Preliminary Results for the year ended 31 Aug 2012

For Immediate Release 27 February 2013

Elephant Capital plc

Preliminary results for the year ended 31 August 2012

Elephant Capital plc (ECAP), the India focused Private Equity Company announces its preliminary results for the year ended 31 August 2012.

Key Points:

·; Net Asset value per share 44p (29 February 2012: 49p; 31 August 2011: 51p)

·; Investments in EIH and ClinTec were realised following 31 August 2012

·; Proposal to return up to GBP 9 million to shareholders by way of tender offer at 39p per share, with tender offer documents accompanying Annual Report to be posted on 27 February 2013

Commenting, Chairman Vikram Lall, said:

"Elephant Capital continued to face challenges with some of its investments during the year. We are now proposing to return up to GBP 9 million to shareholders. Our focus remains on returning further capital to shareholders, though given the relative illiquidity of the remaining portfolio, this may take some time to achieve."

For further information please contact:

Chairman's Statement

Results

As at 31 August 2012, NAV was GBP 21 million or 44p per share; compared to GBP 23.5 million or 49p per share as at 29 February 2012.

Unlisted Investment Portfolio

In December 2012, the Company divested its entire holding in ClinTec Luxembourg SA ("ClinTec") for GBP 3 million through a Share Transfer Agreement and a Share Buyback Agreement, this being GBP 1.9 million above its carried value as at 29 February 2012 and GBP 5 million below the investment cost of GBP 8 million.

Efforts continue to realise Elephant Capital's investment in Global Cricket Ventures, Mauritius ("GCV"). The investment in GCV has been valued at GBP 1.2 million based on the estimated net asset value of GCV as attributable to Elephant Capital's shareholding as at 31 August 2012.

Amar Chitra Katha Private Limited ("ACK") has not performed according to its budget and will shortly be embarking on a rights issue. As this has not happened yet, Elephant Capital's stake in ACK has been valued at GBP 3.7 million at 31 August 2012, however we expect this will have to be adjusted downwards in the near future due to the current performance of the company and in anticipation of a discounted rights issue.

Air Works India (Engineering) Private Limited ("Air Works") has been performing satisfactorily. Air Works successfully raised a further GBP 9.6 million of equity to finance its future growth and make an acquisition. The Company did not participate in this round of financing. Elephant Capital's stake in Air Works was valued at GBP 2.5 million on 31 August 2012.

Full details of the Company's unlisted investments are included in the Investment Manager's Review.

Listed Investment Portfolio

The Indian stock markets have been very volatile during the year finishing up circa 5% by the end of the period. All the listed investments EIH Limited ("EIH"), Mahindra Forgings Limited ("Mahindra Forgings") and Nitco Limited ("Nitco") underperformed during the period.

We have continued our efforts to realise our listed portfolio but have been hampered by poor liquidity. Realisations in the year ended 31 August 2012 were minimal at circa GBP 0.17 million. Since the year end we have, as announced, sold our entire holding in EIH for proceeds of GBP 4.71 million.

Full details of the Company's listed investments are included in the Investment Manager's Review.

Further Return of Capital

As previously announced Elephant Capital is proposing to return capital to its shareholders following the sale of EIH and the settlement of its claim against ClinTec. It is proposed to return a maximum of GBP 9 million to shareholders at a price of 39 pence per share. Full details of the terms of the tender offer are set out in the circular to shareholders which is enclosed with the annual report. The notice and agenda for the Company's annual general meeting to be held on 22 March 2013 is incorporated within the circular to shareholders.

Board changes and cost reduction plan

James Norman Hauslein has expressed his wish to retire from the Board at the forthcoming AGM. The board would like to thank James for his incisive and wise counsel during his tenure as a director.

Following the proposed tender offer the Board proposes to implement cost reductions to bring operating costs down to a level more appropriate to the fund's reduced asset levels. Details of the proposed cost reductions will be announced when the plan is finalised.

Strategy

We will continue our efforts to realise cash from the disposal of our remaining investment portfolio, balancing the timing of disposal with realisation proceeds that we believe to be in the interests of shareholders. Given the illiquidity of our portfolio further capital returns to shareholders may take some time to achieve.

Vikram Lall

26February 2013

Investment Manager's Review

Introduction

During the period Elephant Capital plc ("Elephant Capital" or the "Company") made no new investments.

Elephant Capital made investments via its Mauritian based fund vehicles Tusk Investments 1 Limited and Tusk Investments 2 Limited (individually the "Fund", collectively the "Funds") into businesses that are established or operating primarily in India.

The Funds are managed by Elephant Capital LLP (the "Investment Manager" or "Elephant"), a limited liability partnership which in turn is advised by Elephant India Advisors Private Limited (the "Advisor"), of which the senior executives in India are all members.

The Investment Manager and the Advisor's investment team, led by Gaurav Burman and Mohit Burman, include all the senior executives of the Advisor, all of whom have extensive experience within the private equity and the financial services industry.

Investment strategy

The Company was established to execute a value based strategy in both public and private businesses, building a concentrated portfolio of investments in which the Investment Manager can act as a catalyst for change and value creation.

As the Company has previously announced Elephant Capital will no longer be making any new investments and has adopted a policy of managing and realising its current portfolio and actively looking to return cash to its shareholders.

The Company executed a tender offer amounting to GBP 0.56 million last year and following the recent disposals of EIH and ClinTec proposes a further tender offer, the details of which are set out in the shareholders circular attached to this report.

Investment activity

During the six month period to 31 August 2012, the Investment Manager made no new investments. The focus was on managing the existing portfolio and trying to create liquidity to return cash to the shareholders.

The Investment Manager spent a great deal of time on pursuing a warranty claim against the Founders of ClinTec as a result of the significant continued underperformance of the business against targets and forecasts set out in the share purchase agreement. This matter was brought to a conclusion when Elephant Capital divested its entire shareholding in ClinTec Luxembourg SA for GBP 3 million through a Share Transfer Agreement and a Share Buyback Agreement on 13 December 2012.

The Investment Manager continues to focus on helping GCV pursue it claims for the wrongful termination of its distribution agreement against both World Sports Group (WSG) and the Board of Control for Cricket in India (BCCI), while in parallel negotiating an exit for Elephant Capital from this investment.

After the Company's year-end, on 30 October 2012, Obopay entered into a merger agreement with OBP Investments, OBP Investments Inc., Obopay Inc. and representatives of Obopay's stakeholders. Unfortunately, the value ascribed to Obopay meant that only the Series G investors in Obopay saw any value for their shares and all the other classes of shares were cancelled and extinguished without any conversion or payment. Elephant Capital was an investor in the Series C and Series D preferred stock, which as a result of this merger have been valued at Nil.

Post year end, on the 10 September 2012, Elephant Capital sold its remaining holding in EIH Ltd. for an aggregate consideration of GBP 4.71 million. The sale resulted in a realised loss of GBP 2.16 million (being the excess of the original cost of GBP 6.87 million over the sale proceeds of GBP 4.71 million).

Given this activity Elephant Capital now holds only five investments, two listed; Mahindra Forgings and Nitco, and three unlisted, GCV, Air Works, and ACK. The Investment Manager is looking for ways to realise the remaining listed investments and GCV in the shortest time frame possible and will then focus on finding ways to realise ACK and Air Works over the medium term as these businesses mature. No further investments are envisaged, save for a potential participation in the anticipated Rights Issue which may be called by ACK.

Given the reduced portfolio the Investment Manager is in discussions with the Board to find a way in which the portfolio can be managed in a more cost effective manner.

Portfolio Review

Air Works India (Engineering) Private Limited

Air Works is a leading independent provider of aviation MRO (maintenance, repair and overhaul) services in India. The MRO market in India has experienced rapid growth in recent years, with increasing demand for new aircraft driven by demand from both the commercial and the business aviation sectors.

Founded in 1951, Air Works has successfully transformed itself from a family run business focused on providing maintenance services to business aircraft, into a professionally managed organisation providing a full suite of services to business as well as commercial aircraft in India, the UK, the Middle East and South East Asia. The company has a first mover advantage in the domestic market and has built up strong relationships with aircraft OEM's (original equipment manufacturers), including Gulfstream, Bombardier, Honeywell and AgustaWestland.

In May 2011, Elephant Capital invested GBP 2.5 million, for a 4.8% stake in Air Works. The company acquired the MRO business of an established competitor, InterGlobe General Aviation ("IGGA") during the same time as the investment by Elephant Capital. In November 2011, an additional GBP 0.5 million was invested for a 0.7% stake in the company on a fully diluted basis, as the second tranche to the initial funding.

The company has been performing satisfactorily. Post the reporting period Air Works announced that they had raised a further GBP 9.6 million at the same valuation as the last round of financing, the funds have been used to finance a further acquisition and pay down some debt.

Amar Chitra Katha Private Limited

ACK is one of the leading children's media companies in India, with a catalogue of over 750 print and digital products and 25 major (and 50+ minor) proprietary characters with India-wide recognition. ACK's origins are in children's books and comics, with "Amar Chitra Katha", the number one children's comic book series dating back to 1967. Other key brands include Tinkle, the number one English magazine for children.

In recent years, ACK has sought to diversify its product offering to digital media platforms including films, TV, online, mobile, and other new media platforms. The company's focus areas include creating new content and merchandise and expanding e-commerce (direct to consumer and indirect channels). The Investment Manager has been a proponent of focusing on the core values of the business and crafting a strategy that will allow the company to take its unique and rich library to a larger audience using a digital distribution strategy and upgrading its products to build a larger print business. The new management team led by Vijay Sampath has been working hard to execute the company's growth strategy.

Elephant Capital invested GBP 3.2 million in ACK in a primary transaction, in June 2010. In April 2011, it announced a further investment of GBP 0.9 million in a second funding round, led by Future Ventures India Limited (FVIL). Elephant Capital's stake in ACK was 22% post this investment. ACK subsequently purchased back 70,457 of its own shares representing 15 % of existing paid up capital of the company, at the purchase price FVIL and Elephant Capital paid in the second round. Neither Elephant Capital nor its co-investors participated in this buy back and hence Elephant's shareholding in the business has increased to 26%.

During the year ACK's management team have been focused on restructuring the business to focus on its core. The management were doing a good job and ACK was tracking on budget save for a very expensive and with the benefit of hindsight, ill-fated decision to launch an animated film. While the Board was assured that the potential loss from this film would be managed by finding partners to bear some of the costs and risks, this did not happen and the business has had to digest a large loss on this project. The only good to come from the decision is that the shareholders now seem more aligned on how the business needs to develop and are more risk averse as a result.

As a result of the film, post year end ACK has announced the desire to execute a discounted Rights offering. Elephant Capital is reviewing the terms of the Rights Issue to decide whether it will participate in this Rights Issue. If it chooses to, the approximate investment will be GBP 0.4 million.

ClinTec Luxembourg S.A

As a result of the Warranty Claim initiated against the shareholders of ClinTec, Elephant Capital divested its entire shareholding in ClinTec Luxembourg SA for GBP 3 million through a Share Transfer Agreement and a Share Buyback Agreement on the 13 December 2012.

Global Cricket Ventures Limited, Mauritius

In November 2009, Elephant Capital announced an investment of GBP 5.95 million in a primary transaction in GCV, a cricket-focused, digital media and broadcasting company. At the time of its investment, GCV was the exclusive licensee of key internet and mobile rights to the Indian Premier League ("IPL") and key internet rights to the Champion's League Twenty20 ("CLT20") cricket tournaments.

In mid-2010, the Board of Control for Cricket in India (the "BCCI") announced that it would be rescinding its global media contracts with World Sports Group ("WSG") from whom GCV sublicensed many of its own cricket-related rights. Further, WSG terminated GCV's contractual rights relating to the IPL. This obviously dealt a fatal blow to the business prospects of GCV, as GCV lost its key rights as a result of this action and ahead of the fourth IPL season, these rights were re-awarded to other parties. As a result of WSG's termination, GCV entered into active discussions to settle liabilities towards its own sub-licensees and has made significant progress on such settlements.

GCV views WSG's termination of its contractual rights to be wrongful and has commenced legal proceedings to enforce its legal rights. GCV has also entered into a dialogue with the BCCI to explore the possibility of a resolution of the current situation.

The investment has been valued at GBP 1.2 million based on the Investment Manager's best estimate of the net asset value of GCV, attributable to the Company's shareholding in GCV. The Investment Manager has initiated discussions with the other shareholders in the business to exit its shareholding and the Investment Manager is keen to negotiate a resolution to the matter during the next reporting period.

Mahindra Forgings Limited

Mahindra Forgings is part of the wider Mahindra Group, one of the best known industrial groups in India and a leader in the automotive space with approximately USD 6 billion per annum in revenues. Mahindra Forgings itself is focused on manufacturing forging components for the commercial vehicle market in Europe and in India and is the leading manufacturer of crankshaft and stub axles for Indian cars, multi-utility vehicles and tractors. India has a very strong track record in manufacturing high value and critical auto-components for the world market and a series of acquisitions left Mahindra Forgings very well placed to compete in this space in Europe.

Elephant Capital invested in Mahindra Forgings in 2007 and its current holding is 3% of the ownership of the company.

Nitco Limited

Nitco is one of the largest manufacturers of flooring tiles in India, selling more than 10 million square metres of tiling in FY 2012. It has a direct interest in the real estate sector through a wholly-owned subsidiary which develops residential and commercial property assets in Maharashtra. Elephant Capital became interested in the company because it wanted to participate in the significant real estate growth in India and believed that Nitco offered a strong play on the sector.

However, the environment changed dramatically post Elephant Capital's investment in 2007, with the credit crisis ushering in an unprecedented decline in global property markets. The sector has yet to regain its earlier buoyancy and periodical interest rate hikes have further dampened sentiments.

Despite various promises from the management that they would try and sell the company's real estate holdings to pay down debt, the words proved empty and the business failed to execute this strategy. The Investment Manager decided to resign its board seat and sadly Nitco has continued to become over leveraged and we hear reports that the company has failed to meet some debt obligations and is now in a work-out situation with the banks.

Elephant Capital is looking for ways in which to sell its shareholding in what has become a highly illiquid and out of favour stock.

As at 31 August 2012, the portfolio was as follows:

The valuations of the above are in accordance with International Financial Reporting Standards and International Private Equity and Venture Capital Association guidelines. All investments are held at fair value through profit or loss and are recognised at the transaction date on initial recognition.

*Part of the investment in Mahindra Forgings Limited is held via an intermediary holding company, Elephant Capital 1 Limited (Mauritius).

Realisations

164 thousand shares of EIH Ltd. have been sold during the year.

Principles of valuations of investments

Principles of valuation of unlisted investments

Investments are stated at amounts considered by the directors to be a reasonable assessment of their fair value, where fair value is the amount at which an asset could be exchanged between knowledgeable, willing parties in an arm's length transaction.

All investments are valued according to one of the following bases:

§ Cost (less any provision required)

§ Price of recent transaction

§ Discounted cash flows or earnings (of underlying businesses)

§ Earnings multiple

§ Net assets

§ Sale price

Investments are valued at cost for a limited period after the date of acquisition. Thereafter, investments are valued on one of the other bases described above and the earnings multiple basis of valuation will be used unless this is inappropriate, as in the case of certain asset based businesses.

Under the discounted cash flow technique the projected cash flows from business operations are discounted at the "Weighted Average Cost of Capital" to the providers of capital to the business. The sum of the discounted value of such free cash flows is the value of the business.

When valuing on earnings multiple basis, earnings before interest, taxes, depreciation and amortization (EBITDA) or net profit of the current year, will normally be used. Such profits will be multiplied by an appropriate and reasonable earnings multiple (EBITDA multiple or net profit multiple as the case may be). This is normally related to comparable quoted companies, with adjustments made for points of difference between the comparator and the company being valued, in particular for risks, size, illiquidity, earnings growth prospects and surplus assets or excess liabilities.

Where a company has incurred losses, or if comparable quoted companies are not primarily valued on an earnings basis, then the valuation may be calculated with regard to the underlying net assets and any other relevant information, such as the pricing for subsequent recent investments by a third party in a new financing round that is actively being sought, then any offers from potential purchasers would be relevant in assessing the valuation of an investment and are taken into account in arriving at the valuation.

Where appropriate, a marketability discount (as reflected in the earnings' multiple) may be applied to the investment valuation, based on the likely timing of an exit, the influence over that exit, the risk of achieving conditions precedent to that exit and general market conditions.

When unlisted investments have obtained an exit (either by listing or trade sale) after the valuation date but before finalisation of the Company's relevant accounts (interim or final), the valuation is based on the sale price.

In arriving at the value of an investment, the percentage ownership is calculated after taking into account any dilution through outstanding warrants, options and performance related mechanisms.

Principles of valuation of listed investments

Investments are valued at bid-market price or the conventions of the market on which they are quoted.

Valuation review procedures

Valuations are initially prepared by the Advisor. These valuations are then subject to review by external auditors, prior to final approval by the directors.

Events after the reporting date

Subsequent to the year end, there has been a decline in thevalue of the Elephant Capital's listed investments, due to a fall in the price of Mahindra Forgings. This has increased the unrealised losses by GBP 0.12 million.

Further details on events after the reporting date are disclosed in note 25 to the financial statements.

Gaurav Burman

On behalf of Elephant Capital LLP

27 February 2013

Consolidated Statement of Comprehensive Income

(The accompanying notes are an integral part of the financial statements.)

Consolidated Statement of Financial Position

Company Statement of Financial Position

Statement of Cash Flows

(The accompanying notes are an integral part of the financial statements.)

(The accompanying notes are an integral part of the financial statements.)

Company Statement of Changes in Equity

(The accompanying notes are an integral part of the financial statements.)

Notes to Consolidated Financial Statements

1. General information and statement of compliance with IFRS

Elephant Capital plc (the 'Company') is a public limited company, incorporated in the Isle of Man on 16 May 2006 and listed on the Alternative Investment Market ('AIM') of the London Stock Exchange, with its registered office at 3rd Floor, Exchange House, 54-62 Athol Street, Douglas, Isle of Man, IM1 1JD.

The Group represents the Company and its subsidiaries. The financial statements comprise the Group's consolidated statement of comprehensive income, consolidated statement of financial position, consolidated statement of cash flows and consolidated statement of changes in equity. The financial statements also include the Company statement of financial position, the Company statement of cash flows and the Company statement of changes in equity to comply with the Isle of Man Companies Act 1982. Under section 3(5) (b) (ii) of the Isle of Man Companies Act 1982, the Company is exempt from the requirement to present its own statement of comprehensive income. The accounting policies for the preparation of the Company statement of financial position, statement of cash flow and statement of changes in equity to the extent they differ from accounting policies used for the preparation of the consolidated financial statements have been separately disclosed in the following notes.

Under Protocol 3 of the UK's Treaty of Accession, the Isle of Man is part of the customs territory of the European Union. The financial statements have been prepared in accordance with the applicable International Financial Reporting Standards ('IFRS') as adopted by the European Union.

The financial statements for the year ended 31 August 2012(including comparatives) were approved and authorised for issue by the Board of Directors on 26 February 2013.

2. Nature of operations

The Company's business consists of investing through the Group, in businesses that have operations primarily in India and generating returns for its shareholders.

3. Standards, amendments and interpretations to existing standards that are not yet effective and have not been adopted early by the Group

At the date of authorisation of these financial statements, certain new standards, interpretations and amendments to existing standards that are likely to be applicable to the Group have been published but are not yet effective and have not been adopted early by the Group.

Amendments to IFRS 9: Financial Instruments (issued 28 October 2010 and amendments issued thereafter)

Effective date: Annual Period beginning on or after 1 Jan 2015

The IASB aims to replace IAS 39 Financial Instruments: Recognition and Measurement in its entirety. IFRS 9 is being issued in phases. To date, the chapters dealing with recognition, classification, measurement and de-recognition of financial assets and liabilities have been issued. These chapters are effective for annual periods beginning 1 January 2015. Further chapters dealing with impairment methodology and hedge accounting are still being developed. The Group's management has yet to assess the impact of this new standard on the Group's consolidated financial statements. However, they do not expect to implement IFRS 9 until all of its chapters have been published and they can comprehensively assess the impact of all changes.

Amendment (issued 28 October 2010) (Effective from 1 January 2013) In October 2010, the IASB amended IFRS 9 to incorporate requirements for classifying and measuring financial liabilities and derecognising financial assets and financial liabilities.

IFRS10 Consolidated Financial Statements (issued 12 May 2011)

Effective date: Annual Period beginning on or after 1 Jan 2013

IFRS 10 supersedes IAS 27 Consolidated and Separate Financial Statements and SIC-12Consolidation - Special Purpose Entities. It introduces a new, principle-based definition of control which will apply to all investees to determine the scope of consolidation.The Group's management has yet to assess the impact of these new and revised standards on the Group's consolidated financial statements.

IFRS 12 Disclosures of interests in other entities (issued 12 May 2011)

Effective date: Annual Period beginning on or after 1 Jan 2013

IFRS 12 combines the disclosure requirements for subsidiaries, joint arrangements, associates and structured entities within a comprehensive disclosure standard. The Group's management has yet to assess the impact of these new and revised standards on the Group's consolidated financial statements.

IFRS 13 Fair Value Measurement (issued 12 May 2011)

Effective date: Annual Period beginning on or after 1 Jan 2013

The new IFRS does not affect which items are required to be 'fair-valued', but specifies how an entity should measure fair value and disclose fair value information. Prior to the publication of IFRS 13, the guidance on measuring fair value was distributed across many IFRSs. IFRS 13 has been developed to remedy this problem, by:

- establishing a single source of guidance for all fair value measurements clarifying the definition of fair value and related guidance

- enhancing disclosures about fair value measurements (new disclosures increase transparency about fair value measurements, including the valuation techniques and inputs used to measure fair value).

Though the standard would apply to the Group and the fair value measurements, the Group's management has yet to assess the impact of this new standard on the Group's consolidated financial statements.

IAS27 Separate Financial Statements (issued 12May 2011)

Effective date: Annual Period beginning on or after 1 Jan 2013

Consequential changes have been made to IAS27 as a result of the publication of the new IFRSs. IAS 27 will now solely address separate financial statements, the requirements for which are substantially unchanged. Though applicable, based on management's assessment, the standard is not likely to have an impact on the Company financial statements as the requirements have remained unchanged.

IAS1, 'Presentation of Financial statements' (Issued 16 June 2011)

Annual periods beginning on or after 1 July 2012

The amendment requires entities to separate items presented in OCI into two groups, based on whether or not they may be recycled to profit or loss in the future. Items that will not be recycled such as revaluation gains on property, plant and equipment − will be presented separately from items that may be recycled in the future − such as deferred gains and losses on cash flow hedges. Entities that choose to present OCI items before tax will be required to show the amount of tax related to the two groups separately. Given the current transactions, this amendment is not likely to have any impact on the Group.

Amendments to IFRS 10, IFRS 12 and IAS 27 Investment Entities (issued on 31 October 2012)

Annual periods beginning on or after 1 January 2014

This standard, introduced an exception to the principle that all subsidiaries shall be consolidated. The amendments define an investment entity and require a parent that is an investment entity to measure its investments in particular subsidiaries at fair value through profit or loss in accordance with IFRS 9 Financial Instruments instead of consolidating those subsidiaries in its consolidated and separate financial statements. In addition, the amendments introduce new disclosure requirements related to investment entities in IFRS 12 Disclosure of Interests in Other Entities and IAS 27 Separate Financial Statements.

While the standard is applicable to the Group, there would be no impact from the current accounting treatment as the Group is already availing the exemption under IAS 39 for venture capital organizations.

Improvements to IFRSs 2009-2011(issued on 17 May 2012)

Annual periods beginning on or after 1 January 2013

The improvements make amendments to the following five standards:

IFRS 1 First-time Adoption of International Financial Reporting Standards

Issue: Repeated application of IFRS 1

IAS 1 Presentation of Financial Statements

Issue: Clarification of requirements for comparative information

IAS 16 Property, Plant and Equipment

Issue: Classification of servicing equipment

IAS 32 Financial Instruments: Presentation

Issue: Tax effect of distribution to holders of equity instruments

IAS 34 Interim Financial Reporting

Issue: Interim financial reporting and segment information for total assets and liabilities.

While most of the above improvements are applicable to the Group, none of these are likely to have an impact on the Group

Transition Guidance (Amendments to IFRS 10, IFRS 11 and IFRS 12) (issued 28 June 2012)

Annual periods beginning on or after 1 January 2014

The amendments also provide additional transition relief in IFRS 10, IFRS 11 Joint Arrangements and IFRS 12 Disclosure of Interests in Other Entities, limiting the requirement to provide adjusted comparative information to only the preceding comparative period. Furthermore, for disclosures related to unconsolidated structured entities, the amendments will remove the requirement to present comparative information for periods before IFRS 12 is first applied.

4. Summary of significant accounting policies

4.1 Overall considerations

The consolidated and Company financial statements have been presented on a going concern basis. The significant accounting policies that have been used in the preparation of these consolidated and Company financial statements are summarised below. The consolidated and Company financial statements have been prepared using the measurement bases specified by IFRS as adopted by the European Union for each type of asset, liability, income and expense. The consolidated and Company financial statements have been prepared on the historical cost basis except that certain financial assets and liabilities are stated at fair value. The measurement bases are more fully described in the accounting policies below.

4.2 Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries drawn up to 31 August each year. Control is achieved where the Company has the power to govern the financial and operating policies of an investee enterprise so as to obtain benefits from its activities. The Company obtains and exercises control through more than half of the voting rights.. All subsidiaries have a reporting date of 31 August.

On acquisition, the identifiable assets, liabilities and contingent liabilities of a subsidiary are measured at their fair values at the date of acquisition. All significant inter-company transactions and balances between Group entities are eliminated on consolidation. Amounts reported in the financial statements of subsidiaries are adjusted where necessary to ensure consistency with the accounting policies adopted by the Company.

The results of the subsidiaries acquired or disposed of during the year are included in the consolidated statement of comprehensive income from the effective date of acquisition or up to the effective date of disposal, as appropriate.

Non-controlling interest, presented as part of equity, represent the portion of a subsidiary's profit or loss and net assets that is not held by the Group. The Group attributes total comprehensive income (or loss) of subsidiaries between the owners of the parent and the non-controlling interests based on their respective ownership interests.

4.3 Investment in associates

Associates are those entities over which the Group is able to exercise significant influence but which are neither subsidiaries nor joint ventures. By way of exemption under IAS 28 for venture capital organisations, the Group has designated its investments at fair value through profit or loss and accounted for in accordance with IAS 39 Financial Instruments: Recognition and Measurement at fair value. The changes in fair value are recognised in profit or loss in the period of change.

4.4 Foreign currency translation

The consolidated financial statements are presented in Pounds Sterling (GBP), which is also the functional currency of the Company.

Foreign currency transactions are translated into the functional currency of the respective Group entity, using the exchange rates prevailing at the dates of the transactions (spot exchange rate). Foreign exchange gains and losses resulting from the settlement of such transactions and from the re-measurement of monetary items at year-end exchange rates are recognised in profit or loss. Non-monetary items measured at historical cost are translated using the exchange rates at the date of the transaction (not retranslated). Non-monetary items measured at fair value are translated using the exchange rates at the date when fair value was determined.

In the Group's financial statements all assets, liabilities and transactions of the Group entities are presented in Pounds Sterling which is the functional currency of all entities within the Group. The functional currency of the entities in the Group has remained unchanged during the reporting period.

4.5 Revenue recognition

Revenue comprises income from investments, interest and dividend income. Revenue is recognised to the extent it is probable that the economic benefits will flow to the Group, the revenue can be reliably measured and when the criteria mentioned below have been met:

Interest income

Interest income comprises income from treasury deposits and loans recoverable. Interest income is recognised on accrual basis using the effective interest method.

Dividend income

Dividend income from investments is recognised when the entity's right to receive payment has been established.

4.6 Expenses

All expenses are recognised on accrual basis through profit or loss.

4.7 Impairment of non-financial assets

For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are largely independent cash inflows (cash-generating units). As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level.

All individual assets or cash-generating units are reviewed at each reporting date to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any.

An impairment loss is recognised for the amount by which the asset's or cash-generating unit's carrying amount exceeds its recoverable amount. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

An impairment loss is recognised as an expense and disclosed as a separate line item in the statement of comprehensive income. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years.

4.8 Income taxes

Tax expense recognised in profit or loss comprises the sum of deferred tax and current tax, not recognised in other comprehensive income or directly in equity.

Current income tax assets and/or liabilities comprise those obligations to, or claims from, fiscal authorities relating to the current or prior reporting periods, that are unpaid at the reporting date. Current tax is payable on taxable profit, which differs from profit or loss in the financial statements. Calculation of current tax is based on tax rates and tax laws applicable in each jurisdiction and that have been enacted or substantively enacted by the end of the reporting period.

Deferred income taxes are calculated using the liability method on temporary differences between the carrying amounts of assets and liabilities and their tax bases. Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted by the end of the reporting period. Deferred tax liabilities are always provided for in full. Deferred tax assets are recognised to the extent that it is probable that they will be able to be utilised against future taxable income. Deferred tax assets and liabilities are offset only when the Group has a right and intention to set off current tax assets and liabilities from the same taxation authority.

Changes in deferred tax assets or liabilities are recognised as a component of tax income or expense in profit or loss, except where they relate to items that are recognised in other comprehensive income or directly in equity, in which case the related deferred tax is also recognised in other comprehensive income or directly in equity, respectively.

4.9 Investment in subsidiaries

Investments in subsidiaries are valued at cost less provision for impairment in the financial statements of the Company. Where investment is subsidiaries are identified for distribution to shareholders, based on the plan identified by the holding companies and where the criteria for such distribution is met, such amounts are classified as "Assets held for distribution to owners" on the Statement of Financial Position.

4.10 Financial instruments

Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial instrument. Financial assets are de-recognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and all substantial risks and rewards are transferred. A financial liability is de-recognised when it is extinguished, discharged, cancelled or expires.

Financial assets and financial liabilities are measured initially at fair value plus transactions costs except for financial assets and financial liabilities carried at fair value through profit or loss which are measured initially at fair value and transaction costs are charged to profit or loss.

Subsequent measurement criteria of financial assets and financial liabilities are described below:

Financial assets

For the purpose of subsequent measurement, the Group's financial assets can be classified into the following categories upon initial recognition:

·; loans and receivables; and

·; financial assets at fair value through profit or loss

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial recognition these are measured at amortised cost using the effective interest method, less provision for impairment. Discounting is omitted where the effect of discounting is immaterial. The Group's cash and cash equivalents, trade and other receivables fall into this category of financial instruments.

All loans and receivables are subject to review for impairment at least at each reporting date. Further, individually significant loans and receivables are considered for impairment when they are past due or when there is other objective evidence that a specific counterparty will default. Impairment is evaluated by comparison of the carrying value to expected cash flows discounted by original effective interest rate (which is computed at the initial recognition).

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss include financial assets that are either classified as held for trading or that meet certain conditions and are designated at fair value through profit or loss upon initial recognition. The Company's and the Group's business is investing in financial assets with a view to profiting from their total return in the form of income and capital growth. This portfolio of financial assets is managed and its performance evaluated on a fair value basis, in accordance with the documented investment strategy, and information about the portfolio is provided internally on that basis to the Company's Board of directors and other key management personnel. Accordingly, upon initial recognition the investments are designated by the Company and its subsidiaries as "at fair value through profit or loss". They are included initially at fair value, which is taken to be their cost (excluding expenses incidental to the acquisition which are written off in the statement of comprehensive income). Subsequently, the investments are valued at 'fair value' with gains or losses recognised in profit or loss. Fair value of such investments is determined by reference to active market transactions or using a valuation technique where no active market exists which is done in accordance with IAS 39 and the International Private Equity and Venture Capital Association valuation guidelines.

For investments in associate undertakings, in accordance with the limited exemption available under IAS 28 to private equity/ venture capitalist organisation for investments in associates which upon initial recognition are designated at fair value through profit or loss, the investments are accounted at fair value through profit or loss.

All income and expenses relating to financial assets that are recognised in profit or loss are presented within 'net losses/ gains on financial assets at fair value through profit or loss', 'Investment and other income' or 'other financial items', except for impairment of receivables which is presented as a separate line item on the face of the Statement of Comprehensive Income.

Financial liabilities

The Company's financial liabilities include trade and other payables which are measured subsequently at amortized cost using the effective interest method.

4.11 Cash and cash equivalents

Cash and cash equivalents comprise balance with banks and demand deposits which are readily convertible to known amounts of cash and are subject to insignificant risk of change in value.

4.12 Equity and reserves

Share capital represents the nominal value of shares that have been issued. All shares are equally eligible to receive dividends and the repayment of capital and represent one vote each at the shareholders' meetings of the Company.

Share premium includes any premium received on issue of share capital. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits.

Distributable capital reserve is a specified reserve created by reclassifying the amounts lying in the share premium account for reduction in share capital of the Company through buy-back of its own shares. The reserve has been created for the distribution of capital to the equity shareholders following a tender offer.

Retained earnings/accumulated losses include all current and prior period retained net profits or losses. All transactions with owners of the parent are recorded separately within equity.

Gain or loss to the extent unrealised is transferred from retained earnings to 'Unrealised investment revaluation reserve' and is transferred to retained earnings upon realisation.

4.13 Provisions, contingent liabilities and contingent assets

Provisions are recognised when there is a present obligation as a result of a past event that probably will require an outflow of resources and a reliable estimate of the amount of the obligation can be made. A present obligation arises from the presence of a legal or other constructive commitment that has resulted from past events. Provisions are measured at the estimated expenditure required to settle the present obligation, based on most reliable evidence available at the reporting date.

A disclosure for a contingent liability is made when there is a present obligation that may, but probably will not, require an outflow of resources. Disclosure is also made in respect of a present obligation as a result of a past event that probably requires an outflow of resource, where it is not possible to make a reliable estimate of the outflow. Where there is a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

Contingent assets are not recognised in the financial statements. However, contingent assets are assessed continually and if it is virtually certain that an inflow of economic benefits will arise, the asset and related income are recognised in the period in which the change occurs.

4.14 Earnings per share

Basic earnings per share are calculated by dividing the net profit or loss (after deducting attributable taxes) for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Partly paid equity shares are treated as a fraction of an equity share to the extent that they were entitled to participate in dividends relative to a fully paid equity share during the reporting period.

5. Significant management judgements in applying accounting policies

Information about significant management judgements that have the most significant effect on the financial statements is summarised below. Critical estimation uncertainties are described in note 6 to the financial statements.

Investments recognised at fair value through profit or loss

The Group has recognised its investments at fair value through profit or loss. In accordance with IAS39, an entity may record an item at fair value through profit or loss if they are either classified as held for trading or if they meet certain conditions and are designated at fair value through profit or loss upon initial recognition. The management has designated all the investments in listed as well as unlisted securities at fair value through profit or loss, as they meet the requirements in IAS 39. The facts considered in applying this judgement are included under note 4.10.

Determination of functional currency of individual entities

Following the guidance under IAS 21 "The effects of changes in foreign exchange rates" the functional currency of each individual entity is determined to be the currency of the primary economic environment in which the entity operates. In the presence of mixed indicators, the management applies judgement in determining the functional currency of each individual entity within the Group which most faithfully represents the economic effects of the underlying transactions, events and conditions under which the entity conducts its business. The consolidated financial statements are presented in Pounds Sterling, which is also the functional currency of the Company.

6. Estimation uncertainty

When preparing the financial statements management undertakes a number of judgements, estimates and assumptions about recognition and measurement of assets, liabilities, income and expenses that have a significant effect on the financial statements.

The actual results may differ from the judgements, estimates and assumptions made by management, and will seldom equal the estimated results.

Information about the significant estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, incomes and expenses is provided below:

Fair value of unquoted investments

Management uses valuation techniques in measuring the fair value of financial instruments, where active market quotes are not available. In applying the valuation techniques, management makes maximum use of market inputs, and uses estimates and assumptions that are, as far as possible, consistent with observable data that market participants would use in pricing the instrument. Where applicable data is not observable, management uses its best estimate about the assumptions that other market participants would make. These estimates may vary from the actual prices that would be achieved in an arm's length transaction at the reporting date. Details of the assumptions used are given in note 14. Further, the levels of hierarchy for the investments have been disclosed in note 23.

Impairment

An impairment loss is recognised for the amount by which the assets' carrying amount exceeds its recoverable amount. To determine the recoverable amount, individually significant assets are considered for impairment when they are past due or when there is other objective evidence that a specific counterparty will default. These assumptions relate to future events and circumstances. The actual results may vary and may cause adjustments to the Group's assets in future financial periods. Impairment loss on investment in subsidiaries and loan to subsidiaries has been recorded in the standalone financial statements of the Company and related information has been disclosed in note 12 and 13 respectively.

Deferred tax asset

Deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. The Group's assessment of the probability of availability of future taxable income against which deferred tax assets can be utilised is adjusted for significant non-taxable income and expenses and specific limits to the use of any unused tax loss or credit. The tax rules in the numerous jurisdictions in which the Group operates are also carefully taken into consideration. These estimates may vary due to changes in tax legislation which affects the tax rates that are expected to apply in the relevant period and due to availability of taxable profits which affects recognition of deferred tax assets. The Group had unused tax losses amounting to GBP 4,462 thousand as at 31 August 2012(31 August 2011:GBP3,767 thousand) in relation to its subsidiaries in Mauritius.

7. Investment and other income

* Represents fee from the co-investment vehicle.

8. Net losses on financial assets at fair value through profit or loss

9.

Under the "Investment Management Agreement", the amount of management fee payable from Tusk Investments 1 Limited and Tusk Investments 2 Limited for the year ended 31 August 2012 and 31 August 2011 is at 2% of NAV of Elephant Capital plc as at the most recent valuation date.

'Management fee' disclosed in the consolidated statement of comprehensive income also includes inter alia, expenses incurred out of service fees received from investee companies by Elephant 2 Limited (Manager).

10. Other expenses

* Other expenses include amounts out of the management fee paid to Elephant Capital LLP (Investment Manager), and incurred by it till 17 December 2010 the date the Investment Manager ceased to be part of the Group.

11. Taxation

The Company is a resident of the Isle of Man for income tax purposes, being subject to the standard rate of income tax, which is currently 0%. No provision for taxation has, therefore, been made.

The Mauritian entities consolidated in the Group are Global Business License Category 1 (GBL1) companies in Mauritius and under the current laws and regulations are liable to pay income tax on their net income at a rate of 15%. The entities are, however, entitled to a tax credit equivalent to the higher of actual foreign tax suffered and 80% of the Mauritian tax payable in respect of their foreign source income thus reducing their maximum effective tax rate to 3%. No Mauritian capital gains tax is payable on profits arising from the sales of securities, and any dividends and redemption proceeds paid by the entities to their member will be exempt in Mauritius from any withholding tax. At 31 August 2012, the entities had no income tax liability due to tax losses carried forward.

Deferred taxation

No deferred tax asset has been recognised in respect of the tax loss carried forward for GBP 2,291 thousand and GBP 2,171 thousand-in Tusk Investments 1 Limited and Tusk Investments 2 Limited respectively as no taxable income is probable in the foreseeable future.

A reconciliation of the income tax expense based on accounting profit and the actual income tax expense is as follows:

12. Investments in subsidiaries (Company Statement of Financial Position)

* Amounts have been rounded to the nearest thousand.

**Previously known as Tusk Investments Fund 1 and Tusk Investments Fund 2.

*** As of 31 August 2012, in the Company financial statements, an impairment analysis of the investment in subsidiaries was carried out and consequently, an additional impairment loss of GBP 3,565 thousand was recorded on account of decline in the value of investments made through group subsidiaries.

****During the year, the Board decided to commence a programme of disposal of the Company's listed portfolio and to return further capital to shareholders. Further, a two of the Group's unlisted investments have also been divested subsequent to the year end. Accordingly listed investments and some of these unlisted investments have been classified as current investments and as a consequence, in the Company's statement of financial position, the related investments in subsidiaries has also been classified as held for distribution to owners and the related portion of the loan to subsidiary has also been classified as current.

The Group comprises the following entities:

13. Loans to subsidiaries(Company Statement of Financial Position)

Loans to subsidiaries in the standalone financial statements of the Company comprise the following:

* As of 31 August 2012, a loan of GBP 24,000 thousand was given by Elephant Capital plc to Elephant Capital LP in order to provide further funds to Tusk Investments 1 Limited and Tusk Investments 2 Limited for making investments in certain investee companies in accordance with the investment strategy of the Group.

Further, the loan classified as non-current has not been discounted to its present value, as the repayment period is not determinable.

** As of 31 August 2012, in the Company financial statements, an impairment analysis of the loan to subsidiaries was carried out and consequently, a reversal of impairment loss of GBP 377 thousand was recorded on account of the increase in the value of investments made through group subsidiaries.

14. Investments at fair value through profit or loss

The Group has invested in a portfolio of quoted and unquoted securities. The quoted securities are listed on the Bombay Stock Exchange ('BSE') and the National Stock Exchange ('NSE'), India and the value of such quoted investments has been determined using the closing bid market prices on the NSE as at the reporting date.

The Group has made various investments in unquoted securities as summarised below. The fair value of the unquoted investments has been determined using appropriate methodology in accordance with International Private Equity and Venture Capital Guidelines and guidance provided in IAS 39.

(i) Global Cricket Ventures (GCV) - As at 31 August 2012, the Group held a 45.56% equity stake in Global Cricket Ventures Limited (Mauritius). The total cost of the investment was GBP 5,949 thousand. The Company's directors have decided to exit from this investment and accordingly, the value of this investment as on 31 August 2012 has been determined on the basis of best estimate of net assets of GCV attributable to Elephant Capital's shareholding.

(ii) Amar Chitra Katha (ACK )- As at 31 August 2012, the Group held a 25.87% equity stake in Amar Chitra Katha (P) Ltd. at a total cost of GBP 4,085 thousand. The investment has been valued on 'discounted cash flows of earnings of underlying business'. The key assumptions used in the valuation of the investment as at 31 August 2012 are as under-

(iii) ClinTec-As of 31 August 2012, the Group held a 28.57% equity stake in ClinTec which had been acquired for GBP 8,000 thousand. The investment is measured at net realisable value of investment as on 31 August 2012.

(iv) Air Works- During the year ended 31 August 2012, the Group acquired further equity shares in the amount of GBP 471 thousand. As of 31 August 2012, the Group held an aggregate 5.52 % (fully diluted basis) stake in Air Works at a total cost of GBP 2,922 thousand. The investment has been valued on 'discounted cash flows of earnings of underlying business'. The key assumptions used in the valuation of the investment as at 31 August 2012 are as under-

Details of the Group's investments are as under:

*the current year includes a loss of GBP 156 thousand on investment in Obopay consequent to a merger referred to in note 25 (ii).

15. Receivables

All trade and other receivables are short- term and their carrying values are considered to be a reasonable approximation of their fair value.

16. Cash and cash equivalents

17. Payables

All trade and other payables are short- term and their carrying values are considered to be a reasonable approximation of their fair value.

18. Share capital

*On 14 September 2011, The Company bought back and cancelled a total of 661,000 ordinary shares at a price of 35 pence per share. The cancellation of share capital is reflected in the share capital and distributable capital reserve accounts in the consolidated statement of change in equity.

The Company's share capital comprises ordinary shares. Rights attached to ordinary shares include the right to vote at the Company's meetings of shareholders including the AGM and to receive future dividends. On listing, warrants were allocated to initial placees of the ordinary shares in the ratio of one warrant for every five ordinary shares. Each warrant entitles the holder to subscribe for ordinary shares at a subscription price of GBP 1.25 (including 25% premium to the placing price), from 2007 to 2012, within 30 days of the Company's interim unaudited accounts being released to shareholders, subject to certain conditions.

Further, the Company allocated warrants to Elephant India Limited ('EIL Warrant) in respect of investment by the co-investment vehicle. The EIL Warrants were subject to the same terms and conditions as the warrants issued under the initial placing of ordinary shares.

Following the expiry of the subscription period on 26 June 2012, the warrants were suspended from trading on 27 June 2012 and were cancelled with effect from 4 July 2012.

19. Loss and net asset value per share

There were no options in issue to dilute the earnings per share as at 31 August 2012.

20. Financial assets and liabilities

The carrying amounts presented in the consolidated statement of financial position relate to the following categories of financial assets and liabilities:

Financial assets

The above loans and receivables do not carry any interest income and management considers the fair values to be not materially different from the carrying amounts recognised in the statement of financial position as they are expected to be settled within one year.

Financial liabilities

None of the financial liabilities are interest bearing. Management considers the fair values to be not materially different from the carrying amounts recognised in the statement of financial position as they are expected to be settled within the next one year.

The accounting policies for each category of financial instruments are provided in note 4.10. Information relating to fair values is presented in the related notes. The methods used to determine the fair values are described in note 14 above. A description of the Group's financial instruments risks, including risk management objectives and policies is given in note 22.

21. Related party transactions

i. Related parties

(a) Key Management Personnel (KMP)