Trinity Capital Regulatory News (TRC)

Trinity Capital PLC

Consolidated financial statements for the year ended 31 March 2012

Trinity Capital PLC (AIM: TRC), a fund created for investing in Indian real estate and infrastructure, announces its Preliminary Results for the year ended 31 March 2012.

- Ends -

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Chairman's Report

24 July 2012

Dear Shareholder

Dear Shareholder

The pace of implementation of the realisation mandate of Trinity Capital plc ("Trinity" or the "Company") slowed during the financial year ended 31 March 2012. This has been caused principally by economic conditions in India.

During the year, Trinity sold its holdings in Enigma, Kapstone and Rustomjee at close to carrying values, generating proceeds of £20.6 million. The Company distributed £22.1 million, or 10.5p per share, to investors, taking aggregate distributions over the past two financial years to £122.05 million, or 58.0p per share. The Company's net assets declined during the year ended 31 March 2012 by £40.8 million to £58.2 million or 27.6p per share, mainly resulting from the shareholder distributions and a reduction in the carrying values of the remaining investments.

Investor sentiment in the Indian property and equity markets has been weak due mainly to the declining rate of economic growth, a deterioration in investor sentiment and a sharp depreciation of the value of the Rupee. The 12% depreciation of the Rupee against Sterling has been a significant contributing factor to the fall in all of the reported investment valuations. There is considerable uncertainty surrounding recent Indian Government policy announcements on taxation. Moves to retrospectively tax offshore capital gains where a company's principal underlying business is in India and wide discretionary powers in relation to anti-avoidance rules have had a marked negative impact on foreign investor sentiment towards the country. The effect of these tax developments on Trinity and its subsidiaries remains unclear.

Domestic and international demand for property investments, especially the type of non-income producing development assets that we hold, has declined significantly. Four of our seven remaining investments, valued in aggregate at £38.9 million, are held jointly with Immobilien Development Indien I GmbH & Co. KG ("Immobilien I") and Immobilien Development Indien II GmbH & Co. KG ("Immobilien II"), (together the "Immobilien funds"), both of which are managed by SachsenFonds.

Trinity's share of the carrying value of the jointly-held investments in Lokhandwala and Luxor Cyber City have been written down from the 31 March 2011 values by 44% to £5.8 million and by 28% to £5.0 million respectively. Although we have received indicative offers, the realisation of these investments has stalled. SachsenFonds advised us that they obtained the approval of their investors to change the Luxor planning consents to that of a township. The change to township status would add significant value to the investment and allow an orderly exit if commercial terms can be agreed with a development partner, the promoters and SachsenFonds. There has been no material change with regard to the sale or development of our holding in Uppals IT Park "Tech Oasis" and, given the market conditions, we have written down the value of our holding by 30% to £12.8 million. We have held constant in Rupee terms the value of our investment in MK Malls, where again we have been unable to progress realisation because SachsenFonds' consent is required. The MK Malls valuation converted into a write-down by 12% to £7.8 million due to currency depreciation.

Of the Company's investments where SachsenFonds is not involved, the value of our investments in Jodhana and Horizon has been broadly maintained at £4.4 million and £6.5 million respectively. Absent a corporate transaction, realisation of the Jodhana investment will result from project development cash flows. We have an option to sell the shares in Horizon in 2013.

The value of our shareholding in DB Realty has fallen significantly over the past year, although it has recovered since our half year report was issued. The release of the promoters from custody has enabled them to return to manage the business. Although DB Realty owns some of the best development sites in Mumbai, including MK Malls, weak demand for property and limited availability of development finance imply that improvement in operating performance may take time. Since the end of the financial year, we have sold some of our shares in DB Realty in a very illiquid market and we are hopeful that as the market and company show signs of recovery buyers for larger blocks of the shares may emerge.

The appeal lodged by the Immobilien funds against the July 2011 dismissal on jurisdictional grounds by the Supreme Court of Mauritius in favour of our Mauritian subsidiary, our former investment manager and its principals has yet to be heard. Since we issued our interim financial statements for the period ended 30 September 2011, there has been no progress in implementing the Immobilien funds' approval to negotiate with Trinity a settlement of the legal claims for an aggregate payment to the Immobilien funds of approximately £2.0 million. Where indicative offers have been received for our investments held jointly with the Immobilien funds, final agreement on terms remains uncertain. The structure and strategy of the Immobilien funds is opaque and SachsenFonds does not have an investment manager in India.

The Board is committed to reduce operating costs where possible; administration and other costs for the year ended 31 March 2012 totalled £1,332,000 and for the previous year were £3,546,000. At 31 March 2012, Trinity held cash of £11.1 million. Further distributions will be made to shareholders as investments are sold and liabilities are reduced.

The Board is appreciative of the service it receives from its key providers, Indiareit, IOMA, Kross-Border, and Arden Partners. Indiareit has delivered attractive realisation proposals and strategies with respect to all of our investments but, unfortunately, negotiations with SachsenFonds have been fruitless and attractive realisation opportunities blocked. When Indiareit was appointed in June 2010, nobody imagined that it would take more than three years to sell the investment portfolio and, as such, we will be reviewing the arrangements with them to ensure that interests and incentives continue to be appropriately aligned.

The Board is appreciative of your continued support and we hope that the pace of realisation will pick up again in the current financial year.

Yours faithfully

Martin M Adams

Chairman

Investment Manager's Report

Indian Real Estate Overview

India's macro-economic environment continues to deteriorate with GDP growth slipping to a nine-year low of 6.5% in 2011-12, the current account deficit touching a high of 4% and inflation rate increasing to reach 7.55% in May, 2012. The currency has also seen a sharp fall of over 15% against the US dollar between February and June 2012. The main real estate markets have been adversely affected by the overall economic sentiment, resulting in a drop in sales of both residential and commercial properties. The overall outlook for 2012 is not very buoyant.

Residential real estate overview

Residential property price growth slowed in 2011. Sales and absorption have been adversely hit on account of high interest rates (and expectations of a decline in coming quarters), along with persistent high inflation and prices. New launches declined sharply by 19% y-o-y in 2011, primarily in the segments priced less than Rs. 4,000 per sq. ft. (Source: Real Estate Intelligence Service, JLL). Launches in the Rs. 4,000 to Rs. 7,500 per sq. ft. range saw an increase. High end residential projects continued to witness a slowdown both in terms of new launches and sales velocity, especially in Mumbai.

Going forward, it is expected that price rises in certain areas are likely to continue, although at a slower pace than 2011. However, certain locations which have witnessed rapid price growth in the past will not only resist a further increase, but also face some downward pressure.

Commercial real estate overview

The absorption of office space remained healthy with around 36.7 million sq. ft. being absorbed in 2011 (Source: Real Estate Intelligence Service, JLL). This buoyancy is expected to slow down in 2012, partly due to slowing economic growth. Domestic demand growth has fallen due to macroeconomic issues such as policy paralysis within the Government, high inflation, declining currency and slowdown in corporate earnings growth. The prime markets of Bangalore, Mumbai and NCR-Delhi have seen rents rise marginally; however rents in the other markets have remained stable. Significant new supply is expected in select micro markets such as Gurgaon and Noida, leading to high vacancy rates.

The Revised Direct Tax Code will have a significant negative impact on the IT office (non SEZ) and IT office (SEZ) supply when it becomes effective as it impacts the earnings of both landlords and tenants.

Economic and regulatory overview

Inflation continues to remain a challenge in India. Although the central bank cut key interest rates for the first time in 3 years in April 2012 in order to boost investment, no further cuts were announced in the policy review in July 2012. Tight monetary policy is expected to continue as long as inflation shows little sign of reducing to reach the targeted level of 5%.

The 2012 Indian budget raised significant concerns by seeking to retrospectively change a landmark Indian Supreme Court judgment in favour of Vodafone. A retrospective amendment was introduced in the Indian Income Tax Act to tax capital gains on offshore share sales where an underlying asset is situated in India. This will significantly impact all share sale transactions overseas and drew criticism from both existing and potential investors. The Government also introduced a General Anti Avoidance Rule ('GAAR'), which grants wide discretionary powers to the tax authorities. Implementation of GAAR has now been deferred until 2013. The introduction of a service tax on real estate transactions also served to increase costs of real estate transactions.

The latest Finance Ministry directives also prevent banks from entertaining comprehensive debt renegotiations for real estate developers. This, coupled with the macroeconomic scenario, will result in liquidity issues for developers.

The uncertain macroeconomic environment has had a negative effect on Trinity's investments, in particular the slow pace of sales in the Lokhandwala project and the continued depressed demand for Special Economic Zones (SEZ) projects such as Luxor Cyber City and Uppals IT Park "Tech Oasis".

Luxor Cyber City

Market overview

The market dynamics in Gurgaon on the commercial office front have not seen a significant change over the last few quarters. The city remains one of the most preferred IT/ITES destinations in the country. It has an existing Grade A office stock of 36.3 million sq. ft. comprising IT and non-IT space in almost equal proportion. However, there is prospective stock of over 9 million sq. ft. for each of the next three years in the pipeline, which will almost double the projected office market size in Gurgaon by end 2015. With this level of new supply in different stages of development, rental levels are expected to remain stagnant and vacancy rates are expected to remain high in the short to medium term. The current vacancy rate is 22.3% in spite of healthy absorption rates. (Source: Real Estate Intelligence Service, JLL).

Project location overview

LCC is located is just off the major national highway NH8. However, demand for an IT SEZ in the micro market where the project is located is not promising in the foreseeable future due to its distance from the main hub of existing office space in Gurgaon.

Partner/ promoter overview

Mr. B.K. Uppal (promoter of Uppal Housing, a leading local developer) and Mr. D.K. Jain (promoter of Luxor Group, a large industrial house active in NCR) are the other shareholders of LCC, with whom the project is to be developed.

Development overview

The project is a "notified" (registered) SEZ. However, the underlying SEZ approval (which is granted on an annual basis) has expired and an application has been filed for renewal.

Since inception, no development work has been undertaken due to lack of agreement on strategy between shareholders and adverse market conditions during the 2008-09 period. The market situation for IT office space remains poor due to significant current and upcoming supply. The adverse changes in tax laws introduced in last year's budget are also a dampener.

Various best use studies and change of land use options have been examined to change the product mix for LCC to improve return potential. The best land use in today's context is likely to be to develop a residential township, for which a minimum of 100 acres of contiguous land is required to obtain a license. This approach involves several regulatory and development risks from aggregation of additional land, obtaining a township license, market risk of selling plots to realize proceeds and then remitting cash outside India to TC14.

Exit strategy/ timelines

The valuation of the project has seen a significant drop as compared with March 2011 due to worsening macroeconomic tax and property market environment and an increase in costs.

Considering the complications involved in undertaking a residential township development, a strategic sale/ developer buyback is also being explored as a realisation alternative.

Any final decision of change to a township and realisation of investment must be taken in consultation with Immobilien II/SachsenFonds. .

Jodhana

Market overview

Jodhpur is a city with a very rich heritage, a manufacturing hub for handicrafts and an important tourist destination in the north western Indian state of Rajasthan. The residential real estate segment has been very active in recent years owing to project launches by local and regional developers. Residential development essentially comprises of prime single family gated compounds, with launch of few multi-family apartments. The prospective buyers are primarily wealthy businessmen residing within Jodhpur and Non Resident Indians who originate from Jodhpur and are keen to maintain a link with the city. Residential property prices have seen a significant increase during the past few years.

Project location overview

Umaid Bhawan Palace, the residence of the former Maharaja (King) of Jodhpur, is an iconic monument in the city and attracts tourists and travelers from across the world. A large portion of the palace is now being managed as a luxury hotel by the Taj Group. The palace is renowned for its grandeur and spectacular architecture which lends significant prestige to the area, allowing for new developments to be positioned as high-end products. The Jodhana project site is located in the precincts of the palace.

Partner/ promoter overview

The Maharaja of Jodhpur is a prominent ceremonial figure and commands significant respect and authority. The project is a joint venture with Marudhar Hotels Pvt. Ltd. (MHPL) (a company promoted by the Maharaja of Jodhpur), which is also the owner of the Jodhana project land. Jodhana has acquired development rights over the land from MHPL and the project is being developed by the investee company.

Development overview

The Investment Manager has restructured the commercial terms of the investment for TCML. The development mix has also changed to a residential development due to limited demand for commercial real estate in the area, low rentals, higher capital expenditure requirement and longer gestation period for recovery of capital. The plan is now to undertake a high end villa development on the 19 acre land parcel and a combination of a plotted residential layout and apartments on the 9.7 acre land parcel.

The layout plan approval for the 19 acre master plan has been obtained and the infrastructure works have commenced on site. The next step is to seek approval of the building plans for which villa areas and building details are being finalised. Discussions are also ongoing regarding appointment of a marketing agency and finalisation of pricing of the project. The development is managed by Jodhana, relying on the expertise of the Investment Manager. The services provided by the Investment Manager are in addition to those provided under the Investment Management Agreement.

The conceptualisation for the development of apartments on the 9.7 acre land parcel has begun and the architects have been appointed.

Exit rationale/ strategy

The valuation of the project has seen a marginal fall in Rupee terms on account of the worsening macroeconomic environment which impacted the cost of equity.

The project launch is expected to take place in Q3 2012, with an exit over 3 years through development and sale of residential units. Being a residential development, the project will be self-liquidating through project cash flows.

Uppals IT Park "Tech Oasis"

\* TCML also provided £7.5 million of mezzanine debt to TC1 in October 2008 (included below)

** 1 equity share is held by an affiliate of the former investment manager and the process of transfer is in progress

Market overview

The farmers in the Greater Noida region challenged the legality of land acquisition by the Greater Noida/ Noida authorities and filed petitions in the courts. Although a state court judgement upheld the validity of the acquisition, enhanced compensation had to be paid to the farmers by the Greater Noida development authority. Construction work in the region has stopped until the master plan of the entire area is re-approved by a Government planning board, which is expected shortly. Some farmers have appealed to higher courts.

Aside from the above, the endemic problem in Greater Noida continues to be oversupply. Although high quality infrastructure exists, large areas of land with good access are abundant. This is particularly relevant for commercial real estate (most of which will cater to the IT/ITES sector). In the year 2012, 1 million per sq. ft. of office space is expected to be completed, while the absorption is expected to be only 0.2 million per sq. ft. Taking into account the vacant stock from previous years, vacancy levels are expected to rise to around 76% in 2012 and further to almost 79% in 2013 (Source : Real Estate Intelligence Service, JLL).

Project location overview

The Yamuna Express way, a 165 km access controlled six-lane concrete expressway connecting NCR with the northern hinterlands, terminating at Agra (a major city in the northern Indian state of Uttar Pradesh) will be open for public use in August 2012. The project land has significant frontage onto the expressway. The Indian Grand Prix is held in October each year on the Formula 1 race track located close to the project site. These initiatives will eventually boost the real estate demand in the region.

Partner/ promoter overview

There is no Indian partner/ promoter in the project.

Development overview

The project land is zoned for the IT/ITES industry and has received approval as a Special Economic Zone (SEZ) from the Indian government.

The land was originally procured from the local authority on a lease instalment basis. The entire lease premium to the local authority has been paid by Uppals IT.

The market conditions for both the sector and the micro market have been unfavourable since inception. For this reason, no development work has been undertaken to date. Since October, 2011 no construction work was permitted by the authorities due to the requirement for re-approval of the area's master plan due to the dispute with farmers.

The extended timelines sought from the Greater Noida authority for achieving certain construction milestones had been due to expire in July, 2012. An application is being made for further extension. Based on initial discussions with the authority, Uppals IT is confident of obtaining the approvals. However, development will remain a challenge until market conditions improve.

Exit/ realization strategy

The valuation continues to decline due to challenging market conditions and risk factors.

The immediate focus is protection of land value. The Investment Manager will be evaluating any possible realization strategies as they emerge.

Any exit decision would need to be taken in consultation with Immobilien I and Immobilien II who are co-investors in TC1 together with TCML.

Horizon

Market overview

The size of the Indian logistics industry is estimated to be almost US$ 80-100 billion measured by revenues. Considering the current demand and disorganised nature of the industry, Frost & Sullivan in its report on Indian Transportation Logistics 2011 suggests that the industry is likely to witness consistent growth of around 8-9 % annually and reach revenues of US$ 190-200 billion by 2020.

However, with the overall negative macroeconomic scenario, the short term prospects for the Indian logistics industry have also diminished. Two major policy changes, which were expected to boost the sector, have not been introduced, the first being authorisation of foreign direct investment in the multi brand retail sector and the second being changes in taxation.

According to Fitch Ratings' annual report, "2012 Outlook: Indian Logistics Industry". The Indian logistics industry is not expected to see any significant changes in 2012.

Project location overview

Horizon's projects include container freight stations, free trade warehousing zones, inland container depots and logistics and warehousing facilities located across the country.

Partner/ promoter overview

SKIL Group, the promoter shareholder of Horizon is a leading player in the Indian infrastructure industry and has executed large scale projects nationwide. It is the SKIL group's expertise which will enable execution of Horizon's projects and creation of value.

Development overview

Horizon is making progress on several projects undertaken and the Investment Manager is monitoring these on a regular basis.

Horizon's major projects include:

·; A container freight station located near the Jawaharlal Nehru Port, Navi Mumbai (the port handles about 60% of the container traffic in the country)

·; A free trade warehousing zone ('FTWZ') in Navi Mumbai, in respect of which a co-developer status has been granted to a subsidiary of Horizon, which proposes to acquire additional land for development of a larger area under the FTWZ

·; Development of an inland clearance depot in NCR, a container freight station at Pipavav, a multimodal logistics park at Jhansi besides the warehousing facilities in Navi Mumbai

·; Setting up an additional logistics park as a part of the Sohar SEZ in Oman

These activities will create greater substance in Horizon, and ultimately result in capture of greater value at the time of listing, which is currently targeted for 2013.

Exit/ realisation strategy

The agreement with the promoters for TCML's exit at a base price of Rs. 22 per share in 2013 continues in place. This price has been used as the basis for the valuation of the asset as at 31 March 2012.

There also exists a possible upside if an initial public offering of Horizon materialises, or Horizon is merged with another listed entity at a more attractive price prior to the option date in 2013.

Lokhandwala

Market overview

Mahalaxmi is a well established high end residential hub of South Mumbai with good connectivity to other parts of the city via rail and road linkages. Several projects have been launched in the micro market by well-known developers, thus resulting in a large amount of stock being available. However, as is the case throughout Mumbai, sales are facing a slowdown at current prices.

Project location overview

The micro market boasts of good social infrastructure including premium hotels such as the Four Seasons and the Shangri-La. The nearby high street development known as Phoenix Mills, complete with outlets of all leading clothing brands (such as Zara, Giorgio Armani etc.), a multiplex cinema, high end food and beverage outlets, entertainment zone etc is a well known social destination.

Promoter/ partner overview

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

Development overview

Spread across 7 acres of land, the project was originally an encroached site with over 2,100 slums, which have now been relocated. According to slum redevelopment guidelines in Mumbai, the project has a re-housing component for the existing slum dwellers in lieu of which the developer is entitled to construct residential towers for sale. The sale component is being developed as a high end residential project. The construction of both the free sale areas and the slum rehabilitation area are now in progress after the project had been delayed for over 2 years.

The project has been launched as "Minerva" and comprises two towers of around 84 floors each, including stilt and podium parking and amenities in addition to the slum rehabilitation buildings. Sales of approximately 120 apartments or almost 35% of proposed stock has been contracted. However the project is experiencing resistance to sales at the quoted price of Rs. 25,000 per sq. ft. in common with other nearby competing developments.

The scale of the project will result in development execution challenges given the complexity of design and targeted height. This may also lead to further delays as timelines for completion may stretch. The state Government has also recently introduced new development regulations which may result in a reduction in permissible saleable area for the project, thus adversely impacting overall realisation proceeds from the project.

In January 2012 the Development Control Regulations ("DCR") were changed. The new rules impact on the approval for and therefore costs of development. The impact of the new DCR and how the new regulations will be implemented in practice are unclear and therefore subject to interpretation. Lokhandwala received certain development approvals prior to the new rules coming into force and, for the purpose of this valuation exercise, CBRE has assumed that there will be no change in the plans to those already approved for Lokhandwala and that the new rules would be only applicable for additional floor space (which has yet to be approved). However, it must be noted that, if the developer opts for an amendment of the already approved plans then this may have a negative impact on the valuation.

Exit/ realisation strategy

The valuation of the project has seen a significant drop since March, 2011 essentially on account of projected delays in timelines, rises in costs and slower sales.

A strategic sale/ developer buyback during the development phase of the project is the most likely realisation strategy given the likelihood of the project extending beyond the fund life.

Any exit decision would need to be taken in consultation with Immobilien II who are partners in TC5. Recent indications from Immobilien II are that they are receptive to an early realisation.

MK Malls

TC10's investment in DB (BKC) Realtors Private Limited ("MK Malls") 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 figures below refer only to the economic interest in the CCPS.

MK Malls is engaged in an attractively located commercial office development in the Bandra Kurla Complex business district of Mumbai.

Although the promoters were released from custody, there has been no progress with respect of the project or the suspension of TC10's legal rights. DB Realty, which manages the MK Malls project has limited recourse to finance, although there are indications that this position is easing. The amount due to TC10 on exercise of the right to sell all CCPS (in which TCML has the entire economic interest) has still not been paid by the promoters.

TC10's 88% ownership by Immobilien I and Immobilien II poses further challenges in negotiating an exit.

Directors' Report

The Directors have pleasure in presenting their report and financial statements of the Group for the year ended 31 March 2012.

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 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 2012 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 £22,095,000 (2011: £99,955,000).

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

Arvind Pahwa

Philip Scales (resigned 16 January 2012)

Graham Smith (appointed 16 January 2012)

Pradeep Verma

None of the Directors had interests in the shares of the Company at 31 March 2012 (2011: none).

Details of the Directors' remuneration are provided in note 12.

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

24 July 2012

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.

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; 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 within 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), Arvind Pahwa Graham Smith 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), Martin Adams and Graham Smith.

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, Arvind Pahwa 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 2012 which comprise the Group Statement of Comprehensive Income, the Group and Parent Company Statements of Financial Position, the Group Statement of Cash Flows and the Group and Parent Company Statements of Changes in Equity and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs).

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.

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 2012 and of the Group's loss for the year then ended;

·; have been properly prepared in accordance with IFRSs; 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

Consolidated Statement of Comprehensive Incomefor the year ended 31 March 2012

Consolidated Statement of Financial Positionas at 31 March 2012

Company Statement of Financial Positionas at 31 March 2012

The Company made a loss of £20,124,000 (2011: loss of £3,797,000).

Statements of Changes in Equityfor the year ended 31 March 2012

Statements of Changes in Equityfor the year ended 31 March 2012

Consolidated Statement of Cash Flowsfor the year ended 31 March 2012

Notes to the Financial Statementsfor the year ended 31 March 2012

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 Trinity'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.

2. Summary of significant accounting policies

(a) Statement of compliance

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs).

The consolidated financial statements were authorised for issue by the Board on 24 July 2012.

(b) Basis of measurement

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

(c) Functional and presentation currency

These consolidated financial statements are presented in Sterling. The Company's functional currency is Indian Rupee (Rs). All financial information presented in Sterling has been rounded to the nearest thousand.

(d) Use of estimates and judgements

The preparation of the consolidated 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.

(a) Consolidation

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 the power to govern the financial and operating policies of a portfolio company so as to obtain benefits from its activities.

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.

 (b) Business combinations

The acquisition of subsidiaries is accounted for using the purchase method. The cost of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the portfolio company, plus any costs directly attributable to the business combination. The portfolio company's identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 are recognised at their fair value at the acquisition date, except for non-current assets (or disposal groups) that are classified as held for resale in accordance with IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations, which are recognised and measured at fair value less costs to sell.

Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business combination over the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. If, after reassessment, the Group's interest in the net fair value of the portfolio company's identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess is recognised immediately in profit or loss.

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 accrued for on an accruals basis and are presented as revenue items except for expenses that are incidental to the disposal 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 retranslated 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 retranslated 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 retranslation are recognised in profit or loss, except for differences arising on the retranslation 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, excluding foreign operations in hyperinflationary economies, are translated to Sterling at exchange rates at the dates of the transactions.

The income and expenses of foreign operations in hyperinflationary economies are translated to Sterling at the exchange rate at the reporting date. Prior to translating the financial statements of foreign operations in hyperinflationary economies, their financial statements for the current year are restated to account for changes in the general purchasing power of the local currency. The restatement is based on relevant price indices at the reporting date.

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.

At the date of authorisation of the financial statements, the following standards and interpretation were in issue, but not yet effective. The impact of these statements on the Group's financial statements in the period of initial application is not known at this stage. These statements, where applicable, will be applied in the year when they are effective.

Future changes in accounting policies

IASB (International Accounting Standards Board) and IFRIC (International Financial Reporting Interpretations Committee) have issued the following standards and interpretations with an effective date after the date of these financial statements:

The Directors do not expect the adoption of the standards and interpretations to have a material impact on the Group's financial statements in the period of initial application.

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 is 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.

Fair values of financial assets and financial liabilities that are traded in active markets are based on quoted market prices or dealer price quotations. For all other financial instruments the Company determines fair values using valuation techniques, as described in detail in note 10.

The table below analyses financial instruments measured at fair value at the end of the reporting period, by the level in the fair value hierarchy into which the fair value measurements are categorised:

The following table shows a reconciliation from the beginning balances to the ending balances for fair value measurements in level 3 of the fair value hierarchy:

Estimated performance fee (carried interest) on investments

As described in note 4, a provision has been made for performance fees. This is calculated by reference to the total fair value of those assets covered by the investment management agreement.

Estimated future legal fees

As described in note 18, 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

On 18 June 2010, Trinity Capital Mauritius Limited ("TCML"), a wholly owned subsidiary of the Company, entered into an investment management agreement (to which the Company is also a party) appointing Indiareit Investment Management Company ("Indiareit") as investment manager to TCML. Indiareit was entitled to an investment management fee of US$2.2 million in the first year of the contract, US$1.89 million in the second year, and US$1.69 million in the third and subsequent years. In addition Indiareit is entitled to a performance fee of 7.5 per cent of the realised net proceeds received by the Group from the disposal of its investments other than DB Realty. After the third anniversary of the contract, 50% of the annual investment management fees of US$1.69 million will be set-off against any future performance feesand, if such future performance fees are less than the aggregate annual management fees, the balance shall be repaid by the Investment Manager out of performance fees it received prior to the third anniversary of the Investment Manager's appointment.

The provision for the performance fees to which Indiareit would be entitled based on the fair value of all investments, apart from the excepted assets noted above, amounted to £3,248,000 (2011: £5,475,000) at 31 March 2012. The movements of the performance fee charge in the Statement of Comprehensive Income are made up as follows:

5. Other administration fees and expenses

6. 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.

7. Earnings per share

Basic earnings per share is calculated by dividing the net profit 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 earnings per share and basic earnings per share.

8. Distributions

The Company made the following distributions during the year and the previous year:

The distributions were paid out of reserves created upon the cancellation of the share premium reserve which arose at the time of the Company's admission to AIM.

9. Investments in subsidiaries

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

In addition to above, the Company has the following subsidiaries in India:

(a) Uppals IT Projects Private Limited: Trinity Capital (One) Limited held 100% of the total equity share capital at 31 March 2012.

(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 at 31 March 2012.

(c) Nirmaan Buildwell Private Limited: Trinity Capital (Fourteen) Limited held 99.99% of the total equity share capital at 31 March 2012.

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.

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

The Group holds full or partial ownership interests in a number of unquoted Indian companies. Some of these companies invest in development property projects ("the Project Companies"). For the Project Companies, CB Richard Ellis ("CBRE") conducted an independent valuation (acting as external valuers) of the development properties owned by each of these companies as at 31 March 2012. Based on CBRE's valuation of the development properties, 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 Project Companies. CBRE also carried out certain Agreed Upon Procedures to test these computations of the fair value of Group's interest in Project Companies. The Directors also valued the Group's ownership interests in the unquoted companies not owning property development projects.

For the Project Companies, 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. Management 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 and ranges between 17.15% and 27.15%.

The unlisted equity securities comprising non-development property holdings are valued using a mixture of discounted cash flow and price earnings multiples. At March 2012, the only investment in this category was Horizon Countrywide Logistics Limited, and the valuation was based on the present value of the put option held by the Group company.

Listed equity securities are valued at the closing market price. At March 2012, there was only one holding of listed equity securities, DB Realty Limited.

Investments are recorded at fair value are as follows:

\* The valuation of the investment in Uppals IT Project Pvt Ltd has been prepared on the basis that relevant lease extensions will be obtained from the local government development authority. The Board believes that such extensions will be forthcoming (and the valuation of the investment has been prepared on this basis) but there is no guarantee that this will take place. If such extensions were not obtained then the value of this investment would be materially lower.

11. Share capital

The authorised share capital at 31 March 2011 and 31 March 2012 and the issued and fully paid share capital at the same dates was 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.

The Board's policy is to maintain a strong capital base so as to maintain investor, creditor, and market confidence. In accordance with the investment policy adopted by the Shareholders in March 2010, the Company's ordinary shares are trading at a price below the NAV per Ordinary Share the Company shall immediately effect a return of capital through a cash distribution to Shareholders. If the Company's Ordinary Shares are trading at a price above the NAV per ordinary share, the Board will selectively determine, on a periodic basis, whether or not to make new investments.

Group capital comprises share capital and reserves.

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

12. Directors' remuneration

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

The Directors' Incentive Plan was approved by Shareholders on 29 November 2011, and provides for payments to Martin Adams, Pradeep Verma and Johns Chapman amounting to 0.75%, 0.375% and 0.175% respectively of amounts distributed to shareholders.

The fixed fee paid to Stephen Coe includes £15,000 per annum for acting as Chairman of the Audit Committee and Remuneration Committee. The fixed fee to John Chapman includes £15,000 per annum for acting as Chairman of the Legal Committee

13. Disposals of investments

Realised gains on disposal of investments are as follows:

14. 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 2012.

15. Cash and cash equivalents

16. Provision for future legal costs

The Company is engaged in a dispute, as described in note 18, 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 2011 for the amount of the estimated legal costs yet to be incurred in the litigation. On 13 July 2011, the Supreme Court in Mauritius set aside the claim lodged by Immobilien I and Immobilien II. Immobilien I and Immobilien II appealed against that decision on 26 July 2011. A provision of £2 million is retained for the estimate of future legal costs associated with the dispute.

The movement in the provision is as follows:

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.

17. Commitments

There were no outstanding contractual commitments at the year end.

18. Contingent Liabilities

On 12 January 2011 the Company received a notification of claim from Immobilien. In addition to the Company, the notification was addressed to Trinity Capital Mauritius Ltd. ("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 dismissed those claims. On 26 July 2011, the Civil Court of appeal in Mauritius was served with a notice of appeal.

By way of background, in November 2007 and May 2008 Immobilien I and Immobilien II purchased from TCML interests in various Mauritian companies (the "Mauritian 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 are 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 is 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 has retained a provision of £2,000,000 for future legal costs in defending the actions, as described in note 16. 

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 £61,664,000 (2011: £104,888,000).

At 31 March 2012, 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 £3,083,000 (2011: £5,244,000).

The Group does not hedge against foreign exchange movements, except from time to time for short term receivables or payables with a known settlement date.

(ii) Market price risk

The Group is exposed to market price risk arising from its investment in unlisted and listed 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 £3,083,000 (2011: £5,244,000). 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 2012 (2011: 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 prior to his appointment; Philip Scales was a Director of the Company. Both are Directors of the Administrator. They received no Directors' fees from the Company during the year (2011: nil). The fees paid by the Company to the Administrator (excluding VAT) for the year amounted to £131,000 (2011: £192,000).

21. Subsequent events

There are no significant subsequent events.