTH network.

Key Developments: The company’s revenues increased in 2013 by over 30% and its EBITDA margin is expected to exceed 30% overall, with a 40% EBITDA margin in mature cities. With operations in 56 Russian cities, the number of subscribers stood at 5.7 million at year-end. The company finalized its first acquisition of the #2 player in St Petersburg, further strengthening its position in this market.

EMC Industry: Medical Services/Health Care BVIL Cost Basis: $2.4 million

Location: Russia, Moscow BVIL FMV: $2.4 million



Company Description: A leading private hospital operator in Moscow, with a strong platform focusing on the premium segment and with well developed competencies both in outpatient and inpatient segments.

Investment Rationale: Consistently strong profitability and growth, with a combination of a strong management team and hands-on shareholders. Proceeds from the investment were used to finance the construction of new clinics and a rehabilitation center.

Key Developments: In December 2012, the company opened its third full-care hospital, more than doubling its total capacity. In 2013 EMC opened a children’s inpatient clinic, started a new paid ambulance program, won a concession agreement to re-build and operate hospital #63 in Moscow and commenced refurbishment of a building for the specialized rehabilitation center outside Moscow. The company showed nearly 40% revenue growth in 2013.

http://portal.bvcp.ru/projects/Logo/Forms/AllItems.aspx

Directors' Report

History

Activities

Directors' Shareholdings

No. of Shares

Acquired

Date Acquired

40 21 January 2014

20 31 January 2014

Directors' Responsibilities

■

■

■

■

The Directors present their Annual Report and Audited Consolidated Financial Statements of Baring Vostok Investments PCC

Limited (the “Company”) for the year ended 31 December 2013.

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 Consolidated Financial Statements; and

prepare the Consolidated Financial Statements on the going concern basis unless it is inappropriate to presume that the

Company will continue in business.

The Company was incorporated in Guernsey, Channel Islands on 5 October 2001. On 17 July 2013, at an Extraordinary General

Meeting, the requisite majority of the shareholders of the Company gave consent for the conversion of the Company to a

protected cell company (“PCC”) and on the same day it changed its name from Baring Vostok Investments Limited to Baring

Vostok Investments PCC Limited. Upon conversion, the Company established a “Cell” which holds through its investment in

Baring Vostok Investments Holdings Limited ("BVIHL"), the Company’s interest in Yandex via Baring Vostok Private Equity Fund,

L.P.3 and will not make any new investments. The remainder of the Company’s existing and any new investments will be held in

the “Core”, directly or indirectly through BVIHL.

The principal activity of the Company pre-conversion was to carry on business as a closed ended investment company and it was

admitted to the official list of the CISE on 29 October 2001.

In addition, the Company raised USD 32 million of new capital (the “Placing”), by issuing new Core Shares at a Placing Price of

USD 3,681 per Share, representing a 2 per cent. premium to the net asset value (“NAV”) attributed to each Core Share as at the

Calculation Date of 10 June 2013 (with the premium used to cover the expenses of the Placing and to ensure that the Placing

was non-dilutive to such NAV).

Post-conversion, the Core principally aims to invest, directly or indirectly, in a portfolio of primarily middle-market companies in

Russia and other countries of the former Soviet Union principally in shares of unlisted companies that are generally illiquid and

difficult for investors outside of the Region to access. The Core may invest directly as a co-investor alongside funds managed by

Baring Vostok or indirectly through such funds.

The Directors of the Company are as set out on page 2. Post year end the Directors purchased shares in the Company's Core as

detailed in the table below.

On 18 July 2013, the Company’s Cell Shares and Core Shares commenced trading on the Channel Islands Securities Exchange

(“CISE”).

Member of the Board

Richard Crowder

The Directors are required by The Companies (Guernsey) Law, 2008 (''Companies Law'') as amended to prepare Consolidated

Financial Statements for each financial period which give a true and fair view of the state of affairs of the Group as at the end of

the financial period and the profit or loss of the Group for that period. In preparing these Annual Consolidated Financial

Statements the Directors are required to:

Peter Touzeau

The Cell holds the Company’s interest in Yandex via Baring Vostok Private Equity Fund, L.P.3 through BVIHL and will not make

any new investments.

The Company is exposed to direct and indirect financial risks as a result of its own investments, which include investments in

other investment funds. These investment funds have direct exposure to the Russian economy and currency. Significant risks are

detailed in note 11 of the consolidated financial statements.




Private and

Confidential

Directors' Report

Director Biographies

John Dudley Fishburn (Chairman)

Peter Touzeau

Richard Crowder

Simon Faure

Christopher Legge

Dudley has a career as a business man with strong links to the not-for-profit world, particularly universities on both sides of the

Atlantic. He was a journalist and Conservative politician, having been Executive Editor of the Economist and Member of

Parliament of the United Kingdom for Kensington.

The Directors confirm that they have complied with the above requirements when preparing the consolidated financial

statements.

The Directors have taken all steps they ought to have taken as Directors to make themselves aware of any relevant audit

information and to establish that the Company’s auditor is aware of that information.

This confirmation is given and should be interpreted in accordance with the provisions of Section 249 of The Companies

(Guernsey) Law, 2008.

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 Consolidated Financial Statements comply with The

Companies (Guernsey) Law, 2008. They are also responsible for safeguarding the assets of the Company and hence for taking

reasonable steps for the prevention and detection of fraud and other irregularities.

So far as the Directors are aware, there is no relevant audit information of which the Company’s auditor is unaware.

Christopher currently holds a number of non-executive directorships in the financial services sector including several which are UK

listed where he also chairs the Audit Committee. Having joined Ernst & Young in Guernsey as an audit manager in 1983, he was

appointed a partner in 1986 and managing partner in 1998. From 1990 to 1998, he was head of Audit and Accountancy and

was responsible for the audits of a number of banking, insurance, investment fund, property fund and other financial services

clients. He was appointed managing partner for the Channel Islands region in 2000 until retiring in 2003.

He is the chairman of Bluecube Technology Solutions Ltd, and Mulvaney Capital Management Ltd. He is on the board of Philip

Morris International Inc and of GFI Group Ltd. In the recent past, Mr Fishburn has served terms on many Boards including: HSBC

Bank Plc, Beazley Group Plc, Saatchi and Saatchi Plc.

In October 2001 he joined Ipes (Guernsey) Limited ("Ipes") as an Assistant Director, with a remit to build up a new team to

administer existing and new Private Equity Funds. The portfolio of Funds include both Russian and European clients. He is a

Director of the General Partner to four active Baring Vostok Funds, all of which are currently domiciled in Guernsey.

Richard Crowder, holds a range of non-executive directorships and consultancy appointments. Having worked as an Investment

Manager with Ivory & Sime in Edinburgh and as a Head of Investment Research with W.I. Carr in the Far East, he undertook a

wide range of responsibilities for Schroders in London and the Far East, culminating in the role of Director of J Henry Schroder

Wagg & Co Ltd and Managing Director for Schroders’ Singapore associate merchant bank. Having then worked as Chairman of

Smith New Court International Agency and Director of Smith New Court Plc, Mr Crowder was the founding Managing Director of

Schroders’ Channel Islands subsidiary from 1991 until he became a non-executive Director in 2000. He is resident in Guernsey.

Simon has been an Investment Director at PPM Managers for over nine years focused on private equity investments in

Europe and Emerging Markets. Prior to PPM, he spent two years at Insight Investment Ltd and four years at AIG Global

Investments Ltd., where he was focused on private equity investments. He is a member of several advisory boards of private

equity funds and a current member of the BVCA Limited Partner Committee.

Peter has been employed in the Guernsey Financial Services industry for over 20 years. The first 12 years as an account manager

and accountant to a number of Captive Insurance companies on behalf of Sedgwick Management Services (Guernsey) Limited

and later following the sale of Sedgwick on behalf of Marsh.




Private and

Confidential

Directors' Report

Director Meeting Attendance

J. Dudley FishburnRichard CrowderSimon FaureChristopher LeggePeter Touzeau

Amb. Arthur Hartman

J. Dudley FishburnRichard CrowderChristopher Legge

Substantial Interests

Calvey Family Trust 42.80%15.30%

Independent Auditors

Corporate Governance Assurance Statement

Performance Evaluation

1

On 30 September 2011 the Guernsey Financial Service Commission (the “Commission”) issued the Finance Sector Code of

Corporate Governance (“FSC”) The Code comprises Principles and Guidance, and provides a formal expression of good

corporate practice against which shareholders, boards and the Commission can better assess the governance exercised over

companies in Guernsey’s finance sector.

1

1

The following shareholders have more than a 10% shareholding in the Core:

The Directors have considered the effectiveness of the corporate governance practices of the Company in respect of the FSC and

the CISE continued obligations, in the context of the nature, scale and complexity of the Company, and are satisfied that the

Company complies with the FSC Code and all other corporate governance obligations which apply to Guernsey registered

companies admitted to listing on the official list of the CISE and to trading on the CISE.

The Board understands the importance of evaluating its performance and to consider the tenure and independence of each

Director. The Directors will undertake evaluations of the Board, Chairman and Investment Manager during the year ending 2014.

The auditors, PricewaterhouseCoopers CI LLP have indicated their willingness to continue in office. A resolution to re-appoint

PricewaterhouseCoopers Cl LLP as auditors will be proposed at the next Annual General Meeting.

During the year a further 6 ad hoc Board/Committee meetings were held to deal with matters substantially of an administrative

nature and these were attended by those directors available and outside the UK at the time. In addition, there were 5 meetings

to discuss and approve the restructure of the Company, completed in November 2013.

1

Audit Committee

MeetingsHeld Attended

Prudential Assurance Company Ltd

A formal regime of quarterly Board and Committee meetings have now replaced the previous ad-hoc schedule.

nilnil

For each director, the tables below set out the number of Scheduled Board and Audit Committee meetings they were entitled to

attend during the year ended 31 December 2013 and the number of such meetings attended by each director.

Held Attended

nil1

nilnil

1nil

Scheduled Board

Meetings

Shareholder%

interest

1

1 11 11




Private and

Confidential

Independent Auditors' Report to the Members of


Report on the Consolidated Financial Statements

Director's Responsibility for the Consolidated Financial Statements

Auditors' Responsibility

Opinion

Report on other Legal and Regulatory Requirements

In our opinion, the consolidated financial statements give a true and fair view of the financial position of the Group as of 31

December 2013, and of its financial performance for the year ended in accordance with United Kingdom Accounting Standards

and have been properly prepared in accordance with the requirements of The Companies (Guernsey) Law, 2008.

We have audited the accompanying consolidated financial statements of Baring Vostok Investments PCC Limited (''the

Company'') which comprise the Consolidated Balance Sheet as of 31 December 2013 and the Consolidated Profit and Loss

Account, and Consolidated Statement of Total Recognised Gains and Losses for the period then ended and a summary of

significant accounting policies and other explanatory notes.

The Directors are responsible for the preparation of consolidated financial statements that give a true and fair view in

accordance with United Kingdom Accounting Standards and with the requirements of Guernsey law. The Directors are also

responsible for such internal control as they determine is necessary to enable the preparation of Consolidated Financial

Statements that are free from material misstatements, whether due to fraud or error.

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our

audit in accordance with International Standards on Auditing. Those Standards require that we comply with ethical

requirements and plan and perform the audit to obtain reasonable assurance whether the consolidated financial statements are

free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated

financial statements. The procedures selected depend on the auditors’ judgement, including the assessment of the risks of

material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk

assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated

financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of

expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness

of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the

overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

We read the other information contained in the Annual Report and consider the implications for our report if we become aware

of any apparent misstatements or material inconsistencies with the consolidated financial statements. The other information

comprises only the Management and Administration, the Chairman's Statement, the Investment Portfolio, the Report of the

Manager and Directors' Report.

In our opinion the information given in the Directors' Report is consistent with the consolidated financial statements.




Private and

Confidential

Consolidated Profit and Loss AccountFor the year ended 31 December 2013

1 Jan 13 to 1 Jan 12 to31 Dec 13 31 Dec 12

Core Cell

Consolidated

Total TotalNotes USD USD USD USD

IncomeInvestment income 2 234,081 - 234,081 -Investment interest received 2 8,304 - 8,304 -

Total income 242,385 - 242,385 -

ExpenditureLegal and professional fees 2 951,906 364,544 1,316,450 1,720Audit fees 32,250 8,741 40,991 11,006Administration fees 2 & 5 260,235 52,475 312,710 40,361Directors' fees 5 53,577 8,949 62,526 23,599Listing fees 10,821 3,990 14,811 3,844Sundry expenses 2,204 176 2,380 2,420Foreign exchange loss 2,605 266 2,871 707Management fees 5 616,618 - 616,618 -Bank interest paid 10,828 - 10,828 -

Total expenses 1,941,044 439,141 2,380,185 83,657

Net loss for the year (1,698,659) (439,141) (2,137,800) (83,657)

All activities are derived from ongoing operations.

There is no difference between the loss for the year as stated above and its historical cost equivalent.

The notes on pages 23 to 33 form part of these consolidated financial statements.




Private and

Confidential

Consolidated Statement of

Total Recognised Gains and LossesFor the year ended 31 December 2013

1 Jan 13 to 1 Jan 12 to31 Dec 13 31 Dec 12

Core Cell

Consolidated

Total TotalNotes USD USD USD USD

Loss for the year (1,698,659) (439,141) (2,137,800) (83,657)

Movement in realised gains on investments 6 & 10 71,490,759 1,740,168 35,634,573 8,631,474

Movement in unrealised gains on investments 6 & 10 (41,838,229) 14,141,417 9,899,542 (121,376)

Total recognised gains for the year 27,953,871 15,442,444 43,396,315 8,426,441

The notes on pages 23 to 33 form part of these consolidated financial statements.




Private and

Confidential

Consolidated Notes to the Financial StatementsFor the year ended 31 December 2013

1. GENERAL INFORMATION

2. PRINCIPAL ACCOUNTING POLICIES

On 18 July 2013, the Company’s Cell Shares and Core Shares commenced trading on the Channel Islands Securities

Exchange (“CISE”).

Baring Vostok Investments Limited

Baring Vostok Investments Limited (the "Company") was incorporated in Guernsey, Channel Islands on 5 October 2001.

The following accounting policies have been applied consistently in dealing with items which are considered material in

relation to the Company’s consolidated financial statements.

The consolidated financial statements have been prepared under the historical cost convention and in accordance with

United Kingdom Accounting Standards as modified for the revaluation of investments. The Directors of the Company have

taken the exemption in Section 244 of The Companies (Guernsey) Law, 2008 (as amended) and have therefore elected to

only prepare consolidated financial statements for the period.


On 17 July 2013, at an Extraordinary General Meeting, the requisite majority of the shareholders of the Company gave

consent for the conversion of the Company to a protected cell company (“PCC”) and on the same day it changed its name

from Baring Vostok Investments Limited to Baring Vostok Investments PCC Limited. Upon conversion, the Company

established a “Cell” which holds through its investment in BVIHL, a new subsidiary of the Company registered in Guernsey,

the Company’s interest in Yandex via Baring Vostok Private Equity Fund, L.P.3 and will not make any new investments. The

remainder of the Company’s existing and any new investments will be held in the “Core”, directly or indirectly through

Baring Vostok Investments Limited ("BVIHL").

Basis of Preparation

In addition, the Company raised USD 32 million of new capital (the “Placing”), by issuing new Core Shares at a Placing Price

of USD 3,681 per Share, representing a 2 per cent. premium to the net asset value (“NAV”) attributed to each Core Share

as at the Calculation Date of 10 June 2013 (used to cover the expenses of the Placing and ensure that the Placing was non-

dilutive to such NAV).

New Accounting Standards

The Accounting Standards Board has developed and issued a new framework of accounting standards to be generally

accepted in the United Kingdom. This framework currently consists of three new standards which are applicable for all

accounting periods beginning on or after 1 January 2015.

FRS 102 "The Financial Reporting Standard Applicable in the UK and Republic of Ireland" is the standard which replaces

current UK GAAP. It is based on International Financial Reporting Standards (IFRS) for SMEs, which is a simpler version of

full IFRS and is restricted in scope. FRS 102 does however contain extended disclosures on financial instruments which

derive from IFRS 7 and which must be included by entities that meet the definition of a financial institution, in addition to

those disclosures which are applicable to all entities applying FRS 102.

FRS 100 "Application of Financial Reporting Requirements" sets out the rules and guidance on how to select the appropriate

accounting framework for a particular entity or group.

FRS 101 "Reduced Disclosure Framework" introduces a new framework enabling most subsidiaries to use the recognition

and measurement bases of IFRS, while being exempt from having a number of disclosures required by full IFRS in their

Consolidated Financial Statements.

These standards are available to be adopted early. The Directors are in the process of considering the impact of the

application of these standards but do not expect to adopt them prior to the application date.




Private and

Confidential


2. PRINCIPAL ACCOUNTING POLICIES (CONTINUED)

Subsidiary undertakings

Date of

Control

Group

Ownership

%

Country of

incorporation

Baring Vostok Investment Holdings Limited 17/06/2013 100 Guernsey

■

■

Going Concern

Foreign currency assets and liabilities are translated into United States Dollar (''USD'') at the rate of exchange ruling at the

Balance Sheet date. Transactions in foreign currencies during the course of the year are translated at the rate of exchange

ruling on the date of transactions.

Any forward foreign currency exchange contracts or exchange traded currency futures held at the year end have been

independently valued at year end market rates by reference to the last transaction on 31 December 2013. All profits and

losses on such contracts are recognised in the Consolidated Profit and Loss Account.

Foreign Exchange

Interest, of all forms, is recognised on an accruals basis.

Aggregation of Consolidated Financial Statements

The Directors believe it is appropriate to continue to adopt the going concern basis in preparing the consolidated financial

statements as the assets of the Company consist of sufficient securities which are readily realisable to cover expenses and

other expected cash flows as they fall due, there is no gearing and minimal creditors. Accordingly, the Company has

adequate financial resources available to continue in operational existence for the foreseeable future.

The consolidated financial statements contain the results of the Company and Group and also present the year's individual

results of the Core and Cell respectively.

Investment Income

Income is included in the Consolidated Profit and Loss Account on the following basis:

Consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the

Company (its subsidiary undertakings) made up to the Balance Sheet date. Control is achieved where the Company has the

power to govern the financial and operating policies of the investee entity so as to obtain benefits directly from its activities.

The existence and effect of potential voting rights that are currently exercisable or convertible are considered when

assessing whether the Company controls another entity.

Subsidiary undertakings are fully consolidated from the date of which control is transferred to the Group. They are de-

consolidated from the date that control ceases.

Inter-company transactions, balances, income and expenses on transactions between Group companies and those

transactions between the Core and Cell are eliminated on consolidation. Profits and losses resulting from inter-company

transactions that are recognised in assets are also eliminated. Accounting polices of subsidiary undertakings are consistent

with the polices adopted by the Group.

Dividends are recognised when the underlying investments become ex-dividend and are reflected gross of any

withholding tax; and




Private and

Confidential


2. PRINCIPAL ACCOUNTING POLICIES (CONTINUED)

Expenses and Expense Allocation

Portfolio of Investments

Cash Flow Statement

3. TAXATION

Expenses are included in the Profit and Loss Account on an accruals basis. Expenses incurred on behalf of the Company are

allocated between the Core and Cell pro-rata based on the most recently published net asset value. Expenses incurred

exclusively by the Core or Cell are allocated in full to the Core or Cell respectively.

Investments are valued through the Consolidated Statement of Total Recognised Gains and Losses using Directors'

valuation. For quoted investments or investments with a readily available market value, Directors valuation is determined by

reference to the bid-market price ruling at the Balance Sheet date or if not available, the latest bid price of the quoted

investment.

Directors valuation of investments in unlisted funds (including limited partnerships) are valued at the NAV of that

investment as determined in accordance with the terms of the underlying funds' constitutive documents and as notified by

the respective fund manager or administrator as at the valuation date. The valuation date of each fund may not always be

co-terminus with the valuation date of the Company, and in such cases, the valuation of the fund as at the latest valuation

date of the fund is used, i.e. the latest available price is used on the valuation date. The NAV reported by the respective

fund manager or administrator and used by the Directors as at 31 December 2013 may be unaudited as at that date and

may differ from the final audited NAV struck in the relevant fund as at 31 December 2013. However, it is the belief of the

Directors that the NAVs used by the Company should not be materially different from the final audited NAV struck for these

funds held at 31 December 2013.

The Company is exempt from the requirement to prepare cash flow statements as required by Financial Reporting Standard

No. 1 (Revised 1996) on the grounds that it qualifies as a small entity.

With effect from 1 January 2008, Guernsey abolished certain aspects of the exempt Company regime for the majority of

Guernsey Companies. Thereafter, these companies are taxed at the standard rate (0%). However, due to the classification

of the Company, the Directors were able to elect to remain a tax exempt Company. The States of Guernsey Income Tax

Authority has granted the Company exemption from Guernsey Income Tax.

In addition, the NAVs used to value these fund investments may also significantly differ from the proceeds realised through

distributions to the Company of proceeds generated by the funds from the ultimate realisation of their own portfolios of

investments, and these differences may be significant.

Loans and preference shares in unlisted companies are classified as loans and receivables and valued at amortised cost less

any material impairment in value.

Realised profits and losses on investments are calculated by reference to the net proceeds on disposal and the average cost

attributable to those investments. Realised surpluses and deficits on the partial sale of investments are arrived at by

deducting the average cost of such investment from the sales proceeds. The purchases and sales of investments are

accounted for on the trade date. Unrealised profits and losses on investments are calculated by reference to the carrying

value at the year end and the carrying costs of investments held. All realised and unrealised profits and losses on

investments are reflected in the Statement of Total Recognised Gains and Losses.




Private and

Confidential


4. DISTRIBUTIONS

5. MATERIAL AGREEMENTS

■

■

Adjusted Market Capitalisation; and

Adjusted NAV

Manager

"Qualifying Assets" means assets of the Core in respect of which no management fees or carried interest is payable to a

member of the Baring Vostok Group. For the avoidance of doubt Baring Vostok Private Equity Fund L.P.3. shall not be

deemed a Qualifying Asset.

On 26 September 2013, the Investment Manager of the Company (Baring Vostok Fund (GP) L.P.) a Guernsey registered

Limited Partnership, was replaced by Baring Vostok Investment Managers Limited, a Guernsey registered company.

Persuant to the Listing Document and as further defined under the terms of the Management Agreement dated 23 August

2013, the Manager shall receive a Management Fee from the Core for its management services to the Company. The

quarterly fee shall be at the rate of 1.5 per cent of the lower of:

The Investment Manager of the Company was, until 26 September 2013, Baring Vostok Fund (GP) L.P., a Guernsey

registered limited partnership. Under the terms of the Investment Manager’s agreement dated 17 October 2001, the

Investment Manager shall receive a fee of USD 1 per annum for its management services to the Company, and is entitled to

reimbursement of all out of pocket expenses incurred in the performance of its duties relating to the Company.

"Adjusted Market Capitalisation" means the percentage of the Market Capitalisation of the Core Shares on any given date

which is equal to the percentage of the Core Assets which is represented by Qualifying Assets.

each determined as at the last Business Day of the relevant calendar quarter and as at the last Business Day of the

other two months in such calendar quarter and payable within 30 days of the relevant quarter end.

Core

Persuant to the Listing Document, the Core will distribute 50 per cent of realised gains from private equity investments to

Core Shareholders by way of dividends, compulsory redemptions or the repurchase of Core Shares. In determining whether

to return such realised gains in the form of dividends, compulsory redemptions or share repurchases, the Directors will have

regard to the prevailing share price rating of the Core Shares. In particular, the Directors currently intend to prioritise share

repurchases over dividends or compulsory redemptions where the market price at which the Core Shares trade is more than

10 per cent below the NAV per Core Share for more than 1 month prior to any distribution.

The Articles also permit the Directors, in their absolute discretion, to offer a scrip dividend alternative to Core Shareholders

when a cash dividend is declared from time to time. In the event a scrip dividend is offered in the future, an electing Core

Shareholder would be issued new, fully paid up Core Shares (or Core Shares reissued from treasury) pursuant to the scrip

dividend alternative, calculated by reference to the higher of (i) the prevailing average mid-market quotation of the Core

Shares on CISE over five trading days; or (ii) the NAV per Core Share, at the relevant time. The scrip dividend alternative

would be available only to those Core Shareholders to whom Core Shares might lawfully be marketed by the Company. The

Directors’ intention is not to offer a scrip dividend at any time that the Core Shares trade at a material discount to the NAV

per Core Share.

Cell

Persuant to the Listing Document, the Cell will distribute 100 per cent of the distributions it receives from its ultimate

investment in Yandex via Baring Vostok Private Equity Fund L.P.3 by way of dividends, compulsory redemptions or the

repurchase of Cell Shares. Any net income received will be distributed by way of dividend each year.

The remaining 50 per cent of realised gains from private equity investments will be reinvested into new private equity

investments in accordance with the Core's Investment Policy.

"Adjusted NAV" means the value of the Qualifying Assets comprised in the Core Assets less the value of the portion of all

liabilities attributable to the Core which is that proportion equal to the percentage of the Core Assets represented by

Qualifying Assets.

"The Baring Vostok Group" refers to the Investment Adviser, the Investment Manager and such other entities as may from

time to time share common control with the Investment Adviser.




Private and

Confidential


5. MATERIAL AGREEMENTS (CONTINUED)

■

■

■

Director

Fee (p.a.)

USD

45,000-

60,00050,000

-

6. INVESTMENTS2013 2013 2013 2012

Core Cell

Consolidated

Total TotalUSD USD USD USD

107,330,309 21,069,835 90,803,790 8,993,51814,972,263 14,141,417 66,710,034 56,810,492

Valuation 122,302,572 35,211,252 157,513,824 65,804,010

Performance Fee

Investment Cost

Unrealised gain on investments

Persuant to the Listing Document the Manager will be entitled to receive a Performance Fee from the Core equal to 20% by

which the Adjusted NAV exceeds the Initial Adjusted NAV / Adjusted NAV at the last Calculation Date.

Administrator

Richard Crowder Simon FaureJohn Dudley Fishburn Christopher LeggePeter Touzeau

The Performance Fee becomes payable to the Manager if Adjusted NAV on calculation date exceeds the Threshold NAV.

Under the terms of the Administration Agreement dated 17 October 2001, the Administrator, Ipes (Guernsey) Limited

(formerly International Private Equity Services Limited) (“IPES”) provides Secretarial, Directors and Administration services

to the Company and is entitled to receive administration fees, director’s fees and reimbursement of expenses as may be

determined from time to time by the parties.

Directors’ Fees

The "Threshold NAV" is the highest of:

1.5 x Initial Adjusted NAV; or

Initial Adjusted NAV plus 8% annualised effective internal rate of return; or

Highest Adjusted NAV as at any previous calculation.

"Qualified Distributions" means all distributions related to Qualifying Assets by way of any dividends or other distributions or

through redemption or purchase of Core shares.

The "Initial Adjusted NAV" means the Adjusted NAV as at close of business on the date of Admission.

Simon Faure has agreed to waive his Director fee to which he would otherwise have been entitled to. The Company shall

pay IPES the sum of GBP 7,500 per annum in respect of the services of Peter Touzeau as a Director.




Private and

Confidential


7. DEBTORS2013 2013 2013 2012

Core Cell

Consolidated


D1 1,969 544 2,513 2,221D2 31,286 - 31,286 -D3 - - - 4,360,574D4 379,454 - 379,454 -D5 2 - 2 2D6 1,854 25 1,879 1,773D7 433,231 - 433,231 -

847,796 569 848,365 4,364,570

8. CREDITORS2013 2013 2013 2012

Core Cell

Consolidated


C1 516,618 - 516,618 -C2 104,355 25,233 129,588 11,491C3 32,370 8,937 41,307 10,175C6 32,414 8,949 41,363 12,404C7 - 379,454 379,454 -C8 - - - 3,363

685,757 422,573 1,108,330 37,433

9. SHARE CAPITAL

2013 2013 2013 2012

Core Cell

Consolidated


Issued:Share Capital

2 - 2 21,854 25 1,879 1,774

Preference Share Capital

84,856,229 31,946,158 116,802,387 236

84,858,085 31,946,183 116,804,268 2,012

Nominal shares of USD 0.01 each

Ordinary shares of USD 1 each

Management fees payable

Administration fees payable

Audit fees payable

Prepaid listing fees

Distributions receivable

Directors fees payable

Redeemable Preference Shares

Loan repayable - Core

Share capital due (ordinary shares)

Share capital due (nominal shares)Reimbursement of legal costs

Loan receivable - Cell

Deposit - Otkritie Brokers

Loan receivable - Cell of USD 379,454 relates to restructuring fees the Core settled on behalf of the Cell and which are now

repayable and bear no interest.

Other expenses payable

Loan receivable - Cell of USD 379,454 relates to restructuring fees the Core settled on behalf of the Cell and which are now

repayable and bear no interest.

Reimbursement of legal costs of USD 433,231 is the amount of Placing Costs incurred by the Company in excess of 2

percent of Gross Placing Proceeds which, pursuant to the Listing Document, is due to be reimbursed by Baring Vostok

Capital Partners Limited.




Private and

Confidential


9. SHARE CAPITAL (CONTINUED)

Rights Attaching to the Ordinary and Redeemable Participating Preference Shares

Nominal Shares

Ordinary Shares

Core Redeemable Preference Shares

■

■

■

Cell Redeemable Preference Shares

■

■

Cell Shares shall carry rights on dividends and distributions and rights in a winding up as set out in the Articles, including:

the right to receive dividends and distributions paid out of the Cell Assets as from time to time determined by the

Directors to be distributed by way of interim and/or final dividends or by any other means in accordance with the

Companies Law;

the right to receive on a return of capital or other distribution of assets on a winding up or otherwise (other than

conversion, redemption or purchase of shares) the Cell Assets and available for distribution;

The Directors may redeem the Cell Shares at a price per share determined by reference to the NAV of the Cell and as set

out in a redemption notice. Cell Shares will be redeemed pro rata to the holdings of shareholders at the relevant time.

The Nominal Shares shall carry no voting rights, nor any right to dividends.

Ordinary Shares shall only be issued in respect of the Core and shall carry no voting rights unless there are no Core Shares

or Cell Shares in issue. In the event of a winding up, the Ordinary Shares carry the right to receive out of the assets of the

Core a return of the nominal amount paid up on such shares, before the return of the nominal amounts paid up on all Core

Shares.

Nominal Shares may only be issued to the Manager at par and for the purposes of providing funds for the redemption of

Core Shares or Cell Shares, and shall be issued in respect of the Core or the Cell from which such shares are to be

redeemed. In the event of a winding up, the Nominal Shares carry the right to receive a return of the nominal amount paid

up on such shares, payable out of the assets of the Core or the Cell, as the case may be (after the return of the nominal

amounts paid up on the shares of the Core or the Cell, as the case may be, and (in the case of the Core only) the Ordinary

Shares).

Core Shares shall carry voting rights, rights on dividends and distributions and rights in a winding up as set out in the

Articles, including:

the right to receive dividends and distributions paid out of the Core Assets as from time to time determined by the

Directors to be distributed by way of interim and/or final dividends or by any other means in accordance with the

Companies Law;

the right to receive on a return of capital or other distribution of assets on a winding up or otherwise (other than

conversion, redemption or purchase of shares) the Core Assets available for distribution after the return of the nominal

amount paid up on the Ordinary Shares;

the right to receive notice of, and to vote at, general meetings of the Company. Each holder of a Core Share who is

present in person or by proxy (or, being a corporation by representative) at a general meeting will have on a show of

hands one vote and on a poll every such holder who is present in person or by proxy (or, being a corporation, by

representative) will have one vote in respect of each Core Share held by him.

The Directors may redeem the Core Shares at a price per share determined by reference to the NAV of the Core and as set

out in a redemption notice. Core Shares will be redeemed pro rata to the holdings of shareholders in the Core at the

relevant time.




Private and

Confidential


10. NET FINANCE DUE TO SHAREHOLDERS

Consolidated - Total 1 Jan 2013

Movements

during the year 31 Dec 2013

USD USD USD

Share capital issued 236 116,802,151 116,802,387 Realised gain on investments 64,194,481 35,634,573 99,829,054 Unrealised gain on investments 56,810,492 9,899,542 66,710,034 Accumulated losses before financing (289,889) (2,137,800) (2,427,689) Shares redeemed (45,503,116) (38,542,483) (84,045,599) Capital distributions - (31,946,158) (31,946,158)

Net finance due to shareholders 75,212,204 89,709,825 164,922,029

Company - Total (Pre-conversion) 1 Jan 2012

Movements


USD USD USD

Share capital issued - 236 236Realised gain on investment 55,563,007 8,631,474 64,194,481Unrealised gain on investment 56,931,868 (121,376) 56,810,492Accumulated losses before financing (206,232) (83,657) (289,889)Shares redeemed (45,503,116) - (45,503,116)Capital distributions - - -


Company - Core 1 Jan 2013

Movements


USD USD USD

Share capital issued 236 84,855,993 84,856,229 Realised gain on investments 64,194,481 71,490,759 135,685,240 Unrealised gain on investments 56,810,492 (41,838,229) 14,972,263 Accumulated losses before financing (289,889) (1,698,659) (1,988,548) Shares redeemed (45,503,116) (26,354,786) (71,857,902) Capital distributions - (31,946,158) (31,946,158)


Company - Cell (established 17 July 2013) 17 July 2013

Movements


USD USD USD

Share capital issued - 31,946,158 31,946,158Realised gain on investment - 1,740,168 1,740,168Unrealised gain on investment - 14,141,417 14,141,417Accumulated losses before financing - (439,141) (439,141)Shares redeemed - (12,187,697) (12,187,697)Capital distributions - - -

Net finance due to shareholders - 35,200,905 35,200,905




Private and

Confidential


11. RISK

Significant Accounting Policies

Credit Risk

■

■

■

Market risk

The Company has entered into financial transactions with counterparties which have resulted in the following financial

assets and financial liabilities: Investments, Debtors, Cash at Bank and Creditors.

Market risk is the risk that future changes in market prices, other than those generated from interest rate or foreign

exchange movements, may adversely affect the value or burden of a financial instrument.

Market risk is concentrated in investments. The Company's investments are susceptible to market risk arising from

uncertainties about future prices of the investments themselves or the assets and liabilities underpinning the investments.

The Manager moderates this risk through a careful selection of securities and other financial instruments within the

specified limits agreed with the Board of Directors. The Company's market risk is managed through diversification of the

investment portfolio. The Company's overall market positions are monitored by the Company's Manager and are reviewed,

as appropriate, by the Board of Directors.

Investments

Debtors

Cash at Bank

Credit risk is concentrated in the Investments and Cash at Bank balances. Direct and indirect investments in loans are

subject to credit risk in as far as the borrower may default on repayments leading to partial or complete loss of the loan

amount. The Directors mitigate this risk by considering the credit risk and liquidity of the borrower. Other investments are

exposed to credit risk in so far the respective counterparty may fail in its obligations to the Company, leading to partial or

complete loss of the amount invested. All transactions in listed and unlisted securities are settled using approved brokers.

The cash at bank balances are placed with banking counterparties that are deemed to hold a sound credit rating, the main

counterparty has a Moody Long Term A-1 rating, which substantially mitigates the credit risks identified.

At 31 December 2013, had the market price of the investments susceptible to market risk increased or decreased by 20%

with all other variables held constant, the increase or decrease in Net Finance Due to Shareholders would be USD

31,502,765 (2012: USD 13,160,802).

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of

measurement and the basis on which income and expenses are recognised in respect of each class of financial asset,

financial liability and equity instrument are disclosed in note 2 to the consolidated financial statements.

Credit risk represents the risk that a counterparty to a financial instrument fails to discharge their obligation, contractual or

otherwise, which causes the Company to suffer a financial loss.

Credit risk has been generated on the following financial assets:

The Company's activities expose it to a variety of direct and indirect financial risks: market risk (including currency risk,

interest rate risk and price risk), credit risk and liquidity risk. The Company's overall risk management programme focuses

on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Company's financial

performance.

The Company is exposed to direct financial risks as a result of its own investments, which include investments in other

investment funds. Indirect financial risk exposure occurs through the Company's exposure to risks as a result of the

investment funds into which it invests. Any significant concentrations of indirect risks are also detailed in this note.

The Company does have a significant concentration of risk to the Russian public and private markets. At 31 December

2013, the appropriate concentration of risk through the Company's investments to these mandates was USD 152,513,824

(2012: USD 65,804,010).




Private and

Confidential


11. RISK (CONTINUED)

Currency Risk

2013 2012Direct currency exposure Consolidated

Total TotalGBP GBP

Investments - -

Cash at Bank 15 -

Debtors 179,830 1,375

Creditors (283,613) (15,747)

(103,768) (14,372)

2013 2012Indirect currency exposure Consolidated

Total TotalRUB RUB

Investments in Baring Vostok Private Equity Funds 4,119,792,351 2,008,996,425

4,119,792,351 2,008,996,425

Liquidity Risk

Interest Rate Risk

■

■

Although the majority of the Company's financial assets and liabilities are non interest bearing, the Company holds USD

7,670,051 in cash representing 4.65% of its NAV.

As at 31 December 2013, had the exchange rate between USD and RUB increased or decreased by 10% with all other

variables held constant, the increase or decrease respectively in net assets attributable shareholders would be USD

12,529,782. The USD:RUB rate as at 31 December 2013 was 32.88 (2012: 30.53)

The Company does not have a policy of hedging exposure, therefore it is exposed to risk on adverse changes in foreign

exchange rates. However, as at 31 December 2013, 100.11% of the net assets of the Company are held in the base

currency USD. The Board of Directors monitor the currency allocation to mitigate risk.

Liquidity risk is defined as the risk that the Company would encounter difficulty in meeting obligations associated with

financial liabilities. The Directors of the Company do not regard the liquidity risk as being material. The Directors monitor

the liquidity and the recoverability of investments to ensure obligations to creditors can be met. Financial liabilities held at

31 December 2013 were not material.

the risk that the fair value of financial assets and liabilities will fluctuate because of market interest rate changes; and

the risk that future cash flows of financial instruments will fluctuate because of market interest rate changes.

Currency risk is the risk that the value of a financial asset or financial liability will fluctuate because of changes in foreign

exchange rates. The table below indicates the relative Balance Sheet direct and indirect exposures as at the reporting date

as the Company holds financial instruments denominated in currencies other than the reporting currency:

By ensuring cash is held with institutions with good credit ratings and by linking interest rates on loans receivable with

established industry rates, the Directors of the Company believe interest rate risk, other than that due to uncontrollable

market forces is mitigated.

Interest rate risk is represented by the following two component risks:

As at 31 December 2013, had the exchange rate between USD and GBP increased or decreased by 10% with all other

variables held constant, the increase or decrease respectively in net assets attributable shareholders would be USD 17,146.

The USD:GBP rate as at 31 December 2013 was 0.61 (2012: 0.62).




Private and

Confidential


12. RELATED PARTIES

13. UNDRAWN COMMITMENTS

14. ULTIMATE PARENT AND CONTROLLING PARTY

15. POST BALANCE SHEET EVENTS

The Group’s investment portfolio has significant exposure to the Russian economy. Due to the political situation in Russia

and Ukraine, Russian stock devalued during the first quarter of 2014 and will result in a decrease in assets after Balance

Sheet date.

At 31 December 2013, the Company had an undrawn capital commitment of USD 5,711,121 (2012: Nil) to Baring Vostok

Fund IV (GP) L.P. and USD 962,099 (2012: Nil) to Baring Vostok Fund III (GP) L.P.

On 7 April 2014, the Investment Committee approved an investment of USD 5,500,000 into M.Video.

On 9 April 2014, the Company completed an investment of USD 752,000 into Kolyosa.

On 26 March 2014, the Company completed an investment of USD 977,472 into Tigers Realm Coal Limited (“TIG”).

The Directors consider there to be no ultimate or immediate controlling party.

Due to the conversion of the Company to a protected cell company during the year, higher than normal Legal and

Professional and Administration fees were incurred in bringing the Company to its current state. These amounted to USD

1,751,866 and USD 61,459 respectively which are not anticipated to be incurred going forward. Of these Legal and

Professional fees incurred, USD 433,231 is due from Baring Vostok Capital Partners Limited, persuant to the Listing

Document, as the amount of Placing Costs incurred by the Company was in excess of 2 percent of the Gross Placing

Proceeds.




Private and

Confidential

Baring Vostok Investments PCC Limited · 2020. 9. 24. · Baring Vostok Investments PCC Limited 5...

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