RNS Number : 2514I
  TRIO Finance Limited
  17 November 2008
   















    TRIO FINANCE LIMITED

    ANNUAL REPORT AND CONSOLIDATED ACCOUNTS

    FOR THE YEAR ENDED 30 SEPTEMBER 2008



















 ANNUAL REPORT:                                             Page

 Directors and Advisers                                     2

 Summary                                                    3

 Chairman's Statement                                       4

 Investment Manager's Report                                5

 Directors' Report                                          8

 Corporate Governance Statement                             11

 Directors' Remuneration Report                             13

 Statement of Directors' Responsibilities                   14

 Independent Auditors' Report                               15

 Consolidated Income Statement                              17

 Company Income Statement                                   18

 Consolidated Statement of Changes in Shareholders' Equity  19

 Company Statement of Changes in Shareholders' Equity       20

 Consolidated Balance Sheet                                 21

 Company Balance Sheet                                      22

 Consolidated Cash Flow Statement                           23

 Company Cash Flow Statement                                24

 Notes to Financial Statements                              25


 Directors                                               Auditors
 Julian Waldron (Chairman)                               Deloitte & Touche LLP
 Helen Green                                             Regency Court
 Peter Hodson                                            Glategny Esplanade
 Ash Shah                                                St. Peter Port
                                                         Guernsey GY1 3HW

 Registered Office of the Company                        Legal Counsel
 Dorey Court                                             Speechly Bircham
 Admiral Park                                            6 St. Andrew Street
 St. Peter Port                                          London EC4A 3LX
 Guernsey GY1 3BG
                                                         Registrar
 Administrator and Secretary of the Company              Capita IRG (CI) Limited
 Kleinwort Benson (Channel Islands)                      2nd Floor
 Fund Services Limited                                   No 1 Le Truchot
 Dorey Court                                             St. Peter Port
 Admiral Park                                            Guernsey GY1 4AE
 St. Peter Port    
 Guernsey GY1 3BG                                        UK Transfer Agent
                                                         Capital Registrars
 Sub-Administrator                                       The Registry
 Investors Fund Services (Ireland) Limited               34 Beckenham Road
 Block D                                                 Beckenham
 Iveagh Court                                            Kent BR3 4TU
 Harcourt Road    
 Dublin 2    

 Custodian
 Investors Trust & Custodial Services (Ireland)    
 Limited
 Block D
 Iveagh Court
 Harcourt Road
 Dublin 2

 Investment Manager
 Wharton Asset Management Bermuda Limited
 Bank of Bermuda Building
 6 Front Street
 Hamilton HM11
 Bermuda

 Sub-Manager
 Wharton Asset Management UK LLP (from 29 February
 2008)
 Wharton Asset Management GB Limited (until 29 February
 2008)
 49 Upper Brook Street
 London W1K 2BR

 Corporate Brokers
 Citigroup Global Markets Limited
 Citigroup Centre
 Canada Square
 London E14 5LB
    TRIO Finance Limited ('TRIO or the 'Company') is a closed-ended real estate investment company that invested primarily in a diversified
portfolio of real estate debt, including commercial and residential mortgage backed securities and commercial real estate loans. The Company
also invested in the residual income pieces of securitisation transactions. TREAL PLC ('TREAL'), Longlands Finance No 2 Limited
('Longlands') and Pheasantry Limited are three the subsidiaries of TRIO, together with TRIO, the 'Group'. Wharton Asset Management Bermuda
Limited manages TRIO.

 Highlights
    *     Satisfactory results achieved during a year of financial turmoil in which credit has been curtailed significantly and property
prices have decreased significantly. 
    *     Following the downgrading of assets owned by Lions Hill Limited ('Lions Hill') and US$27.5m impairment charges being booked in
Lions Hill, funding covenants were breached. On 21 January 2008 its lenders appointed administrators and receivers. The continued
deterioration in the global asset backed securities market and likelihood of future defaults on some of the assets owned by Lions Hill will
not enable it to repay its obligations in the foreseeable future. Hence TRIO is unlikely to be able to regain control of Lions Hill.
Therefore all the assets and liabilities of Lions Hill have been deconsolidated and the losses on it have been limited to US$21m
representing the TRIO's initial investment. The reversal of prior year consolidated losses in excess of this have resulted in gains of
US$13.2m being recognised in the current year. 
    *     In August 2008, the entire remaining B loan portfolio held by TREAL of US$273m was sold at par, a structuring fee of EUR1.5m
incurred and the loan fully repaid. This was an exceptional achievement in the current environment and a reflection of the strength of the
portfolio. 
    *     US$51.7m is held in cash and short-term investments. Other than this the only remaining assets are 2 residual income positions in
US assets, which have been written down to US$nil with total impairment charges of US$15m made against these.
    *     Provision of US$6.55m, has been made for the liquidation of TRIO, of which US$5.75m relates to the termination of the investment
management agreement.
    *     No residual risk left and no loans remaining outstanding.
    *     Consolidated net loss of US$2.0m (US$28.4m loss in prior year as result of impairment charges of US$42.8m).
    *     Consolidated reported NAV per share as at 30 September 2008 of US$5.62 compared to US$(1.79) as at 30 September 2007. This is
primarily due to
    -    loss generated in the year of US$2.0m; and
    -    reversal of unrealised losses on available for sale investments in Lions Hill following deconsolidation (US$59.6m).
    *     Company NAV US$5.62 compared to US$5.99 as at 30 September 2007. The reduction was as a result of the loss made in the year and
the payment of a dividend of US$3.52m.

 Key Performance Indicators
    *     Net loss after tax of US$2.0 m, which includes impairment charges of US$12.6m and reversal of prior consolidated losses in Lions
Hill of US$13.2m. 
    *     Operating expenses excluding finance, structuring, termination and liquidation costs have declined from US$4.3m to US$2.6m for the
current year.  
    *     US$51.7m cash and cash equivalents at year-end. 
    *     Basic and Fully Diluted Loss per share of US$(0.25). The Loss per share for the previous period was US$(2.87). 

 Outlook
    The Company is to be wound up and the residual cash be returned to shareholders. Therefore the Company is not regarded as a going
concern and the financial statements have not been prepared on a going concern basis.TRIO had a very eventful year amidst the worldwide
credit crises and turbulence in the financial sector, culminating in the disposal of the entire remaining European B Loan Portfolio,
followed by decision to cease investment activity and consequently return cash to shareholders. 
    During the year, TRIO generated underlying profit from investments of US$4.6m (31 September 2007: loss of US$28.4m). After provisions
for termination of contracts and liquidation, TRIO reported a net loss of US$2.0m. The Group reported loss in earnings per share of US$0.25
(31 September 2007: loss US$2.87). This included a realised gain on Lions Hill deconsolidation of US$13.2m, impairment charges of $12.6m (of
which US$11.06m related to Lions Hill) and a provision for closure costs of US$6.55m. 
    The net asset value per share as at 30 September 2008 was US$5.62 compared to US$(1.79) at 30 September 2007, an improvement primarily
from the reversal of unrealised losses (US$59.6m) in Lions Hill, an SPV formerly controlled by TRIO, offset by loss generated in the year of
US$2.0m. 
    In January 2008 a subsidiary of TRIO, Lions Hill, was put into receivership by its lenders following the breach of its funding covenants
but this had no significant impact on TRIO's (the holding company) NAV as a full provision for the amount invested in Lions Hill had already
been made in the financial statements for the year ended 30 September 2007. The continued deterioration in the US asset backed securities
market and likelihood of further defaults on some of the assets held by Lions Hill will not enable it to repay its obligations in the
foreseeable future. Consequently TRIO is unlikely to be able to regain control of Lions Hill. The assets and liabilities of Lions Hill have
been deconsolidated from TRIO.
    The European portfolio continued to perform well, in line with expectations with some of the loans being repaid early due to sale of the
underlying properties. There were no defaults or credit impairments. This demonstrated the high quality of the commercial real estate and
that it was still sought after at the time albeit in an environment where valuations were still under pressure. After much negotiation, on
11 August 2008, the entire remaining portfolio was sold at par with a structuring fee of US$2.2m payable. This was an exceptional
achievement in a credit restricted market and low transaction volumes. The loans were fully paid off and facility terminated. 
    There remained 3 residual income positions, which had been fully provided for. Subsequent to the year-end, one of these was closed and
the other two sold for a nominal amount. 
    After consideration of potential investment opportunities for re-investment of the cash and consultation with shareholders, on 30
September 2008, the Board confirmed its intention to return cash to shareholders as quickly as possible and an expectation to wind up the
Company. The Company has fully provided for ongoing costs to liquidation, termination of investment management and other operating
agreements and anticipates approximately US$45m will be available to return to shareholders. This is in addition to dividends paid since
inception of US$24.6m. 







    Julian Waldron 
    Chairman
    17 November 2008
    Investment Performance

    Despite the turbulent year in the financial markets and particularly real estate related assets, TRIO has achieved a satisfactory return
in the year to 30 September 2008. The underlying operating profit was US$4.6m (US$2.0m loss after provision for liquidation costs US$6.55m)
compared to a loss of US$28.4m for the year ended 30 September 2007. At 30 September 2008 TRIO had invested in 2 residual income positions
('RIPs') compared to 12 European B loans and 3 RIPs as at 30 September 2007 (excluding Lions Hill). 

    The European portfolio performed well, in line with expectations with some of the loans being repaid early due to the sale of the
underlying properties. This demonstrated that high quality commercial real estate was still sought after in Europe albeit in an environment
where valuations are under pressure. There were no defaults or credit impairments. 

    Following the full repayments of the Aurora Euro B Loan and Kamppi B loan, some partial repayments of other B loans and the sale of the
entire remaining portfolio in TREAL in August 2008 cash resources increased from US$15.1m at 30 September 2007 to US$51.7m at 30 September
2008. 

    The worldwide credit crunch continued to have an impact on the Group's business growth. Financial institutions have virtually stopped
making new credit available and have struggled to provide broker marks at which the assets are valued. These valuations have proved that
these marks do not necessarily represent the actual realisations of such assets in this market. The weighted average price of the TREAL B
loans as at 30 September 2007 was 98.9. This fell to 90.5 at 30 June 2008, a decrease of 8.5%. However, we were able to sell the remaining B
loans at par in August 2008 less structuring fee and the facility fully repaid. In effect the portfolio after these transaction and legal
costs was sold at an average of 99.2. This was an exceptional achievement in the current market but also reflected the strength of the
portfolio.

    The 3 RIPs were valued at US$1m on 30 September 2007 but have been written down to US$nil at 30 September 2008. One of the RIPs had an
event of default, all its assets were liquidated, there are no further distributions expected and the notes have been surrendered. As at 30
September 2008 only 2 RIPs remained in the portfolio at year-end. Subsequent to the year-end both these RIPs were sold for a total
consideration of US$150.

    As previously reported Lions Hill breached its funding covenants and on 21 January 2008 its lenders appointed administrators and
receivers. Given the continued deterioration in the US asset backed securities market and likelihood of future defaults on some of the
assets held, Lions Hill will not be able it to repay its obligations in the foreseeable future. Consequently TRIO is unlikely to be able to
regain control of Lions Hill and the assets and liabilities in Lions Hill have been deconsolidated. As at 21 January 2008, TRIO had
recognised the full losses of Lions Hill in the consolidated accounts although the extent of the loss was limited to US$21m representing
TRIO's investment in Lions Hill. On deconsolidation, the losses exceeding US$21m have been written back in the consolidated income statement
resulting in a realised gain of US$13.2m.

    Key performance indicators

    Net loss after tax of US$2.0m for the year to 30 September 2008, resulting in loss per share of US$(0.25) compared to US$(2.87) for the
year ended 30 September 2007. The loss in the year to 30 September 2008 includes impairment charges of US$12.6m, a realised gain on
deconsolidation of Lions Hill of US$13.2m and a provision for liquidation of TRIO of US$6.55m of which US$5.75m relates to the termination
of the investment management agreement.

    Excluding the gain on deconsolidation, impairments, termination costs and liquidation provision, the profit for the year was US$4m (for
the year to 30 September 2007 US$14.3m).

    Operating expenses excluding finance, structuring, termination and liquidation costs have declined from US$4.3m for the year to 30
September 2007 to US$2.6m for the year to 30 September 2008.

    At the year-end, a provision of US$6.55m, of which US$5.75m relates to the termination of the investment management agreement, has been
made given the expectation that the Company would be wound up and residual cash returned to shareholders.
    Net asset value

    Consolidated reported NAV per share as at 30 September 2008 was US$5.62 compared to US$(1.79) at 30 September 2007. The consolidated NAV
has improved mainly as a result of the reversal of unrealised losses on available for sale investments in Lions Hill Limited ("Lions Hill"),
an SPV formerly controlled by TRIO, following deconsolidation (US$59.6m); and. partially offset by the loss generated in the year of
US$2.0m. As explained in last year's financial report, TRIO had taken the maximum loss in respect of Lions Hill and, as there is no further
exposure for TRIO, the Board and Manager believed that it was appropriate to follow the performance of TRIO excluding any mark to market
changes in the Lions Hill portfolio, as represented by the Company NAV. The Company NAV as at 30 September 2007 was US$5.99 per share and
effectively represented the NAV of the Group after limiting TRIO's loss in Lions Hill to US$21m i.e. writing down the fair value of TRIO's
investment in Lions Hill to US$nil. The Company NAV per share as at 30 September 2008 was US$5.62 compared to US$5.99 at 30 September 2007. The reduction was as a result of the loss made in the
year and the payment of a dividend of US$3.52m.

    Portfolio Composition and Diversification

    The aggregate market value of the investments has declined from US$569m as at 30 September 2007 to US$nil as at 30 September 2008. No
assets were acquired in the year. The primary reasons for the reduction were:

                 -Deconsolidation of the Lions Hill Portfolio - US$210m;
    -During the period prior to August 2008 there were partial repayments on several B loans amounting to US$85m, all within TREAL; 
    -Sale of remaining B loans in August 2008 in aggregate USD$273m; and 
                 -Additional impairments on the RIPs.

    Given the deconsolidation of Lions Hill, all comparatives of the portfolio as at 30 September 2007 referred to below within this
Investment Manager's report below are excluding the Lions Hill portfolio. 

    As at 30 September 2008 TRIO held 2 RIPs, which were fully, written down (30 September 2007: 12 B Loans and 3 RIPs held with a weighted
average life of 4.4 years). The yield on the on the 2 RIPs was nil and the portfolio as at 30 September 2007 comprised of floating rate
assets with a weighted average yield of 7.46%. 

    As at 30 September 2007 the 12 B loans represented 99.7% of the portfolio and were all unrated and the geographical exposure comprised
36% in the UK 64% in Continental Europe. 

    The residual cash balance, including the proceeds from the disposal of the B loans, have been placed on short term deposits and 99.6%
are in US Dollars.

    Financing

    Following the appointment of receivers and administrators for Lions Hill, TRIO lost control over Lions Hill and hence the group has no
access to financing from this vehicle. Similarly after the disposal of the remaining assets held in TREAL all the loans were repaid in full
and the facilities lapsed. Consequently the Group has no available facilities at the year-end. 
    Related party transactions

    Related party transactions are disclosed in note 19 to the financial statements. There have been no material changes in the related
party transactions described in the last annual report, other than provisions made for the early termination of the investment management
agreement amounting to US$5.75m. In consideration for the early termination of the Investment Management Agreement (conditional upon the
approval of the shareholders of the Company) by an Agreement dated 17 November 2008 between the Company and the Investment Manager, the
Company shall pay the Investment Manager the sum of US$5.75m in full and final settlement of all fees and expenses due to the Investment
Manager by the Company and in full settlement of all compensation due to the Investment Manager in respect of such termination, including
any indemnification of the Investment Manager in respect of any claims, actions, losses, damages, liabilities and demands of any nature
whatsoever in respect of or arising out of the termination of the Investment Management Agreement.
    Risks and uncertainties

    The Company's risks and uncertainties have been disclosed in Note 14.

    Outlook

    Given the worsening in the financial market, the extreme volatility and lack of available funding, the opportunities to grow the Company
are severely curtailed. After feedback from shareholders, the Board resolved on 30 September 2008 to return the residual cash to the
shareholders after provision for termination of long-term contracts. Therefore the Company is not regarded as a going concern and the
financial statements have been prepared on a break up basis.



    The Directors present their annual report and the audited consolidated financial statements for the year ended 30 September 2008.

    TRIO Finance Limited was registered on 11 May 2006 with registered number 44776 and is domiciled in Guernsey, Channel Islands, and
commenced its operations on 5 June 2006. The Company is a closed-ended investment company incorporated in Guernsey with limited liability
under the Companies (Guernsey) Law 1994 and its Ordinary Shares are listed on the London Stock Exchange. The registered office of the
Company is Dorey Court, Admiral Park, St. Peter Port, Guernsey, GY1 3BG, Channel Islands. 'Group' is defined as the Company and its
subsidiaries: TREAL Public Limited Company ("TREAL"), Longlands Finance No. 2 Limited ("Longlands") and Pheasantry Limited. Both Longlands
and Pheasantry Limited were dormant during the year and Longlands was struck off on 13 October 2008. Pheasantry will be struck off on 31
December 2008. 

    Principal activity and business review
    The principal activity of the Group during the year was that of an investment company. Following the sale of the realisable assets on 11
August 2008 the Group has ceased its investment activities. The Directors intend to return residual cash to shareholders and wind up the
Company. As such the financial statements are prepared on break up basis and all activities are shown as discontinued.

    Results and dividends
    The results for the year, and the Group's and Company's financial position at the end of the year, are shown on pages 17 to 24.

    Directors
    The Directors of the Company who served during the year were:

    Julian Waldron (Chairman)
    Helen Green
    Peter Hodson
    Ash Shah

    The Directors' interests in the share capital of the Company (some of which are held directly or by entities in which the Directors may
have a beneficial interest) were:

                                  30 September 2008            30 September 2007
                                 Number of Ordinary    Number of Ordinary Shares
                                             Shares  
 Julian Waldron (Chairman)                    3,200                        3,200
 Helen Green                                      -                            -
 Peter Hodson                                     -                            -
 Ash Shah                                         -                            -


    Substantial interests in share capital 
    As at 31 October 2008 the following holdings representing more than 3 per cent of the Company's issued share capital had been reported:

                                     Number of Ordinary Shares  Percentage held
 Citigroup Global Markets UK Equity                  1,620,211           20.25%
 Roy Nominees Limited                                1,680,000           21.00%
 HSBC Global Custody Nominee (UK)                    1,554,080           19.43%
 Euroclear Nominees Limited                            857,000           10.71%
 Vidacos Nominees Limited                              541,344            6.77%
 Credit Agricole Cheureux                              507,000            6.34%
 Goldman Sachs Securities                              246,800            3.09%

    On 7 November 2008, the Company had been notified, in accordance with chapter 5 of the Disclosure and Transparency Rules, of the
following voting rights as a shareholder of the Company:

 Date of notification  Name of shareholder                         % of voting rights  Number of shares  Nature of holding
 03/10/2007            Lehman Brothers International (Europe)            2.98%           238,243                    Direct
 07/10/2007            Pictet Asset Management                           4.95%           396,000                    Direct
 08/10/2007            Pictet Asset Management                           4.95%           396,000                    Direct
 23/10/2007            Lehman Brothers International (Europe)            2.98%           238,243                    Direct
 05/12/2007            Citigroup Global Market UK Equity Limited         18.64%          1,491,089                  Direct
 05/12/2007            Citigroup Global Market UK Equity Limited         19.48%          1,558,101                  Direct
 05/12/2007            Citigroup Global Market UK Equity Limited         15.33%          1,226,000                  Direct
 05/08/2008            Goldman, Sachs & Co                               3.09%           246,800                    Direct
 10/10/2008            Credit Agricole Cheuvreux International           8.55%           684,000                    Direct
                       Limited

    The Investment Manager
    Wharton Asset Management Bermuda Limited was appointed Investment Manager on 31 May 2006. The Directors are satisfied with the
performance of the Investment Manager. However, given the decision to cease investment activities the Company propose to terminate the
investment management agreement.

    Auditors
    It is anticipated that liquidators will be appointed to wind up the Company and hence the Auditors will not be reappointed at the
forthcoming Annual General Meeting. 

    Administrator and Secretary
    Kleinwort Benson (Channel Islands) Fund Services Limited was appointed as administrator and secretary on 31 May 2006. Investors Fund
Services (Ireland) Limited is the sub-Administrator of the Group. 

    Custodian
    Investors Trust & Custodial Services (Ireland) Limited was appointed custodian on 31 May 2006. 

    Listing Requirements
    On 5 June 2006 the Company's Ordinary Shares were admitted to the Official List of The London Stock Exchange.





    Authorised Share Capital
    Upon incorporation 2 Ordinary Shares of no par value were issued. On 5 June 2006 the Company issued 9,495,998 Ordinary Shares for
subscription in its Initial Public Offering at an Offer Price of US$10 per Ordinary Share. In addition, the Company simultaneously issued
500,000 Ordinary Shares to Trident Capital Limited, an affiliate of the Investment Manager and 4,000 Ordinary Shares to Julian Waldron both
at a price of US$10 per Ordinary Share.  

    On 11 September 2007, following an Extraordinary General Meeting, for every five existing Ordinary Shares, four new Ordinary Shares were
issued, resulting in a total of 8,000,000 Ordinary Shares in issue. A special dividend of US$11,000,000 was paid, (US$1.10 per share on 10
million Ordinary Shares) on 26 September 2007 (declared on 9 August 2007). A dividend of US$0.44 per share on 8 million shares (US$3,520,000
in total) was proposed on 20 November 2007 and paid on 2 and 3 January 2008.

    On behalf of the Board on 17 November 2008.






    Julian Waldron                    Peter Hodson
    Director                              Director

    The Directors are committed to ensuring that high standards of corporate governance are maintained and have made it Group policy to
comply with best practice on corporate governance, insofar as the Directors believe it is relevant and appropriate to the Group, and
notwithstanding the fact that as a Guernsey registered investment company it is not obliged to comply with the "Combined Code" (i.e. the
Code of Best Practice published by the Committee on the Financial Aspects of Corporate Governance).

    However, the Group complies with the corporate governance guidelines issued by the Guernsey Financial Services Commission on 10 December
2004, whose underlying principles are similar to those of the Combined Code. In addition, the Directors, in accordance with best practice,
comply with the Combined Code provisions as far as possible.

    Going Concern
    Given the decision to cease investment activities, return cash to shareholders and subsequently wind up the company the Directors
believe it is not appropriate to adopt the going concern basis in preparing the financial statements.

    Board Effectiveness
    For the purposes of assessing compliance with the Combined Code, the Board considers all of the Directors, other than Mr Shah, as
independent of the Investment Manager and the Sub-Manager and free from any business or other relationship that could materially interfere
with the exercise of their independent judgement.

    In accordance with the Combined Code, the Board has established an Audit Committee and a Nomination Committee, in each case with
formally delegated duties and responsibilities within written terms of reference. The Directors do not consider it necessary for the Group
to establish a separate remuneration committee.  

    Mrs Green chairs the Audit Committee and its other members are Mr Hodson and Mr Waldron. Only independent Directors serve on the Audit
Committee and members of the Audit Committee have no links with the Group's external auditors and are independent of the Investment Manager
and the Sub-Manager. The Audit Committee meets not less than once a year and meets the external auditors at least once a year without the
non-independent director present.

    The Audit Committee is responsible for overseeing the Group's relationship with the external auditors, including making recommendations
to the Board on the appointment of the external auditors and their remuneration. The Audit Committee is required to consider the nature,
scope and results of the auditors' work and reviews, and develop and implement policy on the supply of any non-audit services that are to be
provided by the external auditors. It receives and reviews reports from the Investment Manager and the Group's external auditors relating to
the Group's annual report and accounts. The Audit Committee focuses particularly on compliance with legal requirements, accounting standards
and the Listing Rules and ensuring that an effective system of internal financial and non-financial controls is maintained. The ultimate
responsibility for reviewing and approving the annual report and accounts remains with the Board.  

    The Nomination Committee is chaired by Mr Hodson and its other members are Mrs Green and Mr Waldron. The members of the Nomination
Committee are independent of the Investment Manager and the Sub-Manager. The Nomination Committee meets not less than once a year, has
responsibility for considering the size, structure and composition of the Board, and retirements and appointments of additional and
replacement Directors and the Nomination Committee makes appropriate recommendations to the Board.



    The following table shows the number of meetings held by the Board and each committee for the year ended 30 September 2008 as well as
the number of attendances at each meeting.

                            Number of meetings  Number of attendances
 Board of Directors

 Julian Waldron (Chairman)                  10                      9
 Helen Green                                10                      9
 Peter Hodson                               10                     10
 Ash Shah                                   10                      9

                            Number of meetings  Number of attendances
 Audit Committee

 Julian Waldron (Chairman)                   2                      2
 Helen Green                                 2                      2
 Peter Hodson                                2                      2

    The identity of each of the chairmen of the committees referred to above are reviewed on an annual basis. The membership of these
committees and their terms of reference are kept under review.

    The other independent Directors will assess the performance of the Chairman.  

    Internal Controls
    The Directors acknowledge that they are responsible for establishing and maintaining the Company's system of internal control and
reviewing its effectiveness. The Directors review not just internal controls but all controls including operations, compliance and risk
management. The key procedures established to provide internal control are:

    Investment management is provided by Wharton Asset Management Bermuda Limited who has appointed Wharton Asset Management LLP from 29
February 2008 (Wharton Asset Management GB Limited until 29 February 2008) as Sub-Manager. The Board is responsible for setting the overall
investment policy and monitors the actions of the Investment Manager at regular Board meetings. Administration and company secretarial
services are provided by Kleinwort Benson (Channel Islands) Fund Services Limited. The Sub-Administrator to which certain functions are
delegated is Investors Fund Services (Ireland) Limited. Custody of assets is undertaken by Investors Trust & Custodial Services (Ireland)
Limited. 

    The Directors of the Company clearly define the duties and responsibilities of their agents and advisers, whose appointments are made by
the Board after due consideration. The Board monitors the ongoing performance of such agents and advisers. Each of the above agents and
advisers maintain their own systems of internal control on which they report to the Board. The systems are designed to ensure effectiveness
and efficient operation, internal control and compliance with laws and regulations. In establishing the systems of internal control, regard
is paid to the materiality of relevant risks, the likelihood of costs being incurred and costs of control. It follows, therefore, that the
systems of internal control can only provide reasonable but not absolute assurance against the risk of material misstatement or loss.


    This report describes how the Board has applied the Principles of Good Governance relating to Directors' remuneration. A resolution to
approve the report will be proposed at the Annual General Meeting of the Group at which the financial statements will be presented for
approval.

    Each of the Directors has been appointed with effect from 11 May 2006. The Chairman receives an annual fee of US$140,000 and Mrs Green
and Mr Hodson receive an annual fee of US$25,000, in each case payable quarterly in equal instalments in arrears. 

    The following fees were receivable for their services as directors of TRIO Finance Limited:

                              2008       2007
                              US$        US$
 Julian Waldron (Chairman)    140,000    140,000
 Helen Green                   25,000     25,000
 Peter Hodson                  25,000     25,000
 Ash Shah                           -          -
                              190,000    190,000

    Mrs Green also receives a fee of EUR5,000 per annum as a director of TREAL and received a fee of EUR5,000 per annum for Lions Hill until
30 September 2007 and a fee of EUR5,000 per annum for Longlands until 31 December 2007. Mrs Green's services are provided by Saffery
Champness Management International Limited to whom her directors' fees are paid. Mr Shah does not receive a fee for the performance of his
duties as a member of the Board (or as a director of Lions Hill, TREAL or Longlands).

    The termination costs provision includes four months total directors fees of US$63,333, assuming that the company would be wound up in
January 2009 and a fee of US$70,000 for the Chairman, Julian Waldron and US$3,125 for each of Helen Green and Peter Hodson as agreed
payments for severance in lieu of their notices under their appointments. 




    Directors' Responsibilities

    The Directors are responsible for preparing the Annual Report and the financial statements. The Directors are required to prepare
financial statements for the group in accordance with International Financial Reporting Standards (IFRSs). Company law requires the
Directors to prepare such financial statements in accordance with IFRSs and The Companies (Guernsey) Law, 1994.

    International Accounting Standard 1 requires that financial statements present fairly for each financial year the Group's financial
position, financial performance and cash flows. This requires the faithful representation of the effects of transactions, other events and
conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the
International Accounting Standards Board's Framework for the Preparation and Presentation of Financial Statements'. In virtually all
circumstances, a fair presentation will be achieved by compliance with all applicable IFRSs.

    Directors are also required to:
    *     properly select and apply accounting policies;
    *     present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable
information; and 
    *     provide additional disclosures when compliance with the specific requirements in IFRSs is insufficient to enable users to
understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance.

    The Directors are responsible for keeping proper accounting records, which disclose with reasonable accuracy at any time the financial
position of the company, for safeguarding the assets, for taking reasonable steps for the prevention and detection of fraud and other
irregularities and for the preparation of a Directors' report, which complies, with the requirements of The Companies (Guernsey) Law, 1994.

    Legislation in Guernsey and the United Kingdom governing the preparation and dissemination of financial statements differs from
legislation in other jurisdictions.

    Directors' responsibility statement

    We confirm that to the best of our knowledge:
    *     the financial statements, prepared in accordance with International Financial Reporting Standards, give true and fair view of the
assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a
whole; and

    *     the Investment Manager's report includes a fair review of the development and performance of the business and the position of the
Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and
uncertainties they face.



    By order of the Board,



    Director                                Director
    Julian Waldron                      Peter Hodson
    17 November 2008                17 November 2008

    We have audited the consolidated financial statements of TRIO Finance Limited (the "financial statements") for the year ended 30
September 2008 which comprise the Consolidated and Company Income Statement, Consolidated and Company Statement of Changes in Shareholders'
Equity, Consolidated and Company Balance Sheet, Consolidated and Company Cash Flow Statement and related notes 1 to 22. These financial
statements have been prepared under the accounting policies set out therein.

    This report is made solely to the Company's members, as a body, in accordance with Section 64 of The Companies (Guernsey) Law, 1994. 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
Auditors' Report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other
than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

    Respective responsibilities of Directors and Auditors

    The Directors' responsibilities for preparing the annual report and the financial statements in accordance with International Financial
Reporting Standards and applicable Guernsey law are set out in the statement of Directors' Responsibilities.

    Our responsibility is to audit the financial statements in accordance with relevant Guernsey legal and regulatory requirements and
International Standards on Auditing (UK and Ireland).

    We report to you our opinion as to whether the financial statements give a true and fair view in accordance with the International
Financial Reporting Standards and whether the financial statements have been properly prepared in accordance with The Companies (Guernsey)
Law, 1994. We also report to you if, in our opinion, the Directors' report is not consistent with the financial statements, if the Group or
Company has not kept proper accounting records, or if we have not received all the information and explanations we require for our audit.

    We read the other information accompanying the financial statements and consider whether it is consistent with those statements. The
other information comprises only the Chairman's Statement, Investment Manager's Report, Directors' Report, the Corporate Governance
Statement and the Directors' Remuneration Report. We consider the implications for our report if we become aware of any apparent
misstatements or material inconsistencies with the financial statements. Our responsibilities do not extend to any other information.

    Basis of audit opinion

    We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board.
An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also
includes an assessment of the significant estimates and judgements made by the Directors in the preparation of the financial statements, and
of whether the accounting policies are appropriate to the Group's circumstances, consistently applied and adequately disclosed. We are not
required to review any Corporate Governance disclosures required by The Listing Rules of the Financial Services Authority as the Company has
availed itself of an exemption, as an overseas Company, from the requirement to publish a statement of compliance with The Combined Code.

    We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to
provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether
caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of
information in the financial statements.


    Opinion

    In our opinion the financial statements give a true and fair view in accordance with International Financial Reporting Standards of the
state of the Group's and Company's affairs as at 30 September 2008 and of the Group and Company's loss for the year ended 30 September 2008
and have been properly prepared in accordance with The Companies (Guernsey) Law, 1994.

    Emphasis of matter - Financial statements prepared other than on a going concern basis

    Without qualifying our opinion, we draw attention to notes 1 and 2 to the financial statements concerning the Company's decision not to
continue as a going concern and the basis on which the financial statements are prepared. Following the sale of the B loan portfolio in
August 2008 and following consultation with the shareholders, the Board resolved on 30 September 2008 to return residual cash to the
shareholders and to wind up the Company. These conditions, along with other matters set forth in note 1, are the reasons why the entity is
not regarded as a going concern and as such the Directors have not prepared the financial statements on a going concern basis.



    Deloitte & Touche LLP
    Chartered Accountants
    Guernsey, Channel Islands
    Date: 17 November 2008



                                 Note         Year ended 30             Year ended 30
                                             September 2008            September 2007
                                                        US$                       US$
                                                             
 Operating income                                            
 Interest income from cash and                    1,347,451                   531,531
 cash equivalents                                            
 Interest income from                            29,388,084                47,602,167
 investments held as available                               
 for sale                                                    
 Net realised (loss)/gains on                   (1,098,837)                 7,316,315
 investments held as available                               
 for sale                                                    
 Realised gain on                 9              13,168,767                         -
 deconsolidation of Lions Hill                               
 Net foreign exchange losses                      (477,358)               (4,711,716)
 Impairment charges               7            (12,564,675)              (42,762,196)
 Total operating income                          29,763,432                 7,976,101
                                                             
                                                             
 Operating expenses                                          
 Other operating expenses         4            (11,418,598)               (4,341,778)
 Finance costs                    5            (20,338,288)              (32,054,094)
 Total operating expenses                      (31,756,886)              (36,395,872)
                                                             
 Net loss                                       (1,993,454)              (28,419,771)
                                                             
 Loss per Ordinary Share          8                          
 Basic                                            US$(0.25)                 US$(2.87)
 Diluted                                          US$(0.25)                 US$(2.87)
                                                             
 Weighted average Ordinary        8    Number                  Number
 Shares outstanding                                          
 Basic                                            8,000,000                 9,895,890
 Diluted                                          8,000,000                 9,895,890

    All items in the above statement are derived from discontinued operations.

    The accompanying notes form an integral part of the financial statements.

        



                                 Note         Year ended 30    Year ended 30 September 2007
                                             September 2008  
                                                        US$                             US$
                                                             
 Operating income                                            
 Interest income from cash and                      278,545                          78,687
 cash equivalents                                            
 Interest income from                            10,128,664                      18,550,960
 investments held as available                               
 for sale                                                    
 Net realised gains on                            4,291,771                          30,800
 investments held as available                               
 for sale                                                    
 Net realised foreign exchange                    2,583,289                     (2,178,281)
 gains/(losses)                                              
 Net unrealised foreign                                   -                       (409,191)
 exchange losses                                             
 Impairment charges               7             (1,504,502)                    (42,836,947)
 Total operating profit/(loss)                   15,777,767                    (26,763,972)
                                                             
                                                             
 Operating expenses                                          
 Other operating expenses         4             (8,769,842)                     (3,578,234)
 Total operating expenses                       (8,769,842)                     (3,578,234)
                                                             
 Net profit/(loss)                                7,007,925                    (30,342,206)
                                                             
 Earnings/(loss) per Ordinary     8                          
 Share                                                       
 Basic                                              US$0.88                       US$(3.07)
 Diluted                                            US$0.88                       US$(3.07)
                                                             
 Weighted average Ordinary        8    Number                  Number
 Shares outstanding                                          
 Basic                                            8,000,000                       9,895,890
 Diluted                                          8,000,000                       9,895,890

    All items in the above statement are derived from discontinued operations.

    The accompanying notes form an integral part of the financial statements.



                                   Share  Share premium  Other reserve  Capital reserve        Net unrealised       Accumulated        Total

                                 capital                                                       gain/(loss) on          profits/
                                                                                           available for sale          (losses)
                                                                                                  investments

                              Note  US$             US$            US$              US$                   US$               US$          
US$

 Balance at 1 October 2007             -              -     37,622,539          350,872          (64,831,565)        12,521,379 
(14,336,775)

 Net loss for the year                 -              -              -                -                     -       (1,993,454)  
(1,993,454)
 Reversal of unrealised losses   9     -              -              -                -            59,639,975                 -   
59,639,975
 on available for sale
 securities on deconsolidation
 of Lions Hill
 Reversal of unrealised losses         -              -              -                -             5,191,590                 -    5,191,590

 on available for sale
 securities
 Total Recognised Income and           -              -              -                -            64,831,565       (1,993,454)   
62,838,111
 Expense for the year
 Distribution to Ordinary        6     -              -              -                -                     -       (3,520,000)  
(3,520,000)
 Shareholders of the Company

 Balance at 30 September 2008          -              -     37,622,539          350,872                     -         7,007,925   
44,981,336


 Balance at 1 October 2006             -              -     92,251,670          350,872               131,173         7,412,019  
100,145,734

 Net loss for the year                 -              -              -                -                     -      (28,419,771) 
(28,419,771)
 Net unrealised loss on                -              -              -                -          (64,962,738)                 - 
(64,962,738)
 available for sale securities
 Total Recognised Income and           -              -              -                -          (64,962,738)      (28,419,771) 
(93,382,509)
 Expense for the year
 Distribution to Ordinary        6     -              -              -                -                     -      (10,100,000) 
(10,100,000)
 Shareholders of the Company
 Special distribution to         6     -              -   (11,000,000)                -                     -                 - 
(11,000,000)
 Ordinary Shareholders
 Transfer to accumulated profit        -              -   (43,629,131)                -                     -        43,629,131            
-
 Balance at 30 September 2007          -              -     37,622,539          350,872          (64,831,565)        12,521,379 
(14,336,775)

    The accompanying notes form an integral part of the financial statements.



                                 Note  Share Capital  Share premium  Other reserve  Capital reserve        Net unrealised       Accumulated 
      Total 
                                                                                                           gain/(loss) on          profits/
                                                                                                       available for sale          (losses)
                                                                                                          investments and
                                                                                                           investments in
                                                                                                            subsidiaries 

                                  US$            US$            US$            US$              US$                   US$               US$
 Balance at 1 October 2007                         -              -     37,622,539          350,872             6,428,216         3,520,000 
  47,921,627

 Net profit for the year                           -              -              -                -                     -         7,007,925 
   7,007,925
 Reversal of unrealised gains                      -              -              -                -           (6,428,216)                 - 
 (6,428,216)
 on available for sale
 securities
 Total Recognised Income and                       -              -              -                -           (6,428,216)         7,007,925 
     579,709
 Expense for the year
 Distribution to Ordinary         6                -              -              -                -                     -       (3,520,000) 
 (3,520,000)
 Shareholders of the Company

 Balance at 30 September 2008                      -              -     37,622,539          350,872                     -         7,007,925 
  44,981,336


 Balance at 1 October 2006                         -              -     92,251,670          350,872             7,210,117           333,075 
 100,145,734
 Net loss for the year                             -              -              -                -                     -      (30,342,206) 
(30,342,206)
 Net unrealised loss on                            -              -              -                -             (781,901)                 - 
   (781,901)
 available for sale securities
 Total Recognised Income and                       -              -              -                -             (781,901)      (30,342,206) 
(31,124,107)
 Expense for the year
 Distribution to Ordinary         6                -              -              -                -                     -      (10,100,000) 
(10,100,000)
 Shareholders of the Company
 Special distribution to          6                -              -   (11,000,000)                -                     -                 - 
(11,000,000)
 Ordinary Shareholders
 Transfer to accumulated profit                    -              -   (43,629,131)                -                     -        43,629,131 
           -
 Balance at 30 September 2007                      -              -     37,622,539          350,872             6,428,216         3,520,000 
  47,921,627

                                    Note  30 September 2008    30 September 2007
                                                        US$                  US$
 Non-current assets                                          
 Available for sale investments      11                   -          568,629,899
                                                             
 Current assets                                              
 Cash and cash equivalents                       51,718,000           15,107,862
 Other assets                        12               6,358            8,354,726
                                                 51,724,358           23,462,588
                                                             
 Total assets                                    51,724,358          592,092,487
                                                             
 Equity and liabilities                                      
                                                             
 Equity                                                      
 Share capital                       16                   -                    -
 Share premium account               17                   -                    -
 Other reserve                       17          37,622,539           37,622,539
 Capital reserve                     19             350,872              350,872
 Net unrealised loss on available    11                   -         (64,831,565)
 for sale investments                                        
 Accumulated profits                              7,007,925           12,521,379
 Total equity attributable to                    44,981,336         (14,336,775)
 equity holders of the parent                                
                                                             
 Current liabilities                                         
 Interest on loans                   13                   -            7,321,454
 Interest on subordinated notes                           -              157,684
 Other liabilities                   15           6,743,022              965,418
                                                  6,743,022            8,444,556
                                                             
 Non-current liabilities                                     
 Loans                               13                   -          597,984,706
                                                             
 Total liabilities                                6,743,022          606,429,262
                                                             
 Total equity and liabilities                    51,724,358          592,092,487
                                                             

    The accompanying notes form an integral part of the financial statements.

    These financial statements were approved and authorised for issue by the Board of Directors on 17 November 2008.

    Signed on behalf of the Board of Directors by:




    Julian Waldron                Peter Hodson 
    Director                          Director

                                    Note  30 September 2008    30 September 2007
                                                        US$                  US$
 Non-current assets                                          
 Investments in subsidiaries         10                   -           40,525,339
 Available for sale investments      11                   -            1,012,659
                                                          -           41,537,998
                                                             
 Current assets                                              
 Cash and cash equivalents                       51,718,000            6,343,272
 Other assets                        12               6,358              791,295
                                                 51,724,358            7,134,567
                                                             
 Total assets                                    51,724,358           48,672,565
                                                             
 Equity and liabilities                                      
                                                             
 Equity                                                      
 Share capital                       16                   -                    -
 Share premium account               17                   -                    -
 Other reserve                       17          37,622,539           37,622,539
 Capital reserve                     19             350,872              350,872
 Net unrealised gain on                                   -            6,428,216
 investments                                                 
 Accumulated profits                              7,007,925            3,520,000
 Total equity attributable to                    44,981,336           47,921,627
 equity holders of the parent                                
                                                             
 Current liabilities                                         
 Other liabilities                   15           6,743,022              750,938
 Total liabilities                                6,743,022              750,938
                                                             
 Total equity and liabilities                    51,724,358           48,672,565
                                                             

    The accompanying notes form an integral part of the financial statements.

    These financial statements were approved and authorised for issue by the Board of Directors on 17 November 2008.

    Signed on behalf of the Board of Directors by:







    Julian Waldron        Peter Hodson 
    Director                   Director



                                 Note         Year ended 30       Year ended 30 September 2007
                                             September 2008
                                                        US$                                US$
 Net cash inflow/(outflow) from   18            407,427,213                      (152,847,818)
 operating activities

 Investing activities

 Deconsolidation of Lions Hill    9             (3,555,237)                                  -
 Cash flows from investing                      (3,555,237)                                  -
 activities


 Financing activities

 Dividends paid to Shareholders   6             (3,520,000)                       (10,100,000)
 Payment of special dividend to   6                       -                       (11,000,000)
 Shareholders
 Net (repayment)/borrowings                   (338,468,150)                        177,478,511
 under loan facilities
 Interest paid on loans                        (25,273,688)                       (26,119,770)
 Cash flows from financing                    (367,261,838)                        130,258,741
 activities

 Net increase /(decrease) in                     36,610,138                       (22,589,077)
 cash and cash equivalents

 Reconciliation of net cash
 flow to movement in net cash
 Net increase /(decrease) in                     36,610,138                       (22,589,077)
 cash and cash equivalents
 Cash and cash equivalents at                    15,107,862                         37,696,939
 start of year 
 Cash and cash equivalents at                    51,718,000                         15,107,862
 end of year



    The accompanying notes form an integral part of the financial statements.


                                 Note         Year ended 30       Year ended 30 September 2007
                                             September 2008
                                                        US$                                US$
 Net cash inflow from operating   18             48,894,728                          7,521,402
 activities

 Financing activities

 Dividends paid to Shareholders   6             (3,520,000)                       (10,100,000)
 Payment of special dividend to   6                       -                       (11,000,000)
 Shareholders
 Cash flows from financing                      (3,520,000)                      (21,100,000) 
 activities

 Net increase/(decrease) in                      45,374,728                       (13,578,598)
 cash and cash equivalents

 Reconciliation of net cash
 flow to movement in net cash
 Net increase/(decrease) in                      45,374,728                       (13,578,598)
 cash and cash equivalents
 Cash and cash equivalents at                     6,343,272                        19,921,870 
 start of year 
 Cash and cash equivalents at                    51,718,000                          6,343,272
 end of year 


    1.    General information

    TRIO Finance Limited (the "Company") was registered on 11 May 2006 with registered number 44776 and is domiciled in Guernsey, Channel
Islands, and commenced its operations on 5 June 2006. The Company is a closed-ended investment company incorporated in Guernsey with limited
liability and its Ordinary Shares are listed on the London Stock Exchange. The registered office of the Company is Dorey Court, Admiral
Park, St. Peter Port, Guernsey, GY1 3BG, Channel Islands. "Group" is defined as the Company and its subsidiaries: TREAL Public Limited
Company ("TREAL") and Longlands Finance No. 2 Limited ("Longlands"). Longlands was struck off on 12 October 2008. Another subsidiary,
Pheasantry Limited, has been dormant and will be struck off on 31 December 2008. On 21 January 2008, Lions Hill ('Lions Hill') was served a
notice of default on the US$400m facility by its Lender. Following such notice, the Lender has appointed Margaret Mills and Alan Hudson of
Ernst & Young, London and David Hughes of Ernst & Young, Dublin as joint administrators and receivers of Lions Hill. As a result of this, TRIO has lost control of Lions Hill and from this date, Lions
Hill was deconsolidated from the Group. The continued deterioration in the US asset backed securities market and likelihood of further
defaults on some of the assets held by Lions Hill will not enable it to repay its obligations in the foreseeable future. Consequently TRIO
is unlikely to be able to regain control of Lions Hill. The amounts removed from the consolidated balance sheet as a result of
deconsolidating Lions Hill are disclosed in Note 9 to these financial statements.

    On 27 February 2007, the Company reclassified its listing from its previous listing under Chapter 15 of the Listing Rules to that of an
overseas company listed under Chapter 14 of the Listing Rules.

    The Group's investment objective was to provide stable income returns to shareholders in the form of semi-annual dividends and the
potential for capital growth. The Group invested predominantly in investment grade asset-backed securities (with a primary focus on real
estate mortgage-backed securities) and real estate related financial assets. It sought to achieve this by investing both in residual income
positions of CDOs or fund structures (in particular targeting CDOs or funds managed by the Investment Manager or its affiliates) and
investing in one or more special purpose vehicles or CDOs established by the Group. The Group also made direct acquisitions of such
securities. Target assets could be in cash or synthetic form. The Group could also invest directly in synthetic instruments, subject to the
restrictions on exposure set out in the Prospectus at the IPO. Following the sale of the realisable assets on 11 August 2008 the Group has
ceased its investment activity and the investment objective will no longer be pursued.

    The Group's investment management activities were managed by its Investment Manager, Wharton Asset Management Bermuda Limited (the
"Investment Manager"), a private limited company incorporated in Bermuda. The Group has entered into an Investment Management Agreement (the
"Investment Management Agreement") under which the Investment Manager manages its day-to-day investment operations, subject to the
supervision of the Company's Board of Directors. The Investment Manager has appointed Wharton Asset Management GB Limited until 29 February
2008 and Wharton Asset Management UK LLP, thereafter both investment management companies incorporated in the United Kingdom and authorised
and regulated by the Financial Services Authority, to perform certain sub-management functions. The Group has no direct employees. For its
services, the Investment Manager receives a monthly management fee (which includes a reimbursement of expenses) and a quarterly
performance-related fee. The Group has no ownership interest in the Investment Manager. The Group is administered by Kleinwort Benson (Channel Islands) Fund Services Limited (the "Administrator"). Investors
Fund Services (Ireland) Limited are the sub-administrator.

    Given the decision to cease investment activities, the Company proposes to terminate the investment management agreement.

    The following standard has been adopted in these financial statements:

    In the current year, the Group has adopted IFRS 7 Financial instruments: Disclosures which was effective for annual reporting period
beginning on or after 1 January 2007, and the resulting changes to IAS 1 Presentation of Financial Statements.


    1.    General information (continued)

    The impact of the adoption of IFRS 7 and the changes to IAS 1 has been to expand the disclosures provided in the financial statements
regarding the Group's financial instruments and management of capital (notes 14 and 16).

    At the date of authorisation of these accounts, the following Standard, which has not been applied in these financial statements, was in
issue but not yet effective: 

    2.    Significant accounting policies

    Statement of compliance
    The financial statements of the Group have been prepared in accordance with International Financial Reporting Standards ("IFRS"), which
comprise standards and interpretations approved by the International Accounting Standards Board ("the IASB"), and International Accounting
Standards and Standing Interpretations Committee interpretations approved by the International Accounting Standards Committee ("IASC") that
remain in effect, together with applicable legal and regulatory requirements of Guernsey Law and the Listing Rules of the UK Listing
Authority.

    Basis of preparation
    The financial statements of the Group are prepared under IFRS on the historical cost or amortised cost basis except that the following
assets and liabilities are stated at their fair value: derivative financial instruments, financial instruments held for trading and
financial instruments classified as available for sale. 

    The preparation of financial statements in conformity with IFRS requires the Group to make estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during
the reporting period. The details of these estimates and assumptions are described below and in Notes 3 and 14. Actual results could differ
from those estimates. 

    These financial statements are presented in US Dollars and the functional currency of the Group is also considered to be US Dollars.

    Going concern
    Given the decision to cease investment activity, return cash to shareholders and subsequently wind up the Company, the Directors believe
it is not appropriate to prepare the financial statements on a going concern basis and hence the financial statements have been prepared on
a break up basis other than going concern providing for costs of winding up.

    Basis of consolidation
    Subsidiaries are entities controlled by the Company. The financial statements of subsidiaries are included in the consolidated financial
statements from the date that control commences until the date that control ceases. Control is the power to govern financial and operating
policies of an entity so as to obtain benefits from its activities. 

    In accordance with the Standing Interpretations Committee Interpretation 12 "Consolidation-Special Purpose Entities" ("SIC 12"), the
Company consolidates only entities over which control is indicated by activities, decision-making, benefits and residual risks of ownership.
Where the Company does consolidate a special purpose entity ("SPE"), the interest in the notes not held by the Company will be shown as a
liability in the balance sheet. Any income or expenses attributable to these note holders will be shown as an expense in the income
statement. In accordance with SIC 12 the Company does not consolidate an SPE in which it holds less than a substantial interest in the
residual income position. Where it holds more than a substantial interest, it does not consolidate the SPE where the residual income
position represents only a small part of the gross assets of the SPE and the Company was 
    neither involved in the establishment of the SPE or the origination of the assets owned by the SPE, on the basis that the Company is not
exposed to the majority of the risks and benefits of the assets owned by the SPE, provided control is not otherwise indicated by the
Company's activities, decision making, benefits and residual risks or ownership. 
    2.    Significant accounting policies (continued)

    Investments
    Investments are classified as available for sale and are stated at fair value, with any resultant gain or loss being recognised directly
in equity, except for impairment losses and, in the case of monetary items such as debt securities, foreign exchange gains and losses that
are taken to the income statement. When these investments are derecognised, the cumulative gain or loss previously recognised directly in
equity is recognised in the income statement. Where these investments are interest*bearing, interest calculated using the effective interest
method is recognised in the income statement. Expenses incidental to the acquisition of available for sale investments are included within
the cost of that investment.

    Further details of the factors and assumptions surrounding the estimation uncertainty in valuations are set out in Note 3.  

    Investments are recognised/derecognised by the Group on the date it commits to purchase/sell the investments in regular way trades.

    Investments in subsidiaries are stated at fair value, including any interest in subordinated notes.

    Cash and cash equivalents
    Cash and cash equivalents include amounts held in interest bearing accounts, including any cash collateral held for forward foreign
exchange contracts. The maximum amount to be held as collateral is 2% of the notional value of the forward foreign exchange contracts plus
mark to market value of the contracts.

    Derivative financial instruments
    Derivative financial instruments used by the Group to hedge its exposure to foreign exchange and interest rate risks arising from
operational, financing and investment activities that do not qualify for hedge accounting are accounted for as trading instruments. The
Group may also enter into credit default or total return swap arrangements where the underlying asset or assets would otherwise be within
the Group 's investment policy in order to obtain substantially the same economic exposure to the returns and risks associated with holding
such underlying asset or assets.

    Derivative financial instruments (including embedded derivatives) are recognised initially at fair value. Subsequent to initial
recognition, derivative financial instruments are stated at fair value. The gain or loss on remeasurement to fair value is recognised
immediately in the income statement. However, where derivatives qualify for hedge accounting, recognition of any resultant gain or loss
depends on the nature of the item being hedged.

    Forward exchange contracts
    Fair value of forward exchange contracts is their quoted market price at the balance sheet date, being the present value of the quoted
forward price.

    Fair value
    All financial assets carried at fair value are initially recognised at fair value and subsequently re-measured at fair value based on
quoted bid prices where such bids are available from a third party in a liquid market. Where quoted bids are not available, broker marks are
sought, and where multiple marks are available the lowest such mark is taken. If quoted bid prices or broker marks are unavailable, the fair
value of the financial asset is estimated using pricing models incorporating discounted cash flow techniques. These pricing models apply
assumptions regarding asset*specific factors and economic conditions generally, including delinquency rates, prepayment rates, default
rates, maturity profiles, interest rates and other factors that may be relevant to each 
    financial asset. Where such pricing models are used, inputs are based on market related measures at the balance sheet date.

    Where actual performance data regarding defaults, delinquencies and prepayments received in respect of a given asset is markedly
different from the default, delinquency and prepayment assumptions incorporated in the pricing model for the asset, the assumptions are
revised to reflect this data and the pricing model is updated accordingly. In addition to the actual performance data observed in respect of
a particular asset, market factors are also taken into account within the model.  Dealer marks (where available) and any other available
indicators are assessed to determine the fair value of the investment.


    2.    Significant accounting policies (continued)

    Offsetting financial instruments
    Financial assets and liabilities are offset and the net amount reported within assets and liabilities when there is a legally
enforceable right to set off the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the
liability simultaneously.

    Interest-bearing loans and borrowings
    Interest*bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial
recognition, interest*bearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised
in the income statement over the period of the borrowings on an effective interest basis.

    Financing costs associated with the issuance of financings are deferred and amortised over the term of the financings using the
effective interest rate method.

    Foreign currency transactions
    Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction. Monetary assets
and liabilities denominated in foreign currencies at the balance sheet date are translated to US Dollars at the foreign exchange rate ruling
at that date. Foreign exchange differences arising on translation are recognised in the income statement.

    Impairment
    The carrying amounts of the Group's available for sale assets are reviewed at each balance sheet date to determine whether there is any
indication of impairment.

    When a decline in the fair value of an available for sale financial asset has been recognised directly in equity and there is objective
evidence that the asset is impaired, the cumulative loss that had been recognised directly in equity is recognised in the income statement
even though the financial asset has not been derecognised. The amount of the cumulative loss that is recognised in the income statement is
the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously
recognised in the income statement. 

    Reversals of impairment
    An impairment loss in respect of an investment in an equity instrument classified as available for sale is not reversed through the
income statement. If the fair value of a debt instrument classified as available for sale increased and the increase can be objectively
related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss shall be reversed, with the
amount of the reversal recognised in the income statement. 

    An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have
been determined, net of amortisation, if no impairment loss had been recognised.

    Transaction expenses
    The preliminary expenses of the Group directly attributable to its initial public offering and any costs associated with the
establishment of the Group are charged to the share premium account.

    Share warrants have been granted to an affiliate of the Investment Manager have been treated as a transaction expense on the basis that
they were granted by the Group as a fee for the affiliate's role as promoter and indemnification of certain costs, liabilities and losses in
connection with raising capital for the Group. The fair value of such warrants is charged to the share premium account. The share premium
account is credited with the fair value of such warrants at the time that such warrants are vested.







    2.    Significant accounting policies (continued)

    Interest income
    Interest income is accrued based on the outstanding principal amount of the Group's financial assets and their contractual terms.
Premiums and discounts associated with the purchase of financial assets are amortised or accreted into interest income over the projected
lives of the investments using the effective interest method as defined under International Accounting Standard 39. The Group's policy for
estimating prepayment speeds for calculating the effective yield is to evaluate historical performance, market consensus indicators and
current market conditions. Where the Group adjusts its effective yield calculation to take account of any change in underlying assumptions,
such adjustments are recognised in the income statement.

    Other receivables
    Other receivables do not carry any interest and are short-term in nature and are accordingly stated at their nominal value as reduced by
appropriate allowances for estimated irrecoverable amounts.

    Financial liabilities and equity
    Financial liabilities and equity are classified according to the substance of the contractual arrangements entered into. An equity
instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Financial
liabilities and equity are recorded at the proceeds received, net of issue costs.

    Other accruals and payables
    Other accruals and payables are not interest bearing and are stated at their nominal value. Expenses are accrued for in the period in
which they were incurred.

    Segmental reporting
    The Directors are of the opinion that the Company and its Group are engaged in a single segment of business of investing in debt
securities and operates solely from Guernsey and therefore no segmental reporting is provided. 

    3.    Critical accounting judgements and key sources of estimation uncertainty

    In the process of applying the Group's accounting policies (described in Note 2 above), the Group has determined that the following
judgements and estimates have the most significant effect on the amounts recognised in the financial statements:

    Income recognition 
    The Group's available for sale investments are stated at fair value and all the investments are floating rate assets except the residual
income positions. As stated in Note 2, interest income on investments held (except residual interest positions) is accrued based on the
outstanding principal amount and their contractual terms.  Income is recognised for the residual interest positions on an effective interest
rate ("EIR") method in accordance with paragraph 30 of IAS18 "Revenue". In addition, the amortisation of any premium or discount is based on
the effective interest rate ("EIR"). The EIR is taken as the effective interest rate on the acquisition of the asset and remains unchanged
throughout the holding period except where the LIBOR/ EURIBOR rate has changed significantly.

    Valuation of investments
    In accordance with the Group's accounting policies, fair value of financial assets is primarily based on quoted bid prices where such
bids are available from a third party. Where quoted bids are not available, broker marks are sought, and where multiple marks are available
the lowest such mark is taken. The vast majority of the investments are real estate backed loans and real estate backed securities. The
remainder are residual income positions. Given the illiquidity and widening of spreads due to recent and current market conditions, these
quoted marks from brokers may not necessarily represent the realisation value of such assets as of the balance sheet date.



    3.    Critical accounting judgements and key sources of estimation uncertainty (continued)

    Valuation of investments (continued)

    As described in Note 14 to the financial statements, the market for subordinated asset-backed securities and the Group's ability to deal
in investments may be limited. There is no active secondary market in residual income positions and, further, there is no industry standard
agreed methodology to value residual income positions. Prices for the residual income positions are obtained from the lead trustee bank.

    As an additional indication of fair value, the Group performs discounted cash flow models for each of the assets. The cash flow data for
these models is obtained from data providers such as Intex, trustee reports and in some cases information provided by the originator.  Where
actual performance data regarding defaults, delinquencies, recovery rates and prepayments received in respect of a given asset is markedly
different from the default, delinquency and prepayment assumptions incorporated in the pricing model for the asset, the assumptions are
revised to reflect this data and the pricing model is updated accordingly. The key assumptions within the model are voluntary and
involuntary prepayment speeds, severity on liquidations, changes in pipeline of delinquencies, call option and changes in interest rates. In
addition to the actual performance data observed in respect of a particular asset, market factors such as house price indices and
refinancing opportunities are also taken into account within the model.

    If the discounted cash flows based on the assumed EIR is less than the book-amortised cost (reduced by any impairment charges to date)
then the difference results in an impairment charge to the income statement and the amortised cost is reduced.

    A comparison is made of this reduced amortised cost with the fair value derived from broker marks and the lower of the two is taken as
fair value. All B loans are valued at broker marks.

    In addition, these cash flows may lead to a changing pattern of future amortisation of premium/ discounts and therefore affect future
interest income. 

    The fair value of the Group's investments is set out in Note 11 and a further description of the risks associated with the Group's
investments is provided in Note 14. 

    Further disclosures of key assumptions and key sources of estimation uncertainty are set out in Note 2 to the financial statements under
the heading "Fair Value" and Note 14.

    Termination and Liquidation costs

    Given the decision to wind up the Company provision for termination of contracts and liquidation of the Company have been made. These
are estimates based on the contractual arrangements with the various providers principally in respect of investment management, investment
administration, registrars, directors, legal and liquidators' costs. 














    4.    Other operating expenses
                                                Group                           Group
                                        Year ended 30    Year ended 30 September 2007
                                       September 2008  
                                                  US$                             US$
 Investment management,                                
 custodian and administration                          
 fees                                                  
 Investment management and                  1,550,665                       2,470,847
 incentive fee (Note 19)                               
 Administration fee (Note 19)                 206,741                         353,681
 Custodian fee (Note 19)                       14,179                          32,783
                                            1,771,585                       2,857,311
 Other operating expenses                              
 Audit fees                                   264,931                         109,434
 Interim review fees                                -                          23,834
 Tax fees                                      26,686                          12,000
 Directors' fees payable to the               190,000                         190,000
 directors of TRIO Finance                             
 Limited                                               
 Directors' fees payable to the                66,866                          61,907
 directors of the Subsidiaries                         
 Legal fees                                   331,033                         203,063
 Special purpose vehicles set                       -                         228,471
 up costs                                              
 Professional fees - secondary                      -                         500,000
 offer                                                 
 Provision for termination and              6,550,000                               -
 liquidation costs (Note 3,15                          
 and 19)                                               
 Structuring fees on sale of                2,236,426                               -
 TREAL portfolio                                       
 Other expenses                              (18,929)                         155,758
                                            9,647,013                       1,484,467
                                                       
 Total other operating expenses            11,418,598                       4,341,778

    The Group has no employees. 

                                              Company                         Company
                                        Year ended 30    Year ended 30 September 2007
                                       September 2008  
                                                  US$                             US$
 Investment management,                                
 custodian and administration                          
 fees                                                  
 Investment management and                  1,550,665                       2,470,847
 incentive fee (Note 19)                               
 Administration fee (Note 19)                 145,590                         146,338
 Custodian fee (Note 19)                        5,202                          15,205
                                            1,701,457                       2,632,390
 Other operating expenses                              
 Audit fees                                   187,145                          79,984
 Interim review fees                                -                          23,834
 Tax fees                                      11,710                           3,000
 Directors' fees payable to the               190,000                         190,000
 directors of TRIO Finance                             
 Limited                                               
 Legal fees                                   150,479                          67,200
 Special purpose vehicles set                       -                          33,386
 up costs                                              
 Professional fees - secondary                      -                         500,000
 offer                                                 
 Provision for termination and              6,550,000                               -
 liquidation costs (Note 3,15                          
 and 19)                                               
 Other expenses                              (20,949)                          48,440
                                            7,068,385                         945,844
                                                       
 Total other operating expenses             8,769,842                       3,578,234




    5.    Finance costs

                                                        Group                           Group
                                 Year ended 30 September 2008    Year ended 30 September 2007
                                                          US$                             US$
 Finance costs arises from:                                    
     Loans held at amortised                       20,338,288                      30,526,908
 cost                                                          
     Subordinated note held at                              -                       1,527,186
 amortised cost                                                
     Total finance costs                           20,338,288                      32,054,094

    There were no finance costs for the Company.

    6.    Dividends

    A dividend of US$0.44 per share on 8 million shares (US$3,520,000 in total) was proposed by directors on 20 November 2007 and paid
during the year. In the year ended 30 September 2007 dividends of US$0.36 per share on 10 million shares (US$3,600,000 in total) and US$0.65
per share on 10 million shares (US$6,500,000 in total) was paid. No dividend is proposed in respect of the year to 30 September 2008.

    A special dividend of US$1.10 per share on 10 million shares (US$11,000,000) was proposed by the directors on 9 August 2007 and paid on
26 September 2007 out of other reserves.

    7.    Impairment charges

    Group impairment charges comprise US$11,060,173 (2007: US$27,466,951) in relation to investments held by Lions Hill prior to
deconsolidation and US$1,504,502 (2007: US$15,295,245) in relation to investments held by TRIO Finance Limited, the Company. Impairment
charges are where there has been a permanent diminution in the value of the asset and the charge is the extent to which this is not
recoverable.  The amount of the cumulative loss that is recognised in the income statement is the difference between the acquisition cost
and the current fair value, less any impairment loss on that financial asset previously recognised in the income statement.

    Company impairment charges comprise US$1,504,502 (2007: US$15,295,245) in relation to investments held by TRIO Finance Limited and
US$nil (2007:US$27,541,702) in relation to TRIO Finance Limited's investment in its subsidiary, Lions Hill.

    8.    (Loss)/Earnings per ordinary share
                                                Group                   Group
                                        Year ended 30           Year ended 30
                                       September 2008          September 2007
                                                  US$                     US$
 The calculation of the basic                          
 and diluted earnings per share                        
 is based on the following                             
 data:                                                 
 Earnings for the purposes of                          
 basic and diluted earnings per           (1,993,454)            (28,419,771)
 share being net loss                                  
 attributable to equity holders                        
                                                       
 Weighted average number of                            
 Ordinary Shares for the                    8,000,000               9,895,890
 purposes of basic and diluted                         
 earnings per share                                    
 Effect of dilutive potential                          
 Ordinary Shares                                       
 Warrants                                           -                       -
 Weighted average number of                            
 Ordinary Shares for the                    8,000,000               9,895,890
 purpose of diluted earnings                           
 per share                                             



    8.    (Loss)/Earnings per ordinary share (continued)

                                              Company                 Company
                                        Year ended 30           Year ended 30
                                       September 2008          September 2007
                                                  US$                     US$
 The calculation of the basic                          
 and diluted earnings per share                        
 is based on the following                             
 data:                                                 
 Earnings for the purposes of               7,007,925            (30,342,206)
 basic and diluted earnings per                        
 share being net loss                                  
 attributable to equity holders                        
                                                       
 Weighted average number of                            
 Ordinary Shares for the                    8,000,000               9,895,890
 purposes of basic and diluted                         
 earnings per share                                    
 Effect of dilutive potential                          
 Ordinary Shares                                       
 Warrants                                           -                       -
 Weighted average number of                            
 Ordinary Shares for the                    8,000,000               9,895,890
 purpose of diluted earnings                           
 per share                                             

    A payment of a special dividend of US$11,000,000 on 16 August 2007 was followed by a share consolidation whereby 4 new shares were
issued for 5 old shares on 11 September 2007, resulting in reduction in shares from 10,000,000 to 8,000,000.

    There is no share dilution in 2008 and 2007, as the market price of the shares is below the exercise price of the warrants.

    9.    Deconsolidation of Lions Hill 

    As explained in note 1, on 21 January 2008 the Group lost control of its interest in Lions Hill. The continued deterioration in the US
asset backed securities market and likelihood of further defaults on some of the assets held by Lions Hill will not enable it to repay its
obligations in the foreseeable future. Consequently TRIO is unlikely to be able to regain control of Lions Hill and Lions Hill has been
deconsolidated.

    The net liabilities of Lions Hill at the date of deconsolidation and the comparative year-end balance sheet were as follows:

                                            21 January 2008    30 September 2007
 Assets                                                 US$                  US$
 Investments at fair value                      184,240,206          210,142,288
 Cash and cash equivalents                        3,555,237            8,656,785
 Interest receivable                              2,335,559            1,843,568
 Total assets                                   190,131,002          220,642,641
                                                             
 Non Current Liabilities                                     
 Loans                                        (259,516,556)        (278,872,821)
                                              (259,516,556)        (278,872,821)
                                                             
 Current Liabilities                                         
 Interest on loans                              (2,543,738)          (3,841,383)
 Other liabilities                                (166,653)            (180,574)
                                                (2,710,391)          (4,021,957)
 Total Liabilities                            (262,226,947)        (282,894,778)
                                                             
                                                             
 Total net liabilities pre                     (72,095,945)  
 deconsolidation                                             
 Unrealised losses reversed                      59,639,875  
 Foreign exchange losses on                       (712,697)  
 deconsolidation                                             
                                               (13,168,767)  
                                                             
 Realised gain on deconsolidation of             13,168,767  
 Lions Hill                                                  
 Total consideration                                      -  
                                        21 January 2008 US$  
 Satisfied by:                                               
 Cash                                                        
 Deferred consideration                                   -  
                                                          -  
 Net cash outflow arising on                                 
 disposal:                                                   
 Cash and cash equivalents                      (3,555,237)  



    The consolidated income statement includes the following amounts relating to Lions Hill:

                                                     Period from                 Year  
                                                  1 October 2007   to 30 September 2007
                                               to 21 January 2008
                                                              US$                   US$
 Operating income                
 Interest income from cash and                             60,314               134,209
 cash equivalents                
 Interest income from                                   5,214,847            22,853,594
 investments                     
 Net realised gains on                                    603,432             1,317,669
 investments                     
 Impairment charges                                  (11,060,173)          (27,466,951)
 Net foreign exchange losses                              (8,550)           (1,337,835)
 Total operating income                               (5,190,130)           (4,499,314)
                                 
 Operating expenses              
 Other operating expenses                               (224,239)             (347,666)
 Finance costs                                        (5,142,130)          (18,739,068)
 Total operating expenses                             (5,366,369)          (19,086,734)
                                 
 Net loss                                            (10,556,499)          (23,586,048)

    10.    Investments in subsidiaries

    Lions Hill Limited ("Lions Hill") was incorporated in Ireland on 19 December 2005 and, pursuant to the Articles of Association of Lions
Hill, the Company has the right to appoint a majority of the Board of Directors of Lions Hill. Two of the Directors of the Company have been
appointed directors of Lions Hill. To ensure that the Company will be able to maintain a majority of the Board of Directors of Lions Hill in
the future, the Company has been allocated three "B" ordinary shares in Lions Hill carrying the right to appoint a majority of the Board of
Directors. Lions Hill was established for the sole purpose of acquiring and holding interests in certain assets, including assets comprised
in the initial portfolio. Following credit agency downgrades of certain Lions Hill's assets, Lions Hill was in breach of the loan covenants
in its facility agreement. It entered a standstill agreement with its lender until 19 January 2008. Under this the lender imposed certain
conditions. Following the expiry of the Standstill Agreement, on 21 January 2008, Lions Hill was served notice of default on the US$400m facility by its Lender. Following such notice,
the Lender has appointed Margaret Mills and Alan Hudson of Ernst & Young, London and David Hughes of Ernst & Young, Dublin as joint
administrators and receivers of Lions Hill. The continued deterioration in the US asset backed securities market and likelihood of further
defaults on some of the assets held by Lions Hill will not enable it to repay its obligations in the foreseeable future. 


    10.    Investments in subsidiaries (continued)

    Consequently TRIO is unlikely to be able to regain control of Lions Hill but has no further obligation to support Lions Hill whose
funding is non-recourse to the Group. Under International Financial Reporting Standards ("IFRS"), TRIO is deemed to have relinquished
control of Lions Hill and its assets and liabilities have been deconsolidated from this date giving rise to a reversal of unfunded
unrealised losses of US$13,168,767, which had been recognised in the consolidated income statement.

    TREAL Public Limited Company ("TREAL") was incorporated in Ireland on 19 July 2006 and, pursuant to the Articles of Association of
TREAL, the Company has the right to appoint a majority of the Board of Directors of TREAL. Two of the Directors of the Company have been
appointed directors of TREAL. To ensure that the Company will be able to maintain a majority of the Board of Directors of TREAL in the
future, the Company has been allocated three "B" ordinary shares in TREAL carrying the right to appoint a majority of the Board of
Directors. TREAL was established for the sole purpose of acquiring and holding interests in certain assets, which to date have been all real
estate loans. Following the sale of the entire portfolio in August 2008 the Company has ceased investment activities and remains dormant. 

    Longlands Finance No. 2 Limited ("Longlands") was incorporated in Ireland on 5 December 2006 and, pursuant to the Articles of
Association of Longlands, the Company owns all of the voting shares in Longlands and has two Directors on the Board of Directors of
Longlands. Longlands was established for the sole purpose of acquiring and holding interests in certain assets, which to date has been a
single real estate loan, which has been disposed of. As the Company is dormant and is no longer required, the company was struck off on 13
October 2008.

    Pheasantry Limited ("Pheasantry") was incorporated in the Cayman Islands on 28 April 2006 and, pursuant to the Articles of Association
of Pheasantry, the Company owns all of the voting shares in Pheasantry. Pheasantry was established for the sole purpose of acquiring and
holding interests in real estate related funds for a temporary period while opportunities arose for acquiring real estate related
securities. Pheasantry has been dormant in the period and is scheduled to be struck off on 31 December 2008.
                                 Lions Hill         TREAL  Longlands  Pheasantry         Total
                                        US$           US$        US$         US$           US$
 Fair value as at 30 September            -    40,503,134     22,205           -    40,525,339
 2007
 Pay downs and sales                      -  (42,748,568)          -           -  (42,748,568)
 Realised and unrealised
 gain/(loss)                              -     2,245,434   (22,205)           -     2,223,229
 Impairment charge                        -             -          -           -             -
 Fair value as at 30 September            -             -          -           -             -
 2008

                                 Lions Hill       TREAL  Longlands  Pheasantry       Total
                                        US$         US$        US$         US$         US$
 Fair value as at 30 September   31,341,702  12,762,232          -  16,587,520  60,691,454
 2006

 Purchases                            200,000    37,253,740    22,885,421             -    60,339,161
 Sales                            (4,000,000)  (10,224,000)  (22,885,421)  (16,000,000)  (53,109,421)
 Realised and unrealised                    -       711,162        22,205     (587,520)       145,847
 gain/(loss)
 Impairment charge               (27,541,702)             -             -             -  (27,541,702)
 Fair value as at 30 September              -    40,503,134        22,205             -    40,525,339
 2007

    The investments in subsidiaries are stated at the fair value of the Company's investment. 

    11.    Available for sale investments

    The following is a summary of the Group's investments at 30 September 2008:
                                                   Group                Group
                                       30 September 2008    30 September 2007
                                                     US$                  US$
                                                          
 Cost as at start of year                    600,202,519          511,157,493
 Purchases                                             -          369,698,251
 Pay downs and sales proceeds              (373,494,865)        (243,913,675)
 Deconsolidation of Lions Hill             (249,171,743)                    -
 Realised gains                               34,312,165            7,316,315
 Amortisation of premium/(discount)              716,599          (1,293,669)
 Impairment charge                          (12,564,675)         (42,762,196)
 Cost as at end of year                                -          600,202,519
 Unrealised gains on foreign exchange                  -           33,258,945
 Unrealised losses on market values                    -         (64,831,565)
 Fair value as end of year                             -          568,629,899

    The following is a summary of the Company's investments at 30 September 2008:
                                               Company              Company
                                     30 September 2008    30 September 2007
                                                   US$                  US$
                                                        
 Cost as at start of year                    1,841,744           19,901,337
 Amortisation of discount                    (337,242)          (2,764,348)
 Impairment charge                         (1,504,502)         (15,295,245)
 Cost as at end of year                              -            1,841,744
 Unrealised losses on market values                  -            (829,085)
 Fair value as end of year                           -            1,012,659

    12.    Other assets

                                  Group                Group
                      30 September 2008    30 September 2007
                                    US$                  US$
                                         
 Interest receivable              6,358            8,313,529
 Other assets                         -               41,197
                                  6,358            8,354,726

                                Company              Company
                      30 September 2008    30 September 2007
                                    US$                  US$
                                         
 Interest receivable              6,358              785,036
 Other assets                         -                6,259
                                  6,358              791,295

    The Directors consider that the carrying amount of other receivables approximates their fair value.

    13.    Loans

    As at 30 September 2008, the Group had no borrowing facilities in place. However, during the year the Group had the following borrowing
facilities in place in Lions Hill and TREAL:

    TREAL

    In August 2007, TREAL requested an extension of the revolving facility as required under the facility agreement. The lender did not
respond and consequently the extension was deemed to have been refused. Under the agreement, the repayment date of the loan extended to 31
August 2016, ten years from the date the facility was originally granted. Following the sale of the assets owned by TREAL all the loans were
repaid and there were no outstanding facilities as at 30 September 2008. 

    The outstanding facilities as at 30 September 2007 were as follows:

 Loan Principal   Loan Principal  Interest payable  Total outstanding  Maturity date     Weighted average
                  USD equivalent                                                          interest rate
 EURO 27,445,956      39,032,266           337,434         39,369,700  31 August 2016        4.94000
 EURO 746,688          1,061,902             9,627          1,071,529  31 August 2016        4.94500
 EURO 59,982,574      85,304,219           812,477         86,116,696  31 August 2016        4.93000
 EURO 10,600,000      15,074,790           128,772         15,203,562  31 August 2016        4.96000
 EURO 8,000,000       11,377,200            43,549         11,420,749  31 August 2016        5.30000
 GBP 14,010,375       28,544,038           368,961         28,912,999  31 August 2016        6.74000
 GBP 20,347,764       41,455,517           617,313         42,072,830  31 August 2016        6.71013
 GBP 30,000,000       61,120,500           847,105         61,967,605  31 August 2016        6.74500
 SEK 233,800,877      36,141,453           314,833         36,456,286  31 August 2016        4.48000
                     319,111,885         3,480,071        322,591,956

    The assets of TREAL (valued at US$357,474,951 as at 30 September 2007) were provided as security against these loans.  

    Lions Hill

    As at 30 September 2008, as the Group had no control over Lions Hill following the appointment of receivers and administrators the
assets and liabilities of Lions Hill have been deconsolidated (See note 1 and 9).

    The outstanding facilities as at 30 September 2007 were as follows:

 Loan Principal   Loan Principal  Interest payable  Total outstanding  Maturity date    Weighted average
                  USD equivalent                                                         interest rate
 USD 137,617,058     137,617,058         2,159,594        139,776,652  23 March 2017        6.010000
 EURO 17,925,000      25,492,039           235,251         25,727,290  25 April 2017        4.885630
 GBP 56,320,735      114,745,049         1,433,809        116,178,858  25 April 2017        6.707200
 GBP 500,000           1,018,675            12,729          1,031,404   2 May 2017          6.707200
                     278,872,821         3,841,383        282,714,204


   Total      Amounts due after    Amounts due within one year        Total
              more than one year                                30 September 2008
 Lions Hill                     -                            -                  -
 TREAL                          -                            -                  -
                                -                            -                  -

    13.    Loans (continued)

              Amounts due after    Amounts due within one year        Total
   Total      more than one year                                30 September 2007
 Lions Hill           278,872,821                    3,841,383        282,714,204
 TREAL                319,111,885                    3,480,071        322,591,956
                      597,984,706                    7,321,454        605,306,160

    The fair value of loans at 30 September 2007 may have been greater than the book cost given that lenders were unwilling to provide
financing at these interest rates for these assets at that time. However it was not practical or possible to measure the fair value of such
loans.

    14    Financial instruments

    Categories of financial instruments

    The following table details the categories of financial assets and liabilities held by the Group at the year-end:
                                                 Group               Group
                                           30 September 2008   30 September 2007
                                                          US$                US$
 Financial assets held as available for
 sale:
 Investments                                                -        568,629,899
 Loans and receivables
 Cash and cash equivalents                         51,718,000         15,107,862
 Other assets                                           6,358          8,354,726
 Total assets                                      51,724,358        592,092,487
 Liabilities
 Held for trading:
 Forward foreign exchange contracts                         -            273,514
 Liabilities held at amortised cost:
 Other liabilities                                  6,743,022          8,171,042
 Loans                                                      -        597,984,706
 Total Liabilities                                  6,743,022        606,429,262

    The following table details the categories of financial assets and liabilities held by the Company at the year-end:
                                                Company             Company
                                           30 September 2008   30 September 2007
                                                          US$                US$
 Financial assets held as available for
 sale:
 Investments in subsidiaries                                -         40,525,339
 Available for sale investments                             -          1,012,659
 Loans and receivables
 Cash and cash equivalents                         51,718,000          6,343,272
 Other assets                                           6,358            791,295
 Total assets                                      51,724,358         48,672,565
 Liabilities
 Held for trading:
 Forward foreign exchange contracts                         -            273,514
 Liabilities held at amortised cost:
 Other liabilities                                  6,743,022            477,424
 Total Liabilities                                  6,743,022            750,938



    14    Financial instruments (continued)

    Categories of financial instruments (continued)

    The Group invested predominantly in investment grade-backed securities (with a primary focus on real estate mortgage-backed securities)
and real estate related financial assets. As at 30 September 2008 the Group held only 2 residual income positions, both of them have been
written down to zero. The principal risks to which the Group and Company are exposed are market risk, interest rate risk, currency risk,
credit risk and certain counterparty risks. In certain instances as described more fully below, the Group and Company entered into
derivative transactions in order to mitigate particular types of risk.

    The nature and extent of the financial investments and the risk management policies employed by the Group are discussed below, together
with the potential risks and uncertainties that could have a material impact on the performance of the Group. Given there is no residual
risk remaining at 30 September 2008, the risk is assessed on the 31 March 2008 and 30 September 2007 portfolios. The portfolio at 31 March
2008 represents a suitable proxy for the Group's risks during the year.

    Market risk
    The Group's and Company's exposure to market risk is comprised mainly of movements in the value of its investments and, to the extent
that the Group and Company incur indebtedness in the future, changes in interest rates that either increase its cost of borrowing or, in the
event the Group and Company make any fixed interest investments in the future, may decrease its interest income. All of the Group's and
Company's investments are floating rate or backed by floating rate assets and, as such, will be valued based on a market credit spread over
a benchmark (such as LIBOR or EURIBOR). Increases in the credit spreads above such benchmarks may affect the 

    Group's net equity or net income directly through their impact on unrealised gains or losses on investments within the portfolio, and
therefore the Group's and Company's ability to make gains on such investments, or indirectly through their impact on the Group's and
Company's ability to borrow and access capital.

    Changes in mark to market value of the assets, which are based on broker marks would reduce the net asset value by an amount equivalent
to the revaluation. There are no floating rate assets as at 30 September 2008. The weighted average price of these floating rate assets as
at 31 March 2008 was 93.72 (30 September 2007: 92.45) and a reduction of a further 5% in market value would reduce the NAV from US$3.86 to
US$1.93 per share. There is no impact on profit and loss to the extent that the movements are considered temporary.

    As at 31 March 2008, one residual income position held had a carrying value of US$387,500, after impairments. In the quarter to 30 June
2008, this asset was fully impaired and therefore there is no further risk on the RIPs. As at 31 March 2008, none of the floating rate
assets in TREAL were impaired. If an impairment loss of 5% across this portfolio were to be recognised the profit or loss would be reduced
by US$15.45m as at 31 March 2008 (30 September 2007:US$7.99m). The effect on the net asset value would depend on the extent to which the
mark to market revaluations had already recognised this revaluation arising from impairments.

    Interest rate risk
    To the extent that the Group and Company incurs indebtedness, changes in interest rates can affect the Group's net interest income,
which is the difference between the interest income earned on interest*earning investments and the interest expense incurred on
interest*bearing liabilities. Changes in the level of interest rates also can affect, among other things, the Group's and Company's ability
to acquire loans and investments, the value of its investments and the Group's and Company's ability to realise gains from the settlement of
such assets.

    The Group and Company entered into hedging transactions for the purposes of efficient portfolio management, where appropriate, to
protect its borrowings from interest rate fluctuations. These instruments were used to hedge as much of the interest rate risk as the
Investment Manager determines is in the best interests of the Group, given the cost of such hedges. The Group and Company may bear a level
of interest rate risk that could otherwise be hedged when the Investment Manager believes, based on all relevant facts, that bearing such
risks is advisable.

    As at 30 September 2008, 31 March 2008 and 30 September 2007 there were no interest rate hedges.


    14    Financial instruments (continued)

    Interest rate risk (continued)

    Interest rate profile Group - 30 September 2008
                                   US$         US$                   US$
                                 Fixed    Floating  Non-interest bearing      Weighted Average
                                                                                          Rate
 Available for sale investments      -           -                     -                     -
 Cash equivalents                    -  51,718,000                     -                 2.21%
 Loans and interest on loans         -           -                     -                     -

    Interest rate profile Group - 31 March 2008
                                   US$            US$                   US$
                                 Fixed       Floating  Non-interest bearing      Weighted Average
                                                                                             Rate
 Available for sale investments      -    309,459,404                     -                 7.50%
 Cash equivalents                    -     20,166,276                     -                 3.32%
 Loans and interest on loans         -  (302,216,342)                     -                 5.10%

    Interest rate profile Group - 30 September 2007
                                   US$            US$                   US$
                                 Fixed       Floating  Non-interest bearing      Weighted Average
                                                                                             Rate
 Available for sale investments      -    568,629,899                     -                 7.37%
 Cash equivalents                    -     15,107,862                     -                 5.20%
 Loans and interest on loans         -  (605,306,160)                     -                 5.90%

    Interest rate profile Company - 30 September 2008
                                   US$         US$                   US$
                                 Fixed    Floating  Non-interest bearing      Weighted Average
                                                                                          Rate
 Investments in subsidiaries         -           -                     -                     -
 Available for sale investments      -           -                     -                     -
 Cash equivalents                    -  51,718,000                     -                 2.21%

    Interest rate profile Company - 31 March 2008
                                   US$         US$                   US$
                                 Fixed    Floating  Non-interest bearing      Weighted Average
                                                                                          Rate
 Investments in subsidiaries         -  28,285,419                     -                33.68%
 Available for sale investments      -     387,500                     -                28.17%
 Cash equivalents                    -   3,983,129                     -                 3.80%

    Interest rate profile Company - 30 September 2007
                                   US$         US$                   US$
                                 Fixed    Floating  Non-interest bearing      Weighted Average
                                                                                          Rate
 Investments in subsidiaries         -  40,525,339                     -                18.76%
 Available for sale investments      -   1,012,659                     -                23.64%
 Cash equivalents                    -   6,343,272                     -                 4.57%




    14 Financial instruments (continued)

    Interest rate risk (continued)

    Although investments in residual income positions have been treated as floating rate investments in the above table, income on these
investments is based on the effective interest method after taking into account historical performance, market indicators and current market
conditions (see Note 2 - Interest income). These effective yield calculations are adjusted periodically to take account of any changes in
underlying assumptions.

    Given the subordinated nature of residual income positions (RIPs) and the fact that many of them do not carry a fixed or stated coupon,
the Group and Company calculate the weighted average rate of the portfolio on the basis of: (i) for investments that are unrated and which
do not have a stated coupon, the gross asset value of the investment multiplied by the interest rate derived from using the effective
interest method (see Note 2 - Interest income); and (ii) for investments that carry a fixed coupon, the net asset value of the investment
after leverage multiplied by the stated coupon. 

    As explained above under market risk, the year-end portfolio consists of two RIPs, which have been fully provided for. As such there is
no further exposure to interest rate risk. As at 31 March 2008 the average effective interest rate was 28.17% (30 September 2007: 23.64%) on
the three RIPs.

    The remaining assets were all floating rate assets, either quarterly or monthly interest paying and the applicable LIBOR is re-set at
each such pay date. 90.41% of these TREAL assets based on par value as at 31 March 2008 (88.21% at 30 September 2007) were financed by
floating rate loans whose interest rates were re-set at dates matching the asset it is financing. Therefore the TREAL portfolio's interest
rate risk was limited to the cash funded assets amounting to US$31.69m as at 31 March 2008 (US$42.66m as at 30 September 2007). Therefore
for every one percent reduction in interest rate would potentially reduce annualised income by US$0.32m on 31 March 2008 assets and US$0.43m
on 30 September 2007 assets. 

    Within TREAL, the early repayment of Aurora B Loan of EUR13m (of which EUR10m was funded by the sub-ordinated note) on 20 March 2008 and
EUR20m from KAMPPI on 21 April 2008 released cash as these were both funded from the sub-ordinated note from TRIO. These were uninvested and
held in Euros to match the original investment by TRIO. The cash was held on overnight or term deposits and the interest income exposed to
interest rate risk. On 13 August 2008 following the sale of the TREAL assets this cash less the transaction cost was available to TRIO. This
has been held in overnight or short-term deposits.

    As at 30 September 2008, the Group has US$51.72m cash (30 September 2007: US$15.1m). This is in placed on overnight or term deposits and
the interest income is exposed to interest rate risk. A 100bps decline in LIBOR or term deposit rate has the effect of reducing income by
US$0.52m annualised (30 September 2007:US$0.15m). As at 30 September 2008, the Company has US$51.72m cash (30 September 2007: US$6.3m). This
is in placed on overnight or term deposits and the interest income is exposed to interest rate risk. A 100bps decline in LIBOR or term
deposit rate has the effect of reducing income by US$0.52m annualised (30 September 2007:US$0.06m).

    Currency risk

    The Group's and Company's financial statements are denominated in US Dollar while investments are made and realised in both US Dollar
and other currencies. Changes in rates of exchange may have an adverse effect on the value, price or income of the investments. A change in
foreign currency exchange rates may adversely impact returns on the Group's and Company's non-US Dollar-denominated investments. The Group's
and Company's principal non-US Dollar currency exposures are to Euros, Pounds Sterling and Swedish Krona but this may change from time to
time.

    The Group's and Company's policy is to finance assets in the same underlying currency as the asset itself and to hedge any currency risk
on a case by case basis and also, where the Investment Manager considers appropriate, on an overall portfolio basis. The Group may bear a
level of currency risk that could otherwise be hedged where it considers that bearing such risks is advisable.


    14    Financial instruments (continued)

    Currency risk (continued)

    As at 30 September 2008 the majority of the Group's assets are held in cash as all securities except for 2 residual income positions
have been sold and loans financing these repaid.

    Group currency profile - 30 September 2008
                                       Total          US$       GBP       EUR       SEK
                                    (in US$)     (in US$)  (in US$)  (in US$)  (in US$)
 Available for sale investments            -            -         -         -         -
 Cash equivalents                 51,718,000   51,498,274   188,137    31,589         -
 Other assets                          6,358        6,358         -         -         -
 Foreign exchange contracts                -            -         -         -         -
 Loans and interest on loans               -            -         -         -         -
 Other liabilities               (6,743,022)  (6,743,022)         -         -         -
                                  44,981,336   44,761,610   188,137    31,589         -

    Group currency profile - 31 March 2008
                                         Total          US$            GBP            EUR           SEK
                                      (in US$)     (in US$)       (in US$)       (in US$)      (in US$)
 Available for sale investments    309,459,404      387,500    118,561,023    174,071,907    16,438,974
 Cash equivalents                   20,166,276    2,867,577         95,831     17,173,263        29,605
 Other assets                        5,770,558      503,804      2,271,971      2,699,558       295,225
 Foreign exchange contracts          (136,500)   47,351,400              -   (47,487,900)             -
 Loans and interest on loans     (302,216,342)            -  (128,234,910)  (156,862,236)  (17,119,196)
 Other liabilities                 (2,122,318)  (2,122,318)              -              -             -
                                    30,921,078   48,987,963    (7,306,085)   (10,405,408)     (355,392)

    Group currency profile - 30 September 2007
                                         Total            US$            GBP            EUR           SEK
                                      (in US$)       (in US$)       (in US$)       (in US$)      (in US$)
 Available for sale investments    568,629,899     80,803,166    235,173,554    216,511,724    36,141,455
 Cash equivalents                   15,107,862     11,537,758      3,080,313        489,791             -
 Other assets                        8,354,726      1,099,712      3,680,948      3,006,203       567,863
 Foreign exchange contracts          (273,514)     42,417,000              -   (42,690,514)             -
 Loans and interest on loans     (605,306,160)  (139,776,652)  (250,163,696)  (178,909,526)  (36,456,286)
 Other liabilities                   (849,588)      (849,588)              -              -             -
                                  (14,336,775)    (4,768,604)    (8,228,881)    (1,592,322)       253,032

    Company currency profile - 30 September 2008
                                       Total          US$       GBP       EUR       SEK
                                    (in US$)     (in US$)  (in US$)  (in US$)  (in US$)
 Investment in subsidiaries*               -            -         -         -         -
 Available for sale investments            -            -         -         -         -
 Cash equivalents                 51,718,000   51,498,274   188,137    31,589         -
 Other assets                          6,358        6,358         -         -         -
 Foreign exchange contracts                -            -         -         -         -
 Other liabilities               (6,743,022)  (6,743,022)         -         -         -
                                  44,981,336   44,761,610   188,137    31,589         -





    14    Financial instruments (continued)

    Currency risk (continued)

    Company currency profile - 31 March 2008
                                       Total          US$       GBP           EUR       SEK
                                    (in US$)     (in US$)  (in US$)      (in US$)  (in US$)
 Investment in subsidiaries*      28,285,419            -         -    28,285,419         -
 Available for sale investments      387,500      387,500         -             -         -
 Cash and cash equivalents         3,983,129    2,867,576    92,540     1,023,013         -
 Other assets                        503,805      503,805         -             -         -
 Foreign exchange contracts        (136,500)   47,351,400         -  (47,487,900)         -
 Other liabilities               (2,102,272)  (2,102,272)         -             -         -
                                  30,921,081   49,008,009    92,540  (18,179,468)         -

    Company currency profile - 30 September 2007
                                      Total         US$       GBP           EUR       SEK
                                   (in US$)    (in US$)  (in US$)      (in US$)  (in US$)
 Investment in subsidiaries*     40,525,339           -    22,205    40,503,134         -
 Available for sale investments   1,012,659   1,012,659         -             -         -
 Cash and cash equivalents        6,343,272   5,881,065   274,995       187,212         -
 Other assets                       791,295     785,036         -         6,259         -
 Foreign exchange contracts       (273,514)  42,417,000         -  (42,690,514)         -
 Other liabilities                (477,424)   (477,424)         -             -         -
                                 47,921,627  49,618,336   297,200   (1,993,909)         -
    * The investment in subsidiaries is subject to underlying currency risk based on its investments and loan facility (as described in note
13).

    The Group hedged its exposure to foreign exchange movements with the use of forward foreign exchange contracts. There are no unsettled
foreign exchange contracts as at 30 September 2008. (Unsettled contracts at 30 September 2007 are disclosed in note 15). As at 31 March 2008
there was an unsettled foreign exchange contract as below:

 Maturity Date      Amount Bought   Amount Sold     Unrealised Gain
                                                    US$
 26 October 2007    US$ 47,351,400  EUR 30,000,000        (136,500)
                                                          (136,500)

    As at 31 March 2008 and 30 September 2007, the entire floating rate asset portfolio was financed by loans or cash in the same underlying
currency as the assets. Hence currency risk is minimal and the only exposure is mark to market changes in price fluctuations of the asset.
This arises, as loans are the original purchase price whereas the market valuations are a function of the broker marks. Whilst there is no
effect on the net asset value, a 5% decline in non-USD denominated asset versus the base currency will crystallise an unrealised loss in the
income statement of US$0.4m and a corresponding increase in movement of reserves by US$0.4m (30 September 2007: US$1.1m).

    The EUR30m Subordinated Note in TREAL was held in Euro denominated assets, including cash. The Group had hedged its exposure to currency
risk in respect of this by forward foreign exchange contracts as disclosed in Note 15. Whilst there was no net currency exposure, it would
affect the USD cash balances in order to finance the hedge and any collateral margin requirements. A 5% appreciation of the Euro would have
reduced available working capital by US$2.11m.




    14    Financial instruments (continued)

    Credit and default risk
    The Group and Company are subject to credit risk with respect to its investments. The Group and Company seek to mitigate credit risk by
actively monitoring its portfolio of investments and the underlying credit quality of its holdings. The Group and Company seek to minimise
credit risk further by ensuring its investment portfolio is diversified by asset type, geography, industry and issuer or borrower. The Group
and Company do not generally intend to undertake any credit hedging activities other than from time to time entering into transactions to
hedge 
    their credit exposure in relation to individual investments.

    Assets subject to credit risk 
                                 30 September 2008  31 March 2008  30 September 2007
                                          (in US$)       (in US$)           (in US$)

 Available for sale investments                  -    309,459,404        568,629,899
 Cash equivalents                       51,718,000     20,166,276         15,107,862

    All the cash was held by financial institutions with a long-term credit rating AA- and A+ and short-term credit rating A-1+ and A-1.

    The credit ratings of the available for sale assets by Moody's was as follows:

 Percentage of available for sale             A2  Baa1  Baa2  Baa3  Ba2  Unrated
 investments
 As at 31 March 2008                           -     -     -     -    -     100%
 As at 30 September 2007                      5%    1%   14%    7%   4%      69%
 As at 30 September 2007 excluding Lions       -     -     -     -    -     100%
 Hill

    The Group's and Company's hedging transactions using derivative instruments and any credit default or total return swap arrangements
entered into by the Group or Company or any of its funding vehicles may involve certain additional risks, including counterparty credit
risk. The Group and Company enters into derivative arrangements with counterparties that are major financial institutions with investment
grade credit ratings and with which the Investment Manager is familiar. As a result, the Group and Company do not anticipate that any such
counterparties will fail to meet their obligations.

    As at 30 September 2008 the Company had only invested in 2 RIPs (30 September 2007:3), which have been fully written down to zero.

    The Group had hedged its credit exposure to each of the loans matching the individual investments within the TREAL floating rate asset
portfolio by Total Return Swaps. The hedge was provided against the outstanding value of TREAL loans as at 31 March 2008 US$298.9m (30
September 2007:US$322.6m). If TREAL, the funding vehicle, defaulted on interest or repayment of a loan, any cash including any subordination
amounts within the vehicle would be first used to repay the loan and the balance satisfied by the Total Return Swap. Accordingly the maximum
loss that is borne by the Company would have been its EUR30m subordination in TREAL. 




    14    Financial instruments (continued)

    Residual interest risk
    Some of the Group's and Company's investments consist of interests in and/or economic exposures to limited recourse securities that are
subordinated in right of payment and ranked junior to other securities that are secured by or represent ownership in the same pool of
assets. In the event of default by an issuer in relation to such investments, holders of the issuer's more senior securities are entitled to
payments in priority to the Group and Company. Some of the Group's and Company's investments also have structural features that divert
payments of interest and/or principal to more senior classes of securities secured by or representing ownership in the same pool of assets
when the delinquency or loss experience of the pool exceeds certain levels. 

    This may lead to interruptions in the income stream that the Group and Company anticipate receiving from their investment portfolio,
which may lead to the Group and Company having less income to distribute to Shareholders.

    Although holders of asset-backed securities generally have the benefit of first ranking security (or other priority rights) over any
collateral, control of the timing and manner of the disposal of such collateral upon a default typically will devolve to the holders of the
senior class of securities outstanding. There can be no assurance that the proceeds of any such sale of collateral will be adequate to repay
in full the Group's and Company's investments.

    As at 30 September 2008, the market value of RIPs was US$Nil (30 September 2007: US$1.01m). To the extent that no further distributions
are made, this is the maximum future loss to the Group in income and net asset value from further impairments on these assets.

    Liquidity risk
    The market for subordinated asset-backed securities, including real estate loans and residual income positions, is illiquid.
Accordingly, many of the Group's investments are illiquid. In addition, investments that the Group and Company purchase in privately
negotiated (also called "over the counter" or "OTC") transactions may not be registered under relevant securities laws or otherwise may not
be freely tradable, resulting in restrictions on their transfer, sale, pledge or other disposition except in a transaction that is exempt
from the registration requirements of, or is otherwise in accordance with, those laws. As a result of this illiquidity, the Group's and
Company's ability to vary its portfolio in a timely fashion and to receive a fair price in response to changes in economic and other
conditions may be limited.

    Furthermore, where the Group acquires investments for which there is not a readily available market, the Group's ability to deal in any
such investment or obtain reliable information about the value of such investment or risks to which such investment is exposed may be
limited.

    Maturity profile Group - 30 September 2008
                                              Within one year  Within one year  One to five years  One to five years  Over five years
                                       Total            Fixed         Floating              Fixed           Floating         Floating
                                         US$              US$              US$                US$                US$              US$

 Available for sale investments            -                -                -                  -                  -                -
 Cash equivalents                 51,718,000                -       51,718,000                  -                  -                -
 Loans and interest                        -                -                -                  -                  -                -
 Other assets and other          (6,736,664)                -     (6,736,664)                   -                  -                -
 liabilities
                                  44,981,336                -       44,981,336                  -                  -                -




    14    Financial instruments (continued)

    Liquidity risk (continued)

    Maturity profile Group - 31 March 2008
                                                Within one year  Within one year  One to five years  One to five years  Over five years
                                         Total            Fixed         Floating              Fixed           Floating         Floating
                                           US$              US$              US$                US$                US$              US$

 Available for sale investments    309,459,404                -       32,106,725                  -        199,487,836       77,864,843
 Cash equivalents                   20,166,276                -       20,166,276                  -                  -                -
 Loans and interest *            (302,216,342)      (3,330,287)                -                  -                  -    (298,886,055)
 Other assets and other              3,511,740                -        3,511,740                  -                  -                -
 liabilities
                                    30,921,078      (3,330,287)       55,784,741                  -        199,487,836    (221,021,212)

    * Loans and interest includes interest payable to 31 March 2008. The corresponding contractual undiscounted cash flows for loans and
interest on loans would be as follows:

                                     Within one year  Within one year  One to five years  One to five years  Over five years
                              Total            Fixed         Floating              Fixed           Floating         Floating
                                US$              US$              US$                US$                US$              US$
 Loans and interest   (361,765,935)                -     (23,473,360)                  -      (256,009,620)     (82,282,955)

    Maturity profile Group - 30 September 2007
                                                Within one year  Within one year  One to five years  One to five years  Over five years
                                         Total            Fixed         Floating              Fixed           Floating         Floating
                                           US$              US$              US$                US$                US$              US$

 Available for sale investments    568,629,899                -        3,735,736                  -        358,685,596      206,208,567
 Cash equivalents                   15,107,862                -       15,107,862                  -                  -                -
 Loans and interest **           (605,306,160)      (7,321,454)                -                  -                  -    (597,984,706)
 Other assets and other              7,231,624                -        7,231,624                  -                  -                -
 liabilities
                                  (14,336,775)      (7,321,454)       26,075,222                  -        358,685,596    (391,776,139)

    ** Loans and interest includes interest payable to 30 September 2007. The corresponding contractual undiscounted cash flows for loans
and interest on loans would be as follows:

                                     Within one year  Within one year  One to five years  One to five years  Over five years
                              Total            Fixed         Floating              Fixed           Floating         Floating
                                US$              US$              US$                US$                US$              US$
 Loans and interest   (771,997,031)                -    (128,078,934)                  -      (419,027,802)    (224,890,295)





    14    Financial instruments (continued)

    Liquidity risk (continued)

    Maturity profile Company - 30 September 2008
                                              Within one year  Within one year  One to five years  One to five years  Over five years
                                       Total            Fixed         Floating              Fixed           Floating         Floating
                                         US$              US$              US$                US$                US$              US$

 Investment in subsidiaries                -                -                -                  -                  -                -
 Available for sale investments            -                -                -                  -                  -                -
 Cash equivalents                 51,718,000                -       51,718,000                  -                  -                -
 Other assets and other          (6,736,664)                -      (6,736,664)                  -                  -                -
 liabilities
                                  44,981,336                -       44,981,336                  -                  -                -

    Maturity profile Company - 31 March 2008
                                              Within one year  Within one year  One to five years  One to five years  Over five years
                                       Total            Fixed         Floating              Fixed           Floating         Floating
                                         US$              US$              US$                US$                US$              US$

 Investment in subsidiaries       28,285,419                -       28,285,419                  -                  -                -
 Available for sale investments      387,500                -          387,500                  -                  -                -
 Cash equivalents                  3,983,129                -        3,983,129                  -                  -                -
 Other assets and other          (1,734,967)                -      (1,734,967)                  -                  -                -
 liabilities
                                  30,921,081                -       30,921,081                  -                  -                -


    Maturity profile Company - 30 September 2007
                                             Within one year  Within one year  One to five years  One to five years  Over five years
                                      Total            Fixed         Floating              Fixed           Floating         Floating
                                        US$              US$              US$                US$                US$              US$

 Investment in subsidiaries      40,525,339                -       40,525,339                  -                  -                -
 Available for sale investments   1,012,659                -          212,659                  -            800,000                -
 Cash equivalents                 6,343,272                -        6,343,272                  -                  -                -
 Other assets and other              40,357                -           40,357                  -                  -                -
 liabilities
                                 47,921,627                -       47,121,627                  -            800,000                -






    14    Financial instruments (continued)

    Liquidity risk (continued)

    As described in note 10, following credit agency downgrades of certain of Lions Hill's assets, Lions Hill was in breach of the loan
covenants in its facility agreement. It entered a standstill arrangement with its lender and as part of that arrangement was unable to make
distributions to TRIO and no assets could be bought or sold without the lender's authority. This arrangement remained in place until 19
January 2008. At that time the liabilities of Lions Hill were in excess of its assets. Following the breaches of funding covenants by Lions
Hill, on 21 January 2008 its lenders appointed administrators and receivers. The continued deterioration in the US asset backed securities
market and likelihood of future defaults on some of the assets held, Lions Hill would not be able to repay its obligations in the
foreseeable future. Consequently TRIO was unlikely to regain control of Lions Hill and TRIO had recognised the full extent of its investment
in Lions Hill. As at 30 September 2007 however, as the losses of Lions Hill attributable to the Company were limited to the value of the Company's participation notes in Lions Hill, the Directors were
of the opinion that the Group and Company had adequate liquidity to continue in operational existence for the foreseeable future.

    The Group's need to continue its investment activities in the short term was mitigated by the long term funding in place, with a
remaining life of 8.06 years as at 11 August 2008, when the TREAL portfolio was sold (9.21 years as at 30 September 2007), whilst the
average asset life was 3.61 years (4.89 years as at 30 September 2007). Accordingly the Group was able to finance its existing investments
through their lives. 

    15    Other liabilities

                                                    Group                Group
                                        30 September 2008    30 September 2007
                                                      US$                  US$
                                                           
 Derivative financial assets -                             
 unrealised loss on forward foreign                     -              273,514
 exchange contracts                                        
 Investment management and incentive                    -              127,484
 fee payable                                               
 Administration fee payable                        24,720               77,200
 Custodian fee payable                              2,120                7,951
 Audit fees payable                                95,000              100,000
 Directors fee payable                             35,000               70,320
 Legal fees payable                                 1,532              129,017
 Tax fees                                           9,000               12,000
 Provision for termination and                  6,550,000                    -
 liquidation costs (Note 3, 4 and 19)                      
 Accrued expenses                                  25,650              167,932
                                                6,743,022              965,418














    15    Other liabilities (continued)

                                                  Company              Company
                                        30 September 2008    30 September 2007
                                                      US$                  US$
                                                           
 Derivative financial assets -                             
 unrealised loss on forward foreign                     -              273,514
 exchange contracts                                        
 Investment management and incentive                    -              127,484
 fee payable                                               
 Audit fees payable                                95,000               80,000
 Administration fee payable                        24,720               40,000
 Directors fee payable                             35,000               47,500
 Legal fees payable                                 1,532                9,018
 Custodian fee payable                              2,120                4,000
 Tax fees                                           9,000                3,000
 Provision for termination and                  6,550,000                    -
 liquidation costs (Note 3, 4 and 19)                      
 Accrued expenses                                  25,650              166,422
                                                6,743,022              750,938

    The Directors consider the carrying amount of other liabilities approximate their fair value. 

    There were no unsettled forward foreign exchange contracts in the Group and Company as at 30 September 2008. The following forward
foreign exchange contracts in the Group and Company were unsettled at 30 September 2007:

 Maturity Date      Amount Bought   Amount Sold     Unrealised Gain
                                                    US$
 26 October 2007    US$ 42,417,000  EUR 30,000,000        (273,514)
                                                          (273,514)

    16    Share capital

    The capital structure of the Company consists of cash and cash equivalents and equity attributable to equity holders, comprising issued
share capital, capital redemption reserve, share premium account, other reserve and retained earnings as disclosed on the balance sheet. The
Company does not have any externally imposed capital requirements. At 30 September 2008 the Company had capital of US$44,981,336 (2007:
US$47,921,627).

    The Group's investment objective was to provide stable returns to shareholders in the form of semi-annual dividends and the potential
for capital growth as described in note 1. Following the sale of the realisable assets of the Group on 11 August 2008 the Group has ceased
new investment and the investment objective is not longer being pursued.

    The risks managed by the Group's investment Manager are described in note 14.















    16    Share capital (continued)

    Authorised share capital
                                       30 September 2008               30 September 2007
                                 Number of Ordinary Shares  US$  Number of Ordinary Shares  US$

 Ordinary shares of no par                       Unlimited    -                  Unlimited    -
 value each

 Issued and fully paid
                                 Number of Ordinary Shares  US$  Number of Ordinary Shares  US$
 Balance at start of period                      8,000,000    -                 10,000,000    -
 Share consolidation during the                          -    -                (2,000,000)    -
 period
 Balance at end of period                        8,000,000    -                  8,000,000    -

    On 16 August 2007, the directors proposed the payment of a special interim dividend of US$11,000,000 (equivalent to US$1.10 per existing
ordinary share) out of the other reserve account. Following this, at an Extraordinary General Meeting of the Company held on 10 September
2007, a share consolidation was approved to reduce the number of existing Ordinary Shares by 20 per cent with the result that shareholders
receive four new Ordinary Shares for every five existing Ordinary Shares held on 11 September 2007.

    The Company has authority to buy back up to 14.99% of the issued share capital until the next Annual General Meeting.  

    17    Share premium account and other reserve

 Share premium account             Group and Company    Group and Company
                                   30 September 2008    30 September 2007
                                                 US$                  US$
                                                      
 Balance at start and end of year                  -                    -

 Other reserve account                  Group and Company    Group and Company
                                        30 September 2008    30 September 2007
                                                      US$                  US$
                                                           
 Balance at start of year                      37,622,539           92,251,670
 Special distribution to ordinary                       -         (11,000,000)
 shareholders                                              
 Transfer to accumulated                                -         (43,629,131)
 profits/(losses)                                          
 Balance at end of year                        37,622,539           37,622,539

    The Company passed a special resolution cancelling the amount standing to the credit of its share premium account immediately following
admission to the London Stock Exchange. In accordance with The Companies (Guernsey) Law, 1994 (as amended) (the "Companies Law"), the
Directors applied to the Royal Court in Guernsey for an order confirming such cancellation of the share premium account following admission.
The other reserve created on cancellation is available as distributable profits to be used for all purposes permitted by the Companies Law,
including the buy back of Ordinary Shares and the payment of dividends.


    18    Notes to cash flow statement

    The following is note to the consolidated cash flow statement
                                                Group                        Group
                                        Year ended 30      Year ended 30 September
                                       September 2008                         2007
                                                  US$                          US$
 Net loss                                 (1,993,454)                 (28,419,771)
 Adjustments for:                                      
 Realised loss/(gain) on                    1,098,837                  (7,316,315)
 investments                                           
 Realised foreign exchange               (24,112,057)                            -
 gains on investments                                  
 Realised gain on                        (13,168,767)                            -
 deconsolidation of Lions Hill                         
 Amortisation of                            (716,599)                    1,293,669
 (premium)/discount (note 11)                          
 Impairment charges (note 7,11)            12,564,675                   42,762,196
 Unrealised foreign exchange               33,258,945                 (34,627,246)
 losses/(gains) on investments                         
 (note 11)                                             
 Interest expense on loans                 20,338,288                   32,054,094
 Realised foreign exchange                (5,294,586)                            -
 gains on deconsolidation of                           
 Lions Hill                                            
 Unrealised (gains)/losses on               (273,514)                      425,394
 derivatives (note 15)                                 
                                           21,701,768                    6,172,021
 Purchases of investments (note                     -                (397,364,071)
 11)                                                   
 Pay downs and sale of                    373,494,865                  243,913,675
 investments (note 11)                                 
                                          373,494,865                (153,450,396)
                                                       
 Decrease/(increase) in                     6,012,809                  (5,026,829)
 receivables                                           
 Increase/(decrease) in                     6,217,771                    (542,614)
 payables                                              
                                           12,230,580                  (5,569,443)
 Net cash inflow/(outflow) from           407,427,213                (152,847,818)
 operating activities                                  

    The following is note to the Company cash flow statement
                                                 Company                         Company
                                 Year ended 30 September    Year ended 30 September 2007
                                                    2008  
                                                     US$                             US$
 Net profit/(loss)                             7,007,925                    (30,342,206)
 Adjustments for:                                         
 Realised gains on investments               (4,291,771)                               -
 Realised foreign exchange                   (5,188,759)                               -
 gains on investments                                     
 Impairment charges (note 7,11)                1,504,502                      42,836,947
 Amortisation of discount (note                  337,242                       2,764,348
 11)                                                      
 Unrealised (gains)/losses on                  (273,514)                         409,191
 derivatives (note 15)                                    
                                               (904,375)                      15,668,280
 Purchases of investments (note                        -                    (60,339,161)
 10 & 11)                                                 
 Pay down and sale of                         42,748,568                      53,109,421
 investments (note 10 & 11)                               
                                              42,748,568                     (7,229,740)
                                                          
 Decrease/(increase) in                          784,937                       (237,567)
 receivables                                              
 Increase/(decrease) in                        6,265,598                       (679,571)
 payables                                                 
                                               7,050,535                       (917,138)
                                                          
 Net cash inflow from operating               48,894,728                       7,521,402
 activities                                               

    Purchases and pay downs or sales of investments are considered to be operating activities of the Group, given its purpose, rather than
investing activities. 


    19    Material agreements and related parties

    Investment Manager
    The Group is party to an Investment Management Agreement with Wharton Asset Management Bermuda Limited, dated 31 May 2006, pursuant to
which the Group has appointed the Investment Manager to manage the assets and liabilities and obligations of the Group in accordance with,
inter alia, the investment objective and policy of the Group, subject to the overall supervision and direction of the Board of Directors of
the Group. On TRIO relinquishing control of Lions Hill on appointment of receivers and administrators on 21 January 2008, the Investment
Manager no longer manages the assets and liabilities of Lions Hill.

    The Group pays the Investment Manager a Management Fee and Incentive Fee (see Notes 4 and 15).

    There have been no material changes in the related party transactions described in the last annual report, other than provisions made
for the early termination of the investment management agreement amounting to US$5.75m. In consideration for the early termination of the
Investment Management Agreement (conditional upon the approval of the shareholders of the Company) by an Agreement dated 17 November 2008
between the Company and the Investment Manager, the Company shall pay the Investment Manager the sum of US$5.75m in full and final
settlement of all fees and expenses due to the Investment Manager by the Company and in full settlement of all compensation due to the
Investment Manager in respect of such termination, including any indemnification of the Investment Manager in respect of any claims,
actions, losses, damages, liabilities and demands of any nature whatsoever in respect of or arising out of the termination of the Investment
Management Agreement

    Management Fee
    The Investment Manager is entitled to receive from the Group an annual management fee of 1.75 per cent. of the gross equity of the Group
(the "Management Fee") calculated and payable monthly in arrears. For these purposes, gross equity means the aggregate gross proceeds to the
Group of all issues of shares in the capital of the Group (less any capital distribution made by the Group). The Management Fee charge for
the year was US$1,550,665 (2007: US$1,724,915), of which US$Nil (2007: US$127,484) was outstanding at the year-end. 

    Investments in other entities managed by the Investment Manager
    As at 30 September 2008, the Company held investments with a total value of US$Nil (2007: US$998,450) in the following entities, which
are managed by the Investment Manager: G Square Finance 2006-1 Limited and G Square Finance Limited. 

    Incentive Fee
    The Investment Manager is also entitled to receive an incentive compensation fee (the "Incentive Fee") in respect of each incentive
period that will be paid quarterly in arrears. An incentive period will comprise each successive quarter, except the first such period shall
be the period from Admission to 30 September 2006.

    The Incentive Fee for each incentive period will be an amount equivalent to 25 per cent. of the amount by which A exceeds (B * C)
where:

 A =   the Group's consolidated net income excluding any realised and
       unrealised gains or losses (but only to the extent they have not been
       deducted in a prior incentive period) as shown in the Group's latest
       consolidated management accounts for the relevant quarter, before
       payment of any Incentive Fee;
 B =   the time-weighed gross equity of the Group; and
 C =   one per cent. plus one quarter of three month LIBOR (as at the
       beginning of the relevant incentive period).

    Where there is a difference between the Group's consolidated net income for the relevant incentive period as shown in the Group's
quarterly management accounts compared to the Group's audited annual accounts, the consolidated net income for the relevant incentive period
as reflected in the audited accounts shall prevail. Any excess Incentive Fee paid or any additional Incentive Fee due in respect of any
incentive period attributable to any such difference will be repaid by or paid to the Investment Manager, as the case may be. The Incentive
Fee charge for the year was US$nil (2007: US$745,932), of which US$nil (2007: US$nil) was outstanding at the year-end.  

    19    Material agreements and related parties (continued)

    Administration Fee
    The Group is party to an Administration Agreement with Kleinwort Benson (Channel Islands) Fund Services Limited dated 31 May 2006,
pursuant to which the Administrator has agreed to provide for the day-to-day administration of the Group, including maintenance of accounts
and provision of a company secretary. For the provision of services under the Administration Agreement, the Administrator is entitled to
receive fees, which will be agreed in writing from time to time between the Group and the Administrator. The initial fee has been agreed to
be 0.125 per cent. per annum of the Group's gross assets and 0.025 per cent. of Lions Hill's gross assets (subject in each case to a minimum
monthly fee of US$10,000), plus certain additional charges for ancillary services. The Administration Fee for the year was US$206,741 (2007:
US$353,681), of which US$24,720 (2007: US$77,200) was outstanding at the year-end.

    Custodian Fee
    The Group is party to a Custody Agreement with Investors Trust & Custodial Services (Ireland) Limited dated 31 May 2006, pursuant to
which the Custodian has agreed to be responsible for providing custodial services which include being global custodian of all the
investments and property of the Company and its subsidiaries and SPVs, the safekeeping and registration of property for the Group and the
settlement of all transactions relating to the property. For the provision of services under the Custody Agreement, the Custodian is
entitled to receive a fee, which will be agreed in writing from time to time between the Group and the Custodian. The fee during the period
has been 0.005 per cent. per annum of DTCC deliverable gross assets and 0.015 per cent. per annum of Euroclear deliverable gross assets plus
certain transaction fees. 

    On 2 July 2007, State Street Corporation completed the acquisition of Investors Financial Services Corporation, the parent company of
the Sub-Administrator and Custodian.

    Investment Manager Warrants
    In recognition of the promoter role and indemnification of certain costs, liabilities and losses incurred by the affiliate of the
Investment Manager, Trident Capital Limited, in raising capital for the Company, the Company granted on 31 May 2006 warrants to that
affiliate. The warrants represent the right to acquire 1,000,000 Shares, being 10 per cent of the number of Offer Shares, at an exercise
price equal to the Offer Price. The warrants are fully vested and immediately exercisable on the date of admission to the London Stock
Exchange and will remain exercisable until the 10th anniversary of that date. The Company may grant further warrants in connection with any
future offering of Shares. Such warrants, if any will represent the right to acquire Shares equal to no more than 10 per cent of the number
of Shares being offered in respect of that future offering and will have an exercise price equal to the offer price for that offering. As at
the date of admission, the aggregate fair value of the warrants granted at the time of the Initial Public Offering using a Black-Scholes valuation model was US$350,872 (reflecting a valuation of US$0.35
per warrant). This amount has been treated as a cost of the Initial Public Offering and deducted from share premium and credited to the
capital reserve.

    Subordinated Note
    Carmen General Partner Limited, a limited liability company incorporated under the laws of England and Wales acting in its capacity as
general partner of the Carmen Limited Partnership (collectively, "Carmen"), entered into a note purchase agreement dated 2 February 2007
with TREAL.  Pursuant to the note purchase agreement, Carmen acquired EUR10,000,000 in principal amount of participating term notes issued
by TREAL for a cash consideration of EUR10,000,000. On 13 August 2007, EUR2,000,000 participation notes were redeemed for a cash
consideration of EUR2,000,000 and on 5 September 2007; the remaining EUR8,000,000 participation notes were assigned to TRIO Finance Limited
for a cash consideration of EUR8,000,000. TRIO Finance Limited subsequently redeemed these participation notes on 6 September 2007.






    20. Exchange rates

    The following exchange rates (against the US$) were used to convert the investments and other assets and liabilities denominated in
currencies other than US$:
                 30 September 2008  30 September 2007
 Euro                 1.40465            1.42215
 Pound Sterling       1.78245            2.03735
 Swedish Krona          N/A              6.46905

    21 Post Balance Sheet events

    There have been no further post balance sheet events other than the sale of the two remaining RIPs for a consideration of US$150.

    22 Approval of financial statements

    The Board of Directors approved these financial statements on 17 November 2008.



This information is provided by RNS
The company news service from the London Stock Exchange
 
  END 
 
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