10 Aug 2010 07:00
| Date: | 10 August 2010 |
| On behalf of: | Trinity Capital PLC |
| Embargoed until: | 0700hrs |
Trinity Capital PLC
Consolidated financial statements for the period ended 31 March 2010
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 2010
- Ends -
Further information, please contact:
Enquiries:
Hogarth
Tim McCall / James White +44 207 357 9477
IOMA Fund and Investment Management Limited
Philip Scales, Director +44 1624 681250
Evolution Securities
Nominated Adviser and Joint Broker
Bobbie Hilliam / Chris Clarke, Corporate Finance +44 207 071 4300
Arden Partners plc, Joint Broker
Chris Hardie, Corporate Finance +44 207 614 5917
Chairman's Report
Dear Shareholder
The approval by shareholders of the appointment of Indiareit as investment manager and the change of name to Trinity Capital PLC ("Trinity" or the "Company") at the extraordinary general meeting ("EGM") held on 30 July 2010 are important milestones.
Indiareit hit the ground running when they were appointed as investment manager on 18 June 2010 and they have impressed the Board with the speed and thoroughness with which they are (i) familiarising themselves with the portfolio companies and the complicated range of structures and issues; and (ii) approaching the property development and investment realisation strategies. Indiareit were appointed after an extensive beauty parade exercise was carried out by Rothschild and DTZ International Property Advisers. Rothschild also assisted and advised the Board on the appropriateness of the terms of appointment.
Given that Indiareit were appointed so recently and they were not the investment manager during the period to which the enclosed financial statements pertain, we have not asked them to provide a management presentation for inclusion in this annual report. However, Indiareit prepared, together with the administrator, IOMA, the updates with regard to the status of each of the Company's investments. These summaries try to give, in each case, a flavour for the investment held, the Board's valuation, the project in which we have an interest, the equity partners involved and some of the issues that impact on the timing and prospects for realisation. When the Company issues the interim financial statements for the 6 month period to 30 September 2010, Indiareit will provide a management report and perspective.
During the financial year to 31 March 2010, Trinity's net assets rose from £281.2 million to £296.3 million, with net asset value per share increasing by 15% from £1.13 to £1.30. The Board has determined that the value of the investment portfolio and the value adjusted for non-controlling interests rose from £214.8 million to £243.2 million. As in the past, CBRE assisted with the valuation and Protiviti Consulting carried out certain agreed upon procedures to test the computation of the fair value of the Trinity group's interest. The methodology underpinning the valuations is consistent with that applied in previous years. As one would expect, all assumptions and issues relating to each investment will be reviewed and validated by Indiareit in conjunction with the preparation of the interim accounts and management report as at 30 September 2010.
The statement of financial position was impacted positively by a 7% weakening of Sterling against the Indian Rupee during the year. Operating costs and management fees rose from £8.1 million in the year to 31 March 2009 to £10.4 million in the year to 31 March 2010, equivalent to 4.8 pence per share, caused mainly by a significant increase in legal costs. Further details are provided below.
Shareholders will be very much aware that the financial statements do not tell the story of what was a very eventful year involving significant changes to the Board, the termination of the previous management agreement and two material litigation processes outside India: one involving the former investment manager; and the second involving two funds sponsored by SachsenFonds, which in 2007 and 2008 acquired assets from the Trinity group for an aggregate price of £86.4 million.
The circular issued to shareholders on 5 July 2010 in connection with the EGM provided among other information:
·; an update on the disputes with (a) the former investment manager; and (b) with Immobilien I and Immobilien II, the funds sponsored by SachsenFonds;
·; an investment and operating update, including key financial data relating to the first quarter of the 2010/11 financial year; and
·; the selection process and terms of appointment of Indiareit as investment manager.
The circular is available for download from the Company's website http://www.trinitycapitalplc.com/ under the link Investor Relations/ Key Financial Data. Rather than repeat information provided a month ago in the circular, the remainder of this report aims to update and provide further information to shareholders.
The two resolutions on which shareholders voted at the EGM on 30 July 2010 passed with overwhelming support. During the shareholder consultation process in the lead up to the EGM, we outlined some of the issues Trinity faces in connection with the realisation of investments, disputes and the ability of the Company to effect distributions.
One issue which was raised during the discussions with shareholders was whether the Board has the optimum mix of resource and experience in the context of the change in the immediate priorities facing the Company. As Indiareit gets up to speed in managing the investment portfolio, the Board's main day-to-day focus will be increasingly directed towards the disputes and the realisation of the holdings in DB Realty, Pipavav Shipyard and DB Hospitality. In order to be able to properly address shareholders' concerns, the Board withdrew the resolutions from the EGM agenda concerning the proposed Directors' incentive plan. The Board has initiated a process to reconsider the most effective way to implement the investment policy adopted by shareholders in March 2009, including the possible appointment of a further Director. Once a conclusion has been reached, an announcement will be made to shareholders. The Board is, of course, proceeding on the basis that all Directors must at all times remain independent.
In terms of the investment portfolio, inevitably, some holdings are more straightforward than others. Consistent with the investment policy, attractive disposal opportunities which maximise shareholder value will continue to be sought by Indiareit and the Company. The Board will not consider fire sales of any investments. Indiareit, supported by the Board, will continue to work with the Company's partners in India to maximise the value of our assets and seek exit opportunities at the appropriate times.
On the back of the strong performance of Indian stock markets during the last financial year, the former investment manager put forward proposals in relation to the disposal of the investments in listed Phoenix Mills and the new listing of IL&FS Transportation Networks, which were approved by the Board and proceeds of £19.4 million were generated.
Subsequent to year-end and termination of the previous management agreement, the holding in listed Fortis Healthcare was sold at an effective trailing price earnings multiple of 58 times during a strong rally in the company's share price. £17.6 million was generated despite the limited liquidity in the stock by virtue of the promoters' 80% ownership of the company.
After advice was sought from one of India's leading investment banks, a subsidiary of the Company sold 40% of its holding in Pipavav Shipyard in a formal tender process during the 12 month lock up period. The sale generated £15.9 million in proceeds, which is equivalent to the Rupee cost of the Trinity group's entire investment. Prior to the tender offer, the promoters owned 40% of Pipavav Shipyard and other locked-in shareholders owned a further 43%, leaving a limited free float of shares. The Pipavav Shipyard disposal was a finely balanced judgment given the high company valuation, the limited operating history of the business, the rally in the share price in the run up to the tender, the inability to sell into the market due to the lock up and the risk of the share price falling significantly when the lock up expires. A number of other locked-in shareholders also sold shares in the tender.
The Board retains direct responsibility for selling the remainder of the listed shareholdings in Pipavav Shipyard and DB Realty and in both cases will appoint professional advisers as and when appropriate to assist in decision making after the respective lock-up periods expire in October 2010 and February 2011. The holding in DB Realty is the largest investment in the portfolio.
As DB Hospitality requires further capital to finance its hotel developments and the prospects for realisation in the short term at an attractive valuation are low, after the financial year end, the Board decided to sell Trinity's interest in DB Hospitality for approximately £14.7 million. This compares with a valuation at 30 September 2009 of £10.6 million. The buyer has paid a non-refundable deposit of approximately £1.4 million, being 10% of the sales consideration. At the request of the buyer, completion of the sale, which will include interest on the unpaid balance, is now set to occur by the end of October 2010.
At the previous year end, Trinity had an outstanding investment commitment of £6.5 million in Lokhandwala. During the last financial year, this investment was made in full. The investment financed the final relocation of slum dwellers and site mobilisation has commenced, which is part of the justification for the increased year end valuation.
Although the township developments by Kapstone and Enigma through the Rustomjee group are now progressing, the investments may require restructuring. The Rustomjee development in Bandra, Mumbai, also with the Rustomjee group, is now ready to proceed. Unwinding the investment (which had commenced in 2009) has proven difficult, but continuation with the project will necessitate significant additional equity capital and agreement with Immobilien II, which controls the Mauritian holding company.
No further investment was made in Luxor Cyber City during the last financial year and an outstanding investment commitment approved by the Board (but not legally binding) was reduced from £10.5 million to £3.0 million in conjunction with a reversal of the "trifurcation" strategy that had previously been embarked upon involving the division of the land development rights between the three shareholders.
Luxor Cyber City and Uppals IT represent the Company's largest exposures to development projects. At the time of investment, both had received outline development approvals as IT special economic zones, a sector that is over supplied with limited attractive prospects in the medium term. Construction has yet to commence on either site. The investment in Uppals IT is further complicated by a series of operational issues, which includes the failure to obtain the approval for the master layout plan and meet construction commitments for the first phase of the project given to the local Government development authority in March 2006. As a result of the failure to meet the set timelines under the land lease, the authorities have threatened to repossess the land from Uppals IT. After seeking professional advice, the board of Uppals IT believes that the timelines for the first phase of project can be extended, although the terms and timing of the extension remain uncertain. The investment valuation has been prepared on the basis that a lease extension will be granted on reasonable terms.
A subsidiary of Trinity has initiated legal proceedings in India against Panthera Developers, an Indian affiliate of the former investment manager, to dispute the issue of a controlling equity interest in Sankalp to themselves. Panthera Developers and other affiliates of the former investment manager are also challenging the termination of service agreements with a number of Indian SPVs in which Trinity's subsidiaries and Immobilien I and/ or Immobilien II own equity interests.
Construction has also not yet commenced at Jodhana, although given the attractive prospects for the residential development, Indiareit is optimistic that the outstanding issues can be resolved amicably.
The management and realisation of the five investments jointly held with Immobilien I and Immobilien II are proving to be particularly complicated given the backdrop of the legal proceedings those funds have initiated in Mauritius against their former investment manager, its partners and the Company.
Until the litigation with the Company's former investment manager and the litigation with Immobilien I and Immobilien II conclude one way or another, the disputes will continue to absorb significant resource and cost. The Board is mindful of the need to strike a balance between the resources necessary to protect the Company's position and the costs thereof. Legal costs are scrutinised monthly and formal reviews take place once a quarter. Although we cannot predict the outcome of the litigation in terms of cost or timing, we have made formal provisions in the Statement of Financial Position as at 31 March 2010 for an estimated additional £12.7 million of legal and related costs. Further details are provided in note 21 to the financial statements. During the 12 months to 31 March 2010, legal costs incurred in respect of investigations, litigation and normal corporate activities were approximately £2.3 million.
Besides legal costs, the Company's other main operating expense relates to the cost of managing the investment portfolio. Management fees paid to the former investment manager in the last financial year amounted to £5.6 million. In addition, related party fees paid by Trinity group companies to affiliates of the former investment manager in the last financial year amounted to at least £0.7 million (2008/9: £15.3 million). This compares with US$2.2 million (approximately £1.5 million) that the Company has agreed to pay to Indiareit in the first year of their new management contract. Further details related to both management and performance fees are provided in note 6 to the financial statements.
As the Company implements its investment policy and realises assets in an orderly fashion, cash balances will continue to increase. Trinity's investment policy requires that, as long as the Company's shares are trading at a price below their underlying net asset value, capital will be returned through cash distributions to shareholders. Between March and June 2009, the Company bought back 21,367,702 shares for an aggregate consideration of £12 million. Distributions to shareholders will only be effected to the extent that the Company has excess funds available after taking fully into account all of its actual or potential liabilities, which includes amounts that may be payable by the Company (together with costs) as a result of the legal disputes. Therefore, it remains unlikely that significant distributions will be made to shareholders in the short term by way of dividends, share buybacks or other methods of returning capital. The Board intends to make an appropriate announcement to shareholders in advance of a distribution being made, which will include details of the expected timing and method of distributing cash. Capital will only be returned to shareholders to the extent that the Board is entirely satisfied that liabilities can be met from the Company's assets remaining after distributions have occurred.
Note 21 to the financial statements provides important information in connection with potential liabilities that may arise from the legal disputes.
Although the former investment manager has advised the Company of a claim for £112 million in connection with the termination of the previous management agreement, the Board does not believe that the Company has any liability in this regard. For this reason, no formal provision has been made in the financial statements with regard to a potential liability under the claim. If and when the Board, acting on professional advice, or the arbitration tribunal with jurisdiction over this dispute, decides that there is merit to the claim by the former investment manager and indicates what type and/ or quantum of claim may be payable, the Company will make an appropriate accounting provision in its financial statements. This accounting treatment of the claim by the former investment manager accords with International Financial Reporting Standards but does not affect the Company's intentions as regards distributions mentioned above.
Similarly, the Board does not believe that the Company has any liability with regard to the claim received from Immobilien I and Immobilien II. This claim is for an amount of €115.7 million plus amounts for interest, prejudice, trouble, annoyance and damages. Immobilien I and Immobilien II are demanding that the original sales of investments are unwound so that the original amounts they paid for the assets (plus compensation) are refunded to them. If and when the Board, acting on professional advice, or any court or arbitration tribunal with jurisdiction over the dispute between the Company and/ or its Mauritian subsidiary and Immobilien I and Immobilien II decides that there is merit to such claims and indicates what type and/ or quantum of claim may be payable, the Company will make an appropriate accounting provision in its financial statements. Again, this accounting treatment of the claim by Immobilien I and Immobilien II accords with International Financial Reporting Standards but does not affect the Company's intentions as regards distributions mentioned above.
The Board does not intend to enter into public debate about the decisions it has made and will rely on the integrity of the legal processes, judges and arbitrators to deliver justice. The Board remains confident that the current disputes will conclude in the Company's favour. Appropriate announcements and disclosures will, of course, continue to be made to shareholders as and when material events occur.
The Board very much appreciates the support and feedback it has received from shareholders during these testing times and looks forward to continuing to maintain a close dialogue.
Yours faithfully
Martin M. Adams
Chairman
Summary of Investments
The following investment summaries are intended to give shareholders a brief update on the status of each of the investments. The summaries are not exhaustive and, insofar as they relate to development projects, they do not include all of the details and circumstances surrounding each of the projects. Accordingly no reliance may be placed by any person for any purpose whatsoever on the information, representations or opinions contained in the summaries and no liability is accepted for any such information, representations or opinions.
Uppals IT Park "Tech Oasis"
| Indian Investee Company | Uppals IT Projects Private Limited |
| Mauritian SPV | Trinity Capital (One) Limited (TC1) |
| Promoter/ Developer | n.a. |
| Location | Greater Noida, NCR, Uttar Pradesh |
| Project | Development of IT/ITES SEZ with Residential and Commercial Space |
| Saleable Area | 10.16 million sq. ft. |
| Date of Investment | October 2006 |
| Ownership of TC1 | Trinity: 67%* Immobilien I: 8% Immobilien II: 25% |
| TC1's interest in Indian Investee Company | 100%** |
\* Trinity 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.
| Valuation summary | Amount invested £ million | Valuation 31 March 2010 £ million | Valuation 31 March 2009 £ million |
| Total investment by TC1 | 36.2 | 35.5 | 39.1 |
| Trinity share of TC1 | 26.7 | 26.3 | 28.7 |
The Uppals IT project is located in the Greater Noida area of the National Capital Region (NCR), which is one of the fastest growing townships in India spread over 36,000 hectares. Greater Noida has good physical and social infrastructure, which are key for successful residential and commercial developments in India. Steadily increasing supply of all types of property in the Noida/ Greater Noida belt over the last year has outpaced demand. The oversupply is particularly acute in IT/ITES commercial real estate, evidenced by high vacancy rates and falling rentals. The planned supply of 8.5 million sq. ft. of IT/ITES space in the area will more than double the existing estimated stock of 8.4 million sq. ft.
Uppals IT's land borders the almost complete 165 km Yamuna 6 lane expressway connecting NCR with Agra and covers 76 acres. Originally approved by the Indian Government as a special economic zone (SEZ) for users from the IT/ITES industry, "notification" of the project with the local authority has not yet occurred, thereby potentially leaving scope for change of use. No development partner has so far been agreed with Immobilien I and Immobilien II nor has development work started on site. Because Uppals IT failed to obtain the approval for the master layout plan and meet construction commitments given to the local authority, there is a risk that the land may be repossessed. After seeking professional advice, the board of Uppals IT believes that the timelines for the first phase of project may be extended, although the terms and timing of the extension remain uncertain. As part of the ongoing dialogue with the local authority, alternative uses for the property will be evaluated.
Affiliate companies of the former investment manager are challenging the termination of service agreements by Uppals IT and are seeking compensation. Uppals IT has demanded repayment of all fees paid to date under these arrangements.
Realisation of the investment is a distant prospect. Only after the lease has been extended and a development mix approved by the local authorities will it be possible to negotiate an agreement with a development partner, Immobilien I and Immobilien II. At that time, alternative realisation strategies will be considered in conjunction with Immobilien I and Immobilien II.
Lokhandwala
| Indian Investee Company | Lokhandwala Kataria Constructions Pvt. Ltd |
| Mauritian SPV | Trinity Capital (Five) Limited (TC5) |
| Promoter/ Developer | Lokhandwala Group |
| Location | Mahalaxmi (South Mumbai), Mumbai, Maharashtra |
| Project | Redevelopment project under a slum clearance scheme for development and sale of residential units and parking |
| Saleable Area | 929,215 sq. ft. |
| Date of Investment | October 2006: £6.26m October 2009: £6.18m |
| Ownership of the TC5 | Trinity: 59% Immobilien I: 41% |
| TC5's interest in Indian Investee Company | 49% |
| Valuation summary | Amount invested £ million | Valuation 31 March 2010 £ million | Valuation 31 March 2009 £ million |
| Total investment by TC5 | 12.4 | 25.5 | 18.2 |
| Trinity share of TC5 | 7.3 | 15.1 | 10.7 |
Mahalaxmi is a high end residential location, which is likely to see consistent demand for quality residential development in the coming years.
The project is centrally located close to the Four Seasons Hotel, Mumbai. It is a high-end residential development and, at 80 storeys and 300 meters in height, the building will be amongst the highest in Mumbai. The project is a slum redevelopment project and the promoter, the Lokhandwala Group, has developed over 10 million sq. ft. of other projects in Mumbai including slum redevelopments. Residential prices for premium apartments in Mumbai have witnessed strong appreciation in the past year and the project should be able to withstand any short term correction. In the longer run, the project should see consistent off-take and value uplift, given the strategic location and the economics of the high end residential segment.
The project had been delayed due to various regulatory issues for over two years, but the site has now been cleared of slums and tenants have been relocated so that construction can commence. Given the complexity of design and the targeted height, the development could take up to 6 years to complete. Substantial funding is expected from pre-sales and bank financing. Bank financing of INR2,000 million (approx. £28 million) has already been arranged.
The project should be completed within 5 to 6 years, and therefore the main realisation options are either holding through the development cycle or a strategic sale over the next 12 to 18 months. Since Immobilien I is a co-investor in the project, any exit decision would need to be taken in consultation with them.
Kapstone
| Indian Investee Company | Kapstone Constructions Pvt. Ltd |
| Mauritian SPV | Trinity Capital (Three) Limited (TC3) |
| Promoter/ Developer | Keystone Realtors/ Rustomjee Group |
| Location | Thane, Mumbai, Maharashtra |
| Project | Development of a Township with Residential, Commercial and Retail Space |
| Saleable Area | 9.2 million sq. ft. |
| Date of Investment | October 2006 |
| Ownership of TC3 | Trinity: 100% |
| TC3's interest in Indian Investee Company | 16% |
| Valuation summary | Amount invested £ million | Valuation 31 March 2010 £ million | Valuation 31 March 2009 £ million |
| Total investment by TC3 | 10.6 | 15.3 | 12.4 |
Thane is one of the furthest suburbs of Mumbai and is located on Salsette Island to the Northeast of the city. With good rail and road connections, Thane has witnessed a substantial change in its overall development profile over the last few years, from being positioned as a low-end residential hub for industrial workers, to one of the fastest growing suburbs of Mumbai for affordable middle income housing. Thane has also evolved as a location for commercial and retail development due to lack of developable land in the more established areas of Mumbai. Rustomjee Group, the leading Mumbai based developer, is the majority partner leading the development.
Spread over 127 acres, the project is conceptualised as one of the largest integrated developments in the Thane area, complete with civic amenities including shopping, schools, commercial area etc. Work on the first phase has commenced and, of the 1.2 million sq. ft. of the residential portion, 819 units or 66% has already been sold. The magnitude of a development spanning over 4 million sq. ft. of residential units (over 4,000 homes) and over 4 million sq. ft. of commercial space pose challenges in execution, cost control and access to working capital funding. The projected time frame for completion of the project is around 2015-16.
An increase in the saleable area from 7.2 million sq. ft. to 9.2 million sq. ft. has positively impacted the valuation of the project. Given the long time to completion of the project, a sale of the investment prior to project completion is likely.
DB Hospitality
| Indian Investee Company | DB Hospitality Private Limited |
| Mauritian SPV | Trinity Capital (Seven) Limited (TC7) |
| Promoter / Developer | Dynamix Balwas Group |
| Location | Mumbai, Pune, Goa, Ahmedabad |
| Project | Hotels |
| Date of Investment | December 2006 |
| Ownership of TC7 | Trinity: 100% |
| TC7's interest in Indian Investee Company | 9.54% |
| Valuation summary | Amount invested £ million | Valuation 31 March 2010 £ million | Valuation 31 March 2009 £ million |
| Total investment by TC7 | 12.2 | 14.7 | 11.7 |
DB Hospitality owns and develops luxury hotel properties in prime locations in India, operated under brands including Meridien and Hyatt.
In June 2010 an offer was accepted to allow the sale of the investment in DB Hospitality for the equivalent of INR1,000.2 million. This will generate a profit on investment of approximately £2.5 million compared with a carrying value at 30 September 2009 of £10.6 million. At 31 March 2010, the investment was revalued to £14.7 million, being the sterling equivalent of the expected disposal proceeds.
A non-refundable deposit of approximately £1.4 million was received in July 2010, being 10% of the final sales consideration. Completion of the sale including interest on the unpaid balance is expected to occur by end of October 2010.
MK Malls
| Indian Investee Company | MK Malls & Developers Private Limited |
| Mauritian SPV | Trinity Capital (Ten) Limited (TC10) |
| Promoter / Developer | Dynamix Balwas Group |
| Location | Bandra Kurla Complex, Mumbai |
| Project | Commercial Office Development |
| Date of Investment | December 2006: £5.9m January 2008: £6.4m |
| Ownership of TC10 (by voting rights)* | Immobilien I: 40% Immobilien II: 48% Trinity: 12% |
* TC10's investment in MK Malls consists of (a) equity; (b) redeemable optionally convertible cumulative preference shares ("ROCCPS"), convertible into equity; 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 entire economic interest in the equity and ROCCPS. Trinity 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.
| Valuation summary | Amount invested £ million | Valuation 31 March 2010 £ million | Valuation 31 March 2009 £ million |
| Total investment by TC10 | 12.3 | 12.7 | 16.5 |
MK Malls is engaged in a commercial office development in the Bandra Kurla Complex business district of Mumbai. Work on site has been delayed but construction is now scheduled to commence in the current financial year.
The CCPS in which Trinity owns the economic interest were originally structured to resemble mezzanine debt with an IRR capped at 18-20% pa. The CCPS carry no preferential right to distributions, dividends or liquidity preference in the event of winding up of MK Malls after the CCPS are compulsorily converted into equity of MK Malls in November 2010 and January 2011 respectively.
Apparently due to changes in Indian legislation after execution of the relevant agreement between MK Malls and TC10, TC10 subscribed to CCPS instead of redeemable preference shares. Any restructuring, transfer or disposal of the CCPS will require the consent of the promoter, TC10, Immobilien I and Immobilien II.
The investment has been valued on the basis that the investment will be recovered and proceeds distributed in accordance with the original contractual terms.
Luxor Cyber City
| Indian Investee Company | Luxor Cyber City Pvt. Ltd. |
| Mauritian SPV | Trinity Capital (Fourteen) Limited (TC14) |
| Promoter/ Partner | Uppal & Luxor Group |
| Location | Sector 77 and 78, Gurgaon, Haryana, NCR |
| Project | Development of IT/ITES SEZ with Supporting Residential and Commercial Space |
| Saleable Area | 6.6 million sq. ft. |
| Date of Investment | June 2007 |
| Ownership of TC14 | Trinity: 85% Immobilien II: 15% |
| TC14's interest in Indian Investee Company | 49.38% |
| Valuation summary | Amount invested £ million | Valuation 31 March 2010 £ million | Valuation 31 March 2009 £ million |
| Total investment by TC14 | 37.9 | 22.2 | 29.8 |
| Trinity share of TC14 | 32.2 | 18.8 | 25.3 |
Gurgaon is the second largest IT/ITES destination in India. In Q3 2008, Gurgaon witnessed a sharp decline in transaction activity and rental levels caused by the global economic slowdown and the impact on the IT/ ITES industry in India. Since mid-2009, there has been a marked improvement in sentiment.
Luxor Cyber City was originally planned as an IT/ ITES SEZ, to be developed together with Uppal Housing, a leading local developer and Luxor group, a large industrial house, active in NCR. In 2009, in order to reassess the viability of the project, Luxor commissioned an independent analysis of demand and supply in Gurgaon and the nearby areas. The conclusion was not optimistic about the market prospects for the project. Since inception, no development work has been undertaken on the site, largely due to disagreements between the project investors. Proposals to "trifurcate" the project, under which each partner would carry out its own proportionate development on commonly owned land, have been reversed and new plans are now being considered. The development mix and target market is being reviewed in the light of changed market conditions.
Further investment of £10.5 million in connection with the investment in Luxor, previously approved by the Board, but not legally binding, was reduced to £3.0 million in conjunction with the reversal of the "trifurcation" strategy. An affiliate of the former investment manager is seeking compensation in connection with an agreement which did not come into effect when "trifurcation" was abandoned.
Since Immobilien II is a co-investor in the project, any decision to exit would need to be taken in consultation with them.
Rustomjee
| Indian Investee Company | Rustomjee Constructions Pvt. Ltd. |
| Mauritian SPV | Trinity Capital (Fifteen) Limited (TC15) |
| Promoter/ Developer | Keystone Realtors/ Rustomjee Group |
| Location | MIG Group IV, Gandhi Nagar, Bandra (East), Mumbai |
| Project | Residential Redevelopment |
| Saleable Area | 450,000 sq. ft. and rehabilitation of 355,200 sq. ft. |
| Date of Investment | May 2008 |
| Ownership of TC15 | Trinity: 45% Immobilien II: 55% |
| TC15's interest in Indian Investee Company | 49% voting shares |
| Valuation summary | Amount invested £ million | Valuation 31 March 2010 £ million | Valuation 31 March 2009 £ million |
| Total investment by TC15 | 3.6 | 3.4 | 3.3 |
| Trinity share of TC15 | 1.6 | 1.5 | 1.5 |
The Rustomjee project, located in the highly desirable Bandra area, is a quality residential development. Rustomjee Group, the leading Mumbai based developer, is the majority partner leading the development
The original investment commitment by TC15 was for a total of £20.5 million in four separate tranches, to be contributed pro rata by TC15's shareholders, each subject to fulfilment of conditions. The first tranche of £3.6 million was invested in May 2008. No further investments have been made since. During the course of 2009, due to failure to meet conditions precedent, the Rustomjee Group released TC15 from its obligations to pay the further tranches, and the process of unwinding the transaction was initiated. However, this has been a complicated and slow process.
The various development approvals have now been obtained to permit the project to commence with an additional 70% addition to the original permitted construction area. As a result, a number of options are now under consideration with the Rustomjee Group and Immobilien II, but no final decision has been reached.
Sankalp
| Indian Investee Company | Sankalp Buildwell Pvt. Ltd. |
| Mauritian SPV | Trinity Capital (Sixteen) Limited (TC16) |
| Promoter/ Developer | Panthera Developers Private Ltd, an affiliate of the former investment manager |
| Location | Pipavav, District Amreli, Gujarat |
| Project | Residential, Commercial, Retail, Hospitality & Healthcare |
| Saleable Area* | approx. 6,622,000 sq. ft. |
| Date of Investment | October 2008 |
| Ownership of TC16 | Trinity: 100% |
| TC16's interest in Indian Investee Company* | 31.6% of voting rights 61.84% of profit share |
* TC16 has filed an application with the Company Law Board (CLB) to challenge the validity of the differential voting rights in Sankalp on the basis that the shares were issued in violation of Indian laws and the affairs of Sankalp were conducted in circumstances of "oppression" and "mismanagement".
| Valuation summary | Amount invested £ million | Valuation 31 March 2010 £ million | Valuation 31 March 2009 £ million |
| Total investment by TC16 | 3.3 | 1.5 | 2.2 |
Located in Gujarat, Pipavav Shipyard is one of the fastest growing ports and industrial towns in India. The shipyard is due to be operational shortly and, together with the related industries, will be the largest employer in the area. However, the social and civic infrastructure has not kept pace with the port development, thereby opening a plethora of opportunities for infrastructure and real estate investments.
The Sankalp project is located near the port and is intended to meet the demand for housing from middle and lower middle income blue collar and engineering workforce employed by the port and ancillary industries. Purportedly spread over 186 acres, Sankalp is intended to be an integrated residential township also providing amenities including a school, hospital, hotels, commercial and retail areas. Construction is yet to commence for several reasons, including failure to obtain statutory approvals and disputes with local villagers. Further delay is now likely due to TC16's application to the CLB on a number of significant issues including the issue of shares and rights to the developer in violation of Indian laws. Once the CLB has ruled on TC17's application, development work can commence. Development of the project will be phased over 8 to 10 years and significant external funding will be required.
Exit options for TC16 include a strategic sale after completion of the first phase, 2 or 3 years after resolution of the legal dispute.
Jodhana
| Indian Investee Company | Jodhana Developers Pvt. Ltd. |
| Mauritian SPV | Trinity Capital (Seventeen) Limited (TC17) |
| Promoter/ Partner | Marudhar Hotels Private Limited |
| Location | Umaid Bhawan Palace Precincts, Jodhpur, Rajasthan |
| Project | Master Planning and Development of a Residential Scheme |
| Saleable Area | 750,103 sq. ft. |
| Date of Investment | October 2008 |
| Ownership of the TC17 | Trinity: 100% |
| TC17's interest in Indian Investee Company | 48% of voting rights |
| Valuation summary | Amount invested £million | Valuation 31 March 2010 £million | Valuation 31 March 2009 £million |
| Total investment by TC17 | 6.1 | 4.1 | 8.3 |
Located in Jodhpur, the second largest commercial city in Rajasthan, Northwest India, the Umaid Bhawan Palace and the related residential developments are located in the heart of the city. Formerly completely occupied as the residence of the Maharaja of Jodhpur, a large portion of the palace is now managed as a luxury hotel by the Taj Group. The Umaid Bhawan Palace is renowned for its grandeur and spectacular architecture, which lends significant prestige and high end market positioning to the related residential developments.
The residential market has witnessed brisk demand in the past year, particularly high end landed developments and prime single family gated compounds. The Jodhana project consists of two plots: the first is 9.2 acres slated for high end residential villas and the second is 19.5 acres, earmarked for retail and commercial space. The land is within the precincts of Umaid Bhawan Palace.
There are a number of significant issues that remain to be resolved related to the legal structure of the investment, a service contract entered into with an affiliate of the former investment manager, securing development rights and funding. Development is expected to commence after these matters have been resolved.
Exit from the project is envisaged in stages through 3 year development and sale of the residential units.
Enigma
| Indian Investee Company | Enigma Constructions Pvt. Ltd. |
| Mauritian SPV | Trinity Capital (Eighteen) Limited (TC18) |
| Promoter / Developer | Keystone Realtors/ Rustomjee Group |
| Location | Virar, West Mumbai |
| Project | Development and Sale of a Residential Township, Parking and Retail Space |
| Saleable Area | 12.40 million sq. ft. |
| Enigma stake in project | 50% profit share |
| Date of Investment | October 2008 |
| Ownership of TC18 | Trinity: 100% |
| TC18's interest in Indian Investee Company | 23.03% |
| Valuation summary | Amount invested £ million | Valuation 31 March 2010 £ million | Valuation 31 March 2009 £ million |
| Total investment by TC18 | 5.7 | 5.9 | 5.5 |
Virar has emerged as an up and coming location for affordable lower and middle income housing in the suburbs of Mumbai. New road networks, educational facilities and hospitals are under construction. Rustomjee Group, the leading Mumbai based developer, is the majority partner leading the development
The project is well located less than 3 km from the station where Mumbai's western commuter railway line originates. The magnitude of development of over 12 million sq. ft. over the next 15 years will pose significant challenges in execution, cost control and delivery timelines. Construction work has commenced on the project and completion of the first residential towers is expected to be completed by 2011.
A strategic sale during the development phase of the project is the most likely realisation strategy.
Horizon
| Indian Investee Company | Horizon Countrywide Logistics Limited |
| Mauritian SPV | Trinity Capital (Four) Limited (TC4) |
| Promoter/ Developer | SKIL Group |
| Location | Nationwide |
| Project | Logistics |
| Date of Investment | October 2008 |
| Ownership of TC4 | Trinity: 100% |
| TC4's interest in Indian Investee Company | 22.7% |
| Valuation summary | Amount invested £ million | Valuation 31 March 2010 £ million | Valuation 31 March 2009 £ million |
| Total investment by TC4 | 11.2 | 4.7 | 5.1 |
The Indian logistics industry is generally considered to have significant potential and is forecast to grow at around 8% pa over the next 3 to 5 years. With continuing high rates of Indian GDP growth of 7 to 10% pa projected in the next 5 years, businesses will increasingly require integrated efficient logistics services for their storage and transportation needs. The few existing nationwide logistics service providers command healthy valuations. SKIL Group is an experienced operator in the infrastructure field. Horizon is their first foray into the logistics business.
Horizon's facilities are located throughout India including in NCR in the north, Maharashtra in the west and Andhra Pradesh in the south. The company has a healthy project list including container freight stations, warehousing and logistics facilities. The development of all facilities and projects is at a very early stage.
During the last financial year, a significant arm's length transaction in the equity of Horizon took place at average price of INR12 per share, which was a 41% discount to the INR29.11 price per share paid by TC4.
Pipavav Shipyard
| Indian Investee Company | Pipavav Shipyard Limited |
| Mauritian SPV | Trinity Capital (Nine) Limited (TC9) |
| Promoter/ Developer | SKIL Group |
| Location | Amreli, Gujarat |
| Project | Infrastructure |
| Date of Investment | January 2007 |
| Ownership of TC9 | Trinity: 100% |
| TC9's interest in Indian Investee Company | 6.9%; 45,900,000 shares* |
* 18.7 million shares were sold in July 2010.
| Valuation summary | Amount invested £ million | Valuation 31 March 2010 £ million | Valuation 31 March 2009 £ million |
| Total investment by TC9 | 13.5 | 41.2 | 29.7 |
Located on the western coast of India in Gujarat, the shipyard owned by Pipavav is currently under construction. SKIL, the promoters, have substantial experience in infrastructure project development and execution.
Upon completion of construction, Pipavav's shipyard is expected to be one of the largest in India with the ability to accommodate vessels up to 400,000 DWT (compared with most Indian private shipyard's average capacities of 25,000 DWT). Pipavav's shipyard is expected to have substantial time-to-market advantage in India over its rivals and will be one of the few shipyards authorised to construct and repair ships for the Indian navy. In June 2010, Pipavav Shipyard announced that it was the lowest bidder for naval orders valued at INR25 billion.
In October 2009, Pipavav successfully floated its shares on the Bombay Stock Exchange and National Stock Exchange through an IPO at a price of INR56 per share. TC9's acquisition price was INR25 per share. Over 82% of Pipavav's shares are subject to lock up, including TC9's shareholding, until October 2010. Further capital was raised by Pipavav in May 2010 through a debenture convertible at INR 70 per share.
The share price stood at INR70.2 at 31 March 2010 and has performed strongly since. As the lock up restrictions did not apply to a tender offer made by the promoters at INR61.50 per share, in July 2010, TC9 sold 18.7 million shares. Although the traded price for the free float of shares was at a premium over the tender price, the lock up prohibits TC9 from selling into the market until October 2010. The sale price under the tender implied a valuation of Pipavav at a trailing price earnings multiple of 162, price to book of 3.7 times and EV/ EBITDA of 41.
TC9 will retain a professional adviser in due course in connection with the sale of its remaining holding of 27.2 million shares.
DB Realty
| Indian Investee Company | DB Realty Ltd |
| Mauritian SPV | Trinity Capital (Eleven) Limited (TC11) |
| Promoter/ Developer | Dynamix Balwas Group |
| Location | Mumbai and Pune, Maharashtra |
| Project | Real Estate |
| Date of Investment | April 2007 |
| Ownership of the Mauritian SPV | Trinity: 100% |
| TC11's interest in Indian Investee Company | 4.7%; 11,340,000 shares |
| Valuation summary | Amount invested £ million | Valuation 31 March 2010 £ million | Valuation 31 March 2009 £ million |
| Total investment by TC11 | 26.4 | 60.9 | 46.2 |
DB Realty has a 25 year history of real estate development in Maharashtra. The group's current portfolio of 25 projects is located in prime areas of Mumbai and Pune with 61 million sq. ft. of residential, commercial, retail and urban space under development.
In February 2010, DB Realty's shares listed on the Bombay Stock Exchange and National Stock Exchange at a price of INR468 per share. TC11's effective acquisition price was INR190 per share. At 31 March 2010, the share price was INR453, giving DB Realty a market capitalisation of approximately £1.6 billion.
The shares held by TC11 are locked up until February 2011. TC11 will retain a professional adviser in due course in connection with the sale of its investment.
Directors' Report
The Directors have pleasure in presenting their report and financial statements of the Group for the year ended 31 March 2010.
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 invests 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.
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 2010 are set out in the Consolidated Statement of Comprehensive Income.
A review of the Group's activities are set out in the Chairman's Report and investment.
The Directors do not recommend the payment of a dividend (2009: £nil).
Directors
The Directors of the Company during the year and to date of this report, were as follows
| Michael Cassidy | Resigned 14 July 2009 |
| Paul Orchard Lisle | Resigned 14 July 2009 |
| Bill Hamilton Turner | Resigned 14 July 2009 |
| Philip Scales |
|
| Pradeep Verma |
|
| Martin Adams |
|
| Stephen Coe | Appointed 13 July 2009 |
| Arvind Pahwa | Appointed 10 December 2009 |
None of the Directors had interests in the shares of the Company at 31 March 2010.
Details of the Directors' remuneration are given in note 13.
Company Secretary
The secretary of the Company during the year and to 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
Director
Statement of Directors' Responsibilities in Respect of the Annual Report and the Financial Statements
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare Group and Parent Company 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 Group and Parent Company financial statements in accordance with International Financial Reporting Standards.
The Group and Parent Company 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 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 Combined Code does not directly apply to companies incorporated within the Isle of Man but the Board of Trinity Capital PLC has developed its internal procedures to be in line with the recommendations of the Combined Code where appropriate and these are monitored on a regular basis. The Directors will continue to comply with the relevant requirements of the Combined 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 adopted throughout the year under review.
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 regular Board meetings held, 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. However, it has been necessary for them to assume a more executive role, not least because of the change of Investment Manager. In particular Martin Adams and Pradeep Verma have spent significant time working for the Company in addition to their normal non-executive duties, and it is envisaged that this will continue.
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 terms of reference of the Audit Committee covers the following:
• The composition of the Committee, quorum and who else attends meetings.
• Appointment and duties of the Chairman.
• 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.
• Duties in relation to internal systems, procedures and controls.
Remuneration and Nomination Committee
The Remuneration Committee is a sub-committee of the Board and makes recommendations to the Board which retains the right of final decision.
The purpose of the Committee is to:
·; set the remuneration of Directors of the Company;
·; demonstrate to the shareholders of the Company that the remuneration of the non-executive Directors of the Company and other senior executives of the Company (if any) 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; and
·; 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.
·; consider the appropriateness of the Board's composition, and assess the suitability of potential Board members
The Committee is authorised by the Board to:
·; seek any information it requires from any employee of the Company in order to perform its duties, including calling an employee to be questioned at a meeting of the Committee as and when required, and all employees are directed to co-operate with any such request made by the Committee.
·; when the fulfilment of its duties requires, to 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 shall have full authority to commission any reports or surveys which it deems necessary to help it fulfil its obligations.
·; 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 shall have full authority to commission any reports or assistance which it deems necessary to help it fulfil its obligations.
Although the Committee can seek the advice and assistance of any of the Company's executives, it needs to ensure that this role is clearly separated from their role within the business.
Report of the Independent Auditors, KPMG Audit LLC, to the members of Trinity Capital PLC
We have audited the Group and Parent Company financial statements (the "financial statements") of Trinity Capital PLC for the year ended 31 March 2010 which comprise the Consolidated Statement of Comprehensive Income, the Consolidated and Parent Company Statements of Financial Position, States, the Consolidated and Parent Company Statements of Changes in Equity and the Consolidated Cash Flow Statement and the related notes. These financial statements have been prepared under the accounting policies set out therein.
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 Auditors
The Directors' responsibilities for preparing the Annual Report and the financial statements in accordance with applicable law and International Financial Reporting Standards are set out in the Statement of Directors'.
Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland).
We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance with the Companies Acts 1931 to 2004. We also report to you if, in our opinion, the Company has not kept proper accounting records, or if we have not received all the information and explanations we require for our audit.
We read the Directors' Reportand any other information accompanying the financial statements and consider whether it is consistent with the audited financial statements. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the audited financial statements. Our responsibilities do not extend to any other information.
Basis of opinion
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgments made by the Directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the Group's and Company's circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.
OpinionIn our opinion the financial statements:
·; give a true and fair view, in accordance with International Financial Reporting Standards, of the state of the Group and Parent Company's affairs as at 31 March 2010 and of the Group's profit for the year then ended; and
·; have been properly prepared in accordance with the Companies Acts 1931 to 2004.
KPMG Audit LLC
Chartered Accountants
Heritage Court
41 Athol Street
Douglas
Isle of Man IM99 1HN
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2010
|
| Note | 2010 |
| 2009 |
|
|
| £'000 |
| £'000 |
|
|
|
|
|
|
| Interest income from cash and cash equivalents |
| 272 |
| 4,102 |
| Dividend income |
| 61 |
| 98 |
| Foreign exchange gain |
| 96 |
| 86 |
| Fair value movement on investments | 10 |
|
|
|
| Reclassification of subsidiary |
| - |
| 53,403 |
| Other |
| 37,711 |
| (163,294) |
| Net realised gains on disposal of investments | 17 | 7,064 |
| - |
| Net realised gains on disposal of subsidiaries | 17 | - |
| 31,795 |
| Net investment income/(loss) |
| 45,204 |
| (73,810) |
|
|
|
|
|
|
| Investment Manager's management fees | 6 | (5,349) |
| (5,491) |
| Other administration fees and expenses |
| (5,061) |
| (2,602) |
| Investment Manager's performance fees | 6 | 2,474 |
| 20,459 |
| Movement in provision for future legal costs | 21 | (12,700) |
| - |
| Total expenses |
| (20,636) |
| 12,366 |
|
|
|
|
|
|
| Profit/(loss) before tax |
| 24,568 |
| (61,444) |
|
|
|
|
|
|
| Taxation | 7 | - |
| - |
| Profit/(loss) for the year |
| 24,568 |
| (61,444) |
|
|
|
|
|
|
| Other comprehensive income |
| - |
| - |
|
|
|
|
|
|
| Total comprehensive income/(loss) |
| 24,568 |
| (61,444) |
|
|
|
|
|
|
| Total comprehensive income/(loss) attributable to: |
|
|
|
|
| Equity holders of the Company |
| 24,013 |
| (54,750) |
| Non-controlling interest |
| 555 |
| (6,694) |
| Total comprehensive income(loss) for the year |
| 24,568 |
| (61,444) |
|
|
|
|
|
|
| Basic and diluted earnings/(loss) per share (pence) | 8 | 11.2 |
| (23.6) |
Consolidated Statement of Financial Position
at 31 March 2010
|
| Note | 2010 |
| 2009 |
|
|
| £'000 |
| £'000 |
| Non-current assets |
|
|
|
|
| Investments at fair value through profit or loss | 10 | 266,236 |
| 234,727 |
| Total non-current assets |
| 266,236 |
| 234,727 |
|
|
|
|
|
|
| Current assets |
|
|
|
|
| Trade and other receivables | 14 | 15,815 |
| 101 |
| Cash and cash equivalents |
| 37,405 |
| 60,038 |
| Prepayments |
| 113 |
| 142 |
| Total current assets |
| 53,333 |
| 60,281 |
|
|
|
|
|
|
| Total assets |
| 319,569 |
| 295,008 |
|
|
|
|
|
|
| Non-current liabilities |
|
|
|
|
| Provision for legal costs | 21 | (7,900) |
| - |
| Performance fee provision | 6 | (7,940) |
| (7,795) |
| Total non-current liabilities |
| (15,840) |
| (7,795) |
|
|
|
|
|
|
| Current liabilities |
|
|
|
|
| Trade and other payables | 15 | (2,669) |
| (6,006) |
| Provision for legal costs | 21 | (4,800) |
| - |
| Total current liabilities |
| (7,469) |
| (6,006) |
|
|
|
|
|
|
| Total liabilities |
| (23,309) |
| (13,801) |
|
|
|
|
|
|
| Net assets |
| 296,260 |
| 281,207 |
|
|
|
|
|
|
| Equity: |
|
|
|
|
| Ordinary shares | 11 | 2,107 |
| 2,321 |
| Distributable reserve |
| 205,539 |
| 217,362 |
| Retained reserves |
| 65,771 |
| 41,758 |
| Other reserves |
| (167) |
| (167) |
| Total equity attributable to equity holders of the Company |
| 273,250 |
| 261,274 |
| Non-controlling interest |
| 23,010 |
| 19,933 |
| Total equity |
| 296,260 |
| 281,207 |
|
|
|
|
|
|
| Net Asset Value per share (£ ) | 18 | 1.30 |
| 1.13 |
These financial statements were approved by the Board on 9 August 2010 and signed on their behalf by
Stephen Coe Philip Scales
Director Director
Company Statement of Financial Position
At 31 March 2010
|
| Note | 2010 |
| 2009 |
|
|
| £'000 |
| £'000 |
|
|
|
|
|
|
| Non-current assets |
|
|
|
|
| Group balances | 9 | 182,101 |
| 181,851 |
| Total non-current assets |
| 182,101 |
| 181,851 |
|
|
|
|
|
|
| Current assets |
|
|
|
|
| Trade and other receivables | 14 | 52 |
| 66 |
| Cash and cash equivalents |
| 37,051 |
| 51,916 |
| Prepayments |
| 81 |
| 106 |
| Total current assets |
| 37,184 |
| 52,088 |
|
|
|
|
|
|
| Total assets |
| 219,285 |
| 233,939 |
|
|
|
|
|
|
| Non-current liabilities |
|
|
|
|
| Provision for legal costs | 21 | (7,900) |
| - |
|
|
|
|
|
|
| Current liabilities |
|
|
|
|
| Trade and other payables | 15 | (2,560) |
| (3,285) |
| Provision for legal costs | 21 | (4,800) |
| - |
| Total current liabilities |
| (7,360) |
| (3,285) |
|
|
|
|
|
|
| Total liabilities |
| (15,260) |
| (3,285) |
|
|
|
|
|
|
|
|
|
|
|
|
| Net assets |
| 204,025 |
| 230,654 |
|
|
|
|
|
|
| Equity: |
|
|
|
|
| Ordinary shares | 11 | 2,107 |
| 2,321 |
| Distributable reserve |
| 205,539 |
| 217,362 |
| Retained reserves |
| (3,621) |
| 10,971 |
| Total equity |
| 204,025 |
| 230,654 |
The Company made a loss of £14,592,000 (2009: profit of £524,000).
These financial statements were approved by the Board on 9 August 2010 and signed on their behalf by
Stephen Coe Philip Scales
Director Director
Statements of Changes in Equity
For the year ended 31 March 2010
| GROUP | Share Capital |
Capital Redemption Reserve | Distributable reserves | Retained Earnings | Other Reserves | Shareholders funds |
Non-controlling Interest |
Total Equity |
|
| £'000 |
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| Balance at 1 April 2008 | 2,321 | - | 217,362 | 96,508 | 212 | 316,403 | 26,494 | 342,897 |
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income | - |
- | - | (54,750) | - | (54,750) | (6,694) | (61,444) |
|
|
|
|
|
|
|
|
|
|
| Transactions with owners, recorded directly in equity: |
|
|
|
|
|
|
|
|
| Decrease in value of share options | - |
- | - | - | (379) | (379) |
| (379) |
| Increase in non-controlling interest shareholding | - |
- | - | - | - | - | 16,731 | 16,731 |
| Disposal of subsidiaries | - |
- | - | - | - | - | (16,824) | (16,824) |
| Additional investment | - |
- | - | - | - | - | 226 | 226 |
|
|
|
|
|
|
|
|
|
|
| Balance at 31 March 2009 | 2,321 |
| 217,362 | 41,758 | (167) | 261,274 | 19,933 | 281,207 |
|
|
|
|
|
|
|
|
|
|
| Balance at 1 April 2009 | 2,321 |
- | 217,362 | 41,758 | (167) | 261,274 | 19,933 | 281,207 |
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income | - |
- | - | 24,013 | - | 24,013 | 555 | 24,568 |
|
|
|
|
|
|
|
|
|
|
| Transactions with owners, recorded directly in equity: |
|
|
|
|
|
|
|
|
| Share buy backs | (214) |
214 | (12,037) | - | - | (12,037) | - | (12,037) |
| Additional investment | - |
- | - | - | - | - | 2,522 | 2,522 |
|
|
|
|
|
|
|
|
|
|
| Balance at 31 March 2010 | 2,107 |
214 | 205,325 | 65,771 | (167) | 283,950 | 23,010 | 296,260 |
| COMPANY | Share Capital | Capital Redemption Reserve | Distributable reserves | Retained Earnings | Other Reserves | Shareholders' funds | |
|
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| Balance at 1 April 2008 | 2,321 | - | 217,362 | 10,457 | 379 | 230,519 | |
|
|
|
|
|
|
|
| |
| Total comprehensive income | - | - | - | 514 | - | 514 | |
|
|
|
|
|
|
|
| |
| Transactions with owners, recorded directly in equity: |
|
|
|
|
|
| |
| Decrease in value of share options | - | - | - | - | (379) | (379) | |
|
|
|
|
|
|
|
| |
| Balance at 31 March 2009 | 2,321 | - | 217,362 | 10,971 | - | 230,654 | |
|
|
|
|
|
|
|
| |
| Balance at 1 April 2009 | 2,321 | - | 217,362 | 10,971 | - | 230,654 | |
|
|
|
|
|
|
|
| |
| Total comprehensive loss | - | - | - | (14,592) | - | (14,592) | |
|
|
|
|
|
|
|
| |
| Transactions with owners, recorded directly in equity: |
|
|
|
|
|
| |
| Share buy backs | (214) | 214 | (12,037) | - | - | (12,037) | |
|
|
|
|
|
|
|
| |
| Balance at 31 March 2010 | 2,107 | 214 | 205,325 | (3,621) | - | 204,025 |
Consolidated Statement of Cash Flows
For the year ended 31 March 2010
|
|
|
| 2010 |
| 2009 |
|
| Note |
| £'000 |
| £'000 |
|
|
|
|
|
|
|
| Net cash used by operating activities | 16 |
| (8,679) |
| (14,449) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cash flows from investing activities |
|
|
|
|
|
| Purchase of investments | 17 |
| (6,182) |
| (39,561) |
| Interest received |
|
| 273 |
| 4,201 |
| Proceeds from disposal of investments | 17 |
| 3,964 |
| - |
| Proceeds from disposal of subsidiaries |
|
| - |
| 54,754 |
| Dividends received |
|
| 61 |
| - |
| Reclassification of subsidiary |
|
| - |
| (1,540) |
| Net cash (outflow)/inflow from investing activities |
|
| (1,884) |
| 17,854 |
|
|
|
|
|
|
|
| Cash flows from financing activities |
|
|
|
|
|
| Repurchase of equity shares |
|
| (12,037) |
| - |
| Net cash (outflow) from financing activities |
|
| (12,037) |
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net (decrease)/increase in cash and cash equivalents |
|
| (22,600) |
| 3,405 |
|
|
|
|
|
|
|
| Cash and cash equivalents at the start of the year |
|
| 60,038 |
| 56,617 |
| Effect of foreign exchange fluctuation on cash held |
|
| (33) |
| 16 |
|
|
|
|
|
|
|
| Cash and cash equivalents at the end of the year |
|
| 37,405 |
| 60,038 |
Notes to the Financial Statements
For the year ended to 31 March 2010
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.
The Group has no employees.
2. Summary of significant accounting policies
2.1 Basis of preparation
(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 of Directors on 9 August, 2010.
(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, which is the Company's functional currency. 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 4.
(e) Changes in accounting policy
Presentation of financial statements
The Group applied revised IAS 1 Presentation of Financial Statements (2007), which became effective as of 1 January 2009. As a result, the Group presents in the consolidated statement of changes in equity all owner changes in equity, whereas all non-owner changes in equity are presented in the consolidated statement of comprehensive income.
Comparative information has been re-presented so that it also is in conformity with the revised standard. Since the change in accounting policy only impacts presentation aspects, there is no impact on earnings per share.
(f) Other accounting developments
Disclosures pertaining to fair values and liquidity of financial instruments
The Company has applied Improving Disclosures about Financial Instruments (Amendments to IFRS 7), issued in March 2009, that require enhanced disclosures about fair value measurements and liquidity risk in respect of financial instruments.
The amendments require that fair value measurement disclosures use a three-level fair value hierarchy that reflects the significance of the inputs used in measuring fair values of financial instruments. Specific disclosures are required when fair value measurements are categorised as Level 3 (significant unobservable inputs) in the fair value hierarchy. The amendments require that any significant transfers between Level 1 and Level 2 of the fair value hierarchy be disclosed separately, distinguishing between transfers into and out of each level. Furthermore, changes in valuation techniques from one period to another, including the reasons therefore, are required to be disclosed for each class of financial instruments.
Disclosures in respect of fair values of financial instruments are included in notes 3 and 10.
Furthermore the definition of liquidity risk has been amended and it is now defined as the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset.
The amendments require disclosure of a maturity analysis for non-derivative and derivative financial liabilities, but contractual maturities are required to be disclosed for derivative financial liabilities only when contractual maturities are essential for an understanding of the timing of cash flows. For issued financial guarantee contracts, the amendments require maximum amount of the guarantee to be disclosed in the earliest period in which the guarantee could be called.
Disclosures in respect of liquidity risk are included in note 3.
2.2 Basis of Consolidation
(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.
2.3 Segment reporting
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 recognition
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.
2.5 Expenses
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.
2.6 Taxation
Income tax expense comprises current and deferred tax. Income tax expense is recognised in profit or loss except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
(a) Current Income tax
Current tax is the expected tax payable on the taxable income 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.
(b) Deferred income tax
Deferred tax is recognised using the balance sheet method, providing for 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 the following temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and differences relating to investments in subsidiaries and jointly controlled entities to the extent that they probably will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.
2.7 Foreign currency transactions
(a) Functional and presentation currency
Items included in the financial statements of each of the Group's entities are measured using the 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 currencies other than Sterling are translated at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated into Sterling at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the Statement of Comprehensive Income. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated into Sterling at foreign exchange rates ruling at the dates the fair value was determined.
(c) Group companies
The results and financial position of all the group entities (none of which has the Currency of a hyperinflationary economy) that have a functional Currency different from the presentation Currency are translated into the presentation Currency as follows:
(i) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;
(ii) income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and
(iii) all resulting exchange differences are recognised as a separate component of equity.
2.8 Financial instruments
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 taken to the Statement of Comprehensive Income.
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.
2.9 Provisions
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.
2.10 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:
| New/Revised International Financial Reporting Standards (IAS/IFRS) | Effective date (accounting periods commencing after) |
|
|
|
| IAS 1 Presentation of Financial Statements (Revised April 2009)* | 1 January 2010 |
| IAS 7 Statement of Cash Flows (Revised April 2009)* | 1 January 2010 |
| IAS 17 Leases (Revised April 2009)* | 1 January 2010 |
| IAS 24 Related Party Disclosures - Revised definition of related parties | 1 January 2011 |
| IAS 28 Investments in Associates - Consequential amendments resulting from amendments to IFRS 3 (2008) | 1 July 2009 |
| IAS 31 Interests in Joint Ventures - Consequential amendments resulting from amendments to IFRS 3 (2008) | 1 July 2009 |
| IAS 32 Financial Instruments: Presentation - Amendments relating to classification of rights issues | 1 February 2010 |
| IAS 36 Impairment of Assets (Revised April 2009)* | 1 January 2010 |
| IAS 38 Intangible Assets (Revised April 2009)* | 1 July 2009 |
| IAS 39 Financial Instruments: Recognition and Measurement - Amendments for embedded derivatives when reclassifying financial instruments | 30 June 2009 |
| IAS 39 Financial Instruments: Recognition and Measurement - Amendments for eligible hedged items | 1 July 2009 |
| IAS 39 Financial Instruments: Recognition and Measurement (Revised April 2009)* | 1 January 2010 |
| IFRS 2 Share-based Payment - Amendments relating to group cash-settled share-based payment transactions | 1 January 2010 |
| IFRS 3 Business Combinations - Comprehensive revision on applying the acquisition method | 1 July 2009 |
| IFRS 5 Non-current Assets Held for Sale and Discontinued Operations (Revised April 2009)* | 1 January 2010 |
| IFRS 8 Operating Segments (Revised April 2009)* | 1 January 2010 |
| IFRS 9 Financial Instruments - Classification and Measurement | 1 January 2013 |
| IFRIC Interpretation |
|
|
|
|
| IFRIC 17 Distributions of Non-Cash Assets to Owners | 1 July 2009 |
| IFRIC 18 Transfers of Assets from Customers | 1 July 2009 |
| IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments | 1 July 2010 |
*Amendments resulting from April 2009 Annual Improvements to IFRSs
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. 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 of Directors, with assistance from the Investment Manager to the extent possible and as appropriate.
(a) Market risk
(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 £266,236,000 (2009: £232,078,000)
At 31 March 2010, 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 £13,312,000 (2009: £11,604,000).
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 £13,312,000 (2009: £11,736,000). 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.
|
| Less than 1 month |
1-3 months | 3 months to 1 year |
1-5 years |
Over 5 years | Non- interest bearing |
Total |
| 31 March 2010 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
|
|
|
|
|
|
|
|
|
| Financial assets |
|
|
|
|
|
|
|
| Investments at fair value through profit or loss | - | - | - | 12,700 | - | 253,536 | 266,236 |
| Trade and other receivables | - | - | - | - | - | 15,815 | 15,815 |
| Cash and cash equivalents | 37,405 | - | - | - | - | - | 37,405 |
| Prepayments | - | - | - | - | - | 113 | 113 |
|
|
|
|
|
|
|
|
|
| Total financial assets | 37,405 | - | - | 12,700 | - | 269,464 | 319,569 |
|
|
|
|
|
|
|
|
|
| Financial liabilities |
|
|
|
|
|
|
|
| Performance fee provision | - | - | - | - | - | 7,940 | 7,940 |
| Provision for legal costs | - | - | - | - | - | 12,700 | 12,700 |
| Trade and other payables | - | - | - | - | - | 2,669 | 2,669 |
|
|
|
|
|
|
|
|
|
| Total financial liabilities | - | - | - | - | - | 23,309 | 23,309 |
| Total interest rate sensitivity gap | 37,405 | - | - | 12,700 | - | - | - |
|
|
|
|
|
|
|
|
|
|
| Less than 1 month |
1-3 months | 3 months to 1 year |
1-5 years |
Over 5 years | Non- interest bearing |
Total |
| 31 March 2009 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
|
|
|
|
|
|
|
|
|
| Financial assets |
|
|
|
|
|
|
|
| Investments at fair value through profit or loss | - | - | - | 16,511 | - | 218,216 | 234,727 |
| Trade and other receivables | - | - | - | - | - | 101 | 101 |
| Cash and cash equivalents | 60,038 | - | - | - | - | - | 60,038 |
| Prepayments | - | - | - | - | - | 142 | 142 |
|
|
|
|
|
|
|
|
|
| Total financial assets | 60,038 | - | - | 16,511 | - | 218,459 | 295,008 |
|
|
|
|
|
|
|
|
|
| Financial liabilities |
|
|
|
|
|
|
|
| Performance fee provision | - | - | - | - | - | 7,795 | 7,795 |
| Trade and other payables | - | - | - | - | - | 6,006 | 6,006 |
|
|
|
|
|
|
|
|
|
| Total financial liabilities | - | - | - | - | - | 13,801 | 13,801 |
| Total interest rate sensitivity gap | 60,038 | - | - | 16,511 | - |
|
|
(b) Credit risk
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 2010 (2009: nil).
(c) Liquidity risk
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:
| 31 March 2010 | Less than 1 month | 1-3 months | 3 months to 1 year | 1-5 years | Over 5 Years | No stated maturity |
|
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| Financial liabilities |
|
|
|
|
|
|
| Performance fee provision | - | - | - | - | - | 7,940 |
| Provision for legal costs | - | - | - | - | - | 12,700 |
| Trade and other payables | 2,669 | - | - | - | - | 2,669 |
|
|
|
|
|
|
|
|
|
| 2,669 | - | - | - | - | 23,309 |
|
|
|
|
|
|
|
|
| 31 March 2009 | Less than 1 month | 1-3 months | 3 months to 1 year | 1-5 years | Over 5 Years | No stated maturity |
|
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| Financial liabilities |
|
|
|
|
|
|
| Performance fee provision | - | - | - | - | - | 7,795 |
| Trade and other payables | 772 | - | - | - | - | 5,234 |
| Investment commitments | - | - | - | - | - | 10,582 |
|
|
|
|
|
|
|
|
|
| 772 | - | - | - | - | 23,611 |
|
|
|
|
|
|
|
|
4. Critical accounting estimates and assumptions
These disclosures supplement the commentary on financial risk management (see note 3).
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:
|
| Level 1 | Level 2 | Level 3 | Total |
|
| £'000 | £'000 | £'000 | £'000 |
| Investments - designated at fair value through profit or loss (note 10) |
|
|
|
|
| Development property owning companies | - | - | 138,933 | 138,933 |
| Non-development property company holdings: |
|
|
|
|
| Listed equity securities | 20,466 | - | 102,163 | 122,629 |
| Unlisted equity securities | - | - | 4,674 | 4,674 |
|
| 20,466 | - | 245,770 | 266,236 |
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:
|
|
| Development Property companies | Unlisted equity securities | Listed equity securities | Total |
|
|
| £'000 | £'000 | £'000 | £'000 |
| Fair value brought forward |
| 184,844 | 40,738 | - | 225,582 |
| Capital calls |
| 6,182 | - | - | 6,182 |
| Disposals |
| - | (5,970) | - | (5,970) |
| Transfers out of level 3 |
| (46,170) | (29,676) | - | (75,846) |
| Transfers in to level 3 |
| - | - | 75,846 | 75,846 |
| Movement in fair value |
| (5,923) | (418) | 26,317 | 19,976 |
| Fair value at year end |
| 138,933 | 4,674 | 102,163 | 245,770 |
Estimated performance fee (carried interest) on investments
As described in note 6, a provision has been established for performance fees. In previous financial years, this was based on the fair value gains recognised, to reflect the terms of the Portfolio Management Agreement in force at that time. With the appointment of a new investment manager, the provision is calculated by reference to the total fair value of those assets covered by the new investment management agreement, and not just the gains, in accordance with the terms of the new agreement.
Estimated future legal fees
As described in note 21, 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.
5. Other administration fees and expenses
|
|
| 2010 |
| 2009 |
|
|
| £'000 |
| £'000 |
| Audit fees |
| 160 |
| 168 |
| Legal fees |
| 2,249 |
| 647 |
| Administration fees |
| 306 |
| 183 |
| Other professional costs |
| 787 |
| 1,281 |
| Insurance |
| 181 |
| 124 |
| Directors' fees (note 13) |
| 1,107 |
| 183 |
| Bank charges |
| 7 |
| 6 |
| Share based payment expense (note 12) |
| - |
| (379) |
| Other |
| 264 |
| 389 |
|
|
| 5,061 |
| 2,602 |
Audit fees represent auditor's remuneration for work undertaken in connection with the statutory audit of the Group.
6. Investment Manager fees and performance fees
Trikona Advisers Limited ("TAL"), in its capacity as Investment Manager until March 16, 2010 received a management fee of 2 per cent. per annum of the amount subscribed on the issue of the Placing Shares plus returns from investment retained by the Group for further investment. The fee for the period from 1 April 2009 to 16 March 2010 amounted to £5,349,000. The fee was payable quarterly in advance, and the final payment was for the full quarter up to 31 March 2010, i.e. including 15 days beyond termination of the Portfolio Management Agreement. Consequently the Company has notified a reclaim of £233,000 for the 15 days, and which is included in other receivables in the statement of financial position.
TAL was also entitled to a carried interest (performance fee), subject to meeting minimum returns. In previous reporting periods, a provision had been made in respect of the relevant fair value investment gains recognised in the financial statements. According to the Portfolio Management Agreement which governed this relationship, performance fees would be payable upon termination, provided certain conditions had been met. The Company considers that no performance fee is payable in the light of the circumstances in which the Portfolio Management Agreement was terminated and because relevant conditions had not been satisfied.
In proceedings with the Company, TAL claims to be entitled to be entitled to a payment of performance fees and future management fees (see note 21.)
On 18 June 2010, the 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. In addition to the investment management fee, Indiareit will be paid a performance fee of 7.5 per cent. of the realised net proceeds received by the Group for the disposal of its investments other than DB Realty, DB Hospitality and Pipavav Shipyard. Although this appointment formally took place only after the year-end, the Company has made a provision of £7,940,000 in these financial statements 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 and Fortis Healthcare which was sold prior to their appointment.
The movements of the performance fee charge in the Statement of Comprehensive Income are made up as follows:
|
| 2010 | 2009 |
|
| £'000 | £'000 |
|
|
|
|
| Amount paid upon disposals (80% of amount due) | - | (6,440) |
| Decrease / (increase) in provision (terminated agreement) | 7,795 | 28,513 |
| Decrease / (increase) in liability for 20% retention of fee on disposals - see note 19 | 2,619 | (1,614) |
| Provision based on new investment management agreement | (7,940) | - |
|
|
|
|
|
| 2,474 | 20,459 |
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. They 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. Earning/(loss) 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.
|
| 2010 | 2009 |
| Profit /(loss) attributable to equity shareholders of the parent) (£'000) | 24,013 | (54,750) |
| Weighted average number of ordinary shares (thousands) for the purposes of basic earnings per share | 214,875 | 232,050 |
| Basic earnings/(loss) per share (pence) | 11.2 p | (23.6) p |
There is no difference between fully diluted earnings per share and basic earnings per share.
9. Investments in subsidiaries
The subsidiaries of Trinity Capital PLC are recorded at cost in the financial statements of the Company..
| Name | Country of Incorporation | Proportion of ownership interest | |
|
|
| At 31 March 2010 | At 31 March 2009 |
| Trinity Capital Mauritius Limited | Mauritius | 100% | 100% |
| Trinity Capital (One) Limited | Mauritius | 67% | 67% |
| Trinity Capital (Two) Limited | Mauritius | 100% | 100% |
| Trinity Capital (Three) Limited | Mauritius | 100% | 100% |
| Trinity Capital (Four) Limited | Mauritius | 100% | 100% |
| Trinity Capital (Five) Limited | Mauritius | 59% | 59% |
| Trinity Capital (Seven) Limited | Mauritius | 100% | 100% |
| Trinity Capital (Eight) Limited | Mauritius | 100% | 100% |
| Trinity Capital (Nine) Limited | Mauritius | 100% | 100% |
| Trinity Capital (Eleven) Limited | Mauritius | 100% | 100% |
| Trinity Capital (Twelve) Limited | Mauritius | 100% | 100% |
| Trinity Capital (Thirteen) Limited | Mauritius | 100% | 100% |
| Trinity Capital (Fourteen) Limited | Mauritius | 85% | 85% |
| Trinity Capital (Sixteen) Limited | Mauritius | 100% | 100% |
| Trinity Capital (Seventeen) Limited | Mauritius | 100% | 100% |
| Trinity Capital (Eighteen) Limited | Mauritius | 100% | 100% |
| Trinity Capital (Nineteen) Limited | Mauritius | 100% | 100% |
| Trinity Capital (Twenty) Limited | Mauritius | 100% | 100% |
| Trinity Capital (Twenty One) Limited | Mauritius | 100% | 100% |
| Trinity Capital (Twenty Two) Limited | Mauritius | 100% | 100% |
| Trinity Capital (Twenty Three) Limited | Mauritius | 100% | 100% |
| Trinity Capital (Twenty Four) Limited | Mauritius | 100% | 100% |
In addition to above, the Company has the following subsidiaries in India:
(a) Uppals IT Projects Private Limited: Trinity Capital (One) Limited holds 99.99% of the total equity share capital.
(b) Sankalp Buildwell Private Limited: Trinity Capital (Sixteen) Limited holds over 98% of the total equity share capital but only 32% voting rights due to differential classes of equity shares (voting and non-voting). Trinity Capital (Sixteen) Limited has challenged the validity of the differential voting shares before the Company Law Board, New Delhi, India as being in violation of Indian laws.
(c) Jodhana Developers Private Limited -Trinity Capital (Seventeen) Limited holds over 94% of the total equity share capital but only 48% of the voting rights.
(d) Nirmaan Buildwell Private Limited: Trinity Capital (Fourteen) Limited holds 99.99% of the total equity share capital.
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 16 March 2010. This was the date on which the termination of the Portfolio Management Agreement with Trikona Advisers Limited became effective. The Directors concluded that there would be no material difference in the value of the unquoted investments at that date and at the year end. 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. The Directors also valued the Group's ownership interests in the unquoted companies not owning property development projects. Protiviti Consulting Private Limited, an independent firm of advisors carried out certain agreed upon procedures to test the computation of the fair value of Group's interest.
For the Project Companies, the Directors' valuations are based 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 14.8% and 24.8%.
Discounted cash flow techniques were not used in the valuation of the investments in Rustomjee Constructions Pvt Ltd. and MK Malls Developers Pvt Ltd. Instead, these are valued at the Group's share of the estimated underlying net asset value. The unlisted equity securities comprising non-development property holdings are valued using a mixture of discounted cash flow and price earnings multiples, except for those holdings for which there is a recent transaction in which case that transaction price is used as the valuation basis.
Listed equity securities are valued at the closing market price, adjusted to reflect an estimated discount to reflect the size of holding and any lock-in restrictions that apply.
Investments are recorded at fair value as follows:
| 31 March 2010 | At Cost
£'000 | Fair value Adjustment £'000 | At Fair Value £'000 |
| Development property owning companies (all unlisted equity securities): |
|
|
|
| Uppals IT Project Pvt Ltd*. | 36,194 | (682) | 35,512 |
| Lokhandwala Kataria Constructions Pvt Ltd. | 12,440 | 13,107 | 25,547 |
| Kapstone Constructions Pvt Ltd. | 10,593 | 4,708 | 15,301 |
| DB Hospitality Pvt Ltd. | 12,176 | 2,523 | 14,699 |
| M K Malls Developers Pvt Ltd. | 12,283 | 417 | 12,700 |
| Luxor Cyber City Pvt Ltd. | 37,904 | (15,753) | 22,151 |
| Rustomjee Constructions Pvt Ltd. ("MIG Bandra") | 1,630 | (87) | 1,543 |
| Sankalp Buildwell Pvt Ltd. | 3,330 | (1,860) | 1,470 |
| Jodhana Developers Pvt Ltd. | 6,060 | (1,988) | 4,072 |
| Enigma Constructions Pvt Ltd. ("Virar") | 5,660 | 278 | 5,938 |
|
| 138,270 | 663 | 138,933 |
|
|
|
|
|
| Non-development property company holdings |
|
|
|
| Listed equity securities | 53,155 | 69,474 | 122,629 |
| Unlisted equity securities | 11,239 | (6,565) | 4,674 |
|
|
|
|
|
|
| 202,664 | 63,572 | 266,236 |
\* 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.
| 31 March 2009 | At Cost
£'000 | Fair value Adjustment £'000 | At Fair Value £'000 |
| Development property owning companies (all unlisted equity securities): |
|
|
|
| Uppals IT Project Pvt Ltd. | 36,194 | 2,894 | 39,088 |
| Lokhandwala Kataria Constructions Pvt Ltd. | 6,258 | 5,477 | 11,735 |
| Kapstone Constructions Pvt Ltd. | 10,593 | 1,759 | 12,352 |
| DB Hospitality Pvt Ltd. | 12,176 | (428) | 11,748 |
| M K Malls Developers Pvt Ltd. | 12,283 | 4,228 | 16,511 |
| Luxor Cyber City Pvt Ltd. | 37,904 | (8,108) | 29,796 |
| DB Realty Pvt Ltd. | 26,381 | 19,789 | 46,170 |
| Rustomjee Constructions Pvt Ltd. ("MIG Bandra") | 1,630 | (148) | 1,482 |
| Sankalp Buildwell Pvt Ltd. | 3,330 | (1,175) | 2,155 |
| Jodhana Developers Pvt Ltd. | 6,060 | 2,202 | 8,262 |
| Enigma Constructions Pvt Ltd. ("Virar") | 5,660 | (115) | 5,545 |
|
| 158,469 | 26,375 | 184,844 |
|
|
|
|
|
| Non-development property company holdings |
|
|
|
| Listed equity securities | 20,898 | (11,753) | 9,145 |
| Unlisted equity securities | 29,498 | 11,240 | 40,738 |
|
|
|
|
|
|
| 208,865 | 25,862 | 234,727 |
11. Share capital
| Authorised share capital | No. of shares | £ |
|
|
|
|
| Ordinary shares of £0.01 each | 416,750,000 | 4,167,500 |
| Deferred shares of £0.01 each | 250,000 | 2,500 |
|
|
|
|
|
| 417,000,000 | 4,170,000 |
|
| 2010 | 2010 | 2009 | 2009 |
|
| No. of Shares Issued and Fully Paid | Share Capital £ | No. of Shares Issued and Fully Paid | Share Capital £ |
|
|
|
|
|
|
| Ordinary shares of £ 0.01 each | 210,432,498 | 2,104,325 | 231,800,200 | 2,318,002 |
| Deferred shares of £0.01 each | 250,000 | 2,500 | 250,000 | 2,500 |
|
|
|
|
|
|
|
| 210,682,498 | 2,106,825 | 232,050,200 | 2,320,502 |
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.
Capital management
The Board's policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence. The Board manages the Group's affairs to achieve shareholder returns through capital growth and income.
At the EGM held on 24 March 2009, the Company was given authority to purchase up to 70% of its own shares on the market. In the first three months of the financial year the Company purchased 21,367,702 of its own shares on the market for a total consideration of £12,037,000 and cancelled them.
Group capital comprises share capital and reserves.
Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements.
12. Share options
Options were granted at the time of the admission to AIM, giving the option holder the right to subscribe for shares at £1.00 per share, exercisable at any time between the first and fifth anniversaries of the admission to AIM, as follows:
Numis 3,787,503 shares
Trikona Advisers 2,525,002 shares
Founder shareholder 1,262,501 shares
The Directors have determined that the fair value of the options granted cannot be reliably measured at the measurement date (the date of grant). Therefore, the intrinsic value method has been used to determine the value of the share-based payment transaction.
The intrinsic value at 31 March 2010 is nil (2009: nil).
13. Directors' remuneration
Details of Directors' remuneration are as follows:
|
|
| 2010 £'000 |
| 2009 £'000 |
| Michael Cassidy | to date of resignation | 62 |
| 78 |
| Paul Orchard Lisle | to date of resignation | 39 |
| 45 |
| Bill Hamilton Turner | to date of resignation | 20 |
| 38 |
| Philip Scales |
| - |
| - |
| Martin Adams |
| 52 |
| - |
| Pradeep Verma |
| 39 |
| 11 |
| Stephen Coe | from date of appointment | 65 |
| - |
| Arvind Pahwa | from date of appointment | 12 |
| - |
|
|
| 289 |
| 172 |
Also included in these financial statements is an accrual of £818,000 for fees to Martin Adams and Pradeep Verma for time spent during the year in addition to their normal non-executive duties. This is calculated on the basis of additional time spent at the daily rate implied by their Directors' fees.
14. Trade and other receivables
|
| 2010 | 2009 | 2010 | 2009 |
|
| Group | Group | Company | Company |
|
| £'000 | £'000 | £'000 | £'000 |
| Other receivables | 331 | 101 | 52 | 66 |
| Proceeds of investment disposals | 15,484 | - | - | - |
|
| 15,815 | 101 | 52 | 66 |
The proceeds of investment disposals relate to the sale of shares in ITNL in conjunction with its IPO. The proceeds were received on 1 April 2010.
15. Trade and other payables
|
| 2010 | 2009 | 2010 | 2009 |
|
| Group | Group | Company | Company |
|
| £'000 | £'000 | £'000 | £'000 |
| Investment commitments on behalf of Non-controlling Interest | - | 2,650 | - | - |
| Performance fee payable | - | 2,584 | - | 2,584 |
| Directors' fee payable (note 15) | 818 | - | 818 | - |
| Other creditors and accruals | 1,851 | 772 | 1,742 | 701 |
|
| 2,669 | 6,006 | 2,560 | 3,285 |
16. Net cash used by operating activities
|
| 2010 | 2009 |
|
| £'000 | £'000 |
| Profit/(loss) for the year | 24,568 | (61,444) |
| Adjustments for: |
|
|
| Fair value (loss)/gains on investments | (37,711) | 109,891 |
| Interest income from cash and cash equivalents | 272 | (4,103) |
| Dividend income | 61 | (98) |
| Foreign exchange gain | 96 | - |
| Net realised gain on disposal of investments | (7,064) | - |
| Net realised gain on disposal of subsidiaries | - | (31,795) |
| Share option expense | - | (379) |
| Changes in working capital |
|
|
| Increase in receivables | (201) | (20) |
| Increase/(decrease) in payables | 11,300 | (26,501) |
| Net cash used by operating activities | (8,679) | (14,449) |
17. Additions to and disposals of investments
On 22 October 2009, Trinity Capital (Five) Limited invested a further £6,182,000 in Lokhandwala Kataria Constructions Pvt Ltd. This was to fulfil its pre-existing subscription obligations. At 31 March 2009, this commitment was reported as amounting to £6,465,000. The amount ultimately paid was lower because of exchange rate movements.
On 9 November 2009 Trinity Capital (Thirteen) Limited disposed of its entire interest in Phoenix Mills Limited at a loss of £3,405,000.
On 30 March 2010 Trinity Capital (Two) Limited's interest in IL&FS Transportation Networks Limited ("ITNL") was disposed of by participation in the offer for sale in conjunction with ITNL's IPO, for a profit net of disposal costs of £10,469,000. The proceeds were received on 1 April 2010, following the Company's financial year end.
18. 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 2010.
|
| 2010 | 2009 |
| Net assets (£'000) | 273,250 | 261,274 |
| Number of shares in issue (note 11) | 210,682,498 | 232,050,000 |
| NAV per share | £1.30 | £1.13 |
19. Cash and cash equivalents
|
|
| 2010 | 2010 | 2009 | 2009 |
|
|
| Group | Company | Group | Company |
|
|
| £'000 | £'000 | £'000 | £'000 |
| Cash held with banks* |
| 19,606 | 19,252 | 16,518 | 8,396 |
| Money market funds |
| 17,799 | 17,799 | 43,520 | 43,520 |
|
|
| 37,405 | 37,051 | 60,038 | 51,916 |
* Included in the cash balance is an amount of £2,619,000 (2009: £2,584,000) held in an escrow account As described in note 6, this relates a retention of 20% of the performance fees from investment disposals. Although the Company believes that the amount held in the escrow account is not payable, the full balance will remain in escrow until the dispute has been resolved.
20. Commitments
There were no outstanding contractual commitments at the year end.
21. Contingent Liabilities
The contracts for the disposal of subsidiaries in the previous two financial years 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 Directors cannot yet state with full certainty that such obligations will not arise, but it is not possible to quantify the level of compensation which may become payable.
In addition, the Company is involved in two separate disputes:
Trikona Advisers LimitedOn 9 December 2009, the Company and TCML served notice on TAL of the termination of the Portfolio Management Agreement ("PMA") as a result of breaches of the PMA by TAL. The 60 business days' notice of termination expired on 16 March 2010, at which time the PMA terminated and TAL ceased to manage TCML's assets. Since the Company and TCML served the Notice of Termination, further significant breaches by TAL of the terms of the PMA have come to light, which the Company's legal advisers have formally notified to TAL. The Company and TCML are pursuing a claim against TAL for damages arising from TAL's breaches of the PMA. In response, TAL, which disputes that it has committed any breaches of the PMA and disputes that the Company and TCML were therefore entitled to terminate the PMA, has advised the Company and TCML that it is demanding payment of damages amounting to £112 million arising from their claim of breach of the PMA by the Company and TCML.
Disputes arising under the PMA are governed by English law and arbitration provisions. The arbitration process is subject to the rules and proceedings of the London Court of International Arbitration. The Company is confident that it will prevail and the Board is fully committed to pursuing TAL and defending any claims that TAL may bring against it in the arbitration process or otherwise.
Immobilien I/ Immobilien II/ SachsenFondsOn 12 January 2010 the Company received a notification of claim from 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 GmbH. In addition to the Company, the notification was also addressed to TCML, TAL, Mr Aashish Kalra, Mr Rakshitt Chugh (who together control TAL) and TSF Advisers Mauritius Limited (a joint venture between TAL and SachsenFonds Asset Management GmbH). Proceedings commenced in the Supreme Court of Mauritius in March 2010.
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 proceedings commenced by Immobilien I and Immobilien II make serious allegations against TAL and Messrs Kalra and Chugh in connection with the transactions in November 2007 and May 2008 and their subsequent behaviour in relation to the Mauritian TC Companies and the Indian Companies. In respect of the Company the proceedings allege: (i) a general failure to supervise and prevent the activities of TAL and Messrs Kalra and Chugh; (ii) that the Company colluded with TAL and Messrs Kalra and Chugh; and (iii) that the Company benefited from completion of the transactions. The amount claimed by Immobilien I and Immobilien II is their original cost of the investments, being nearly €116 million, plus amounts to compensate for prejudice, trouble, annoyance, interest and costs.
The Company has contested the jurisdiction of the Mauritian court in respect of the claims against it being made by Immobilien I and Immobilien II. The Board is fully committed to defending those claims. Most of the complaints made by Immobilien I and Immobilien II relate to the behaviour of TAL and Messrs Kalra and Chugh; indeed certain of the allegations relate to the behaviour of these parties in relation to companies in which neither TCML nor the Company has any interest whatsoever. The Board is of the view that joining the Company into this claim is an opportunistic strategy on the part of Immobilien I and Immobilien II to circumvent terms of certain agreements entered into as there is no contractual relationship between the Company and either Immobilien I or Immobilien II. The agreements under which TCML sold interests in the Mauritian TC Companies to Immobilien I and Immobilien II contain provisions whereby disputes are governed by arbitration. It is notable that no relief is sought against TCML in the proceedings before the Supreme Court of Mauritius.
As the Company is confident that neither of the above two claims against it will succeed, it does not consider it necessary to provide for either of them in the financial statements. Although no provision has been made in the financial statements for these claims, distributions to shareholders will only be effected to the extent that the Company has excess funds available after taking fully into account all of its actual or potential liabilities, which includes amounts that may be payable by the Company (together with costs) as a result of the legal disputes
The Company has made a provision of £12,700,000 for future legal costs in defending these two actions, of which £4,800,000 is estimated for the year to March 2011 and provided for as a current liability, with the remaining £7,900,000 provided for as a long term liability. 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.
22. Related party transactions
Philip Scales is a Director of the Company and of the Administrator. The fees of the Administrator for the year amounted to £188,000 (2009: £95,000).
Panthera Developers Private Limited and Enfield Property Management Services Private Limited, both affiliates of the former investment manager, are challenging the termination of service agreements with a number of development property owning companies (as listed in note 10) Amounts paid to these related parties during the year amounted to at least £660,000 (2009: £3,414,000).
23. Events after the balance sheet date
Sale of investments
On 19, 20 and 21 April 2010, Trinity Capital (Eight) Limited sold its entire holding of shares in Fortis Healthcare Limited for £17.6 million and thereby realised a profit against original cost of £4.1 million. The fair value of the holding at 31 March 2010 was £20.5 million.
In July 2010, Trinity Capital (Nine) Limited sold 18.7 million of its 45.9 million shares in Pipavav Shipyard Limited for £15.9 million. This crystallised a profit against original cost of £10.9 million. The fair value of the holding at 31 March 2010 was £16.8 million
On 22 June 2010, Trinity Capital (Seven) Limited entered an agreement (which was amended on 29 June 2010 and 28 July 2010) to sell its holding of shares in DB Hospitality Pvt Ltd. for INR 1,000 million (approximately £14.7 million at prevailing exchange rates). On 28 July the parties agreed an extension for completion including interest no later than 29 October 2010 and the Company received a 10% non-refundable deposit of approximately £1.4 million. Assuming no significant change in exchange rates before the remaining consideration is received, a profit against original cost of £2.5 million will crystallise.
Appointment of investment manager
On 18 June 2010, TCML 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. The appointment was approved by shareholders at an EGM on 30 July 2010.
Change of name
The Company changed its name from Trikona Trinity Capital PLC to Trinity Capital PLC on 2 August 2010.