Trinity Capital Regulatory News (TRC)

Trinity Capital PLC

Consolidated financial statements for the period ended 30 September 2010

Trinity Capital PLC (AIM: TRC), a fund created for investing in Indian real estate and infrastructure, announces its Interim Results for the period ended 30 September 2010.

- Ends -

Further information, please contact:

Enquiries:

MHP Communications

Tim McCall / James White +44 203 128 8756

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 Statement

1 December 2010

Dear Shareholder

Material progress has been made during the current financial period in implementing the investment policy of Trinity Capital PLC ("Trinity" or the "Company"). Significant cash proceeds have been generated from the disposals of investments, which will be distributed to shareholders in due course to the extent that is appropriate. Distributions to shareholders will only be effected to the extent that the Board is entirely satisfied that liabilities can be met from the Company's assets after the distributions have occurred. In this regard, the litigation processes which will determine any liabilities related to the legal disputes with the former investment manager and the two funds sponsored by SachsenFonds are formally underway.

In the light of the above, I am pleased to say that today we have announced the Company's intention to make a distribution of 16.6 pence per share amounting to £35 million in total, to be paid on 23 December 2010.

Investment Manager

The appointment of Indiareit as Trinity's new investment manager on 18 June 2010 was approved by shareholders on 30 July 2010. After an extensive induction period, Indiareit's management team is now fully up to speed with the structures, valuations, operational, legal and realisation challenges related to each of Trinity's property development assets. They now participate actively on the boards of investee companies. Indiareit has been working closely with the Company's Audit Committee and valuers, CBRE and Protiviti, in support of the valuation process as at 30 September. Indiareit's first investment manager's report to shareholders is provided in this interim report, which includes comments and prospects on the Indian property market in general and Trinity's investment portfolio in particular.

Operating Environment

As Indiareit's report highlights, India's economy continues to experience robust growth and, having avoided the worst effects of foreign capital withdrawal during the global financial crisis, the country's financial and property markets have been buoyant. Although this has facilitated the gradual realisation of Trinity's investments, the Reserve Bank of India is tightening monetary policy and property lending criteria in an effort to dampen excessive speculation. The longer term prospects for continued high rates of economic growth in India will require continuing public investment in education and infrastructure; and reforms to support business, particularly in areas such as taxation.

Whilst property prices have generally been improving, changes in the tax environment for SEZs and slowdowns in the pre-sales of certain residential projects have had a dampening effect on the valuation of Trinity's investments.

Financial Highlights

During the first six months of the financial period, Trinity's net asset value per share fell by 3.8% from £1.30 to £1.25 The discount to NAV at which Trinity's shares trade on AIM narrowed from approximately 58.50% to 48.55% during the first six months of the financial period.

Total expenses for the period have fallen to more normal levels for a Company of this size and nature being £1.57million (6 months ending 30 September 2009: £7.83 million) compared with £20.57 million for the 12 months ended 31 March 2010. The March year end figures included estimated future legal fees in respect of the disputes with the Company's former investment manager and with Immobilien I and Immobilien II totalling £12.7 million. It has not been considered necessary to amend the provision for such legal fees at 30 September 2010.

As at 30 September 2010, Trinity held £82.7 million of cash (31.4% of net asset value), £92.2 million in listed equities (35.0% of net asset value), and £126.2 million in unlisted investments (45.0% of net asset value). Since the end of the period, £32.4 million has been generated from the sale of shares in Pipavav Shipyard and £12.9 million from the sale of the DB Hospitality investment.

As at 30 November 2010, cash balances amounted to £126.2 million, equivalent to £0.60per share. All cash is held in UK sterling and placed on deposit with UK clearing banks and in large, diversified, and conservatively managed money market funds.

Investments

Part of Trinity's holding of shares in Pipavav Shipyard was sold in July 2010, when there was a public offer from the promoters. The remainder was sold in October 2010 after the lock up expired in a series of trades at prevailing market prices. Aggregate realisation proceeds amounted to £48.3 million, compared with an original cost of investment in £13.5 million.

In April 2010, Trinity sold its entire shareholding in Fortis Healthcare, generating realisation proceeds of £17.7 million. The investment cost £13.5 million.

The sale of DB Hospitality concluded in October 2010; proceeds amounted to £14.3 million compared with a cost of investment totalling £12.2 million.

The Company's largest investment is a 4.7% shareholding in DB Realty ("DBR") which at £57.8m represents 21% of net asset value; the Company owns 11,340,000 shares in DBR. As at 30 September the Company's valuation is based upon the mid market price. It should be noted that the shares the Company holds in DBR are currently subject to a lock-in and cannot be disposed until February 2011. Approximately 14% of DBR's shares are currently available for trading and it is not possible to accurately predict what will take place when the lock in period ends (over our and other investors'holdings) and a much larger percentage will be available for trading. Typical daily trading volumes are circa 690,000 shares and the average daily delivery volume is only circa 190,000 shares. The share price has been volatile moving between INR540 and INR360 between 31 March 2010 and 30 September 2010. Since 30 September the share price has fallen (based upon the closing price on 1 December) by 51% to INR218. The net effect of the drop of the share price is a reduction of listed equity securities value by £26.8 million.

Disclosure was made in the 2010 Annual Report of the expiry of the land lease related to the Uppal IT project. I am pleased to report that the authorities have agreed not to repossess the land and have extended the timelines for development of the first phase of project. Indiareit provides detailed comments on Uppal IT and the other development assets in their investment manager's report.

Complicated legal issues continue to surround the Company's investment in Sankalp, and the case before the Company Law Board is in progress.

Legal Disputes

The formal dispute resolution processes in relation to the legal claims received from the former investment manager and the two funds sponsored by SachsenFonds are underway.

Based on advice of the Company's legal advisers, the Board continues to believe that Trinity does not have any liability towards the former investment manager in relation to its claim in connection with the termination of the previous management agreement. The Company has also made a formal claim for damages against the former investment manager.

Similarly, the Board continues to believe that the Company has no liability with regard to the claim received from the funds promoted by SachsenFonds. In June 2010, the Supreme Court of Mauritius heard Trinity's arguments to the effect that the Mauritian court should not accept jurisdiction to consider the claims by the SachsenFonds' funds. The outcome of that hearing is awaited.

Investment Policy

Trinity's original Admission Document issued on 13 April 2006 included a statement that "The Directors confirm that, as required by the AIM Rules, they will seek Shareholder approval of the Fund's investment policy at each annual general meeting of the Fund."

On 24 March 2009, shareholders approved the following investment policy:

"The Company shall promptly but having due regard to all applicable legal, governmental and regulatory constraints and with a view to maximising shareholder value, dispose of all its assets in an orderly fashion.

If the Company's Ordinary Shares are trading at a price below the NAV per Ordinary Share, the Company shall immediately affect a return of capital through a cash distribution to Shareholders.

The Company shall continue to seek new investment opportunities. If the Company's Ordinary Shares are trading at a price above the NAV per Ordinary Share, the Board will selectively determine, on a periodic basis, whether or not to make new investments."

The Board is now implementing this investment policy in accordance with the regulatory requirements of AIM and the shareholder resolution.

Distributions

The investment policy requires that Trinity distributes cash not required to meet liabilities as long as the share price is at a discount to net asset value.

Trinity will only make distributions to shareholders to the extent that it has excess funds 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. When the Board has determined that the Company has excess funds, it will be distributed to shareholders.

The Board intends to make appropriate announcements in advance of any distributions being made, which will include details of the amount of the distribution, the method by which the distribution will be made and the timing of the distribution. Distributions may be effected by way of share buyback in the market, tender offers and/ or dividends. Shareholders have authorised the Company to repurchase in the market up to 70 per cent of the shares currently in issue. 

Board Changes

In the course of informal shareholder consultations in July, one issue which was raised was the experience of the Board in the context of the change in the immediate priorities facing the Company, and specifically the legal disputes. As Indiareit is now managing all day-to-day aspects of the development assets in the portfolio, the Board's main focus is on the legal disputes and the realisation of the listed investments. Accordingly, the Board concluded that it would be advantageous to appoint another director who has significant litigation experience and is familiar with closed end fund structures, particularly those invested in emerging markets. The Remuneration & Nomination Committee conducted a formal selection process that involved interviewing a number of candidates. At the end of this process, it concluded that John Chapman should be appointed as a non-executive director. The Board is delighted that shareholders have approved John's appointment and my colleagues and I warmly welcome John as a Director. John has been acting as a consultant to Trinity since 5 September 2010 as is therefore up to speed with all of the major issues facing the Company.

The Board has formed a Litigation Committee, which is chaired by John and on which I and Graham Smith (of the Company's administrator) also serve as members. The Board has also formed an Investment Committee, which I chair and on which John Chapman, Pradeep Verma and Arvind Pahwa also serve as members.

John's appointment to the Board, the renewal the Company's share buyback powers and the introduction of a Director's Incentive Plan were approved by shareholders at an extraordinary general meeting held on 29 November 2010.

Outlook

As progress is made in connection with the implementation of the investment policy and the dispute resolution processes, the Board intends to continue to update shareholders and, in due course, effect distributions.

Thank you for your continued support.

Yours faithfully

Martin M Adams

Chairman

Investment Manager's Report

Indian Real Estate overview

The Indian real estate market is now witnessing greater buoyancy as compared to the last few quarters with a spate of residential launches across the country. However, metropolitan markets such as Mumbai and Bangalore have seen a 20-25% annual increase in capital values resulting in a tempering of demand. This has resulted in an adverse impact for Trinity in projects such as Enigma, Kapstone and Lokhandwala, which have seen a slowing down of sales velocity. The price upside has, however, been muted in the rest of the country and is likely to look up over the next 12-18 months, proving beneficial for projects such as Jodhana. New suburban locations are opening up all over the country, opening up fresh avenues for residential real estate growth. The focus will continue to be on budget housing, with a more cautious growth predicted for luxury homes.

Commercial real estate is staging a gradual but convincing comeback and, in our opinion, demand is set to increase significantly in the coming year. Latest research indicates that construction of office spaces to meet this demand may reach and even surpass 5 million square feet nationwide. The rental rates have seen an upward trend and have risen higher than corresponding capital values due to the buoyancy in the market. As a result, outright purchase of commercial property is once again in vogue.

Special Economic Zones (SEZs'), which have been provided with several tax incentives till date to encourage development of commercial IT space are, however, set to be adversely impacted with the introduction of the new Direct Tax Code ('DTC') (proposed to be implemented with effect from April 1, 2012). The DTC is to impose certain taxes on income from SEZs which was exempt till now (including a tax on profits to be distributed from the SEZ). This will result in an increase in tax liability for the SEZ projects of Trinity i.e. Luxor and Uppals IT. However, removal of tax incentives for SEZs may lead to reduced supply and improved realizations, which are currently under pressure due to oversupply. Further, the DTC provides that the existing tax incentives will continue to be available to SEZ developers notified on or before March 31, 2012 and SEZ units operational on or before March 31, 2014.

With the Indian economy slated to grow by 8.5% in this year alone and per capita income showing a surge of 10.5% over last year, Indian retail is also poised for a turnaround. The Indian retail market is now worth close to $450 billion,

and we have every reason to believe that this figure will double over the next half decade. With this exponential expansion in organized retail, absorption of retail mall space across India is also forecasted to grow at a Compounded Annual Growth Rate of 30% during 2009-2012. (Source : JLL.)

Summary of Investment Valuations

Luxor Cyber City

Gurgaon has an existing Grade A office stock of 27.5 million sq ft, comprising IT and non-IT space in almost equal proportion. Although there has been a marked improvement in sentiment since mid-2009, current vacancy rate is still 18.5% and a further supply of 19.8 million sq ft is expected before the end of 2012. As a result, the project is expected to take longer to lease out than existing projections and hence has seen a fall in valuations since March 31, 2010.

Luxor Cyber City is located just off a major national highway which augurs well for its commercial acceptance. However, the micro-market is largely under-developed at this stage, with only a few development projects under development including Emaar MGF Palm Hills and Vatika India Next, with a target completion time of 3-5 years.

The project is a notified special economic zone (SEZ). However, no development work has been undertaken on the site, partly due to adverse market conditions including over supply, high vacancy rates and lower realizations but mainly for lack of funding commitment from the partners to sustain development work. The new DTC 2010 which proposes to alter the tax framework for SEZs in India makes it highly critical to complete development within the time frame prescribed to continue availing the existing tax incentives (refer section on 'Indian Real Estate overview' above).

The investment manager has brought to TC14's attention a change in the Gurgaon masterplan wherein a proposed road is likely to pass right through the site. This proposed road may be detrimental to the project, especially if developed as an SEZ/office development. Appropriate legal action will now be taken by Luxor to mitigate/alleviate the risks prior to commencing development activity at the site.

The investment manager is focusing on finding a reputable developer with extensive experience in developing and leasing SEZ's for optimizing value from this investment. However, realisation of investment in the course of development at close to current carrying values is unlikely prior to 2014.

Any exit decision would need to be taken in consultation with Immobilien II who are partners in TC14.

. Uppals IT Park "Tech Oasis"

\* 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.

Greater Noida can be considered to be an outlier in India given the high quality of physical infrastructure having already been provided by the government in anticipation of inhabitation. However, as a result of the extensive, high quality road network, it has witnessed un-precedented supply of land with good access which in effect has already created excess supply now threatening to be a glut. The current stock of Grade A office space in Noida/Greater Noida is 9.6 million sq ft (mostly IT/ITES buildings) with a high vacancy rate of 28.6%. The expected supply of Grade A office before end-2012 is an incremental 8.4 million sq. ft, with limited visibility of increased demand. As a result, leasing out of the project within the existing timelines may prove to be a challenge in the case of Uppals IT This is reflected in a fall in valuation since March 31, 2010.

The Uppals IT project comprises a land area of 76 acres on the Yamuna Expressway (expected to be operational in April 2011) connecting National Capital Region with Agra. The project has very good frontage to the expressway, but the location has not kept its promise of rapid development. The area within a 10 km radius of the project site is still thinly populated and/or rural, implying only a small catchment of working population that is required for office buildings. As a result, many seasoned local developers like DLF, Unitech, 3C, Logix have adopted a wait-and-watch or exit mode for their land plots in this sub-market.

The project land is zoned for IT/ITES industry by the local authority, and thereafter has received approval from the Indian government as a special economic zone (SEZ). Given that construction work had not commenced on the site in contravention to the land lease agreement, an extension was sought from the local authority to ensure no default. On September 15 2010, the local authority has provided an extension of timeline for first phase of the project until July1, 2012 and hence the risk of land repossession, referred to in the 2009 Annual Report, has been successfully alleviated. However, the new DTC 2010 which proposes to alter the tax framework for SEZs in India makes it critical to complete development within the time frame prescribed to continue availing the tax incentives (refer section on 'Indian Real Estate overview' above). The master-plan for the project is still under process.

The investment manager is evaluating several alternatives for optimizing value from this investment. Specific advice is also being sought from consultants and the local authority on whether a change of land use is possible since liquidating a residential land parcel will be easier than liquidating a Special Economic Zone land parcel. The investment manager believes that a fair market price for an outright land sale on an as-is-where-is basis is no more than INR 20-25 mn per acre, compared with the original effective cost of ~ INR 40 mn per acre and an effective valuation on September 30, 2010 of ~INR 26.4 mn per acre. 

Any exit decision would need to be taken in consultation with Immobilien I and Immobilien II who are partners in TC1.

Lokhandwala

The subject site is located in Mahalaxmi - an established high end residential location, located in central Mumbai. The market has seen a flurry of acquisitions and new launches from reputed developers like India Bulls, Lodha, DLF, DB Realty, etc. in the last 6-9 months, primarily targeted at the luxury residential segment. The projects have also seen substantial investor interest driving prices to all-time highs between the Rs. 20,000 - Rs. 30,000 per sq.ft. range. Residential prices for premium apartments in Mumbai have seen strong appreciation in the past year but are now beginning to see resistance at current price levels. Lokhandwala Infrastructure, a Mumbai based developer having developed over 10 million sq.ft. and having a strong presence in the slum rehabilitation / redevelopment space, is the majority partner leading the project.

The project is centrally located close to the Four Seasons Hotel and the upcoming Shangri-la hotel in central Mumbai. The site abuts the Apollo Mills site being developed by Lodha Developers. The site is in close proximity to other luxury residential projects like Orchid Turf View (DB Realty), Vivarea (K. Raheja Corp) and Bellissimo (Lodha Developers).

The project has already been launched in the market, branded as "Minerva" and is being promoted as a high-end residential development with two towers of 80 storeys each and over 300 meters in height, amongst the tallest in Mumbai. The project saw good presales at an average pre launch price of INR 16,000 per sq ft. However, given the high launch price of INR 22,500 per sq ft and the supply in the micro-market, there has been a drop in volumes. During the construction cycle and nearing completion, the project should, nevertheless, see consistent take-up and value uplift, given the strategic location and the economics of the high end residential segment. The project is being developed under a slum rehabilitation scheme and hence had seen some delay on account of certain regulatory issues including a stop work notice, which have now been addressed. The site is fully clear of slums with substantial numbers of tenants relocated and construction has now commenced. Presently, the construction of buildings for rehabilitating the slum-dwellers is under progress. Given the complexity of design and the targeted height, the development could take up to 6-7 years to complete and risk cost over-runs. The project is expected to get substantial funding for construction from pre-sales. Financial closure has also been achieved through bank financing of INR 2,000 million from Bank of Baroda in consortium with UCO Bank at an interest rate of 13.5% per annum.

The valuation of the project has seen a significant drop since March 2010 value. This has been partly due to an increase in construction cost, slum rehabilitation costs, and delay in timelines associated with approvals and clearances of slums on site. We have also extended the likely build time for this project. The project should be completed within 6 to 7 years, and therefore the main realisation options are either holding through the development cycle or a strategic sale / developer buyback over the next 12-18 months. Any exit decision would need to be taken in consultation with Immobilien I who are partners in TC5.

Kapstone

Thane is located along the eastern suburbs of Mumbai. With road and rail connectivity further improved following the completion of 2 additional flyovers along the eastern express highway, Thane is now a 45 mins drive from the city centre. Additional rail lines have also been commissioned connecting Thane to locations like Kalyan, Panvel, Belapur and Kurla. With the mushrooming of shopping malls, hospitals and residential/commercial developments, Thane has developed into a self-sufficient township location for middle and upper-middle class populations, boasting superior connectivity to Mumbai city than most similar locations along the western suburbs. Rustomjee Group, a leading Mumbai based developer, is the majority partner leading the project, which is the largest integrated development in the region.

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. It is located on both sides of the arterial Eastern Express Highway and abuts the premium Lodha Paradise development, being developed by Lodha Developers. The site is about 2.5 kms from the Thane Railway Junction and is less than a kilometre from key roads like Ghodbunder Road and Kolshet Road. The site also has easy access to shopping malls, hospitals, markets and other social infrastructure.

Work on the first residential phase of about 1.32 million sq.ft. is in full swing. The first 18 floor building i.e. 'Astrea' measuring about 0.12 million sq.ft. is already in the process of being handed over for possession. Civil work for the next phase 'Athena' measuring close to 0.5 million sq.ft. has been completed and all 4 wings of 27 floors each, are expected to be handed over between March - June 2011 in phases. 'Acura' and 'Altier', measuring a combined area of about 0.75 million sq.ft. are expected to be completed by December, 2012. The next phase comprising premium apartments in 40 floor towers called 'Azziano' measuring almost 1 million sq.ft. is expected to be launched in December, 2010.

Sale volumes have seen some decline in the last 6-9 months with sale prices stabilising between INR 6000 - 6500 per sq.ft. However, scarcity of reliable labour and key raw materials like sand, have impacted construction costs adversely and this is expected to increase further going forward. The projected time frame for completion of the project is around 2019 which unfortunately will create challenges in terms of making effective and timely returns from the project

The valuation of the project has declined from the March 2010 value, primarily due to increase in construction cost, drop in sale volumes due to reduced affordability, given the rapid price escalation and delay in timelines related to regulatory approvals. A strategic sale/ developer buyback during the development phase of the project is the most likely realisation strategy. Complete exit by way of asset sales as per the development plan may be constrained by the end of Trinity's life in 2016. It may be noted that lock-in for the investment under FDI guidelines has already expired in 2009 and hence a strategic sale during the project will be a more effective way of making an exit from the project.

Sankalp

* 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." 

Since TC16 has filed an application with the Company Law Board (CLB) regarding Sankalp, the investment manager is playing a limited role in the management of this investment.

While the Pipavav Shipyard has performed well and there is captive demand that could be captured by this project, the investment manager believes that 186 acres is a large area which is difficult to realize value from in less than 8 - 10 years hence a secondary institutional sale must be done to realize TC's investment. The land owner of the project land, E-Complex, has sent a notice of termination of JDA to Sankalp, which has been suitably responded to and refuted.

Neither the development nor a secondary sale is meaningful to discuss until the pending litigation is completed.

Jodhana

Jodhpur is the second largest city of Rajasthan, with a population of over 1 million and best known for its forts, vibrant culture and handicraft exports. The Marwari community (both resident and non-resident) includes several wealthy businessmen that maintain a close linkage with the city. The local residential market in Jodhpur has witnessed brisk demand in the past year, particularly high-end landed developments and prime single family gated compounds.

Located in the precincts of the Umaid Bhawan Palace in Jodhpur, the Jodhana project has undoubtedly the most prestigious address in town. The location is conducive to a residential-led development. The current investment manager has led discussions with the partner for a fair re-negotiation of the commercial terms of the project such that development can now take place with a positive approach. The investment manager will lead the approval process and the development can be managed by the Board of the Indian SPV, relying on the expertise of investment manager by outsourcing construction to a strong local contractor. 

In view of the market conditions and in consultation with the partner, the development mix for the project is now planned as: 9.7 acres plotted residential layout, 15 acres high-end residential villas and 4 acres earmarked for commercial space (a decision to be taken on this component depending on market conditions going forward). A renowned architect from New Delhi has already been engaged by Jodhana for master-planning of the villa development.

Exit from the project is envisaged in stages through a 3 year development plan, expected to start in Q1 2011. Being primarily residential, the project would be self liquidating in nature completing the course in tandem with the development plan.

Enigma

Virar is located on the periphery of Mumbai along the western suburbs. New road networks, improving rail connectivity and existing as well as upcoming educational facilities and hospitals are fuelling its growth as a preferred location for affordable lower and middle income housing. The market is seeing significant residential activity with township projects under execution by branded developers like HDIL, Kanakia Spaces and Mayfair Developers, in addition to large number of local players. Rustomjee Group, a leading Mumbai based developer, is the majority partner leading the project, which is the largest integrated development in the region.

The project is located less than 3 km from the Virar railway station where Mumbai's western commuter railway line originates. By road, the site would be about a 2.5 hrs drive from the city.

Construction work is proceeding along expected timelines in the project. Currently, 4 phases measuring about 3.3 million sq.ft. are at various levels of construction and expected to be handed over phase-wise between October 2011 and March 2012. These phases have seen over 90% absorption despite hardening of sale prices, now in the range of Rs. 3000 - 3500 per sq.ft. However, sale volumes have been declining steadily given the higher ticket sizes due to price rise. Construction cost has been escalating due to labour and raw material issues: however, the same have been under some control due to advanced 'MIVAN Shuttering' construction techniques being employed. It may be noted that the magnitude of development of over 12 million sq. ft. over the next 12 - 15 years will pose significant challenges in execution, cost control and delivery timelines.

The valuation of the project has declined from the March 2010 value, primarily due to increase in construction cost, drop in sale volumes due to reducing affordability and delay in timelines. A strategic sale/ developer buyback during the development phase of the project is the most likely realisation strategy. Complete exit by way of asset sales as per the development plan may be constrained by the fund life expiry in 2016. It may be noted that lock-in for the TC18 investment under FDI guidelines expires in September, 2011.

Horizon

The growth outlook for Indian logistics industry continues to remain robust, with increasing focus of the government as well as the private sector towards infrastructure development. Coupled with this, the likelihood of sustained demand for pan India logistics service providers on account of robust trade growth will prove beneficial for the sector.

Horizon boasts of a healthy project list including container freight stations, warehousing and logistics facilities located across the country. The SKIL Group, one of the leading infrastructure players in the country, is the promoter shareholder of the company.

The investment manager, during the past six months, has been negotiating with the promoters a number of exit possibilities from this investment including a fallback option to sell TC4's shares to promoter at an agreed option price of INR 22 per share. Trinity, in turn, has agreed to give operational freedom relating to Horizon to the promoter in order to facilitate the smooth and efficient functioning of the company. The option price is at a significant premium of 80% to the valuation as on March 31, 2010 and forms the basis of the valuation as on September 30, 2010.

INDEPENDENT REVIEW REPORT TO TRINITY CAPITAL PLC

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly report for the six months ended 30 September 2010 which comprises the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Financial Position, the Consolidated Statement of Changes in Equity, the Consolidated Statement of Cash Flows and the related explanatory notes. We have read the other information contained in the half-yearly report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the Company in accordance with the terms of our engagement. Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this 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 for our review work, for this report, or for the conclusions we have reached.

Directors' responsibilities

The half-yearly report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly report in accordance with the AIM Rules.

As disclosed in note 2, the annual financial statements of the Group are prepared in accordance with IFRSs. The condensed set of financial statements included in this half-yearly report has been prepared in accordance with IAS 34 Interim Financial Reporting.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly report for the six months ended 30 September 2010 is not prepared, in all material respects, in accordance with IAS 34 and the AIM Rules.

KPMG Audit LLC

Chartered Accountants Heritage Court

41 Athol Street

Douglas

Isle of Man

IM99 1HN

1 December 2010

Consolidated Statement of Comprehensive Income

For the period ended 30 September 2010

Consolidated Statement of Financial Position

at 30 September 2010

These financial statements were approved by the Board on 1 December 2010 and signed on their behalf by

Stephen Coe Philip Scales

Director Director

Statements of Changes in Equity

For the period ended 30 September 2010

.

Consolidated Statement of Cash Flows

For the period ended 30 September 2010

Notes to the Financial Statements

For the period ended 30 September 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 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. Statement of compliance

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 period ended 31 March 2010.

The consolidated financial statements of the Group as at and for the year ended 31 March 2010 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 1 December 2010.

3. Change in accounting policy

Except as described below, the accounting policies applied by the Group in these interim consolidated financial statements are the same as those applied by the Group in its consolidated financial statements as at and for the period ended 31 March 2010.

IFRS 3 Business Combinations (Revised) and IAS 27 Consolidated and Separate Financial Statements (Amended)

The Group adopted the revised standards from 1 April 2010. IFRS 3 (Revised) introduces significant changes in the accounting for business combinations occurring after this date. Changes affect the valuation of non-controlling interest, the accounting for transaction costs, the initial recognition, and subsequent measurement of a contingent consideration and business combinations achieved in stages. These changes impact the amount of goodwill recognised the reported results in the period that an acquisition occurs and future reported results. IAS 27 (Amended) requires that a change in the ownership interest of a subsidiary (without loss of control) is accounted for as a transaction with owners in their capacity as owners. Therefore, such transactions no longer give rise to goodwill, nor give rise to a gain or loss.

Furthermore, the amended standard changes the accounting for losses incurred by the subsidiary as well as the loss of control of a subsidiary. The changes required by IFRS 3 (Revised) and IAS 27 (Amended) will affect future acquisitions or loss of control of subsidiaries and transactions with non-controlling interests. The change in accounting policy was applied prospectively and had no material impact on earnings per share or the results for the period ended 30 September 2010.

4. Critical accounting estimates and assumptions

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 and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at end for the year ended 31 March 2010.

5. Financial risk management policies

The principal risks and uncertainties are consistent with those disclosed in preparation of the Group's annual financial statements for the year ended 31 March 2010.

6. Other administration fees and expenses

(1) Audit fees represent auditor's remuneration for work undertaken in connection with the statutory audit of the Group.

(2) £2,744,000 was released from the provision for legal costs during the period (as described in note 12), which offsets the legal costs actually incurred in respect of the litigation such that the net legal costs for the period amounted to £166,000.

7. Share capital

8. (Loss)/earnings per share

The basic 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 dilutive potential ordinary shares; the diluted loss per share is the same as the basic loss per share.

9. Investment Manager fees and performance fees

On 18 June 2010, Trinity Capital Mauritius Limited ("TCML"), a wholly owned subsidiary of the Company, entered into an investment management agreement (to which the Company is also a party) appointing Indiareit Investment Management Company ("Indiareit") as investment manager to TCML. In addition to the investment management fee of USD 2.2 million in the first year of the contract, Indiareit will be entitled to 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.

The provision for the performance fees to which Indiareit would be entitled based on the fair value of all investments, apart from the excepted assets noted above, amounted to £7,110,000 at 30 September 2010. The movements of the performance fee charge in the Statement of Comprehensive Income are made up as follows:

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 30 September 2010. 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 in Project Companies and the unlisted non-development property companies.

For the Project Companies, the Directors' valuations are based (where appropriate) on a discounted cash flow methodology. The methodology uses the cash-flow data generated by CBRE (which in turn is partially based on company-generated cash flows) and observable market data on interest rates and equity returns. The discount rates used for valuing equity securities are determined based on historic equity returns for other entities operating in the same industry for which market returns are observable. Management uses models to adjust the observed equity returns to reflect the actual debt/equity financing structure of the investment. The discount rate applied varies from project to project to take account of the estimated risk and ranges between 15.78% and 25.28%.

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 are as follows:

Realised gains/ (losses) on disposal of investments are as follows:

11. Net cash used by operating activities

12 Contingent Liabilities

The contracts for the disposal of subsidiaries in the previous two financial periods 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:

On 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, 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.

On 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 made a provision in the Annual Report and Accounts of March 2010 of £12,700,000 for future legal costs in defending these two actions, of which £2,744,000 has been utilised in the six months to September 2010, leaving an unutilised provision of £9,956,000. £4,500,000 is estimated for the period to 30 September 2011 and provided for as a current liability, with the remaining £5,456,000 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.

13 Net assets value per share

14 Related party transactions

Philip Scales is a Director of the Company and of the Administrator. The fees of the administrator for the period amounted to £119,017 (Six months ended 30 September 2010: £132,650). The administration fee payable was £99,911 (31 March 2010: £88,403).

15 Events after the balance sheet date

In June 2010, Trinity Capital (Seven) Limited entered an agreement to sell its holding of shares in DB Hospitality Pvt Ltd. for INR 1,000 million The Company received a 10% non-refundable deposit of approximately £1.3 million. On 25 October, the buyer concluded the purchase with the settlement of the balance of the consideration amounting to approximately £12.9 million.

In October 2010, Trinity Capital (Nine) Limited sold its remaining shares in Pipavav Shipyard Limited at market prices The aggregate sales proceeds, after transaction costs, were £32.4 million.