Investing in leading fintech companies across …...tion in the emerging fintech ecosys-tem through...

Investing in leading fintech companies across emerging markets

Annual Report 2016

>02

Contents

Management report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 03

Interview with Irene Shvakman, Chairwoman of REVO . . . . . . . . . . . . . 05

Investment portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 06

TCS Group Holding PLC (Tinkoff Bank) . . . . . . . . . . . . . . . . . . . . . . . . 08

JUMO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

REVO Technology and Sorsdata . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

TransferGo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

FinanZero . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Finja . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

The Vostok Emerging Finance share . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Financial summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Company information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Board, management and auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Income Statements – Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Balance Sheets – Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Statement of changes in equity – Group . . . . . . . . . . . . . . . . . . . . . . . 24

Statement of cash flows – Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Alternative Performance Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Income Statement – Parent Company . . . . . . . . . . . . . . . . . . . . . . . . . 27

Balance Sheet – Parent Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Statement of changes in equity – Parent Company . . . . . . . . . . . . . . . 29

Statement of cash flows – Parent Company . . . . . . . . . . . . . . . . . . . . . 30

Notes to the financial statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Declaration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

Independent Auditor’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

Content

Upcoming Reporting DatesVostok Emerging Finance shall issue

the following reports:

Interim report for the first three months

May 17, 2017

General meeting of shareholders 2017

May 18, 2017

Interim report for the first six months

August 30, 2017

Interim report for the first nine months

November 29, 2017

Financial accounts bulletin

March 14, 2018

Annual report and account

April 2018

General meeting of shareholders 2018

May 2018

>03 Management report

Dear fellow shareholder,

If we were to describe how we feel at

VEF post 2016, our first full year of

operation, we would use two words;

proud and ambitious . We are very

proud of what we have achieved to

date, inclusive of setting up and listing

the company, raising capital, making

our first investments, watching them

grow and our Net Asset Value and

share price along with it . Our ambition

comes from the fact that despite what

we have achieved to date, we feel we

are only at the start of our journey

and believe we are in a strong place

in terms of investment opportunity

set, coupled with our position to take

advantage of it . If we could add one

more sentiment, it would be grateful .

We are very grateful to the support

our shareholders have shown us on

our journey so far and happy that we

have been able to repay that faith with

healthy returns on investment thus far .

Reflecting on 2016, we summarise

our key achievements…

> We began the year on the front foot

having just closed a successful

rights issue in December 2015, rais-

ing SEK 588 mln for our focused

mandate .

> Having started the year with four

portfolio companies across two

geographies, we ended 2016 with

seven portfolio companies across

five geographies, and have added

another since .

> Of most importance, we continue to

meet our rights issue investor prom-

ises of building out a diversified

portfolio of quality fintech holdings

across a number of different lines

of financial services and across a

number of different scalable emerg-

ing geographies .

> Deepened our experience and posi-

tion in the emerging fintech ecosys-

tem through travel and closer inte-

grations with fintech players across

numerous emerging markets, all

while deepening the team bench at

VEF .

> Our NAV per share and share price

continue to grow and reflect all of

aforementioned factors .

…and have followed this up with an

eventful and positive start to 2017:

> We have made follow on invest-

ments into portfolio companies

Jumo and REVO/Sorsdata .

> The REVO/Sorsdata transaction

was a benchmark transaction as

we welcome Baring Vostok, Rus-

sia’s leading PE house, who led a

USD 20 mln funding round for the

company .

> We announced our latest portfolio

investment, a USD 9 mln investment

into Iyzico, Turkey’s leading online

payments player .

> Pipeline continues to keep us busy,

as we are advanced with a couple

of opportunities, with real potential

to put more money to work and add

to the portfolio depth, diversity and

quality .

On the portfolio front, focusing more

on the last quarter of 2016 and the

start of 2017, key highlights includ-

ed the Iyzico transaction, the REVO/

Sorsdata follow on funding deal and

Tinkoff 2016 numbers and dividend

announcement .

> In January 2017, we announced our

eighth portfolio investment, into Iyzi-

co, an online Turkish payments play .

VEF made an investment of USD 9

mln and holds a sizeable minori-

ty position . The company currently

supports thousands of merchants,

both Turkish and International, to

accept online payments from Turk-

ish citizens safely and efficiently .

As well as being one of the larger

emerging market economies and

populations, Turkey is Europe’s

largest consumer card market, but

remains vastly under-penetrated

in the fast growth online payment

space . Turkey has unique card

market dynamics which, coupled

with the importance of the grow-

ing share of e-commerce transac-

tions leaves us very positive on the

market opportunity in front of Iyzi-

co . There is a wealth of experience

in the Iyzico management team,

which is what really drew us to this

opportunity .

> VEF also announced in January

2017 that it agreed to invest up to

USD 5 mln over a number of tranch-

es in REVO/Sorsdata as part of a

broader funding round, totalling up

to USD 20 mln . The new round was

led by Baring Vostok, a leading pri-

vate equity firm operating in Russia

and the CIS . This is a third invest-

ment by VEF into the companies,

following on an earlier round in late

2015 .

> Tinkoff delivered stellar results for

12M 2016, where it delivered a

RoAE of 42 .5% on strong balance

sheet/revenue growth and lower

cost of risk . They followed this up

with positive outlook for 2017 for

the business and a new dividend

policy announced for 2017 (VEF

netted USD 2 .4 mln in dividend pay-

ments from TCS Group Holding PLC

through 2016) . As previously men-

tioned, in Tinkoff we see as many

new fintech business lines coming

through as we do in maybe a dozen

separate fintech companies in other

markets we focus on .

>04

On the cash front, with a USD 55

mln cash and liquid asset balance at

YE16, VEF is well positioned for fol-

low on financial support to our portfo-

lio companies as well as additions of

new holdings for the near future .

While it is always nice to speak

about strategy and portfolio evolution

nothing speaks louder to investors

then delivery in our NAV per share

and share price . In this regard, 2016

was a very successful year for VEF, as

we saw our NAV per share and share

price rise 57% and 54% YoY respec-

tively . Over the year, the uptrend was

principally a result of the gradual con-

tinued rise of Tinkoff Credit Systems

share price, our largest and most fruit-

ful holding to date . Arguably, of more

importance to our future value cre-

ation is that we have now seen up-val-

uation rounds in two of our earliest

portfolio company investments, JUMO

and REVO/Sorsdata . We are espe-

cially very proud of the performance

from REVO/Sorsdata in Russia and

are not surprised that we were able

to attract blue chip local PE investor

Baring Vostok into the cap table, as

part of a broader funding round that

we were more than happy to support .

For some more insights on REVO, we

have for this Annual Report included

a short interview with the Co-found-

er and Chairwoman, Irene Shvakman .

Looking ahead, we remain encour-

aged by the opportunity set that is

emerging market’s fintech and how we

are very well positioned to take advan-

tage of it . We continue to unearth

quality opportunities across a number

of different fintech segments and geo-

graphic markets . Specifically, of late,

we are doing a lot of work and seeing

multiple opportunities in the account-

ing software as a service (SaaS) and

payroll spaces, while Mexico, Egypt

and India are on our current geo-

graphic focus radar . With the capital

we have, the target has always been

and remains to build a quality portfo-

lio of 10 holdings +/- across a num-

ber of different segments of fintech

and across a number of different scal-

able emerging markets, and we are

well on our way to achieving this goal .

As we continue to invest, and reduce

our investable cash position, we will

continue to review the opportunity set

in front of us before making decisions

on any further capital needs of the

business as we go .

As always, I would like to close off

my comments by thanking my sup-

portive board of directors and the

deepening team at Vostok Emerging

Finance for all their input and efforts

over the period . To fellow sharehold-

ers, we appreciate your on-going sup-

port . As a listed investment compa-

ny, our shareholder base continues

to evolve and we welcome those new

shareholders to the story while thank-

ing those who have moved on . At VEF,

we remain committed to delivering

shareholder value through a focused

approached on increasing the NAV

per share, coupled with healthy level

of company transparency and inves-

tor communication as we go . We take

a long-term view on our company,

investments and indeed life, which is

a necessary positive when investing

in the space that we do . Encouraged

by our success to date, we remain

focused for the long exciting journey

ahead .

April 2017,

David Nangle

>05 Interview with Irene Shvakman, Chairwoman of REVO

Irene Shvakman is Chairwoman and co-founder of REVO and Sorsdata

To start, for our readers, could you summarise exactly what REVO and Sorsdata do and what is your vision for both companies?REVO and Sorsdata are leading fin-

tech companies in Russia . REVO is

the leader in providing instant pay-lat-

er solutions for on- and off-line retail-

ers in the region . The company has

built partnerships with major nation-

al merchants in footwear, apparel,

children’s, health and beauty, jewel-

lery, travel and other categories and

enables partners to offer their shop-

pers the opportunity to pay for their

purchases in easy monthly instal-

ments . REVO leverages leading edge

mobile, cloud, and data technologies

to make buying and paying easy .

Sorsdata works with major retail-

ers to deliver end to end personal-

ized marketing solutions . Sorsda-

ta’s services assist merchants with

increasing repeat purchases, expand-

ing baskets, reducing lapse rates, and

reactivating customers .

Where would you say you are at in your journey, just starting, growth phase, is maturity even close?REVO and Sorsdata are first movers

and deliver services that are new to

the market . We believe that the mar-

ket for our services is at an early stage

of development and that technological

advances are likely to make our ser-

vices even more relevant with time .

We see many years of growth ahead .

What have you found to be the main headwinds as you and the team built this business over the past few years?Early on we experienced similar head-

winds as most other early stage com-

panies . It was difficult to attract top tal-

ents and raise capital . Now the key

challenge is managing growth – exe-

cuting on the key opportunities, stay-

ing humble, striking the right balance

between investment and earnings .

In every company’s life there are tipping points which really define the road to success, could you mention 1 or 2 of yours?For us there were several key mile-

stones . First, it was landing our first

major client -- a national retailer who

believed in our service . Second, it

was our first investor – VEF – who

believed in our team and our busi-

ness model . We came across many

investors who thought we should be

doing something that they saw some-

where in some other market . VEF was

the only one who wanted to invest in

us and in what we were trying to build .

What are the pros and cons of operating in a country like Russia?It’s probably obvious, but Russia is a

huge market with many opportunities .

It’s easy to focus only on the challeng-

es – of which there are many for sure

– but there are few people that see

the opportunities here and have the

ability to execute in this environment .

Loaded question! How would you describe your relationship with VEF and your equity partners in general?We are fortunate in having two very

strong investors – VEF and Baring

Vostok – who have experience with

building major technology companies

in our region . Our investors are our

partners . We love them challenging

us, bringing ideas, discipline, opening

doors, etc . We want our investors to

engage with us and help us build suc-

cessful companies .

To close off, what would you say to investors in Vostok Emerging Finance, who indirectly are shareholders in your companies?VEF is unique among fintech inves-

tors with whom we have interact-

ed . They have a real insight into how

to operate in emerging markets, the

unique challenges and opportunities

these markets offer and have a great

track record of spotting and backing

success stories .

>06 Investment portfolio

Number of shares Company

Fair value, USD

Dec 31, 2016

Percent- age

weight

Fair value, USD

Dec 31, 2015

Valuation change per share, 2016

6,379,794 TCS Group Holding PLC (Tinkoff Bank)2 67,306,827 46 .4% 19,458,372 246% 1

1,994 JUMO3 12,705,768 8 .7% 10,309,704 8% 1

3,584 REVO Technology3 4,700,000 3 .2% 4,700,000 – 1

601,202 TransferGo3 3,154,798 2 .2% -7% 1,4

13,600 FinanZero3 1,099,245 0 .8% -9% 1,4

Finja3 1,000,985 0 .7% – 1

882 Sorsdata3 300,000 0 .2% 300,000 – 1

Liquidity management1,2 29,887,284 20 .6%

Cash and cash equivalents 24,997,933 17 .2% 62,301,599

Total investment portfolio 145,152,840 100.0% 97,069,675

Other net liabilities -826,501 -1,521,757

Total Net Asset Value 144,326,339 95,547,918

1 . This investment is shown in the balance sheet as financial asset at fair value through profit or loss . 2 . Level 1 of financial asset at fair value through profit or loss3 . Level 2 of financial asset at fair value through profit or loss4 . Attributable to currency exchange differences

Portfolio structure – Net Asset Value

The investment portfolio stated at mar-

ket value as at December 31, 2016 is

shown to the right .

TCS Group Holding PLC 46 .4%

JUMO 8 .7%

REVO Technology 3 .2%Cash and cash equivalents 17 .2%TransferGo 2 .2%

FinanZero 0 .8%Finja 0 .7%

Sorsdata 0 .2%Liquidity management 20 .6%

>07

Portfolio developmentVostok Emerging Finance’s net asset

value as at December 31, 2016 was

USD 144 .3 mln (December 31, 2015:

USD 95 .9 mln) or USD 0 .22 per share

(December 31, 2015: USD 0 .14 per

share) . Given a SEK/USD exchange

rate of 9 .10 (December 31, 2015:

8 .35) this corresponds to a net asset

value of SEK 1,313 .0 mln (December

31, 2015: SEK 798 .1 mln) or 1 .99 SEK

per share (December 31, 2015: SEK

1 .21 per share) .

Over the period January 1, 2016–

December 31, 2016, Vostok Emerging

Finance’s net asset value per share in

USD increased by 57 .1% . During the

same period the MSCI Emerging Mar-

kets index increased by 8 .6% in USD

terms . The majority of VEF’s growth

in net asset value was a result of Tin-

koff Bank’s 246% appreciation in USD

terms in the year . Vostok Emerging

Finance’s SDR price increased by

41% in USD in 2016 .

Over the course of 2016, VEF

invested in 3 new portfolio compa-

nies: FinanZero (USD 1 .2 mln), Trans-

ferGo (USD 3 .4 mln) and Finja (USD

1 .0 mln) . VEF also participated in a

follow-on investment with JUMO (USD

1 .6 mln) .

Since the close of the year 2016,

VEF also participated in a follow-on

round with REVO and Sorsdata (USD

5 .0 mln) and invested in a new port-

folio company, Iyzico (USD 9 .0 mln) .

July 2015Incorporated and listed on Nasdaq First North, Sweden

December 2015Successful rights issue raising SEK 588 mln/ USD 70 mln

March 2016Investment: FinanZero (USD 1 .2 mln)

August 2016Investment: Finja (USD 1 .0 mln)

January 2017Investments: REVO/Sorsdata (USD 5 mln),Iyzico (USD 9 mln)

September 2015Investments: REVO/Sorsdata (USD 2 .5 mln),JUMO (USD 4 mln)

December 2015Investments: REVO/Sorsdata (USD 2 .5 mln),JUMO (USD 6 mln)

June 2016Investment: TransferGo (USD 3 .4 mln)

December 2016Investment: JUMO (USD 1 .6 mln)

0.90

1.10

1.30

1.90

1.50

1.70

Jan2016

Dec2015

Feb2016

Mar2016

Apr2016

May2016

Jun2016

Jul2016

Aug2016

Sep2016

Oct2016

Nov2016

Dec2016

Vostok Emerging Finance SDR and monthly Net Asset Value developmentDecember 2015–December 2016 (SEK/SDR) . Adjusted for rights issue in 2015 .■ Net Asset Value - - - Rights Issue — SDR Price

>08 TCS Group Holding PLC (Tinkoff Bank)

Tinkoff Bank is an innovative provider

of digital financial services, focused

on the retail and SME segments of

Russia . Since its launch in 2007 by

Mr Oleg Tinkov, a renowned Russian

entrepreneur with a long track record

of creating successful businesses,

Tinkoff Bank initially grew into a leader

in the Russian credit card market, very

much in the mould of Capital One in

the US before broadening the offering

and being at the forefront of innova-

tion in delivery of online consumer and

SME financial services . The low-cost,

innovation driven business model is

flexible with a proven ability to rapidly

grow and contract given the cyclicali-

ty of the Russian marketplace . A core

strength of Tinkoff Bank’s success

has been its deep and growing loyal

senior management bench, which

consists of a team of experienced

professionals formerly employed by

the likes of Visa, McKinsey and sev-

eral top Russian banks and tech com-

panies, and are widely regarded to

be the foremost management team in

the Russian financial services space

today . Tinkoff Bank was listed on the

main list of London Stock Exchange

since October 25, 2013 .

In its core credit card business,

Tinkoff Bank is the number 2 cred-

it card issuer in Russia with 10 .3%

market share in 2016, second only to

State champion Sberbank . The core

card business has been the engine

room of the businesses success and

financial performance since inception .

Arguably the more exciting aspect

of the Tinkoff business is the many

new financial offerings which con-

tinue to come out of the Tinkoff sta-

ble and layer onto its core card offer-

ing and continue to add value to the

group and its shareholders . Tinkoff

Bank has developed a successful

online retail deposits programme,

branded Tinkoff Black, which now

has north of 2 mln customers . Tinkoff

Bank’s other innovative lines of busi-

ness include Tinkoff Online Insurance,

which enables Tinkoff Bank to under-

write and sell its own innovative online

TCS Group Holding PLC

Vostok Emerging Finance’s number of shares as at Dec 31, 2016 6,379,794

Total Value as at Dec 31, 2016 (USD) 67,306,827

Share of total portfolio 46.4%

Share of total shares outstanding 3.5%

Value development Jan 1–Dec 31, 2016 (in USD) 246%

Website: tinkoff.ru/eng/

2010 20162014201320122011 2015

0

3

6

15

12

9

4Q15 4Q163Q162Q161Q16

0

1

5

4

2

3

0.3

11.0

3.4

5.8

3.8

2.0 1.9

0.9

3.7

2.9

2.5

1.9

TCS Group: annual net income (RUB bln)

2010 20162014201320122011 2015

0

3

6

15

12

9

4Q15 4Q163Q162Q161Q16

0

1

5

4

2

3

0.3

11.0

3.4

5.8

3.8

2.0 1.9

0.9

3.7

2.9

2.5

1.9

TCS Group: quarterly net income (RUB bln)

http://www.tinkoff.ru/eng/

>09

insurance products . The banks pivot

to focus on the smaller end of Russia’s

SME segment occurred in 2016, and

they ended the year with 60k cus-

tomers and growing from an esti-

mated SME market size in Russia of

5 mln . In October 2015, Tinkoff Bank

announced the launch of brokerage

services for its customers based on

BCS Broker solution . The new offer-

ing enables Tinkoff Bank’s custom-

ers to open brokerage accounts and

purchase securities online . In summa-

ry, with the core business on the front

foot as Russia’s economy has stabi-

lised and begin to show growth again,

Tinkoff Bank has taken the opportuni-

ty to push hard on a number of new

business lines with a view to drive fur-

ther growth and diversify the group’s

revenue streams going forward .

2016 was the year when Tinkoff

Bank’s reported financials finally start-

ed to flourish after a gradual recov-

ery from the Russian recession of the

previous few years . For FY16, Tinkoff

Bank delivered an RoAE of 42 .5%

(2015 8 .6%) and an RoAA of 7 .1%

(2015 1 .5%), with the recovery pri-

marily driven by improved asset qual-

ity coupled with strong credit and top

line revenue growth . 2016 also saw

the recovery of dividend flow in tan-

dem with the bottom line delivery and

on March 14, 2017, together with its

4Q16 results, the bank announced a

new dividend policy, planning to dis-

tribute surplus capital quarterly, as

determined by the board, with a tar-

get dividend payout of 50% of the pre-

ceding quarter’s net income . Finally,

on the outlook and guidance front . On

March 14, 2017 Tinkoff upgraded its

guidance for FY2017 . Tinkoff expects

net income for FY2017 to amount to

RUB 14 bln and a cautious cost of

risk at 9–10% for 2017 .

TCS guidance for 2017

2016 FY

2017 Original guidance (as of Nov 2016)

2017 Revised

guidance

Net loan portfolio growth +25 .4% +15–20% 20%+

Cost of risk 7 .6% Around 10% 9–10%

Cost of borrowing 10 .7% Around 9% Around 9%

Net income RUB 11 bln RUB 13–14 bln RUB 14 bln+

Source: Company data, March 2017

20162015

1.5%

7.1%

0%

2%

4%

10%

8%

6%

0%

2%

4%

10%

8%

6%

4Q15 4Q163Q162Q161Q16

2.9%

8.7%

7.3%6.8%

5.3%

TCS Group: return on assets (%)

20162015

1.5%

7.1%

0%

2%

4%

10%

8%

6%

0%

2%

4%

10%

8%

6%

4Q15 4Q163Q162Q161Q16

2.9%

8.7%

7.3%6.8%

5.3%

20162015

0%

15%

30%

60%

45%

0%

15%

30%

60%

45%

4Q15 4Q163Q162Q161Q16

8.6%

42.5%

16.7%

51.4%

43.4%41.5%

32.3%

TCS Group: return on equity (%)

20162015

0%

15%

30%

60%

45%

0%

15%

30%

60%

45%

4Q15 4Q163Q162Q161Q16

8.6%

42.5%

16.7%

51.4%

43.4%41.5%

32.3%

>10 JUMO

JUMO is a mobile money marketplace

for people, small businesses, mobile

network operators and now also finan-

cial service providers . Jumo operates

across Africa but headquartered out

of Cape Town . Through partnerships

with mobile network operators and

a variety of financial service provid-

ers, JUMO offers mobile wallet users

access to a growing suite of financial

products . The mobile money ecosys-

tem consists of consumers, agents

(where consumers deposit and with-

draw their money) and merchants

who accept mobile money payment .

In its early days JUMO found that all

three of these constituents had lim-

ited access to financial choices so

they built their first product, Access,

which solves short-term working capi-

tal requirements .

2016 has been an important year for

JUMO, making strong progress oper-

ationally, geographically and financial-

ly . Financially, monthly disbursements

more than doubled year-on-year .

Operationally, JUMO has successfully

completed the transition to a market-

place and away from a simple balance

sheet credit provider . Having signed

up several financial service providers

to the model and completing their first

marketplace transactions, this marks

a milestone in the development of the

JUMO

Vostok Emerging Finance’s number of shares as at Dec 31, 2016 1,994




Value development Jan 1–Dec 31, 2016 (in USD) 8%

Website: jumo.world

business . JUMO has also succeed-

ed in growing their bench of engineer-

ing talent, now employing more than

200 people . Geographically, JUMO

has experienced strong interest from

established, global, Mobile Network

Operators and Financial Service Pro-

viders to partner across Africa and

beyond . As important, on the product

diversification front, Jumo is launching

a savings product through integration

with financial service providers in 2017

to complement the existing and grow-

ing suite of credit products . The focus

for 2017 will be on scaling and driving

momentum on the marketplace as well

as looking beyond Africa .

Vostok Emerging Finance has

invested a total of USD 11 .6 mln during

the fourth quarters of 2015 and 2016 .

An initial investment of USD 4 mln was

completed in October 2015, an addi-

tional USD 6 mln in December 2015

and USD 1 .6 mln in December 2016 .

All investments were for newly issued

shares . As per December 31, 2016,

JUMO is valued on the basis of the

latest funding round which occurred

in December 2016 with a valuation of

USD 12 .7 mln for VEF’s 7 .6% owner-

ship in the company .

http://www.jumo.world

>11 REVO Technology and Sorsdata

REVO Technology





Value development Jan 1–Dec 31, 2016 (in USD) –

Website: revoplus.ru

Sorsdata

Vostok Emerging Finance’s number of shares as at Dec 31, 2016 882

Total Value as at Dec 31, 2016 (USD) 300,000




REVO and Sorsdata were founded in

December 2012 . REVO was formed to

address unmet needs of leading Rus-

sian merchants in purchase financing

leveraging newest available mobile

and cloud technologies . Sorsdata,

REVO’s sister company, is a data ana-

lytics and consumer marketing/loyal-

ty company, which collaborates close-

ly with REVO .

Vostok Emerging Finance owns

25% of both companies, following

exercising its option in December

2015 to acquire an additional 12 .5% of

each company at the same terms as

in VEF’s initial investment in late Sep-

tember 2015 .

REVO’s business model applies

proven mobile and cloud solutions,

alongside a well-established cred-

it approval infrastructure and collec-

tion operations in Russia to offer cus-

tomers staggered-payment solutions

at the time of purchase . The strat-

egy is to capture and analyse con-

sumer data to drive growth and prof-

itability of merchants . The company

is focused on lower ticket retail cat-

egories with over USD 100 billion in

annual turnover, including apparel,

toys, footwear, sporting goods, house-

wares, cosmetics, medical services

and others . REVO is the first mover

in the Russian market to deliver small

REVO Operational Development

Dec 2013

Dec 2014

Dec 2015

Dec 2016

No . of connected stores 67 572 1,623 1,680No . of instalment plans issued (monthly) 6,402 9,969 41,217 40,142Avg . instalment plan issued (RUB) 2,442 3,852 4,103 4,913Avg . duration of instalment plan (months) 4 .5 4 .9 4 .6 4 .9Net interest margin 65% 59% 77% 70%

Source: Company data received from REVO Technology

http://www.revoplus.ru

>12

ticket instalment plans for consum-

ers in a paperless way at merchant’s

cash registers . This model is simi-

lar in many ways to that of Klarna in

Sweden and Affirm in the US .

Sorsdata focuses on customer data

analytics largely gathered through the

REVO machine and provides target-

ed marketing services for merchants

to drive repeat purchases and loyalty .

This model is similar in many ways to

that of Aimia in Canada .

In 2015, REVO’s business experi-

enced another strong year of growth

as it continued to sign up new mer-

chants, both at a regional and feder-

al level, increased store rollout with-

in existent merchant partners and

improved store penetration with-

in existing merchant agreements, all

while building its consumer custom-

er base with rising repeat rates and

decreasing default payments . Online

merchant acquisition started to show

early traction in 2015, while 4Q15 was

the first full quarter of profitability for

the business on an operating profit

level, a key milestone for any young

growing company . Sorsdata is at an

earlier stage of product roll out with

a number of pilot projects currently in

progress at partner retail chains .

During 2016, REVO has continued

to deliver strong growth in its mer-

chant point of sale/consumer instal-

ment credit business and continuous-

ly adding a diverse array of regional

and nationwide merchant partners to

its service . REVO is profitable on an

operating profit level .

As per December 31, 2016, VEF

has invested a total of USD 4 .7 mln

in the company . REVO is valued on

the basis of the latest transaction in

the company when VEF exercised

its option to double its ownership

stake to 25% . VEF closed the second

tranche of the investment on Decem-

ber 16, 2015 .


has invested a total of USD 0 .3 mln

in Sorsdata . Sorsdata is valued on

the basis of the latest transaction in

the company when VEF exercised

its option to double its ownership

stake to 25% . VEF closed the second

tranche of the investment on Decem-

ber 16, 2015 .

>13

TransferGo





Value development Jan 1–Dec 31, 2016 (in USD) -7%*

* Attributable to currency exchange differences

Website: transfergo.com

TransferGo

TransferGo is a fast growth digital

money transfer business, focused

primarily on individuals who regular-

ly send money to their home markets .

Geographically, today TransferGo is

mainly focused on the key corridors

of broader Europe, with principal flows

channelling from West to East, while

its segment of focus is blue-collar

works, who are some of the most con-

sistent and regular remittance cus-

tomers . TransferGo is based in the UK

and is regulated by the UK Financial

Conduct Authority (FCA) as an autho-

rised payment institution .

Remittances is one of the more

attractive markets within global finan-

cial services and one that has been

ripe from disruption for some time .

Totalling c . USD 600 bn of annual

peer-to-peer flows globally, pricing

and speed of delivery remain too

high/slow . Remittances is a business

that is won on the balance and inter-

action between trust, speed and price

and the majority of the industry has

been failing customers for years on

these metrics .

2016 marked a successful year

for TransferGo which was focused

on increasing the penetration of new

products across their growing active

user base and growing market share

meaningfully in their core corridors .


invested a total of USD 3 .4 mln in

TransferGo during the second quarter

of 2016 . As per December 31, 2016,

TransferGo is valued on the basis of

this transaction .

TransferGo MetricsSep

2015Dec

2015Mar

2016June 2016

Sep 2016

Dec 2016

No . of active users (transacted over last 90 days) 22,300 27,800 32,522 37,645 40,461 51,792Money flow (GBP mln) 6 .3 7 .1 9 .8 15 .3 14 .4 19 .1Avg . ticket size (GBP) 270 240 269 370 328 336

Source: Company data received from TransferGo

http://transfergo.com

>14 FinanZero

FinanZero




Share of total shares outstanding 20%

Value development Jan 1–Dec 31, 2016 (in USD) -9%*

* Attributable to currency exchange differences

Website: finanzero.com.br

FinanZero is a pioneer marketplace

for consumer loans in Brazil . The

business is an independent broker for

loans, negotiating the customer’s loan

with several banks and credit institu-

tions, to find the loan with the best

interest rate and terms for the con-

sumer . FinanZero handles the lending

process from start to finish, with the

customer and the bank fully integrat-

ed into FinanZero’s system . The busi-

ness combines aspects of compar-

ison, lead generation and consumer

loan brokerage .


invested a total of USD 1 .2 mln in

FinanZero during the first quarter of

2016 . As per December 31, 2016,

FinanZero is valued on the basis of

this transaction .

http://finanzero.com.br

>15

Finja is a newly established fintech

company in Pakistan with a mission

to offer innovative financial services to

Pakistan’s rapidly growing digitally lit-

erate population by displacing cash .

Finja was founded by tech and bank-

ing industry veterans Qasif Shahid,

Monis Rahman and Umer Munawar .


has agreed to invest USD 1 .0 mln in

Finja over three equal tranches, where

each tranche is conditional upon spe-

cific deliverables . If all tranches are

complete, the total stake in the com-

pany would be 22 .5% . As per Decem-

ber 31, 2016 Finja is valued on the

basis of this transaction, the first

tranche of USD 0 .33 mln being invest-

ed in the form of a convertible note

which will automatically be converted

to shares in July 2017, at the latest .

Finja

Finja

Vostok Emerging Finance’s number of shares as at Dec 31, 2016 –



Share of total shares outstanding –


Website: finja.pk

http://www.finja.pk/

>16 The Vostok Emerging Finance share

Share informationAll the shares carry one vote each .

The shares are traded as depository

receipts (SDR) in Stockholm, where

Pareto Securities AB is the custodi-

an bank . A depository receipt car-

ries the same dividend entitlement as

the underlying share and the holder

of a depository receipt has a corre-

sponding voting right at shareholders

meetings . The holder of a depository

receipt must, however, follow certain

instructions from the custodian bank

in order to have the right to participate

in shareholders meetings .

DividendsNo dividend has been proposed for

the year .

Share turnoverThe average daily turnover during

2016 was 514,000 shares . Trading

has been conducted 100 percent of

the time .

The marketVEF’s share (SDR) is traded on Nas-

daq First North, since July 16, 2015,

with the ticker VEMF SDB . Recent and

historic quotes for VEF’s share are

easily accessible on a number of busi-

ness portals as well as via profession-

al financial and real-time market data

providers . To the right are some of the

symbols and codes under which the

VEF SDR can be found .

VEF SDRISIN Code SE0007192018

Nasdaq First North short name (ticker) VEMF SDB

Bloomberg VEMFSDB:SS

Financial Times VEMF SDB:STO

Yahoo Finance VEMF-SDB.ST

Major shareholdersAs per December 31, 2016 Holding, SDRs Holding, %

Libra Fund* 108,138,484 16 .3%Swedbank Robur Funds 57,674,245 8 .7%Fidelity Funds 57,451,758 8 .7%Finstar 54,672,768 8 .3%State Street Bank & Trust** 53,320,307 8 .1%Alecta Pension Insurance 34,250,000 5 .2%Ruane Cunniff 32,967,270 5 .0%Goldman Sachs & Co** 27,965,532 4 .2%Svenska Handelsbanken AB (Luxemburg)** 20,428,000 3 .1%Bank Julius Baer & Co** 18,354,000 2 .8%10 major holders 465,222,364 70.3%Other holders (approx . 8,300) 196,273,631 29 .7%Total 661,495,995 100.0%Based on Euroclear Sweden AB data and holdings known to the Company . Including foreign nominees . * Holding as per the latest notification to the Company .** Nominee .

0.90

1.10

1.30

1.90

1.50

0

500

1,000

1,500

1.70

Jul2015

OctAug Sep Nov Dec Feb Mar Jul Aug SepApr May Jun Oct Nov DecJan2016

VEF share price development July 16, 2015–December 31, 2016Adjusted for rights issue in 2015 .— VEF SDR Price (SEK, left axis) — MSCI Emerging Markets Index (adjusted, left axis) ■ VEF SDR average daily turnover (thousand SDRs, right axis)

>17 Financial summary

Group income statements in brief

(Expressed in USD thousand)Jan 1, 2016– Dec 31, 2016

May 28, 2015– Dec 31, 2015

Result from financial assets at fair value through profit or loss 48,141 758

Dividend and coupon income 3,031 –

Total income 51,172 758

Other operating expenses -2,031 -698

Operating result 49,141 60

Net financial items -483 993

Result before tax 48,657 1,053

Tax -1 –

Profit for the period 48,656 1,053

Total other comprehensive income for the period -2 –

Total comprehensive income for the period 48,654 1,053

Group balance sheets in brief

(Expressed in USD thousand) Dec 31, 2016 Dec 31, 2015

Financial non-current assets 120,155 34,768

Current receivables 28 25

Tax receivables 1 –

Cash and cash equivalents 24,998 62,302

Total assets 145,182 97,095

Equity 144,326 95,548

Current liabilities 856 1,546

Total equity and liabilities 145,182 97,095

Group cash flow statement in brief


May 28, 2015– Dec 31, 2015

Cash flow used in operating activities -37,516 -7,589

Cash flow from investing activities – –

Cash flow used in/from financing activities -42 68,880

Cash flow for the period -37,559 61,291

Cash and cash equivalents at the beginning of the period 62,302 –

Exchange rate differences in cash and cash equivalents 255 1,011

Cash and cash equivalents at the end of the period 24,998 62,302

>18

Key financial ratios

2016 2015

Return on capital employed, % 40 .6% 2 .2%

Equity ratio, % 99 .4% 98 .4%

Shareholders’ equity/share, USD 0 .22 0 .14

Net asset value, USD 144,326,339 95,547,917

Exchange rate at balance sheet date, SEK/USD 9 .10 8 .35

Net asset value, SEK 1,313,012,535 798,054,872

Share data

Earnings/share, USD 0 .07 0 .01

Diluted earnings/share, USD 0 .07 0 .01

Net asset value/share, USD 0 .22 0 .14

Net asset value/share, SEK 1 .99 1 .21

Weighted average number of shares outstanding 661,495,995 193,316,971

Weighted average number of shares outstanding (fully diluted) 661,495,995 193,316,971

Number of shares at balance sheet date 661,495,995 661,495,995

Definitions

Return on capital employed is defined as the Company’s result for the period plus interest expenses plus/less exchange

differences on financial loans divided by the average capital employed (the average total assets less non-interest bearing

liabilities over the period) . Return on capital employed is not annualised .

Equity ratio is defined as shareholders’ equity in relation to total assets .

Shareholders’ equity/share is defined as shareholders’ equity divided by total number of shares .

Net asset value is defined as shareholders’ equity .

Earnings/share is defined as result for the period divided by average weighted number of shares for the period .

Diluted earnings/share is defined as result for the period divided by average weighted number of shares for the period

calculated on a fully diluted basis .

Net asset value/share is defined as shareholders’ equity divided by total number of shares .

>19 Company information

BackgroundVostok Emerging Finance Ltd (VEF) is

an investment company that invests

foremost in early stage fintech com-

panies across emerging and frontier

markets .

The prime geographic focus is on

emerging and frontier markets, with a

natural bias for markets with sizeable

populations and growth profiles and

where modern financial services are

nascent but already gaining traction .

From a segmental viewpoint, VEF

looks at all aspects of financial ser-

vices, inclusive of credit, payments,

mobile money and all forms of finan-

cial marketplaces .

VEF looks to invest in business-

es led by entrepreneurs with proven

track records and in companies that it

believes have viable concepts, strate-

gies and early track records that are

scalable and can deliver fast growth .

VEF predominantly, but not exclu-

sively, focuses on investing in pri-

vate companies and taking equity

stakes . VEF looks to acquire sizeable

minority stakes and board represen-

tation where appropriate in its portfo-

lio companies . VEF may also make

investments in other parts of the cap-

ital structure, such as debt, to sup-

port targeted companies’ growth and

also ensure that investment funds are

working while seeking future equity

investment opportunities .

VEF was incorporated and regis-

tered with the Bermuda Registrar of

Companies on May 28, 2015 with

registered number 50298 as a whol-

ly owned subsidiary of Vostok New

Ventures Ltd (VNV) . There were no

business activities in the Company

between May 28, 2015 and June 9,

2015 .

A Special General Meeting of the

shareholders of VNV on June 9,

2015 resolved in accordance with the

Board of Directors’ proposed transfer

of its holding in TCS Group Holding

PLC (Tinkoff Bank) to the sharehold-

ers through the spin-off of VEF . On

July 16, 2015 the shares in VEF, which

held the VNV group’s stake in Tinkoff

Bank (9,079,794 SDRs), were distrib-

uted to VNV’s shareholders by way of

a mandatory redemption program .

From July 16, 2015 the Swedish

Depository Receipts (SDR) of Vostok

Emerging Finance Ltd are traded on

First North, with the ticker VEMF SDB .

In December 2015, the Company

raised its first external capital through

a fully subscribed rights issue, which

brought in gross proceeds of USD

69 mln .

The first financial year comprised

the period May 28, 2015–December

31, 2015 . Thereafter the financial year

is January 1–December 31 .

In October 2016, two subsidiaries

to Vostok Emerging Finance Ltd . were

established . One Cypriot subsidiary,

Vostok Emerging Finance (Cyprus)

Limited, for managing the investment

portfolio and one Swedish subsidiary,

Vostok Emerging Finance AB, which

provides business support services

to the parent company .

As of December 31, 2016, the

Vostok Emerging Finance Ltd Group

consists of the Bermudian parent com-

pany Vostok Emerging Finance Ltd;

one wholly-owned Cypriot subsidiary,

Vostok Emerging Finance (Cyprus)

Limited; and one wholly-owned

Swedish subsidiary, Vostok Emerging

Finance AB .

Organisation of activitiesThe Board of Directors meets in per-

son at least twice a year and more fre-

quently if needed . In addition to this,

meetings are conducted by telephone

conference when necessary . Between

meetings, the Managing Director has

regular contact with the Chairman of

the Board and the other Board mem-

bers . The Board of Directors adopts

decisions on overall issues affecting

Vostok Emerging Finance group .

The Managing Director manag-

es the group’s day-to-day activities

and prepares investment recommen-

dations in cooperation with the other

members of the Board of Directors .

Recommendations on investments

are made by the Board of Directors

of the parent company to the Board

of the Cypriot subsidiary . Invest-

ment decisions are then taken by the

Board of Directors of Vostok Emerg-

ing Finance (Cyprus) Limited .

Results for the year and net asset valueThe result from financial assets at fair

value through profit or loss amount-

ed to USD 48 .14 mln, mainly due to

the share price appreciation in Tinkoff

Bank . Dividend income from Tinkoff

Bank was USD 2 .42 mln .

Net operating expenses amounted

to USD -2 .03 mln .

Net financial items were USD

-0 .48 mln .

Net result for the year was USD

48 .66 mln .

Total shareholders’ equity amount-

ed to USD 144 .33 mln on December

31, 2016 .

>20 Board, management and auditors

Board of DirectorsLars O Grönstedt

Chairman of the BoardSwedish citizen, born 1954 . Chairman

and member of the board since 2015 .

Lars O Grönstedt holds a BA in lan-

guages and literature from Stockholm

University, and an MBA from

Stockholm School of Economics . Mr .

Grönstedt spent most of his profes-

sional life at Handelsbanken . He was

CEO of the bank 2001–2006, and

Chairman 2006–2008 . Today he is,

among other things, senior advisor

to Nord Stream, chairman of Scypho,

East Capital Explorer and Vostok New

Ventures Ltd, deputy chairman of the

Swedish National Debt Office, speak-

er of the elected body of representa-

tives of Trygg-Stiftelsen, and sits on

the boards of the IT company Pro4U,

and the Institute of International

Economics at Stockholm University .

Holdings in VEF: 144,500 SDRs .

Remuneration: USD 48 thousand .

No agreement regarding severance

pay or pension .

Milena Ivanova

Board memberBulgarian citizen, born 1975 . Member

of the board since 2015 . Professional

and educational background: Milena

Ivanova served as the Deputy Head

of Equity Research for Renaissance

Capital and the firm’s Strategist for

Russia, based in Moscow until the

end of 2012 . She joined Renaissance

Capital in early 2008 as the banks

analyst for Central Asia based in

Almaty, and subsequently served

as Head for Research and Equities

for Central Asia . Previously, Milena

Ivanova has among other things

worked for UniCredit Markets &

Investment Banking (CAIB) as an

Analyst in the equity research banking

David Nangle

Nadja Borisova Anders F . Börjesson

Lars O Grönstedt Milena Ivanova

Voria Fattahi Per Brilioth

team, responsible for CEE region-

al financial sector coverage and indi-

vidual banking stocks . Milena Ivanova

holds a MBA from INSEAD, France

and a bachelor in European Business

from University of Lincolnshire and

Humberside, UK .




pay or pension .

Voria Fattahi

Board memberSwedish citizen, born 1982 . Member

of the board since 2016 . Professional

and educational background: in

August 2015, Voria Fattahi joined

Volati AB as Investment Director,

focusing on investments in Nordic

companies that spans several dif-

ferent sectors . Prior to joining Volati,

Voria served as Investment Director

at Kinnevik AB, between 2011–2015,

with a key focus on investments in, and

development of digital businesses pri-

marily in the financial services sector

in both developed and emerging mar-

kets . Before Kinnevik he was, during

2007–2010, a senior associate in the

financial and business services team

at Apax Partners, focusing on invest-

ments in financial services companies

globally . He began his career as an

analyst at JP Morgan within the finan-

cial institutions group . He is a direc-

tor of Lomond Industrier and Besikta

Bilprovning . He has previously held

directorships in Bayport Management

Limited (2011–2015) and Milvik AB

(2011–2015) . Voria Fattahi has a

Master of Science degree in Business

and Economics from the Stockholm

School of Economics and an MBA

from INSEAD .



>21


pay or pension .

Per Brilioth

Board memberSwedish citizen, born 1969 .

Member of the board since 2015 .

Professional and educational back-

ground: Between 1994 and 2000,

Per Brilioth was head of the Emerging

Markets section at Hagströmer &

Qviberg and he has worked close to

the Russian stock market for a num-

ber of years . Currently Per Brilioth is

the Managing Director of Vostok New

Ventures Ltd . Per Brilioth is a gradu-

ate of Stockholm University and holds

a Master of Finance from the London

Business School . Other significant

board assignments: Chairman of the

board of Pomegranate Investment

AB, member of the boards of Vostok

New Ventures Ltd, Tethys Oil AB and

LeoVegas AB .

Holdings in VEF: 2,790,000 SDRs .



pay or pension .

David Nangle

Managing Director and Board memberIrish citizen, born 1975 . Member of

the board and Managing Director

since 2015 . Professional and edu-

cational background: David Nangle

has focused on the emerging mar-

kets financials sector and was

part of the ING Baring’s Emerging

Markets Research team between

2000 and 2006 . David then joined

Renaissance Capital and has helped

the firm develop and grow their finan-

cials and research footprint from a

strong Russia base to a leading pan-

EMEA and frontiers franchise . David

Nangle holds a degree in B . Comm

International (French) from University

College Dublin, Ireland .

Holdings in VEF: 3,425,000 SDRs, of

which 657,895 constitute Saving DRs

under LTIP 2016, and 1,905,000 call

options . Salary and variable remu-

neration: USD 457 thousand . Agree-

ment regarding severance pay and

pension: David Nangle has the right

to 12 months’ salary in the event of

termination of appointment on the

part of the company . He must himself

observe 6 months’ notice of termina-

tion . David Nangle also has a pension

plan based on British market practice .

Group managementDavid Nangle

Managing Director. See also heading “Board of Direc-

tors” above .

Nadja Borisova

Chief Financial Officer. Swedish and Russian Citizen, born

1968 . Holdings in VEF: 270,563

SDRs, of which 210,526 constitute

Saving DRs under LTIP 2016 .

Anders F . Börjesson

Acting General Counsel. Swedish citizen, born 1971 . Hold-

ings in VEF: 650,526 SDRs, of which

210,526 constitute Saving DRs under

LTIP 2016 .

AuditorsPricewaterhouseCoopers AB

Ulrika Ramsvik

Born 1973 . Authorised Public Accountant, Auditor-in-charge. Auditor in the Company since 2015 .

PricewaterhouseCoopers AB, Gothen-

burg, Sweden .

Bo Hjalmarsson

Born 1960 . Authorised Public Accountant, Co-signing auditor. Auditor in the Company since 2015 .

PricewaterhouseCoopers AB, Stock-

holm, Sweden .

>22 Income Statements – Group

(Expressed in USD thousand) NoteJan 1, 2016– Dec 31, 2016

May 28, 2015– Dec 31, 2015

Result from financial assets at fair value through profit or loss¹ 7 48,141 758

Dividend and coupon income 8 3,031 –

Total operating income 51,172 758

Operating expenses 9 -2,031 -698


Financial income and expenses

Interest income 1 8

Interest expense – 985

Currency exchange gains/losses, net -484 –



Taxation 11 -1 –

Net result for the period 48,656 1,053

Earnings per share (in USD) 12 0 .07 0 .01

Diluted earnings per share (in USD) 12 0 .07 0 .01

1 . Financial assets at fair value through profit or loss are carried at fair value . Gains or losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category is presented in the income statement within ‘Result from finan-cial assets at fair value through profit or loss’ in the period in which they arise .

Statement of comprehensive income


May 28, 2015– Dec 31, 2015


Other comprehensive income for the period:

Items that may be classified subsequently to profit or loss:

Currency translation differences -2 –

Total other comprehensive income for the period -2 –


Total comprehensive income for the periods above is entirely attributable to the equity holders of the Company .

>23 Balance Sheets – Group

(Expressed in USD thousand) Note Dec 31, 2016 Dec 31, 2015

Non-current assets

Financial non-current assets

Financial assets at fair value through profit or loss 13, 14 120,155 34,768

Total financial non-current assets 120,155 34,768

Current assets

Cash and cash equivalents 15 24,998 62,302

Tax receivables 1 –

Other current receivables 28 25

Total current assets 25,027 62,327

TOTAL ASSETS 145,182 97,095

SHAREHOLDERS’ EQUITY (including net result for the financial period) 16 144,326 95,548

Current liabilities

Non-interest bearing current liabilities

Trade payables – 1,491

Other current liabilities 17 732 21

Accrued expenses 124 34

Total current liabilities 856 1,547

TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES 145,182 97,095

>24 Statement of changes in equity – Group

(Expressed in USD thousand)Share

CapitalAdditional

paid in capitalOther

reservesRetained earnings Total

Balance at May 28, 2015 – – – – –

Issuance of share capital 735 26,322 – – 27,057

Net result for the period May 28, 2015 to December 31, 2015 – – – 1,053 1,053

Total comprehensive income for the period May 28, 2015 to December 31, 2015 – – – 1,053 1,053

Transactions with ownersProceeds from share issue 5,880 63,198 – – 69,078Transaction costs share issue – -1,648 – – -1,648Share based compensation – 7 – – 7

Balance at December 31, 2015 6,615 87,880 – 1,053 95,548

Balance at January 1, 2016 6,615 87,880 – 1,053 95,548

Net result for the period January 1, 2016 to December 31, 2016 – – – 48,656 48,656Other comprehensive income for the periodCurrency translation difference – – -2 – -2

Total comprehensive income for the period January 1, 2016 to December 31, 2016 – – -2 48,656 48,654

Transactions with ownersTransaction costs share issue – -42 – – -42Value of employee services:- Employee share option scheme – 45 – – 45- Share based long-term incentive program (Note 10) – 120 – – 120

Balance at December 31, 2016 6,615 88,003 -2 49,710 144,326

>25 Statement of cash flows – Group


May 28, 2015– Dec 31, 2015

Operating activities


Adjustment for non-cash items:

Interest income and expense, net -1 -8

Currency exchange gains/-losses -484 -985

Result from financial assets at fair value through profit or loss -48,141 -758

Other non-cash items affecting profit or loss -2,860 7

Change in current receivables -7 -25

Change in current liabilities -1,153 71

Net cash used in operating activities -3,988 -645

Investments in financial assets -36,559 -14,998


Sales of financial assets – 8,046

Interest received 1 8

Tax paid -1 –

Net cash flow used in operating activities -37,516 -7,589

FINANCING ACTIVITIES

Proceeds from rights issue, net of transaction costs -42 68,880

Net cash flow used in/from financing activities -42 68,880

Change in cash and cash equivalents -37,559 61,291

Cash and cash equivalents at beginning of the period 62,302 –

Exchange gains/losses on cash and cash equivalents 255 1,011

Cash and cash equivalents at end of period 24,998 62,302

>26 Alternative Performance Measures

As of July 3, 2016, new guidelines on APMs (Alternative Performance Measures) are issued by ESMA (the European

Securities and Markets Authority) . APMs are financial measures other than financial measures defined or specified by

International Financial Reporting Standards (IFRS) .

Vostok Emerging Finance regularly uses alternative performance measures to enhance comparability from period to

period and to give deeper information and provide meaningful supplemental information to analysts, investors and other

parties .

It is important to know that not all companies calculate alternative performance measures identically, therefore these

measurements have limitations and should not be used as a substitute for measures of performance in accordance with

IFRS .

Below you find our presentation of the APMs and how we calculate these measures .

Jan 1, 2016– Dec 31, 2016

May 28, 2015– Dec 31, 2015

Return on capital employed, %1 40 .57 2 .2

Equity ratio, %2 99 .41 98 .40

Shareholders’ equity/share, USD3 0 .22 0 .14

Earnings/share, USD4 0 .07 0 .01

Diluted earnings/share, USD5 0 .07 0 .01

Net asset value/share, USD6 0 .22 0 .14

Net asset value/share, SEK6 1 .99 1 .21

Net asset value, SEK 1,313,012,535 798,054,872

Weighted average number of shares for the financial period 661,495,995 193,316,971

Weighted average number of shares for the financial period (fully diluted) 661,495,995 193,507,831

Number of shares at balance sheet date 661,495,995 661,495,995

1 . Return on capital employed is defined as the Company’s result for the period plus interest expenses plus/less exchange differences on financial loans divided by the average capital employed (the average total assets less non-interest bearing liabilities over the period) . Return on capital employed is not annualised .

2 . Equity ratio is defined as shareholders’ equity in relation to total assets .

3 . Shareholders’ equity/share is defined as shareholders’ equity divided by total number of shares .

4 . Earnings/share is defined as result for the period divided by average weighted number of shares for the period .

5 . Diluted earnings/share is defined as result for the period divided by average weighted number of shares for the period calculated on a fully diluted basis .

6 . Net asset value/share is defined as shareholders’ equity divided by total number of shares .

>27 Income Statement – Parent Company

(Expressed in USD thousand) NoteJan 1, 2016– Dec 31, 2016

May 28, 2015– Dec 31, 2015

Result from financial assets at fair value through profit or loss 7 46,836 758

Dividend and coupon income 8 1,692 –

Total operating income 48,527 758

Operating expenses 9 -2,025 -698


Financial income and expenses

Interest income 210 8

Interest expense – 985

Currency exchange gains/losses, net -489 –



Taxation – –


Earnings per share (in USD) 11 0 .07 0 .01

Diluted earnings per share (in USD) 11 0 .07 0 .01

Statement of comprehensive income


May 28, 2015– Dec 31, 2015


Total other comprehensive income for the period – –


>28 Balance Sheet – Parent Company

(Expressed in USD thousand) Note Dec 31, 2016 Dec 31, 2015

Non-current assets

Financial non-current assets

Shares in subsidiaries 19 16 –

Financial assets at fair value through profit or loss 13 35,142 34,768

Receivables from Group companies 82,667 –

Total financial non-current assets 117,825 34,768

Current assets


Other current receivables 24 25

Total current assets 24,912 62,327

TOTAL ASSETS 142,737 97,095

SHAREHOLDERS’ EQUITY (including net result for the financial period) 16 141,893 95,548

Current liabilities

Non-interest bearing current liabilities

Trade payables – 1,491

Other current liabilities 17 724 21

Accrued expenses 120 34

Total current liabilities 844 1,547

TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES 142,737 97,095

>29 Statement of changes in equity – Parent Company

Attributable to owners of the company

(Expressed in USD thousand)Share

CapitalAdditional

paid in capitalRetained earnings Total

Balance at May 28, 2015 – – – –

Issuance of share capital 735 26,322 – 27,057

Net result for the period May 28, 2015 to December 31, 2015 – – 1,053 1,053

Total comprehensive income for the period May 28, 2015 to December 31, 2015 – – 1,053 1,053

Transactions with ownersProceeds from rights issue 5,880 63,198 – 69,078Transaction costs share issue – -1,648 – -1,648Share based compensation – 7 – 7

Balance at December 31, 2015 6,615 87,880 1,053 95,548

Balance at January 1, 2016 6,615 87,880 1,053 95,548

Net result for the period January 1, 2016 to December 31, 2016 – – 46,223 46,223

Total comprehensive income for the period January 1, 2016 to December 31, 2016 – – 46,223 46,223

Transactions with ownersTransaction costs share issue – -42 – -42Value of employee services:- Employee share option scheme – 45 – 45- Share based long-term incentive program (Note 10) – 120 – 120

Balance at December 31, 2016 6,615 88,002 47,276 141,893

>30 Statement of cash flows – Parent Company


May 28, 2015– Dec 31, 2015

Operating activities


Adjustment for non-cash items:

Interest income -210 -8

Currency exchange gains/-losses -488 -985

Result from financial assets at fair value through profit or loss -46,836 -758

Dividend and coupon income -1,692 –

Other non-cash adjustments 172 7

Change in current receivables and liabilities -1,481 46

Net cash used in operating activities -4,312 -645

Investments in financial assets -34,992 -14,998

Sales of financial assets – 8,046


Interest received 1 8

Net cash flow used in operating activities -37,611 -7,589

Investing activities

Investments in subsidiaries -16 –

Net cash flow used in investing activities -16 –

Financing activities

Proceeds from options issued to employees -42 –

Proceeds from rights issue, net of transaction costs – 68,880

Net cash flow used in/from financing activities -42 68,880

Change in cash and cash equivalents -37,669 61,291

Cash and cash equivalents at beginning of the period 62,302 –

Exchange gains/losses on cash and cash equivalents 255 1,011

Cash and cash equivalents at end of period 24,888 62,302

>31 Notes to the financial statements

(Expressed in USD thousand unless indicated otherwise)

NOTE 1 GENERAL INFORMATIONVostok Emerging Finance Ltd (“VEF” or “the Company”) was incorporated and registered with the Bermuda Registrar of Com-panies on May 28, 2015 with registered number 50298 . The registered office of the Company is in Hamilton, Bermuda (Clar-endon House, 2 Church Street, Hamilton, Bermuda) . There were no business activities in the Company between May 28, 2015 and June 9, 2015 .

VEF’s business concept is to use experience, expertise and a widespread network to identify and invest in assets with consid-erable potential for value appreciation and obtain a return .

In October 2016, two subsidiaries to Vostok Emerging Finance Ltd . were established . One Cypriot subsidiary, Vostok Emerging Finance (Cyprus) Limited, for managing the investment portfolio and one Swedish subsidiary, Vostok Emerging Finance AB, which provides business support services to the parent company .

These Group consolidated financial statements were autho-rised for issue by the Board of Directors on April 19, 2017 . The Board of Directors propose that the Parent Company accumu-lated profit and additional paid in capital of TUSD 135,278 is retained and no dividend is paid .

The principal accounting policies adopted in the preparation of these financial statements are set out below .

NOTE 2 SIGNIFICANT ACCOUNTING PRINCIPLESAccounting basisThe consolidated and the parent company financial statements are prepared in accordance with International Financial Report-ing Standards, IFRS, as adopted by EU, as at December 31, 2016 . The consolidated financial statements have been prepared under the historical cost convention, as modified by the reval-uation of financial assets at fair value through profit and loss . The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates . It also requires management to exercise its judgement in the process of applying the Group’s accounting policies . The areas involv-ing a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 4 .

Changes in accounting policy and disclosuresNew and amended standards adopted by the GroupThere are no new or revised IFRS standards that are effective for the first time for the financial year beginning on or after 1 January 2016 that have had a material impact on the Group .

New standards and interpretations not yet adoptedA number of new standards and amendments to standards and interpretations are effective for annual periods beginning after January 1, 2016, and have not been applied in preparing these consolidated financial statements . The Group is yet to assess the full impact of these new standards .

IFRS 9, ‘Financial instruments’, addresses the classification, measurement and recognition of financial assets and financial liabilities . The complete version of IFRS 9 was issued in July 2014 . It replaces the guidance in IAS 39 that relates to the classi-fication and measurement of financial instruments . IFRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories for financial assets: amortised cost, fair value through other comprehensive income and fair value through profit or loss . The basis of classification depends on the entity’s business model and the contractual cash flow characteristics of the financial asset . Investments in equity instruments are required to be measured at fair value through profit or loss with the irrevocable option at inception to present changes in fair value in other comprehensive income not recycling . There is now a new expected credit losses model that replaces the incurred loss impairment model used in IAS 39 . For financial liabilities, there were no changes to classification and measurement except for the recognition of changes in own cred-it risk in other comprehensive income, for liabilities designated at fair value through profit or loss . IFRS 9 relaxes the require-ments for hedge effectiveness by replacing the bright line hedge effectiveness tests . It requires an economic relationship between the hedged item and hedging instrument and for the hedged ratio to be the same as the one management actually use for risk management purposes . Contemporaneous documentation is still required but is different to that currently prepared under IAS 39 . The standard is adopted by the EU and is effective for accounting periods beginning on or after January 1, 2018 . Early adoption is permitted . The Group does not expect any significant impact on the financial statements . The group does not intend to adopt IFRS 9 before its mandatory date .

IFRS 15, ‘Revenue from contracts with customers’, deals with revenue recognition and establishes principles for reporting use-ful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity s contracts with customers . Revenue is recognised when a customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good or service . The standard replaces IAS 18 ‘Revenue’ and IAS 11 ‘Construction contracts’ and related interpretations . The standard is adopted by the EU and is effective for annual periods beginning on or after January 1, 2018 and earlier application is permitted . The new standard will not have any significant impact on the Group’s financial statements . The group does not intend to adopt IFRS 15 before its mandatory date .

IFRS 16, ‘Leases’, affects primarily the accounting by leases and will result in the recognition of almost all leases on balance sheet . The standard removes the current distinction between operating and financing leases and requires recognition of an asset (the right to use the leased item) and a financial liability to pay rentals for virtually all lease contracts . An optional exemption exists for short-term and low-value leases . The income statement will also be affected because the total expense is typically higher in the earlier years of a lease and lower in later years . Addition-ally, operating expense will be replaced with interest and depre-

>32 ciation, thereby increasing the operating result . Operating cash flows will be higher as cash payments for the principal portion of the lease liability are classified within financing activities . Only the part of the payments that reflects interest can continue to be presented as operating cash flows . The accounting by lessors will not significantly change . Some differences may arise as a result of the new guidance on the definition of a lease . Under IFRS 16, a contract is, or contains, a lease if the contract con-veys the right to control the use of an identified asset for a period of time in exchange for consideration . The standard is mandato-ry for financial years commencing on or after January 1, 2019 . The new standard will not have any significant impact on the Group’s financial statements . At this stage, the group does not intend to adopt the standard before its effective date . There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Group .

Financial periodThe financial year comprises the period January 1–December 31 .

Principles of consolidation SubsidiariesSubsidiaries are all entities (including structured entities) over which the Group has control . The Group controls an entity when the Group is exposed to or has rights to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity . Subsidiaries are fully consolidated from the date on which control is transferred to the Group . They are deconsolidated from the date that control ceases . The Group applies the acquisition method to account for business combinations . The consideration transferred for the acquisition of a subsidiary is the fair values of the assets trans-ferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group . The consideration transferred includes the fair value of any asset or liability result-ing from a contingent consideration arrangement . Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair val-ues at the acquisition date . The Group recognises any non-con-trolling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the recognised amounts of acquiree’s identifiable net assets . Acquisition-related costs are expensed as incurred . If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in the acquiree is re-measured to fair value at the acquisition date; any gains or losses arising from such re-measurement are recognised in profit or loss . Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date . Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with IAS 39 either in profit or loss or as a change to other comprehensive income . Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is account-ed for within equity . Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated . Unrealised losses are also eliminated . When neces-sary, amounts reported by subsidiaries have been adjusted to conform with the Group’s accounting policies .

In accordance with IFRS 10 Consolidated Financial State-ments the Group values its investments (portfolio companies) at

fair value . Vostok Emerging Finance falls within the classification of an investment company as its business concept is to use experience, expertise and a widespread network to identify and invest in assets with considerable potential for value apprecia-tion and obtain a return .

Investments in associated companiesAssociated companies are all entities where the Company has the right to exercise significant influence, which is normally the case when the Company holds between 20% and 50% of the voting rights . As Vostok Emerging Finance falls within the classi-fication of an investment company, all investments in associates are accounted for by applying fair value . On increase/decrease of the investments in associated companies, the Group makes an assessment of fair value for the total investment .

Segment reportingOperating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker in the same way as for a Swedish company governed by the Swedish Companies Act and the Swedish Corporate Gov-ernance Code . The board of directors of an investment compa-ny is by necessity deeply involved in investment decisions and monitoring portfolio companies’ performance . The Board has therefore been identified as the chief operating decision maker of the Company for purposes of internal reporting . In the internal reporting of the Company, there is only one operating segment .

Foreign currency translation(a) The functional and presentational currency Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’) . The functional currency of the Company is USD, which is also the presentational currency . All amounts are stated in USD thousands if not otherwise stated .

(b) Transactions and balancesTransactions in currencies other than USD are translated into USD at the rate of exchange that was in effect at the transac-tion date . Monetary assets and liabilities denominated in foreign currencies are translated at rates of exchange prevailing at the balance sheet date . Realized and unrealized exchange gains/losses on portfolio investments, which include loan receivables, investments in associated companies, and financial assets at fair value through profit or loss are recognized in profit or loss as part of the result from each of the categories of financial assets, which are included in the investment portfolio . Realized and unrealized exchange gains/losses on other assets and lia-bilities are reported among financial items .

c) Group companiesAs at the reporting date, the assets and liabilities of subsidiaries that have not the same functional currency as the Parent Com-pany are translated into the presentation currency of the Group at rates of exchange prevailing at the balance sheet date . Their income statements are translated at the average exchange rate for the year . The exchange differences arising on the translation are recognized as other comprehensive income . The following exchange rates have been used:

Average Closing

SEK 8 .5613 9 .0971

>33 Financial AssetsThe Group classifies its financial assets in the following catego-ries: financial assets at fair value through profit or loss, and loans and receivables . The classification depends on the purpose for which the financial assets were acquired . Management deter-mines the classification of its financial assets at initial recogni-tion . Purchases and sales of financial assets are recognized on trade-date – the date on which the Group commits to purchase or sell the asset . Financial assets are derecognized when the rights to receive cash flows from the investments have expired or have been transferred and the Company has transferred sub-stantially all risks and rewards of ownership .

Financial assets at fair value through profit or lossThis category has two subcategories:> Designated . The first includes any financial asset that is desig-

nated on initial recognition as one to be measured at fair value with fair value changes in profit or loss .

> Held for trading . The second category includes financial assets that are held for trading . All derivatives (except those designat-ed as hedging instruments) and financial assets acquired or held for the purpose of selling in the short term or for which there is a recent pattern of short-term profit taking are held for trading .

The financial assets that are classified as financial assets at fair value through profit or loss are all classified by the Group in the subcategory designated . Assets in this category are classified as current assets if expected to be settled within 12 months; otherwise, they are classified as non-current . Financial assets are securities held in listed and unlisted companies .

Financial assets carried at fair value through profit or loss is initially recognized at fair value and transaction costs are expensed in the income statement . Thereafter they are subse-quently carried at fair value . Gains or losses arising from chang-es in the fair value of the ‘financial assets at fair value through profit or loss’ category are presented in the income statement within ‘Result from financial assets at fair value through profit or loss’ in the period in which they arise . Dividend income from financial assets at fair value through profit of loss is recognized in the income statement as “Dividend income” when the Group’s right to receive payments is established .

The fair values of quoted investments are based on current bid prices . If the market for a financial asset is not active (and for unlisted securities), the Group establishes fair value by using valuation techniques .

These include the use of recent arm’s length transactions, ref-erence to other instruments that are substantially the same, dis-counted cash flow analysis, and option pricing models making maximum use of market inputs and relying as little as possible on entity specific inputs .

Loans and receivablesLoans and receivables are non-derivative financial assets with fixed or determinable payments that are not traded in an active market . They are included in current assets, except for maturities greater than 12 months after the balance sheet date . These are classified as non-current assets . The Group’s loans and receiv-ables comprise ‘Cash and cash equivalents’ in the balance sheet .

Investments in loans and receivables are initially recognized at fair value plus transaction costs . Loans and receivables are carried at amortized cost using the effective interest method .

Interest on loan receivables which are considered parts of the investment portfolio is presented in the income statement as ‘Result from loan receivables’ among operating income items . Interest on other loans and receivables is presented in the income statement as ‘Interest income’ among financial items .

A financial asset or group of assets is impaired, and impair-ment losses are recognised, only if there is objective evidence as a result of one or more events that occurred after the initial recognition of the asset . An entity is required to assess at each balance sheet date whether there is any objective evidence of impairment . If any such evidence exists, the entity is required to do a detailed impairment calculation to determine whether an impairment loss should be recognised .

The amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated cash flows discounted at the financial asset’s original effective interest rate . Impairment losses on portfolio investments are pre-sented in the income statement within ‘Result from loan receiv-ables’ . Impairment losses on other financial assets are recog-nized in the income statement as ‘Other financial expenses’ among financial items .

Due to the short-term nature of the current receivables, their carrying amount is assumed to be the same as their fair value .

Financial liabilitiesThe Group classifies its financial liabilities in the following cate-gory: other financial liabilities . Management determines the clas-sification of its financial liabilities at initial recognition .

Other financial liabilitiesOther financial liabilities include trade payables and are subse-quently measured at amortised cost using the effective interest method .

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period . The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an inte-gral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability or (where appropriate) a shorter period, to the net carry-ing amount on initial recognition .

The carrying amounts of trade and other payables are assumed to be the same as their fair values, due to their short-term nature .

Cash and cash equivalentsCash and cash equivalents include cash and bank balances and other short-term highly liquid investments with original maturities of three months or less .

Share capitalOrdinary shares are classified as equity . Share issue costs asso-ciated with the issuance of new equity are treated as a direct reduction of the proceeds .

Current and deferred income taxThe current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the company’s subsidiaries operate and generate taxable income . Management periodically evaluates positions taken in tax returns with respect to situations

>34 in which applicable tax regulations is subject to interpretation and establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities .

Deferred income tax is provided in full, using the liability meth-od, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements . However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss . Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled .

Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised . Deferred income tax is provided on temporary differences arising on investments in subsidiaries except where the timing of the reversal of the tem-porary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future . The Group currently has no temporary differences and has no deferred income tax recognised .

Employee benefitsPension obligationsThe Group has a defined contribution pension plan which is based on the market practice . The Group has no further obliga-tions once the contributions have been paid . The contributions are reported as a cost recognised as employee benefit pension expense in profit or loss when they are due .

Share-based compensationThe Group operates an equity-settled, share-based compen-sation plan . The fair value of the employee services received in exchange for the grant of the options is recognised as an expense . The total amount to be expensed over the vesting peri-od is determined by reference to the fair value of the options granted, excluding the impact of any non-market vesting con-ditions (for example, profitability and sales growth targets) . Non-market vesting conditions are included in assumptions about the number of options that are expected to become exer-cisable . At each balance sheet date, the entity revises its esti-mates of the number of options that are expected to become exercisable . It recognizes the impact of the revision of original estimates, if any, in the income statement, and a corresponding adjustment to equity over the remaining vesting period .

The proceeds received net of any directly attributable trans-action costs are credited to share capital (nominal value) and additional paid in capital when the options are exercised .

Long-term incentive programThrough the long-term incentive program, the company will grant shares to the participants at nil consideration . The fair value of deferred shares granted to employees for nil consid-eration under the long-term incentive program is recognised as an expense over the relevant service period, being the period to which the services are performed and the vesting period of the shares . The fair value is measured at the grant date of the shares and is recognised in equity . The number of shares expected to vest is estimated based on the non-market vesting conditions .

The estimates are revised at the end of each reporting period and adjustments are recognised in profit or loss and in equi-ty . Where shares are forfeited due to a failure by the employee to satisfy the service conditions, any expenses previously rec-ognised in relation to such shares are reversed effective the date of the forfeiture .

Revenue recognitionRevenue comprises the fair value of the consideration received in the ordinary course of the Group’s activities .

For investments held at both the start and end of year, the change in value consists of the difference in the market value between these dates . For investments acquired during the year, the change in value consists of the difference between cost and the market value at the end of the year . For investments sold during the year, the change in value consists of the difference between the sales price received and the value of investments at the start of the year . All changes in value are reported in the income statement within ’Result from financial assets at fair value through profit or loss’ or ‘Result from loan receivables’, depending on from what category of assets the changes in value relate .

Dividend income is recognised when the right to receive pay-ment is established . Furthermore, dividend income is accounted for inclusive of withholding taxes . These withholding taxes are shown either as an expense in the income statement, or as a current receivable, depending on whether or not the withholding tax is refundable .

Interest income on non-current loan receivables is recognised on a time-proportion basis using the effective interest method . When a receivable is impaired, the Group reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income . Interest income on impaired non-current loan receiv-ables is recognised using the original effective interest rate .

Interest income on current loan receivables and other receiv-ables is recognised taking into account accrued interest on the balance sheet date .

Other consideration received in the ordinary course of the Group’s activities is reported as “other income” in the income statement .

Cash flow statementThe cash flow statement is presented in accordance with the indirect method . The Group’s business consists of investments in portfolio companies . Therefore, the investments are classified as the Group’s operating activities and not investment activities .

NOTE 3 SIGNIFICANT ESTIMATES AND JUDGEMENTSThe management of Vostok Emerging Finance Ltd has to make estimates and judgements when preparing the Financial State-ments of the Group . Uncertainties in the estimates and judge-ments could have an impact on the carrying amount of assets and liabilities and the Group’s result . The most important esti-mates and judgements in relation thereto are:

Fair value of unlisted financial assets The estimates and judgements when assessing the fair value of unlisted investments in financial assets at fair value through

>35 profit or loss are continually evaluated and are based on his-torical experience and other factors, including expectations of future events that are believed to be reasonable under the cir-cumstances .

NOTE 4 FINANCIAL RISK MANAGEMENTFinancial risk factorsThe Group’s activities expose it to a variety of financial risks: market risks (including foreign exchange risk, price risk and interest rate risk), credit risk, liquidity risk and cash flow inter-est-rate risk .

Risk management is carried out by management under poli-cies approved by the Board of Directors .

Market related risksEmerging and frontier markets risksVostok Emerging Finance is subject to risks associated with ownership and management of investments and in particular to risks of ownership and management in emerging and frontier markets . As these countries are still, from an economic point of view, in a phase of development, investments are affected by unusually large fluctuations in profit and loss and other factors outside the Group’s control that may have an adverse impact on the value of Vostok Emerging Finance’s adjusted equity . Invest-ing in emerging and frontier markets entails a high level of risk and requires special consideration of factors, including those mentioned here, which are usually not associated with invest-ment in shares in more developed countries . Unstable state administration could have an adverse impact on investments .

None of the emerging or frontier markets has a fully developed legal system comparable to that in more developed countries . Existing laws and regulations are sometimes applied inconsis-tently and both the independence and efficiency of the court sys-tem constitute a significant risk . Statutory changes have taken place and will probably continue to take place at a rapid pace, and it remains difficult to predict the effect of legislative chang-es and legislative decisions for companies . It could be more difficult to obtain redress or exercise one’s rights in emerging and frontier markets than in more mature legal systems . Vostok Emerging Finance continuously monitors these risk areas through various channels including third party research reports and through knowledge and expertise within the Group’s net-work . The Group evaluates any significant findings from above mentioned monitoring and if needed takes action in order to mitigate identified risk areas .

Exposure to financial services companies in emerging and frontier marketsVostok Emerging Finance is subject to risks associated with ownership and management of investments in financial ser-vices companies in emerging and frontier markets . Therefore, the Group’s business, operating results, financial condition and prospects may be affected by the materialization of such risks, which include, but may not limited to, the following:> Regulatory risks – most financial services companies in

emerging and frontier markets are subject to extensive regu-latory requirements . Such requirements, or the interpretation by competent authorities of such, may change rapidly . Failure to adapt to the relevant requirements may lead to sanctions or loss of business opportunities, which in turn could have a

material adverse effect on the business, results of operations, financial condition and prospects of the Group’s investments .

> Operational risk – financial services companies in emerging and frontier markets are exposed to operational risk, including the risk of fraud by employees, customers or outsiders, mis-management, unauthorized transactions by employees and operational errors . Any failure to properly mitigate operation-al risk could have a material adverse effect on the business, results of operations, financial condition and prospects of the Group’s investments .

> Reputational risk – consumer behaviour may be negatively impacted by negative publicity in traditional media as well as in social media . Any loss or reputation could have a material adverse effect on the business, results of operations, financial condition and prospects of the Group’s investments .

> IT risk – financial services companies are likely to be depen-dent on IT systems and any disruption that affects the opera-tions of critical systems could have a material adverse effect on the business, results of operations, financial condition and prospects of the Group’s investments .

Vostok Emerging Finance works, primarily through board repre-sentation, to ensure that each portfolio company has appropri-ate internal control processes to handle these business-related risks .

Exposure to RussiaThe major parts of the Group’s investments, which operate in Russia, consist of the ownerships of shares in TCS Group Hold-ing PLC (46 .4% of the portfolio), REVO (3 .2% of the portfolio) and Sorsdata (0 .2% of the portfolio) . Russia has been undergo-ing deep political and social change in recent years . The value of these investments may be affected by uncertainties such as political and diplomatic developments, social or religious instability, changes in government policy, tax and interest rates, restrictions on the political and economic development of laws and regulations in Russia, major policy changes or lack of inter-nal consensus between leaders, executive and decision-making bodies and strong economic groups . These risks entail in par-ticular expropriation, nationalisation, confiscation of assets and legislative changes relating to the level of foreign ownership . In addition, political changes may be less predictable in a growth country such as Russia than in other more developed countries . Such instability may in some cases have an adverse impact on both the operations and SDR price of the Group . Since the col-lapse of the Soviet Union in 1991, the Russian economy has, from time to time, shown> significant decline in GDP> weak banking system with limited supply of liquidity to foreign

companies> growing black and grey economic markets> high flight of capital> high level of corruption and increased organised economic

crime> hyperinflation> significant rise in unemploymentThe Russian economy is largely dependent on the production and export of oil and natural gas, which makes it vulnerable to fluctuations in the oil and gas market . A downturn in the oil and gas market may have a significant adverse impact on the Rus-sian economy . Vostok Emerging Finance continuously monitors the macroeconomic and socioeconomic development in Russia through various channels including third party research reports

>36 and through knowledge and expertise within the Group’s net-work . The Group evaluates any significant findings in order to mitigate any adverse impact on the Group’s operations .

Business related risksAcquisition and disposal riskAcquisitions and disposals are by definition a natural element in Vostok Emerging Finance’s activities . All acquisitions and dis-posals are subject to uncertainty . The Company’s explicit exit strategy is to sell its holdings to strategic investors or via the market . There are no guarantees that the Company will suc-ceed in selling its participations and portfolio investments at the price the shares are being traded at on the market at the time of the disposal or valued at the balance sheet . Vostok Emerging Finance may therefore fail to sell its holdings in a portfolio com-pany or be forced to do so at less than its maximum value or at a loss . If Vostok Emerging Finance disposes of the whole or parts of an investment in a portfolio company, the Company may receive less than the potential value of the participations, and the Company may receive less than the sum invested . Vostok Emerging Finance operates in a market that may be subject to competition with regard to investment opportunities . Other investors may thus compete with Vostok Emerging Finance in the future for the type of investments the Company intends to make . There is no guarantee that Vostok Emerging Finance will not in the future be subject to competition which might have a detrimental impact on the Company’s return from investments . The Company can partially counter this risk by being an active financial owner in the companies .

Vostok Emerging Finance invests in and consequently supply added value in the form of expertise and networks . Despite the Company considering that there will be opportunities for benefi-cial acquisitions for Vostok Emerging Finance in the future, there is no guarantee that such opportunities for acquisition will ever arise or that the Company, in the event that such opportunities for acquisition arose, would have sufficient resources to com-plete such acquisitions .

Accounting practice and other informationPractice in accounting, financial reporting and auditing in emerg-ing and frontier markets cannot be compared with the corre-sponding practices that exist in the Western World . This is princi-pally due to the fact that accounting and reporting have only been a function of adaptation to tax legislation . In addition, access to external analysis, reliable statistics and historical data is inade-quate . The effects of inflation can, moreover, be difficult for exter-nal observers to analyse . Although special expanded accounts are prepared and auditing is undertaken in accordance with inter-national standards, no guarantees can be given with regard to the completeness or dependability of the information that relates to the Company’s investments and potential investments . Inade-quate information and weak accounting standards may adversely affect Vostok Emerging Finance in future investment decisions .

Corporate governance riskMisuse of corporate governance remains a problem in emerging and frontier markets . Minority shareholders may be badly treat-ed in various ways, for instance in the sale of assets, transfer pricing, dilution, limited access to Annual General Meetings and restrictions on seats on boards of directors for external inves-tors . In addition, sale of assets and transactions with related parties are common . Transfer pricing is generally applied by

companies for transfer of value from subsidiaries and external investors to various types of holding companies . It happens that companies neglect to comply with the rules that govern share issues such as prior notification in sufficient time for the exercise of right of pre-emption . Prevention of registration of shares is also widespread . Despite the fact that independent authorised registrars have to keep most share registers, some are still in the hands of the company management, which may thus lead to register manipulation . A company management would be able to take extensive strategic measures without proper consent from the shareholders . The possibility of shareholders exercising their right to express views and take decisions is made considerably more difficult . Inadequate accounting rules and standards have hindered the development of an effective system for uncovering fraud and increasing insight .

Shareholders can conceal their ownership by acquiring shares through shell company structures based abroad which are not demonstrably connected to the beneficiary, which leads to self-serving transactions, insider deals and conflicts of inter-est . Deficiencies in legislation on corporate governance, judicial enforcement and corporate legislation may lead to hostile take-overs, where the rights of minority shareholders are disregarded or abused, which could affect Vostok Emerging Finance in a detrimental manner .

To minimise this risk, as much due diligence is carried out on management and fellow shareholders as it is the business itself and Vostok Emerging Finance looks to attain board representa-tion . Both internal and external counsel is applied with respect to legal due diligence to help ensure our rights are upheld in the majority of investments .

Dependence on key individualsVostok Emerging Finance is dependent on its senior executives and board members . It cannot be ruled out that Vostok Emerg-ing Finance might be seriously affected if any of the senior exec-utives left the Company or if the Company is not able to recruit relevant people in the future .

Financial related risksInvestments in growth markets Investments in growth markets entail a number of legal, econom-ic and political risks . Many of these risks cannot be quantified or predicted, neither are they usually associated with investments in developed economies .

International capital flows Economic unrest in a growth market tends also to have an adverse impact on the equity market in other growth countries or the share price of companies operating in such countries, as investors opt to re-allocate their investment flows to more stable and developed markets . The SDR price may be adversely affected during such periods . Financial problems or an increase in perceived risk related to a growth market may inhibit foreign investments in these markets and have a negative impact on the country’s economy . The Company’s operations, turnover and profit development may also be adversely affected in the event of such an economic downturn .

Foreign exchange riskThe Group’s accounting currency is USD . The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, mainly with respect to the

>37 Swedish Krona (SEK) . The total exchange exposure for the Com-pany is shown in the table below . An increase (decrease) of 10% of the USD towards SEK would affect the Company’s equity by USD -0 .5 mln (3 .4 mln) .

Exposure to foreign exchange (MUSD)

Gross assets Dec 31, 2016

Gross liabilities Dec 31, 2015

SEK 5 .6 0 .1

Other 1 .1 –

Total 6 .7 0 .1

Price riskThe Company is exposed to listed equity securities price risk because of investments held by the Company and classified on the balance sheet as financial assets at fair value through profit or loss . The price risk associated with VEF’s portfolio may be illustrated by stating that a 15 .0% decrease in the price of the quoted shares in the Company’s portfolio at December 31, 2016 would have affected post-tax profit and equity by approximately USD 10 .1 mln (2 .9 mln) .

Liquidity riskLiquidity risk refers to the risk that liquidity will not be available to meet payments commitments due to the fact that the Company cannot divest its holdings quickly or without considerable extra costs . Although, this risk may be relatively low as long as the Company has significant cash balance and the core investment, class A shares in TCS Group Holding PLC, which may readily be converted into GDRs listed on the London Stock Exchange, it may increase in the future if the portfolio changes focus to private equity investments which are less liquid than listed hold-ings . The table below shows the Company’s contracted financial cash flows for the coming periods .

Contracted cash flows Dec 31, 2016 Dec 31, 2015

< 3 months 727 1,491

3–12 months – –

1–5 years – –

> 5 years – –

Credit riskCredit risk is the risk that one party to a financial instrument will cause a loss for the other party by failing to pay for its obligation .

The Company is exposed to counterparty credit risk on cash and cash equivalents and liquidity portfolio with banks and finan-cial institutions . Per December 31, 2016 the cash is placed in bank accounts, within financial institutions . The majority of the Company’s cash was placed in financial institutions with a credit quality step 1–3 . Therefore, the Company considers the credit risk to be limited .

Credit Quality Step

Moody’s Fitch S&P’s

1 Aaa–Aa3 AAA–AA- AAA–AA-

2 A1–A3 A+–A- A+–A-

3 Baa1–Baa3 BBB+–BBB- BBB+–BBB-

4 Ba1–Ba3 BB+–BB- BB+–BB-

5 B1–B3 B+–B- B+–B-

6 worse than B3 worse than B- CCC+ and worse

Maximum credit risk exposure (MUSD)

Dec 31, 2016 Dec 31, 2015

Lending to financial institutions

- Credit Quality step 1–3 42,043 48,169

- No rating 12,842 14,133

Total 54,885 62,302

Capital risk managementThe Group’s objectives when managing capital are to > safeguard the Group’s ability to continue as a going concern in

order to provide returns for shareholders and benefits for other stakeholders, and

> maintain an optimal capital structure to reduce the cost of cap-ital .

To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to share-holders or issue new shares . The Group has during 2015 com-pleted a right issue and raised USD 68 mln and therefore capital risk is considered limited . No dividend has been proposed for the year .

NOTE 5 FAIR VALUE ESTIMATIONThe fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date . A market is regarded as active if quoted prices are readily and reg-ularly available from an exchange, dealer, broker, industry Com-pany, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis . The quoted market price used for finan-cial assets held by the Company is the current bid price . These instruments are included in level 1 . The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques . These valuation techniques max-imize the use of observable market data where it is available and rely as little as possible on entity specific estimates . If all significant inputs required to fair value an instrument are observ-able, the instrument is included in level 2 . If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3 .

Investments in assets that are not traded on any market will be held at fair value determined by recent transactions made at prevailing market conditions or different valuation models depending on the characteristics of the company as well as the nature and risks of the investment . These different techniques may include discounted cash flow valuation (DCF), exit-multiple valuation also referred to as Leveraged Buyout (LBO) valuation, asset based valuation as well as forward looking multiples val-uation based on comparable traded companies . Usually, trans-action-based valuations are kept unchanged for a period of 12 months unless there is cause for a significant change in valuation . After 12 months, the Company will normally derive fair value for non-traded assets through any of the models described above . At each reporting date, possible changes or events subsequent to the relevant transaction are assessed and if this assessment implies a change in the investment’s fair value, the valuations are adjusted accordingly .

>38 The fair value of financial instruments is measured by level of the following fair value measurement hierarchy: > Quoted prices (unadjusted) in active markets for identical

assets or liabilities (level 1) .> Inputs other than quoted prices included within level 1 that are

observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2) .

> Inputs for the asset or liability that are not based on observ-able market data (that is, unobservable inputs) (level 3) .

The following table presents the Company’s assets that are mea-sured at fair value at December 31, 2016 .

Level 1 Level 2 Level 3 Total balance

Financial assets at fair value through profit or loss 97,194 22,961 – 120,155

Total assets 97,194 22,961 – 120,155

The following table presents the Company’s assets that are mea-sured at fair value at December 31, 2015 .

Level 1 Level 2 Level 3 Total balance

Financial assets at fair value through profit or loss 19,458 15,310 – 34,768

Total assets 19,458 15,310 – 34,768

As per December 31, 2016, the Company’s holding in Tinkoff Bank is classified as a level 1 investment as its GDRs are trading on London Stock Exchange . Vostok Emerging Finance also has liquidity management portfolio of listed corporate bonds that are also classified as level 1 investments . REVO, Sorsdata, the investments in JUMO, TransferGo, FinanZero and Finja are all valued as level 2 on the basis of the valuations in their respective latest transaction which all closed in late 2015 and throughout 2016 . The validity of valuations based on a transaction is inevi-tably eroded over time, since the price at which the investment was made reflects the conditions that existed on the transac-tion date . At each reporting date, possible changes or events subsequent to the relevant transaction are assessed and if this assessment implies a change in the investment’s fair value, the valuation is adjusted accordingly . The transaction-based valu-ations are frequently assessed using multiples of comparable traded companies for each unlisted investment or other valua-tion models . When the Company uses transaction-based valua-tions of unlisted holdings, no material event is deemed to have occurred at the specific portfolio company that would suggest that the transaction-based value is no longer valid .

Tinkoff BankThe investment in Tinkoff Bank is listed on the London Stock Exchange and the valuation is based on the closing bid-price per December 31, 2016 .

JUMOAs per December 31, 2016, VEF owns 1,994 shares or 7 .6% fully diluted in JUMO World Limited (formerly known as AFB Mauri-tius) that owns and operates JUMO . JUMO is valued as per the most recent transaction in the company in December 2016 . The transaction values VEF’s stake at USD 12 .7 mln . As per Decem-ber 31, 2016, JUMO is valued on the basis of this transaction and is categorized as a level 2 investment .

REVOAs per December 31, 2016, VEF has a 25% ownership in REVO and has invested a total of USD 4 .7 mln in the company . REVO is valued on the basis of the latest transaction in the company when VEF exercised its option to double its ownership stake to 25% . VEF closed the second tranche of the investment on December 16, 2015 . Even though the transaction is just over 12 months old it is deemed to be the best fair value estimate as per December 31, 2016 as the company has performed in line with VEF’s initial expectations . REVO is valued at USD 18 .8 mln post-money and VEF’s stake is duly valued at USD 4 .7 mln as a level 2 investment . VEF owns 3,584 shares in REVO .

TransferGoAs per December 31, 2016, VEF owns 9 .8% in TransferGo and has invested a total of USD 3 .4 mln in the company in June 2016 . As per December 31, 2016, TransferGo is valued on the basis of this transaction and is categorized as a level 2 invest-ment .

FinanZeroAs per December 31, 2016, VEF owns 13,600 shares in Finan-Zero following an investment in primary capital of approximately USD 1 .2 mln in March 2016 . As per December 31, 2016, Finan-Zero is valued on the basis of this transaction and is categorized as a level 2 investment .

FinjaAs per December 31, 2016, VEF has agreed to invest USD 1 .0 mln in Finja over three equal tranches, where each tranche is conditional upon specific deliverables . If all tranches are com-plete, the total stake in the company would be 22 .5% . As per December 31, 2016, the first tranche of USD 0 .3 mln was com-pleted and Finja is valued on the basis of this transaction . The first tranche, being invested in the form of a convertible note which will automatically be converted to shares in July 2017, at the latest, is categorized as a level 2 investment . The remaining payments are considered probable and therefore included in the investment as well as a liability .

SorsdataAs per December 31, 2016, VEF owns 25% of Sorsdata and has invested a total of USD 300k in the company . Sorsdata is valued on the basis of the latest transaction in the company, when VEF exercised its option to double its holding . VEF closed this (second) tranche of the investment on December 16, 2015 . Sorsdata is duly valued at USD 1 .2 mln post-money and VEF’s stake is valued at USD 300k as level 2 investment . VEF owns 882 shares in Sorsdata .

>39 Change in financial assets at fair value through profit or loss

Company Opening balance Jan 1, 2016

Investments/ (disposals), net, USD

FV change Closing balanceDec 31, 2016

Percentage weight of total portfolio

Tinkoff Bank 19,458,372 – 47,848,455 67,306,827 46 .4%

JUMO 10,309,704 1,567,512 828,552 12,705,768 8 .7%

REVO 4,700,000 – – 4,700,000 3 .2%

TransferGo – 3,403,288 -248,490 3,154,798 2 .2%

FinanZero – 1,206,513 -107,268 1,099,245 0 .8%

Finja – 1,000,000 985 1,000,985 0 .7%

Sorsdata 300,000 – – 300,000 0 .2%

Liquidity management – 30,049,168 -161,884 29,887,284 20 .6%

Total 34,768,076 37,226,481 48,160,350 120,154,907 82 .8%

NOTE 6 SEGMENT INFORMATIONFor management purposes, the Group is organised into one main operating segment, which invests in equity securities . All of the Group’s activities are interrelated, and each activity is dependent on the others . Accordingly, all significant operating decisions are based upon analysis of the Group as one seg-ment . The financial results from this segment are equivalent to the financial statements of the Group as a whole .

NOTE 7 RESULT FROM FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

Group 2016

Group 2015

Parent Company

2016

Parent Company

2015

Proceeds from sale of financial assets at fair value through profit or loss – 8,046 – 8,046

Acquisition value of sold financial assets at fair value through profit or loss – -8,046 – -8,046

Change in fair value of remaining financial assets at fair value through profit or loss 48,141 758 46,836 758

Result from financial assets at fair value through profit or loss 48,141 758 46,836 758

During 2016 and 2015 result from financial assets at fair value through profit or loss comprises the result from fair value chang-es of financial assets that have been designated on initial rec-ognition as assets to be measured at fair value with fair value changes in profit or loss .

NOTE 8 DIVIDEND AND COUPON INCOME

Group 2016

Group 2015

Parent Company

2016

Parent Company

2015

Dividend and coupon income recognized in the income statement1 3,031 – 1,692 –

whereof unsettled at balance sheet date – – – –

Tax withheld on dividends – – – –

Net proceeds from dividends and coupons, net of tax, recognized in the income statement during the year 3,031 – 1,692 –

1 . 2016: USD 3 .0 mln (2016: 0) coming from TCS Group Holding PLC in June and December 2016 .

NOTE 9 OPERATING EXPENSES BY NATURE

Group 2016

Group 2015

Parent Company

2016

Parent Company

2015

Employee benefit expense (Note 10) 1,064 323 999 323

Service agreement between Vostok Emerging Finance AB and Vostok Emerging Finance Limited – – 77 –

Other expenses 967 375 949 375

Total operating expenses 2,031 698 2,025 698

>40 NOTE 10 EMPLOYEE BENEFIT EXPENSE2016

Base salaries/

Board fee

Pension expenses

Share based

compen-sation

Total

Lars O Grönstedt, Chairman of the Board 48 – – 48

Milena Ivanova, Board member 23 – – 23

Voria Fattahi, Board member¹ 14 – – 14

Per Brilioth, Board member 23 – – 23

David Nangle, Board member and Managing Director 457 46 70 573

Key management personnel² 83 1 45 129

Total 648 47 115 810

1 . Voria Fattahi was appointed Board member May 19, 2016 . 2 . The key management personnel relate to the CFO and the legal coun-

sel . The legal counsel provides services as acting General Counsel to the Company through a service agreement with a wholly owned company on arm’s length terms, note 20 related party .

2015

Base salaries/

Board fee

Pension expenses

Share based

compen-sation

Total

Lars O Grönstedt, Chairman of the Board 15 – – 15

Milena Ivanova, Board member 3 – – 3

Josh Blachman, Board member 3 – – 3

Keith Richman, Board member 3 – – 3

Per Brilioth, Board member 32 – – 32

David Nangle, Board member and Managing Director 158 17 7 182

Key management personnel 46 – – 46

Total 260 17 7 284

Decisions regarding remuneration to managers are made by the Board of Directors . The Managing Director has the right to 12 months’ salary in the event of the termination of appointment on part of the company . He must himself observe 6 months’ notice of termination . The rest of the management has a notice period of one month, which also applies to the company in the event of termination on part of the company . No notice period applies to the Board of Directors .

In addition to the personnel stated in the table above, the Company has four additional part-time employees .

The Incentive ProgramThe incentive program, that was authorised by a Special General Meeting in Vostok New Ventures on June 9, 2015 and adopted by resolution of the Sole Member of the Company on the same day, entitles present and future employees to be allocated call

options to acquire shares represented by SDRs in the Company (“Options”) .

Principal Conditions and Guidelines> The exercise price for the Options shall correspond to 120

percent of the market value of the SDRs of the Company at the time of the granting of the Options .

> The Options may be exercised during an exercise period of three months starting five years from the time of the grant .

> For employees resident outside of Sweden, no premium shall be paid for the Options and the Options may only be exercised if the holder is still employed within the group at the time of exercise .

> For employees resident in Sweden, the employees may elect either of the following alternatives:a) No premium shall be paid for the Options and the Options

may only be exercised if the holder is still employed within the group at the time of exercise (same as for employees resident outside of Sweden);

orb) The Options shall be offered to the employee at a purchase

price corresponding to the market value of the Options at the time of the offer . The Options shall be fully transfer-able and will thereby be considered as securities . This also means that Options granted under this option (b) are not contingent upon employment and will not lapse should the employee leave his or her position within the group .

> Options may be issued by the Company or by other group companies .

Preparation and AdministrationThe Board of Directors of the Company, or a designated com-mittee appointed by the Board of Directors, shall be authorized to determine the detailed terms and conditions for the Options in accordance with the principal conditions and guidelines set forth above . The Board of Directors of the Company may make necessary adjustments to satisfy certain regulations or market conditions abroad . The Board of Directors of the Company shall also be authorized to resolve on other adjustments in conjunc-tion with material changes affecting the group or its business environment, which would mean that the described conditions for the incentive plan would no longer be appropriate .

AllocationThe incentive plan includes granting of not more than 2,000,000 (post rights issue: 5,080,000) Options . Allocation of Options to the Managing Director of the Company shall not exceed 1,000,000 (post rights issue: 2,540,000) Options and alloca-tion to each member of the executive management or to other key employees of the Company shall not exceed 400,000 (post rights issue: 1,016,000) Options .

The allocation of Options shall be decided by the Board of Directors of the Company or by a designated subcommittee there-of, taking into consideration, among other things, the performance of the employee and his or her importance to the group . Specific criteria to be considered include the employee’s ability to manage and develop the existing portfolio and to identify new investment opportunities and evaluate conditions of new investments as well as return on capital or estimated return on capital in investment targets . The employees will not initially be offered the maximum allocation of Options and a performance-related allocation sys-tem will be maintained since allocation of additional Options will

>41 require fulfilment of stipulated requirements and targets . The Board of Directors of the Company, or a designated subcommittee thereof, shall be responsible for the evaluation of the performance of the employees . The outcome of stipulated targets shall, if pos-sible, be reported afterwards . Directors who are not employed by the group shall not be able to participate in the plan .

Bonus for employees resident in Sweden under option (b)In order to stimulate the participation in the plan by employ-ees resident in Sweden electing option (b) above, the Company intends to subsidize participation by way of a bonus payment which after tax corresponds to the Option premium . Half of the bonus will be paid in connection with the purchase of the Options and the remaining half at exercise of the Options, or, if the Options are not exercised, at maturity . In order to emulate the vesting mechanism offered by the employment requirement under option (a) above, the second bonus payment is subject to the requirement that the holder is still an employee of the group at the time of exercise or maturity, as the case may be . Thus, for employees in Sweden who choose option (b), the participation in the plan includes an element of risk .

Dilution and costsIn the event all 2,000,000 (post rights issue: 5,080,000) Options are fully exercised, the holders will acquire shares represent-ed by SDRs corresponding to a maximum of approximately 2 .7 (post rights issue: 0 .8) percent of the share capital . The total negative cash flow impact for the bonus payments described above is estimated to approximately SEK 11,000,000 over the life of the incentive plan, provided that all Options are offered to employees resident in Sweden, that all such employees choose to purchase the Options under option (b) above, and that all Option holders are still employed by the Company at the time of exercise or maturity of the Options . Currently, there is no similar option (b) for employees resident outside of Sweden provided in the incentive plan 2015 and the only negative cash flow under option (a) relates to the social security contributions at the time of exercise of the Options . Other costs for the incentive plan, including fees to external advisors and administrative costs for the plan are estimated to amount to approximately SEK 250,000 for the duration of the Options . Social security contributions in respect of outstanding Options granted to the Managing Direc-tor who is resident outside of Sweden amount to approximately USD 46,000 .

PurposeThe purpose of the proposed incentive plan is to create condi-tions that will enable the Company to retain and recruit compe-tent employees to the group as well as to promote long-term interests of the Company by offering its employees the opportu-nity to participate in any favourable developments in the value of the Company .

Rights issue During December 2015, the Company conducted a rights issue . The Board has subsequently adjusted the terms for the options, as required under the terms of the 2015 share-based incen-tive program . The original terms of the incentive plan includ-ed granting of not more than 2,000,000 Options where options to the Managing Director of the Company was not to exceed 1,000,000 Options and to each member of the executive man-agement or to other key employees of the Company was not

to exceed 400,000 Options . If all 2,000,000 Options fully were exercised, the holders were to acquire shares represented by SDRs corresponding to a maximum of approximately 2 .7 per-cent of the share capital .

Before the rights issue a total of 750,000 Options with an exercise price of SEK 3 .70 was granted to the Managing Direc-tor, David Nangle . Under the revised terms, each option issued 2015 entitled the holder of one option to subscribe for a total of 2 .54 options, which lead to a total of 1,905,000 outstanding Options . The new exercise price of the Options is SEK 1 .46 .

Outstanding Options

2016

Beginning of the period 1,905,000

Granted during June 2016 1,000,000

Granted during August 2016 500,000

Outstanding at the end of the period 3,405,000

Per December 31, 2016 a total of 3,405,000 options were out-standing . 1,905,000 to Managing Director and 1,500,000 to other employees .

Market value of the options is calculated with the help of the Black & Scholes options valuation model .

For options granted in June 2016 the market value is SEK 0 .26/option . Significant inputs into the model for options grant-ed in June where share price as at June 7, 2016 (SEK 1 .13), exercise price (SEK 1 .33), standard deviation of expected share price returns based on an analysis of historical share prices (33 .0 per cent), option life until July 31, 2021, the Swedish mar-ket interest rate as at June 7, 2016, (-0 .27 per cent); and a divi-dend yield of 0 per cent .

For options granted in August 2016 the market value is SEK 0 .14/option . Significant inputs into the model for options granted in August where share price as at August 25, 2016 (SEK 1 .22), exercise price (SEK 1 .46), standard deviation of expected share price returns based on an analysis of historical share prices (20 .9 per cent), option life until November 24, 2021, the Swedish market interest rate as at August 25, 2016, (-0 .53 per cent); and a dividend yield of 0 per cent .

Share-based incentive program (LTIP 2016)At the 2016 annual general meeting held on May 19, 2016, it was resolved to implement a share-based long-term incentive program for management and key personnel in Vostok Emerg-ing Finance . The program runs from January 1, 2016 through March 31, 2019, and encompasses a maximum of 11,315,790 shares, corresponding to a dilution of 1 .71% of the total number of shares outstanding . Program participants purchase shares in the company, and for each purchased share is entitled to receive a number of additional shares, so-called performance shares, free of charge, subject to fulfilment of a performance condition set by the Board of Directors on the basis of the Company’s NAV . Pursuant to IFRS 2, the costs for the program will be report-ed over the profit and loss statement during the vesting period August 31, 2016 through December 31, 2018 .

The rights to receive shares automatically convert into ordi-nary shares (Swedish Depository Receipts) at the end of the pro-gram at an exercise price of nil . The participants do not receive any dividends and are not entitled to vote in relation to the rights to receive shares during the vesting period . If a participant ceas-es to be employed by the group within this period, the rights will

>42 be forfeited, except in limited circumstances that are approved by the board on a case-by-case basis .

The fair value of the rights at grant date was estimated by taking the market price of the company’s shares on that date which was SEK 1 .27 (USD 0 .15) per share without adjustment for any dividends that will not be received by the participants on their rights during the vesting period . Total expenses arising from share-based payment transactions recognised during the period as part of employee benefit expense were MUSD 0 .12 (2015: –) .

NOTE 11 TAXCorporate income tax – generalThe parent company, Vostok Emerging Finance Limited is exempted and therefore not liable for tax in Bermuda .

The Group’s Cypriot entity is subject to corporation tax on taxable profits at the rate of 12 .5% for 2016 .

Under certain conditions, interest may be exempt from income tax and only subject to defence contribution at the rate of 30% as from April 29, 2013 .

Any gains from disposal of qualified securities are not subject to corporate tax in Cyprus .

During 2016, the Swedish subsidiary’s profits are subject to Swedish income tax at the rate of 22% .

Income tax expense

Group 2016 Group 2015

Current tax -1 –

Deferred tax – –

Taxation -1 –

The tax on the Group’s result before tax differs from the theoret-ical amount that would arise using the tax rate of the countries where the Group operates as follows:

Group 2016 Group 2015


Tax calculated at domestic tax rates applicable to profits in the respective countries -305 –

Tax effects of:

- Income not subject to tax 331 –

- Expenses not deductible for tax purposes -27 –

- Adjustment in respect of prior years – –

- Utilisation of previously unrecognised tax losses – –

- Tax losses for which no deferred income tax asset was recognised – –

Tax charge -1 –

The weighted average applicable tax rate was 0 .6% .

NOTE 12 EARNINGS PER SHAREBasic earnings per share have been calculated by dividing the net result for the financial year by the weighted average number of shares in issue during the year .

Diluted earnings per share have been calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive ordinary shares . Share options are the only category of dilutive potential ordinary shares for the company . For the share options, a calculation is made in order to determine the number of shares that would have been acquired at fair value (determined as the average annual market share price of the Company’s shares) based on the monetary value of the subscription rights to outstanding share options . The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the options .

2016 2015

Profit attributable to the equity holders of the company 48,656 1,053

Weighted average number of ordinary shares on issue 661,495,995 193,316,971

Earnings per share, basic 0 .07 0 .01

Adjustment for dilution effect of incentive options – –

Weighted average number of ordinary shares fully diluted 661,495,995 193,316,971

Earnings per share, diluted 0 .07 0 .01

>43 NOTE 13 FINANCIAL INSTRUMENTS BY CATEGORYThe accounting policies for financial instruments have been applied to the line items below:

December 31, 2016 – Group

Assets as per balance sheet

Assets at fair value

through profit and loss – designated

Loans and receivables

Total

Financial assets at fair value through profit or loss 120,155 – 120,155

Cash and cash equivalents – 24,998 24,998

Total assets 120,155 24,998 145,153

December 31, 2015 – Group





Total



Total assets 34,768 62,302 97,070

Liabilities as per balance sheet

Financial liabilities

measured at amortised

cost

Total

Trade payables -1,491 -1,491

Total liabilities -1,491 -1,491

December 31, 2016 – Parent





Total



Receivables from Group Companies – 82,667 82,667

Total assets 35,142 107,555 142,697

December 31, 2015 – Parent





Total



Total assets 34,768 62,302 97,070

Liabilities as per balance sheet

Financial liabilities

measured at amortised

cost

Total

Trade payables -1,491 -1,491

Total liabilities -1,491 -1,491

The carrying value for cash and cash equivalents as well as for the trade payables is considered consistent with the fair value .

>44

Change in financial assets at fair value through profit or loss

Company Opening balance Jan 1, 2016

Investments/ (disposals), net, USD

FV change Closing balanceDec 31, 2016

Percentage weight of total portfolio

Tinkoff Bank 19,458,372 – 47,848,455 67,306,827 46 .4%

JUMO 10,309,704 1,567,512 828,552 12,705,768 8 .7%

REVO 4,700,000 – – 4,700,000 3 .2%

TransferGo – 3,403,288 -248,490 3,154,798 2 .2%

FinanZero – 1,206,513 -107,268 1,099,245 0 .8%

Finja – 1,000,000 985 1,000,985 0 .7%

Sorsdata 300,000 – – 300,000 0 .2%

Liquidity management – 30,049,168 -161,884 29,887,284 20 .6%

Total 34,768,076 37,226,481 48,160,350 120,154,907 82 .8%

NOTE 14 NON-CURRENT FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

Group Dec 31, 2016

Group Dec 31, 2015

Parent Company

Dec 31, 2016

Parent Company

Dec 31, 2015

Beginning of the period 34,768 – 34,768 –

Additions (Shareholder’s in-kind contribution: TCS Group Holding PLC) – 27,058 – 27,058

Additions (new investments) 37,227 14,998 35,659 14,998

Disposal value – -8,046 – -8,046

Transfers to VEF (Cyprus) Limited – – -82,140 –

Change in fair value for the period 48,160 758 46,855 758

End of the period 120,155 34,768 35,142 34,768

NOTE 15 CASH AND CASH EQUIVALENTSCash, cash equivalents and bank overdrafts include the follow-ing for the purposes of the cash flow statement:

Group Dec 31, 2016

Group Dec 31, 2015


of which short-term investments equivalent to cash – –

Total 24,998 62,302

NOTE 16 SHARE CAPITAL AND ADDITIONAL PAID IN CAPITALGroup and Parent Company Number of

shares heldShare

capitalAdditional

paid in capital

At May 28, 2015 – – –

New shares issued 73,449,555 735 26,322

Proceeds from rights issue 587,996,440 5,880 63,198

Transaction costs rights issue – – -1,648

Employees share option scheme:

– value of employee services – – 7

At December 31, 2015 661,495,995 6,615 87,880

Transaction costs share issue – – -42

Employees share option scheme – – 45

Share based long-term incentive program – – 120

At December 31, 2016 661,495,995 6,615 88,003

The assets specified in the table above are investments in finan-cial assets at fair value through profit or loss . TCS Group Holding PLC is valued on the basis of the closing bid price as per the

balance sheet date . All other assets are valued on the basis of the latest transaction . See note 5 for further information .

>45 Rights issueOn November 17, 2015, the company invited its shareholders to subscribe to a rights issue of 587,996,440 SDRs at an issue price of SEK 1 .00 per SDR on the basis of 8 SDRs for every SDR held . The issue was fully subscribed .

Employee share option schemeThere are currently 3,405,000 ordinary shares available under the employee share option scheme . Each option entitles the holder to one new share (SDR) in Vostok Emerging Finance Ltd . For more information on the options, see Note 10 .

Share capitalThe authorised share capital of the Company is USD 10,000 mln divided into 1,000 mln shares of USD 0 .01 par value, each carrying one vote . All issued redeemable shares are fully paid . The Company does not possess any own shares .

Additional paid in capitalAdditional paid in capital consist of share premiums regarding new shares issued and share based compensation .

NOTE 17 OTHER CURRENT LIABILITIES

Group Dec 31,

2016

Group Dec 31,

2015

Parent Company

Dec 31, 2016

Parent Company

Dec 31, 2015

Pending investment in Finja 667 – 667 –

Other current liabilities 65 21 57 21

Total 732 21 724 21

NOTE 18 PLEDGED ASSETS AND CONTINGENT LIABILITIESThe Company had no contingent liabilities or pledged assets as per December 31, 2016 .

NOTE 19 SHARES IN SUBSIDIARIESParent Company Country Number

of sharesShare of

capital and votes, %

Book value Dec 31,

2016,

Vostok Emerging Finance (Cyprus) Limited Cyprus 10,000 100 10,000

Vostok Emerging Finance AB Sweden 500 100 5,683

Total 15,683

All the companies are included in the consolidated financial statements from the time of corporation .

NOTE 20 RELATED PARTY TRANSACTIONSThe Group has identified the following related parties:

Key Management and Board of Directors, including members of the Board and Management, and members of the Board of subsidiaries .

During the period, the Group has recognized the following related party transactions:

(USD thousand) Operating expenses Current liabilities

Dec 31, 2016

Dec 31, 2015

Dec 31, 2016

Dec 31, 2015

Key management and Board of Directors* 783 267 – –

* Compensation paid or payable includes salary and consulting fees to the management and remuneration to the Board members .

The costs for a new long term incentive program (LTIP 2016) for the management amounted to USD 0 .12 mln, excluding social taxes . See details of the LTIP 2016 in Note 10 .

NOTE 21 EVENTS AFTER THE BALANCE SHEET DATEOn January 19, 2017, Vostok Emerging Finance announced that it agreed to invest USD 9 mln into the Turkish payments com-pany Iyzico, leading a broader Series C USD 13 mln investment round . VEF is joined by existing investors, IFC, a member of the world bank and 212, one of the foremost VC funds in Turkey, in the round . Post the transaction VEF holds a sizeable minority position and board representation in the company .

Iyzico is a leading Turkish payment solution provider for online retailers . The company currently has over 8,500 live mer-chants and 160,000 seller accounts under marketplaces and is one of the fastest growing financial technology companies in the region . Founded in 2013, Iyzico is based in Turkey and licensed as a Turkish payment institution by the Bankacilik Düzenleme ve Denetleme Kurumu (BDDK) .

As well as being one of the larger and more populous emerg-ing market economies, Turkey is Europe’s largest consumer card market, but remains vastly under-penetrated in the fast growth online payment space . Furthermore, Turkey operates a relatively unique card system, as merchants require solutions like Iyzico’s to accept e-commerce card payments from across the variety of card families in the market . The unique market dynamics, cou-pled with the importance of the growing share of e-commerce transactions are key positive aspects of the market opportunity in front of Iyzico .

On January 20, 2017, Vostok Emerging Finance announced that it agreed to invest up to a further USD 5 mln at a higher val-uation in REVO Technologies and Sorsdata as part of a broader funding round, totalling up to USD 20 mln . The new round is led by Baring Vostok, a leading Private Equity firm operating in Russia and the CIS . This is a third investment by VEF into the companies, following on an earlier round in late 2015 .

NOTE 22 ADOPTION OF ANNUAL REPORTThe annual report has been submitted by the Board of Directors on April 19, 2017, see page 46 . The balance sheet and profit and loss accounts are to be adopted by the company’s shareholders at the annual general meeting on May 18, 2017 .

>46

The Board of Directors and the Managing Director declare that the consolidated financial statements have been prepared in accordance with IFRS as adopted by the EU and give a true and fair view of the Group’s financial position and results of operations . The financial statements of the Parent Company have been prepared in accordance with IFRS and give a true and fair view of the Parent Company’s financial position and results of operation .

April 19, 2017

Lars O Grönstedt Milena Ivanova

Chairrman of the Board Board member

Per Brilioth Voria Fattahi

Board member Board member

David Nangle

Board member and Managing Director

Our auditor’s report was submitted on April 19, 2017

PricewaterhouseCoopers AB

Ulrika Ramsvik

Authorised Public Accountant

Auditor-in-charge

Bo Hjalmarsson

Authorised Public Accountant

Declaration

>47 Independent Auditor’s ReportTo the annual general meeting of Vostok Emerging Finance Ltd., corporate identity number 50298

Report on the audit of the consolidated financial statements and parent company financial statements

Our opinionWe have audited the consolidat-

ed financial statements and the par-

ent company financial statements of

Vostok Emerging Finance Ltd . for the

year 2016 . The consolidated financial

statements and the parent company

financial statements are included on

pages 22–46 in this document .

In our opinion, Vostok Emerg-

ing Finance Ltd . consolidated finan-

cial statements and parent compa-

ny financial statements present fairly,

in all material respects, the consoli-

dated financial position of the Group

and the parent company financial posi-

tion as at December 31, 2016, and of

its consolidated financial performance

and parent company financial perfor-

mance and its consolidated cash flows

and parent company cash flows for the

year then ended in accordance with

International Financial Reporting Stan-

dards (IFRS) as adopted by the EU .

Basis for opinion We conducted our audit in accor-

dance with International Standards

on Auditing (ISAs) . Our responsibili-

ties under those standards are further

described in the Auditor’s responsibil-ities for the audit of the consolidat-ed financial statements and parent company financial statements sec-tion of our report . We are indepen-

dent of the parent company and the

group in accordance with profession-

al ethics for accountants in Sweden

and have otherwise fulfilled our ethi-

cal responsibilities in accordance with

these requirements .

We believe that the audit evidence

we have obtained is sufficient and

appropriate to provide a basis for our

opinion .

Other information Management is responsible for the

other information . The other informa-

tion comprises the pages 1–21, which

we obtained prior to the date of this

auditor’s report .

Our opinion on the consolidat-

ed financial statements or the parent

company financial statements does

not cover the other information and we

do not and will not express any form

of assurance conclusion thereon .

In connection with our audit of the

consolidated financial statements and

the parent company financial state-

ments, our responsibility is to read

the other information identified above

and, in doing so, consider wheth-

er the other information is material-

ly inconsistent with the consolidat-

ed financial statements or the parent

company financial statements or our

knowledge obtained in the audit, or

otherwise appears to be materially

misstated .

If, based on the work we have per-

formed on the other information that

we obtained prior to the date of this

auditor’s report, we conclude that

there is a material misstatement of

this other information, we are required

to report that fact . We have nothing to

report in this regard .

Responsibilities of management and those charged with gover-nance for the consolidated finan-cial statements and the parent company financial statementsManagement is responsible for the

preparation and fair presentation

of the consolidated financial state-

ments and the parent company finan-

cial statements in accordance with

International Financial Reporting

Standards (IFRS) as adopted by the

EU, and for such internal control as

management determines is neces-

sary to enable the preparation of con-

solidated financial statements and

parent company financial statements

that are free from material misstate-

ment, whether due to fraud or error .

In preparing the consolidated finan-

cial statements and parent company

financial statements, management is

responsible for assessing the Group’s

ability to continue as a going concern,

disclosing, as applicable, matters

related to going concern and using

the going concern basis of accounting

unless management either intends to

liquidate the Group or to cease oper-

ations, or has no realistic alternative

but to do so .

Those charged with governance

are responsible for overseeing the

Group’s financial reporting process .

Auditor’s responsibilities for the audit of the consolidated financial statements and parent company financial statementsOur objectives are to obtain reason-

able assurance about whether the

consolidated financial statements and

parent company financial statements

as a whole are free from material mis-

statement, whether due to fraud or

error, and to issue an auditor’s report

that includes our opinion . Reasonable

assurance is a high level of assur-

ance, but is not a guarantee that an

audit conducted in accordance with

ISAs will always detect a material mis-

statement when it exists . Misstate-

ments can arise from fraud or error

and are considered material if, individ-

ually or in the aggregate, they could

reasonably be expected to influence

>48

the economic decisions of users

taken on the basis of these consoli-

dated financial statements and parent

company financial statements .

As part of an audit in accordance with

ISAs, we exercise professional judg-

ment and maintain professional scep-

ticism throughout the audit . We also:

> Identify and assess the risks of

material misstatement of the con-

solidated financial statements and

parent company financial state-

ments, whether due to fraud or

error, design and perform audit pro-

cedures responsive to those risks,

and obtain audit evidence that is

sufficient and appropriate to provide

a basis for our opinion . The risk of

not detecting a material misstate-

ment resulting from fraud is high-

er than for one resulting from error,

as fraud may involve collusion, forg-

ery, intentional omissions, misrepre-

sentations, or the override of internal

control .

> Obtain an understanding of inter-

nal control relevant to the audit in

order to design audit procedures

that are appropriate in the circum-

stances, but not for the purpose of

expressing an opinion on the effec-

tiveness of the Group’s internal

control .

> Evaluate the appropriateness of

accounting policies used and the

reasonableness of accounting esti-

mates and related disclosures

made by management .

> Conclude on the appropriate-

ness of management’s use of the

going concern basis of account-

ing and, based on the audit evi-

dence obtained, whether a material

uncertainty exists related to events

or conditions that may cast signifi-

cant doubt on the Group’s ability to

continue as a going concern . If we

conclude that a material uncertain-

ty exists, we are required to draw

attention in our auditor’s report to

the related disclosures in the con-

solidated financial statements or

parent company financial state-

ments or, if such disclosures are

inadequate, to modify our opinion .

Our conclusions are based on the

audit evidence obtained up to the

date of our auditor’s report . Howev-

er, future events or conditions may

cause the Group to cease to contin-

ue as a going concern .

> Evaluate the overall presentation,

structure and content of the consol-

idated financial statements and par-

ent company financial statements,

including the disclosures, and

whether the consolidated financial

statements represent the underlying

transactions and events in a man-

ner that achieves fair presentation .

> Obtain sufficient appropriate audit

evidence regarding the financial

information of the entities or busi-

ness activities within the Group to

express an opinion on the consol-

idated financial statements . We are

responsible for the direction, super-

vision and performance of the group

audit . We remain solely responsible

for our audit opinion .

We communicate with those charged

with governance regarding, among

other matters, the planned scope

and timing of the audit and signifi-

cant audit findings, including any sig-

nificant deficiencies in internal control

that we identify during our audit .

Stockholm, April 19, 2017

PricewaterhouseCoopers AB

Ulrika Ramsvik Bo Hjalmarsson

Authorized Public Accountant Authorized Public Accountant Auditor-in-charge

>49 Glossaryof terms and acronyms used in the annual report

CIS Commonwealth of Independent States (former Soviet Union)

E Estimate

EBITDA Earnings Before Interest, Taxes, Depreciation and Amortization

EMEA Europe, Middle East & Africa

EV Enterprise Value, i.e. stock exchange value + net liability

EUR Euro

F Forecast

FX Foreign exchange rate

GDP Gross Domestic Product

GDR Global Depository receipt

IPO Initial Public Offering

IRR Internal Rate of Return

k Thousand

Latam Latin America

mln Million

NAV Net Asset Value

N1 Capital adequacy ratio The bank equity capital adequacy ratio (N1) is established as the ratio of the bank’s equity capital to the overall risk-weighted assets minus the sum of the reserves created for depreciation of securities and possible losses on Risk Groups 3–5 loans

n/a Not available

NPL Non performing loans: defined as loans overdue over 90 days

P/B Price-to-Book, i.e. the relationship between the stock exchange value and book value

RoAA Return on average assets

RoAE Return on average equity

RoE Return on Equity

RTS Russian Trading System, the leading trading place for Russian shares

RUB Russian Rubles

SDR Swedish Depository Receipt

SEC Securities and Exchange Commission

SEK Swedish Kronor

T Thousand

USD United States Dollars

Y-o-Y Year-on-Year

Clarendon House 2 Church Street Hamilton HM 11Bermuda www .vostokemergingfinance .com

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