Final Results

4 February 2011 THE THROGMORTON TRUST PLC Announcement of results in respect of the year ended 30 November 2010 Financial Highlights As at As at 30 November 30 November Change 2010 2009 % Assets Net assets (£'000) 127,296 106,917 +19.1(1) Undiluted net asset 212.80p 144.26p +47.5 value per share - with income +52.2 reinvested Diluted net asset 200.64p 144.26p +39.1 value per share - with income +43.5 reinvested Ordinary share price 163.00p 115.75p +40.8 (mid-market) - with income +46.4 reinvested Subscription share 24.25p 8.00p +203.1 price (mid-market) Year ended Year ended 30 November 30 November Change 2010 2009 % Revenue Net revenue after 1,931 3,105(2) -37.8 taxation (£'000) Revenue return per 2.85p 3.86p(2) -26.2 ordinary share Dividends - Interim 0.58p 0.55p +5.5 - Final 2.42p 2.20p +10.0 - Special dividend nil 2.00p - Total dividends paid and payable in respect of the year ended 30 November 3.00p 4.75p -36.8 (1) The change in net assets is attributable to the tender offer, conversion of subscription shares and market movements. (2) Includes the write back of interest on prior years' VAT, attributable to shareholders. Chairman's Statement Performance In the year under review the Company's undiluted net asset value per share ("NAV") increased by 52.2% (diluted NAV per share increased 43.5%) whilst the share price rose by 46.4%. By comparison, the Hoare Govett Smaller Companies plus AIM (excluding Investment Companies) Index (the "benchmark index") increased by 23.4%. (All percentages calculated in sterling terms with income reinvested). Since the sharp decline in global economic activity, in late 2008 and the subsequent instability in markets, your Company has enjoyed a second consecutive year of excellent performance with an increase in the undiluted NAV of 150.2% over the two years since 1 December 2008. Under the terms of the management agreement with BlackRock Investment Management (UK) Limited ("BlackRock"), any outperformance of the benchmark index from 11 September 2008 and subsequent periods will give rise to a performance fee. For the year ended 30 November 2010 the performance fee amounted to £6,117,000. While this is a substantial fee, it is in respect of an outstanding period of outperformance against our benchmark. Details of the performance fee calculation are shown in note 4. The portfolio is jointly managed by Mike Prentis, who has responsibility for the long only portfolio, and Richard Plackett, who has responsibility for the contracts for difference ("CFD") portfolio. I am sure that shareholders will join me in congratulating Mike and Richard on such outstanding performance. This was driven by good stock selection across a range of sectors including the electronic and electrical equipment sectors, natural resources and pharmaceuticals. Richard also made effective use of the Company's unique ability to go short as well as long through its CFD portfolio. Further details are given in the Investment Manager's Report. I am also delighted to report that both Mike and Richard have recently been recognised for their investment achievements with Mike winning the Investor of the Year award at the Grant Thornton Quoted Companies Awards and Richard winning the awards for Small Cap Equity and Long Term Performance - Equity Strategies at the Eurohedge 2010 awards. Since the year end the Company's undiluted NAV has increased by 15.7% and the share price has increased by 19.2%. Revenue return and dividends Revenue return per share for the year amounted to 2.85 pence compared with 3.86 pence for the previous year, a decrease of 26.2%. This decrease is largely attributable to prior year income being boosted by the receipt of interest on VAT refunded amounting to 1.68 pence per share. After adjusting for this, total revenue on a like for like basis had increased by 7.0%. Last year, the Directors paid a special dividend of 2.00p representing the VAT interest recovery. The Directors are proposing an increased final dividend of 2.42 pence per share making a total dividend for the year of 3.00 pence per share representing an increase of 9.1% on the previous year (excluding last year's special dividend). The final dividend is payable on 25 March 2011 to shareholders on the Company's register on 18 February 2011 (ex dividend date is 16 February 2011). Tender offers As mentioned in my interim statement, the Company held a general meeting at which shareholders approved proposals designed to: - provide for a tender offer for up to 25% of the ordinary shares in issue on 12 April 2010, the record date (excluding ordinary shares held in treasury) with a 9% exit charge and associated costs; - authorise the Directors to make subsequent repurchases of up to 14.99% of the ordinary shares in issue on the record date; - remove the obligation of the Board to consider tender offers on a twice-yearly basis; and - cancel the Company's share premium account to provide additional distributable reserves which may be required to allow the Company to undertake the purchase of ordinary shares. It was announced on 29 June 2010 that the tender offer had been undersubscribed, with valid tenders received for 21.3% of the Company's ordinary shares. It was therefore not necessary to implement the subsequent repurchase of up to 14.99% of the ordinary shares in issue. It is the current intention of the Board not to make further tender offers to shareholders and to focus on increasing the size of the Company. Subscription shares On 1 October 2009 the Company allotted a total of 14,822,901 subscription shares to shareholders on the Company's register on 30 September 2009, by way of bonus issue, on the basis of one subscription share for every five ordinary shares held at that date. During the year the Company has issued a total of 1,512,289 ordinary shares, following the conversion of subscription shares into ordinary shares for a total consideration of £2,208,000. Following the latest conversion opportunity on 31 January 2011, a further 977,559 ordinary shares were issued on 2 February 2011, subject to listing on 7 February 2011, for a total consideration of £ 1,427,000 Following the listing of the additional shares, the Company will have 60,797,273 ordinary shares (excluding 7,400,000 shares currently held in treasury) and 12,333,053 subscription shares in issue. Subscription shareholders will have further opportunities to subscribe for all or any of the ordinary shares to which their subscription shares relate on each of 30 April, 31 July and 31 October 2011 at 146.00 pence per share. At the date of this report the Company's diluted NAV is 228.01 pence and the share price is 194.25 pence compared with the exercise price of 146.00 pence per share. Discount and share buybacks The Directors recognise the importance to investors of ensuring that any discount of the Company's share price to its underlying NAV is as small as possible. Accordingly, the Directors monitor the discount closely and will consider share repurchases in the market if the discount to NAV widens significantly. In the year under review the Company did not purchase any shares other than through the tender offers. The Directors have the authority from shareholders to buy back up to 14.99% of the Company's issued share capital. This authority expires at the forthcoming Annual General Meeting ("AGM") on 11 March 2011 when a resolution will be put to shareholders to renew it. Outlook We remain cautiously optimistic about the near term prospects for the smaller companies sector which has performed well since the worst effects of the global economic crisis. However, with good opportunities to purchase stocks at attractive valuations, particularly those with exposure to higher growth in the international markets and the consistent good performance of the CFD portfolio, we expect to see the Company continue to deliver good returns for shareholders. Richard Bernays Chairman 4 February 2011 Principal risks The key risks faced by the Company are set out below. The Board regularly reviews and agrees policies for managing each risk, as summarised below. Performance risk - The Board is responsible for deciding the investment strategy to fulfil the Company's objective and monitoring the performance of the Investment Manager. An inappropriate strategy may lead to poor performance. To manage this risk the Investment Manager provides an explanation of significant stock selection decisions and the rationale for the composition of the investment portfolio. The Board monitors and maintains an adequate spread of investments in order to minimise the risks associated with factors specific to particular sectors, based on the diversification requirements inherent in the Company's investment policy. Income/dividend risk - The amount of dividends and future dividend growth will depend on the Company's underlying portfolio. Any change in the tax treatment of the dividends or interest received by the Company may reduce the level of dividends received by shareholders. The Board monitors this risk through the receipt of detailed income forecasts and considers the level of income at each meeting. Regulatory risk - The Company operates as an investment trust in accordance with Chapter 4 of Part 24 of the Corporation Tax Act 2010. As such the Company is exempt from capital gains tax on the profits realised from the sale of its investments. The Investment Manager monitors investment movements, the level and type of forecast income and expenditure and the amount of half yearly dividends to ensure that the provisions of Chapter 4 of Part 24 of the Corporation Tax Act 2010 are not breached. The results are reported to the Board at each meeting. Operational risk - In common with most other investment trust companies, the Company has no employees. The Company therefore relies upon the services provided by third parties and is dependent on the control systems of the Investment Manager and the Company's other service providers. The security, for example, of the Company's assets, dealing procedures, accounting records and maintenance of regulatory and legal requirements, depend on the effective operation of these systems. These are regularly tested and monitored and an internal control report, which includes an assessment of risks together with procedures to mitigate such risks, is prepared by the Investment Manager and reviewed by the Audit Committee at least twice a year. The Investment Manager, BNYM and BMLI each produce an annual SAS70 report which is reviewed by their auditors and gives assurance regarding the effective operation of controls. The reports are also reviewed by the Audit Committee. Market risk - Market risk arises from volatility in the prices of the Company's investments. It represents the potential loss the Company might suffer through holding investments in the face of negative market movements. The Board considers asset allocation, stock selection, unquoted investments and levels of gearing on a regular basis and has set investment restrictions and guidelines which are monitored and reported on by the Investment Manager. The Board monitors the implementation and results of the investment process with the Investment Manager. Financial risks - The Company's investment activities expose it to a variety of financial risks that include foreign currency risk and interest rate risk. The Company has approximately 39% of its portfolio invested in AIM traded securities, and, by the very nature of its investment objective, largely invests in smaller companies, and liquidity in these securities can from time to time become constrained, making these investments difficult to realise at or near published prices, giving rise to additional liquidity risk. This is taken into consideration by the Directors when determining the valuation of these holdings. There are also risks linked to the Company's use of derivative transactions including CFDs. Related party transactions The investment management fee for the year charged by BlackRock was £997,000 (2009: £838,000). In addition a performance fee was payable of £6,117,000 (2009: £353,000). BlackRock agreed to waive management fees payable by the Company up to the level of transition and restructuring costs of £1,068,000. At the year end, an amount of £7,362,000 was outstanding in respect of management and performance fees, net of the management fee waiver (2009: £905,000). The Company's CFD counterparty BMLI, is associated with BlackRock. At the year end, the Company had a cash balance of nil (2009: an overdrawn balance of £40,000) with the CFD counterparty. The Company also had an investment in BlackRock's Institutional Cash Fund of £721,000 (2009: £14,000) at the year end. The Board consists of five non-executive Directors, all of whom are considered to be independent by the Board. None of the Directors has a service contract with the Company. The Chairman receives an annual fee of £30,000, the Chairman of the Audit and Management Engagement Committee receives an annual fee of £19,000 and each other Director receives an annual fee of £17,000. Directors' fees were last increased with effect from 1 December 2004. It is proposed that with effect from 1 December 2010, the annual remuneration of the Chairman will be increased to £33,000, the Chairman of the Audit and Management Engagement Committee to £23,000 and the other Directors to £20,000. These increases are subject to shareholders passing resolution 8 in respect of Directors' Remuneration at the Annual General Meeting to be held on Friday 11 March 2011. All five members of the Board hold shares in the Company. Richard Bernays holds 40,000 ordinary shares and 8,000 subscription shares, Simon Beart holds 21,019 ordinary shares (including 1,613 ordinary shares held by Mrs Beart) and 2,715 subscription shares, Lord Latymer holds 5,915 ordinary shares and 810 subscription shares, Eric Stobart holds 10,803 ordinary shares and 2,064 subscription shares and Harry Westropp holds 20,000 ordinary shares and 4,000 subscription shares. Statement of Directors' Responsibilities In accordance with Disclosure and Transparency Rule 4.1.12, the Directors also confirm to the best of their knowledge and belief that: - the financial statements, prepared in accordance with IFRS as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit/(loss) of the Company and the Group; and - this Annual Report includes a fair view of the development and performance of the business and the position of the Company and the Group, together with a description of the principal risks and uncertainties that it faces. For and on behalf of the Board of Directors Richard Bernays Chairman 4 February 2011 Investment Manager's Report Market review and overall investment performance Markets moved up over the course of the financial year, but not without the occasional periods of volatility, especially during early summer. Confidence that the global economy is in reasonable shape built during the year, but the financial position of some European countries, the strength of recovery in the US, the determination of Chinese authorities to slow down their high economic growth rate, and the implications of UK public spending cuts, have all been concerns for markets. The Company's undiluted NAV increased by 52.2% to 212.80p (diluted NAV per share increased by 43.5%), compared to an increase in the benchmark index of 23.4%. We also significantly outperformed large capitalisation stocks; the FTSE 100 increased by only 6.5% over the year. (All percentages calculated in sterling terms with income reinvested). Portfolio performance Our strongest performance came in the electronic and electrical equipment sector, where stocks such as Domino Printing Sciences, Oxford Instruments and Gooch & Housego all contributed significantly to relative performance. These are all well run, world leading companies with well invested product ranges and very international customer bases. Each company has traded increasingly well as the year progressed and is well positioned for the future. The resources sector also performed well for us. Within mining our best contributions came from Western Coal and Eastern Platinum. Both benefitted from higher selling prices and production levels; Western Coal also announced a takeover by a US company, Walter Energy Corp. late in the year. Within the oil sector Encore Oil and Cove Energy were our biggest successes. Encore had two important oil finds in the North Sea, and Cove found gas in three deepwater wells offshore East Africa. The pharmaceuticals and biotechnology sector was also a strong contributor; Abcam and Hutchison China Meditech were our best sector performers. Both have continued to trade well. Hutchison China Meditech continues to see strong demand growth in China for its traditional medicines. The main disappointment from a stock point of view was BATM. BATM's trading in their telecoms division has been well behind expectations, with one of their key customers itself losing market share mainly, we believe, to Chinese competitors. We reduced our holding in the company. Whilst most of our relative outperformance in the period came, as usual, from stock selection, sector allocation was also positive. The three sectors that contributed most were electronic & electrical equipment, industrial engineering and mining. We were heavily overweight in each sector, and each outperformed our benchmark index. The CFD portfolio generated net gains of £7.2 million during the year, maintaining its consistent record since the portfolio was put in place in September 2008. The gains were entirely due to the long CFD portfolio, with the short CFD portfolio breaking even in the year. In the context of a market which rose, and a benchmark which rose by 23.4% during the year, we regard no overall loss on the short CFD portfolio as a good performance. Activity We have seen a marked increase in bid activity during the year, with holdings in Care UK, Rensburg Sheppards, Chloride, BSS Group, Bluebay Asset Management and most recently Western Coal all receiving takeover bids. Outside our portfolio holdings there were many other bids for companies in our investment universe. This is a great time for corporate buyers to make strategic acquisitions at prices that probably will not be achievable after a fuller economic recovery. We have generally seen better value at the smaller end of our investment universe and so we have sold some of our holdings with market capitalisations in excess of £1 billion where we have taken the view that upside was more limited. We have invested in a range of companies which are well positioned and attractively valued. Some examples include Yule Catto, a polymers company which derives over half of its revenues from the Asia Pacific region and other high growth developing markets; and Mecom a publisher of local newspapers in Continental Europe with a rapidly growing online business and resilient subscription revenues. We are attracted to online business models given their inherent scalability, and one new and highly successful business of this type is Blinkx, where revenue growth is expected to remain strong. We also invested in a few IPOs, including Supergroup whose share price has more than doubled since the IPO, we have accordingly taken some profits. Portfolio positioning Our portfolio positioning has not changed materially. The portfolio is built around good quality growth companies which we know well, are run by management we regard highly, which are truly differentiated and have the ability to maintain organic growth and margins, generate cash, and which have strong balance sheets. These are our core holdings. We particularly like companies with high levels of overseas earnings, especially from Asia Pacific, for example, Spirax-Sarco and Hutchison China Meditech. We also like companies with good revenue visibility or predictability, such as Abcam and ITE Group. A key part of our strategy is to invest in companies with high levels of intellectual property or strong brands, examples include Fidessa and Aveva; these are protected by strong, sustainable barriers to entry and have real pricing power. We generally prefer companies which have their own products, rather than service companies; these tend to be able to scale more quickly. We are always looking to invest in interesting new companies which have the potential to become core holdings in the future. Inevitably new holdings start off as small holdings in our portfolio until our confidence grows or until they give cause for concern or fail to meet our expectation, in which case we usually sell. The CFD portfolio long positions are invariably in our core holdings, but the aggregate of our long only position and long CFD position will not under normal circumstances exceed 3.0% of net assets at the individual stock level. Our short CFD positions are in companies we see as flawed, operating in commoditised, highly competitive industries, such as food producers, or facing structural challenges, for instance from internet based competitors. Our individual short positions are small and liquid. The CFD portfolio was net long throughout the year. The net long position was slightly reduced in the autumn; at the end of the financial year it was approximately 6% net long. Outlook We are encouraged by the performance of our portfolio holdings over the last year. Management of most of these companies are positive but cautious. Many are well run businesses exposed to higher growth parts of the world such as the Asia Pacific region and Brazil. Within developed markets data from the US has been mixed but seems to be gradually improving, and Germany is faring well. Europe generally looks set for an extended period of low growth relative to other parts of the world. In the UK the coalition government is taking steps to rebalance the economy which require austerity at both government and consumer level. Whilst we contrinue to consider companies that give us good quality exposure to UK consumers with low risk and attractive valuations, these are not easy to find. On the whole therefore, our portfolio remains weighted towards quality, international franchises. Looking ahead we continue to believe that a carefully chosen portfolio of smallcap and midcap companies should continue to outperform larger capitalisation companies' indices. We expect the CFD portfolio to continue to add value. Mike Prentis and Richard Plackett BlackRock Investment Management (UK) Limited 4 February 2011 Fifty Largest Investments as at 30 November 2010 Market value % of net Prospective Company £'000 assets PE ratio* Description Aveva Group Ordinary 2,867 Development and marketing shares of engineering computer Long CFD 957 3.0 26.1 software position Domino Printing Ordinary 2,614 Manufacture of inkjet and Sciences shares laser commercial printers Long CFD 898 2.8 15.3 position Abcam # Ordinary 2,456 Production and shares distribution of research Long CFD 870 2.6 28.5 grade antibodies and position associated products Spirax Sarco Ordinary 2,457 Design and manufacture of Engineering shares steam management systems Long CFD 809 2.6 15.6 position Oxford Ordinary 1,817 Design and manufacture of Instruments shares scientific instruments Long CFD 979 2.2 17.3 position Fidessa group 2,710 2.1 17.3 Development and marketing of financial trading connectivity software Rotork Ordinary 1,766 Engineering, shares manufacturing and design Long CFD 868 2.1 18.0 of valve actuators position Renishaw Ordinary 1,658 Design and manufacture of shares instruments used for Long CFD 817 1.9 18.0 calibration purposes position Victrex Ordinary 1,618 Manufacture and supply of shares PEEK thermoplastic Long CFD 837 1.9 16.3 products position Hutchison China 2,396 1.9 - Development and supply of Meditech # traditional Chinese medicines to the Chinese market ITE Group Ordinary 1,873 Organisation of trade shares exhibitions in Russia and Long CFD 374 1.8 14.0 other FSU countries position Spectris Ordinary 1,270 Development and marketing shares of productivity enhancing Long CFD 948 1.7 13.3 instrumentation and position controls Avocet Mining # Ordinary 1,633 Gold exploration and shares production Long CFD 561 1.7 11.7 position IQE # 2,168 1.7 31.5 Manufacture and supply of compound semiconductor wafers Cove Energy # 2,150 1.7 - Exploration for oil & gas offshore East Africa City of London 2,116 1.7 11.6 Management of investment Investment Group funds primarily invested in emerging markets Rathbone Ordinary 1,498 Private client fund Brothers shares management Long CFD 612 1.7 15.5 position Senior Ordinary 1,248 Manufacture and supply of shares components for the Long CFD 704 1.5 11.1 aerospace and automotive position sectors Western Coal # 1,949 1.5 9.3 Metallurgical and thermal coal production Gulfsands 1,750 1.4 8.0 Exploration and Petroleum # production of oil in Syria, other Middle Eastern countries and North Africa Immunodiagnostic 1,717 1.4 21.0 Development and supply of Systems # diagnostic testing systems Premier Farnell Ordinary 1,009 Design and distribution shares of electronic components Long CFD 664 1.3 15.7 position Spirent Ordinary 831 Design and supply of Communications shares telecoms testing systems Long CFD 821 1.3 19.7 position Robert Walters Ordinary 1,089 Provision of recruitment shares services Long CFD 547 1.3 18.7 position Booker Ordinary 810 Wholesale of grocery shares products Long CFD 826 1.3 15.3 position Brewin Dolphin 1,581 1.2 9.7 Fund management and Holdings stockbroking Eastern Platinum# 1,580 1.2 36.4 Exploration, development and production of platinum group metals Hargreaves 1,575 1.2 6.8 Mining, importing, Services # processing and supply of coal and related products Bellway 1,513 1.2 14.8 Housebuilding Dialight Ordinary 971 Design and manufacture of shares light emitting diode Long CFD 470 1.1 18.4 solutions position Gooch & Housego# 1,411 1.1 19.2 Manufacture of precision optical components SDL Ordinary 634 Supply of multilingual shares translation software and Long CFD 745 1.1 18.2 translation services position Hyder Consulting 1,354 1.1 9.5 Provision of engineering design services Encore Oil # 1,339 1.1 - Exploration for oil & gas in the North Sea Keller Group Ordinary 1,017 Provision of ground shares engineering solutions Long CFD 285 1.0 9.0 position Shaftesbury Ordinary 833 Investment in London West shares End real estate Long CFD 435 1.0 32.7 position Xaar 1,173 0.9 25.7 Design and manufacture of ink jet print heads Alterian 1,159 0.9 15.1 Development and sale of software to improve customer communication and marketing Hargreaves 1,149 0.9 26.8 Provision of investment Lansdown management services Aurelian Oil & 1,124 0.9 - Exploration and Gas # development of oil & gas in Eastern Europe Highland Gold 1,119 0.9 9.4 Production of gold in Mining # Russia and the former Soviet Union Elementis 1,089 0.9 12.0 Manufacture of speciality chemicals Yule Catto 1,088 0.9 8.9 Manufacture of speciality chemicals Endace # 1,078 0.8 55.0 Design and manufacture of solutions to monitor data networks Bahamas 1,062 0.8 - Exploration for oil & gas Petroleum # in the Bahamas Valiant 1,054 0.8 6.7 Exploration and production Petroleum # of oil and gas in the North Sea region Petra Diamonds # 1,053 0.8 30.1 Production of diamonds Intermediate Ordinary 620 Provision of mezzanine Capital Group shares capital mainly to private Long CFD 412 0.8 9.9 companies position Bowleven # 1,024 0.8 - Exploration and development of oil & gas offshore in West Africa Inchcape 951 0.7 10.0 Distribution and retail of cars and aftermarket services 50 largest 89,460 70.3 investments * Prospective PE ratio derived using late 2010 analyst estimates and relates to the next set of full year results for each company. # Traded on the Alternative Investment Market ("AIM") of the London Stock Exchange. All investments are in equity shares unless otherwise stated. Disclosure of the Company's smaller holdings would not add materially to shareholders' understanding of the Company's portfolio structure and priority investment themes, hence only the fifty largest investments have been disclosed. Comparative for Ten Largest Investments 2009 2009 Market % value of net Company £'000 assets Aveva Group Ordinary 2,289 shares Long CFD 1,007 3.1 position Domino Printing Ordinary 1,930 Sciences shares Long CFD 820 2.6 position Abcam Ordinary 2,058 shares Long CFD 920 2.8 position Spirax Sarco Ordinary 1,616 Engineering shares Long CFD 804 2.3 position Oxford Instruments Ordinary 139 shares Long CFD 348 0.5 position Fidessa group 2,498 2.3 Rotork Ordinary 1,703 shares Long CFD 1,105 2.6 position Renishaw 557 0.5 Victrex Ordinary 1,780 shares Long CFD 832 2.4 position Hutchison China 1,217 1.1 Meditech Distribution of Investments as at 30 November 2010 % of % of % of long % of long short net only CFD CFD asset Sector portfolio portfolio portfolio value Oil & Gas Producers 10.4 4.4 0.0 11.7 Oil Equipment, 0.5 0.0 0.0 0.5 Services & Distribution Oil & Gas 10.9 4.4 0.0 12.2 Chemicals 2.9 4.0 0.0 3.7 Industrial Metals 1.4 0.0 0.0 1.5 Mining 9.1 4.4 0.0 10.4 Other Basic 0.3 0.0 0.0 0.3 Materials Basic Materials 13.7 8.4 0.0 15.9 Construction & 1.3 1.3 -1.6 1.5 Materials Aerospace & Defence 0.9 5.5 -8.0 1.3 General Industrials 0.5 0.0 -0.2 0.5 Electronic & 9.3 19.5 -4.4 12.7 Electrical Equipment Industrial 7.4 7.9 0.0 9.1 Engineering Industrial 0.5 0.0 -3.8 0.2 Transportation Support Services 8.3 8.7 -34.7 7.6 Total Industrials 28.2 42.9 -52.7 32.9 Beverages 1.8 4.1 0.0 2.6 Food Producers 0.5 0.0 -9.1 -0.2 Household Goods & 1.8 3.2 -1.7 2.3 Home Construction Consumer Goods 4.1 7.3 -10.8 4.7 Health Care 2.8 0.0 -4.2 2.6 Equipment & Services Pharmaceuticals & 2.7 0.0 -4.3 2.5 Biotechnology Food & Drug 0.6 3.9 -4.6 0.9 Retailers Health Care 6.1 3.9 -13.1 6.0 General Retailers 3.2 0.0 -16.7 2.1 Media 5.1 1.8 0.0 5.7 Travel & Leisure 2.7 2.0 -2.4 3.0 Consumer Services 11.0 3.8 -19.1 10.8 Fixed Line 0.7 0.0 0.0 0.7 Telecommunications Telecommunications 0.7 0.0 0.0 0.7 Electricity 0.6 0.0 0.0 0.6 Utilities 0.6 0.0 0.0 0.6 Non-life Insurance 0.4 0.0 0.0 0.4 Real Estate Holdings 0.9 2.6 0.0 1.4 & Development Real Estate Services 0.5 0.0 0.0 0.5 Industrial & Office 1.0 0.0 0.0 1.1 REITs Retail REITs 0.6 2.1 0.0 1.0 Speciality REITs 0.3 0.0 0.0 0.3 Financial Services 7.3 7.1 0.0 8.9 Equity Investment 0.2 0.0 0.0 0.2 Instruments Financials 11.2 11.8 0.0 13.8 Software & Computer 10.0 11.8 -4.3 12.2 Services Technology Hardware 3.5 5.7 0.0 4.6 & Equipment Technology 13.5 17.5 -4.3 16.8 Total investments 100.0 100.0 -100.0 114.4 Analysis of the UK and AIM traded portfolio Gross Basis (long and short CFD portfolios in aggregate plus long portfolio) % of Index portfolio FTSE 250 40.3 FTSE AIM 34.7 FTSE Small Cap 18.8 Other 5.1 FTSE Fledgling 1.1 Net Basis (long CFD portfolio less short CFD portfolio plus long portfolio) % of Index portfolio FTSE AIM 38.9 FTSE 250 34.8 FTSE Small Cap 19.2 Other 5.8 FTSE Fledgling 1.3 Market capitalisation as at 30 November 2010 % of net Long Positions portfolio £1bn + 16.2 £400m - £1bn 33.5 £100m - £400m 41.7 £0 - 100m 15.2 Short Positions £1bn + -1.2 £400m - £1bn -3.6 £100m - £400m -1.7 £0 - 100m -0.1 Position size as at 30 November 2010 % of net Long Positions portfolio £0m - £1m 45.7 £1m - £2m 30.2 £2m + 30.6 Short Positions £0m - £1m -6.5 Historical Record Assets Creditors: amounts Total falling NAV Issued assets less due after Equity Mid-market absolute share current more than shareholders(1) NAV per price per Year to return capital liabilities one year funds share share 30 November % £'000 £'000 £'000 £'000 p p 2010 +47.5 3,494 127,296 - 127,296 212.8 163.0 2009 +54.2 4,224 106,917 - 106,917 144.3 115.8 2008 -51.94 6,863 77,029 - 77,029 93.5(1) 62.8 2007 -2.4 7,003 304,683 32,169 272,514 194.6(2) 152.0 2006 +16.2 8,179 358,381 32,169 326,212 199.4(2) 164.3 2005 +27.8 9,130 345,5532 32,169 313,3842 171.6(2,3) 142.0 2004 +28.0 11,488 340,7463 32,194 308,5523 134.3(2,3) 110.3 2003 +35.4 11,600 277,557 34,119 243,438 104.9(2) 84.0 2002 -24.9 11,863 228,953 45,126 183,827 77.5 59.0 2001 -9.7 11,886 290,332 45,126 245,206 103.2 81.0 1. Undiluted NAV per continuing share. 2. Prior charges at par. 3. Restated for changes in accounting policies: the principal changes were to value investments at bid (previously mid) market value and to account for dividends in the period in which they are paid. 4. Includes £5.5 million in respect of the write-back of prior years' VAT. Revenue Net Total Revenue revenue Available Return Dividends Year to gross finance Revenue before for per for 30 November revenue costs expenses taxation Taxation distribution share share £'000 £'000 £'000 £'000 £'000 £'000 p p 2010 2,596 2 655 1,939 8 1,931 2.85 3.00 2009 4,896(5) 2 1,785 3,109 4 3,105 3.86 4.75 2008 7,562(6) 798 1,912 4,852 4 4,848 3.85 5.40 2007 6,196 1,983 1,851 2,362 14 2,348 1.54 2.20 2006 7,113 1,937 1,915 3,261 - 3,261 1.84 2.00 2005 7,064 1,973 1,898 3,193 - 3,193 1.58 1.75 2004 7,428 2,136 1,715 3,577 - 3,577 1.55 1.60 2003 7,383 2,550 1,510 3,323 - 3,323 1.40 1.50 2002 7,177 2,582 1,472 3,123 58 3,065 1.29 1.50 2001 8,092 2,611 1,926 3,555 196 3,359 1.40 1.50 5. Includes interest of £2,469,000 received in relation to the refund of prior years' VAT. 2009 revenue has been restated following the Company's decision to adopt IFRS. 6. Includes £2,284,000 in respect of the write-back of prior years' VAT. Consolidated Statement of Comprehensive Income for the year ended 30 November 2010 Revenue Revenue Capital Capital Total Total 2010 2009 2010 2009 2010 2009 Notes £'000 £'000 £'000 £'000 £'000 £'000 Gains on investments held at fair value through profit or loss - - 41,570 40,197 41,570 40,197 Net return on contracts for difference 212 142 7,029 1,305 7,241 1,447 Income from investments held at fair value through profit or loss 3 2,380 2,232 - - 2,380 2,232 Other income 3 4 53 - - 4 53 Interest on write back of prior years' VAT 3 - 2,469 - - - 2,469 ----- ----- ------ ------ ------ ------ Total revenue 2,596 4,896 48,599 41,502 51,195 46,398 ----- ----- ------ ------ ------ ------ Investment management and performance fees 4 (249) (210) (6,865) (981) (7,114) (1,191) Other expenses 5 (399) (565) 329 532 (70) (33) ----- ----- ------ ------ ------ ------ Total operating expenses (648) (775) (6,536) (449) (7,184) (1,224) ----- ----- ------ ------ ------ ------ Net return before finance costs and taxation 1,948 4,121 42,063 41,053 44,011 45,174 Finance costs (2) (2) - - (2) (2) Costs on redemption of debenture stocks - - - (30) - (30) Change in tender offer provision (7) (1,010) (174) 1,111 (181) 101 ----- ----- ------ ------ ------ ------ Return on ordinary activities before taxation 1,939 3,109 41,889 42,134 43,828 45,243 ----- ----- ------ ------ ------ ------ Taxation on ordinary activities (8) (4) - - (8) (4) ----- ----- ------ ------ ------ ------ Net return for the year after taxation 1,931 3,105 41,889 42,134 43,820 45,239 ----- ----- ------ ------ ------ ------ Earnings per ordinary share - basic and undiluted 7 2.85p 3.86p 61.74p 52.45p 64.59p 56.31p ----- ----- ------ ------ ------ ------ The total column of this statement represents the Consolidated Statement of Comprehensive Income, prepared in accordance with IFRS, as adopted by the European Union. The supplementary revenue and capital columns are both prepared under guidance published by the Association of Investment Companies ("AIC"). All items in the above statement derive from continuing operations. No operations were acquired or discontinued during the year. All income is attributable to the equity holders of The Throgmorton Trust PLC. There are no minority interests. The net return of the Group for the year was £43,820,000 (2009: £45,239,000). The change in tender offer provision represents the movement in the value of the tender pool between the tender date and the final distribution date to tendering shareholders. Of this change, the movement within the capital column represents the change in market value of tendered investments since the tender date, and the movement within the revenue column represents changes in income on tendered investments that fell due to tendering shareholders. In addition the movement in tender offer provision of £1,010,000 in 2009 included £967,000 relating to interest on VAT recovered in relation to prior years. The Group does not have any other recognised gains or losses. The net return for the year disclosed above represents the Group's Comprehensive Income. Statement of Changes in Equity for the year ended 30 November 2010 Share Capital Share premium Special redemption Capital Revenue capital account reserve reserve reserve reserve Total Note £'000 £'000 £'000 £'000 £'000 £'000 £'000 Group For the year ended 30 November 2010 At 30 November 2009 4,224 35,272 - 11,114 48,954 7,353 106,917 Total Comprehensive Income: Return for the year - - - - 41,889 1,931 43,820 Transactions with owners, recorded directly to equity: Exercise of subscription shares 61 2,147 - - - - 2,208 Cancellation of treasury shares (791) - - 791 - - - Cancellation of share premium account - (35,272) 35,272 - - - - Transfer of assets to tender pool - - - - (22,197) - (22,197) Dividends paid and declared (see (a) below) 6 - - - - - (3,452) (3,452) ----- ----- ------ ------ ------ ----- ------- At 30 November 2010 3,494 2,147 35,272 11,905 68,646 5,832 127,296 ----- ----- ------ ------ ------ ----- ------- For the year ended 30 November 2009 At 30 November 2008 6,863 35,272 - 8,327 17,872 8,695 77,029 Total Comprehensive Income: Return for the year - - - - 42,134 3,105 45,239 Transactions with owners, recorded directly to equity: Exercise of subscription shares 148 - - - (148) - - Share issue costs - - - - (265) - (265) Transfer of assets to tender pool - - - - (10,639) - (10,639) Shares repurchased and cancelled (2,787) - - 2,787 - - - Dividends paid and declared (see (b) below) 6 - - - - - (4,447) (4,447) ----- ----- ------ ------ ------ ----- ------- At 30 November 2009 4,224 35,272 - 11,114 48,954 7,353 106,917 ----- ----- ------ ------ ------ ----- ------- Company For the year ended 30 November 2010 At 30 November 2009 4,224 35,272 - 11,114 50,432 5,875 106,917 Total Comprehensive Income: Return for the year - - - - 41,892 1,928 43,820 Transactions with owners, recorded directly to equity: Exercise of subscription shares 61 2,147 - - - - 2,208 Cancellation of treasury shares (791) - - 791 - - - Cancellation of share premium account - (35,272) 35,272 - - - - Transfer of assets to tender pool - - - - (22,197) - (22,197) Dividends paid and declared (see (a) below) 6 - - - - - (3,452) (3,452) ----- ----- ------ ------ ------ ----- ------- At 30 November 2010 3,494 2,147 35,272 11,905 70,127 4,351 127,296 ----- ----- ------ ------ ------ ----- ------- For the year ended 30 November 2009 At 30 November 2008 6,863 35,272 - 8,327 19,648 6,919 77,029 Total Comprehensive Income: Return for the year - - - - 41,836 3,403 45,239 Transactions with owners, recorded directly to equity: Exercise of subscription shares 148 - - - (148) - - Share issue costs - - - - (265) - (265) Transfer of assets to tender pool - - - - (10,639) - (10,639) Shares repurchased and cancelled (2,787) - - 2,787 - - - Dividends paid and declared (see (b) below) 6 - - - - - (4,447) (4,447) ----- ----- ------ ------ ------ ----- ------- At 30 November 2009 4,224 35,272 - 11,114 50,432 5,875 106,917 ----- ----- ------ ------ ------ ----- ------- a. Final dividend of 2.20p per share and special dividend of 2.00p per share for the year ended 30 November 2009, declared on 29 January 2010 and paid on 26 March 2010 and Interim dividend of 0.58p per share for the year ended 30 November 2010, declared on 20 July 2010 and paid on 31 August 2010. b. Final dividend of 1.85p per share and special dividend of 3.00p per share for the year ended 30 November 2008, declared on 1 April 2009 and paid on 1 May 2009 and Interim dividend of 0.55p per share for the year ended 30 November 2009, declared on 21 July 2009 and paid on 27 August 2009. Statement of Financial Position as at 30 November 2010 Notes 2010 2010 2009 2009 Group Company Group Company £'000 £'000 £'000 £'000 Non current assets Investments held at fair value through profit or loss 134,627 136,428 105,755 107,553 ------- ------- ------- ------- Current assets Other receivables 619 619 350 350 Amounts due in respect of contracts for difference 8,066 8,066 2,784 2,784 Cash 1,256 653 1,032 17 ------- ------- ------- ------- 9,941 9,338 4,166 3,151 ------- ------- ------- ------- Total assets 144,568 145,766 109,921 110,704 Current liabilities Other payables (9,307) (10,505) (2,222) (3,005) Bank overdraft - - (40) (40) Collateral pledged in respect of contracts for difference (7,965) (7,965) - - Amounts due in respect of contracts for difference - - (742) (742) ------- ------- ------- ------- (17,272) (18,470) (3,004) (3,787) ------- ------- ------- ------- Net assets 127,296 127,296 106,917 106,917 ------- ------- ------- ------- Equity attributable to equity holders Share capital 8 3,494 3,494 4,224 4,224 Share premium account 9 2,147 2,147 35,272 35,272 Special reserve 9 35,272 35,272 - - Capital redemption 9 11,905 11,905 11,114 11,114 reserve Capital reserves 9 68,646 70,127 48,954 50,432 Revenue reserve 9 5,832 4,351 7,353 5,875 ------- ------- ------- ------- Total equity shareholders' funds 127,296 127,296 106,917 106,917 ======= ======= ======= ======= Net asset value per ordinary share - undiluted 7 212.80p 212.80p 144.26p 144.26p ======= ======= ======= ======= Net asset value per ordinary share - diluted 7 200.64p 200.64p 144.26p 144.26p ======= ======= ======= ======= Consolidated Cash Flow Statement For the year ended 30 November 2010 2010 2010 2009 2009 Group Company Group Company £'000 £'000 £'000 £'000 Operating activities Profit before taxation 43,828 43,828 45,243 45,243 Add back interest paid 165 165 303 303 Gains on investments held at fair value through profit or loss including transaction costs (48,603) (48,606) (41,501) (41,203) Net movement on foreign exchange 4 4 (1) (1) Net movement in investments held at fair value through profit or loss 95,694 95,694 116,922 116,922 In specie transfer of assets to tendering shareholders (7,793) (7,793) - - Purchases of investments held at fair value through profit or loss (81,828) (81,828) (91,155) (91,155) (Increase)/decrease in other receivables (27) (27) 458 458 (Increase)/decrease in amounts due from brokers (228) (228) 595 595 Increase/(decrease) in amounts due to brokers 646 646 (167) (167) Increase/(decrease) in other payables 6,390 6,805 (1,410) (1,708) Scrip dividends included in investment income - - (5) (5) ------ ------ ------ ------ Net cash inflow from operating activities before interest and taxation 8,248 8,660 29,282 29,282 ------ ------ ------ ------ Interest paid (165) (165) (303) (303) Taxation on overseas income - - (10) (10) ------ ------ ------ ------ Net cash inflow from operating activities 8,083 8,495 28,969 28,969 ------ ------ ------ ------ Financing activities Distributions to tender shareholders (14,286) (14,286) (28,306) (28,306) Proceeds from exercise of subscription shares 2,208 2,208 - - Subscription share issue costs paid (250) (250) - - Redemption of debenture stock - - (30) (30) Dividends paid (3,452) (3,452) (4,447) (4,447) ------ ------ ------ ------ Net cash outflow from financing activities (15,780) (15,780) (32,783) (32,783) ------ ------ ------ ------ Decrease in cash and cash equivalents (7,697) (7,285) (3,814) (3,814) Effect of foreign exchange rate changes (4) (4) 1 1 ------ ------ ------ ------ Change in cash and cash equivalents (7,701) (7,289) (3,813) (3,813) Cash and cash equivalents at the start of the year 992 (23) 4,805 3,790 ------ ------ ------ ------ Cash and cash equivalents at the end of the year (6,709) (7,312) 992 (23) ------ ------ ------ ------ Comprised of: Cash 1,256 653 1,032 17 Collateral pledged in respect of contracts for difference (7,965) (7,965) - - Bank overdraft - - (40) (40) ------ ------ ------ ------ Total (6,709) (7,312) 992 (23) ====== ====== ====== ====== Notes to the financial statements 1. Principal activity The principal activity of the Company is that of an investment trust company within the meaning of section 1158 of the Corporation Tax Act 2010. The Company has two subsidiaries, The Third Throgmorton Trust Limited the principal activity of which was investment dealing in shares and other investments and T.T. Finance PLC which acted as a financing subsidiary. 2. Accounting policies The policies set out below have been applied consistently throughout the year. (a) Basis of preparation The financial statements of the Group have been prepared in accordance with IFRS as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006. Insofar as the Statement of Recommended Practice ("SORP") for investment trust companies and venture capital trusts issued by the AIC, revised in January 2009, is compatible with IFRS, the financial statements have been prepared in accordance with guidance set out in the SORP. Previously the financial statements were prepared in accordance with UK Generally Accepted Accounting Practices. These comprise standards and interpretations of the International Accounting Standards and Standard Interpretations Committee as approved by the International Accounting Standards Committee that remain in effect, to the extent that IFRS have been adopted by the European Union. The functional currency of the Group is UK pounds sterling as this is the currency of the primary economic environment in which the Group operates. All values are rounded to the nearest thousand pounds (£'000) except where otherwise stated. Group comparative results are presented for all primary statements with effect from this annual reporting date being 30 November 2010. (b) Consolidation The consolidated financial statements incorporate the financial statements of the Company and its subsidiary undertakings, T.T. Finance PLC and The Third Throgmorton Trust Limited, made up to 30 November 2010. The Company has taken advantage of the exemption provided under section 408 of the Companies Act 2006 not to publish its individual Statement of Comprehensive Income and related notes. All of the Group's operations are of a continuing nature (c) Presentation of Consolidated Statement of Comprehensive Income In order to reflect better the activities of an investment trust company and in accordance with guidance issued by the AIC, supplementary information which analyses the Consolidated Statement of Comprehensive Income between items of a revenue and a capital nature has been presented alongside the Consolidated Statement of Comprehensive Income. In accordance with the Company's status as a UK investment company under section 833 of the Companies Act 2006 and section 1158 of the Corporation Tax Act 2010, net capital returns may not be distributed by way of dividend. (d) Investments held at fair value through profit or loss The Company's investments are classified as held at fair value through profit or loss in accordance with IAS 39 - Financial Instruments: Recognition and Measurement and are managed and evaluated on a fair value basis in accordance with its investment strategy. All investments are designated upon initial recognition as held at fair value through profit or loss. Purchases of investments are recognised on a trade date basis. The sales of assets are recognised at the trade date of the disposal. Proceeds are measured at fair value, which is regarded as the proceeds of sale less any transaction costs. The fair value of the long only portfolio is the price of the securities, without deduction for estimated future selling costs. Under IFRS, the investments in the subsidiaries are carried at fair value which is deemed to be the total equity of the subsidiaries. Unquoted investments are valued by the Directors at fair value using International Private Equity and Venture Capital Valuation Guidelines. These policies apply to all current and non current asset investments of the Company and the Group. Changes in the value of investments held at fair value through profit or loss and gains and losses on disposal are recognised in the Consolidated Statement of Comprehensive Income as "Gains or losses on investments held at fair value through profit or loss". Also included within this heading are transaction costs in relation to the purchase or sale of investments. (e) Derivatives Derivatives are held at fair value based either on traded prices or Directors' fair valuation to the extent that traded prices are unavailable. Gains and losses on derivative transactions are recognised in the Consolidated Statement of Comprehensive Income. They are recognised as capital and are shown in the capital column of the Consolidated Statement of Comprehensive Income if they are of a capital nature and are recognised as revenue and shown in the revenue column of the Consolidated Statement of Comprehensive Income if they are of a revenue nature. To the extent that any gains or losses are of a mixed revenue and capital nature, they are apportioned between revenue and capital accordingly. (f) Segmental reporting The Directors are of the opinion that the Company is engaged in a single segment of business being investment business. (g) Income Dividends receivable on equity shares are recognised on an ex-dividend basis. Where no ex-dividend date is available, dividends receivable on or before the year end are treated as revenue for the year. Provisions are made for any dividends not expected to be received. Fixed returns on non equity securities are recognised on a time apportionment basis so as to reflect the effective yield on the security. Interest income is accounted for on an accruals basis. (h) Expenses All expenses, including finance costs, are accounted for on an accruals basis. Expenses have been charged wholly to the revenue column of the Consolidated Statement of Comprehensive Income, except as follows: - expenses including finance costs which are incidental to the acquisition or disposal of investments are included within the cost of the investments. - the investment management fee has been allocated 75% to the capital column and 25% to the revenue column of the Consolidated Statement of Comprehensive Income in line with the Board's expected long term split of returns, in the form of capital gains and income respectively, from the investment portfolio. - performance fees have been allocated 100% to the capital column of the Consolidated Statement of Comprehensive Income, as performance has been predominantly generated through capital returns from the investment portfolio. - BlackRock, has agreed to waive investment management fees of £1,068,000 which includes AXA's termination fee of £444,000 and other costs relating to the change of management and restructuring of the Company of £624,000. The value of this fee waiver benefit has been amortised over the 24 month initial term of the investment management agreement, which is terminable on 6 months notice after an initial 18 month period, and has been allocated to capital. The fee waiver was fully amortised during the year. (i) Finance costs Finance costs are accounted for on an accruals basis. Finance costs are allocated, insofar as they relate to the financing of the Company's investments, 75% to the capital column and 25% to the revenue column of the Consolidated Statement of Comprehensive Income in line with the Board's expected long term split of returns, in the form of capital gains and income respectively, from the investment portfolio. (j) Taxation Deferred taxation is recognised in respect of all temporary differences at the financial reporting date, where transactions or events that result in an obligation to pay more tax in the future or right to pay less tax in the future have occurred at the financial reporting date. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the temporary differences can be deducted. Where expenses are allocated between capital and revenue any tax relief in respect of the expenses is allocated between capital and revenue returns on the marginal basis using the Company's effective rate of corporation tax for the accounting period. (k) Dividends payable Under IFRS, final dividends, should not be accrued in the financial statements unless they have been approved by shareholders before the financial reporting date. Interim dividends should not be accrued in the financial statements unless they have been paid. Dividends payable to equity shareholders are recognised in the Statement of Changes in Equity when they have been approved by shareholders in the case of a final dividend or paid in the case of an interim dividend, and have become a liability of the Company. (l) Cash and cash equivalents Cash comprises cash in hand and demand deposits. Cash equivalents are short term, highly liquid investments, that are readily convertible to known amounts of cash and that are subject to an insignificant risk of changes in value. 3. Income 2010 2009 £'000 £'000 Investment income: UK listed dividends 2,161 1,963 Overseas listed dividends 219 269 ----- ----- 2,380 2,232 ----- ----- Other income: Deposit interest 2 20 Underwriting commission 2 33 ----- ----- 4 53 ----- ----- Interest on VAT refunded - 2,469 ----- ----- Total 2,384 4,754 ----- ----- Total income comprises: Dividends 2,380 2,232 Interest 2 20 Other income 2 33 Interest on VAT refunded - 2,469 ----- ----- 2,384 4,754 ----- ----- 4. Investment management and performance fees 2010 2010 2010 2009 2009 2009 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Investment management fee 249 748 997 210 628 838 Performance fee - 6,117 6,117 - 353 353 --- ----- ----- --- --- ----- Total 249 6,865 7,114 210 981 1,191 --- ----- ----- --- --- ----- The terms of the investment management agreement with BlackRock provide for a basic management fee, payable quarterly in arrears, of 0.7% per annum on the gross asset value of the Company's long only portfolio plus the gross value of the underlying equities, long and short, to which the Company is exposed through the CFD portfolio. In addition, BlackRock is entitled to a performance fee of 12.5% of any net asset value (total return) outperformance against the Hoare Govett Small Companies plus AIM (ex Investment Companies) Index. The performance fee is subject to a high watermark such that, if in a performance period the Company underperforms the Index, in a future performance period a performance fee is only payable on the net asset value return that represents the net outperformance. In addition, the performance fee in any performance period will be capped at 4.99% of the average value of the Company's assets. Performance fees have been wholly allocated to the capital column of the Consolidated Statement of Comprehensive Income as the performance has been predominantly generated through capital returns from the investment portfolio. As at 30 November 2010, there was a performance fee payable to the Investment Manager of £6,117,000 (2009: £353,000). The net asset value and share price performance with income reinvested which have been disclosed in the financial highlights on page 1 include the subscription share reinvestment, assuming the subscription share entitlement per share was sold and the proceeds reinvested on the first day of trading. This reinvestment factor has been excluded from the calculation of the total return for the purposes of calculating the performance fee. In addition, the accounting adjustments relating to the management fee waiver and the basic management fee have also been excluded from the performance computation. After adjusting for these factors, changes in capital structure, material inflows and outflows and including the impact of the reinvestment of dividends paid in the period, the cum income, total return NAV used to calculate the performance fee amounted to 231.14p, generating outperformance of 34.3% above the benchmark index and a performance fee of £6,117,000. BlackRock has agreed to waive the management fees payable to the Company up to the level of transition and restructuring costs of £1,068,000. This fee waiver benefit has been amortised over the initial period of the management contract of 24 months. A credit of £309,000 (2009: £532,000) has been applied to termination costs in the capital column of the Consolidated Statement of Comprehensive Income. The fee waiver was fully amortised during the year. 5. Other operating activities 2010 2010 2010 2009 2009 2009 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 (a) Other operating expenses Auditors' remuneration: - audit services(a) 28 - 28 28 - 28 - other services 9 - 9 25 - 25 Registrar's fee 55 - 55 41 - 41 Directors' remuneration 100 - 100 106 - 106 Termination costs - (329) (329) - (532) (532) Other administrative costs 207 - 207 365 - 365 --- --- --- --- --- --- 399 (329) 70 565 (532) 33 --- --- --- --- --- --- (a) Auditors' remuneration - other services comprised £9,000, of which £5,000 related to the interim review and £4,000 related to services in respect of the conversion to IFRS. Fees of £25,000 (2009: £40,000) were also paid to Ernst & Young in respect of non audit services provided in relation to the tender offer (2009: tender offer and subscription share issue). These fees were charged directly to the capital reserve in line with all other tender costs. 2010 2009 (b) The Company's total expense ratio ("TER"), calculated as a percentage of average net assets and using expenses, excluding performance fee, interest costs and VAT written back (b): 1.2% 1.3% (b) The Company's TER was calculated using total expenses of £1,396,000 (comprising of investment management fees totalling £997,000 and other operating expenses of £399,000) and average net assets of £117,107,000. BlackRock has agreed to waive the management fees payable by the Company up to the level of transition and restructuring costs of £1,068,000. This fee waiver benefit has been amortised over the initial period of the management contract of 24 months. A credit of £309,000 (2009: £532,000) has been applied to termination costs in the capital column of the Consolidated Statement of Comprehensive Income. The fee waiver was fully amortised during the year. 6. Dividends Payment 2010 2009 Record date date £'000 £'000 Dividends paid or proposed on equity shares: 2008 final of 1.85p 3 April 2009 1 May 2009 - 1,523 2008 special of 3.00p 3 April 2009 1 May 2009 - 2,471 2009 interim of 0.55p 31 July 2009 27 August 2009 - 453 2009 final of 2.20p 19 February 2010 26 March 2009 1,631 - 2009 special of 2.00p 19 February 2010 26 March 2010 1,482 - 2010 interim of 0.58p 30 July 2010 31 August 2010 339 - ----- ----- 3,452 4,447 ----- ----- The Directors have proposed a final dividend of 2.42p per share (2009: Final 2.20p, special 2.00p). The dividends will be paid, subject to shareholders approval on 25 March 2011, to shareholders on the Company's register on 18 February 2011. The proposed final dividend has not been included as a liability in these financial statements as final dividends are only recognised in the financial statements when they have been approved by shareholders. The total dividends payable in respect of the year which form the basis of section 1158 of the Corporation Tax Act 2010 and section 833 of the Companies Act 2006, and the amounts proposed meet the relevant requirements as set out in the legislation and are as follows: 2010 2009 £'000 £'000 Dividends paid or proposed on equity shares: Interim paid 0.58p (2009: 0.55p) 339 453 Final proposed of 2.42p* (2009: 2.20p) 1,471 1,631 Special dividend of 0.00p (2009: 2.00p) - 1,482 ----- ----- 1,810 3,566 ----- ----- *based upon 60,797,273 ordinary shares. 7. Consolidated returnand net asset value per ordinary share Revenue and capital returns per share are shown below and have been calculated using the following: 2010 2009 Net revenue return attributable to continuing ordinary shareholders (£'000) 1,931 3,105 Net capital return attributable to continuing ordinary shareholders (£'000) 41,889 42,134 ------- ------- Total equity attributable to continuing ordinary shareholders (£'000) 43,820 45,239 ------- ------- Total equity (£'000) 127,296 106,917 ------- ------- The weighted average number of ordinary shares in issue during each year, on which the return per ordinary share was calculated, was: 67,839,455 80,343,189 The number of ordinary shares in issue at the end of the year, on which the undiluted net asset value was calculated, was: 59,819,714 74,116,108 The number of ordinary shares in issue at the end of the year, on which the diluted net asset value was calculated, was: 73,130,326 88,939,009 Actual number of subscription shares in issue at the end of each year 13,310,612 14,822,901 Undiluted Revenue earnings per share 2.85p 3.86p Capital earnings per share 61.74p 52.45p ------- ------- Total earnings per share 64.59p 56.31p ------- ------- Net asset value per share 212.80p 144.26p ------- ------- Diluted Revenue earnings per share 2.85p 3.86p Capital earnings per share 61.74p 52.45p ------- ------- Total earnings per share 64.59p 56.31p ------- ------- Net asset value per share 200.64p 144.26p ------- ------- Ordinary share price 163.00p 115.75p Subscription share price 24.25p 8.00p ======= ======= At the year end, the Company had in issue 13,310,612 subscription shares which confer the right to subscribe at set times for all or any of the ordinary shares to which the subscription shares relate at a price of 146p per share. As the Company's NAV was in excess of the exercise price, the subscription shares are considered to be dilutive and a fully diluted NAV per share was calculated by adjusting the total equity for consideration receivable on the exercise of all subscription shares in existence at the time. There was no dilution to the earnings per share as the average share price of the ordinary shares was below the exercise price of the subscription shares. 8. Share capital Continuing Tender Treasury Subscription Total ordinary shares shares number shares shares shares in issue number number in issue number number £'000 Allotted, called up and fully paid share capital comprised: Ordinary shares of 5p each: At 1 December 2009 74,116,108 - 7,400,000 14,822,901 96,339,009 4,224 Shares cancelled from treasury on 26 July 2010 - - (7,400,000) - (7,400,000) (370) Tendered - July 2010 (15,808,683) 15,808,683 - - - - Cancelled/transferred to treasury on 30 July 2010 following tender offer - (15,808,683) 7,400,000 - (8,408,683) (421) ---------- ---------- --------- ---------- ---------- ----- 58,307,425 - 7,400,000 14,822,901 80,530,326 3,433 Subscription shares of 1p each: Conversion of subscription shares into ordinary shares 1,512,289 - - (1,512,289) - 61 ---------- ---------- --------- ---------- ---------- ----- 1,512,289 - - (1,512,289) - 61 ---------- ---------- --------- ---------- ---------- ----- At 30 November 2010 59,819,714 - 7,400,000 13,310,612 80,530,326 3,494 ---------- ---------- --------- ---------- ---------- ----- With the exception of the July 2010 tender offer no ordinary shares were purchased or cancelled in the year (2009: nil, with the exception of the August 2009 tender offer). On 26 July 2010, 7,400,000 ordinary treasury shares were cancelled. On 30 July 15,808,683 ordinary shares were tendered and 8,408,683 shares were cancelled (2009: 8,235,089) and 7,400,000 shares were transferred to treasury. 5,675,770 ordinary shares were purchased pursuant to the in specie distribution and a further 10,132,913 ordinary shares were purchased under the cash exit option. During the year the Company has issued a total of 1,512,289 ordinary shares, following the conversion of subscription shares into ordinary shares for a total consideration of £2,208,000. Following the latest conversion opportunity on 31 January 2011, a further 977,559 ordinary shares were issued on 2 February 2011, subject to listing on 7 February 2011, for a total consideration of £1,427,000. Following the listing of the additional shares, the Company will have 60,797,273 ordinary shares (excluding 7,400,000 shares currently held in treasury) and 12,333,053 subscription shares in issue. The subscription shares were allotted as a bonus issue to ordinary shareholders on 30 September 2009, on the basis of one subscription share for every five ordinary shares. Each subscription share confers the rights but not the obligation to subscribe for one ordinary share, at a pre-determined price of 146p per ordinary share, exercisable quarterly on 30 April, 31 July and 31 October 2011, after which the rights of the subscription shares will lapse. The ordinary shares (including new ordinary shares issued as a result of the exercise of subscription share rights) carry the right to receive any dividends and have one voting right per ordinary share. There are no restrictions on the voting rights of the ordinary shares or on the transfer of ordinary shares. The subscription shares do not carry the right to receive any dividends and do not have any voting rights. There are no restrictions on the transfer of the subscription shares 9. Reserves Group Capital reserve Capital (arising on reserve revaluation Share Capital (arising on of premium Special redemption investments investments Revenue account reserve reserve sold) held) reserve £'000 £'000 £'000 £'000 £'000 £'000 At 1 December 2009 35,272 - 11,114 41,372 7,582 7,353 Movement during the year: Cancellation of treasury shares - - 791 - - - Revenue return for the year - - - - - 1,719 Cancellation of share premium account (35,272) 35,272 - - - - Transfer to tender pool - - - (22,197) - - Change in value of tender pool - - - (174) - - Exercise of subscription shares 2,147 - - - - - Gains on realisation of investments - - - 16,260 - - Change in investment holding gains - - - - 25,314 - Loss on foreign currency transactions - - - (4) - - Gains on contracts for difference - - - 1,005 6,024 212 Finance costs, investment management and performance fee charged to capital after taxation - - - (6,536) - - Dividends paid during the year - - - - - (3,452) ----- ------ ------ ------ ------ ----- At 30 November 2010 2,147 35,272 11,905 29,726 38,920 5,832 ----- ------ ------ ------ ------ ----- Company Capital reserve Capital (arising on reserve revaluation Share Capital (arising on of premium Special redemption investments investments Revenue account reserve reserve sold) held) reserve £'000 £'000 £'000 £'000 £'000 £'000 At 1 December 2009 35,272 - 11,114 41,372 9,060 5,875 Movement during the year: Cancellation of treasury shares - - 791 - - - Revenue return for the year - - - - - 1,716 Cancellation of share premium account (35,272) 35,272 - - - - Transfer to tender pool - - - (22,197) - - Change in value of tender pool - - - (174) - - Exercise of subscription shares 2,147 - - - - - Gains on realisation of investments - - - 16,260 - - Change in investment holding gains - - - - 25,317 - Loss on foreign currency transactions - - - (4) - - Gains on contracts for difference - - - 1,005 6,024 212 Finance costs, investment management and performance fee charged to capital after taxation - - - (6,536) - - Dividends paid during the year - - - - - (3,452) ----- ------ ------ ------ ------ ----- At 30 November 2010 2,147 35,272 11,905 29,726 40,401 4,351 ----- ------ ------ ------ ------ ----- The special reserve arising on the cancellation of the share premium account may be used as distributable profits for all purposes and in particular the acquisition by the Company of its own ordinary shares. 10. Publication of non statutory accounts The financial information contained in this announcement does not constitute statutory accounts as defined in the Companies Act 2006. The 2010 annual report and financial statements will be filed with the Registrar of Companies shortly. The report of the Auditor for the year ended 30 November 2010 contains no qualification or statement under section 498(2) or (3) of the Companies Act 2006. The comparative figures are extracts from the audited financial statements of The Throgmorton Trust PLC and its subsidiaries for the year ended 30 November 2009, which have been filed with the Registrar of Companies. The report of the Auditor on those accounts contained no qualification or statement under section 498 of the Companies Act. This announcement was approved by the Board of Directors on 4 February 2011. 11. Annual Report Copies of the annual report will be sent to members shortly and will be available from the registered office, c/o The Company Secretary, The Throgmorton Trust PLC, 33 King William Street, London EC4R 9AS. 12. Annual General Meeting The Annual General Meeting of the Company will be held at 33 King William Street, London EC4R 9AS on Friday, 11 March 2011 at 12:00 p.m. ENDS The Annual Report will also be available on the BlackRock Investment Management website at http://www.blackrock.co.uk/content/groups/uksite/documents/ literature/1111079283.pdf. Neither the contents of the Manager's website nor the contents of any website accessible from hyperlinks on the Manager's website (or any other website) is incorporated into, or forms part of, this announcement. For further information, please contact: Jonathan Ruck Keene, Managing Director, Investment Companies, BlackRock Investment Management (UK) Limited Tel: 020 7743 2178 Mike Prentis, BlackRock Investment Management (UK) Limited Tel: 020 7743 2312 Richard Plackett, BlackRock Investment Management (UK) Limited Tel: 020 7743 4869 Emma Phillips, Media & Communication, BlackRock Investment Management (UK) Limited Tel: 020 7743 2922 Louise Dolan, FD Tel: 020 7269 7192 4 February 2011 33 King William Street London EC4R 9AS

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