REG - Trinity Capital - Annual Financial Report <Origin Href="QuoteRef">HCM.L</Origin> <Origin Href="QuoteRef">TRC.L</Origin> - Part 1
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Trinity Capital PLC
29 July 2014
Trinity Capital PLC
Consolidated financial statements for the year ended 31 March 2014
Trinity Capital PLC (AIM: TRC), a fund created for investing in Indian real
estate and infrastructure, announces its Annual Results for the year ended 31
March 2014.
Further information, please contact:
IOMA Fund and Investment Management Limited
Graham Smith, Director +44 1624 681250
Arden Partners
Nominated Adviser and Broker
Chris Hardie +44 207 614 5900
Chairman's Report
Dear Shareholder
Much like the performance of the Indian economy, the last financial year was
rather disappointing for Trinity Capital plc ("Trinity" or the "Company")
measured by the number of investment realisations.
The only asset to be sold during the year was the investment in Luxor Cyber
City, which generated proceeds of £9.2 million and funded most of the
distribution to shareholders of £10.5 million. Details were reported in
Trinity's interim financial statements. At 31 March 2014, Trinity held five
investments in India, valued, after allowing for the co-investors' interests,
at a total of £22.8 million, equivalent to 10.9 pence per share.
Subsequent to the end of the financial year, on 24 July 2014, Trinity
announced the realisation of the investment in Jodhana, which generated net
proceeds of £3.1 million.
Trinity's net asset value per share declined by 41% to 13.4 pence at 31 March
2014 from 22.9 pence at the beginning of the financial year. 5 pence of the
reduction was due to the September distribution to shareholders, 1.2 pence due
to a reduction in the Rupee value of investments and the remaining 3.3 pence
decline was due largely to realised and unrealised losses caused by the 20%
depreciation of the Rupee against Sterling during the year. The Company does
not hedge its currency exposure to the Rupee. Net assets stood at £28.1
million at 31 March 2014.
Economic conditions in India continued to stagnate for much of the year.
Activity in the property sector was muted as a result of limitations on
mortgage lending from banks and non-bank financial institutions, high interest
rates and low GDP growth and consumer demand. During the 12 months to 31 March
2014, the Bombay Stock Exchange's Realty Index rose by 3% compared with a 19%
increase in the benchmark SENSEX. Business sentiment is, however, changing as
a result of the election in May of a new central Government with a clear
parliamentary majority. If the Government delivers on the promised economic
reforms and the return of business confidence boosts economic activity,
investment, lending and consumption, then the property market will gradually
recover.
Following the reverse takeover and merger of Horizon with other SKIL group
companies in late 2013 into a listed entity now named SKIL Infrastructure
Limited, our shares were finally permitted to trade in May 2014 and we have
been gradually selling our position into an illiquid market. By 22 July 2014,
we had sold 39% of our holding at a weighted average price of INR 53 per share
compared with a market price at the end of March 2014 of INR 101. It is
disappointing that a company like SKIL would default on the acquisition of our
shares when our put option was exercised in September 2013. Crystallisation of
our losses through the sale of the shares in the market will permit our
Mauritius subsidiary to commence legal action in India to seek damages against
SKIL and its promoters. This was never our desire, and we continue to hope
that SKIL's management will honour their obligations to avoid time consuming
and costly litigation that can only damage SKIL's standing and the reputations
of its promoters and management.
During the past financial year, Trinity witnessed a reduction of 31% in the
value of the three investments jointly held with the funds managed by
SachsenFonds. SachsenFonds' appeal of the Mauritius lower court order
dismissing their claims on jurisdictional grounds in 2011 is unlikely to be
heard until late 2014 at the earliest. We remain optimistic that if and when
the case is finally heard the Mauritius appellate court will affirm the lower
court's order of dismissal.
Trinity has reinitiated discussions with SachsenFonds and its partner Deutsche
Fonds Holding ("DFH") with a view to trying to better understand the issues
facing each of the stakeholders, protect the value of our joint investments
and eventually unscramble the relationship. The German funds operate under a
cloud of confidentiality and the lack of transparency and public information
makes it difficult for us to assist in developing mutually beneficial
solutions. Nevertheless, even if a comprehensive agreement eludes us, we are
hopeful that a more open and constructive dialogue will lead to positive
results.
Our largest investment is Uppal IT, which is held through our controlling
equity interest in Trinity Capital (One) Limited ("TC-1"). TC-1 is owned
jointly with the SachsenFonds-managed funds. In October 2013, TCML demanded
repayment of its outstanding advance to TC-1 of £7.5 million. As TC-1 did not
have the funds to repay, TCML commenced bankruptcy proceedings in Mauritius
with a view to an independent liquidator selling TC-1's assets (principally
the holding in Uppal IT) and using the proceeds to repay TCML's loan, with any
residual being available to TC-1's shareholders. At 31 March 2014, Uppal IT
held cash in Rupees equivalent to approximately £6.9 million. Legal processes
take time in Mauritius, but we are optimistic that the result will be
favourable to TCML.
We are in negotiations to sell to the promoters the mezzanine debt securities
issued by DB (BKC) Realtors Private Limited (MK Malls) in which the Company,
through its wholly owned subsidiary, Trinity Capital Mauritius Limited
("TCML"), has a beneficial interest through Trinity Capital (Ten) Limited
("TC-10"). The two Indian funds managed by SachsenFonds control TC-10.
Consistent with the property market in general, the Minerva residential
project in Mumbai managed by the Lokhandwala group continues to encounter
sluggish demand. SachsenFonds is still not prepared to permit our joint
venture company to accept the offer received for the holding in the Indian
entity.
During the financial year, Indiareit continued to assist in the management of
the investment portfolio. Performance fees payable to Indiareit on investment
realisations are currently negotiated on a case-by-case basis.
At 31 March 2014, Trinity held cash of £7.6 million and, since the end of the
financial year, net proceeds of £3.9 million were received. Following a review
of the Company's financial requirements to meet operating costs and
liabilities, Trinity has today announced a further distribution to
shareholders of £5.3 million, equivalent to 2.5 pence per share.
In the 2014/15 financial year, our main focus will be on the investments in
Uppal IT, Lokhandwala and MK Malls, in respect of which we will work with
SachsenFonds and DFH. We will also continue to sell our shares in SKIL.
Yours faithfully
Martin M. Adams
Chairman
Investment Manager Report
Indian Real Estate Overview
The economic indicators for the past year remained bleak - the GDP growth rate
is estimated to be 4.8% in 2013-14 as per Reserve Bank of India's estimates
(the lowest in 10 years). Rising prices of essential food items like
vegetables, fruits and cereals have pushed up wholesale price index based
inflation to five-month high of 6.01 per cent in May 2014, implying that
rising prices continue to remain a worry. The central bank, while focussing on
inflation, is unable to lower key rates and this in turn is impacting growth.
While the Indian Rupee has stabilized at about the GBP: INR 100 level, it is
still approximately 20% down from 18 months ago. The high fiscal and current
account deficits remain a cause for worry.
The general economic sentiment has turned cautiously optimistic over the past
month ever since the general elections in the country have resulted in a
stable government at the centre - the earlier opposition party (BJP) has been
given a majority mandate. It is largely expected that the new government,
under the leadership of the new prime minister Mr. Narendra Modi will be
decisive on the policy front, which will benefit industry and the economy as a
whole. The immediate indications have been positive with the stock market
breaking all time high records consistently during the first few weeks of the
new government. However, any impact from these reforms on the real economy
could take months or even years.
Residential real estate update
The slowdown continues, although some signs of change are emerging on a market
by market basis. While high-end luxury products continue to face pressure
both in terms of sales velocity and pricing, for example in Mumbai and
especially in the micro-market where the Lokhandwala project is located, the
mass market and mid-market products in some cities (e.g. Bangalore) have
witnessed a slightly increased interest from the buyers. Actual translation of
this into sales will take time and it is expected that the market may improve
during the festive season towards the end of the year.
Commercial real estate update
The slowdown has significantly impacted the commercial real estate market,
even more so than residential. Even in the last quarter (Q1 2014), the
commercial real estate market saw sluggish transaction activity and a low
level of new completions. The corporate occupiers exercised significant
caution while looking at new spaces, resulting in subdued leasing activity
during the first three months of the year. The majority of these deal closures
took place for small to medium-sized office spaces and a large portion was
consolidation to regions or micro markets where rentals were lower.
In terms of outlook, corporate demand is expected to be slow until
demonstrable progress is made by the new government and its impact is felt on
the economy. As regards Greater Noida, the region continues to be plagued by a
severe oversupply of office space, with around two-thirds of completed stock
remaining vacant.
Trinity's investments are also impacted by the macro-economic and regulatory
factors. We provide below a detailed update on each asset.
Summary of Investments
Jodhana
On 18 July 2014, Trinity Capital (Seventeen) Limited sold its investment in
Jodhana, which generated proceeds of £3.1 million. This equals the net
carrying value of the Company's interest in the financial statements at 31
March 2014 in INR terms, but in GBP terms this generated a loss in the post
year-end period of £0.1 million because of currency movements.
Uppals IT Park "Tech Oasis"
Indian Investee Company Uppals IT Projects Private Limited
Mauritian SPV Trinity Capital (One) Limited (TC1)
Local Promoter/ Partner n.a.
Location Greater Noida, National Capital Region (NCR), Uttar Pradesh
Project Development of IT/ITES SEZ with Residential and Commercial Space
Development potential 10.16 million sq. ft., basis above product mix
Date of Investment October 2006
Ownership of TC1 TCML: 67%*Immobilien I: 8%Immobilien II: 25%
TC1's interest in Indian Investee Company 100%
*TCML also provided £7.5 million of mezzanine debt to TC1 in October 2008.
Market overview
There has been little improvement in the Greater Noida office market - it
continues to be plagued with severe oversupply. Most of the office space
remains vacant and considering the forecasted demand and upcoming supply
mismatch, the situation is only expected to get worse going forward.
As mentioned in previous updates, farmers in the Greater Noida region had
challenged the legality of the land acquisition by the Greater Noida/ Noida
authorities. While the acquisition was upheld by the state court, construction
work was stopped till master plan of the entire area was re-approved by a
government planning board. This approval has since been given and construction
activity continues in the region. However, some farmers continue to pursue the
matter with higher courts.
Project location overview
The project land is located in Greater Noida and has frontage on the Yamuna
expressway (a fully operational 165 km long access controlled six lane
concrete pavement expressway connecting NCR with a major city in northern
Indian city of Uttar Pradesh, Agra). It is also located very close to the
Formula 1 race track. While the Expressway has been the fulcrum of real estate
activity in the region, the supply of both residential and office space in the
Greater Noida market as a whole far exceeds the demand at present. As a
result, even though several new projects have been launched many kilometres
further down from our site towards Agra, they have seen limited absorption.
Partner/ promoter overview
There is no Indian partner / promoter in this project.
Development overview
The project land is zoned for the IT/ITES industry and has received approval
as a Special Economic Zone (SEZ) from the Indian government. The requisite
lease premium has been paid to the local authority.
Since the development has to be constructed in line with the zoning and
approval received, the product mix does not justify any development, given the
market conditions. This has been the case since inception - hence, the site is
still at undeveloped land stage. In any case, between October 2011 and August
2012, no construction work was permitted by the authorities due to the
requirement for re-validation of the area's master plan. Subsequent to such
re-validation, Uppals IT has followed up with the authorities and obtained
approval for construction of a boundary wall. The design of the boundary wall
had been frozen, the necessary building material requirements drawn up and the
contractor had been appointed. The construction of the boundary wall is now in
progress. This will further help in protecting land value and securing the
site.
Uppals IT had applied for a further extension of timelines for completion of
phase I of the project and has obtained further extension from the local
authority on 30 April 2014.
As regards the farmer issue with the higher courts, apart from the risk as to
status of ownership, there is a possibility that landowners such as Uppals IT
will be asked by the authority to share in enhanced compensation payments to
the farmers. However, this outcome, though a risk, is remote.
Exit/ realization strategy
The Manager has been evaluating possible realization strategies, however
nothing concrete has emerged as yet. Any exit decision would need to be taken
in consultation with Immobilien I and II.
A few preliminary expressions of interest to acquire the land have been
received.
Horizon
Indian Investee Company SKIL Infrastructure Limited (previously Horizon Countrywide Logistics Limited )
Mauritian SPV Trinity Capital (Four) Limited (TC4)
Local Promoter/ Developer SKIL Group
Location Nationwide
Project Logistics
Date of Investment October 2008
Ownership of TC4 TCML: 100%
TC4's interest in Indian Investee Company 22.7%
Market overview
The future of the Indian logistics sector continues to look very promising,
considering the current demand and unorganised nature of the industry. Experts
believe that India's logistics sector would grow at a rate of 15 to 20 per
cent per annum going forward.
Project location overview
SKIL Infrastructure Limited's projects include container freight stations,
free trade warehousing zones, inland container depots and logistics and
warehousing facilities located in different cities across the country.
Partner/ promoter overview
SKIL Group, the promoter shareholder of the company, is a leading player in
the Indian infrastructure industry and has executed large scale projects
nationwide. It is the SKIL group's expertise which will enable execution of
Horizon's projects and creation of value.
Development overview
SKIL Infrastructure Limited is progressing its various projects with the
objective of creation of greater substance. However the pace of progress has
been slower than expected
Exit/ realisation strategy
The planned merger of Horizon Countrywide Logistics Limited with another
listed entity of the SKIL group was completed and TC-4 was allotted shares in
the new listed entity under the court approved scheme of merger. These shares
are tradable on the Bombay Stock Exchange.
SKIL defaulted on the acquisition of TC-4's shares when the put option was
exercised in September 2013. Given that a negotiated settlement with promoters
did not work out, Trinity and the TC-4 board decided to progress with a sale
of shares in the open market - however trading volume continues to be limited
and hence it will take some time for all the shares are to be disposed of and
an exit completed via this route. Besides, the realisation price also
continues to be low, partly as a result of it being an illiquid stock. The
Company will consider legal action in India to seek damages against SKIL and
its promoters.
Since the financial year end, we sold 39% of our holding at a weighted average
price of INR 53 per share compared with a market price at the end of March
2014 of INR 101.
Lokhandwala
Indian Investee Company Lokhandwala Kataria Constructions Pvt. Ltd
Mauritian SPV Trinity Capital (Five) Limited (TC5)
Local 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
Development potential 929,215 sq. ft., basis above product mix
Date of Investment October 2006: £6.26mOctober 2009: £6.18m
Ownership of the TC5 TCML: 59%Immobilien I: 41%
TC5's interest in Indian Investee Company 49%
Market overview
Mahalaxmi is a high-end residential hub of South Mumbai. Several iconic
projects have been launched and are under construction in the micro-market by
well known developers. However, it has been one of the worst hit in the recent
real estate slow down owing to very high cost of apartments in this region.
The supply demand mismatch continues and oversupply has led to severe pressure
on sales velocity and pricing.
Project location overview
The micro-market is a well-established residential hub with all facilities and
infrastructure in place and operating successfully, including top premium
hotels such as Four Seasons and the Palladium. The nearby high street
development known as Phoenix Mills, complete with outlets of leading clothing
brands (such as Zara, Giorgio Armani etc.), a multiplex cinema, high-end food
and beverage outlets, entertainment zone etc. is a well-known social
destination. The area is also a commercial hub with several well-known office
buildings such as Indiabulls Financial Centre, Peninsula Corporate Park,
Peninsula Business Park, One Indiabulls Centre etc. in the vicinity.
Promoter/ partner overview
Lokhandwala Infrastructure, a large Mumbai based developer having a strong
presence in the slum rehabilitation / redevelopment space, is the majority
partner in the joint venture, and is leading the project development. The
Lokhandwala Group has developed over 10 million sq. ft. of other projects in
Mumbai including slum redevelopments.
Development overview
The (nearly) 2,100 slums that were at the site had already been cleared and
re-located. The construction of the slum rehab building is nearing completion.
Larsen and Toubro (one of India's foremost contractors) had been appointed for
construction of the free-sale area, which is going on steadily after having
been delayed due to several reasons by over 2 years. The project was launched
as "Minerva" and comprises two proposed towers of around 84 floors each,
including stilt and podium parking and amenities in addition to the slum
rehabilitation buildings - around 50% of the project has now been sold.
The challenges, both regulatory and commercial continue to be faced by the
project. A few of the critical approvals such as 'Floor Area Ratio'
construction density (which is presently approved at 25% below plan) and the
final environmental clearance of the Minerva tower are still pending. The
sales velocity is under severe pressure on account of oversupply in the
micro-market and general economic slowdown and 2014 has seen minimal sales.
The construction costs have increased significantly over those projected which
has resulted in an increase in prices of raw materials, labour and financing
costs. Besides, with earlier debt repayment obligations commencing and minimal
sales, the cash flow mismatch has resulted in the need for the project to take
on further debt to continue construction.
Exit/ realisation strategy
Several realisation alternatives are being evaluated, including a strategic
sale/ developer buyback during the development phase of the project.
Any exit decision would need to be taken in consultation with Immobilien I who
are partners in TC5 and this may pose several challenges in realising a timely
exit.
DB (BKC) Realtors
Indian Investee Company DB (BKC) Realtors Private Limited (formerly, MK Malls & Developers Pvt. Ltd.)
Mauritian SPV Trinity Capital (Ten) Limited (TC10)
Local Promoter/ Developer Dynamix Balwas Group
Location Bandra Kurla Complex, Mumbai
Project Commercial Office development
Date of Investment December 2006 : £5.9 millionJanuary 2008 : £6.4 million
Ownership of TC10* Immobilien I : 40%Immobilien II : 48%TCML : 12%
TC10's investment in DB (BKC) Realtors Private Limited (MK Malls) consists of
(a) equity; (b) redeemable optionally convertible cumulative preference shares
(ROCCPS); and (c) compulsorily convertible preference shares (CCPS). In 2007
and 2008, the capital structure of TC10 was reorganised such that the shares
acquired by Immobilien I and Immobilien II in TC10 provided the economic
interest in the equity and ROCCPS. TCML was issued with shares in TC10 which
provide the economic interest in the CCPS, with a return on equity capped at
an IRR of 20%.
MK Malls is engaged in an attractively located commercial office development
in the Bandra Kurla Complex business district of Mumbai.
The amount due to TC10 on exercise of the right to sell all CCPS (in which
TCML has economic interest) after the expiry of three years from the date of
allotment has still not been paid by the promoters. The Manager has
re-initiated dialogue with the promoters after a period of stalemate, with the
objective of providing an exit to TCML. Discussions on a strategic sale/
developer buy back at an appropriate value in order to provide a timely exit
to TCML are ongoing.
Directors' Report
The Directors have pleasure in presenting their report and financial
statements of the Group for the year ended 31 March 2014.
Principal activity and incorporation
The Company is a closed-end investment company, incorporated on 7 March 2006
in the Isle of Man as a public limited company. Its shares were admitted to
trade on the Alternative Investment Market of the London Stock Exchange on 21
April 2006.
The Group has invested in real estate and real estate related entities in
India, primarily in commercial development in the office and business space,
residential, retail, hospitality, and infrastructure sectors deriving returns
from development, long-term capital appreciation and income.
In March 2009, shareholders voted to change the Company's investment policy by
requiring the Company to gradually dispose of its assets over time and return
capital to investors.
The Group has no employees.
The consolidated financial statements comprise the results of the Company and
its subsidiaries (together referred to as the "Group").
Results and dividends
The Group's results for the financial year ended 31 March 2014 are set out in
the Consolidated Statement of Comprehensive Income.
A review of the Group's activities is set out in the Chairman's Report and the
Investment Manager's Report respectively.
During the year, the Company paid distributions of £10.5 million (2013: £10.5
million).
Directors
The Directors of the Company during the year and to date of this report were
as follows:
Martin Adams (Chairman)
John Chapman
Stephen Coe
Graham Smith
Pradeep Verma
None of the Directors had interests in the shares of the Company at 31 March
2014 (2013: none). Details of the Directors' remuneration are provided in note
12.
Company Secretary
The secretary of the Company during the year and at the date of this report
was Philip Scales.
Auditors
The auditors, KPMG Audit LLC, being eligible, have expressed their willingness
to continue in office in accordance with Section 12(2) of the Isle of Man
Companies Act 1982.
On behalf of the Board
Graham Smith
Director
28 July 2014
Statement of Directors' Responsibilities in Respect of the Annual Report and
the Financial Statements
The Directors are responsible for preparing the Directors' Report and the
financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each
financial year, which meet the requirements of Isle of Man company law. In
addition, the Directors have elected to prepare the financial statements in
accordance with International Financial Reporting Standards, as adopted by the
EU.
The financial statements are required by law to give a true and fair view of
the state of affairs of the Group and Parent Company and of the profit or loss
of the Group for that period.
In preparing these financial statements, the Directors are required to:
· select suitable accounting policies and then apply them
consistently;
· make judgements and estimates that are reasonable and prudent;
· state whether they have been prepared in accordance with
International Financial Reporting Standards, as adopted by the EU; and
· prepare the financial statements on the going concern basis unless
it is inappropriate to presume that the Group and Parent Company will continue
in business.
The Directors are responsible for keeping proper accounting records that are
sufficient to show and explain the Parent Company's transactions and disclose
with reasonable accuracy at any time the financial position of the Parent
Company and to enable them to ensure that its financial statements comply with
the Companies Acts 1931 to 2004. They have general responsibility for taking
such steps as are reasonably open to them to safeguard the assets of the Group
and to prevent and detect fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website.
Legislation governing the preparation and dissemination of financial
statements may differ from one jurisdiction to another.
Corporate Governance Statement
The UK Corporate Governance Code does not directly apply to companies
incorporated in the Isle of Man but the Company's Board has developed its
internal procedures to be in line with the recommendations of the UK Corporate
Governance Code where appropriate and these are monitored on a regular basis.
The Directors will continue to comply with the relevant requirements of the UK
Corporate Governance Code to the extent that they consider it appropriate
having regard to the Company's size and the nature of its operations. The
Board is not aware of any reason that would cause it to reconsider its current
approach.
Responsibilities of the Board
The Board of Directors is responsible for the implementation of the investment
policy of the Company and for its overall supervision via the investment
policy and objectives approved by shareholders. At each of the Company's
regular Board meetings, the financial performance of the Company and its
portfolio investments are reviewed.
The Board is also ultimately responsible for the Company's day-to-day
operations, but in order to fulfil its obligations, the Board has delegated
operations through arrangements with the Investment Manager and the
Administrator. All Board members are non-executive.
Audit Committee
The Audit Committee is a sub-committee of the Board and makes recommendations
to the Board which retains the right of final decision. The Audit Committee
has primary responsibility for reviewing the financial statements and the
accounting policies, principles and practice underlying them, liaising with
the external auditors and reviewing the effectiveness of internal controls.
The Audit Committee maintains a risk register to help it identify, evaluate,
monitor and control risks. The Committee members are Stephen Coe (Chairman),
Martin Adams, John Chapman, and Pradeep Verma.
The terms of reference of the Audit Committee covers the following:
• duties in relation to external reporting, including reviews of
financial statements, shareholder communications and other announcements;
• duties in relation to the external auditors, including
appointment/ dismissal, approval of fee, discussion of the audit; and
• duties in relation to internal systems, procedures and controls.
Remuneration and Nomination Committee
The Remuneration and Nomination Committee is a sub-committee of the Board and
makes recommendations to the Board which retains the right of final decision.
The Committee members are Stephen Coe (Chairman) and Martin Adams.
The purpose of the Committee is to:
· set the remuneration of the Directors;
· demonstrate to the shareholders of the Company that the remuneration of
the non-executive Directors of the Company and its subsidiaries (the "Group")
is set by a committee of the Board whose members have no personal interest in
the outcome of the decisions of such committee and who will have due regard to
the interests of shareholders;
· to the extent that any executive or non-executive Director may be
invited to join meetings of the Committee as appropriate he shall absent
himself and take no part in any discussions concerning his own remuneration or
other benefits or matters within the province of the Committee; and
· consider the appropriateness of the Board's composition, and assess the
suitability of potential Board members.
The Committee is authorised by the Board to:
· when the fulfilment of its duties requires, obtain any outside legal or
other professional advice including the advice of independent remuneration
consultants, to secure the attendance of external advisers at its meetings, if
it considers this necessary, and to obtain reliable, up-to-date information
about remuneration in other companies, at the expense of the Company. The
Committee has full authority to commission any reports or surveys which it
deems necessary to help it fulfil its obligations; and
· when the fulfilment of its duties requires, to obtain any outside legal
or other professional advice including the advice of independent recruitment
consultants and to secure the attendance of external advisers at its meetings,
if it considers this necessary, at the expense of the Company. The Committee
has full authority to commission any reports or assistance which it deems
necessary to help it fulfil its obligations.
Legal Committee
The Legal Committee is a sub-committee of the Board and makes recommendations
to the Board which retains the right of final decision. The Legal Committee's
primary responsibility is to oversee the disputes which the Group is currently
involved in. The Committee members are John Chapman (Chairman), Martin Adams
and Graham Smith.
Investment Committee
The Investment Committee is a sub-committee of the Board and makes
recommendations to the Board which retains the right of final decision. The
Investment Committee's primary responsibility is to oversee the realisation of
the Company's portfolio in consultation with the Investment Manager in
accordance with the Company's investment policy. The Committee members are
Martin Adams (Chairman), John Chapman and Pradeep Verma.
Report of the Independent Auditors, KPMG Audit LLC, to the members of Trinity
Capital PLC
We have audited the financial statements of Trinity Capital plc for the year
ended 31 March 2014 which comprise the Group Statement of Comprehensive
Income, the Group and Parent Company Statements of Financial Position, the
Group and Parent Company Statements of Changes in Equity, the Group Statement
of Cash Flows and the related notes. The financial reporting framework that
has been applied in their preparation is applicable law and International
Financial Reporting Standards (IFRSs), as adopted by the EU.
This report is made solely to the Company's members, as a body, in accordance
with Section 15 of the Companies Act 1982. Our audit work has been undertaken
so that we might state to the Company's members those matters we are required
to state to them in an auditor's report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company's members as a body, for our
audit work, for this report, or for the opinions we have formed.
Respective responsibilities of Directors and Auditor
As explained more fully in the Directors' Responsibilities Statement, the
Directors are responsible for the preparation of financial statements that
give a true and fair view. Our responsibility is to audit, and express an
opinion on, the financial statements in accordance with applicable law and
International Standards on Auditing (UK and Ireland). Those standards require
us to comply with the Auditing Practices Board's (APB's) Ethical Standards for
Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the
financial statements sufficient to give reasonable assurance that the
financial statements are free from material misstatement, whether caused by
fraud or error. This includes an assessment of: whether the accounting
policies are appropriate to the Group's circumstances and have been
consistently applied and adequately disclosed; the reasonableness of
significant accounting estimates made by the Directors; and the overall
presentation of the financial statements.
Opinion on the financial statements
In our opinion the financial statements:
· give a true and fair view of the state of the Group's and Parent
Company's affairs as at 31 March 2014 and of the Group's loss for the year
then ended;
· have been properly prepared in accordance with IFRSs as adopted by the
EU; and
· have been properly prepared in accordance with the provisions of
Companies Acts 1931 to 2004.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the
Companies Acts 1931 to 2004 require us to report to you if, in our opinion:
· proper books of account have not been kept by the Parent Company and
proper returns adequate for our audit have not been received from branches not
visited by us; or
· the Parent Company's statement of Financial Position and Statement of
Comprehensive Income are not in agreement with the books of account and
returns; or
· certain disclosures of Directors' remuneration specified by law are not
made; or
· we have not received all the information and explanations we require
for our audit.
KPMG Audit LLC
Chartered Accountants
Heritage Court
41 Athol Street
Douglas
Isle of Man IM99 1HN
28 July 2014
Consolidated Statement of Comprehensive Income
for the year ended 31 March 2014
Notes 2014 2013
£'000 £'000
Interest income from cash and cash equivalents 34 61
Foreign exchange gain/(loss) 8 (84)
Fair value movement on investments 10 12,553 15,536
Net loss on disposal of investments 13 (24,130) (14,380)
Net investment (loss)/profit (11,535) 1,133
Investment Manager's management fees 4 (124) (870)
Investment Manager's performance fees 4 525 3,414
Other administration fees and expenses 5 (956) (979)
Total expenses (555) 1,565
(Loss)/profit before tax (12,090) 2,698
Taxation 6 - -
(Loss)/profit for the year (12,090) 2,698
Other comprehensive income - -
Total comprehensive (loss)/profit (12,090) 2,698
Total comprehensive income attributable to:
Equity holders of the Company (9,541) 505
Non-controlling Interest (2,549) 2,193
(Loss)/profit for the year (12,090) 2,698
Basic and diluted (loss)/earnings per share (pence) 7 (4.5) 0.2
Consolidated Statement of Financial Position
as at 31 March 2014
Group Company
Notes 2014 2013 2014 2013
£'000 £'000 £'000 £'000
Non-current assets
Investments in subsidiaries 9 - - 25,549 41,598
Investments at fair value through profit or loss 10 25,465 50,817 - -
Total non-current assets 25,465 50,817 25,549 41,598
Current assets
Trade and other receivables 39 166 4 5
Cash and cash equivalents 15 7,613 10,166 7,403 8,881
Prepayments 10 124 - -
Total current assets 7,662 10,456 7,407 8,886
Total assets 33,127 61,273 32,956 50,484
Liabilities
Non-current liabilities
Provision for legal costs 16 (2,000) (2,000) (2,000) (2,000)
Performance fee provision 4 - (985) - -
Total non-current liabilities (2,000) (2,985) (2,000) (2,000)
Current liabilities
Trade and other payables (411) (436) (240) (285)
Total current liabilities (411) (436) (240) (285)
Total liabilities (2,411) (3,421) (2,240) (2,285)
Net assets 30,716 57,852 30,716 48,199
Represented by:
Ordinary shares 11 2,107 2,107 2,107 2,107
Capital redemption reserves 214 214 214 214
Distributable reserve 62,234 72,756 62,234 72,756
Retained reserves (36,252) (26,711) (33,839) (26,878)
Other reserves (167) (167) - -
Total equity attributable to equity holders of the Company 28,136 48,199 30,716 48,199
Non-controlling interest 2,580 9,653 - -
Total equity 30,716 57,852 30,716 48,199
Net Asset Value per share (pence ) 14 13.4 22.9
These financial statements were approved by the Board on 28 July 2014 and
signed on their behalf by
Stephen Coe Graham Smith
Director Director
Consolidated Statement of Changes in Equity
for the year ended 31 March 2014
Share Capital Capital Redemption Reserve Distributable Reserve Retained Loss Other Reserves Shareholders' Funds Non-controlling Interest Total Equity
£ '000 £ '000 £ '000 £ '000 £ '000 £ '000 £ '000 £ '000
Balance at 1 April 2012 2,107 214 83,275 (27,216) (167) 58,213 7,460 65,673
Total comprehensive profit - - - 505 - 505 2,193 2,698
Distribution - - (10,519) - - (10,519) - (10,519)
Balance at 31 March 2013 2,107 214 72,756 (26,711) (167) 48,199 9,653 57,852
Balance at 1 April 2013 2,107 214 72,756 (26,711) (167) 48,199 9,653 57,852
Total comprehensive profit/loss - - - (9,541) - (9,541) (2,549) (12,090)
Payment of non-controlling interest - - - - - - (4,524) (4,524)
Distribution - - (10,522) - - (10,522) - (10,522)
Balance at 31 March 2014 2,107 214 62,234 (36,252) (167) 28,136 2,580 30,716
Company Statement of Changes in Equity
for the year ended 31 March 2014
Share Capital Capital Redemption Reserve Distributable Reserve Retained Loss Total Equity
£ '000 £ '000 £ '000 £ '000 £ '000
Balance at 1 April 2012 2,107 214 83,275 (27,542) 58,054
Total comprehensive profit - - - 664 664
Distribution - - (10,519) - (10,519)
Balance at 31 March 2013 2,107 214 72,756 (26,878) 48,199
Balance at 1 April 2013 2,107 214 72,756 (26,878) 48,199
Total comprehensive loss - - - (6,961) (6,961)
Distribution - - (10,522) - (10,522)
Balance at 31 March 2014 2,107 214 62,234 (33,839) 30,716
Consolidated Statement of Cash Flows
for the year ended 31 March 2014
2014 2013
£'000 £'000
Cash flows from operating activities
(Loss)/profit for the year (12,090) 2,698
Adjustments for:
Interest income from cash and cash equivalents (34) (61)
Movement in foreign exchange (8) 84
Movement in performance fee provision 460 (2,189)
Fair value movement on investments (12,553) (15,536)
Net realised loss on disposal of investments 24,130 14,380
Net cash flows from operations before changesin working capital (95) (624)
Changes in working capital
Decrease/(increase) in receivables 241 (237)
Decrease in payables (1,465) (1,481)
Net cash used by operating activities (1,319) (2,342)
Cash flows from investing activities
Interest received 34 61
Proceeds from disposal of investments (note 13) 13,775 12,003
Net cash from investing activities 13,809 12,064
Cash flows from financing activities
Distributions (10,522) (10,519)
Payment of non-controlling interest (4,524) -
Net cash outflow from financing activities (15,046) (10,519)
Net decrease in cash and cash equivalents (2,556) (797)
Cash and cash equivalents at the start of the year 10,166 11,052
Effect of foreign exchange fluctuation on cash held 3 (89)
Cash and cash equivalents at the end of the year 7,613 10,166
Notes to the Financial Statements
for the year ended 31 March 2014
1. General information
The Company is a closed-end investment company incorporated on 7 March 2006 in
the Isle of Man as a public limited company. The address of its registered
office is IOMA House, Hope Street, Douglas, Isle of Man.
The Company is listed on the Alternative Investment Market (AIM) of the London
Stock Exchange.
The Company and its subsidiaries (together the "Group") invest in real estate
and real estate related entities in India, primarily in commercial development
in the office and business space, residential, retail, hospitality and
infrastructure sectors deriving returns from development, long-term capital
appreciation and income.
In March 2009, shareholders voted to change the Company's investment policy by
requiring the Company to gradually dispose of its assets over time and return
capital to investors.
The Group has no employees.
The consolidated financial statements were authorised for issue by the Board
on 28 July 2014.
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), as adopted by the EU.
Except as described below, the accounting policies applied in these financial
statements are the same as those applied in the Group's consolidated financial
statements as at and for the year ended 31 March 2013.
Changes in accounting policies
The Group has adopted the following new standards and amendments to standards,
including any consequential amendments to other standards, with a date of
initial application of 1 April 2013:
· IFRS 10 Consolidated Financial Statements (2011) including the
amendments to IFRS 10, Investment Entities (see (a))
· IFRS 11 Joint Arrangements
· IFRS 13 Fair Value Measurement (see (b))
· Presentation of Items of Other Comprehensive Income (Amendments to IAS
1)
The nature and the effect of the significant changes are further explained
below.
(a) Subsidiaries
As a result of IFRS 10 (2011), the Group has changed its accounting policy for
determining whether it has control over and consequently whether it
consolidates its investee companies. IFRS 10 (2011) introduces a new control
model that is applicable to all investee companies, by focusing on whether the
Group has power over an investee company, exposure or rights to variable
returns from its involvement with the investee company and ability to use its
power to affect those returns. In particular, IFRS 10 (2011) requires that the
Group consolidate investee companies that it controls on the basis of de facto
circumstances.
In accordance with the transitional provisions of IFRS 10 (2011), the Group
reassessed the control conclusion for its investee companies at 1 April 2013.
No changes resulted from this reassessment.
The amendments to IFRS 10, Investment Entities, are required for accounting
periods commencing on or after 1 January 2014. These amendments require
investment entities to state investments in controlled portfolio entities at
fair value through profit or loss, instead of consolidating them. The Group
is assessing the impact of these amendments on its financial statements. It is
considered that any impact will be presentational, as the underlying
investments held by the Group are currently stated at fair value in the
consolidated subsidiaries.
(b) Fair value measurement
IFRS 13 establishes a single framework for measuring fair value and making
disclosures about fair value measurements, when such measurements are required
or permitted by other IFRSs. In particular, it unifies the definition of fair
value as the price at which an orderly transaction to sell an asset or to
transfer a liability would take place between market participants at the
measurement date. It also replaces and expands the disclosure requirements
about fair value measurements in other IFRSs, including IFRS 7 Financial
Instruments: Disclosures.
In accordance with the transitional provisions of IFRS 13, the Group has
applied the new fair value measurement guidance prospectively. Notwithstanding
the above, the change had no significant impact on the
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