Half-yearly Results
(Thomson Reuters ONE) - 29 September 2009 Prosperity Voskhod Fund Limited Half-yearly results for the six months ended 30 June 2009Prosperity Voskhod Fund Limited ("PVF" or the "Company") a Guernseyincorporated, closed-ended investment company admitted to AIM, todayannounces its half-yearly results for the six months ended 30 June2009. The investment objective of the Company is to achieve capitalgrowth by investing in a portfolio of securities involved in thecorporate restructuring and consolidation which are expected to takeplace in Russia and other Newly Independent States ('NIS') of theformer Soviet Union.Key developments: * Unaudited net asset value per share of US$0.587 (based on mid-prices) at 30 June 2009, representing an increase in the first half of the year of 59%, against an increase in the Russian RTS index of 56% and in the RTS II index of 57% * Key investments at 30 June 2009 were Transaero (12.9% of net assets), Bashkirenergo (12.1% of net assets), Mostotrest (9.5% of net assets), Center Telecom (8.8% of net assets), Bashneft (7.9% of net assets), Kuzocm (7.8% of net assets) and Kuzbassraz Coal Co (6.0% of net assets) * Latest unaudited net asset value per share of US$0.780 at 18 September 2009 (based on mid-prices), an increase of 111% since the last year end resulting in an outperformance of the RTS index which rose by 95% in the same periodThe half-yearly results are unaudited.Commenting, Julian Reid, Chairman said:"Investors will have found encouragement in the fact that ProsperityVoskhod Fund has recovered some 111% in the year-to-date whilst, fromthe Fund's strategic investment standing, liquidity has improved withthe very recent listing of Transaero, the Fund's largest holding, onRTS I- the Moscow market with similarities to AIM."Enquiries:Prosperity Voskhod Fund LimitedJulian Reid, ChairmanMobile: +44 (0) 7768 068 200Prosperity Capital Management LimitedElly WordsworthTel: +44 (0) 20 7299 6950www.voskhodfund.comCHAIRMAN'S STATEMENTDear fellow ShareholdersWe have pleasure in providing the semi annual report for theProsperity Voskhod Fund ("PVF") covering the company's first half,that is January 1st to June 30th, 2009 - otherwise referred toherein as the "Period".During, and following on from, the Period the Russian stock markethas partly recovered from the bearish impediments of the economiccrisis of 2008 and well in line with the rebound in global stockmarkets. After reaching a low of 498 in late January, the RTS Indexrecovered to close the Period at 987 - up some 56% in the Period andsome 98% from the January 23rd low and, as at last night, stood at1242 - a gain for the year to date of 97% & 147% from the January lowpoint. In the Period PVF has gained 59% and 111% year to date. A fullreport from our manager is attached which provides detailedinformation on both the market as well as the individual holdings ofthe Fund.Over the past eighteen months, in line with the economic downturn,trading levels in the Russian market have reduced and possiblyrelatively more so in the special situation type investments held bythe Fund. Your Manager, working with the Board, has developed furtherthe valuation methodology for the portfolio which, in an effort tomaximise transparency, is set out in some detail within this report.Of benefit to the liquidity of the Fund has been the listing, lastweek and after the end of the Period, of its largest single holding,Transaero, that presently represents some 13% of assets of the Fund.This holding in Russia's second airline is now listed on RTS I - amarket somewhat equivalent to London's AIM and from where the priceis now sourced for valuation purposes.We thank all shareholders for their continuing support and lookforward to an improved market environment going forward.Yours very sincerelyJulian ReidChairman of Prosperity Voskhod Fund LimitedSeptember 25, 2009MANAGER'S REPORTDear Shareholders,As the credit crunch intensified, and the global economy lurched,2008 became the most financially volatile year since the Second WorldWar. Having weathered the storm well during the first half of lastyear, Russia was hit badly during the summer and fall of 2008 byfalling oil prices, perceived political risks linked to the Georgiaconflict and, following the collapse of Lehman Brothers in September,by the global "rush from risk".After a truly dreadful equity market in the 4Q08, the Russian marketsentiment has improved and we have recently seen a more solidrecovery. The recovery was initially led by blue-chip stocks, butsecond-tier stocks are now catching up. The net asset value ofProsperity Voskhod Fund (the "Fund" or "PVF") is up 83% year-to-dateas of 31 August 2009, though the Investment Manager (the "Manager")is mindful that PVF is still down 31% since inception.Fund UpdateDuring H109, the Manager stuck to the Fund's broad investmentprinciples - pursuing a research-driven, unlevered, "fundamentalvalue" investment strategy. The strategy maintained its focus onfirms benefiting from the on-going restructuring and consolidation,with exposure primarily to small/mid cap companies. PVF continuedfocus on restructuring and consolidation opportunities caused it tolag the initial recovery this year. However, the interest in lessliquid stocks has improved and PVF gained 59% during the first halfof 2009 and, by the end of August, was up 83% year-to-date. The RTSindex rose 56% and 69% respectively during the same periods.More importantly, PVF continues to hold unimpaired and fundamentallyvaluable assets and the Manager is fully focused on enhancing andrealising such values. We continue to be an active shareholder inmany of the Fund's portfolio companies. We hold regular meetings withmanagement and remain in regular contact with regulators andauthorities.Trading in PVF shares has been sporadic, not least since the marketcollapse in September 2008. PVF was initially placed with mainlylarge institutional clients and continues to be closely held. TheManager has proactively developed the monthly factsheet format toinclude more relevant Fund information. The Manager is also workingto distribute Fund information more widely and is in regular contactwith the appointed broker. We will continue pursuing such efforts, inparticular as the market has now started to recover. We are thoughmindful that liquidity could also be created by other means, forexample through combining PVF with other assets to enhance the sizeand investor base. The Manager will communicate with Shareholders asfurther steps are considered.PVF has not made any significant investment or divestment in thefirst half of 2009, though we have continued to take advantage ofsome strategic buying interest. In such a way we sold all of theFund's position in RITEK ($6.8m), Kaluga Turbine Plant ($1.8m) andKondopoga Paper Mill ($1.2m). PVF mainly used the proceeds toincrease its positions in the Bashkirian energy complex, buyingBashneft common and preferred shares, Bashkirenergo, Ufa and Novoil.The purchase of Bashneft preferred shares accounted for most of theadditions. Bashkirian energy complex consists of upstream oilproducer Bashneft, three refineries, one petrochemical plan, aregional petrol retailer and an integrated power utility,Bashkirenergo. All of them used to be controlled by the local rulingfamily, acquired in a less-than-transparent privatisation process.The Federal authorities contested the ownership title in courts andin early 2009, a large financial group, Sistema, purchased thecontrolling stake in the Bashkirian energy complex. The Managerexpects Sistema, a professional Russian investment company, tosubstantially enhance operations, profitability and market valuationsof the Bashkirian companies. Manager-controlled funds are combinedthe second largest investor after Sistema, owning approximately 14%of Bashkirenergo and 10% of Bashneft.More generally in the electricity market, year-on-year electricitydemand was down 7 percent in 1H2009. The Manager expects the demandto stabilise in the third quarter and recover in the fourth quarter.It is also encouraging that the government, despite a "perfect storm"of a financial crisis, has stood by the pre-agreed liberalisation ofgeneration tariffs. Freely traded electricity was expanded to 50percent of output on 1 July 2009 and will be expanded to 100 percentin steps up to the end of 2010. The authorities have also implementedreasonable increases in regulated tariffs in 2009, keeping pace withincreases in gas tariffs. We have also seen how generation companiesand authorities have had a constructive dialogue on revisedinvestment plans in light of lower demand. It is now evident that thegeneration companies are revising down green-field investments andmaximising brown-field opportunities.The oil and gas sector has recovered well as crude averaged almost$72/barrel during June, while the cost base decreased as the rublestabilised after a 30% depreciation. For the last seven months, theruble basket has oscillated between a relatively narrow range of 36.5to 41. The Russian oil and gas companies have hence reinforced theirposition as competitive low-cost producers, with break-even wellbelow $20/bbl.In 2009, PVF has built a 2.2% stake in Dixy Group, bringing theoverall holding by Manager-controlled funds to 15% of the Company.The Manager has a seat on the Board of Directors, which we in thepast have found important to understand the underlying business andto actively promote better corporate governance. You should be awarethat the Manager is also represented on the Board of Directors ofMagnit, a competing food retailer. The representative from theManager is different for the two companies and we have strictpolicies for disclosure of material information to the market in atimely manner.Dixy Group is the third largest discount food retailer in Russia,with close to $2bn in sales. The company operates over 450 leased andowned stores in residential areas of large and medium-sized cities inCentral and North-West Russia and the Urals. The Manager sees upsideto current profitability when compared to market leader Magnit.Valuations are also attractive given the structural undersupply ofmodern retailing in Russia, the significant growth potential forretail-space and likely further consolidation in the sector.PVF also purchased Surgutneftegaz (preferred shares) as a second newposition for the Fund in 2009. The Manager hence put cash receivedfrom strategic sales to work in a reasonably liquid stock at very lowvaluation, while waiting for opportunities to buy larger blocks inrestructuring companies to present themselves.The largest holdings in PVF, beside the Bashkirian energy complex,are Transaero and Mostotrest. Transaero has over the last 3 yearsbecome the second largest airline in Russia. Revenues declined in2009 but the airline continues to take market shares andprofitability is holding up well. The management of Transaero remainscommitted to an IPO as soon as markets are more favourable. As anunlisted company, PVF value the stock at same multiples as listedpeers, but with a liquidity discount.Despite the sharp contraction in economic activity, not least in theconstruction industry, Mostotrest has largely preserved its orderbook and has profited from cheaper input prices. Mostotrest showingsignificant margin expansion in 1H2009 and the Manager expects thecompany to further benefit from increased government spending oninfrastructure in the next few years.Overall, the Manager expects most of PVF's small and mid-cap stocksto be re-rated if the Russian market continues to recover andliquidity improves. It is also pleasing to note that while the Fundhas not traded frequently on AIM, the discount is much narrower thanfor many other traded emerging market funds. The Manager willcontinue to work with appointed broker to improve liquidity in theFund.Market and Economy UpdateDuring 2008 as a whole, the Russian economy grew 5.6% - but much ofthat growth took place during the first six months. After prolongedbouts of "forced selling", as leveraged portfolio investors struggledto meet margin calls and offloaded shares into a falling market, theRTS ended 2008 down 73%, the first annual drop in eight years.Not surprisingly, this sentiment spilt over into 2009 as the globaloutlook remained gloomy. During the first quarter of this year, theRTS was relatively flat, oscillating within a 500-650 point corridor(compared to its 2,488 peak in May 2008). Share prices languished atmultiples that, for the most part, remained well below "fundamentalvalue". By the end of March, though, as commodity prices began torecover, the RTS was up 10% year-to-date.During Q109 especially, currency fears and a lack of bank lendingstarved firms of liquidity, causing double-digit percentage drops inindustrial production and investment. During March, real GDP was 9.5%lower than it was during the same month the year before. Strong GDPgrowth during the first half of 2008 meant that annual GDP numberscontinued to be weighed-down by "adverse base" effects during thesecond quarter of 2009 as well, even as economic activity began torecover.In recent months, though, ultra-low valuations, and genuine signs theeconomy is through the worst, have seen renewed investor interestacross a range of sectors. In April and May, for instance, the RTSrose 22% and 31% respectively as the Russian economy began tostabilise and domestic investors (for the most part) started toreturn to the market.Crucial to the strong performance of the Russian market during H109has been the Central Bank of Russia's (the "CBR") management of theruble. On January 22nd 2009, the authorities announced they woulddefend the currency within a band of between 26 and 41 against thecombined dollar-euro basket. While this announcement was greeted withderision from some quarters, the new ruble band has held firm - and,as of the end of June, the currency stood at 36.8 to the basket. From$386bn in January, CBR reserves grew during H109 to $412bn (theworld's third largest haul). Crucially, bank deposits have alsoincreased in recent months - as the general population switches backinto rubles, amidst a growing belief the domestic currency is "safe"once more. Such stability - if sustained - is likely to be positivefor Russian asset prices, as currency concerns - which were legionlast autumn and winter - feature less prominently in assessments ofinvestment risk.In the coming months, Russia should benefit from strongcommodity-prices, recovering global demand (from other emergingmarkets, at least) and a 30% depreciation of the ruble since lastsummer, not to mention a sizeable fiscal boost. At the same time, CBRhas lowered its main interest rate five times since April, in a bidto stimulate bank lending. The most recent cut in mid-September sawrates fall to 10.5%. Further reductions could happen before the endof the year.During Q408 and Q109, it is no exaggeration to say that Russia'scurrency went through severe volatility, with oil prices falling from$147 all the way down to below $40 in February and the world'scurrency markets smelling blood as the country's economy stalled.During Q209 though, and into this autumn, the fact that the currencystabilised, and households and companies didn't lose any of theirbank deposits, has significantly enhanced the credibility - both athome and abroad - of Russia's central bank. The Manager views this asa significant positive development.Looking ForwardIt is the belief of the Manager that global macroeconomic trendscould bode well for Russian asset prices in the months and years tocome. Given on-going currency stability, and the continued recoveryof the domestic economy, the market could not only attract moredomestic money but also enjoy more inflows from abroad - not leastdue to low economy-wide leverage and the country's abundance of realassets.Both these factors - Russia's relatively low household, corporate andsovereign debt service, and its enviable stock of tangible assetsshould prove increasingly attractive as the Western world"de-leverages" and Western central banks undermine faith inpaper-based fiat currencies with so-called "quantitative easing". Thedrop in the value of the ruble should also provide Russia with asignificant competitive boost as global investors retain some oftheir risk appetite and begin, once again, to search for yield.Despite recent signs of recovery, the economic situation ismaterially different from a year ago - and, even if the economysurges during the second half of 2009, GDP for the year as a wholewill certainly contract. Having said that, most forecasters arepredicting growth of 3-5% next year. In the meantime, while Russiafaces economic challenges, many firms remain in a situation whererestructuring and consolidation can lead to enhanced profitabilityeven in a low-growth environment. The assets owned by the Fund are,for the most part, unimpaired and continue to trade at extremely lowvaluations by any measure.ConclusionPVF's performance during 2008 was obviously disappointing. As aresult of last year's fall in Russian assets prices, as of the end ofAugust the Fund's NAV remained 31% below its price at the time of itsinception. Having said that, the Fund's 2009 performance has beenpromising and the Manager expects the fundamental value of ourportfolio companies to rise as the Russian market continues torecover - and, once again, attracts the attention of significantmoney from overseas portfolio investors.Given that the RTS is still trading at one of the lowest valuation ofany major stock index in the world - and small- and mid-cap stockssuch as those targeted by PVF at even lower multiples - we feel theFund remains extremely good value.Please rest assured that the Manager will continue to work hard forFund shareholders throughout the rest of 2009 and into the new year.We will maintain our established channels of communication - throughour monthly performance reports, PCM newsletters and investorconference calls. We are fully focused on realising the value of ourholdings and will continue to be an "active" investor - doingeverything we can to guard against poor corporate governance.KEY INVESTMENTS (as at 30 June 2009)Transaero (12.9% of net assets) * Transaero has over the last 3 years advanced from the 5th to the 2nd largest Russian airline and its revenue nearly tripled to $1.5 bn. In 2009, the Manager expects Transaero revenues to drop in USD terms to $1.2bn as the passenger traffic drops world-wide in response to the economic crisis. However, as the jet fuel prices have dropped since 2008, profitability will be maintained. Transaero's management is committed to an IPO that would likely be conducted as soon as markets are conducive. On 15 September 2009, the shares of the largest holding of the Group, Transaero, were listed and began trading on the RTS Board. Going forward, if an active market for these shares continues, the investment will be valued using market information from this exchange.Bashkirenergo (12.1% of net assets) * A 4,600 MW capacity integrated power utility in the region of Bashkiria. The company trades at a significant discount to its Russian peers on capacity valuation and has a 2010E P/E of only 3.7x. The stock has risen over 200% so far in 2009 following the purchase of a majority control of the Bashkirian energy assets, including Bashkirenergo, by Sistema Holding. This is seen as a positive catalyst for the company's development and Sistema's capital market credentials should raise Bashkirenergo's profile with international investors. We see further potential upside coming from unbundling and new ownership so as to eliminate the significant discount to the value of the component assets.Mostotrest (9.5% of net assets) * Russia's largest bridge construction company with core operations in Moscow has benefited from the high priority given to road decongestion efforts by the Moscow government. This holding has performed well with the share price rising 60% in May. The release of 1H2009 results showed that although top line revenue decreased in USD terms, profitability increased significantly, mainly due to lower steel and cement prices. Despite a decline in economic activity, the company has managed to preserve its order book. The Manager expects that Mostotrest will consolidate a larger market share in its business which will boost the management's IPO plans after capital markets re-open. Currently the shares trade at P/E of 6 which should increase when the company goes through a secondary listing and as earnings grow.Center Telecom (8.8% of net assets - now sold)Bashneft (7.9% of net assets) * Bashneft is a medium-sized upstream oil company with 90 million bbl annual production. It is the cheapest oil company in the Russian universe trading at 2009E P/E 3 (for preferred shares). The stock has appreciated in 2009 as Sistema has taken a majority stake (also see Bashkirenergo above) but the Manager expects that Bashneft multiples will expand further as the new owner improves operations.Kuzocm (7.8% of net assets) * The Fund holds a 10% stake in this leading Russian manufacturer of copper and aluminum alloys. The global financial crisis has delayed plans for an IPO, and instead the management has had to focus on restructuring and cost optimisation in order to break even in 2009. The Manager expects Kuzocm to gain market share after recovering from the crisis at the expense of weaker competition and lower multiples should help reopen the IPO process.Kuzbassrazrezugol (6.0% of assets) * Russia's second-largest coal producer with 45 million tonnes extracted in 2008, is currently trading at a P/E of 5 and is highly geared to any coal price appreciation (average 2008 coal price was $150/t). With China being the world largest consumer of thermal coal, an upward pressure on the Chinese currency vis-à-vis the US Dollar could pave the way for structural appreciation of global coal prices.Sevzapelektrosetstroy (4.3% of net assets) * Sevzapelektrosetstroy specialises in the construction of power transmission lines all over Russia. The holding private owners have a plan to consolidate the business structure and conduct a secondary listing as soon as the market conditions are conducive. In the meantime the low valuation of Sevzapelectrosetstroy (2009E P/E 6) provides for share price appreciation as international investors become more familiar with the company.Dixy Group (4.1% of net assets - new) * Dixy Group is the third largest discount food retailer in Russia with $1.9bn sales (+34% YoY in 2008). The company operates over 450 leased (70%) and owned (30%) stores in residential areas of large and small cities in Central Russia, the North-West and in the Urals. We see an upside to profitability relative to the peer group and view the valuation as attractive given structural undersupply of modern retail in Russia and significant space growth potential.Surgutneftegaz (3.2% of net assets - new) * Surgutneftegaz is Russia's fourth largest integrated oil company with production of 450 million barrels and refining capacity of 125 million barrels in 2008. At the time of the purchase, Surgutneftegaz' capitalisation at preferred share price was $10bn compared with an estimated $18bn cash position. At the same time, the shares traded at estimated 2009 P/E of 2.5 and 16% expected yield.PORTFOLIO STATISTICS (at 30 June 2009)Top Positions+----------------------------------------------+| | % of | || Name | Net Assets | US$ Mln ||-----------------------+------------+---------|| Transaero | 12.9% | 18.6 ||-----------------------+------------+---------|| Bashkirenergo | 12.1% | 17.4 ||-----------------------+------------+---------|| Mostotrest | 9.5% | 13.7 ||-----------------------+------------+---------|| Center Telecom | 8.8% | 12.7 ||-----------------------+------------+---------|| Bashneft | 7.9% | 11.4 ||-----------------------+------------+---------|| Kuzocm | 7.8% | 11.3 ||-----------------------+------------+---------|| Kuzbassrazrezugol | 6.0% | 8.6 ||-----------------------+------------+---------|| Sevzapelektrosetstroy | 4.3% | 6.2 ||-----------------------+------------+---------|| Dixy Group | 4.1% | 5.9 ||-----------------------+------------+---------|| Surgutneftegaz | 3.2% | 4.6 ||-----------------------+------------+---------|| | 76.6% | 110.4 |+----------------------------------------------+Sector allocation+-------------------------------------------+| | % of | || Sector | Net Assets | US$ Mln ||--------------------+------------+---------|| Cyclical | 25.0% | 35.9 ||--------------------+------------+---------|| Oil & Gas | 17.0% | 24.5 ||--------------------+------------+---------|| Power | 15.1% | 21.7 ||--------------------+------------+---------|| Transport | 12.9% | 18.6 ||--------------------+------------+---------|| Engineering | 9.6% | 13.8 ||--------------------+------------+---------|| Telecommunications | 8.8% | 12.7 ||--------------------+------------+---------|| Consumer Goods | 8.0% | 11.5 ||--------------------+------------+---------|| Financials | 1.3% | 1.8 ||--------------------+------------+---------|| Media | 0.0% | 0.1 ||--------------------+------------+---------|| | 97.7% | 140.6 |+-------------------------------------------+Prosperity Capital Management LimitedGrand CaymanSeptember 2009Consolidated Supplemental Schedule of Investments (unaudited)As at 30 June 2009(All amounts stated in United States Dollars)Level* Description Fair % Net Value Asset Value Consumer Goods 1 DIXY Group 5,852,813 4.07% 2 Belorechenskoe 3,965,540 2.75% 1 Voronezhskaya Konditerskaya Fabrika 146,250 0.10% 1 Rot Front Confectionary 190,710 0.13% 1 Dalkhimpharm 140,575 0.10% 1 Bryansk Dairy Factory 684,414 0.48% 2 Bryansk Dairy Factory (pref) 344,062 0.24% 1 Kraspharma 87,205 0.06% 1 Yasnaya Polyana Confectionery 90,525 0.06% 2 Tambov Confectionary 35,763 0.02% 11,537,857 8.01% Cyclical 1 Gaisky GOK 1,090,525 0.76% 1 Uchalinski GOK 169,150 0.12% 1 Mostotrest 13,704,990 9.52% 1 Kuzbassrazrezugol 8,583,000 5.96% 1 Krasnoyarsknefteproduct (pref) 313,169 0.22% 1 Urgalugol 12,906 0.01% 1 Urgalugol (pref) 23,029 0.01% 1 Solombala CBK (pref) 443,332 0.31% 1 Solombala CBK 163,222 0.11% 1 Electrozinc 133,746 0.09% 3 Kuzocm 11,285,656 7.84% 35,922,725 24.95% Engineering 2 Clubhouse Group GDR 374,488 0.26% 1 GAZ (pref) 92,281 0.06% 1 Sevzapelektrosetstroy 6,203,925 4.32% 2 Trest Prikaspiyelectrosetstroy 223,680 0.16% 1 Spetssetstroy 1,540,013 1.07% 1 Urengoytruboprovodstroy 506,910 0.35% 1 Promtractor 206,717 0.14% 1 Promtractor (pref) 83,850 0.06% 1 Tvervagonzavod 70,200 0.05% 1 Dolgoprudnenskoe NPO 31,688 0.02% 1 Krasny Kotelshchik (pref) 312,779 0.22% 1 NPO ELSIB 273,390 0.19% 1 Kurganmashzavodt (pref) 35,724 0.02% 1 Novgorodsetstroy 191,769 0.13% 1 Cheboksary Aggregatny Plant 1,070,111 0.74% 1 Altaivagonzavod 105,485 0.07% 1 Energospetsmontazh 774,540 0.54% 2 MKS Group (Evkin) 978 - 2 Yasinovatsky Machine GDR 180,253 0.13% 1 Yuzhtruboprovodstroy 1,508,071 1.05% 13,786,852 9.58%* See note 12, financial risk management - valuation of financialinstruments, for details regarding the fair value levels.Level* Description Fair Value % Net Asset Value Financials 1 Alliance Bank JSC 1,838,809 1.28% 2 Oranta Insurance 6,025 - 1,844,834 1.28% Media 1 IMSG 52,277 0.04% 52,277 0.04% Oil & Gas 1 Saratov Kreking (pref) 530,339 0.37% 1 Volgogradgorgaz 270,014 0.19% 1 Ufa NPZ (pref) 169,601 0.12% 1 Ufa NPZ 154,050 0.11% 1 Volgogradoblgaz 862,875 0.60% 1 Saratovolgaz 1,130,500 0.79% 1 Ufaorgsintes (pref) 85,313 0.06% 1 Surgutneftegas (pref) 4,612,975 3.20% 1 Bashneft (pref) 7,793,252 5.41% 1 Bashneft 3,627,141 2.51% 1 Ufaneftehim (pref) 4,090,881 2.84% 1 TNK-BP Holding (pref) 1,093,750 0.76% 1 Novoil (pref) 40,463 0.03% 24,461,154 16.99% Power 1 TGK-9 318,284 0.22% 1 TGK-7 218,976 0.15% 1 Bashkirenergo (pref) 134,407 0.09% 1 Bashkirenergo 17,301,927 12.02% 1 Donbasenergo (Ukr) 279,793 0.19% 1 Centerenergo (Ukr) 1,278,554 0.89% 1 Centerenergo ADR 764,200 0.53% 1 Oblkommunenergo 388,901 0.27% 2 Tsukrovyy Soys Ukrros 22,845 0.02% 2 Anthausa GDR 944,917 0.66% 1 Oblkommunenergo (pref) 7,659 0.01% 21,660,463 15.05% Telecommunications 1 Centretelecom (pref) 443,591 0.31% 1 Centretelecom 12,251,570 8.51% 1 Dalsvyaz (pref) 28,758 0.02% 12,723,919 8.84% Transport 3 Transaero 18,600,223 12.92% 1 Sibir Airlines 3,023 - 2 Omskavia - - 18,603,246 12.92% TOTAL INVESTMENTS 140,593,327 97.66%* See note 12, financial risk management - valuation of financialinstruments, for details regarding the fair value levels. 30 June 2009 31 December 2008 % of restated % of net netDescription Cost Fair Value assets[1] Cost Fair Value assets[2]Analysis of securities byindustry:Consumer Goods 8,155,054 11,537,857 8.01% 5,630,674 6,211,104 6.63%Cyclical 52,535,318 35,922,725 24.95% 55,059,298 27,264,163 29.09%Engineering 48,421,540 13,786,852 9.58% 50,934,823 15,729,824 16.78%Financials 3,956,425 1,844,834 1.28% 3,293,808 1,321,296 1.41%Media 34,751 52,277 0.04% - - -Oil & Gas 37,478,338 24,461,154 16.99% 54,806,480 11,428,791 12.19%Power 42,929,528 21,660,463 15.05% 42,967,148 8,428,087 8.99%Telecommunications 32,183,749 12,723,919 8.84% 31,982,069 5,185,913 5.53%Transport 17,631,310 18,603,246 12.92% 17,631,310 13,128,570 14.01% 243,326,013 140,593,327 97.66% 262,305,610 88,697,748 94.63%Concentration of investments:As at 30 June 2009, the Group invested in certain companies which hadfair market values that were individually in excess of 5% of netassets. These companies are identified in the schedule below: 30 June 2009 31 December 2008 % of Fair % of net Fair restated Value assets[1] Value net assets[2]Transaero 18,600,223 12.92% 13,125,159 14.00%Bashkirenergo 17,436,333 12.11% 5,694,784 6.08%Mostotrest 13,704,990 9.52% 11,135,304 11.88%Centre Telecom 12,695,161 8.82% 5,185,913 5.53%Bashneft 11,420,394 7.93% - -Kuzocm 11,285,655 7.84% 8,341,571 8.90%Kuzbassraz Coal Co 8,583,000 5.96% 5,251,810 5.60% 93,725,756 65.10% 48,734,541 51.99%[1] Except as otherwise expressly indicated, the term "net assets"(total assets less total liabilities) as used in the financialstatements refers to net assets as determined in accordance withInternational Financial Reporting Standards (IFRS) and as reflectedon the Consolidated Statement of Financial Position.[2] As detailed in note 2 "Dividend income", the Group changed itsaccounting policy in relation to dividends during the period. Thiswas considered to have a material effect on the prior period resultsand therefore it was necessary to restate the comparative figures inthe financial statements. 30 June 2009 31 December 2008 % of % of restated Fair net Fair netDescription Cost Value assets[1] Cost Value assets[2]Analysis of securities:Nonexchangetradedfinancialinstruments 35,895,863 30,680,093 21.31% 19,322,991 14,164,174 15.11%Exchangetradedfinancialinstruments 207,430,150 109,913,234 76.35% 242,982,619 74,533,574 79.52% 243,326,013 140,593,327 97.66% 262,305,610 88,697,748 94.63%See note 5 regarding the Company's policy with respect to determiningthe fair value of investments.[1] Except as otherwise expressly indicated, the term "net assets"(total assets less total liabilities) as used in the financialstatements refers to net assets as determined in accordance withInternational Financial Reporting Standards (IFRS) and as reflectedon the Consolidated Statement of Financial Position.[2] As detailed in note 2 "Dividend income", the Group changed itsaccounting policy in relation to dividends during the period. Thiswas considered to have a material effect on the prior period resultsand therefore it was necessary to restate the comparative figures inthe financial statements.Consolidated Statement of Comprehensive Income (unaudited)For the six months ended 30 June 2009(All amounts stated in United States Dollars) Note Six months Restated ended Six months ended 30 June 2009 30 June 2008 US$ US$Investment incomeIncome 3 3,551,616 5,901,153Net gain on investmentsdesignated at fair value through 18,762,706profit or loss upon initialrecognition 4 48,490,765Net foreign exchange (loss)/gain (8,231) 1,374Total operating income 52,034,150 24,665,233Operating expenses 11 (1,539,771) (7,008,840)Total comprehensive income 17,656,393before finance costs 50,494,379Finance costsWithholding tax (267,469) (713,842)Total finance costs (267,469) (713,842)Total comprehensive income for 16,942,551the period 50,226,910Earnings per ordinary shareBasic & Diluted 7 US$0.20 US$0.07Weighted average ordinary sharesoutstanding Number NumberBasic & Diluted 250,000,000 250,000,000All items in the above statement are derived from continuingoperations.All income is attributable to the ordinary shareholders of theCompany.The accompanying notes form an integral part of the financialstatements.Consolidated Statement of Changes in Equity (unaudited)For the six months ended 30 June 2009(All amounts stated in United States Dollars) **Restated Ordinary Share Share Other Retained **Restated shares capital premium reserve earnings Total Number US$ US$ US$ US$ US$Balance at 31December2007, asoriginallystated 250,000,000 2,500,000 122,481,362 119,656,354 96,577,978 341,215,694Effect ofprior yearadjustment onopeningreserves - - - - 35,445 35,445Balance at 31December2007, asrestated 250,000,000 2,500,000 122,481,362 119,656,354 96,613,423 341,251,139Totalcomprehensiveincome forthe period,as restated - - - - 16,942,551 16,942,551Balance at 30June 2008* 250,000,000 2,500,000 122,481,362 119,656,354 113,555,974 358,193,690Balance at 31December2008, asrestated 250,000,000 2,500,000 122,481,362 119,656,354 (150,902,481) 93,735,235Totalcomprehensiveincome forthe period - - - - 50,226,910 50,226,910Balance at 30June 2009 250,000,000 2,500,000 122,481,362 119,656,354 (100,675,571) 143,962,145The accompanying notes form an integral part of the financialstatements.* In line with IAS 34, the comparative period for the ConsolidatedStatement of Changes in Equity is the six months ended 30 June 2008.The balance at that period end will not equate to the balance at 31December 2008, the date of the comparative Consolidated Statement ofFinancial Position.** As detailed in note 2 "Dividend income", the Group changed itsaccounting policy in relation to dividends during the period. Thishad the effect of increasing the dividends recognised in the yearended 31 December 2007, the 6 month-period ended 30 June 2008 and theyear ended 31 December 2008 as detailed in note 2.Consolidated Statement of Financial Position (unaudited)As at 30 June 2009(All amounts stated in United States Dollars) Restated Restated Note 30 June 2009 31 December 31 December 2008 2007 US$ US$ US$AssetsFinancial assets at fairvalue through profit or 5 140,593,327 88,697,748 340,191,246lossCash 6 1,099,466 1,256,190 27,117,147Dividends receivable 3,046,995 2,767,211 798,248Amounts receivable on 2,122,447 -investments sold 66,375Interest receivable - - 15,135Total assets 144,806,163 94,843,596 368,121,776LiabilitiesAccrued expenses 11 816,266 1,106,311 2,130,424Amounts payable on 2,050 24,740,213investments purchased 27,752Total liabilities 844,018 1,108,361 26,870,637Net assets 143,962,145 93,735,235 341,251,139EquityShare capital 8 2,500,000 2,500,000 2,500,000Share premium 9 122,481,362 122,481,362 122,481,362Other reserve 119,656,354 119,656,354 119,656,354Net (deficit)/surplus (100,675,571) (150,902,481) 96,613,423Equity attributable to 93,735,235 341,251,139equity holders 143,962,145These consolidated financial statements were approved by the Board ofDirectors on 29 September 2009.Signed on behalf of the Board of Directors by:A.A. Hall R. PhillipsDirector DirectorThe accompanying notes form an integral part of the financialstatements.Consolidated Statement of Cash Flows (unaudited)For the six months ended 30 June 2009(All amounts stated in United States Dollars) Restated Note Six months ended Six months ended 30 June 2009 30 June 2008 US$ US$Operating activitiesTotal comprehensive income 50,226,910 16,942,551Adjustments for:Changes in unrealised gains 4on investments (70,875,176) (17,738,206)Realised loss/(gain) on 4investments 22,384,411 (1,024,500) 1,736,145 (1,820,155)Increase in receivables (279,784) (3,444,215)(Decrease)/increase in payables (290,045) 3,275,276Cash used in operations (569,829) (168,939) Cash flows provided by/(used) in operating activities 1,166,316 (1,989,094)Cash flows from investingactivitiesPurchases of investments (19,308,589) (25,323,811)Proceeds from sale ofinvestments 17,985,549 229,614Cash flows used in investingactivities (1,323,040) (25,094,197)Net decrease in cash (156,724) (27,083,291)Cash at beginning of period 1,256,190 27,117,147Cash at end of period 1,099,466 33,856Supplementary informationInterest received 1,152 53,006Dividends received 3,024,675 2,184,884The accompanying notes form an integral part of the financialstatements.Notes to the Consolidated Financial Statements (unaudited)1. Organisation and structureProsperity Voskhod Fund Limited (the "Company") was registered on 31August 2006 with registered number 45426, is domiciled in Guernsey,Channel Islands, and commenced its operations on 6 October 2006. TheCompany is a closed-ended investment company incorporated in Guernseywith limited liability under the Companies Law of Guernsey (the"Companies Law"), and its ordinary shares are listed on theAlternative Investment Market ("AIM") of the London Stock Exchange.The registered office of the Company is Dorey Court, Admiral Park,St. Peter Port, Guernsey GY1 3BG, Channel Islands. "Group" is definedas the Company and its subsidiary, Faendo Limited.The Group's investment objective is to achieve capital growth byinvesting in a portfolio of securities involved in the corporaterestructuring and consolidation which are expected to take place inRussia and other NIS (Newly Independent States) countries. The Groupwill invest primarily in small and medium-sized companies, with theaim of being an active and influential minority shareholder.The Group will invest at least 75% of its gross assets in thesecurities of companies established or having their principaloperations in Russia. The Group may invest up to 25% of its grossassets in the securities of companies established or having theirprincipal operations in NIS countries other than Russia, which theCompany expects to be the Ukraine and Kazakhstan, however, the Groupmay, within such limitation and on an opportunistic basis, invest inthe securities of companies established or having their principaloperations in other NIS countries. The Group may not invest more than25% of its gross assets in the securities of companies not listed ona recognised stock exchange or traded on a recognised OTC securitiesmarket.The Group's investment management activities are managed by itsmanager, Prosperity Capital Management Limited (the "Manager"). Itwas incorporated with limited liability and registered as an exemptedcompany under the laws of the Cayman Islands. The Group has enteredinto a management agreement (the "Management Agreement") under whichthe Manager, subject to the overall supervision and control of theDirectors, has responsibility for identifying, analysing, timing andmaking the Group's investments, as well as monitoring and disposingof such investments. The Manager will assist and advise the Directorsif required with the valuation of the Group's assets generally. Underthe terms of the Management Agreement, the Company has agreed to paythe Manager management and performance fees. Refer to note 11 forfurther detail. The Company is administered by Kleinwort Benson(Channel Islands) Fund Services Limited (the "Administrator").Investors Fund Services (Ireland) Limited (IFSIL) provides certainadministration services to the Group under a sub-administrationagreement between IFSIL, the Administrator and the Group. Thissub-administration agreement was novated from Investors Fund Services(Ireland) Limited (IFSIL) to State Street Fund Services (Ireland)Limited on 17 July 2009.The Company owns 100% of the share capital of Faendo Limited, aCyprus company. Faendo Limited is a subsidiary of the Company asProsperity Voskhod Fund Limited retains control over the companythrough its retention of all the risks and rewards of the assetstransferred to, or purchased from Faendo Limited.2. Significant accounting policiesStatement of complianceThese unaudited interim consolidated financial statements include theaccounts of the Company and its wholly owned subsidiary, FaendoLimited (the "Cyprus Subsidiary") (together "the Group") and areprepared in accordance with International Financial ReportingStandards ("IFRS") and interpretations approved by the InternationalAccounting Standards Board ("the IASB").Except as described overleaf, the principal accounting policiesapplied in the preparation of these consolidated financial statementsare consistent with those applicable for the annual audited financialstatements.Basis of preparationThe consolidated financial statements are presented in United StatesDollars which is the functional currency of the Group reflecting thefact that the Company's shares are issued and redeemed in UnitedStates Dollars and distributions to investors are also made in UnitedStates Dollars.Changes in accounting policyThe following new standards and amendments to standards are mandatoryfor the first time for the financial year beginning 1 January 2009.i IAS 1 (revised), 'Presentation of financial statements'. Therevised standard prohibits the presentation of items of income andexpenses (that is 'non-owner changes in equity') in the statement ofchanges in equity, requiring 'non-owner changes in equity' to bepresented separately from owner changes in equity. All 'non-ownerchanges in equity' are required to be shown in a performancestatement.Entities can choose whether to present one performance statement (thestatement of comprehensive income) or two statements (the incomestatement and statement of comprehensive income). The Company haselected to present one statement; a statement of comprehensiveincome. The interim financial statements have been prepared under therevised disclosure requirements. Since the change in accountingpolicy only impacts presentation aspects, there is no impact onearnings per share.ii On 30 November 2006, the International Accounting StandardsBoard issued IFRS 8, Operating Segments, which replaces IAS 14Segment Reporting. This puts an emphasis on the "management approach"to reporting on operating segments. It does not have any impact onthe interim financial statements of the Company.iii Amendment to IAS 32, Financial Instruments: Presentationclarifies under which circumstances puttable financial instrumentsand obligations arising on liquidation have to be treated as equityinstruments. The adoption of the amendment does not have asignificant impact on these financial statements.iv Amendment to IFRS 7, Financial Instruments: Disclosures wereissued by the IASB on 5 March 2009. The amendments require theinclusion of an explicit three-level fair value hierarchy whichgroups fair value measurements based on their observability andrequires numerical disclosure of fair values recognised in tabularformat organised by the level within each hierarchy.Use of estimates and judgementsThe preparation of consolidated financial statements in accordancewith the recognition and measurement principles of IFRS requiresmanagement to make judgements, estimates and assumptions that affectthe reported amounts of assets and liabilities and disclosure ofcontingent assets and liabilities at the date of the consolidatedfinancial statements and the reported amounts of income and expensesduring the period.The estimates and associated assumptions are based on historicalexperience and various other factors that are believed to bereasonable under the circumstances, the results of which form thebasis for making the judgements about carrying values of assets andliabilities that are not readily apparent from other sources. Actualresults could differ from those estimates.Basis of consolidationThe consolidated financial statements comprise of the financialstatements of the Company and the Cyprus Subsidiary for the sixmonths ended 30 June 2009. The Cyprus Subsidiary has beenconsolidated from the date on which control was transferred to theCompany and will cease to be consolidated from the date on whichcontrol is transferred from the Company. At 30 June 2009, the CyprusSubsidiary was the Company's only subsidiary.SubsidiaryThe Company expects to make the majority of its investments throughits Cyprus Subsidiary. The Russia/Cyprus double taxation treaty isexpected to provide for a reduced rate of Russian withholding tax ondistributions made by securities in the Group's portfolio.Financial instruments(i) ClassificationFinancial instruments designated at fair value through profit or lossupon initial recognition include investments in listed and unlistedequity instruments.All other assets are carried at amortised cost.Financial liabilities are carried at amortised cost.(ii) RecognitionThe Company recognises financial assets and financial liabilities onthe date it becomes party to the contractual provisions of theinstrument.Transactions are recognised using trade date accounting.(iii) MeasurementFinancial instruments are measured initially at fair value(transaction price). Transaction costs on financial assets designatedat fair value through profit or loss are expensed immediately.Subsequent to initial recognition, all financial instrumentsclassified at fair value through profit or loss are measured at fairvalue with changes in their fair value recognised in the consolidatedstatement of comprehensive income.All other assets and liabilities are carried at amortised cost.(iv) DerecognitionThe Group derecognises a financial asset when the contractual rightsto the flows from the financial asset expire or it transfers thefinancial asset and the transfer qualifies for derecognition inaccordance with IAS 39.The Group uses the First in - First out (FIFO) method to determinerealised gains and losses on financial asset derecognition.A financial liability is derecognised when the obligation specifiedin the contract is discharged, cancelled or expired.Foreign currency translationTransactions in foreign currency are translated into the functionalcurrency at the foreign exchange rate prevailing on the transactiondate. Monetary assets and liabilities denominated in foreigncurrencies at the statement of financial position date are translatedto United States Dollars at the foreign exchange rates ruling at thatdate. Non-monetary assets and liabilities denominated in foreigncurrencies that are stated at fair value are translated to thefunctional currency at the foreign exchange rates ruling at the datesthat the values were determined. Foreign exchange differencesarising on translation and realised gains and losses on disposals arerecognised in the consolidated statement of comprehensive income.Foreign exchange gains and losses on financial assets and financialliabilities at fair value through profit or loss are recognisedtogether with other changes in the fair value. Included in theconsolidated statement of comprehensive income line item net foreignexchange loss are net foreign exchange gains/(losses) on monetaryfinancial assets and financial liabilities other than thoseclassified at fair value through profit or loss.Interest incomeInterest income arises from cash deposits and is recognised in theconsolidated statement of comprehensive income by the Group using theeffective interest rate method on an accrual basis.Dividend incomeDividend income is recognised in the consolidated statement ofcomprehensive income on the later of the day the board of theinvestee company recommends the dividends and the ex-dividend date tothe shareholders for approval (where the board recommends anex-dividend date prior to the recommendation date); and theex-dividend date. In prior periods, dividend income was recognisedin the consolidated statement of comprehensive income on the approvaldate of the dividend. In accordance with IFRS 8, this represents achange in accounting policy. This change was applied as the Directorsconsidered that it was a more appropriate method of recognisingdividend income as it results in a more accurate net asset value.This change in accounting policy was considered to have a materialeffect on the prior period results and therefore it was necessary torestate the comparative figures in the financial statements. Inaddition, in accordance with IAS 1, the consolidated statement offinancial position as at 31 December 2007 is restated and ispresented in this report. The dividends being recognised in the yearended 31 December 2007, the 6 month-period ended 30 June 2008 and theyear ended 31 December 2008 increased as follows: 31 December 30 June 31 December 2007 2008 2008 US$ US$ US$Dividend income 41,700 1,460,329 3,019,984Withholding tax (6,255) (219,049) (452,998)Net dividend income 35,445 1,241,280 2,566,986In some cases, the Group may receive or choose to receive dividendsin the form of additional shares rather than cash. In such cases theGroup recognises the dividend income for the amount of the cashdividend alternative, with the corresponding debit treated as anadditional investment. Dividend income received by the Group may besubject to withholding tax imposed in the country of origin. Dividendincome is recorded gross of such taxes and the withholding tax isrecognised as a finance expense.ExpensesAll expenses are recognised in the consolidated statement ofcomprehensive income on an accrual basis.Capital expensesThe expenses of the Group directly attributable to the issuance ofshares are charged to the share premium account.3. Income Restated Six months Six months ended ended 30 June 2009 30 June 2008 US$ US$Interest income from cash 1,152 37,871Dividend income 3,550,464 5,863,282 3,551,616 5,901,1534. Gains and losses on investments designated at fairvalue through profit or loss upon initial recognition Six months ended Six months ended 30 June 2009 30 June 2008 US$ US$Net realised (loss)/gain (22,384,411) 1,024,500on investmentsNet unrealised gain on 70,875,176 17,738,206investments 48,490,765 18,762,7065. Investments in securities designated at fair value throughprofit or loss upon initial recognitionThe following is the Group's policy with respect to determining thefair value of investments:(i) At the reporting date, the fair value of exchange tradedfinancial instruments is based on quoted market prices traded inactive markets, without any deduction for estimated future sellingcosts. An active market exists if quoted prices are regularly andreadily available from an exchange, dealer, broker, industry group,pricing services or regulatory agency and those prices representactive and regularly occurring market transactions on an arm's lengthbasis. For financial instruments that are exchange traded and wherethe exchange has been determined to be the appropriate active marketfor these instruments, the quoted market price is based on the bidprice obtainable from either the Russian Trading Systems (RTS), theMoscow Interbank Currency Exchange (MICEX), the Ukrainian StockExchange (PFTS) or the Kazakhstan Stock Exchange (KASE). Thesesecurities fall into Level 1 of the fair value hierarchy as definedby IFRS 7 (see note 12).(ii) At the reporting date, the fair value of (a) non exchangetraded financial instruments and of (b) exchange traded financialinstruments where the exchange is not considered by the Directors tobe an appropriate active market for these instruments, are estimatedby the Manager using market information. The Administrator receivesconfirmation of almost all of these bid prices from independentbrokers. Where the Administrator does receive independentconfirmations of these prices, the securities fall into Level 2 ofthe fair value hierarchy as defined by IFRS 7 (see note 12).(iii) Where independent broker confirmations are not available fornon-exchange traded financial instruments, the Manager estimates thefair value of such financial instruments using common valuationtechniques. As these valuations incorporate some unobservable marketinformation these securities fall into Level 3 of the fair valuehierarchy as defined by IFRS 7 (see note 12).(iv) The values of assets or liabilities in currencies other thanUnited States Dollars are converted into United States Dollars at theprevailing market rate for such currencies at the close of businessin the local market as at the last available trading date in theperiod.In the absence of readily ascertainable market values for theunquoted investments and for certain listed securities which are notactively traded, the Board of Directors has approved the estimatedmarket values determined by the Investment Manager as an estimate ofthe amount that might reasonably be realised on their sale. Thismarket value determination was made after considering certainpertinent factors including the inherent worth of the security. Inaddition the Sub-Administrator has received independent confirmationfrom independent brokers that these prices correspond to fair value.However, because of the inherent uncertainty of valuation, theestimated values as detailed in (ii) and (iii) above, may differ fromthe values that would have been used had a ready market for theinvestments existed and the differences could be material. Thedetails are as follows: 30 June 2009 31 December 31 December 2008 2007 % of % of % ofFair market US$ Net US$ Net US$ Netvalues Assets Assets Assetsestimated bythe Managerinaccordancewith IFRSListed 8,098,055 5.63% 13,632,373 14.54% 18,254,747 5.35%securitiesUnlisted 30,680,093 21.31% 14,164,174 15.11% 28,180,095 8.26%securitiesTotal 38,778,148 26.94% 27,796,547 29.65% 46,434,842 13.61%The net unrealised loss on investments whose values were estimated bythe Investment Manager using market information is US$5,556,650 (31December 2008: net unrealised loss of US$28,290,493; 31 December2007: net unrealised gain of US$6,546,250).The Group invests in countries with limited and developing capitalmarkets. Investing in Russian and CIS securities involves risks notnormally associated with investing in more developed markets withpolitically and economically stable jurisdictions. These risksinclude political, economic and legal uncertainties, delays insettling portfolio transactions and the risk of loss due to Russia'sand the CIS underdeveloped systems for share registration andtransfer. The limited size of th
Datum: 30.09.2009 - 08:01 Uhr
Sprache: Deutsch
News-ID 6390
Anzahl Zeichen: 0
contact information:
Town:
London
Kategorie:
Business News
Diese Pressemitteilung wurde bisher 267 mal aufgerufen.
Die Pressemitteilung mit dem Titel:
"Half-yearly Results"
steht unter der journalistisch-redaktionellen Verantwortung von
Prosperity Voskhod Fund Limited (Nachricht senden)
Beachten Sie bitte die weiteren Informationen zum Haftungsauschluß (gemäß TMG - TeleMedianGesetz) und dem Datenschutz (gemäß der DSGVO).
