REG - Trinity Capital - Annual Financial Report <Origin Href="QuoteRef">TRC.L</Origin> - Part 2
22/08/2016 10:00
- Part 2: For the preceding part double click ID:nRSV7313Ha
Taxation
There is no liability for income tax in the Isle of Man.
The Mauritian subsidiaries are subject to income tax in Mauritius at the rate
of 15% on the chargeable income. The Mauritian subsidiaries are, however,
entitled to a tax credit equivalent to the higher of the foreign tax paid and
a deemed credit of 80% of the Mauritian tax on their foreign source income. No
provision has been made in the financial statements due to the availability of
tax losses.
8. Loss per share
Basic loss per share is calculated by dividing the net loss attributable to
equity shareholders of the parent by the weighted average number of ordinary
shares outstanding during the year.
2016 2015
Loss attributable to equity shareholders of the parent (£'000) (6,969) (4,289)
Weighted average number of ordinary shares (thousands) 210,682 210,682
for the purposes of basic loss per share
Basic loss per share (pence) (3.3) p (2.0) p
There is no difference between fully diluted loss per share and basic loss per
share.
9. Distributions
During the year, the Company paid no distributions (2015: £5.3 million).
10. Investments in subsidiaries
The Company has the following subsidiaries incorporated in Mauritius. They are
recorded at cost in the financial statements of the Company less provision for
impairment.
Name Proportion of ownership interest
At 31 March 2016 At 31 March 2015
Trinity Capital Mauritius Limited 100% 100%
Trinity Capital (One) Limited 67% 67%
Trinity Capital (Four) Limited 100% 100%
Trinity Capital (Five) Limited 59% 59%
Trinity Capital (Ten) Limited 12% 12%
Trinity Capital (Seventeen) Limited (dissolved) - 100%
Trinity Capital (Nineteen) Limited 100% 100%
In addition to above subsidiaries, Trinity Capital (One) Limited holds 100% of
the total equity share capital of
Uppal IT Projects Private Limited ("Uppal"). In accordance with the
amendments to IFRS 10 for investment entities, as a controlled portfolio
entity Uppal is not consolidated but instead the Company's interest is stated
at fair value.
11. Investments - designated at fair value through profit or loss
The Group holds indirect full or partial ownership interests in three unquoted
Indian companies - Lokhandwala Kataria Constructions Pvt. Ltd ("LKCPL"), Uppal
and DB (BKC) Realtors Private Limited ("MK Malls").
Uppal has been valued at the amount of cash that is expected to be available
to the Company (through its subsidiaries) in the event of liquidation. The
value of the investment in MK Malls is based on the net sales proceeds to be
received under the terms of a final draft (but not yet binding) sales
agreement. LKCPL has been valued based on the CBRE valuation (acting as
external independent valuers) as at 31 March 2016. Due to the significant
uncertainties surrounding the valuation assumptions, the Directors have
assessed a number of the risks and reduced all the three valuations to take
into account the present value of estimated future cash flows.
The investments are in projects for which there is very little or no market
comparable information. Consequently the valuations are dependent on
assumptions which are the subject of judgement, and a large range of possible
valuations can be deduced. Due to the inherent uncertainty associated with the
determination of the valuations, the amount realised on disposal may differ
materially from the carrying amount in the financial statements. The impact of
such uncertainty cannot be quantified.
Investments are recorded at fair value are as follows:
2016 2015
£'000 £'000
Beginning of year 16,078 25,465
Disposals- fair value at beginning of period - (7,692)
Fair value adjustment (7,806) (1,695)
End of year 8,272 16,078
The fair value adjustment consists of:
2016 2015
£'000 £'000
Change of investment values measured in Indian Rupees (7,394) (2,970)
(Depreciation)/appreciation of Rupee against Sterling (412) 1,275
Fair value adjustment as above (7,806) (1,695)
Reversal of previously unrealised write-downs of investments disposed during the year (forming part of the realised loss on disposals recorded) - 9,607
Fair value movement as in Statement of Comprehensive Income (7,806) 7,912
IFRS 13, Fair Value Measurement requires disclosure, by class of financial
instruments, if the effect of changing one or more inputs to reasonably
possible alternative assumptions would result in a significant change to the
fair value measurement. The information used in determination of the fair
value of Level 3 investment is chosen with reference to the specific
underlying circumstances and position of the investee company. On that basis,
the Board believe that the impact of changing one or more of the inputs to
reasonably possible alternative assumptions would not change the fair value
significantly.
Fair value hierarchy of investments
The financial assets measured at fair value are valued using a fair value
hierarchy as described in Note 3.
12. Cash and cash equivalents
2016 2015 2016 2015
Group Group Company Company
£'000 £'000 £'000 £'000
Cash held with banks 367 1,109 338 942
Money market funds 5,289 5,272 5,219 5,204
5,656 6,381 5,557 6,146
13. Provision for future legal costs
The Company is engaged in a dispute, as described in note 16, with Immobilien
Development Indien I GmbH & Co. KG ("Immobilien I") and Immobilien Development
Indien II GmbH & Co. KG ("Immobilien II"), being limited partnerships
incorporated in Germany, both sponsored by SachsenFonds Holding GmbH.
Trinity Capital Mauritius Limited, has initiated legal proceedings in
Mauritius against Trinity Capital (One) Limited, to recover a loan of £7.5
million together with interest.
A provision of £2 million (2015: £2 million) has been established since 2012
for the amount of the estimated legal costs yet to be incurred in the Group's
litigation processes.
There is no certainty as to the adequacy of this provision. The actual amount
of future legal costs may differ materially from the £2 million provision, and
will depend on various factors, including the Company's ability to settle
legal claims, the duration and complexity of any litigation, and the
efficiency of the legal process in the jurisdiction where a claim might be
heard.
14. Share capital
The authorised share capital at 31 March 2016 and 31 March 2015 and the issued
and fully paid share capital at the same dates were as follows:
Authorised Issued and fully paid
No. of Shares £ No. of Shares £
Ordinary shares of 1 pence each 416,750,000 4,167,500 210,432,498 2,104,325
Deferred shares of 1 pence each 250,000 2,500 250,000 2,500
417,000,000 4,170,000 210,682,498 2,106,825
The Deferred Shares rank pari passu with the Ordinary Shares save that the
Deferred Shares have no right to dividends or voting rights or the right to
receive notice of or attend any general meeting. On the return of capital in a
winding-up of the Company or otherwise (other than re-purchases or redemptions
of shares authorised by special resolution), the Deferred Shares have the
right to return of par value paid up thereon in priority to the return of the
par value paid up on the Ordinary Shares.
Group capital comprises share capital and reserves.
Neither the Company nor any of its subsidiaries are subject to externally
imposed capital requirements.
15. Net asset value (NAV)
The NAV per Share is calculated by dividing the net assets attributable to the
equity holders of the Company at the end of the year by the number of Shares
in issue as at 31 March 2016.
2016 2015
Net assets (£'000) 11,617 18,586
Number of Shares in issue (note 14) 210,682,498 210,682,498
NAV per Share (pence) 5.5 8.8
16. Contingent Liabilities
On 12 January 2011 the Company received a notification of claim from
Immobilien I and Immobilien II. In addition to the Company, the notification
was addressed to TCML, Trikona Advisers Ltd. ("TAL", the former investment
adviser of the Company,) private persons who together controlled TAL, and TSF
Advisers Mauritius Limited (a joint venture between TAL and SachsenFonds Asset
Management GmbH). On 13 July 2011, the Supreme Court in Mauritius set aside
the claim lodged by Immobilien I and Immobilien II on jurisdictional grounds.
Immobilien I and Immobilien II appealed against that decision on 26 July 2011,
and the appeal was heard on 9 July 2015. The appeal court reserved its
judgement and no decision has yet been issued.
By way of background, in November 2007 and May 2008 Immobilien I and
Immobilien II purchased from TCML interests in various Mauritian companies
(the "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 were partners with TCML in various Mauritian companies in
respect of five development projects in India. One Mauritian TC Company was
sold in its entirety to Immobilien I and Immobilien II. In aggregate,
Immobilien I and Immobilien II paid £86.4 million for investments in which the
Company had invested £41.8 million. The contracts included provisions in the
relevant documentation relating to one investment whereby the Group would be
obliged to make good to the acquirer the economic loss which would arise upon
the non-fulfilment of certain conditions in the contractual arrangements.
The amount claimed by Immobilien I and Immobilien II in the original pleading
was their original cost of the investments, being nearly E116 million, plus
amounts to compensate for prejudice, trouble, annoyance, interest and costs.
The Board remains fully committed to defending the claims made by Immobilien I
and Immobilien II. The Directors do not consider it necessary to provide for
the claims in the financial statements.
17. Commitments
There were no outstanding contractual commitments at the year-end (2015:
nil).
18. Financial risk management
The Group's activities expose it to a variety of financial risks: market risk
(including currency risk, market price risk and interest rate risk), credit
risk and liquidity risk.
Risk management is carried out by the Board, with assistance from the
Investment Manager to the extent possible and as appropriate.
(a) Market risk
(i) Foreign exchange risk
The Group operates internationally and is exposed to foreign exchange risk
arising from various currency exposures, primarily with respect to the Indian
Rupee. Foreign exchange risk arises from future commercial transactions,
recognised monetary assets and liabilities and net investments in foreign
operations.
Net assets denominated in Indian Rupee at the year-end amounted to £8.3
million (2015: £16.1 million).
At 31 March 2016, had the exchange rate between the Indian Rupee and Sterling
increased or decreased by 5% with all other variables held constant, the
increase or decrease respectively in net assets would amount to approximately
£0.4 million (2015: £0.8 million).
The Group does not hedge against foreign exchange movements.
(ii) Market price risk
The Group is exposed to market price risk arising from its investments. All
these securities present a risk of capital loss. The Board and the Investment
Manager are responsible for the selection of investments and monitoring
exposure to market risk. All investments are in Indian companies.
If the value of the group's investment portfolio had increased by 5%, the
Group's net assets would have increased by £0.4 million (2015: £0.8 million).
A decrease of 5% would have resulted in equal and opposite decrease in net
assets.
The Group is exposed to property price risk, property rentals risk and the
normal risks of property development through its investment in Indian real
estate companies.
(iii) Cash flow and fair value interest rate risk
The Group's cash and cash equivalents are invested at short term market
interest rates.
The table below summarises the Group's exposure to interest rate risks. It
includes the Groups' financial assets and liabilities at the earlier of
contractual re-pricing or maturity date, measured by the carrying values of
assets and liabilities.
Less than1 month 1-3months 3 monthsto 1 year 1-5 years Over 5years Non-interestbearing Total
31 March 2016 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Financial assets
Investments at fair value through profit or loss - - - - - 8,272 8,272
Trade and other receivables - - - - - 1 1
Cash and cash equivalents 5,656 - - - - - 5,656
Prepayments - - - - - 30 30
Total financial assets 5,656 - - - - 8,303 13,959
Financial liabilities
Provision for legal costs - - - - - 2,000 2,000
Trade and other payables - - - - - 342 342
Total financial liabilities - - - - - 2,342 2,342
Total interest rate sensitivity gap 5,656 - - - - - -
Less than 1 month 1-3months 3 mthsto 1 year 1-5 years Over 5years Non-interestbearing Total
31 March 2015 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Financial assets
Investments at fair value through profit or loss - - - - - 16,078 16,078
Trade and other receivables - - - - - 3 3
Cash and cash equivalents 6,381 - - - - - 6,381
Prepayments - - - - - 13 13
Total financial assets 6,381 - - - - 16,094 22,475
Financial liabilities
Provision for legal costs - - - - - 2,000 2,000
Trade and other payables - - - - - 345 345
Total financial liabilities - - - - - 2,345 2,345
Total interest rate sensitivity gap 6,381 - - - - - -
(b) Credit risk
Credit risk arises on investments, cash balances and debtor balances. The
amount of credit risk is equal to the amounts stated in the statement of
financial position for each of these assets. Cash balances are limited to
high-credit-quality financial institutions. There are no impairment provisions
as at 31 March 2016 (2015: nil).
(c) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and
marketable securities, the availability of funding through an adequate amount
of committed credit facilities and the ability to close out market positions.
The Company aims to maintain flexibility in funding.
Residual undiscounted contractual maturities of financial liabilities:
31 March 2016 Less than1 month 1-3months 3 monthsto 1 year 1-5 Over 5Years No stated maturity
years
£'000 £'000 £'000 £'000 £'000 £'000
Financial liabilities
Provision for legal costs - - - - - 2,000
Trade and other payables 342 - - - - -
342 - - - - 2,000
31 March 2015 Less than1 month 1-3months 3 monthsto 1 year 1-5 Over 5Years No stated maturity
years
£'000 £'000 £'000 £'000 £'000 £'000
Financial liabilities
Provision for legal costs - - - - - 2,000
Trade and other payables 345 - - - - -
345 - - - - 2,000
19. Related party transactions
Graham Smith is a Director of the Company, and a Director of the
Administrator. He has received no Directors' fees from the Company during the
year (2015: nil). The fees paid by the Company to the Administrator (excluding
VAT) for the year amounted to £0.1 million (2015: £0.1 million).
Details of other Directors' remuneration during the year are given in note 6.
20. Subsequent events
On the date of this Report, the Company announced a distribution to
shareholders of £2.1 million (1.0p per share), payable on 23 September 2016 to
shareholders on the register as at 2 September 2016. The shares will be marked
"ex" on 1 September 2016.
There were no other significant subsequent events.
Company Information
Registered Office
IOMA House
Hope Street
Douglas
Isle of Man
IM1 1AP
Incorporated in the Isle of Man. Company No. 115806C
Directors
Martin Adams (Chairman)
John Chapman
Stephen Coe
Graham Smith
Pradeep Verma
Company Secretary
Philip Scales
Administrator and Registrar
FIM Capital Limited
IOMA House
Hope Street
Douglas
Isle of Man
IM1 1AP
Auditors
KPMG Audit LLC
Heritage Court
41 Athol Street
Douglas
Isle of Man
IM99 1HN
Investment Manager
Indiareit Investment Management Company
IFS Court
28 Cybercity
Ebene
Mauritius
Valuer
CBRE
Henrietta House
Henrietta Place
London
W1G 0NB
Nominated Adviser (NOMAD) and Broker
Arden Partners plc
125 Old Broad Street
London
EC2N 1AR
Website www.trinitycapitalplc.com
This information is provided by RNS
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