annual RepoRt · If by chance you are reading this nonsense when there are so many interesting...

2010

IFRS conSolIdated FInancIal StatementS

annual RepoRt

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2010 | annual Report | Statement of the ceo

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dear friends, colleagues and partners.

If by chance you are reading this nonsense when there are so many interesting texts and books out there, I beg your pardon for the style but let me be sincere.

Firstly, I would like to apologize for the delay of our annual report. We are still to consolidate several countries, but, of course, this does not excuse us.

We have turned three and here is our second annual report. I hasten to reply to the unspoken question, the first one hadn’t been prepared because of unfinished consolidation of the assets. What shall we say about the last year? Generally speaking, the same old stuff which won’t ever go down as symbolically in history as 1998 or 2008 did. It’s well known, that the years of great development rarely make it into history and 2010 does not belong to that kind, it can’t even be considered a year of moderate growth, but rather just another year of recovery after the crisis. perhaps, in the future the public will think of it as of the last chance to emancipate the world from complicated debt and inflationary problems, but the chance of this is futile. more likely, however, it will be completely forgotten.

Frankly speaking, the last year didn’t become something significant for us also. We are in the process of development and are confidently reaching for new heights. to be exact we have become #1 in the Russian bond market in terms of turnover, arranged our first transactions for private equity funds and have successfully passed the inspection of the Russian national Securities market association. Still, 2010 can’t be called the year of great breakthroughs and we did not obtain full satisfaction with the results, although, this probably won’t ever hap-pen, because there is always something to strive for, however banal this may seem. aforesaid might be considered as an official statement. Should you some day see a text bearing my signature indicating complete satisfaction, it would mean that either I’ve got old or it wasn’t written by me.

What is 2011 preparing for us? What shall we do, what shall we buy and what shall we focus on? this year will definitely not be easy. to say the truth, they promise an apocalypse in 2012, in comparison with which the rest is possibly a mere trifle, yet I cannot certainly know. Re-turning to the subject, it looks as if the sentiment is shifting from bonds towards shares. the reasons for this include: the promissory problems of europe (I do confess to writing this text in may 2011 and, please, do not consider me a prophet), as well as a giant hidden inflation in euro zone and in the uSa (What? You say 2%? apparently the people who calculated it have not been to a common store recently), commodity prices, the end of Qe2 and so on. people are looking for shelter from the money overhang in commodities and stocks. the bubble is inflat-ing rapidly. Gold is precariously expensive. Recent Ipos made by various internet companies evoke memories of something that was already witnessed in the beginning of 2000, and we remember only too well how it all ended up. on one hand, shorting this junk is not a recipe as the crowd’s sense of direction is unpredictable and, on the other hand, we can’t possibly bring ourselves to long it. that’s why the best solution is to decide in favor of the securities with clear fundamentals, relying on commodities.

It is common knowledge, that many (but not all) of Russian securities continue to look cheap. By the way, what an interesting paradox it is to consider them as undervalued ones and at the same time to be right nine times out of ten. even now in may, they are stalling on the begin-ning of the year levels. the bond situation is becoming less and less clear. We don’t expect a default to occur in Greece or any other member of the european union, though we can’t completely understand how they are going to repay. It looks as if the agony promises to be long. probably, the next step will be the printing of the euro, why make an effort when it’s

Statement of the Ceo

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already overvalued. according to the fundamental factors, american bonds cannot cost so much, but, for some reason, the whole world appears to be seeking a salvation in them. Just like children who are trying to hide themselves behind their mother’s skirt from a tsunami. Honestly, this was rather a flattering analogy for the americans. In brief, short selling is not clever, SInce tHeRe IS So mucH moneY at tHe maRKet. one big fund was shorting and now it’s shedding of a billion tears. people get what they deserve, this is what happens when somebody gets used to earning the so-called “easy money” and forgets all about the human ability of thinking. talking more on the “easy money”, the sheer cynicism and outrageous behavior of underwriters have reached its zenith. Good securities are distributed only among those belonging to the “in-group”. moreover, in case you are not a big client of the place-ments’ organizer, the total share which you may get will range between 0 and several per cent. perhaps, from a legal point of view, everything is covered up there, however, if it is not for the direct commissions, indirect hidden turnover commissions certainly exist and many, except the FSa, realize that. We deem that headline-making law suits are to follow, but probably it will not happen anytime soon.

the money-market increasingly resembles a battle of three cripples, which are: the uncontrol-lably printed dollar; the euro being torn apart by the inner problems, standing on the threshold of default; and, finally, the yen buried by the burden of debts and cherenkov’s radiation. Which one would we expect to conquer if we had to place a bet on them? – most probably the dollar will, but it’s better to keep away from any of them. there are other wonderful currencies such as the norwegian krone, Swiss franc, australian dollar and, at last, the rouble, which are quite reasonable to stake on.

as for our plans, we are full of ideas of how to perfect ourselves concerning infrastructure, risks, service and quality. the rest will come in due course.

Finally, it is always a pleasure for us to meet all our friends and partners. You are welcome to come to the opening of our new office, as soon as we finish the running repairs. It is needless to say that you are always welcome just to come by; we can always find something to discuss.

Yours sincerely,andrey Gaek

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Group imaGeoveRvIeW

pHIloSopHY and mISSIon

HIStoRY

SHaReHoldeRS StRuctuRe

GRoup StRuctuRe

team

ouR neW HeadQuaRteRS at KazaKova 23

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2010 | annual Report | Group image

RonIn partners was established in 2008 and by the middle of 2009 it has completed its consolidation stage. In 2010 it has created a new subsidiary – RonIn estate, and a new fund - Ron In comecon Fund. the group is now comprised of 8 companies and 3 funds.

RonIn partners is a group of ambitious and rapidly growing companies, providing investment services in Russia and worldwide. By the end of 2010 we have achieved top positions on the mIceX market operator’s rating (by volume). In December 2010 we were ranked 1st in overall bonds trading and 7th in total client’s trading volumes.

our core business segments are brokerage, private banking, financial advising, asset management, a wide variety of corporate finance services, such as assistance with m&a deals and debt financing.

We are very careful at choosing our clients as we focus merely on large net worth clients. over the year 2010 we have experienced an increase of the client base of over 57% compared to the year 2009. their combined

assets, held within our group, amounted to over 1.35 bil uSd. this policy proved to be successful as it maximized the efficiency of our company, and minimized reputation risks.

By the end of 2010 the group employed over 70 talented investment banking professionals. We are keen on automating the internal It systems in order to make an efficient use of our human resources. In 2010 we have automated the processing of trade confirmations from SWIFt messaging system with our back-office database turbo 9, made the client’s auto-reporting system, developed and implemented the front-office module, and made many more automation improvements.

our group trades financial instruments mainly on mIceX, RtS and otc. RonIn llc provides access for the group to the Russian organized markets, and otc deals are usually settled through RonIn europe.

We make otc trades with various Russian and International counterparties, such as merril lynch, credit Suisse, Goldman Sachs, vnesheconombank and many others.

overview

philoSophy and miSSion

ouR pHIloSopHYWe aim at achieving an outstanding competi-tive advantage in the financial industry, using our core competencies: » Specific, tailored solutions for each individual

client» professional team of analysts and experts

with strong analytical and mathematical background

» Believing that the most important factor of our success is the success of our clients.

ouR mISSIonto experience stable, profitable growth through increasing our client base via superior customer service, innovative solutions and di-verse range of services.

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2010 | Annual Report | Group image

History

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ShareholderS StruCture

Group StruCture

ronin partnerSBusiness entity

ronin llC (russia)

ronin truSt (russia)

ronin europe (Cyprus)

ronin finanCe (Bvi)

ronin man-aGement (Caymans)

ronin estate

Core business activity

Brokerage and corporate finance services

asset management

Brokerage and portfolio management

Financing the partners of the group

manages RonIn Geared Fund and RonIn all opportunities Fund

Responsible for the management of our office, and real estate projects of the group

Licenses licensed by FFmS

licensed by FFmS

licensed by cySec

no licenses,Registered by Registrar of companiesRegistration № 1527894

no licenses,Registered by assistant Registrar of companies,Registration № tB-211166

no licenses,Registered by the Federal tax authority of RussiaRegistration № 1107746671779

Membership mIceX,national Securities market association of Russia

national league of managing companies of Russia,national Securities market association of Russia

SWIFt,cyprus International Financial Services association

only key companies of our group are presented on this page, other related companies are not included as they do not play a significant role in the course of our business.

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team

vaSiliy fedorov•ManagingDirector•GraduatedfromMoscowStateUniversitywithaspecializationinappliedmathematics.Mr.FedorovisawinnerofmultipleannualawardsasthebesttraderandspecialistinvariousMBAnominations.•PriortojoiningtheGroupMr.FedorovwasresponsibleforsecuritiesmarketoperationsofNOMOS-Bank.•Mr.FedorovisresponsibleforfurtherbusinessdevelopmentoftheGroup.

alexander popov•ManagingDirector•GraduatedfromMoscowStateUniversityofEconomics,StatisticsandInformatics.In2000Mr.PopovreceivedanMBAqualificationdiplomafromUniversityofIllinoisatChicago,USA•PriortojoiningtheGroupMr.PopovwastheheadofM&AdepartmentofNOMOS-BANKandMoskommerzbank.•Mr.PopovisresponsiblefororiginatingandexecutingM&Atransactionsandmanagementofprivateequityinvestments.

alexey Gomin •ManagingDirector•GraduatedfromMoscowStateUniversitywithaspecializationinappliedmathematics.•In2004-2007Mr.GominmanagedthedivisionofforeignexchangetransactionsandcorporatefinancingofVTB24.•Mr.Gominisresponsiblefornewproductsdevelopmentandclientrelations.

andrey Gaek •ManagingPartner•GraduatedfromMoscowInstituteofPhysicsandTechnologywithaspecializationinappliedmathematics.•PriortocreatingtheGroupMr.Gaekwasresponsibleforinvestment-bankingbusinessinNOMOS-Bankduring15years.•Mr.GaekisresponsibleforleadingthestrategyofthebusinessdevelopmentoftheGroup.

yuliy Shleper•FinancialDirector•GraduatedfromtheFinanceAcademyundertheGovernmentoftheRussianFederationwithaspecializationininternationaleconomicrelations.•PriortojoiningtheGroupMr.ShleperworkedasthetreasurerforExtrobank,SantanderConsumerBankandGazenergoprombank.•Mr.ShleperisresponsibleforfinancialandtreasurymanagementwithintheGroup.

artiom delendik•ManagingDirector•GraduatedfromMoscowStateInstitueofForeignAffairswithaspecializationininternationaleconomicrelations.•PriortojoiningtheGroupMr.DelendikmanagedstructuraldevelopmentdivisioninNOMOS-Bank.•Mr.Delendikisresponsibleforcorporategovernancepoliciesandprocedures.

ivan Guminov•LeadingPortfolioManager•GraduatedfromMoscowInstituteofPhysicsandTechnologywithaspecializationinappliedphysicsandhasMaster’sdegreeinEconomicsfromStateUniversity-HigherSchoolofEconomics.•PriortojoiningtheGroupMr.GuminovheadedagroupofportfoliomanagersinNOMOS-Bank.•Mr.GuminovisresponsiblefortheportfoliomanagementwithintheGroup.

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In december 2010 we have moved our head-quarters to the complex office buildings, situated in the centre of moscow, at the 23 Kazakova Street. Ronin estate now runs everything related to the management of our office.

the complex is situated on the area of 2400 sq. meters and consists of 5 buildings. the front building was built in 1885 by a Russian merchant I. demin, the other buildings we completed by 1893. main structures of the complex have a neo-classical eclectic design and constitute an

the facade of our headquarters back in 1940.

the inner side of our new office.

Inside view of the front building.

element of the city’s historical environment.

We have great plans regarding the recon-struction of the complex. We plan to have a large vIp area in the main building done in a classical design, a modern working area for our employees, a relaxation zone consist-ing of gym, billiard room and recreation room; we even will have our own mini-hotel. all of this is done in order to achieve the most com-fortable and productive stay for our clients and partners and to create the best working conditions for our human resources.

our new headquarterS at kazakova 23

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2010 | annual Report | annual results

annual reSultSopeRatInG envIRonment

YeaR 2011 eXpectatIonS

GRoup FInancIalS

tRadInG volumeS

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operatinG environment in 2010

macRoeconomIcSeconomic environment in 2010 can be characterized as favorable for the functioning of Russian companies. Soft monetary and credit policy of the central Bank and State’s stimulation programme had a positive impact on Gdp. In 2010 the Gdp has demonstrated a growth of 4.0% in relation to the year 2009. the ministry of economic development of Russia forecasts the Gdp growth in 2011 to be 4.2%.

InFlatIonInflation in 2010 has kept at 2009 levels and amounted to 8.8%. excess growth of inflation was correlated with the increased government spending on stimulation programmes and the soft monetary and credit policy of the central Bank.

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FInancIal maRKetS envIRonment In 2010during 2010 the overall situation on the financial markets was favorable. the uSdRuB exchange rate was stable and fluctuated within a 10% corridor between 29-32 rub.

Rate oF ReFInancInGRate of refinancing was actively used in 2010 as an instrument of monetary and credit policy. Its decrease by 100 b.p. during the year from 8.75 to 7.75 has helped to stimulate lending, the growth of industrial production and the growth of Gdp.

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StocK maRKetthe dynamics of the mIceX stock index in the first 3 quarters was prevailing in the 1200-1500 b.p. corridor. contrary to the expectations, may correction of 12% did not become a u-turn in the long-term growing trend. the resumed price growth on the oil and metals markets and hence the expectations of the increasing inflation had an impact on the stock markets as a stable positive driving force in the last quarter. By the end of the year the mIceX index has grown by 23.2% from 1370.01 to 1687.99 b.p.

Bond maRKetGradual decline of the refinancing rate, high liquidity and realization of the stimulation programmes has provided a strong support to the bonds market. Bonds index has grown by 11.7% during 2010, meanwhile, the profitability and spread in relation to the uS treasuries has declined to historical minimal levels. volatility of the market has been minimal.

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2011 expeCtationS

the quantitative measures of economic stim-ulation will bring its results and show up in the first quarter of 2011 in a form of world Gdp growth and the strengthening inflation pressures.

In the first six months of 2011 the situation is unlikely to change, moderate rates of world’s Gdp growth and suitable inflation forecasts will keep low interest rates during the first quarter, however during the second half-year the economic stimulation measures will be gradually shut down in the light of the increasing inflation pressures.

the price growth of debt instruments in 2010 was happening along excess liquidity and forced decrease of interest rates. the increase in the risk appetites and positive signals about the recovering world economy contributed to the expansion of demand for Russian assets. domestic companies have in turn demonstrated an improvement in indi-cators, although it did not affect the stock prices and their potential was not uncovered.

the year 2011 is unlikely to be as positive for the capital markets as were the years 2009-2010. the interest of investors on the debt market will be brought to the new rouble de-nominated bonds with a floating income and to the new placements. moreover, the inves-tors, in their search of yield, will purchase securities with a higher duration and lower credit quality and also protective inflation-hedging instruments. on the stock market there is a high probability of growth as a re-alization of the potentials in response to the inflationary pressures and quantitative stim-ulation of the economy.

our foreCaStS:

Economy: moderate rate of Gdp growth. acceleration of the recovery pace.

Oil prices: $75 - 105

Russian GDP growth: +2.5 - +4.5%

RUB/USD exchange rate: 27 - 31rub.

Russian inflation: 6.5 - 8.0%

Rate of refinancing: 7.75 - 9.5%

the growth rates of the world economy will increase in 2011. asia region and some addi-tional developing countries will grow faster than others, although the recovery of devel-oped economies will be prolonged and tough due to the continuing misbalances and inevi-table end of the government support. asia countries will be first to stop the economic stimulation policy and to increase the interest rates.

the refinancing rate will stay low in the first half-year while the prices of the raw materi-als will show a gradual rise. the second and the third quarters bear high basis interest rate increase probability.

Inflation will show a moderate growth in the first half-year and by the year-end will rise up to 7.5 – 9%. central Bank will maintain inter-est rates at a low level during the first-half of the year and during the second-half, possibly, will increase them by 0.5-1.00 b.p. Ruble/basket exchange rate will remain within the 33-38 rub. range.

oil

Soft monetary policy of the leading central Banks will stay one of the main factors, defin-ing the behavior of the commodity markets in the first-half of 2011. the dollar will continue to stay under pressure, creating demand for protective instruments, primarily for gold. the revival of the global economy following the growing economies of the asian region will sustain the prices on the manufactured goods.

the increase of the aggregate demand in the asian region is still unable to compensate it’s decrease in the developed world, neverthe-less the consumption is steadily rising. With the world’s economic recovery oil prices can be expected to grow up to a $100 per barrel in 2011.

metalS

Sooner or later the liquidity pumping into the financial system should bring an acceleration of the inflation and investors prefer to prepare for it in advance. the most natural protection

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investments are equity and commodity mar-kets. along gold, oil and metals are among the most convenient inflation-protection in-struments for the investors. monetary factor was defining in 2010, therefore the market will be very sensitive to the news, which are able to influence the expectations regarding the change in interest rates. as a result we could see a very high volatility. We assume that the Federal Reserve will start to increase the interest rates in the 2-3 quarter of the 2011 and despite the high volatility we can probably see another wave of the incoming flow of capital into the commodity markets.

BondS

In the first half of the 2001 we deem that the current market picture is likely to promise a sideways non-aggressive positive trend (pric-es up, yields down) and a substantial correc-tion at the time of the rates’ increase. on the fixed-income market in the first half-year we give preference to the quality short-term ru-ble bonds with fixed or floating coupon.

emerging inflation expectations and increas-ing interest rates’ prospects as a result, and the possible halt of buyback of american t-bills within the framework of the govern-ment support termination – all of this, in our opinion, will help to increase the risk-free instruments’ yield, creating quite an un-pleasant environment for the fixed-income instruments in the second half of 2011.

the tendencies on the bonds market will barely change in the first half of 2011. We believe that it is timely to transfer the senti-ment from high-quality issuers to short-term issues of speculative quality with high fixed or floating yield. In addition, we plan to actively participate in the underwriting of high-quality issues and speculative issues, expecting the issuers to provide premiums to the organizers.

up to the 2011 half-year, until the moment of the rising rates, we expect to see a burst of speculative and junk bonds placements, which will be trying to make use of the low rates, while the state and state-like notes will

show a yield lower than the inflation rate, and the spreads with the uS treasuries will shrink to their historical minimums.

StoCkS

the year 2010 did not allow the investors to profitably earn on the stock market. Russian stock market was boxing in a side-ways trend after the growth of 2009. excess liquidity, which in first place got to the financial and commodity markets contrib-uted to the growth of assets in 2009 and the retention of their high value in 2010. the rise of appetite for risk assets and inflationary expectations also gave support to the Russian stock market.

the situation in 2011 will not be neutral-positive, as we perceived it in 2010. the first quarter can still bring some pleasant surprises in a form of yet another rise of prices of the commodities and raw materials, which will be transported to the Russian market. However the expectation of gradual shutdown of gov-ernment economic support measures (which we plan to see in the 2st-3d quarters) and the tightening of the monetary policy will lead to an outflow of money invested into risky as-sets. at the same time a change in economi-cal policies of the countries will testify about the emergence of the sings of real economical recovery and the increase of the fundamen-tal attractiveness of investments into the risky assets. Inflationary pressures will also help the inflow of investment into the financial and commodity markets.

Benchmarks for the RtS index for the first half-year of 2011 are somewhere between 1750-1800. In our opinion the Russian market will successfully carry through the first six months and can reach a benchmark of 1800 points on the mIceX Index, while the availability of the excess liquidity provides a strong support. In the second half-year the fundamental factors will have a higher impact on the definition of the stock, raw materials and commodity markets dynamics, and the change of the monetary policy of the leading global economies might direct to a correction.

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Group finanCialS

aGGreGated inCome Statement for year ended 31.12.2010 (in thouSandS uSd)

Revenue 119 957

direct costs (104 957)

administrative expenses (8 062)

other gains/expenses 29

net finance income 3 984

profit before tax 10 951

Income tax (625)

net income 10 326

ratioS

Return on average equity 16.49%

Return on average assets 5.12%

profit margin 8.61%

over the year 2010 RonIn partners has experienced stable, profitable growth. We have more than doubled our revenue (percentage change of 166%) and increased our net income by 49%. total assets have doubled.

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tradinG volumeS

during 2010 we have settled over 193 thousand buy and sell deals with vari-ous financial instruments and over 60 thousand repo deals. the average trade amount (excluding futures and op-tions) was over 360 thousand uSd for the buy-sell deals and 3.9 million uSd for the repo trades. over the year we have traded over 29 thousand futures on our client’s behalf.

In 2010 we have settled around 44% of our buy and sell deals on organized markets and 56 % over the counter. as for the repo trading 47% of our trans-actions went on the organized mar-kets and 53 % over the counter. there hasn’t been any significant change from the last year’s distribution for buy and sell deals, however there was a ma-jor change for the repo trades, we did much more of them on the organized markets in 2010, as compared to 25% in 2009.

By the end of 2010 we have strength-ened our trading positions on the mIceX market compared to the year 2009 by achieving the first rank on the operators rating in bonds trading volume, 7th rank in general clients trading volumes and 11th rank in bond repo deals.

Regarding the otc trades, we have lim-its open at london’s largest brokerage companies and banks, such as morgan Stanley, tradition, Goldman Sachs, merrill lynch, Barclays, RBS, city and Standard and many others worldwide.

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2010 | annual Report | lines of business pursued in 2010

lineS of BuSineSS purSued in 2010BRoKeRaGe SeRvIceS

aSSet manaGement

coRpoRate FInance SeRvIceS

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BrokeraGe ServiCeS

We provide our Russian clients with bro-kerage services through RonIn Russia and International clients through RonIn europe, however a client may conclude agreement with either company. the range of services does not differ significantly. We are flexible in providing brokerage services to our clients the way they prefer.

We offer custodian services, flexible fee schedules, over-the-counter quotes and buying on margin. We are always open to discuss individual terms and tailored solu-tions. In order to meet the unique needs of our clients, we offer high quality services and products.

In 2010 Ronin Russia gained a direct access to the RtS futures and to the Russian govern-ment bonds markets. this has cut the costs of the sub-broker’s commissions for our cli-ents and also increased the speed of placing the trade orders on those markets. another

favorable opportunity gained by the direct access to the government bonds market is the possibility to raise liquidity through repo’s, as it is easier, cheaper, faster and less constraining (in terms of limits) then doing this through another broker.

RonIn llc has improved its credit rating from “a-“ based on the year 2009 results to “a” based on 2010 results, this rating is provided by the Russian national Rating agency.

during 2010 RonIn has achieved the first position on turnover of bonds on moscow Interbank currency exchange.

Quarterly trading volumes totaled to more than 5 bil. uSd.

RonIn is ranked as one of the top 5 largest investment companies operating on Russian stock exchanges.

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aSSet manaGement

RonIn partners provides asset management services through its subsidiary RonIn trust for Russian customers and through RonIn europe limited for international ones.

asset management company RonIn trust was established in 2002 and provides asset management services to high net worth individuals, private pension funds, insurance companies, and also mutual fund manage-ment.

RonIn trust is a member of the Russian national association of Securities market participants (nauFoR) and the national league of management companies.

at the end of 2010 RonIn trust had $ 354.5 mil. uSd under management, own capital – more than $8.2 mil. uSd.

the Company manaGeS:• 5 mutual funds, with total assets amount-

ing to $84.6 mil. uSd;

• 5 private pension funds(“Khanti-mansi-yskiy”, “transneft”, “avtovaz”, “torgo-vo-promyshlenniy pensionniy fond” and “vnIIeF-Garant”), with total assets total-ing to $243.7 mil. uSd;

• customers’ assets, located in the individual trust - more than $26.1 mil. uSd

Ronin trust has taken 20th place in the rating of the largest Russian management companies following the results of 2010, according to the newspaper «Kommersant».

Ronin turst has obtained 6th place in the ranking of the largest managing companies in terms of insurance reserves under man-agement, according to the rating agency “Ra expert”.

Ronin trust has occupied 11th place in the rank-ing of the largest management companies in terms of non-state pension funds reserve volumes under management at the end of 2010, according to the rating agency “Ra expert”.

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Corporate finanCe ServiCeS & private equity

We provide our clients with comprehensive corporate finance services, which include, but are not limited to, equity capital transactions, debt financing and derivative instruments.

corporate finance services are provided by RonIn Russia, debt financing services are provided both by RonIn Russia and RonIn europe.

We have not concentrated on debt financ-ing during 2010 and have not participated in as many securities’ placements as in 2009 due to the unfavorable market conditions. nevertheless, by the end of the 2010 year RonIn Russia has participated in 18 place-ments and achieved 21st place in the ranking of largest Russian underwriters according to the c-bonds information agency. In 2011 we plan to commerce more actively on the underwriting market.

m&a consultancy includes advisory on equity sale and purchase, restructuring and spin-off, and also deal financing support. the key expertise of our team is advisory on imple-menting a vast range of financial instruments, including venture and mezzanine financing.

the specialization of the Group is private placements and venture capital raising. our key clients are successfully developing com-panies, aiming at achieving highly ambitious goals. possible financing sources are Ron In all opportunities Fund, as well as equity

placements among a wide range of Russian and international investors. In 2010, the first investment of the fund in fast growing sec-tor of FmcG was approved by the Investment committee.

We provide our clients with opportunities of raising capital from public debt market as well as bank financing from largest Russian banks. Bank financing is used by our clients for asset purchases and project financing.

In november 2010 the new fund Ron In comecon was registered jointly with In-ternational Investment Bank (IIB). IIB is the bank owned by countries that are former members of the council for mutual eco-nomic assistance. the new fund will target developing, integration and infrastructure projects in cIS and comecon countries. By the end of 2010 the first target was identified and approved by the Investment committee - construction of Radison Blu hotel in ulan-Bator. the project will be realized jointly with Rezidor International and state-owned funds of Scandinavian countries - Swedfund, Finnfund and IFu danmark.

We provide advisory services on current liquidity optimization to efficient com-panies that have temporary difficulties in connection with the world financial crisis. the optimization includes bank loans refinancing and raising additional funds from investors for capital structure rebalancing.

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2010 | annual Report | Independent auditor’s Report

independent auditor’S report and ConSolidated finanCial StatementSaudItoR'S RepoRt

conSolIdated Statement oF FInancIal poSItIon

conSolIdated Income Statement

conSolIdated Statement oF compReHenSIve Income

conSolIdated Statement oF cHanGeS In eQuItY

conSolIdated caSH FloW Statement

noteS to tHe conSolIdated FInancIal StatementS

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ConSolidated Statement of finanCial poSition

Notes31 December

201031 December

2009

ASSETS

Non-current assetsGoodwill 8 7 358 7 358

other non-current assets 7 370 491

deferred tax assets 24 337 34

8 065 7 883

Current assetsFinancial assets at fair value through profit or loss 10 11 689 6 523

trade and other receivables 11 5 799 4 221

available-for-sale financial assets 9 9 566 2 696

loans originated 13 107 183 66 518

cash and cash equivalents 12 126 841 46 169

261 078 126 127

TOTAL ASSETS 269 143 134 010

EQUITY AND LIABILITIES

Equity attributable to owners of the parentIssued capital 15 167 167

Share premium 15 50 000 50 000

available-for-sale reserve 9 7 29

translation reserve 15 (98) (68)

Retained profit/(losses) 17 604 7 288

67 679 57 416

minority interests 75 47

Total equity 67 754 57 463

Non-current liabilitiesdeferred tax liabilities 346 -

Current liabilitiestrade and other payables 16 77 012 42 111

Income tax payable 175 451

Short-term loans 14 123 137 33 327

accrued liabilities 17 400 470

derivatives liabilities 10 319 188

201 043 76 547

TOTAL EQUITY AND LIABILITIES 269 143 134 010

consolidated Statement of Financial position shall be seen together with the notes to the consolidated financial statements on pages 12 to 48 which form an integral part of these

consolidated financial statements

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ConSolidated inCome Statement

Notes 2010 2009

Revenue trading and investment income 18 108 719 27 625

Rendering of financial services 18 11 238 17 550

119 957 45 175

Direct coststrading and investment expenses 19 (102 595) (25.265)

Rendering of financial services 19 (2 362) (9.935)

(104 957) (35 200)

Gross profit 15 000 9 975

Other operating income and expensesadministrative expenses 20 (8 062) (3 266)

other expenses (5) (12)

other income 22 34 -

operating profit 6 967 6 697

Financial income 21 9 249 1 514

Financial costs 21 (5 265) (365)

Profit before tax 10 951 7 846

Income tax expense 24 (625) (923)

Profit for the year 10 326 6 923 attributable to:

majority shareholders 10 316 6 450


consolidated Income Statement shall be seen together with the notes to the consolidated financial statements on pages 12 to 48 which form an integral part of these


27


ConSolidated Statement of ComprehenSive inCome

Notes 2010 2009

Profit for the year 10 326 6 923

other comprehensive income

exchange differences on translation of foreign operations

(30) (69)

net gain on available-for-sale financial assets 9 (22) 29

other comprehensive income for the year (53) (40)

Total comprehensive income for the year, net of tax 10 274 6 883

attributable to:

majority shareholders 10 265 6 381


consolidated Statement of comprehensive Income shall be seen together with the notes to the consolidated financial statements on pages 12 to 48 which form an integral part of these


28


ConSolidated Statement of ChanGeS in equity

Attributed to equity holders of the parent

Issued capital

Share pre-

mium

Avail-able-

for-sale reserve

Foreign cur-

rency trans-lation

reserve

Re-tained profit

(losses)

Total owners’ equity

Minor-ity in-terests

Total equity

as at 31 december 2008 27 - - 1 (13) 14 - 14

profit for the year - - - - 6 450 6 450 473 6 923

other compre-hensive income - - 29 (69) - (40) 29 (11)

Total compre-hensive income - - 29 (69) 6 450 6 410 502 6 912

acquisition of the control over company - - - - - - 1 058 1 058

acquisition of non-controlling interests - - - - 852 852 (1 513) (661)

Issue of share capital 140 50 000 - - - 50 140 - 50 140

As at 31 Decem-ber 2009 167 50 000 29 (68) 7 289 57 416 47 57 463

profit for the year - - - - 10 316 10 316 28 10 344

other compre-hensive income - - (22) (30) - (52) - (53)

Total compre-hensive income - - (22) (30) 10 316 10 264 28 10 294

As at 31 Decem-ber 2010 167 50 000 7 (98) 17 604 67 679 75 67 754

consolidated Statement of changes in equity shall be seen together with the notes to the consolidated financial statements on pages 12 to 48

form an integral part of these consolidated financial statements

29


ConSolidated CaSh flow Statement

2010 2009

Operating activitiesprofit before tax 10 951 7 846

non-cash adjustments to reconcile profit before tax to net cash flows:

Аccruals (71) 36

Finance income (5 301) (1 514)

Finance costs 5 265 365

Revaluation of securities 237 (385)

movements in provisions 22 36

decrease in non-current assets 48 (208)

Working capital adjustments:

decrease (Increase) in trade and other receivables (16 132) 11 251

decrease (Increase) in trade and other payables 285 (29 743)

decrease in client cash 33 688 32 491

Income tax paid (853) (202)

Net cash flows from operating activities 28 140 20 744

Investing activitiesacquisition of subsidiaries, net of cash paid - (10 542)

acquisition of non-current assets 3 696 -

Sale of non-current assets (3 627) -

cash inflow with the repayment of promissory notes - 35 000

cash flow from loans originated (33 125) (41 008)

Net cash used in investing activities (33 056) (16 550)

Financing activitiesproceeds from issue of share capital - 140

Repayment of borrowings 85 619 33 083

Net cash used in financing activities 85 619 33 223

net increase in cash and cash equivalents 80 703 37 417net foreign exchange difference (31) (32)

cash and cash equivalents at 1 January 46 169 8 784

Cash and cash equivalents at 31 December 126 841 46 169

consolidated cash Flow Statement shall be seen together with the notes to the consolidated financial statements on pages 12 to 48 which form an integral part of these


30


noteS to the ConSolidated finanCial StatementS

1. Corporate information and prinCipal aCtivitieSthese consolidated financial statements include the financial statements of RonIn partners B.v. (the “company”) and its subsidiaries. RonIn partners B.v. and its subsidiaries are hereinafter collectively referred to as the “Group”.

the consolidated financial statements of the Group for the year ended 31 december 2010 were authorized for issue in accordance with a resolution of the directors on 09 June 2010.

RonIn partners B.v., the parent company of the Group, is a private limited liability company incorporated on 18 november 2008 in the netherlands.

the company’s postal and registered address is 21 Kabelweg, amsterdam, the netherlands, 1014 Ba.

as at 31 december 2010 the company was owned by following shareholders:

• Blodgettex Finance limited, cyprus (75% of share capital - 1 share) - the ultimate parent of the Group;

• minority shareholders (total 25% + 1 share).

as at 31 december 2010 the Group had offices in the netherlands, Russia and cyprus.

the Group’s activities are trading, principal investments and rendering of financial services in the following business segments: brokerage, asset management and corporate investment banking services in Russia and abroad. the Group focuses its brokerage and asset management services on the Russian fixed income and equity markets.

the companies that formed the Group as at 31 december 2010 and their key activities are described below:

Share in equity, % Country of incorporation Principal activities

31 december 2009

31 december 2008

RonIn partners B.v. parent company parent company the nether-lands Holding company

RonIn europe ltd. (former nomoS eu-rope ltd.)

100 100 cyprus

Investment firm (portfolio management, brokerage,

investment advice and ancillary services)

RonIn llc 98 98 RussiaBrokerage, dealership, cus-todian, asset management

servicesRonIn trust oJSc (former nm-trust oJSc)

100 100 Russia asset management company

RonIn Holding cJSc (former concord cJSc) 100 100 Russia Holding company

RonIn estate llc 99,9 - Russia Investment activities, Group’s supplier

RonIn Finance ltd. 100 100 BvI Financing of holding compa-nies, investment activities

Ron In management 100 100 cayman Islands

management company of cayman’s investment funds -

dormantRon In all opportuni-ties Fund 100 100 cayman

Islands Investment Fund - dormant

Ron In Geared Fund 100 100 cayman Islands Investment Fund - dormant

Ron In comecon Fund 90 - cayman Islands Investment Fund - dormant

31


noteS to the ConSolidated finanCial StatementS (Continued)

Brokerage services in Russia and worldwide are provided by RonIn llc and RonIn europe ltd – Russia and cyprus-based companies, licensed under the law of the Russian Federation and european union respectively.

asset management services in Russia are provided by RonIn trust oJSc, in particular, to private investors, mutual and pension funds. RonIn europe ltd. is authorized to provide portfolio management services under the law of the Republic of cyprus.

as of 31 december 2010 RonIn trust oJSc had 5 private pension funds and 5 mutual funds under its management.

as at 31 december 2010 the companies of the Group had licenses as follows.

Company Type of license

RonIn trust oJSc - asset management (perpetual)- Fund management (perpetual)

RonIn llc

- Brokerage (perpetual)- dealing (perpetual)- Futures exchange intermediate operations (perpetual)- asset management (perpetual)- depositary services (perpetual)

RonIn europe ltd. - cyprus Investment Firm regulated by cySec (perpetual)

2. Group’S operatinG environment the Group belongs to the financial services industry which still is under the influence of the world-wide financial crisis commenced in 2008. By focusing its operations on the Russian financial markets and by the presence of its subsidiaries in the country the Group is significantly exposed to the economy and the financial system of the Russian Federation. Simultaneously the Group is exposed to the financial regulation framework of cyprus through its major subsidiary RonIn europe ltd.

RUSSIAN FEDERATION. the Russian Federation continues economic reforms and development of its legal, tax and regulatory frameworks as required by a market economy. the recent developments of the Russian government are focused on modernization of the Russian economy in order to improve its productivity and quality, increase the proportion of industries producing knowledged based high-value-added products and services. the future economic situation of the Russian Federation is largely dependent upon the effectiveness of economic, financial and monetary measures undertaken by the Government, together with tax, legal, regulatory, and political developments.

Russian economy is vulnerable to market downturns and economic slowdowns elsewhere in the world. It was noted for its sustained growth during the period from 1999 to 2007. Having contracted due to the global economic crisis in the second half of 2008, the economy resumed moderate growth towards the second half of 2009. the combination of a continuing upward trend in oil and commodity prices, tight monetary policy and balanced governmental support of core enterprises is fuelling a gradual recovery of the Russian economy in 2010.

the activities of professional players in the financial markets in Russia, including stock exchanges, are regulating and supervising by the federal executive body, the Federal Service for Financial markets (FSFm). the FSFm’s key objectives are to maintain stability in the financial markets, make the markets more efficient and attractive to investors, increase market transparency and reduce investment risks. It regulates the activities of financial market players and establishes the conditions for issuing and trading securities.

the tax, currency and customs legislation within the Russian Federation is still subject to varying interpretations and frequent changes. Rights of investors and lenders are strongly in need of further clarification and protection.

32



management is unable to predict all developments which could have an impact on the financial sector and the wider economy and consequently what effect, if any, they could have on the future financial position of the Group.

CYPRUS. the Republic of cyprus is a mediterranean country which is a member of the european union from 1 may 2004. the country has a favourable tax system with the 10% corporate tax rate applied to residents while being in full compliance with the europe directives and procedures and organisation for economic

co-operation and development (oecd) requirements against harmful tax practices. In accordance with cyprus’ Income tax laws, the definition of tax resident of cyprus follows the oecd model convention in relation to “place of effective management”. cyprus has concluded treaties on double taxation with 26 countries, including the Russian Federation.

to regulate the financial market the cyprus Securities and exchange commission (cySec), a public corporate body, was established in accordance with the Securities and exchange commission (establishment and Responsibilities) law of 2001. Since its establishment cySec has been elaborating regulation of the financial industry. presently cyprus Investment firms (cIF) falling under the cySec supervision are required to set up full-time compliance, internal audit and risk management functions. RonIn europe ltd. is a cIF regulated by cySec.

the regulation of the financial industry in cyprus being continually updated and improved, the management expects the regulatory framework to gradually become more efficient and detailed which is going to have a positive effect on the business of the Group.

3. BaSiS of preparationSTATEMENT OF COMPLIANCE. the consolidated financial statements of the Group for the year ended 31 december 2010 have been prepared in accordance with International Financial Reporting Standards (IFRS), International accounting Standards (IaS) published by the International accounting Standards Board, and interpretations published by the International Financial Reporting Interpretations committee (IFRIc).

the Group’s management is responsible for the preparation of these consolidated financial statements in accordance with IFRS.

the consolidated financial statements have been prepared on a historical cost basis, except financial instruments and derivative financial instruments that have been measured at fair value. preparation of the consolidated financial statements requires application of estimates and assumptions which have an effect on the recorded amounts of assets and liabilities, disclosure of the contingent assets and liabilities at the date of the consolidated financial statements preparation as well as on the recorded amounts of income and expenses in the reporting period. despite of the fact that such estimates are based on the information on current events and transactions which is available to the management, actual results can differ from such estimates (see note 6, accounting estimates and assumptions).

the Group companies maintain accounting records and prepare financial statements in compliance with the legislation of their incorporation states. thus, accounting policies and bases of preparation used by the companies forming the Group may differ from IFRS requirements. these consolidated financial statements are prepared based on the accounting records of Group’s companies with allowance for all adjustments and reclassifications required to comply with IFRS principles.

FUNCTIONAL AND PRESENTATION CURRENCY. the individual financial statements of the Group’s entities are prepared in the currency of primary economic environment in which each company operates, i.e., its functional currency.

33



the Group’s entities’ functional currencies are as follows:

RonIn partners B.v. euRo

RonIn europe ltd., Ron In management, Ron In all opportunities Fund, Ron In Geared Fund, RonIn Finance ltd.

uSd

RonIn llc, RonIn trust oJSc, RonIn Holding cJSc RuR

the consolidated financial statements are presented in uSd for the convenience of the users and all values are rounded to the nearest thousand except where otherwise indicated.

Group’s entities’ transactions in currencies other than functional are translated to its functional currency at the exchange rate prevailing at the date of transaction. Foreign exchange differences arising out of such transactions, as well as resulting from translation of monetary assets and liabilities denominated in foreign currencies at the rates prevailing at the reporting date, are recognized in profit or loss.

the Group’s entities’ financial performance and statement of financial position items are translated into the presentation currency of the Group as follows:

• assets and liabilities for each statement of financial position presented (i.e. including comparatives) are translated at the closing rate at the proper reporting date;

• income and expenses for the period are translated at average monthly exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at rates on the dates of the transactions);

• all resulting translation differences are recognized as a separate component of equity via other comprehensive income or loss.

the foreign exchange rates in RuR fixed by cBRF and used in these consolidated financial statements were as follows:

EUR USD

31 december 2009 43.3883 30.2442

31 december 2010 40.3331 30.4769

the corresponding cross rates on the reporting dates were as follows:

31 December 2010 31 December 2009

uSd/euR 0.7556 0.6971uSd/GBp 0.6449 0.6295uSd/cHF 0.9404 1.0380uSd/JpY (100 units) 0.8153 0.9213uSd/czK 19.136 -uSd/aud 0.9828 -

GOING CONCERN ASSUMPTION. these consolidated financial statements were prepared based on the going concern assumption, which means that assets are realized and liabilities are settled in the course of normal business operations. Recoverability of the Group assets as well as its future operations may be materially affected by the current and future economic situation in the Russian Federation, as well as in other counties where the Group entities operate. these consolidated financial statements do not include any adjustments which would be required had the Group been unable to continue as a going concern.

34



4. Summary of SiGnifiCant aCCountinG poliCieSBASIS OF CONSOLIDATION. the consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at 31 december 2010. Subsidiaries are those companies in which the Group, directly or indirectly, has an interest of more than one half of the voting rights or otherwise has power to govern their financial and operating policies. the existence and effect of potential voting rights that are currently exercisable or convertible are considered in determining whether the Group controls a company. Subsidiaries are consolidated from the date when the control over such company’s operations is actually transferred to the Group and are de-consolidated from the date when such control ceases.

the purchase method of accounting is used for acquisition of subsidiaries. the cost of acquisition is measured at the fair value of net assets, shares issued or liabilities incurred as of the date of acquisition, with allowance for the costs directly attributable to acquisition of the entity. the excess of the acquisition cost over the fair value of the subsidiary’s net assets is recognized as goodwill. all intra-group transactions, relevant account balances and unrealized gains on intra-group transactions are eliminated. non-realized expenses are also eliminated unless the cost can be recovered. the accounting policies of the subsidiaries, if appropriate, were changed to make them consistent with the Group’s accounting policies.

minority interest is that part of the net results and of the net assets of a subsidiary which is attributable to the interest which is not owned, directly or indirectly, by the Group. minority interest is presented in the consolidated statement of financial position separately from liabilities and shareholders’ equity.

Goodwill is tested for impairment annually (as at 31 december) and when circumstances indicate that the carrying value may be impaired.

Impairment is determined for goodwill by assessing the recoverable amount of each cash-generating unit (or group of cash-generating units) to which the goodwill relates. Where the recoverable amount of the cash-generating unit is less than their carrying amount an impairment loss is recognised.

acquisitions of non-controlling interests are accounted for using the entity concept method, whereby, the difference between the consideration and the carrying amount of the acquired minority interest is regarded as an equity transaction and so has no impact on goodwill or the profit and loss account.

CASh AND CASh EQUIvALENTS are cash and (or) financial assets which may be converted to cash within one day. cash includes cash on hand and cash in current and settlement bank accounts, cash in market trading systems and held by banks providing brokerage services.

FINANCIAL ASSETS AND LIABILITIES

INITIAL RECOGNITION AND MEASUREMENT OF FINANCIAL INSTRUMENTS. Financial assets within the scope of IaS 39 are classified as financial assets at fair value through profit or loss (in particular financial assets held for trading and derivative financial assets), loans and receivables, available-for-sale financial assets. the Group determines the classification of its financial assets at initial recognition.

Financial liabilities within the scope of IaS 39 are classified as financial liabilities at fair value through profit or loss, in particular derivative financial instruments, loans and borrowings. the Group determines the classification of its financial liabilities at initial recognition.

all financial assets are recognized initially at fair value plus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs. all financial liabilities are recognised initially at fair value and in the case of loans and borrowings, plus directly attributable transaction costs.

In view of transactions settlement risk purchases or sales of securities that require delivery of assets within the time frame established by over-the-counter (otc) convention are recognized on the date of title transfer, except transactions executed in the marketplace (regular way

35



trades). transactions with financial assets in the marketplace are recognized on the trade date, i.e. the date that the Group commits to purchase or sell the assets.

derivative financial instruments are recognized at the trade date.

SUBSEQUENT MEASUREMENT. the subsequent measurement of financial assets and liabilities depends on their classification as follows.

FINANCIAL ASSETS hELD-FOR-TRADING are securities which are acquired for generating profit from short-term fluctuations in price or trader's margin, or are the part of a portfolio which meets the classification of a short-term trading. the Group classifies securities as held for trading if it has an intention to sell them in a short run, i.e. within one year from the acquisition date.

Financial assets held for trading are carried in the consolidated statement of financial position at fair value with changes in fair value recognised at the net value in the income statement, item “trading and investment income (expenses)”. Interest and dividend income or expense is recorded in “trading and investment income (expenses)” according to the terms of the contract, or when the right to the payment has been established.

the fair value of securities is calculated either on the basis of their market quotations or using various valuation methods on the assumption that these securities may be realized in the future. the fair value of financial instruments that are traded in active markets at each reporting date is determined by reference to quoted market prices or dealer price quotations (bid price for long positions and ask price for short positions, mostly on mIceX stock exchange), without any deduction for transaction costs.

DERIvATIvE FINANCIAL INSTRUMENTS. this category includes otc derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by IaS 39.

derivatives are recorded at fair value and carried as assets when their fair value is positive and as liabilities when their fair value is negative. changes in the fair value of derivatives are included in net amount in “trading and investment income (expenses)”.

For derivative financial instruments not traded in an active market, the fair value is determined using appropriate valuation techniques.

the otc currency swaps are initially recognized and subsequently carried at fair value. the fair value at the reporting date in compare with initial zero value at the recognition date can be calculated as the difference between an asset “swap receivable” equal to the present value of the principle and interest payments the counterparty will make in entity’s local currency and a liability “swap payable” equal to the present value of the principle and interest payments the entity of the Group will make in foreign currency to the counterparty. the currency swaps are shown in the consolidated statement of financial position as the difference between future discounted in- and outflows.

LOANS AND RECEIvABLES. loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. after initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate method (eIR), less impairment. amortised cost is calculated by taking into account any discount or premium on acquisition and fee or costs that are an integral part of the eIR. the eIR amortisation is included in finance income in the income statement.

AvAILABLE-FOR-SALE FINANCIAL INvESTMENTS. available-for-sale financial investments include debt securities. debt securities in this category are those which are intended to be held for an indefinite period of time and which may be sold in response to needs for liquidity or in response to changes in the market conditions.

after initial measurement, available-for-sale financial investments are subsequently measured at fair value with unrealised gains or losses recognised as other comprehensive income in the available-for-sale reserve until the investment is derecognised, at which time the cumulative

36



gain or loss is recognised in other operating income, or determined to be impaired, at which time the cumulative loss is recognised in the income statement and removed from the available-for-sale reserve.

Interest and dividend income or expense is recorded in “trading and investment income (expenses)” according to the terms of the contract, or when the right to the payment has been established.

BORROwINGS are initially recognized at fair value which is the amount of assets received (fair value of assets received) plus transaction costs. Borrowings are subsequently stated at amortized cost; any difference between proceeds and redemption value is recognized in the consolidated income statement as finance expenses over the period of borrowings using the eIR.

TRANSACTIONS UNDER REPURChASE AND REvERSE REPURChASE AGREEMENTS. Securities sold under agreements to repurchase at a specified future date (Repo) are not derecognized from the statement of financial position. If a contractor has the right to sell or pledge acquired securities, the Group reclassifies these securities into category of “Financial assets held-for-trading transferred under Repo agreements”. the corresponding cash received, including accrued interest, is recognized on the statement of financial position as a “Repo loans”, reflecting its economic substance as a loan. the difference between the sale and repurchase prices is treated as interest expense and is accrued over the life of the agreement using the effective interest rate method.

conversely, securities purchased under agreements to resell at a specified future date (reverse Repo) are not recognized on the statement of financial position. the corresponding cash paid is recognized on the statement of financial position as a “Repo receivables”. the difference between the purchase and resale prices is treated as interest income and is accrued over the life of the agreement using the effective interest rate method.

ACCOUNTS RECEIvABLE are recognized at the estimated recoverable value calculated as the current value of expected cash flows, including amounts received under guarantees, discounted, if necessary, using the applicable initial interest rate. the difference between the carrying value and the estimated recoverable value is recognized in the consolidated income statement as interest income for the entire term of the corresponding accounts receivable.

FAIR vALUE OF FINANCIAL INSTRUMENTS is an amount for which a financial instrument may be exchanged in a current transaction between two interested parties, excluding forced sale or liquidation. Fair value is best evidenced by the price of a financial instrument quoted in the market.

estimated fair value of a financial instrument was calculated by the Group on the basis of available market information (if any) and appropriate valuation methods. However, a professional judgment is used to interpret market information for the purpose of fair value determination. market information may fail to represent the value of financial instruments which could be identified in an active market, in which transactions are carried out between interested sellers and buyers. although the management uses available market information to determine the fair value of financial instruments, this information may fail to reflect the value which could be realized under current conditions.

the following methods and assumptions were used to estimate the fair values:

• cash and short-term deposits, trade receivables, trade payables and other current liabilities approximate their carrying amounts largely due to short-term maturities of these instruments;

• Fair value of quoted bonds is based on price quotations at the reporting date. the fair value of unquoted debt instruments, loans from bank and other financial liabilities as well as otc currency swaps is estimated by discounting future cash flows using rates currently available for debt on similar terms, credit risk and remaining maturities.

37



the Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

Level 1: quoted (unadjusted) prices in active markets for identical assets and liabilities

Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly

Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data

OFFSETTING. Financial assets and liabilities are set off and the net value is stated in the consolidated statement of financial position only if there is a legally enforceable right to set off the recognized amounts, and the entity intends either to set off or to realize an asset and discharge a liability simultaneously.

PROvISION FOR IMPAIRMENT OF ACCOUNTS RECEIvABLE. the provision amount is determined based on the date of origination of the respective accounts receivable relative to the reporting date.

debt originated 3 years and more from the reporting date is reserved in full. debt originated 12 months and more from the reporting date is reserved in the amount of 30 percent. When debt originates earlier than 9 months from the reporting date, provision amount makes 25 percent of the accounts receivable; from 6 to 9 months – 20 percent; from 3 to 6 months – 10 percent. the allowance is not created with respect to debt originated after 3 months from the reporting date.

FIxED ASSETS AND INTANGIBLE ASSETS are stated at cost less accumulated depreciation/ amortization. these assets are recognized in other non-current assets.

at each reporting date the Group assesses whether there is any indication of impairment of such type of assets. If any such indication exists, the management estimates the recoverable amount, which is determined as the higher of an asset’s fair value less costs to sell and its value in use. If the book value of an asset exceeds its estimated recoverable amount, the book value is reduced to the recoverable amount and the difference is recognized in consolidated income statement. Impairment loss recognized for an asset in prior years is reversed if there has been a change in the estimates used for the calculation of the assets’ recoverable value.

Gains and losses on disposal of assets are determined on the basis of the assets’ carrying value and are considered in calculation of profit/loss. expenses related to repairs and maintenance are recognized in the consolidated income statement when incurred.

DEPRECIATION is calculated using the straight-line method over the assets’ useful life at the depreciation rates from 10% to 33%.

INCOME TAx. Income tax expenses are recognized in the consolidated financial statements in accordance with the requirements of the effective legislation of the countries where the Group’s companies operate. Income tax expenses recognized in the consolidated income statement include current taxation and changes in deferred taxation. current taxes are calculated on the basis of expected taxable profit for the year using income tax rates effective as of the reporting date. current income tax relating to items recognized directly in equity is recognized in equity and not in the consolidated income statement.

deferred income tax is calculated using the liability method in respect of all temporary differences between the tax base of assets and liabilities for the purpose of income tax calculation, and their book value stated in the consolidated financial statements. deferred tax assets are recognized to the extent that it is probable that taxable profit will be received against which temporary differences may be used. deferred tax liabilities are not recognized where it arises from the initial recognition of goodwill. assets and liabilities for deferred taxes are determined using the tax rates, which are expected to be applicable in the period when assets are sold or liabilities settled, based on the tax rates actually in effect at the reporting date. deferred tax items are recognized in correlation to the underlying transaction either

38



in other comprehensive income or directly in equity. deferred tax assets and liabilities are set off only within each individual company of the Group.

OThER TAxES. taxes other than income and sales tax are recognized in administrative expenses.

Revenues, expenses and assets are recognized net of the amount of value added tax (vat) except:

• where vat incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case vat is recognized as part of the cost of acquisition of the asset or as part of the expense item as applicable;

• receivables and payables that are stated with the amount of vat included.

RECOGNITION OF INCOME AND ExPENSES. For all financial instruments measured at amortised cost and interest bearing financial assets classified as available-for-sale (aFS), interest income or expense is recorded using the effective interest rate (eIR), which is the rate that exactly discounts the estimated future cash payments or receipts through the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or liability. Interest income to be received on loans granted, banks deposits and interest expenses to be paid to the third parties on borrowings are recognized as financial income or expenses in the consolidated income statement on an accrual basis.

commission and other fee income are recognized when the corresponding transactions are completed and the income may be determined with a reasonable degree of assurance. payments for deposit services are recognized according to the scope of services rendered within the term of such services, on a pro rata basis.

non-interest expenses are recognized in the consolidated income statement at the time of the provision of services, with the exception of expenses incurred in acquisition of investments which are included in the cost of investments.

5. new aCCountinG pronounCementSat the date of approval of these financial statements the following financial reporting standards were issued by the International accounting Standards Board but were not yet effective:

IAS 12 INCOME TAxES (AMENDMENT) - NOT ADOPTED BY EUROPEAN UNION

limited scope amendment (recovery of underlying assets). the standard is effective for annual periods beginning on or after 1 January 2012.

IAS 24 RELATED PARTY DISCLOSURES (AMENDMENT) ADOPTED BY EUROPEAN UNION

the amended standard is effective for annual periods beginning on or after 1 January 2011. It clarified the definition of a related party to simplify the identification of such relationships and to eliminate inconsistencies in its application. the revised standard introduces a partial exemption of disclosure requirements for government-related entities. the Group does not expect any impact on its financial position or performance. early adoption is permitted for either the partial exemption for government-related entities or for the entire standard.

IAS 32 FINANCIAL INSTRUMENTS: PRESENTATION – CLASSIFICATION OF RIGhTS ISSUES (AMENDMENT) ADOPTED BY EUROPEAN UNION

the amendment to IaS 32 is effective for annual periods beginning on or after 1 February 2010 and amended the definition of a financial liability in order to classify rights issues (and certain options or warrants) as equity instruments in cases where such rights are given pro rata to all of the existing owners of the same class of an entity’s non-derivative equity instruments, or to acquire a fixed number of the entity’s own equity instruments for a fixed amount in any currency. this amendment will have no impact on the Group after initial application.

39



IAS 34 INTERIM FINANCIAL REPORTING – (AMENDMENT) ADOPTED BY EUROPEAN UNION

amendments resulting from may 2010 annual Improvements to IFRSs. the standard is effective for annual periods beginning on or after 1 January 2011.

IFRS 1 FIRST-TIME ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS – NOT ADOPTED BY EUROPEAN UNION

additional exemption for entities ceasing to suffer from severe hyperinflation. the standard is effective for annual periods beginning on or after 1 July 2011.

IFRS 9 FINANCIAL INSTRUMENTS: CLASSIFICATION AND MEASUREMENT NOT ADOPTED BY EUROPEAN UNION

IFRS 9 as issued reflects the first phase of the IaSB work on the replacement of IaS 39 and applies to classification and measurement of financial assets as defined in IaS 39. the standard is effective for annual periods beginning on or after 1 January 2013. In subsequent phases, the IaSB will address classification and measurement of financial liabilities, hedge accounting and derecognition.

the completion of this project is expected in early 2011. the adoption of the first phase of IFRS 9 will have an effect on the classification and measurement of the Group’s financial position. the Group will quantify the effect in conjunction with the other phases, when issued, to present a comprehensive picture.

IFRIC 14 PREPAYMENTS OF A MINIMUM FUNDING REQUIREMENT (AMENDMENT) ADOPTED BY EUROPEAN UNION

the amendment to IFRIc 14 is effective for annual periods beginning on or after 1 January 2011 with retrospective application. the amendment provides guidance on assessing the recoverable amount of a net pension asset. the amendment permits an entity to treat the prepayment of a minimum funding requirement as an asset. the amendment is deemed to have no impact on the financial statements of the Group.

IFRIC 19 ExTINGUIShING FINANCIAL LIABILITIES wITh EQUITY INSTRUMENTS ADOPTED BY EUROPEAN UNION

IFRIc 19 is effective for annual periods beginning on or after 1 July 2010. the interpretation clarifies that equity instruments issued to a creditor to extinguish a financial liability qualify as consideration paid. the equity instruments issued are measured at their fair value. In case that this cannot be reliably measured, the instruments are measured at the fair value of the liability extinguished.

any gain or loss is recognized immediately in profit or loss. the adoption of this interpretation will have no effect on the financial statements of the Group.

IMPROvEMENTS TO IFRS (ISSUED IN MAY 2010)

the IaSB issued Improvements to IFRS, an omnibus of amendments to its IFRS standards. the amendments have not been adopted as they become effective for annual periods on or after either 1 July 2010 or 1 January 2011. the amendments listed below, are considered to have a reasonable possible impact on the Group:

• IFRS 3 Business combinations; Adopted by European Union

• IFRS 7 Financial Instruments: disclosures; Adopted by European Union

• IaS 1 presentation of Financial Statements; Adopted by European Union

• IaS 27 consolidated and Separate Financial Statements; Adopted by European Union

• IFRIc 13 customer loyalty programmes. Adopted by European Union

the Group, however, expects no material impact from the adoption of the amendments and accounting standards on its financial position or performance.

40



6. ACCOUNTING ESTIMATES AND ASSUMPTIONSIn preparation of IFRS consolidated financial statements, management is required to make certain subjective accounting judgments, estimates and assumptions about future events that affect the assessed value of assets and liabilities as of the date of consolidated financial statements, as well as assessed value of income and expenses in the reporting period. the actual results may differ from these assumptions.

7. OThER NON-CURRENT ASSETSthe cost of fixed and intangible assets is not material in the consolidated statement of financial position total, and thus is reported as other non-current assets without any detailed disclosure.

8. GOODwILLthe Group’s goodwill was recognized as a result of acquisitions in 2008 and 2009 years.

Goodwill is tested for impairment at least once per reporting period and when circumstances indicate the carrying value may be impaired. at 31 december 2010 there were no indications that the goodwill may be impaired.

historical value

at 31 december 2009 7 358


Accumulated impairment

at 31 december 2009 -

Impairment recognized in 2010 -

at 31 december 2010 -

Book value



9. AvAILABLE-FOR-SALE FINANCIAL ASSETS

Available-for-sale financial assets carried at fair valueat 31 December 2009 2 696

additions 8 998

disposals (2 164)

accrued coupon 58

net value gain/(loss) on available-for-sale financial assets recognized in other comprehensive income (46)

Reclassification adjustment relating to available-for-sale financial assets disposed during the year 24

at 31 December 2010 9 566

41



the Group holds the following available-for-sale financial assets with a maturity from march 2015 to november 2030

Fitch Ratings Coupon, % 31 December 2010

31 December 2009

veB Finance limited BBB 5.45-6.8 7 050 -

Russian Government Bonds BBB 7.5 1 887 2 696

uS treasury aaa 2.625 524 -

lukoil International Finance B.v. BBB- 2.625 105 -

Total 9 566 2 696

10. finanCial aSSetS and liaBilitieS at fair value throuGh profit and loSSFINANCIAL ASSETS hELD-FOR-TRADING

31 December 2010

31 December 2009

corporate bonds 8 132 4 801

Bonds of the subjects of Russian Federation 2 674 1 475

Total 10 806 6 276

the Group holds listed Rouble denominated bonds with fixed-income which are issued by Russian companies or regional governments. as at 31 december 2010 the maturity date of these bonds was from February 2011 to September 2011.

as at 31 december 2010 bonds included debt securities of the following issuers:

Corporate bonds Quote listMICEx Coupon, % Fair value

Bashneft JSc B 12.5 1 755

pipe metallurgical company JSc А1 9.8 1 571

aHml oJSc А1 7.68-10.25 1 068

GloBeXBanK cJSc B 9.25 851

transneft JSc B 9.9 643

Sukhoi civil aircraft company (Scac) СJSc a1 9.25 510

Home credit and Finance Bank llc А1 8.15 427

noRtH-WeSt telecom oJSc a1 11.7 410

Specialized mortgage agent GpB-mortgage oJSc a1 8 405

mobile teleSystems (mtS) oJSc А1 16.75 263

Joint-Stock Financial corporation Sistema А1 9.75 116

IdGc of the South JSc B 17.5 110

Belon Finance ltd not quoted 17 3

Total 8 132

42



Bond of the subject of the Russian Federation Quote listMICEx Coupon, % Fair value

Government of the moscow region not quoted 9-18 809

Government of the Samara region А1 9.3 659

Government of the Kaluga region not quoted 10.11 525

Government of the Krasnoyarsk Krai not quoted 11.14 414

Government of the tomsk region А1 7 214

Government of the lipetsk region not quoted 7.5 53

Total 2 674

as at 31 december 2009 bonds included debt securities of the following issuers:

Corporate bonds Quote listMICEx Coupon, % Fair value

Home credit and Finance Bank llc a1 15-18.5 1 761

technonIcol-Finance llc B 9.7 800

Sukhoi civil aircraft company (Scac) СJSc a1 7.85 442

First mortgage agent of aHml cJSc a1 6.94 216

aHml oJSc a1 7.68-13.25 129

noRtH-WeSt telecom oJSc a1 11.7 343

mobile teleSystems (mtS) oJSc v 16.75 294

Specialized mortgage agent GpB-mortgage oJSc a1 8 274

Russian Railways oJSc v 14.9-14.33 198

Joint-Stock Financial corporation Sistema B 19 118

Integra Finance ltd not quoted 10.7 112

IdGc of the South JSc v 17.5 109

Belon Finance ltd d 9.25 5

Total 4 801

Bond of the subject of the Russian Federation Quote listMICEx Coupon, % Fair value

Government of the moscow region a1 9-10 916

Government of the tomsk region a1 7 423

Government of the penza region a1 9.8 79

Government of the Samara region a1 9.3 57

Total 1 475

43



DERIvATIvE FINANCIAL ASSETS

the Group uses the short-term otc currency swaps with maturities from 1 day till 1 year either to obtain the optimum return on its surplus funds or to hedge cash flows in respect of committed transactions. the Group does not use the “hedge accounting” as defined by IaS 39.

the table below shows the fair values of derivative financial instruments, recorded in consolidated financial statements as assets or liabilities, together with their notional amounts as at 31 december 2010 and 31 december 2009 correspondingly. the notional amount, recorded gross, is the amount of derivative's underlying asset and is a basis upon which changes in fair value of derivatives are measured.

31 DECEMBER 2010 Financial assets

Financial liabilities

Notional amount

currency swaps 883 319 22 617

Net gain for the year 2010

currency swaps (738)

31 DECEMBER 2009 Financial assets

Financial liabilities

Notional amount

currency swaps 247 188 18 105

Net gain for the year 2010

currency swaps (17)

11. aCCountS reCeivaBle31 December

201031 December

2009

trade receivables 4 991 3 936

less provision for impairment of trade receivables (27) (36)

Trade receivables, net 4 964 3 900

advances paid 639 179

deposits 105 107

taxes receivable 77 18

other receivables 14 17

Total 5 799 4 221

the book value of trade receivables adjusted for doubtful debt provision approximates its fair value less impairment losses.

44



the tables below present the ageing analysis of accounts receivable in relation to the reporting dates 31 december 2010 and 31 december 2009 correspondingly with the breakdown by recognized provision for a possible default on obligations:

31 DECEMBER 2010Less

than 3 months

3-6 months

6-9 months

9-12 months

1-3 years

Over 3 years Total

Receivables trade 4 951 - - 13 27 - 4 991

provision for impairment of trade receivables

- - - (7) (20) - (27)

Receivables trade, net 4 951 - - 6 7 - 4 964

other trade 14 - - - - - 14

provision for impairment of other receivables

- - - - - - -

Other trade, net 14 - - - - - 14

advances originated 639 - - - - - 639

Total trade and other receivables 5 604 - - 6 7 - 5 617

31 DECEMBER 2009Less

than 3 months

3-6 months

6-9 months

9-12 months

1-3 years

Over 3 years Total

Receivables trade 3 883 - - 19 34 - 3 936

provision for impairment of trade receivables

- - - (10) (26) - (36)

Receivables trade, net 3 883 - - 9 8 - 3 900

other trade 17 - - - - - 17

provision for impairment of other receivables

- - - - - - -

Other trade, net 17 - - - - - 17

advances originated 179 - - - - - 179

Total trade and other receivables 4 079 - - 9 8 - 4 096

45



movements of the provision for trade receivables are the following:

Movement of provision

As at 31 December 2009 36

amounts written off during the year as uncollectible (31)

provision for impairment during the year 22

As at 31 December 2010 27

In estimating the probability of settlement of the accounts receivable, the Group takes into account any change in the debtor’s credit quality from the date of debt origination until the reporting date.

the largest debtors as at reporting dates were as follows:

31 December 2010 31 December 2009

npF transneft 3 942 3 003

Khanty-mansiisky non -State pension fund 252 313 trade and industrial pension Fund non -State pension fund 115 -

Real estate investment trust HmB capital 61 -

Kapital Insurance company 40 -

npF autovaz oJSc - 175

Total 4 410 3 492

percent of total trade receivables 89% 90%

12. CaSh and CaSh equivalentScash and cash equivalents as at 31 december 2010 were as follows:

Own funds Client funds Cash on hand Total

uSd 47 791 57 252 - 105 043

Rouble 4 927 15 845 - 20 772

euRo 433 383 1 817

British pound - 72 - 72

Swiss Frank - 10 - 10

australian dollar - 84 - 84

Japanese Yen - 43 - 43

Total 53 151 73 689 1 126 841

cash and cash equivalents as at 31 december 2009 were as follows:

Own funds Client funds Cash on hand Total

uSd 3 669 24 786 - 28 455

Rouble 1 561 15 754 - 17 315

euRo 113 19 1 133

British pound - 55 - 55

Swiss Frank - 9 - 9

Japanese Yen - 202 - 202

Total 5 343 40 825 1 46 169

46



client funds include amounts received by the Group’s entities providing brokerage services in order to facilitate client activities which are deposited in bank brokerage firms and market trading systems. client funds are restricted in usage and are payable on demand.

the Group holds its settlement accounts with the following Banks:

Fitch Ratings(Long-term

IDR)

31 December 2010

31 December 2009

uBS aG Bank a+ 25 397 -

Russian commercial Bank (cyprus) ltd no rating 25 005 -

State corporation "Bank for development and foreign economic affairs" (vnesheconombank) BBB 23 385 -

RBS coutts Bank ltd no rating 22 888 -

national Settlement depository a- 15 882 13 498

Bank of cyprus BBB+ 6 418 614

Khanty-mansiisky Bank B+ 5 556 27 071

nomos-Bank oJSc B+ - 4 540

other banks a- 2 310 446

Total 126 841 46 169

13. loanS oriGinatedas of 31 december 2010 and 31 december 2009 the Group had the following secured short-term loans originated

Interest rate 31 December 2010

31 December 2009

Loans with maturity date less than one year, including:

RuR 4-24% 31 117 1 001

uSd 2-15% 59 199 65 517

euRo 1-4% 16 867 -

Total 107 183 66 518

the Group holds loans originated returning 4 – 24% (2009: 12%) per annum in RuR, 2 – 15% (2009: 4 – 8%) in uSd and 1 – 4% per annum in euR (2009: nil). the loans originated to related parties as of 31 december 2009 are disclosed in note 28, Related party transactions.

the largest amounts as of 31 december 2010 represented by 62 970 as loans originated to Sposa Investments ltd. and 26 991 to edrol Investments ltd., repaid in 2011 (31 december 2009: 51 099 to Sposa Investments ltd. and 13 020 to edrol Investments ltd.). as of 31 december 2010 both debts were secured by cash and securities held by RonIn europe ltd. as a broker on behalf of edrol Investments ltd.

on 31 december 2010 the Group also held a mortgage on the office buildings located in moscow and pledge of shares of Biznesgiprodorinvest oJSc as 100% collateral for the loan originated to the said company amounted to 12 000.

47



14. Short-term loanSas of 31 december 2010 and 31 december 2009 the Group had the following unsecured short-term loans payable.

Interest rate 31 December 2010

31 December 2009

Loans (UNSECURED) with maturity date less than one year, including:

RuR 0.8-10% 15 194 10 451

uSd 0.1-15% 73 026 12 837

euR 3.5-5.5% 34 917 10 039

Total 123 137 33 327

the Group holds loans received paying 0.8 – 10% (2009: 0.8 – 7%) per annum in RuR, 0.1 – 15% (2009: 0.1 – 10%) in uSd and 3.5 – 5.5% (2009: 0 – 5.5%) in euR. the short-term loans received from related parties as of 31 december 2009 are disclosed in note 28, Related party transactions.

15. iSSued Capital and reServeSShare capital of the Group consists of 118,000 ordinary shares authorized, issued, fully paid and outstanding with a par value of 1 euR. as at 31 december 2010 the issued share capital at par value was 167 (as at 31 december 2009 – 167).

the Group neither declared nor paid dividends in 2009 and 2010 years.

other reserves as stated in the consolidated statement of changes in equity

AvAILABLE-FOR-SALE RESERvE

this reserve records fair value changes on available-for-sale financial assets as at 31 december 2010 in the amount of 7 (31 december 2009: 29).

FOREIGN CURRENCY TRANSLATION RESERvE

the foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries as at 31 december 2010 in the amount of (98) (31 december 2009:(68)).

16. aCCountS payaBle31 December

201031 December

2009clients payable 73 695 40 008

other payable 2 109 731

other tax payable 1 046 542

advances received 69 -

trade payable - 8

clients tax payable 93 822

Total 77 012 42 111

48



client funds represent cash received by the Group’s entities from clients under the brokerage agreements in order to facilitate their trading activities, these amounts are payable on demand. the Group holds client funds in bank and brokerage accounts separately from its own fund.

client funds deposited by the Group in banks and market trading systems are presented as cash and cash equivalents, deposited with non-bank brokerage firms - as trade and other receivables (see note 11, accounts receivable and note 12, cash and cash equivalents).

other payables include liability to an employees in the amount of 1 870 (as at 31 december 2009 the major amount was liability to a counterparty of the promotion agreement in the amount of 518).

the accounts payable to related parties as of 31 december 2010 and 2009 are disclosed in 28, Related party transactions within amounts due to clients.

17. aCCrued liaBilitieSaccrued liabilities include employees’ bonuses, provisions for vacation and audit expenses.

18. revenue 2010 2009

Trading and investment income, including: 108 719 27 625 Bond of the subject of Russian Federation 2 772 14 544 Shares 18 703 -corporate bonds 87 244 11 334 promissory notes - 1 747 Rendering of financial services, including: 11 238 17 550Brokerage commission 5 362 12 976 trust management remuneration 4 463 3 496 underwriting fee 497 782 venture fund management remuneration 332 224 mutual fund management remuneration 584 67 other revenue - 6Total 119 957 45 175

Revenue received from related parties is disclosed in note 28, Related party transactions.

19. DIRECT COSTS 2010 2009

Trading and investment expenses, including: 102 595 25 265 Bond of the subject of the Russian Federation 1 651 14 281 Shares 18 174 corporate bonds 81 795 10 582 currency SWap 738 17loss on revaluation of securities 237 385 Rendering of financial services, including: 2 362 9 935Introduction commission 78 8 592 Brokerage commission 1 772 747 depositary services 364 429 underwriting costs 15 121 Information services 133 21 conversion services - 18 trust management expenses - 7 Total 104 957 35 200

49



Introductory fees were charged by the third party (the promoter), which entered into an agreement with RonIn europe ltd. in 2008 to provide introductory services and to promote RonIn europe ltd. to potential clients. as from 01 June 2010 the agreement has been terminated.

20. adminiStrative expenSeS 2010 2009

payroll 5 500 1 847 other expenses 1 383 678 audit, consulting services 714 496 other taxes 360 81 travel expenses 42 34 Software 38 101 advertising 25 29 Total 8 062 3 266

Remuneration of top managers is recognized as administrative expenses, as a part of payroll (see 28, Related party transactions). the remuneration amount includes both salary and bonus payments. Remuneration of the management is determined on the basis of employment agreements.

21. finanCe inCome and expenSeS 2010 2009

Finance incomeInterest income 5 301 887 translation differences 3 948 627

9 249 1 514

Finance expensesInterest expenses (5 265) (365) Finance income net 3 984 1 149

net finance income include FX rates differences, interest losses from received loans and interest income from loans originated (see 13, loans originated and note 14, Short-term loans).

22. nother inCome other income includes result of non-current assets sold in the amount of 27.

23. operatinG leaSeSthe Group leases premises and parking space under operating lease agreements. lease expenses reported in the income statement for the year ended 31 december 2010 made 530 (2009 – 285).

Future aggregated payments under operating lease agreements are set out below: 31 December 2010 31 December 2009

Within 1 year 1 682 579From 1 to 5 years 4 350 1 952Total 6 032 2 531

50



24. inCome taxthe major components of the income tax expense in the consolidated income statement are as follows: 2010 2009

current tax 582 888deferred tax assets (liabilities) 43 35Total 625 923

the differences between IFRS and the tax legislation of the countries, where the Group’s companies operate, result in temporary differences between the carrying value of assets and liabilities for the purpose of consolidated financial statements and the tax base. Stated below is the tax effect from movements in those temporary differences calculated at the tax rate of 10% (the Republic of cyprus) and 20% (the Russian Federation).

the most significant deferred tax assets and liabilities recognized by the Group, as well as the respective changes during the reporting period are set out below.

31 December 2010

Movements for the pe-

riod31 December

2009

accrued liabilities 58 (22) 80

trade and other receivables (28) 37 (65)

Financial assets at fair value through profit or loss (69) (78) 9

tax losses 30 20 10

Total (9) (43) 34

the most significant deferred tax assets and liabilities recognized by the Group, as well as the respective changes during 2009 are set out below.

31 December 2009

Incoming with acquisi-

tions

Movements for the pe-

riod31 December

2008

accrued liabilities 82 78 2 2

prepaid expenses (1) - (1) 0

trade and other receivables (65) 23 (87) (1)

trade and other payables 0 - (1) 1

Financial assetsheld-for-trading 8 (34) 42 -

tax losses 10 - 10 -

Total 34 67 (35) 2

under the existing Group structure, tax losses and current tax assets of individual Group companies cannot be set off against current tax liabilities and taxable profit of other Group companies, and thus a tax may be charged even in case of a consolidated tax loss. therefore, deferred tax assets and liabilities can be offset only if those pertain to the same taxpayer.

51



the reconciliation between the computed income tax and the actual income tax expenses is set out below:

2010 2009

Profit before tax at the tax rate: 10 951 7 846

20% 1 883 3 619

15% 228 104

10% 1 392 1 785

9% 34 8

not taxable 7 414 2 330

Computed tax at the rate: (553) (919)

20% (376) (724)

15% (34) (16)

10% (139) (178)

9% (3) (1)

expenses not deductible (73) (4)

Income tax for the period (625) (923)

25. analySiS By SeGmentFor management purposes, the Group is organized into the following reportable operating segments based on their services and activities:

• brokerage services;

• asset management services;

• investment banking services (m&a advisory, restructuring support, attracting strategic investors and their involvement, securities issue etc.);

• trading and principal investments.

no operating segments have been aggregated to form the above reportable operating segments.

the information on reportable operating segments is preparing for the Group’s management purposes in accordance with IFRS. management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment.

transfer prices between operating segments are on an arm’s length basis in a manner similar to transactions with third parties.

52



the following tables present the information regarding the Group’s operating segments for the year ended 31 december 2010.

DISCLOSED BY SEGMENTS

Broker-age

services

Asset man-age-ment

services

Invest-ment

banking services

Trad-ing and

Principal Invest-ments

Unallo-cated

Adjust-ments

and elimina-

tions

Total for the Group

Revenuetrading and investments income - - - 108 719 - 108 719

Rendering of financial services 5 362 5 379 497 - - 11 238

Revenue from inter-segment transactions 779 16 - - 101 (896) -

Segment revenue 6 141 5 395 497 108 719 101 (896) 119 957

Direct cost - - - - - -trading and investments expenses - - - (102 595) - (102 595)

Rendering financial services expenses (2 347) - (15) - - (2 362)

cost of inter-segment transactions (795) - - - - 795 -

Segment direct cost (3 142) - (15) (102 595) - 795 (104 957)

Administrative expenses (1 199) (4 478) - - (2 385) (8 062)administrative expenses on inter-segment transactions - (73) - - (28) 101 -Segment administrative expenses (1 199) (4 551) - - (2 413) 101 (8 062)

Other expenses - - - - (5) (5)Segment other expenses - - - - (5) - (5)Other income - - - - 34 34other income on inter-segment transactons - - - - - -

Segment other income - - - - 34 - 34

Finance income - - - 9 240 9 9 249Finance income on inter-segment transactons - - - - 96 (96) -Finance expenses - - - (5 114) (151) (5 265)Finance expenses on inter-segment transactons (96) 96 -Segment finance income, net - - - 4 126 (142) - 3 984

Profit/(loss) before tax 1 800 844 482 10 250 (2 425) - 10 951

Income tax - - - - (625) (625)Profit/(loss) for the year 2010 1 800 844 482 10 250 (3 050) - 10 326

53




Broker-age

services

Asset man-age-ment

services

Invest-ment

banking services

Trad-ing and


Unallo-cated

Adjust-ments

and elimina-

tions

Total for the Group

Segment assets as of 31 December 2010

Non-current assets

Goodwill - - - 7 358 - 7 358

other non-current assets - - - 370 - 370

deferred tax assets 337 337

Current assets - - - - - -

Financial assets at fair value through profit or loss - - 11 689 - - 11 689

available-for-sale investments - - 9 566 - - 9 566

trade and other receivables 389 4 454 - 955 - 5 799

Intercompany 33 377 5 66 120 (33 567) -

loans originated - - 107 183 - 107 183

cash and cash equivalents 98 943 88 22 892 4 918 126 841

Total assets at 31 December 2010 132 709 4 547 - 151 396 14 058 (33 567) 269 143

Segment liabilities as of 31 December 2010

Non-current liabilities

deferred tax liabilities - - - - 346 - 346

Current liabilities - - - - -

trade and other payables 64 369 - - 12 643 77 012

Intercompany 33 447 - - 120 (33 567) -

Income tax payable - - - 175 175

Short-term loans received - - 123 137 - 123 137

accruals - - - 400 400

derivative financial instruments - - 319 - 319

Total liabilities at 31 December 2010 97 817 - - 123 456 13 684 (33 567) 201 389

54



the following tables present the information regarding the Group’s operating segments for the year ended 31 december 2009.


Broker-age

services

Asset man-age-ment

services

Invest-ment

banking services

Trad-ing and


Unallo-cated

Adjust-ments

and elimina-

tions

Total for the Group

Revenue

trading and investments income 27 625 27 625

Rendering of financial services 12 981 3 787 782 - - - 17 550

Revenue from inter segment transactions 335 8 - - (343) -

Segment revenue 13 316 3 795 782 27 625 - (343) 45 175

Direct costs

trading and investments expenses (25 265) (25 265)

Rendering of financial services exp (9 085) (730) (120) (9 935)

cost of inter-segment transactions (344) 344 -

Segment direct cost (9 429) (730) (120) (25 265) - 344 (35 200)

Administrative expenses (27) (1 093) - (2 146) - (3 266)

Segment administrative expenses (27) (1 093) - (2 146) - (3 266)

Other expenses - - - (12) - (12)

Segment other expenses - - - (12) - (12)

Finance income - - 972 542 -

1 514

Finance expenses - - (365) -

(365)

Segment finance income, net - - 607 542 -

1 149

Profit/(loss) before tax 3 860 1 972 662 2 967 (1 616) - 7 846

Income tax - - - (923) - (923)

Profit/(loss) 3 860 1 972 662 2 967 (2 539) - 6 923

55




Broker-age

services

Asset manage-

ment services

Trad-ing and


Unallo-cated

Adjust-ments

and elimina-

tions

Total for the Group

Segment assets as of 31 December 2009

Non-current assets

Goodwill - - - 7 358 - 7 358

other non-current assets - - - 491 - 491

deferred tax assets - - - 34 - 34

Current assets - - - - -Financial assets at fair value through profit or loss - - 6 523 - - 6 523

available-for-sale investments - - 2 696 - - 2 696

trade and other receivables 154 3 941 - 126 - 4 221

Intercompany6 848 5 3 483 58 662 (68 998) -

loans originated - - 66 518 - - 66 518

cash and cash equivalents 32 142 167 13 155 705 - 46 169

Total assets at 31 December 2009 41 840 4 113 89 679 67 376 (68 998) 134 010

Segment liabilities as of 31 December 2009

Non-current liabilities

Current liabilities

trade and other payables 40 618 29 10 1 454 - 42 111

Intercompany 10 336 - - 8 032 (18 368) -

Income tax payable - - - 451 - 451

Short-term loans received - - 33 327 - - 33 327

accruals - - - 470 - 470derivative financial instruments - - 188 - - 188

Total liabilities at 31 December 2009 50 954 29 33 525 10 407 (18 368) 76 547

the information in column “unallocated” have not been disclosed by segment as these items are managed on a group basis, and are not provided to the chief operating decision maker at the operating segment level.

no revenue from transactions with a single external customer or counterparty amounted to 10% or more of the Group’s total revenue in 2010.

56



GEOGRAPhIC INFORMATION

the Group operates in two geographic markets: cyprus and Russia. the distribution in 2010 and 2009 correspondingly of the Group’s revenues based on the location of the customers was as follows:


Broker-age

services

Asset manage-

ment services

Invest-ment

banking services

Trad-ing and


Unallo-cated

Total 2010

total revenue per consolidated income statement 5 362 5 379 497 108 719 - 119 957

Including:

Russia 404 5 379 497 108 719 - 114 999

cyprus 4 958 - - - - 4 958


Broker-age

services

Asset manage-

ment services

Invest-ment

banking services

Trad-ing and


Unallo-cated

Total 2010

total revenue per consolidated income statement 12 981 3 787 782 27 624 - 45 175

Including:

cyprus 12 069 - - 2 017 - 14 085

Russia 912 3 787 782 25 607 - 31 090

26. fair valueSthe carrying amounts and fair value of the Group’s financial instruments that are carried in the consolidated financial statements are the same. the methods and assumptions which were used to estimate the fair values are disclosed in note 4, Summary of significant accounting policies.

the following table shows the analysis of financial instruments recorded at fair value by level of the fair value hierarchy as of 31 december 2010 and 31 december 2009 correspondingly.

Level 1 Level 2 Level 3 Total 2010

Financial assets

Financial assets at fair value through profit or loss 10 806 - - 10 806

derivatives assets - 883 - 883

available-for-sale investments 9 566 - - 9 566

20 372 883 - 21 255

57



Level 1 Level 2 Level 3 Total 2009

Financial assets

Financial assets at fair value through profit or loss 6 276 - - 6 276

derivatives assets - 247 - 247

available-for-sale investments 2 696 - - 2 696

8 972 247 - 9 219

during the reporting period ending 31 december 2010, there were no transfers between level 1 and level 2 fair value measurements, and no transfers into and out of level 3 fair value measurements.

27. finanCial riSk manaGement(A) RISk MANAGEMENT FUNCTION

the risk management function within the Group is carried out in respect of major types of risks: credit, market, liquidity and operational risks.

overall management of those risks is performed at the holding’s level by ensuring a proper coordination between the risk management units of the Group’s operating companies.

Risk management committee of RonIn europe ltd. comprising executive director, General manager and Risk manager is ultimately responsible for risk monitoring and implementation of risk mitigation measures while the daily functions of risk management are performed by the risk manager. In its risk managements policies RonIn europe ltd. follows the guidelines formulated in directives of cYSec, including capital requirements and large exposure directives.

RonIn llc and RonIn trust oSJc are firms regulated by the Federal Financial markets Service, Russia (FFmS) and follow FFmS’s regulation in their risk management policies.

RonIn’s llc risk management functions are performed by an internal controller whose main task is to avoid and mitigate conflict of interest situations and make sure that the company is in compliance with the corresponding regulation.

RonIn trust cJSc has a risk management manager whose tasks include:

• formulating risk management measures for portfolios under management tailor made to requirements of each portfolio outlined in the corresponding investment declaration;

• managing risks of investing on its own account.

the Group’s risk management policies are designed to identify and analyse these risks, to set appropriate risk limits and controls, and monitor the risks and limits. the main risk management procedures in respect of particular types of risk currently used by the Group and risk evaluations are described below. presently the Group’s risk assessment and management policies are not formalized in a document form as each company of the Group has internal guidelines compliant with the corresponding regulations.

(B) OPERATIONAL RISkS

the operational risks include the capital, reputation, legal risks and the risk of a client funds sufficiency.

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the Group’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of its business. the Group is subject to minimum capital requirements established by cySec and FFmS which apply to parts of the Group in cyprus and Russia correspondingly.

under the current capital requirements set by cySec cIFs have to maintain a ratio of capital to risk weighted assets (capital adequacy Ratio) above 8%. the ratio of RonIn europe ltd as of 31 december 2010 stood at 69.43% (as at 31.12.2009 23.84%).

FFmS requires investment and asset management firms to maintain capital not less than 35m Roubles and 60m Roubles respectively.

the capital adequacy is closely monitored by Group’s management and shareholders. If the above capital requirements are raised by the authorities as may be expected the Group possesses sufficient capital to increase the share capital of entities to ensure their compliance.

Reputation risk is the risk from a possible association of the Group with the activities of its customer. In order to mitigate the reputation risk the Group has Know Your customer (KYc) procedures in place, also the Group has a very selective approach to choosing its customers. the management of the Group estimates the reputation risk as low.

legal risk is the risk of financial losses, including fines and other penalties, which arise from non-compliance with laws and regulations as a result of weakness in the legal framework or from insufficient analysis of legal issues during transaction documentation preparation. Some companies of the Group are present in jurisdictions where the regulation of financial firms is rapidly developing. the risk is limited to a significant extent due to the presence of an internal lawyer and compliance officers in the Group.

Funds sufficiency risk. the Group does not finance trading operations of its clients, so when accepting a client order a check of the client funds sufficiency is performed. In the case of exchange based orders whereas orders are being received and processed automatically the funds sufficiency is being checked by the software (the transaq programme). In case of otc orders the control is being carried out by a sales officer and a trader independently. the Group has not received any losses due to this risk in the reporting period.

(C) CREDIT RISk

credit risk is the risk of losses as a result of non-performance, late or partial performance by a debtor of its contractual financial obligations to the Group.

trading activities of the Group on behalf of its clients and its own involve settlement risk which arises when a counterparty becomes unable to meet its obligations under an otc trade. the Group settles most of its otc transactions on delivery versus payment terms through Russian and international settlement/clearing agents to ensure that a trade is settled only when both parties have fulfilled their contractual settlement obligations. acceptance of settlement risk on free delivery transactions requires a specific and/or counterparty specific approval by the Group’s top management.

the Group’s back office regularly monitors the settlement reports so that it always has actual information on the status of settlement including the lists of unsettled transactions. If a counterparty fails to meet its obligation beyond some reasonable time the back-office asks the manager in charge of the transaction to take an action to mitigate this risk.

the Group is exposed to the credit risks of bond issuers as disclosed in note 10, Financial assets and liabilities at fair value through profit and loss. the Group mitigates this risk through diversification of its portfolio.

the credit and liquidity quality of financial assets held-for-trading could be assessed by reference to mIceX’s Se quotation list (if listed) disclosed in note 10, Financial assets and liabilities; and available-for-sale financial assets in note 9.

the Group holds funds in accounts with Russian, cyprus and international banks. only banks of high credit quality qualify to hold the Group’s funds. each new bank for account opening

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is to be approved by the Group’s shareholders and should satisfy the following conditions:

• bank should possess sufficient financial strength;

• the Group’s management should have understanding of the bank’s financial situation and its decision making process.

the Group also limits its exposure to bank risk by limiting share of funds kept in any particular bank. the information about long-term Issuer default rating (IdR) assigned by Fitch Ratings to the Group’s banks are disclosed in note 12, cash and cash equivalents.

the total credit risk of the Group arising from loans, receivables and bonds as of the reporting date does not exceed their carrying value, 261 078 (2009: 79 958).

Concentration risk occurs in case of excessive increase of the securities stake of a single issuer (or related issuers) in the portfolio, or where there is an increase in liabilities of a single counterparty (or several related counterparties), which enhances the likelihood of material losses when the above issuers or counterparties are exposed to unfavorable factors.

the Group’s concentrations of credit risk are managed by client/counterparty/issuer and by geographical region. concentration of accounts receivable is outlined with a breakdown by counterparty in note 11, accounts receivable. the maximum credit exposure to one client/counterparty/issuer as of 31 december 2010 represented by 62 970 as loans originated to Sposa Investments ltd. and 26 991 to edrol Investments ltd., both were repaid in 2011 (31 december 2009: 51 099 as loans originated to Sposa Investments ltd. and 13 020 to edrol Investments ltd.).

the following tables shows the maximum exposure to credit risk for the components of the consolidated statement of financial position, except derivatives, by geography before the effect of mitigation through the use of master netting as of 31 december 2010 and 31 december 2009 correspondingly.

Rus-sian

Feder-ation

Cyprus Swit-zerland USA Neth-

erlands Latvia Total

Financial assetsFinancial assets held-for-trading 10 806 - - - - - 10 806available-for-sale investments 7 677 - - 1 889 - - 9 566trade and other receivables 4 635 524 - - - - 5 159

loans originated 10 013 97 170 - - - - 107 183cash and cash equivalents 22 030 31 431 48 285 24 905 134 58 126 843

55 161 129 125 48 285 26 794 134 58 259 558

31 December 2009 Russian Federation Cyprus Nether-

lands Latvia Total

Financial assetsFinancial assets at fair value through profit or loss 6 276 - - - 6 276 available-for-sale investments 2 696 - - - 2 696 trade and other receivables 3 810 221 - - 4 031

loans originated - 66 518 - - 66 518 cash and cash equivalents 45 477 536 133 22 46 168

Total 58 259 67 275 133 22 125 689

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D) MARkET RISk

market risk is the risk that movements in market prices, including foreign exchange rates, interest rates and equity prices will have an adverse affect on the Group’s income or the value of its financial investments. market risk arises from open positions in interest rate fixed income, currency and equity financial instruments, which are subject to general and specific market movements and changes in the level of volatility of market prices.

the Group is exposed to the market risk mainly through its available-for-sale and held-for-trading debt securities.

the market risk of the Group’s financial instruments as of 31 december 2010 and 31 december 2009 was as follows:

31 December 2010

Impact on

Changes in market quotations Profit/(loss) Equity

+3% 270 239

-3% (270) (239)

31 December 2009

Impact on

Changes in market quotations Profit/(loss) before tax Equity

3% increasing/(decreasing) 157/(157) 67/(67)

the Group manages market risks by setting limits on:

• concentrations of exposure to individual issuers of fixed income securities as well as exposure by industry/sector etc;

• open positions in currencies.

the management sets limits on the value of risk that may be accepted, which is monitored on a daily basis. However, the use of this approach does not prevent losses in the event of more significant market changes.

Currency riskcurrency risk is the risk that the value of financial instruments will fluctuate due to changes in foreign exchange rates. currency risk mainly results from open foreign currency positions, i.e. situations when an entity’s assets and liabilities denominated in a currency that is not the Group’s measurement currency are unbalanced.

the Group is exposed to currency risk with regard to ordinary activities and monetary items denominated in currencies other than the functional currency of the Group and the Group’s net investments in foreign subsidiaries.

In particular, the Group is exposed to uSd/RuR and uSd/euR exchange rate fluctuations. the Group’s exposure to foreign currency changes for all other currencies is not material. the Group’s management monitors the exchange rate fluctuations on a continuous basis and acts accordingly.

the financial instruments (monetary assets and liabilities except advances) denominated in currencies other than functional currency of the Group as at the reporting and comparative dates were as follows:

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31 DECEMBER 2010 Russian Roubles EURO GB

Pounds

Japa-nese Yens

Swiss francs

Aus-tralian dollars

Total

Financial assets at fair value through profit or loss 11 689 - - - - - 11 689 own fund 4 926 434 - - - - 5 360 client fund 15 845 383 72 43 10 84 16 437 trade and other receivables 5 284 131 - - - - 5 415 loans originated 21 107 16 866 - - - - 37 973

Total monetary financial assets 58 851 17 814 72 43 10 84 76 874

trade and other payables 3 162 9 - - - - 3 171 clients payable 15 036 383 72 43 10 84 15 628 Short-term loans 13 855 34 787 - - - - 48 642 accruals 282 117 - - - - 399 derivatives liabilities - 188 - - - - 188 Total monetary financial liabilities 32 335 35 484 72 43 10 84 68 028

Net financial assets (liabilities) 26 516 (17 670) - - - - 8 846

31 DECEMBER 2009 Russian Roubles EURO GB

PoundsJapanese

YensSwiss francs Total

Financial assets at fair value through profit or loss 6 523 - - - - 6 523own fund 1 561 114 - - - 1 675client fund 15 754 19 55 202 9 16 039trade and other receivables 3 911 121 - - - 4 032loans originated 1 001 - - - - 1 001

Total monetary financial assets 28 750 254 55 202 9 29 270

trade and other payables 1 462 77 - - - 1 539clients payable 15 404 19 55 202 8 15 688Short-term loans 10 452 10 040 - - - 20 492accruals 350 3 - - - 353derivatives liabilities - 188 - - - 188 Total monetary financial liabilities 27 668 10 327 55 202 8 38 260

Net financial assets (liabilities) 1 082 (10 073) - - 1 (8 990)

Stated below is an effect on the Group’s profit before tax (due to changes in the fair value of financial assets and liabilities) and the Group’s equity (also due to changes in the fair value of available-for-sale financial assets) as a result of a 3% weakening (strengthening) of foreign currencies against 1 uSd:

31 December 2010Changes in foreign currency rates Impact on

Profit/(loss) before tax Equity3% strengthening/(weakening) of Rouble 459/(459) 362/(362)3% strengthening/(weakening) of euRo 530/(530) nil

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31 December 2009Changes in foreign currency rates Impact on

Profit/(loss) before tax Equity3% strengthening/(weakening) of Rouble 168/168 202/(202)3% strengthening/(weakening) of euRo 302/(302) nil

Interest rate riskInterest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. at the reporting date the Group was not directly exposed to the interest rate risk.

(E) LIQUIDITY RISk

liquidity risk is the risk that the Group will encounter difficulty in meeting obligations from its financial liabilities. the Group’s liabilities to clients are always fully covered by the client funds held in bank and brokerage accounts. the Group’s other liabilities are normally fully covered by funds held in the own accounts of the Group, also the financial instruments which the Group invests as principal are highly liquid. thus the Group is not exposed to the liquidity risk.

the table below summarises the maturity profile of the Group’s financial assets and liabilities as of 31 december 2010 and 31 december 2009 correspondingly.

31 DECEMBER 2010On

demandLess

than 1 month

1 to 3 months

3 to 12 months

1 to 5 years Total

Financial assetsFinancial assets at fair value through profit or loss - - 10 806 - - 10 806 derivatives financial assets 883 - - - 883 available-for-sale financial assets - - 9 566 - - 9 566 trade and other receivables - 589 4 460 106 5 5 160 loans originated - 8 931 88 237 10 015 - 107 183 cash and cash equivalents 126 842 - 0 - - 126 842

126 842 10 403 113 069 10 121 5 260 440 Financial liabilitiestrade and other payables 73 695 1 215 2 102 - - 77 012Short-term loans - 54 373 47 072 21 692 - 123 137accrued liabilities - - - 399 - 399derivatives financial liabilities - 319 - - - 319

73 695 55 907 49 174 22 091 - 200 867Net position as of 31 December 2010 53 147 (45 504) 63 895 (11 970) 5 59 573

31 DECEMBER 2009On

demandLess

than 1 month

1 to 3 months

3 to 12 months

1 to 5 years Total

Financial assetsFinancial assets at fair value through profit or loss - - 6 276 - - 6 276derivatives financial assets 21 - 226 - 247available-for-sale financial assets - - 2 696 - - 2 696trade and other receivables - 24 3 897 3 107 4 031loans originated - 65 517 - 1 001 - 66 518cash and cash equivalents 46 169 - - - - 46 169

46 169 65 562 12 869 1 230 107 125 937Financial liabilitiestrade and other payables 40 797 706 609 - - 42 112Short-term loans - 13 701 901 18 725 - 33 327accrued liabilities - - 470 - 470derivatives financial liabilities 27 - 161 - 188

40 797 14 434 1 510 19 356 - 76 097Net position as of 31 December 2009 5 372 51 128 11 359 (18 125) 107 49 840

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28. related party tranSaCtionSFor the purpose of preparation of these consolidated financial statements parties are considered related if one of them is capable to control the other party or may exert significant influence on financial and operating decisions of the other party, as defined in IaS 24, Related party disclosures. In considering relations with each related party, attention is directed to the economic substance of such relations and not merely the legal form.

throughout the reporting period ended 31 december 2010 the Group made a number of transactions with related parties in the course of its ordinary activities.

the following tables provide the total amount of income and cash flow financial statements transactions that have been entered into with related parties for the relevant and 2009 financial years and information regarding outstanding balances at 31 december 2010 and 31 december 2009.

At 31 December 2010 At 31 December 2009Shareholders Other Shareholders Other

Loans originated - - - 13 020Trade and other receivablestrade receivable - 2 25 -Trade and other payablesclients payable 570 15 2 047 3 013other payable 143 902 - -Short-term borrowings 2 572 - 1 074 32 253

2010 2009Shareholders Other Shareholders Other

RevenueBrokerage commission 3 - 599Expensescurrency SWap - - - (17)

Administrative expensesdirectors short-term remuneration (200) (1 336) (45) (492)

Other income 4313 - -

Net finance income (expenses)Interests paid (16) - - (92)Interests received - - - 145

2010 2009Shareholders Other Shareholders Other

Related party transactionsLoans originatedloans originated - - - (43 280)Repayment of loans originated - - - 30 260Trade and other receivablestrade receivable - 24 - -

Short-term borrowingsShort-term loans received 3 900 - 1 074 33 581Repayment of short-term loans (2 412) - - (1 328)Trade and other payablesclients payable received 7 046 7 829 90 152 35 880clients payable repayment (8 519) (537) (92 104) (39 181)Repayment of remuneration (31) (263) (45) (492)

For the most part transactions with related parties were made at market rates. outstanding balances at the year-end are unsecured, interest free and settlement occurs in cash.

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29. SuBSequent eventSthe management does not have information on any other events after the reporting date which must be disclosed in these consolidated financial statements or notes thereto.

30. CommitmentS and ContinGenCieSBeing a provider of financial services to its clients which include brokerage and asset management services the Group holds client assets including cash, securities and other in bank and depo accounts. Financial instruments held in such accounts on behalf of clients or in a fiduciary capacity are not included in these financial statements, except clients cash received under brokerage agreements.

as at 31 december 2010 the Group held financial instruments on behalf of its clients non-designated on the statement of financial position with market value of 1 378 883 (as at 31 december 2009: 1 260 761) including:

• securities under the brokerage agreements with market value of 1 029 651 (as at 31 december 2009: 1 025 590);

• financial instruments held in a fiduciary capacity by the Group entity, RonIn trust cJSc, offering asset management services on the Russian market, as at 31 december 2010 the amount was equal to 349 232 (as at 31 december 2009: 235 171).

In the normal course of business, the Group enters into agreements to manage funds of private and corporate clients without potential liability in respect of any losses suffered by the clients as a result of common risks of investing and owning of the securities, except if resulting from gross negligence or willful default of the Group. However in asset management agreements with private pension funds the Group guaranteed to its clients the return of the principal amount transferred under such agreements and in some cases of income at the effective rate of return up to 6% p.a.

as at 31 december 2010 the Group had no legal disputes or proceedings with counterparties or official authorities significantly material to be disclosed in these financial statements.

31. other informationPROvISIONS IN ThE ARTICLES OF ASSOCIATION GOvERNING PROFIT APPROPRIATION

Article 201. profit may be disposed of by the general meeting as it sees fit.2. the company may make distributions to the shareholders and other persons entitled

to profits available for distribution only in so far as the net assets of the company exceed the aggregate of the paid-up and called-up part of the capital and the reserves which have to be kept by law.

3. profit may be distributed only after approval of the annual accounts showing that such distribution is permissible.

4. Shares held by the company in its own capital shall not be included for the purpose of calculating the distribution of profit, unless such shares are subject to a usufruct or pledge or depositary receipts have been issued for such shares as a consequence of which the usufructuary, pledge or depositary receipt holder is entitled to the profit.

5. depositary receipt which are held by the company or on which the company has an encumbrance on the grounds of which it is entitled to the distribution of profit shall also not be included for the purpose of calculating the distribution of profit.

6. the company may make interim distributions only if the requirements of paragraph 2 have been fulfilled.

Appropriation of result

under preservation of adoption by the annual General meeting of Shareholders, management proposes to add the net result for the financial year 2010, to an amount of uSd 10.316.000 to the retained profit and uSd 9.000 to minority interests.

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DISCLAIMER

to the best of the management’s knowledge and belief (who have taken all reasonable care to ensure that such is the case) the information presented in this annual Report is in accordance with the facts and does not omit anything likely to affect the import of such information.

the sole purpose of this annual Report is to provide background information to assist the recipient in obtaining a general understanding of the business of RonIn partners and its outlook. It is not intended to provide the basis for any investment decision, credit or any other evaluation and is not to be considered as a recommendation or a solicitation of RonIn partners for any recipient of this annual Report to participate in any financial activity. each recipient of this annual Report contemplating participation in any financial activity in any of the jurisdictions where RonIn partners operates must make (and will be deemed to have made) its own independent investigation and appraisal of the business, financial condition, prospects, creditworthiness, status and affairs of any legal entity in which such individual is seeking to invest. none of the statements in this report are intended as a financial advice or a recommendation to buy, sell or call on any security, product, service or investment.

certain statements contained in this annual Report may constitute forward-looking statements and future expectations. these expectations are based on the current assumptions and estimates made by the management and speak only as of the time in which they are made, the company accepts no obligation to update or amend these statements in the future. Forward-looking statements represent matters which are by their nature uncertain and bear a risk of a different actual event development than was predicted. anticipated results may differ from material results due to, among other factors: (1) changes in the general economic conditions, particularly in the Russian Federation and other areas in which RonIn partners operates, including but not limited to changes in Gdp, inflations, interest rates and exchange rates; (2) changes in the economic policies, such as monetary and fiscal, pursued by the Russian Federation and other major world economies; (3) developments and trends on the money, equity, commodity, capital and other markets; (4) changes in the availability and the cost of capital and funding associated with the general conditions on the credit markets as well as creditworthiness of borrowers and counterparties; (5) changes in the accessibility of different liquidity sources; (6) changes in the financial regulation in the Russian Federation, cyprus and other major financial centers in which RonIn partners operates, that may alter the scope of our activities by imposing certain constraints and limitations on our operations and on other financial institutions; (7) the degree to which RonIn partners will be able to implement its strategic plans and whether their realization will bring the intended effects. RonIn partners does not undertake to provide the recipient with access to any additional Information or to update this annual Report or to correct any inaccuracies therein which may become apparent.

RONIN LLC23 Kazakova street, moscow, Russian Federation, 105064phone: +7 495 645 88 85Fax: +7 495 645 88 83e-mail: [email protected]/russia

RONIN Europepythagoras 3 street,pythagoras court, office 301,3027 limassol, cyprusphone: +357 25 8 78 939 Fax: +357 25 8 78 291e-mail: [email protected]/europe

RONIN Trust23 Kazakova street, moscow,Russian Federation, 105064phone: +7 495 645 88 81Fax: +7 495 645 88 86e-mail: [email protected]/trust/

RONIN Management866, 5th Floor, anderson Square Building,Grand cayman KY1-1103, cayman Islandsphone.: +357 25 8 78 939Fax: +357 25 8 78 291e-mail: [email protected]/funds

annual RepoRt · If by chance you are reading this nonsense when there are so many interesting...

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Transcript of annual RepoRt · If by chance you are reading this nonsense when there are so many interesting...