Final Results

THE THROGMORTON TRUST PLC PRELIMINARY ANNOUNCEMENT FOR THE YEAR ENDED 30 NOVEMBER 2004 â€¢ Continued strong outperformance by the Trust â€¢ Net Asset Value per ordinary share 135.4p (2003:104.9p) see table below â€¢ Increased final dividend 1.10p (2003:1.0p) making a total of 1.6p (2003:1.5p) NET ASSET VALUE 30.11.2003 30.11.2004 Year on year 31.01.2005 % change The Throgmorton Trust PLC 104.9p 135.4p +29.0 153.7p FTSE SmallCap (ex Inv. 2,462.4 2,671.5 +8.5 2,869.9 Cos.) FTSE All-Share 2,146.7 2,345.2 +9.2 2,441.2 THE CHAIRMAN, LORD STEWARTBY, COMMENTED: In my last annual statement as Chairman I am pleased to be able to report to shareholders on an outstandingly successful year. While the broader market made satisfactory progress during 2004, the relevant indices, both for the SmallCap sector and for the market as a whole, are still well short of where they stood four years ago. It is therefore particularly gratifying that both the net asset value and the share price of the Trust should have now reached record levels. Portfolio and Net Asset Value At 30 November 2004 net asset value per share stood at 135.4p against 104.9p at the end of the previous November, a rise of 29.0 per cent. This compares with an increase of 8.5 per cent in the FTSE SmallCap Index (excluding Investment Companies). I am glad to be able to report that there have been further gains in the Trust's net asset value in December and January, and that outperformance against the indices has continued. The Trust's portfolio consists of stocks with a spread of market capitalisation, from the lower end of the MidCap index to the increasingly important area of AIM, and is constructed so as to cover a broad range of sectors. Nevertheless, as explained in the Managers' Review, there is strong emphasis on individual stock selection, with regard to positive market background, sound balance sheets, strong management and tight controls. In an improving economy and a rising market this formula can bring exceptional returns, as may be seen from the relative performance of the Trust over the last two years, with a gain of 75 per cent in net asset value per share against 40 per cent and 17 per cent respectively by the SmallCap and All Share Indices. Revenue and Dividend With improved earnings in a number of sectors of the market many companies have been increasing their dividends, with a consequent benefit to the Trust's revenue account. When in 2000 shareholders approved the Board's proposal that a new objective should be adopted for the Trust, dispensing with a reference to income, the result was a rebalancing of the portfolio and a reduction in its yield. Because of the substantial revenue reserves held both by the parent company and by its financing subsidiaries, the Board then took the view that it would be appropriate to set the Trust's dividend at 1.5p per share, even though this was not fully covered by current revenue at the time. This level of dividend was then maintained over the following three years, drawing on reserves to a diminishing degree each year. With its revenue stream growing, the Trust is now in a position to increase its dividend. The directors are therefore proposing a final dividend of 1.1p per share (2003 : 1.0p), making a total for the year of 1.6p (2003 : 1.5p), an increase of 6.7 per cent. A Company Transformed In stepping down from the chairmanship of the Trust after fifteen years, I am confident that my successor inherits responsibility for a company in a sound and flourishing condition, and justly now regarded as one of the leaders in its field. In 1990 it had faced many difficulties: too much debt, incurred in pursuit of a policy of diversification; much of the assets consisting of illiquid and unquoted investments, the valuation of which was declining as the economy deteriorated; and increasing strain on revenue as the profitability of subsidiary and associate companies fell below what was needed to service expensive borrowings. Understandably investor confidence in the company at that time was low, and concerted action was needed to address its problems. Over the following years the businesses of the subsidiaries and associates were stabilised and the companies then sold or wound up, as market conditions allowed; debt was reduced; and the shape of the portfolio was restored to an orthodox form by disposal of residual unquoted holdings. The final stage in the process came in 2000 when, as described above, the decision was taken to alter the objective of the Trust so as to allow a lower yield. That there is a trade-off between yield and capital growth is illustrated by the performance of the Trust's net asset value in the four years now completed since December 2000, when reorganisation of the portfolio had been carried through. The Board wishes to express its appreciation to the Manager for the excellent performance that has been achieved. The Board In November we were pleased to welcome to the Board Mr. Eric Stobart, FCA who has been active for more than thirty years in corporate finance, investment and related areas of financial markets. The intention is that during the current year he should assume the chairmanship of the Audit Committee in succession to Sir Victor Garland. We are grateful to Sir Victor for having filled this responsible post with distinction for several years; he has agreed to seek re-election as a director for one further year in order to provide continuity during the period of transition. At the end of the Annual General Meeting on 30 March I shall hand over as chairman to Mr. Richard Bernays, whose experience and record well qualify him for the task. It is proposed that I should remain on the Board for the time being, in particular so as to be able to address a few remaining administrative matters that derive from the Trust's former involvements as a holding company. I should like to place on record my personal thanks to members of the Board, both past and present, for their support and the contribution that they have made in bringing the Company to the strong position that it holds today. Outlook Market conditions in 2004 were unusually favourable for the SmallCap sector. Whether they will continue to be so in 2005 will be much influenced by the level of consumer demand. While some cooling of the housing market is welcome, a substantial reduction in property values would have wider repercussions for investment. Some reservations should therefore be expressed about prospects for the coming year, and it would be unrealistic to expect so strong a performance as that of 2004. One of the main reasons why smaller companies performed so well last year in relative as well as absolute terms is that their fortunes are more dependent upon the domestic economy than is the case for larger companies. Indeed, because of the international nature of much of their business the earnings and valuation of larger companies have been adversely affected by the prolonged weakness of the dollar, and at some point the exchange rate factor is likely to reverse. Nevertheless, and even if some relative correction of this kind takes place, in our view the outlook for selected small companies remains positive so long as the economy continues to enjoy a reasonable rate of growth. Lord Stewartby Chairman 1 February 2005 The Throgmorton Trust PLC Preliminary statement for the year ended 30 November 2004 Statement of Total Recognised Gains and Losses Year to 30 November 2004 (unaudited) Revenue Capital Total Â£000s Â£000s Â£000s Realised gains and losses - 29,830 29,830 Unrealised gains and losses - 43,880 43,880 Income 7,428 - 7,428 Management fee (1,333) (1,333) (2,666) Other expenses (382) - (382) Net return before finance costs and 5,713 72,377 78,090 taxation Interest payable and similar (2,136) (2,014) (4,150) charges Premium paid on repurchase of - (683) (683) debenture stock Return on ordinary activities 3,577 69,680 73,257 before taxation Tax on ordinary activities - - - Return on ordinary activities after 3,577 69,680 73,257 taxation attributable to equity shareholders Dividends in respect of equity (3,676) - (3,676) shares Transfer (from)/to reserves (99) 69,680 69,581 Return per ordinary share - basic 1.55p 30.25p 31.80p The revenue column of this statement is the profit and loss account of the company. All revenue and capital items in this statement derive from continuing operations. No operations were acquired or discontinued in the year. The Throgmorton Trust PLC Preliminary statement for the year ended 30 November 2004 Statement of Total Recognised Gains and Losses (Continued) Year to 30 November 2003 (audited) Revenue Capital Total Â£000s Â£000s Â£000s Realised gains and losses - (2,199) (2,199) Unrealised gains and losses - 69,913 69,913 Income 7,383 - 7,383 Management fee (1,138) (1,138) (2,276) Other expenses (372) - (372) Net return before finance costs and 5,873 66,576 72,449 taxation Interest payable and similar (2,550) (2,425) (4,975) charges Premium paid on repurchase of - - - debenture stock Return on ordinary activities 3,323 64,151 67,474 before taxation Tax on ordinary activities - - - Return on ordinary activities after 3,323 64,151 67,474 taxation attributable to equity shareholders Dividends in respect of equity (3,494) - (3,494) shares Transfer (from)/to reserves (171) 64,151 63,980 Return per ordinary share - basic 1.40p 27.09p 28.49p The Revenue column of this statement is the profit and loss account of the company. All revenue and capital items in this statement derive from continuing operations. No operations were acquired or discontinued in the year. The Throgmorton Trust PLC Preliminary statement for the year ended 30 November 2004 Revenue Account for the year ended 30 November Â£000s 2004 Â£000s 2003 (unaudited) (audited) Â£000s Â£000s Income from fixed asset investments 6,386 6,318 Franked income 832 580 Unfranked income 7,218 6,898 Other income 147 367 Interest receivable 63 118 Fees and commissions 210 485 Gross Income 7,428 7,383 Expenses and interest 1,333 1,138 Management fee 382 372 Administration expenses 2,136 2,550 Interest payable (3,851) (4,060) Net revenue from ordinary 3,577 3,323 activities (after taxation) Dividends 1,149 1,186 Ordinary shares: 2,527 2,308 Interim Final (3,676) (3,494) Transfer from reserves (99) (171) Earnings per share - basic 1.55p 1.40p The revenue account is a fuller version of the profit and loss account of the Company. All revenue is derived from continuing operations. No operations were acquired or discontinued during the year. The Throgmorton Trust PLC Preliminary statement for the year ended 30 November 2004 Balance Sheet as at 30 November Â£000s 2004 Â£000s 2003 (unaudited) (audited) Â£000s Â£000s Fixed asset investments 343,991 279,647 Listed 44 44 - United Kingdom 2,535 2,889 - Overseas Subsidiary undertakings 346,570 282,580 Current assets 2,456 2,564 Debtors 123 - Cash at bank 2,579 2,564 Creditors: 1,517 1,773 Amounts falling due within one year 1,055 1,248 Trade creditors 825 885 Amounts owed to subsidiary - 1,373 undertakings 2,527 2,308 Sundry creditors Bank overdraft Proposed dividend on ordinary shares (5,924) (7,587) Net current liabilities (3,345) (5,023) Total assets less current 343,225 277,557 liabilities (32,194) (34,119) Creditors: Amounts falling due after one year Debentures, convertible debt and loans Net assets 311,031 243,438 Capital and reserves 3,702 11,488 3,590 11,600 Called up share capital 70,279 35,272 26,399 35,272 Share premium account 186,940 260,921 163,128 193,117 Capital reserves 3,350 3,449 Capital redemption reserve Revaluation reserve Realised capital profits Revenue reserve Total equity shareholders' funds 311,031 243,438 Net asset value per share 135.37p 104.93p Net asset value adjusted for 'fair 129.56p 99.39p value' of debt The Throgmorton Trust PLC Preliminary statement for the year ended 30 November 2004 Reconciliation of Movements in Shareholders' Funds for the year ended 30 November 2004 2003 (unaudited) (audited) Â£000s Â£000s Net surplus revenue for distribution 3,577 3,323 Dividends (3,676) (3,494) Net transferred from reserves (99) (171) Non distributable capital gain/(deficit) 69,680 64,151 Repurchase of ordinary shares (1,988) (4,369) Net increase to shareholders' funds 67,593 59,611 Opening shareholders' funds 243,438 183,827 Closing shareholders' funds 311,031 243,438 The Throgmorton Trust PLC Preliminary statement for the year ended 30 November 2004 Cash Flow Statement for the year ended 30 November 2004 2003 (unaudited) (audited) Â£000s Â£000s Operating activities 6,974 6,506 Cash received from investments 147 367 Interest received 52 89 Underwriting commission (1,285) (1,089) Management fee (98) (101) Cash paid to and on behalf of the directors (329) (226) Other cash payments Net cash inflow from operating activities 5,461 5,546 Servicing of finance (2,136) (2,550) Interest paid - revenue Taxation 8 - Taxation recovered Capital expenditure and financial investment (111,745) (82,460) Purchases of investments 121,181 91,841 Sales of investments (1,285) (1,089) Capital management fee (2,014) (2,425) Interest charged to capital 100 105 Net payments from subsidiaries Net cash inflow from investing activities 6,237 5,972 Dividends (3,456) (3,559) Dividends paid - equity shares Net cash inflow before financing 6,114 5,409 Financing (2,010) (4,347) Repurchase of ordinary shares Repurchase of debenture stock (2,608) - Repayment of convertible loan stock - (11,007) Net cash outflow from financing (4,618) (15,354) Increase/(decrease) in cash 1,496 (9,945) Notes: The financial information set out in the announcement does not constitute the Company's statutory accounts for the years ended 30 November 2004 or 2003. The financial information for the year ended 30 November 2003 is derived from the statutory accounts for that year which have been delivered to the Registrar of Companies. The auditors reported on those accounts; their report was unqualified and did not contain a statement under s237(2) or (3) Companies Act 1985. The statutory accounts for the year ended 30 November 2004 will be finalised on the basis of the financial information presented by the directors in this preliminary announcement and will be delivered to the Registrar of Companies following the Company's annual general meeting. The financial information has been prepared on the basis of the accounting policies set out in the Company's financial statements for the year ended 30 November 2003. The board has recommended the payment of a final dividend of 1.10p per share in respect of the year ended 30 November 2004. Subject to approval by shareholders at the Company's annual general meeting, the dividend will be paid on 5 April 2005 to shareholders on the register of the Company on 4 March 2005.

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