Trinity Capital Regulatory News (TRC)

Trinity Capital PLC

Consolidated financial statements for the year ended 31 March 2015

Trinity Capital PLC (AIM: TRC), a fund created for investing in Indian real estate and infrastructure, announces its Annual Results for the year ended 31 March 2015.

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Chairman's Report

Much of the Board's attention in the past year has been focused on painstaking negotiations with our partners in our Indian properties. Our single objective remains to extricate Trinity Capital plc ("Trinity" or the "Company") from its remaining three investments and the related issues in order to permit the final distribution of proceeds to shareholders and the winding up of the Company. Although some progress has been made, the stars above India, Munich, Mauritius and the Isle of Man have yet to align. Unfortunately, the continuing stagnation in the property markets in the Mumbai and Delhi regions has not facilitated our mission.

Trinity's net asset value ("NAV") declined to £18.6 million (8.8p per share) from £19.9 million (9.4p per share) at 30 September 2014 and £28.1 million (13.4p per share) at the beginning of the financial year. £5.3 million (2.5p per share) was distributed to Shareholders in July 2014, which was generated principally from the sales of the Jodhana and SKIL investments. Net valuation write-downs of £1.7 million were mitigated by the 7.2% appreciation of the Rupee against Sterling from 92.8 to 99.4 during the financial year. Trinity does not hedge its currency exposure and, since 31 March 2015, the Rupee has further depreciated in value by 8.2% to 101.0. Substantially all of the cash held by Trinity and its subsidiaries outside India is denominated in Sterling. As in prior periods, for commercial reasons, Trinity does not disclose the carrying value of individual investments. Operating expenses in the financial year ended 31 March 2015 (excluding performance and directors' incentive fees, which are payable only when asset disposals or distributions respectively occur) amounted to £0.8 million, compared with £0.9 million in the previous financial year, a decrease of 16%.

Trinity holds interests in three remaining properties in India, all of which are owned jointly with the German funds managed by SachsenFonds. We have a continuing dialogue with SachsenFonds and their partner, Deutsche Fonds Holding, to agree the terms on which Trinity could exit its interests. There is no common reason as to why sales have not been consummated.

We have identified a buyer of the mezzanine securities issued by BKC Realtors (formerly MK Malls) in which Trinity holds the entire beneficial interest. Although the sale terms are consistent with agreements struck with the German funds in 2011, completion has been stymied by contractual negotiations between SachsenFonds and the buyer in relation to the equity interest that the German funds will continue to hold after we exit. We have valued this investment on the basis of the agreed net sales proceeds in the expectation that the German funds will act as they have agreed.

Earlier this year, the Mauritian subsidiary ultimately owned by Trinity and SachsenFonds which is financing the Minerva residential project in Mumbai, agreed terms to sell its interest to the Lokhandwala group. We have been advised by the promoters that, as and when (a) the municipal authorities approve an increase in the height of the Minerva tower and/ or (b) other group assets are sold, further financing will be available to buy our equity in the joint venture. The original agreed terms of sale have now expired and SachsenFonds and we have informed the Lokhandwala group that any new take-out will be on revised terms. Continuing sluggish demand for prime residential property in Mumbai and limited bank appetite for mortgage lending may affect the Lokhandwala group's ability to raise further capital. The future of the investment could be bleak if the increased density and/ or further finance cannot be arranged. We believe that our carrying valuation at 31 March 2015 reflects these uncertainties.

Trinity and the German funds have different views on the prospects for the joint investment in Uppal IT. We have been exploring structures, which would permit us to exit the investment and leave the entire project to SachsenFonds to develop for their investors. Uppal IT currently holds cash in Rupees equivalent to approximately £7.15 million. The Mauritian courts have yet to hear the related creditor enforcement action initiated by our Mauritian subsidiary. Even so, we remain optimistic that, absent an alternative settlement with the German funds, our application to liquidate the Mauritian joint venture that holds the equity in Uppal IT will be successful and that the money that is owed to us will be returned.

The German funds' appeal of the Mauritius lower court decision to dismiss their claims against Trinity on jurisdictional grounds in 2011 was finally heard by the appellate court in July 2015. A decision is awaited, which, given the experience we have had, is not predictable.

SKIL's management continues to ignore Trinity's legal rights in respect of the defaulted put option, which caused losses for our Mauritius subsidiary of INR 498.2 million (£5.4 million at the year-end exchange rate). Although we believe SKIL's breach of contract to be clear-cut, the Board is also mindful of possible costs and delays. We hope that SKIL's management will reconsider its failure to meet its financial obligations to us rather than risk the reputational damage that its conduct might raise for potential lenders, investors, suppliers or customers.

The real estate market in India has yet to benefit from the new Government. As such, the potential for further significant joint losses has helped edge SachsenFonds and Trinity towards a resolution of our outstanding issues. If and when there are real prospects to generate cash from our remaining joint investments, the Board is hopeful that all outstanding issues with the German funds can be resolved. If this does not occur, however, there is ample potential for the disputes to escalate.

Martin M. Adams

Chairman

Investment Manager Report

Indian Real Estate Overview

GDP growth of the Indian economy recovered from decadal lows of 4.6%p.a. in Q1-2014 to a projected 7.5%p.a. in Q1-2015. The Wholesale Price Inflation (WPI) has witnessed continuous decline since May 2014, while the Consumer Price Inflation (CPI) is expected to remain range bound (5% to 5.5%) for the next few quarters. Post the two rates cuts of 25 bps each earlier this year; the central bank has further eased the monetary policy rate by 25 bps in the June monetary policy review.

Growth in Industrial Production was recorded at 4.1%p.a. at the end of April 2015, indicating incipient recovery in the output of core sector industries. With lower interest rates and government initiatives including the "Make in India" campaign, growth in Industrial Production is expected to increase further in the coming quarters.

Pro-reform policies of the new Government and expectation of an economic revival have resulted in increase in foreign capital inflows. Major economists and governing authorities have projected India to remain as one of the fastest growing economy in the coming years. The stock market has also generally remained buoyant (except in the last few weeks on account of global cues) and the currency has largely remained stable.

Residential real estate update

The slowdown in the residential sector continues with sales velocity remaining a challenge overall and consequently capital values not showing signs of revival. Inventory overhang is, however, declining driven by decline in new launches, as developers concentrate on completions in on-going projects. The launch of new residential units declined by 33.0% from 66,114 units in Q4-2014 to 44,062 units in Q1-2015. At the end of Q1-2015, the sale velocity was recorded at 8.1%, implying that if no further launches take place in the market, it will take nearly 12 quarters to sell the current unsold inventory.

Commercial real estate update

On the whole, commercial real estate has shown healthy absorption over the past quarter. Average quarterly absorption volume increased from 6.7 million sq ft in FY 13-14 to 7.5 million sq ft in FY 14-15. With the expected recovery in the economy, take-up of office space is expected to further improve in the forthcoming quarters, with healthy demand from IT-ITES and manufacturing firms. Vacancies in office space marginally declined from 17.0% in Q4-2014 to 16.9% in Q1-2015, and are expected to decline further as demand continues to outpace upcoming supply during the next few quarters. Rents in the larger cities of Delhi, Hyderabad and Mumbai have remained stable, while the cities of Pune, Chennai, Kolkata and Bangalore have witnessed moderate quarterly rental growth.

Trinity's investments are also impacted by the macro-economic and regulatory factors. We provide below a detailed update on each asset.

Summary of Investments

Uppals IT Park "Tech Oasis"

\* TCML also provided £7.5 million of mezzanine debt to TC1 in October 2008.

Market overview

The Greater Noida office market has not enjoyed the improvements in the commercial real estate sector witnessed in other parts of India, as referred to earlier. The region is plagued with oversupply and as more completions take place in the coming quarters, vacancy levels could increase further.

Construction work continues in the region after the court's decision to uphold the land acquisition and re-approval of the region's master plan by the government planning board. Some farmers had filed an appeal in the higher court against this decision. However the courts have so far quashed the appeal.

Project location overview

The project land has frontage on the Yamuna expressway (a fully operational 165 km long access controlled six lane concrete pavement expressway connecting NCR with Agra). It is also located very close to the Formula 1 race track. Over-supply of both residential and commercial projects in the region has resulted in the absorption being limited.

Partner/ promoter overview

There is no Indian partner / promoter in this project.

Development overview

The project land is zoned for the IT/ITES industry. The requisite lease premium has been paid to the local authority. There is a possibility of obtaining a partial refund of the lease premium and this is under evaluation.

The product mix currently envisaged (as per the zoning and approvals received) does not justify any development, given the market conditions. This has been the case since inception - hence, the site is still just undeveloped land. In any case, between October 2011 and August 2012, no construction work was permitted by the authorities due to the requirement for re-validation of the area's master plan. Following the re-validation, Uppals IT obtained approval for construction of a boundary wall, which is in progress, although there are challenges from farmers who have encroached parts of the site. Completion of the wall will further help in protecting the land value and securing the site. As a consequence of the lack of any development, the site's approval as a Special Economic Zone (SEZ) has not been extended. However, the site remains designated as an IT/ITES plot.

Exit/ realization strategy

The Manager has been evaluating possible realization strategies, but nothing concrete has emerged as yet. Any exit decision would need to be taken in consultation with Immobilien I and II.

A few preliminary expressions of interest to acquire the land have been received.

Lokhandwala

Market overview

Mahalaxmi is a premium high-rise residential location in South/Central Mumbai, which is well connected to other parts of the city and suburbs through rail and road linkages. The micro market has seen a significant rise in developments under construction as well as ready supply. Most of these projects are targeted at the luxury residential segment. The significant pressure on sales velocity in this segment is continuing partly because of the very high cost of apartments in this region, and this has also resulted in a downward pressure on pricing.

Project location overview

The micro-market boasts a top quality infrastructure with premium hotels such as Four Seasons and the Palladium, a high street development known as Phoenix Mills which contains outlets of leading clothing brands (such as Zara, Giorgio Armani etc.), a multiplex cinema, high-end food and beverage outlets, and an entertainment zone. The area also has several well known office buildings / complexes such as Indiabulls Financial Centre, Peninsula Corporate Park, Peninsula Business Park, and One Indiabulls Centre in the vicinity.

Promoter / partner overview

Lokhandwala Infrastructure, a large Mumbai based developer having a strong presence in the slum rehabilitation / redevelopment space, is the majority partner in the joint venture, and is leading the project development. The Lokhandwala Group has developed over 10 million sq. ft. of other projects in Mumbai including slum redevelopments.

Development overview

The project, marketed under the name "Minerva", continues to face certain regulatory and commercial challenges. The 'Floor Area Ratio' construction density (which is presently approved at 25% below plan) approval is still pending. The final environmental clearance of the Minerva tower is also yet to come. As a result of the overall macro economic conditions in the market, the rate of sales velocity remains under pressure, with no sales having been witnessed over the past few months. The construction costs have increased significantly over those originally projected, on account of an increase in prices of raw materials, labour and financing costs. The project had taken further debt to enable continuing construction, but this is now nearly exhausted. The principal repayments have now fallen due and further high cost debt is being taken to meet the earlier debt obligations. There have been certain legal notices received by the company and its directors in their individual capacity from suppliers of materials for non payment of dues, to which the company has responded.

As regards the status on site, the (nearly) 2,100 slums that were at the site have been cleared and the occupants re-located. The construction of the slum rehab building is nearing completion. Larsen and Toubro (one of India's foremost contractors) has been appointed for the construction of the free-sale area, but this has also almost stopped for the past few months because of the lack of further Floor Area Ratio density approval.

Exit/ realisation strategy

Several realisation alternatives are being evaluated, including a strategic sale/ developer buyback during the development phase of the project.

Any exit decision would need to be taken in consultation with Immobilien I who are partners in TC5 and this may pose several challenges in realising a timely exit.

DB (BKC) Realtors

TC10's investment in DB (BKC) Realtors Private Limited consists of (a) equity; (b) redeemable optionally convertible cumulative preference shares (ROCCPS); and (c) compulsorily convertible preference shares (CCPS). In 2007 and 2008, the capital structure of TC10 was reorganised such that the shares acquired by Immobilien I and Immobilien II in TC10 provided the economic interest in the equity and ROCCPS. TCML was issued with shares in TC10 which provide the economic interest in the CCPS, with a return on equity capped at an IRR of 20%.

The project is a commercial office development in the Bandra Kurla Complex business district of Mumbai.

The amount due to TC10 on the exercise of its right to sell all CCPS (in which TCML has economic interest) after the expiry of three years from the date of allotment has still not been paid by the promoters. The Manager is engaged in dialogue with the promoters with the objective of providing an exit to TCML. Discussions on a strategic sale / developer buy back at an appropriate value in order to provide a timely exit to TCML have been finalized, but this has been stuck due to Immobilien I and II not giving final clearance.

Directors' Report

The Directors have pleasure in presenting their report and financial statements of the Group for the year ended 31 March 2015.

Principal activity and incorporation

The Company is a closed-end investment company, incorporated on 7 March 2006 in the Isle of Man as a public limited company. Its shares were admitted to trade on AIM (formerly the Alternative Investment Market) of the London Stock Exchange on 21 April 2006.

The Group has invested in real estate and real estate related entities in India, primarily in commercial development in the office and business space, residential, retail, hospitality, and infrastructure sectors deriving returns from development, long-term capital appreciation and income.

In March 2009, shareholders voted to change the Company's investment policy by requiring the Company to gradually dispose of its assets over time and return capital to investors.

The Group has no employees.

The consolidated financial statements comprise the results of the Company and its subsidiaries (together referred to as the "Group").

Results and dividends

The Group's results for the financial year ended 31 March 2015 are set out in the Consolidated Statement of Comprehensive Income.

A review of the Group's activities is set out in the Chairman's Report and the Investment Manager's Report respectively.

During the year, the Company paid distributions of £5.3 million (2014: £10.5 million).

Directors

The Directors of the Company during the year and to date of this report were as follows:

Martin Adams (Chairman)

John Chapman

Stephen Coe

Graham Smith

Pradeep Verma

None of the Directors had interests in the shares of the Company at 31 March 2015 (2014: none). Details of the Directors' remuneration are provided in note 6.

Company Secretary

The secretary of the Company during the year and at the date of this report was Philip Scales.

Auditors

The auditors, KPMG Audit LLC, being eligible, have expressed their willingness to continue in office in accordance with Section 12(2) of the Isle of Man Companies Act 1982.

On behalf of the Board

Graham Smith

Director

29 September 2015

Statement of Directors' Responsibilities in Respect of the Annual Report and the Financial Statements

The Directors are responsible for preparing the Directors' Report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year, which meet the requirements of Isle of Man company law. In addition, the Directors have elected to prepare the financial statements in accordance with International Financial Reporting Standards, as adopted by the EU.

The financial statements are required by law to give a true and fair view of the state of affairs of the Group and Parent Company and of the profit or loss of the Group for that period. 

In preparing these financial statements, the Directors are required to:

· select suitable accounting policies and then apply them consistently;

· make judgements and estimates that are reasonable and prudent;

· state whether they have been prepared in accordance with International Financial Reporting Standards, as adopted by the EU; and

· prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and Parent Company will continue in business.

The Directors are responsible for keeping proper accounting records that are sufficient to show and explain the Parent Company's transactions and disclose with reasonable accuracy at any time the financial position of the Parent Company and to enable them to ensure that its financial statements comply with the Companies Acts 1931 to 2004. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation governing the preparation and dissemination of financial statements may differ from one jurisdiction to another.

Corporate Governance Statement

The UK Corporate Governance Code does not directly apply to companies incorporated in the Isle of Man but the Company's Board has developed its internal procedures to be in line with the recommendations of the UK Corporate Governance Code where appropriate and these are monitored on a regular basis. The Directors will continue to comply with the relevant requirements of the UK Corporate Governance Code to the extent that they consider it appropriate having regard to the Company's size and the nature of its operations. The Board is not aware of any reason that would cause it to reconsider its current approach.

Responsibilities of the Board

The Board of Directors is responsible for the implementation of the investment policy of the Company and for its overall supervision via the investment policy and objectives approved by shareholders. At each of the Company's regular Board meetings, the financial performance of the Company and its portfolio investments are reviewed.

The Board is also ultimately responsible for the Company's day-to-day operations, but in order to fulfil its obligations, the Board has delegated operations through arrangements with the Investment Manager and the Administrator. All Board members are non-executive.

Audit Committee

The Audit Committee is a sub-committee of the Board and makes recommendations to the Board which retains the right of final decision. The Audit Committee has primary responsibility for reviewing the financial statements and the accounting policies, principles and practice underlying them, liaising with the external auditors and reviewing the effectiveness of internal controls. The Audit Committee maintains a risk register to help it identify, evaluate, monitor and control risks. The Committee members are Stephen Coe (Chairman), Martin Adams, John Chapman, and Pradeep Verma.

The terms of reference of the Audit Committee covers the following:

• duties in relation to external reporting, including reviews of financial statements, shareholder communications and other announcements;

• duties in relation to the external auditors, including appointment/ dismissal, approval of fee, discussion of the audit; and

• duties in relation to internal systems, procedures and controls.

Remuneration and Nomination Committee

The Remuneration and Nomination Committee is a sub-committee of the Board and makes recommendations to the Board which retains the right of final decision. The Committee members are Stephen Coe (Chairman) and Martin Adams.

The purpose of the Committee is to:

· set the remuneration of the Directors;

· demonstrate to the shareholders of the Company that the remuneration of the non-executive Directors of the Company and its subsidiaries (the "Group") is set by a committee of the Board whose members have no personal interest in the outcome of the decisions of such committee and who will have due regard to the interests of shareholders;

· to the extent that any executive or non-executive Director may be invited to join meetings of the Committee as appropriate he shall absent himself and take no part in any discussions concerning his own remuneration or other benefits or matters within the province of the Committee; and

· consider the appropriateness of the Board's composition, and assess the suitability of potential Board members.

The Committee is authorised by the Board to:

· when the fulfilment of its duties requires, obtain any outside legal or other professional advice including the advice of independent remuneration consultants, to secure the attendance of external advisers at its meetings, if it considers this necessary, and to obtain reliable, up-to-date information about remuneration in other companies, at the expense of the Company. The Committee has full authority to commission any reports or surveys which it deems necessary to help it fulfil its obligations; and

· when the fulfilment of its duties requires, to obtain any outside legal or other professional advice including the advice of independent recruitment consultants and to secure the attendance of external advisers at its meetings, if it considers this necessary, at the expense of the Company. The Committee has full authority to commission any reports or assistance which it deems necessary to help it fulfil its obligations.

Legal Committee

The Legal Committee is a sub-committee of the Board and makes recommendations to the Board which retains the right of final decision. The Legal Committee's primary responsibility is to oversee the disputes which the Group is currently involved in. The Committee members are John Chapman (Chairman), Martin Adams and Graham Smith.

Investment Committee

The Investment Committee is a sub-committee of the Board and makes recommendations to the Board which retains the right of final decision. The Investment Committee's primary responsibility is to oversee the realisation of the Company's portfolio in consultation with the Investment Manager in accordance with the Company's investment policy. The Committee members are Martin Adams (Chairman), John Chapman and Pradeep Verma.

Report of the Independent Auditors, KPMG Audit LLC, to the members of Trinity Capital PLC

We have audited the financial statements of Trinity Capital plc for the year ended 31 March 2015 which comprise the Group Statement of Comprehensive Income, the Group and Parent Company Statements of Financial Position, the Group and Parent Company Statements of Changes in Equity, the Group Statement of Cash Flows and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs), as adopted by the EU.

This report is made solely to the Company's members, as a body, in accordance with Section 15 of the Companies Act 1982. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of Directors and Auditor

As explained more fully in the Directors' Responsibilities Statement, the Directors are responsible for the preparation of financial statements that give a true and fair view. Our responsibility is to audit, and express an opinion on, the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's (APB's) Ethical Standards for Auditors.

 Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Group's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the financial statements. In addition we read the financial and non-financial information in the annual report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion on the financial statements

In our opinion the financial statements:

· give a true and fair view of the state of the Group's and Parent Company's affairs as at 31 March 2015 and of the Group's loss for the year then ended;

· have been properly prepared in accordance with IFRSs as adopted by the EU; and

· have been properly prepared in accordance with the provisions of Companies Acts 1931 to 2004.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies Acts 1931 to 2004 require us to report to you if, in our opinion:

· proper books of account have not been kept by the Parent Company and proper returns adequate for our audit have not been received from branches not visited by us; or

· the Parent Company's statement of Financial Position and Statement of Comprehensive Income are not in agreement with the books of account and returns; or

· certain disclosures of Directors' remuneration specified by law are not made; or

· we have not received all the information and explanations we require for our audit.

KPMG Audit LLC

Chartered Accountants

Heritage Court

41 Athol Street

Douglas

Isle of Man IM99 1HN

29 September 2015

Consolidated Statement of Comprehensive Incomefor the year ended 31 March 2015

Consolidated and Company Statements of Financial Positionas at 31 March 2015

These financial statements were approved by the Board on 29 September 2015 and signed on their behalf by

Stephen Coe Graham Smith

Director Director

Consolidated and Company Statements of Changes in Equityfor the year ended 31 March 2015

Consolidated Statement of Cash Flowsfor the year ended 31 March 2015

Notes to the Financial Statementsfor the year ended 31 March 2015

1. General information

The Company is a closed-end investment company incorporated on 7 March 2006 in the Isle of Man as a public limited company. The address of its registered office is IOMA House, Hope Street, Douglas, Isle of Man.

The Company is listed on the Alternative Investment Market (AIM) of the London Stock Exchange. 

The Company and its subsidiaries (together the "Group") invest in real estate and real estate related entities in India, primarily in commercial development in the office and business space, residential, retail, hospitality and infrastructure sectors deriving returns from development, long-term capital appreciation and income.

In March 2009, shareholders voted to change the Company's investment policy by requiring the Company to gradually dispose of its assets over time and return capital to investors.

The Group has no employees.

The consolidated financial statements were authorised for issue by the Board on 29 September 2015.

2. Summary of significant accounting policies

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU.

The consolidated financial statements have been prepared on the historical cost basis except for financial instruments at fair value through profit or loss which are measured at fair value in the statement of financial position.

These financial statements are presented in Sterling, which is the Company's functional currency. All financial information presented in Sterling has been rounded to the nearest thousand.

The preparation of the financial statements in conformity with IFRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 3.

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries and subsidiary undertakings). Control is achieved where the Company has power over an investee, exposure or rights to variable returns and the ability to exert power to affect those returns.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated Statement of Comprehensive Income from the effective date of acquisition or up to the effective date of disposal, as appropriate.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the Group. All intra-group transactions, balances, income and expenses are eliminated on consolidation.

As an investment entity under the terms of the amendments to IFRS 10 Consolidated Financial Statements the Company is not permitted to consolidate its controlled portfolio entities. The consolidated financial statements incorporate the financial statements of the Company and the financial statements of the intermediate investment holding companies. Control is achieved where the Company has the power to govern the financial and operating policies of an entity company so as to obtain benefits from its activities.

The Directors consider the Company to be an investment entity as defined by IFRS 10 Consolidated Financial Statements as it meets the following criteria as determined by the accounting standard:

· Obtains funds from one or more investors for the purpose of providing those investors with investment management services;

· Commits to its investors that its business purpose is to invest funds solely for returns from capital appreciation, investment income or both; and

· Measures and evaluates the performance of substantially all of its investments on a fair value basis.

A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other business segments. A geographical segment is engaged in providing products or services within a particular economic environment that are subject to risks and returns that are different from those of segments operating in other economic environments.

The Directors are of the opinion that the Group is engaged in a single segment of business being property investment business in one geographical area being India.

Revenue includes interest receivable, dividend income and fair value gains and losses. Interest receivable is accrued on a time basis by reference to the principal outstanding and the effective interest rate applicable.

Fair value gains and losses are recognised in the period of revaluation. Dividend income from investments is recognised when the Company's right to receive payment has been established, normally the ex-dividend date.

All expenses are accounted for on an accruals basis and are presented as revenue items except for expenses that are incidental to the sale of an investment which are deducted from the disposal proceeds.

Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit or loss except to the extent that it relates to a business combination, or items recognised directly in equity or in other comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Current tax payable also includes any tax liability arising from the declaration of dividends.

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for:

· temporary differences on the initial recognition of assets or liabilities in a transaction that is

not a business combination and that affects neither accounting nor taxable profit or loss;

· temporary differences related to investments in subsidiaries and jointly controlled entities to

the extent that it is probable that they will not reverse in the foreseeable future; and

· taxable temporary differences arising on the initial recognition of goodwill.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.

 Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

(a) Functional and presentation currency

Items included in the financial statements of each of the Group's entities are measured usingthe currency of the primary economic environment in which the entity operates ('the functional currency'). The consolidated financial statements are presented in Sterling, which is the Company's functional and presentation currency.

(b) Transactions and balances

Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to the functional currency at the exchange rate at that date. The foreign currency gain or loss on monetary items is the difference between amortised cost in the functional currency at the beginning of the year, adjusted for effective interest and payments during the year, and the amortised cost in foreign currency translated at the exchange rate at the end of the year.

Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are translated to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items in a foreign currency that are measured in terms of historical cost are translated using the exchange rate at the date of the transaction. Foreign currency differences arising on translation are recognised in profit or loss, except for differences arising on the translation of available-for-sale equity investments, a financial liability designated as a hedge of the net investment in a foreign operation that is effective, or qualifying cash flow hedges, which are recognised in other comprehensive income.

(c) Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to Sterling at exchange rates at the reporting date. The income and expenses of foreign operations are translated to Sterling at exchange rates at the dates of the transactions.

Foreign currency differences are recognised in other comprehensive income, and presented in the foreign currency translation reserve (translation reserve) in equity. However, if the operation is a non-wholly-owned subsidiary, then the relevant proportionate share of the translation difference is allocated to the non-controlling interests. When a foreign operation is disposed of such that control, significant influence or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to non-controlling interests. When the Group disposes of only part of its investment in an associate or joint venture that includes a foreign operation while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.

When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future, foreign exchange gains and losses arising from such a monetary item are considered to form part of a net investment in a foreign operation and are recognised in other comprehensive income, and presented in the translation reserve in equity.

Financial assets and financial liabilities are recognised when a Group entity becomes a party to the contractual provisions of a financial instrument. Financial assets and financial liabilities are offset if there is a legally enforceable right to set off the recognised amounts and interests and it is intended to settle on a net basis.

Investments of the Group where the Group does not have control are designated as at fair value through profit or loss on initial recognition. They are measured at fair value. Unrealised gains and losses arising from revaluation are recognised in profit or loss.

Investments in entities over which the Group has control are consolidated in accordance with IAS 27.

The fair value of unquoted securities is estimated by the Directors using the most appropriate valuation technique for each investment.

Securities quoted or traded on a recognised stock exchange or other regulated market are valued by reference to the last available bid price.

A provision is recognised in the statement of financial position when the Group has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation, and the obligation can be reliably measured. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

A number of new standards and amendments to standards are effective for annual periods beginning after 1 April 2014; however, the Group has not applied the following new or amended standards in preparing these consolidated financial statements.

The new or amended standards are not expected to have a significant impact on the Group's consolidated financial statements.

3. Critical accounting estimates and assumptions

These disclosures supplement the commentary on financial risk management (see note 19).

Key sources of estimation uncertainty

Determining fair values

The determination of fair values for financial assets for which there are no observable market prices requires the use of valuation techniques as described in accounting policy note 2.8. For financial instruments that trade infrequently and have little price transparency, fair value is less objective, and requires varying degrees of judgement depending on liquidity, concentration, uncertainty of market factors, pricing assumptions and other risks affection the specific instrument. See also "Valuation of financial instruments" below.

Critical judgements in applying the Company's accounting policies

Critical judgements made in applying the Company's accounting policies include:

Valuation of financial instruments

The Company's accounting policy on fair value measurements is discussed in accounting policy note 2.8. The Company measures fair value using the following hierarchy that reflects the significant of inputs used in making the measurements:

· Level 1: Quoted market price (unadjusted) in an active market for and identical instrument.

· Level 2: Valuation techniques based on observable inputs, either directly (i.e. as prices) or indirectly (i.e. derived from prices). This category included instruments valued using: quoted market prices in active markets for similar instruments: quoted market prices for identical or similar instruments in markets that are considered less than active; or other valuation techniques where all significant inputs are directly or indirectly observable from market data.

· Level 3: Valuation techniques using significant unobservable inputs. This category includes all instruments where the valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instrument's valuation. This category includes instruments that are valued based on quoted prices for similar instruments where significant unobservable adjustments or assumptions are required to reflect differences between the instruments.

All the Company's investments measured at fair value have been valued on the basis of Level 3 described above.

A reconciliation from the beginning balances to the ending balances for Level 3 investments is as follows:

Financial instruments not measured at fair value

The carrying value of short-term financial assets and financial liabilities (cash, debtors and creditors) approximate their fair value.

Estimated future legal fees

As described in note 17, the Company is engaged in litigation. A provision has been made for the associated legal costs, but this amount cannot be calculated with any certainty. The actual amount may differ significantly, and will depend on the duration and complexity of the litigation, and the success or otherwise in reaching settlement with the other parties.

4. Investment management fees and performance fees

The Investment Management Agreement with Indiareit Investment Management Company ("Indiareit") expired on 31 December 2013. However, Indiareit continues to provide investment management services to the Company with performance fees being negotiated on an ad hoc basis and the Company has continued to pay the regular investment management fee of US$198,000 per annum. During the year, a performance fee of £642,000 arising from the disposal of Jodhana (note 12) was paid to Indiareit. In carrying out the valuation of Investments at Fair Value (note 10), the Directors have estimated the performance fees which might be negotiated upon the disposal of individual investments.

5. Other administration fees and expenses

6. Directors' remuneration

Details of Directors' remuneration during the year are as follows:

The Directors' Incentive Plan ("DIP") was approved by Shareholders on 29 November 2012, and provides for payments to Martin Adams, Pradeep Verma and John Chapman amounting, in aggregate to 1.3% of amounts distributed to shareholders. With effect from 1 September 2013, the remuneration and nomination committee amended the rates to each of the Directors benefitting from the DIP with each of their consents.

7. Taxation

There is no liability for income tax in the Isle of Man.

The Group is subject to income tax in Mauritius at the rate of 15% on the chargeable income of Mauritian subsidiaries. The Mauritius subsidiaries are, however, entitled to a tax credit equivalent to the higher of the foreign tax paid and a deemed credit of 80% of the Mauritian tax on their foreign source income. No provision has been made in the financial statements due to the availability of tax losses.

8. Loss per share

Basic loss per share is calculated by dividing the net loss attributable to equity shareholders of the parent by the weighted average number of ordinary shares outstanding during the year.

There is no difference between fully diluted loss per share and basic loss per share.

9. Distributions

The Company made a distribution of 2.5 p per share on 22 August 2014, amounting in total to £5.3 million (2014: distribution of 5 p per share on 6 September 2013, amounting in total to £10.5 million).

10. Investments in subsidiaries

The Company has the following subsidiaries incorporated in Mauritius. They are recorded at cost in the financial statements of the Company less provision for impairment.

In addition to above, the Company has or had an interest in the following entities:

(a) Uppals IT Projects Private Limited: Trinity Capital (One) Limited held 100% of the total equity share capital at 31 March 2015.

(b) Jodhana Developers Private Limited: Trinity Capital (Seventeen) Limited held over 98% of the total equity share capital but only 48.48% of the voting rights and 49% of the economic interest until its disposal on 18 July 2014.

The financial statements of the subsidiaries in India are not consolidated in these financial statements, as they do not meet all the criteria for consolidation as required by IAS 27.

11. Investments - designated at fair value through profit or loss

The Group holds full or partial ownership interests in three unquoted Indian companies.

CBRE conducted an independent valuation (acting as external valuers) of the development property owned by Lokhandwala Kataria Constructions Pvt. Ltd. as at 31 March 2015 and of the development property owned by Uppals IT Project Pvt. Ltd. ("Uppals") as at 31 March 2014. Based on CBRE's valuation of the development properties and taking into account uncertainties identified in completion of the project, which were carried out in accordance with the valuation guidelines of The Royal Institution of Chartered Surveyors, the Directors valued the Group's interest in the equity interests held in each of the Indian companies. CBRE also carried out certain Agreed Upon Procedures to test these computations of the fair value of Group's interest.

CBRE has made certain assumptions regarding the density of the Lokhandwala project and its timings to completions. There are significant uncertainties surrounding these assumptions and accordingly the Directors have assessed a number of the risks and discounted the CBRE valuation accordingly.

As no development has taken place at Uppals and there have been no significant changes in the local market or Uppals itself since March 2014, the Directors have adopted the March 2014 valuation of the Group's interest in Uppals in these March 2015 accounts, subject to an adjustment for currency movements.

The value of the investment DB (BKC) Realtors Private Limited (MK Malls) is based on the net sales proceeds to be received under the terms of a draft (but not yet binding) sales agreement.

The Directors' valuations are based (where appropriate) on a discounted cash flow methodology. The methodology uses the cash-flow data generated by CBRE (which in turn is partially based on company-generated cash flows) and observable market data on interest rates and equity returns. The discount rates used for valuing equity securities are determined based on historic equity returns for other entities operating in the same industry for which market returns are observable. The Board uses models to adjust the observed equity returns to reflect the actual debt/equity financing structure of the investment. The discount rate applied varies from project to project to take account of the estimated risk of about 19%.

The investments are in projects for which there is very little or no market comparable information. Consequently the valuations are dependent on assumptions which are the subject of judgement, and a large range of possible valuations can be deduced. Due to the inherent uncertainty associated with the determination of the valuations, the amount realised on disposal may differ materially from the carrying amount in the financial statements. The impact of such uncertainty cannot be quantified

Investments are recorded at fair value are as follows:

The fair value adjustment consists of:

IFRS 13, Fair Value Measurement requires disclosure, by class of financial instruments, if the effect of changing one or more inputs to reasonably possible alternative assumptions would result in a significant change to the fair value measurement. The information used in determination of the fair value of Level 3 investment is chosen with reference to the specific underlying circumstances and position of the investee company. On that basis, the Board believe that the impact of changing one or more of the inputs to reasonably possible alternative assumptions would not change the fair value significantly.

Fair value hierarchy of investments

The financial assets measured at fair value are valued using a fair value hierarchy as described in Note 3.

12. Disposals of investments

The Group disposed of all of its holding in Jodhana and in SKIL during the year:

Disposals in the prior year were as below:

13. Cash and cash equivalents

14. Provision for future legal costs

The Company is engaged in a dispute, as described in note 17, with Immobilien Development Indien I GmbH & Co. KG ("Immobilien I") and Immobilien Development Indien II GmbH & Co. KG ("Immobilien II"), being limited partnerships incorporated in Germany, both sponsored by SachsenFonds Holding GmbH. A provision was established in March 2012 for the amount of the estimated legal costs yet to be incurred in the litigation. A provision of £2 million (2014: £2 million) is retained for the estimate of future legal costs associated with the dispute.

There can of course be no certainty as to the accuracy of these provisions. The actual amount may differ significantly, and will depend on the duration and complexity of the litigation, and the success or otherwise in reaching settlement with the other parties.

15. Share capital

The authorised share capital at 31 March 2015 and 31 March 2014 and the issued and fully paid share capital at the same dates were as follows:

The Deferred Shares rank pari passu with the Ordinary Shares save that the Deferred Shares have no right to dividends or voting rights or the right to receive notice of or attend any general meeting. On the return of capital in a winding-up of the Company or otherwise (other than re-purchases or redemptions of shares authorised by special resolution), the Deferred Shares have the right to return of par value paid up thereon in priority to the return of the par value paid up on the Ordinary Shares.

Group capital comprises share capital and reserves.

Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements.

16. Net asset value (NAV)

The NAV per share is calculated by dividing the net assets attributable to the equity holders of the Company at the end of the year by the number of shares in issue as at 31 March 2015.

17. Contingent Liabilities

On 12 January 2011 the Company received a notification of claim from Immobilien I and Immobilien II. In addition to the Company, the notification was addressed to TCML, Trikona Advisers Ltd. ("TAL", the former investment adviser of the Company,) private persons who together controlled TAL, and TSF Advisers Mauritius Limited (a joint venture between TAL and SachsenFonds Asset Management GmbH). On 13 July 2011, the Supreme Court in Mauritius set aside the claim lodged by Immobilien I and Immobilien II on jurisdictional grounds. Immobilien I and Immobilien II appealed against that decision on 26 July 2011, and the appeal was heard on 9 July 2015. The appeal court reserved its judgement, and no decision has yet been given.

By way of background, in November 2007 and May 2008 Immobilien I and Immobilien II purchased from TCML interests in various Mauritian companies (the "TC Companies") which in turn owned equity stakes in Indian investment vehicles (the "Indian Companies") which held certain of the Company's development projects in India (the "Transactions"). Accordingly, Immobilien I and/or Immobilien II were partners with TCML in various Mauritian companies in respect of five development projects in India. One Mauritian TC Company was sold in its entirety to Immobilien I and Immobilien II. In aggregate, Immobilien I and Immobilien II paid £86.4 million for investments in which the Company had invested £41.8 million. The contracts included legal provisions in the relevant documentation whereby the Group would be obliged to make good to the acquirer the economic loss which would arise upon the non-fulfilment of certain conditions in the contractual arrangements. 

The amount claimed by Immobilien I and Immobilien II in the original pleading was their original cost of the investments, being nearly €116 million, plus amounts to compensate for prejudice, trouble, annoyance, interest and costs.

The Board remains fully committed to defending the claims made by Immobilien I and Immobilien II. The Directors do not consider it necessary to provide for the claims in the financial statements, but the Company maintains a provision of £2 million for future legal costs to defend the actions.

18. Commitments

There were no outstanding contractual commitments at the year-end (2014: nil).

19. Financial risk management

The Group's activities expose it to a variety of financial risks: market risk (including currency risk, market price risk and interest rate risk), credit risk and liquidity risk.

Risk management is carried out by the Board, with assistance from the Investment Manager to the extent possible and as appropriate.

(i) Foreign exchange risk

The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the Indian Rupee. Foreign exchange risk arises from future commercial transactions, recognised monetary assets and liabilities and net investments in foreign operations.

Net assets denominated in Indian Rupee at the year-end amounted to £16.1 million (2014: £25.9 million).

At 31 March 2015, had the exchange rate between the Indian Rupee and Sterling increased or decreased by 5% with all other variables held constant, the increase or decrease respectively in net assets would amount to approximately £0.8 million (2014: £1.3 million).

The Group does not hedge against foreign exchange movements.

(ii) Market price risk

The Group is exposed to market price risk arising from its investment in equity investments. All these securities present a risk of capital loss. The Board and the Investment Manager are responsible for the selection of investments and monitoring exposure to market risk. All investments are in Indian companies.

If the value of the group's investment portfolio had increased by 5%, the Group's net assets would have increased by £0.8 million (2014: £1.3 million). A decrease of 5% would have resulted in equal and opposite decrease in net assets.

The Group is exposed to property price risk, property rentals risk and the normal risks of property development through its investment in Indian real estate companies.

(iii) Cash flow and fair value interest rate risk

The Group's cash and cash equivalents are invested at short term market interest rates.

The table below summarises the Group's exposure to interest rate risks. It includes the Groups' financial assets and liabilities at the earlier of contractual re-pricing or maturity date, measured by the carrying values of assets and liabilities.

Credit risk arises on investments, cash balances and debtor balances. The amount of credit risk is equal to the amounts stated in the statement of financial position for each of these assets. Cash balances are limited to high-credit-quality financial institutions. There are no impairment provisions as at 31 March 2015 (2014: nil).

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. The Company aims to maintain flexibility in funding.

Residual undiscounted contractual maturities of financial liabilities:

20. Related party transactions

Graham Smith is a Director of the Company, and a Director of the Administrator. He has received no Directors' fees from the Company during the year (2014: nil). The fees paid by the Company to the Administrator (excluding VAT) for the year amounted to £0.1 million (2014: £0.1 million).

Details of Directors' remuneration during the year are given in note 6.

21. Subsequent events

There were no significant subsequent events.