Trinity Capital Regulatory News (TRC)

Trinity Capital PLC

Consolidated financial statements for the period ended 30 September 2016

Trinity Capital PLC (AIM: TRC), an Indian real estate fund, announces its Interim Results for the period ended 30 September 2016.

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Chairman's Report

Dear Shareholder

The Board of Trinity Capital Plc ("Trinity" or the "Company") is pleased to report significant progress implementing the Company's investment policy during the current financial year. We completed a settlement on 15 November 2016 with Immobilien Indien I GmbH & Co. KG and Immobilien Indien II GmbH & Co. KG (together the "Immobilien Funds"), which are managed by SachsenFonds and Deutsche Fonds Holding. The settlement with the Immobilien Funds permitted a further payment to shareholders of 5.0p per share, made on 16 December 2016, supplementing the 1.0p per share distribution paid on 23 September 2016. Trinity has distributed £12.6 million (6.0p per share) during the current financial year. In aggregate, the Company has distributed £161.0 million (76.5p per share) to investors since the end of 2010.

Under the terms of the settlement agreement with the Immobilien Funds, the Company realised its investments in Trinity Capital (One) Limited ("TC-1") and Trinity Capital (Five) Limited ("TC-5") in return for a payment of £8.7 million. The Immobilien Funds also agreed to permit and facilitate Trinity Capital (Ten) Limited ("TC-10") to distribute future disposal proceeds to the Company's wholly owned subsidiary, Trinity Capital Mauritius Limited ("TCML"). In addition, all pending legal proceedings in Mauritius between the parties have been discontinued.

The settlement and second shareholder distribution occurred after the end of the financial period to which the enclosed half yearly report relates. At 30 September 2016, Trinity's Net Asset Value of £14.2 million (6.7p per share) included interests in three investments held through TCML: TC-1, TC-5 and TC-10.

Following the sale of TCML's interests in TC-1 and TC-5, the focus of the Board is now on the investment in TC-10. TC-10 is a special purpose company which owns equity and mezzanine debt-type securities issued by Indian company DB (BKC) Realtors Private Limited ("MK Malls"). TCML established TC-10 in 2006 in order to participate in the financing of the MK Malls project to develop commercial and office space in the prime Bandra Kurla Complex business district of Mumbai. Funds managed by IL&FS, one of India's leading infrastructure development and finance companies, invested alongside TC-10 in MK Malls. MK Malls is controlled and managed by D B Realty, a high-profile property developer in Mumbai, which has experienced difficulties in recent years. D B Realty's problems have contributed to the delayed development of the MK Malls site and, with limited availability of project financing, the timing of construction commencement remains uncertain.

In 2007 and 2008, the Immobilien Funds acquired an 88% equity interest in TC-10 together with 100% of a class of shares which receive all of the economic benefits from the company's common equity exposure to the MK Malls project. TCML retains a 12% equity interest in TC-10 (thereby entitling it to a board seat) together with 100% of a class of shares which receive all of the economic benefits from the company's exposure to compulsorily convertible preference shares ("CCPS") issued by MK Malls. The CCPS held by TC-10 have a face value of INR1 billion (approximately £11.8 million at current exchange rates), a compounding return capped at an IRR of 20% and priority over MK Malls' common equity. The face value and compounding return on the CCPS are denominated in Rupees and, as such, the Sterling equivalent has varied, and will continue to vary, based on prevailing exchange rates.

Over a year ago, a sale of the CCPS to a potential buyer was negotiated at a discount to face value that reflected various risks, including potential issues in enforcing TC-10's rights in India. Although sales documentation has been agreed between TC-10 and the buyer, financing has yet to materialise. Consequently, TCML is seeking alternative buyers of the CCPS while evaluating its legal rights. The carrying value of the investment in MK Malls is based upon the negotiated sale price, adjusted to reflect the possible delays and risks in completing the transaction.

Despite the attractive macroeconomic performance of the Indian economy in the past three years, domestic real estate companies suffer from scarce and expensive property development financing, the uncertainties posed by the Government's recent currency reforms and a weak Rupee (which increases the cost of foreign currency debt).

There is no assurance that TCML or TC-10 will be successful in selling the CCPS in the foreseeable future.

While we pursue a sale of the CCPS, the Board is also reassessing the most appropriate continuing structure of the Company and intends to communicate further with shareholders in due course in this regard.

Yours faithfully

Martin M. Adams

Chairman

Consolidated Statement of Comprehensive Incomefor the period ended 30 September 2016

The notes form an integral part of these financial statements.

Consolidated Statement of Financial Positionat 30 September 2016

The notes form an integral part of these financial statements.

These financial statements were approved by the Board on 28 December 2016 and signed on their behalf by

Stephen Coe Graham Smith

Director Director

Consolidated Statements of Changes in Equityfor the period ended 30 September 2016

The notes form an integral part of these financial statements.

Consolidated Statement of Cash Flowsfor the period ended 30 September 2016

The notes form an integral part of these financial statements.

Notes to the Financial Statementsfor the period ended 30 September 2016

The Company is a closed-end investment company incorporated on 7 March 2006 in the Isle of Man as a public limited company. The Company is listed on the AIM Market of the London Stock Exchange. 

The Company and its subsidiaries (together the "Group") invest in real estate and real estate related entities in India, primarily in commercial development in the office and business space, residential, retail, hospitality and infrastructure sectors deriving returns from development, long-term capital appreciation and income. In March 2009, shareholders voted to change the Company's investment policy by requiring the Company to gradually dispose of its assets over time and return capital to investors.

The Group has no employees.

These interim consolidated financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group as at and for the year-ended 31 March 2016.

The consolidated financial statements of the Group as at and for the year ended 31 March 2016 are available upon request from the Company's registered office at IOMA House, Hope Street, Douglas, Isle of Man or at www.trinitycapitalplc.com.

These interim consolidated financial statements were approved by the Board of Directors on 28 December 2016.

The accounting policies applied in these interim financial statements are the same as those applied in the Group's consolidated financial statements as at and for the year ended 31 March 2016.

There are no IFRS or IFRIC interpretations that are not yet effective that would be expected to have a material impact to the Company.

The preparation of condensed consolidated interim financial statements in conformity with IFRSs requires management to make judgements, estimates, and assumptions that affect the application of accounting policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results for which form the basis of making the judgements about carrying values of assets and liabilities that are not readily available from other sources. Actual results may differ from these estimates.

In preparing these condensed consolidated financial statements, the significant judgements made by management in applying the Group's accounting policies were the same as those that applied to the consolidated financial statements as at and for the year ended 31 March 2016.

The principal risks and uncertainties are consistent with those disclosed in preparation of the Group's annual financial statements as at and for the year ended 31 March 2016.

The authorised share capital at 30 September 2016 and 31 March 2016 and the issued and fully paid share capital at the same dates were as follows:

The basic earnings/(loss) per ordinary share is calculated by dividing the net loss attributable to the ordinary shareholders of the Company by the weighted average number of ordinary shares in issue during the period.

The Company has no potential dilutive ordinary shares; the diluted earnings/(loss) per share is the same as the basic earnings/(loss) per share.

The Company made a distribution of 1.0 pence per share on 23 September 2016, amounting, in total, to £2.1 million. As detailed in note 15, since the reporting date, the Company made a further distribution of 5.0 pence per share, amounting, in total, to £10.5 million. 

Both distributions were paid out of the reserves created upon cancellation of the share premium reserve which had arisen at the time of the Company's admission to AIM in 2006.

The Investment Management Agreement with Indiareit Investment Management Company ("Indiareit") expired on 31 December 2013. However, Indiareit has continued to provide certain investment management services to the Company since the expiry date. Periodic investment management fees were charged by Indiareit at the rate of US$198,000 per annum.

The Group held partial ownership interests in three unquoted Indian companies at the reporting date.

As detailed in note 15, the Company has, since the reporting date disposed of two of its investments. As at 30 September 2016, the valuation of these two investments was based on the negotiated sales price.

The value of the Company's interest in Trinity Capital (Ten) Limited ("TC-10") is based on the net sales proceeds estimated to be received under the terms of a draft (but not yet binding) sale and purchase agreement relating to TC-10's interest in the compulsorily convertible preference shares ("CCPS") issued by the Indian company, DB (BKC) Realtors Private Limited ("MK Malls"). The negotiated sales price is significantly less than the face value of the CCPS. The valuation of the investment in TC-10 has been adjusted to account for execution and other risks in completing the transaction.

Investments are recorded at fair value are as follows:

The fair value adjustment consists of:

Since January 2011, the Company has maintained a provision of £2.0 million to cover the possible costs of defending against legal actions brought by Immobilien Development Indien I GmbH & Co. KG and Immobilien Development Indien II GmbH & Co. KG (together the "Immobilien Funds"). As a result of the agreement with the Immobilien Funds detailed in note 15, the Company has reversed the provision.

Graham Smith is a Director of the Company and of the Administrator. The fees paid to the Administrator for the period amounted to £50,000 (six months ended 30 September 2015: £50,000). Mr Smith was not paid a Director's fee during the period.

As referred to in notes 11 and 12, on 20 October 2016 an agreement was signed with the Immobilien Funds which facilitates the realisation of all of the Company's remaining investments held jointly with the Immobilien Funds. Accordingly, on 15 November 2016, the Company disposed of its investments in Trinity Capital (One) Limited and Trinity Capital (Five) Limited held by its wholly owned subsidiary Trinity Capital Mauritius Limited ("TCML") in return for a payment of INR720,000,000 (£8.7 million). In addition, the Immobilien Funds agreed to permit and facilitate TC-10 to distribute to TCML the proceeds from a future sale of the CCPS. All pending legal proceedings in Mauritius between the parties have been discontinued.

As referred to in note 9, on 16 December 2016, the Company made a 5.0 pence per share distribution (equivalent to £10.5 million).

There have been no other significant events since the reporting date.