Half-yearly Report

The Throgmorton Trust PLC Half Yearly Financial Report 31 May 2011 The Throgmorton Trust PLC The Company's objective is to provide shareholders with capital growth and an attractive total return by investing predominantly in UK smaller companies which are traded on the main market of the London Stock Exchange or on AIM. Key Features - Investment in small/midcap portfolio - Approximately 30% of the Company's net assets may be invested in a Contracts for Difference portfolio - Benchmarked against the Hoare Govett Smaller Companies plus AIM (excluding Investment Companies) Index - Progressive dividend policy - Currently exposed to companies with significant revenue from Asia Pacific, the Americas and Emerging Markets Performance Record Financial Highlights As at As at 31 May 30 November 2011 2010 Change Attributable to ordinary shareholders (unaudited) (audited) % Assets Net assets (£'000)* 154,735 127,296 +21.6 Undiluted net asset value per ordinary share 246.08p 212.80p +15.6 - with income reinvested +16.8 Diluted net asset value per ordinary share 232.05p 200.64p +15.7 - with income reinvested +16.9 Ordinary share price (mid-market) 199.50p 163.00p +22.4 - with income reinvested +23.9 Subscription share price (mid-market) 47.75p 24.25p +96.9 Hoare Govett Smaller Companies plus AIM (excluding Investment Companies) Index 7,985.08 7,017.87 +13.8 For the six For the six months ended months ended 31 May 31 May 2011 2010 Change (unaudited) (unaudited) % Revenue Net revenue return after taxation (£'000) 951 1,013 -6.1 Return per ordinary share - basic 1.57p 1.37p +14.6 Return per ordinary share - diluted 1.51p 1.37p +10.2 Dividend per ordinary share Interim 0.60p 0.58p +3.4 * The change in net assets is attributable to the cash receivable on the conversion of subscription shares and market movements. Chairman's Statement Performance I am pleased to report that for the six months ended 31 May 2011, the Company's diluted net asset value per share ("NAV") increased by 16.9% whilst the share price rose by 23.9%. By comparison, the Hoare Govett Smaller Companies plus AIM (excluding Investment Companies) Index increased by 13.8% (all percentages calculated in sterling terms with income reinvested). The long portfolio and the CFD portfolio contributed £22.6 million and £3.7 million respectively to performance over the period. In general, industrial and technology stocks performed well on the long side. Further information on investment performance is given in the Investment Manager's Report. Over the six month period, equity markets were mixed. The period saw political instability in North Africa and the Middle East, the earthquake and tsunami in Japan, concerns about slowing growth rates in both China and the US and further worries about the debt levels of certain European countries. Despite these concerns UK smaller companies stocks have performed relatively well and have again outperformed large capitalisation stocks over the period. Since the period end the Company's diluted NAV has increased by 1.3% and the share price has decreased by 0.6%. Revenue return and dividends The undiluted revenue return per share for the period amounted to 1.57 pence compared with 1.37 pence for the corresponding period in the previous year, a rise of 14.6%. The Board is pleased to declare an interim dividend of 0.60 pence per share (2010: 0.58 pence per share) payable on 31 August 2011 to shareholders on the register on 5 August 2011 (ex-dividend date is 3 August 2011). Subscription shares During the period and up to the date of this report, the Company has issued a total of 3,060,103 ordinary shares, following the conversion of 3,060,103 subscription shares into ordinary shares for total proceeds of £4,468,000. At the date of this report, the Company had 62,879,817 ordinary shares and 10,250,509 subscription shares in issue. Shareholders will have two further opportunities to subscribe for all or any of the ordinary shares to which their subscription shares relate on each of 31 July and 31 October 2011 at 146 pence per share. As at 26 July 2011 the Company's diluted NAV was 235.02 pence per share and the share price was 198.25 pence per share compared with the exercise price of 146 pence per share. Prospects The concerns highlighted above provide some uncertainty, and markets look set to remain volatile over the remaining months of the financial year. However, the combination of upgrades to our portfolio's earnings expectations and likely M&A activity encourage us to remain cautiously optimistic. In the meantime, we consider that our CFD portfolio gives us the opportunity to benefit from any volatility in markets. Richard Bernays Chairman 27 July 2011 Interim Management Report and Responsibility Statement The Chairman's Statement and the Investment Manager's Report give details of the important events which have occurred during the period and their impact on the financial statements. Principal risks and uncertainties The principal risks faced by the Company can be divided into various areas as follows: - Performance; - Income/dividend; - Regulatory; - Operational; and - Financial. The Board reported on the principal risks and uncertainties faced by the Company in the Annual Report and Financial Statements for the year ended 30 November 2010. A detailed explanation can be found in the Directors' Report on pages 14 and 15 and in note 18 on pages 45 to 50 of the Annual Report and Financial Statements which are available on the website maintained by the Investment Manager, BlackRock Investment Management (UK) Limited, at www.blackrock.co.uk/thrg. In the view of the Board, there have not been any changes to the fundamental nature of these risks since the previous report and these principal risks and uncertainties are equally applicable to the remaining six months of the financial year as they were to the six months under review. The Company may utilise both exchange traded and over-the-counter derivatives, including but not limited to CFDs, as part of its investment policy. These instruments can be highly volatile and potentially expose investors to a higher risk of loss. Further details of the risk factors associated with the use of such derivatives can be found on pages 49 and 50 of the Annual Report and Financial Statements. Related party transactions The Investment Manager is regarded as a related party and details of the management fees payable are set out in note 4 and note 9. The related party transactions with the Directors are set out in note 9. Directors' responsibility statement The Disclosure and Transparency Rules ("DTR") of the UK Listing Authority require the Directors to confirm their responsibilities in relation to the preparation and publication of the Interim Management Report and Financial Statements. The Directors confirm to the best of their knowledge that: - the condensed set of financial statements contained within the half yearly financial report has been prepared in accordance with International Accounting Standard 34 `Interim Financial Reporting'; and - the interim management report, together with the Chairman's Statement and Investment Manager's Report, include a fair review of the information required by 4.2.7R and 4.2.8R of the FSA's Disclosure and Transparency Rules. The half yearly financial report was approved by the Board on 27 July 2011 and the above responsibility statement was signed on its behalf by the Chairman. Richard Bernays For and on behalf of the Board 27 July 2011 Investment Manager's Report Market review and overall investment performance After a firm start to the financial year, markets lost momentum towards the end of February. Investors have had various reasons to worry: initially the unrest in the Middle East and North Africa which caused the oil price to rise sharply, and then the earthquake and tsunami in Japan and the implications of these events on industrial production. Later, concerns resurfaced about the high level of indebtedness of several European countries and the steps they would need to take to gain further international financial support. Recent economic data from the US suggest that the US economy is failing to recover convincingly. All of these factors have created uncertainty for equity investors and markets have been directionless and nervous. The Company's diluted NAV per share rose by 16.9% to 232.05p, which compares to an increase in the benchmark of 13.8%. Ignoring the dilutive effects of the conversion of just over 3 million subscription shares to ordinary shares during the period, the NAV per share rose by 19.2%. Over the same period, the FTSE 100 Index increased by 8.3% (all figures calculated in sterling terms with income reinvested). Portfolio performance Our strongest performance again came in the electronic & electrical equipment sector, where stocks such as Renishaw and Oxford Instruments continued to contribute significantly to relative performance. These, and others we hold in the sector, are well run, world leading companies which have invested heavily in research and development and have products in demand throughout the world, especially in China. In a similar vein our holdings in the industrial engineering sector did well, as did some of our holdings in the software sector, in particular our holdings in Fidessa, Blinkx and System C, which was taken over, and Kofax. Regrettably, our holding in Alterian did not meet revenue and profit expectations and we sold it. We remained significantly underweight in the travel & leisure sector during the period and this proved profitable. We were also underweight in the oil & gas producers sector and this worked well, but the benefit was negated by poor stock selection because our holdings in Cove Energy, Gulfsands and Encore Oil all underperformed. Cove had little newsflow during the period. Gulfsands operates in Syria and the unrest in the country led to a sharp fall in Gulfsands' share price; we have significantly reduced the size of our holding. Encore Oil's long successful drilling record came to an end and this caused the market to worry about the scale of its North Sea reserves; fortunately we had taken considerable profit on our holding at higher share price levels. We were overweight in the mining sector throughout the period and share prices in this sector were hit as uncertainty dominated. Eastern Platinum's first quarter production figures were poor and the mine was disrupted as the workforce sought higher wages, a not uncommon event in the sector in recent months. By contrast Petra Diamonds has continued to operate well, helped by the strong diamond prices and was a major contributor to performance. The CFD portfolio generated net gains of £3.7 million during the period, maintaining its consistent record since inception in September 2008. The gains were entirely due to the long CFD portfolio, with the short CFD portfolio having made a small loss in the period. Performance of the long CFD portfolio was strongly helped by positions in Blinkx, Renishaw and Brammer. Activity It is clear that UK small and mid cap investors have been heavily overweight in international industrials for some time and this has been a successful stance. However, it would appear that this position is now being partly unwound and industrials are being sold. In recent months we have reduced our exposure to industrials by selling holdings in Cookson, Morgan Crucible and Spectris. We prefer holdings such as Spirax-Sarco Engineering, Oxford Instruments and Renishaw, which remain large holdings. We took money out of several other holdings, because valuations were beginning to look quite high, but in general we feel the valuations of our portfolio holdings remain attractive relative to their growth prospects. We reduced our underweight UK consumer position; in particular we reduced our substantial underweight exposure to housebuilders, buying holdings in two South East focused groups, Berkeley Group and Bovis Homes. We also bought holdings in two retailers, Majestic Wine and Dunelm. We expect that the recovery in the UK economy will be more clearly entrenched in 2012 and this should help to rebuild consumer confidence. However, we still expect weak GDP growth relative to many other parts of the world. We have continued to look for international growth stocks, especially those exposed to more reliably growing emerging markets. In April we added a holding in International Personal Finance and Oceans Wilson in May. Oceans Wilson is the holding company for Wilson Sons, a long established port operator and port services business in Brazil. It stands to benefit from the increasing investment in Brazil's offshore oil industry and eventual increased oil production. We have seen a continuation in bid activity during the period, with holdings in System C and Burst Media being acquired. Activity has been less intense than during 2010, probably due to current worries about the strength of the global economy. Portfolio positioning Our portfolio positioning has not changed significantly but the size of some of our sector positions has been reduced. The portfolio is still built around good quality growth companies which we know well, run by management we regard highly, which are truly differentiated and have the ability to maintain organic growth and margins, which generate cash and have strong balance sheets. Our largest overweight sector positions remain in electronics, software and international engineering companies. We remain underweight in real estate, leisure companies, especially pub and gaming companies, food producers and retailers. The CFD portfolio long positions are invariably in our core holdings, but the aggregate of our long only position and long CFD position rarely exceed 3.0% of net assets at the individual stock level. Our short CFD positions are in companies which we see as flawed, operating in commoditised, highly competitive industries, such as food producers, or facing structural challenges. Our individual short positions are small and liquid. The CFD portfolio was net long throughout the period, but the net long was reduced in the Spring. Outlook After the strong run in markets over the last two years we have entered a slightly nervous period. There are plenty of political and economic problems to worry about around the world. It is hard to assess how the high level of indebtedness of certain Eurozone economies will ultimately be managed, and this has led to heightened concerns over the last month or so. However, we do not expect a collapse in world GDP growth, more a hiccup in the strengthening of global growth. Having met management of many of our large holdings in recent weeks, most are trading very strongly and are confident of coping well despite these uncertainties. Accordingly, we see this as a time to stick with our highest conviction stocks and sector positions. We think there is a realistic prospect of better share price performances in the Autumn. Additionally, the significant variation in the prospects of different companies and sectors offers opportunities on both sides of the CFD portfolio. Mike Prentis and Richard Plackett BlackRock Investment Management (UK) Limited 27 July 2011 Twenty Largest Investments Market % of value total Company £'000 portfolio Business activity Oxford Instruments Ordinary shares 2,704 Design and manufacture of Long CFD position 1,274 2.5 scientific instruments Aveva Group Ordinary shares 2,763 Development and marketing of engineering Long CFD position 1,063 2.5 computer software Fidessa group 3,741 2.4 Development and marketing of financial trading connectivity software Abcam* Ordinary shares 2,324 Production and distribution of research Long CFD position 1,063 2.2 grade antibodies and associated products Domino Printing Ordinary shares 2,210 Manufacture of inkjet and laser commercial Long CFD position 1,087 2.1 printers Spirax-Sarco Engineering Ordinary shares 2,064 Design and manufacture of steam management Long CFD position 997 2.0 systems Senior Ordinary shares 1,728 Manufacture and supply of components for Long CFD position 1,207 1.9 the aerospace and automotive sectors Victrex Ordinary shares 1,941 Manufacture and supply of PEEK Long CFD position 971 1.9 thermoplastic products ITE Group Ordinary shares 2,267 Organisation of trade exhibitions in Long CFD position 620 1.9 Russia and other FSU countries Avocet Mining* Ordinary shares 1,642 Long CFD position 1,157 1.8 Gold exploration and production Blinkx* Ordinary shares 2,073 Supply of video technology and an online Long CFD position 705 1.8 catalogue to enable video to be viewed Renishaw Ordinary shares 1,838 Design and manufacture of instruments used for Long CFD position 938 1.8 calibration purposes City of London 2,526 1.6 Management of investment funds primarily invested in emerging markets Hargreaves Services* 2,439 1.6 Mining, importing, processing and supply of coal and related products Hutchison China Meditech* 2,402 1.5 Development and supply of traditional Chinese medicines to the Chinese market Bellway 2,396 1.5 Housebuilding Rotork Ordinary shares 1,468 Engineering, manufacturing and design of valve Long CFD position 862 1.5 actuators Rathbone Brothers Ordinary shares 1,405 Long CFD position 905 1.5 Private client fund management Booker Ordinary shares 1,015 Long CFD position 1,035 1.3 Wholesale of grocery products Elementis 1,822 1.2 Manufacture of specialty chemicals 20 Largest Investments 56,652 36.5 * 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 20 largest investments have been disclosed. Distribution of Investments as at 31 May 2011 % of long % of long % of short % of only CFD CFD total Sector portfolio portfolio portfolio portfolio Oil & Gas Producers 6.8 0.2 0.0 7.0 Oil Equipment, Services & Distribution 0.5 0.3 0.0 0.8 Chemicals 3.5 0.6 0.0 4.1 Industrial Metals & Mining 1.1 0.0 0.0 1.1 Mining 7.9 1.0 -0.4 8.5 Construction & Materials 1.2 0.4 -0.7 0.9 Aerospace & Defence 1.1 1.3 -0.3 2.1 General Industrials 0.5 0.0 -0.4 0.1 Electronic & Electrical Equipment 6.6 3.4 -0.7 9.3 Industrial Engineering 6.4 1.1 0.0 7.5 Industrial Transportation 1.4 0.0 -0.6 0.8 Support Services 8.4 1.7 -2.9 7.2 Food Producers 0.7 0.0 -1.1 -0.4 Household Goods & Home Construction 3.6 0.5 -0.2 3.9 Health Care Equipment & Services 1.9 0.0 -0.3 1.6 Pharmaceuticals & Biotechnology 5.1 0.7 -0.6 5.2 Food & Drug Retailers 1.1 0.6 -0.5 1.2 General Retailers 3.9 0.0 -1.8 2.1 Media 5.3 0.8 0.0 6.1 Travel & Leisure 3.9 0.0 -0.9 3.0 Fixed Line Telecommunications 0.8 0.0 -0.7 0.1 Mobile Telecommunications 0.2 0.0 0.0 0.2 Gas, Water & Multiutilities 0.3 0.0 0.0 0.3 Real Estate Holding & Development 1.5 0.0 0.0 1.5 Real Estate Services 0.7 0.7 0.0 1.4 Industrial & Office REITs 1.0 0.0 0.0 1.0 Retail REITs 0.4 0.6 0.0 1.0 Specialty REITs 0.2 0.0 0.0 0.2 Financial Services 7.6 1.3 -0.3 8.6 Equity Investment Instruments 0.0 0.0 0.0 0.0 Software & Computer Services 9.9 1.7 -0.4 11.2 Technology Hardware & Equipment 2.1 0.5 -0.2 2.4 Total Investments 95.6 17.4 -13.0 100.0 Analysis of the UK and AIM traded portfolio Gross Basis (1) % FTSE 250 43.2 FTSE AIM 32.2 FTSE Small Cap 19.3 FTSE Fledgling 2.8 Other 2.5 Net Basis (2) % FTSE 250 32.0 FTSE AIM 39.7 FTSE Small Cap 21.7 FTSE Fledgling 3.5 Other 3.1 Source: BlackRock. 1. Long and short CFD portfolios in aggregate plus long portfolio. 2. Long CFD portfolio less short CFD portfolio plus long portfolio. Market capitalisation as at 31 May 2011 £0 to £100m £100m to £400m £400m to £1bn £1bn+ Short positions % of portfolio -0.1% -1.8% -5.8% -2.8% Long positions % of portfolio 13.5% 32.7% 26.6% 16.8% Source: BlackRock. Position size as at 31 May 2011 £0 to £1m £1m to £2m £2m+ Short positions % of portfolio -9.2% -1.1% Long positions % of portfolio 36.6% 25.2% 27.9% Source: BlackRock. Consolidated Statement of Comprehensive Income for the six months ended 31 May 2011 Revenue £'000 Capital £'000 Total £'000 Six months ended Year ended Six months ended Year ended Six months ended Year ended 31.05.11 31.05.10 30.11.10 31.05.11 31.05.10 30.11.10 31.05.11 31.05.10 30.11.10 Notes (unaudited)(unaudited)(audited)(unaudited)(unaudited)(audited)(unaudited)(unaudited)(audited) Gains on investments held at fair value through profit or loss - - - 21,367 10,102 41,570 21,367 10,102 41,570 Net return on contracts for difference 75 80 212 3,600 3,079 7,029 3,675 3,159 7,241 Income from investments held at fair value through profit or loss 3 1,256 1,262 2,380 - - - 1,256 1,262 2,380 Other income 3 19 4 4 - - - 19 4 4 ----- ----- ----- ------ ------ ------ ------ ------ ------ Total revenue 1,350 1,346 2,596 24,967 13,181 48,599 26,317 14,527 51,195 ----- ----- ----- ------ ------ ------ ------ ------ ------ Investment management and performance fees 4 (160) (127) (249) (1,476) (1,512) (6,865) (1,636) (1,639) (7,114) Other operating expenses 5 (239) (203) (399) - 285 329 (239) 82 (70) ----- ----- ----- ------ ------ ------ ------ ------ ------ Total operating expenses (399) (330) (648) (1,476) (1,227) (6,536) (1,875) (1,557) (7,184) ----- ----- ----- ------ ------ ------ ------ ------ ------ Net return before finance costs and taxation 951 1,016 1,948 23,491 11,954 42,063 24,442 12,970 44,011 Finance costs (4) (1) (2) - - - (4) (1) (2) Change in tender offer provision - - (7) - - (174) - - (181) ----- ----- ----- ------ ------ ------ ------ ------ ------ Return on ordinary activities before taxation 947 1,015 1,939 23,491 11,954 41,889 24,438 12,969 43,828 Taxation on ordinary activities 4 (2) (8) - - - 4 (2) (8) ----- ----- ----- ------ ------ ------ ------ ------ ------ Net return on ordinary activities after taxation 7 951 1,013 1,931 23,491 11,954 41,889 24,442 12,967 43,820 ----- ----- ----- ------ ------ ------ ------ ------ ------ Earnings per ordinary share - basic 7 1.57p 1.37p 2.85p 38.73p 16.12p 61.74p 40.30p 17.49p 64.59p ----- ----- ----- ------ ------ ------ ------ ------ ------ Earnings per ordinary share - diluted 7 1.51p 1.37p 2.85p 37.23p 16.12p 61.74p 38.74p 17.49p 64.59p ===== ===== ===== ====== ====== ====== ====== ====== ====== The total column of this statement represents the Consolidated Statement of Comprehensive Income, prepared in accordance with International Financial Reporting Standards ("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 period. All income is attributable to the equity holders of The Throgmorton Trust PLC. There are no minority interests. The net return of the Company for the period was £24,442,000 (six months ended 31 May 2010: £12,967,000; year ended 30 November 2010: £43,820,000). The Group had no recognised gains or losses other than those disclosed in the Consolidated Statement of Comprehensive Income and the Statement of Changes in Equity. The net return for the period disclosed above represents the Company's Comprehensive Income. Consolidated Statement of Changes in Equity for six months ended 31 May 2011 Share Capital Share premium Special redemption Capital Revenue capital account reserve reserve reserves reserve Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 For the six months ended 31 May 2011 (unaudited) At 30 November 2010 3,494 2,147 35,272 11,905 68,646 5,832 127,296 Total Comprehensive Income: Return for the period - - - - 23,491 951 24,442 Transactions with owners, recorded directly to equity: Subscription shares exercised 122 4,346 - - - - 4,468 Dividends paid* - - - - - (1,471) (1,471) ----- ----- ------ ------ ------ ----- ------- At 31 May 2011 3,616 6,493 35,272 11,905 92,137 5,312 154,735 ----- ----- ------ ------ ------ ----- ------- For the six months ended 31 May 2010 (unaudited) At 30 November 2009 4,224 35,272 - 11,114 48,954 7,353 106,917 Total Comprehensive Income: Return for the period - - - - 11,954 1,013 12,967 Transactions with owners, recorded directly to equity: Subscription shares exercised 2 69 - - - - 71 Dividends paid** - - - - - (3,113) (3,113) ----- ----- ------ ------ ------ ----- ------- At 31 May 2010 4,226 35,341 - 11,114 60,908 5,253 116,842 ----- ----- ------ ------ ------ ----- ------- For the year ended 30 November 2010 (audited) 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: Subscription shares exercised 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*** - - - - - (3,452) (3,452) ----- ----- ------ ------ ------ ----- ------- At 30 November 2010 3,494 2,147 35,272 11,905 68,646 5,832 127,296 ----- ----- ------ ------ ------ ----- ------- * Final dividend of 2.42p per share for the year ended 30 November 2010, declared on 4 February 2011 and paid on 25 March 2011. ** 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. *** 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 six months ended 31 May 2010, declared on 20 July 2010 and paid on 31 August 2010. Statement of Financial Position as at 31 May 2011 31 May 31 May 30 November 2011 2010 2010 £'000 £'000 £'000 Notes (unaudited) (unaudited) (audited) Non current assets Investments held at fair value through profit or loss 155,409 117,551 134,627 ------- ------- ------- Current assets Other receivables 2,170 854 619 Amounts due in respect of contracts for difference 9,564 5,609 8,066 Cash 895 950 1,256 ------- ------- ------- 12,629 7,413 9,941 ------- ------- ------- Total assets 168,038 124,964 144,568 Current liabilities Other payables (3,820) (3,004) (9,307) Collateral pledged in respect of contracts for difference (8,916) (5,002) (7,965) Amounts due in respect of contracts for difference (567) (116) - ------- ------- ------- (13,303) (8,122) (17,272) ------- ------- ------- Net assets 154,735 116,842 127,296 ======= ======= ======= Equity attributable to equity holders Share capital 8 3,616 4,226 3,494 Share premium account 6,493 35,341 2,147 Special reserve 35,272 - 35,272 Capital redemption reserve 11,905 11,114 11,905 Capital reserves 92,137 60,908 68,646 Revenue reserve 5,312 5,253 5,832 ------- ------- ------- Total equity shareholders' funds 154,735 116,842 127,296 ======= ======= ======= Net asset value per ordinary share - undiluted 7 246.08p 157.54p 212.80p ======= ======= ======= Net asset value per ordinary share - diluted 7 232.05p 155.63p 200.64p ======= ======= ======= Consolidated Cash Flow Statement for the six months ended 31 May 2011 Six months Six months ended ended Year ended 31 May 31 May 30 November 2011 2010 2010 £'000 £'000 £'000 (unaudited) (unaudited) (audited) Net cash (outflow)/inflow from operating activities before financing (4,309) (1,760) 8,083 ----- ----- ------ Financing activities Proceeds from exercise of subscription shares 4,468 71 2,208 Subscription share issue costs paid - (241) (250) Distributions to tender shareholders - - (14,286) Dividends paid (1,471) (3,113) (3,452) ----- ----- ------ Net cash inflow/(outflow) from financing 2,997 (3,283) (15,780) ----- ----- ------ Decrease in cash and cash equivalents (1,312) (5,043) (7,697) Effect of foreign exchange rate changes - (1) (4) ----- ----- ------ Change in cash and cash equivalents (1,312) (5,044) (7,701) Cash and cash equivalents at the start of period (6,709) (23) 992 Subsidiary cash balances at the start of the period - 1,015 - ----- ----- ------ Cash and cash equivalents at the end of the period (8,021) (4,052) (6,709) ===== ===== ====== Comprised of: Cash 895 950 1,256 Collateral pledged in respect of contracts for difference (8,916) (5,002) (7,965) ----- ----- ------ Total (8,021) (4,052) (6,709) ===== ===== ====== Reconciliation of Net Income before Finance Costs and Taxation to Net Cash Flow from Operating Activities Six months Six months ended ended Year ended 31 May 31 May 30 November 2011 2010 2010 £'000 £'000 £'000 (unaudited) (unaudited) (audited) Operating activities Profit before taxation 24,438 12,969 43,828 Add back interest paid 92 85 165 Gains on investments held at fair value through profit or loss including transaction costs (25,066) (13,265) (48,603) Net movement on foreign exchange - (1) 4 Sales of investments held at fair value through profit or loss 47,218 31,394 95,694 Purchases of investments held at fair value through profit or loss (43,865) (33,360) (81,828) In specie transfer of assets to tendering shareholders - - (7,793) Increase in other receivables (293) (11) (27) Increase in amounts due from brokers (1,289) (478) (228) Increase/(decrease) in amounts due to brokers 313 (33) 646 (Decrease)/increase in other payables (5,781) 1,045 6,390 Scrip dividends included in investment income - (14) - ----- ----- ----- Net cash (outflow)/inflow from operating activities before interest and taxation (4,233) (1,669) 8,248 ----- ----- ----- Interest paid (92) (85) (165) Tax on income 16 (6) - ----- ----- ----- Net cash (outflow)/inflow from operating activities (4,309) (1,760) 8,083 ===== ===== ===== Notes to the Financial Statements for the six months ended 31 May 2011 1. Principal activity The principal activity of the Company is that of an investment trust company within the meaning of sub-sections 1158-1165 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. Basis of preparation The half yearly financial report has been prepared using the same accounting policies as set out in the Company's annual report and financial statements for the year ended 30 November 2010 (which were prepared in accordance with IFRS as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006), and in accordance with International Accounting Standard 34. Insofar as the Statement of Recommended Practice ("SORP") for investment trust companies and venture capital trusts issued by the Association of Investment Companies ("AIC"), revised in January 2009 is compatible with IFRS, the financial statements have been prepared in accordance with the guidance set out in the SORP. 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. Accordingly, the financial statements are presented in UK pounds sterling. 3. Income Six months Six months Year ended ended ended 31 May 31 May 30 November 2011 2010 2010 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Investment income: UK listed dividends 1,207 1,145 2,161 Overseas listed dividends 49 117 219 ----- ----- ----- 1,256 1,262 2,380 ----- ----- ----- Other income: Deposit interest 1 1 2 Underwriting commission 18 3 2 ----- ----- ----- 19 4 4 ----- ----- ----- Total 1,275 1,266 2,384 ===== ===== ===== 4. Investment management and performance fees Six months ended Six months ended Year ended 31 May 2011 31 May 2010 30 November 2010 (unaudited) (unaudited) (audited) Revenue Capital Total Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Investment management fee 160 480 640 127 381 508 249 748 997 Performance fee - 996 996 - 1,131 1,131 - 6,117 6,117 --- ----- ----- --- ----- ----- --- ----- ----- Total 160 1,476 1,636 127 1,512 1,639 249 6,865 7,114 === ===== ===== === ===== ===== === ===== ===== 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 to derivatives through its 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 Smaller Companies plus AIM (excluding 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. The investment management fee is allocated 75% to the capital column and 25% to the revenue column of the Consolidated Statement of Comprehensive Income. A performance fee of £996,000 was accrued for the six months ended 31 May 2011 (six months ended 31 May 2010: £1,131,000; year ended 30 November 2010: £6,117,000). The performance fees have been wholly allocated to the capital column of the Consolidated Statement of Comprehensive Income, as performance has been predominantly generated through the capital returns of the investment portfolio. 5. Other operating expenses Six months Six months Year ended ended ended 31 May 31 May 30 November 2011 2010 2010 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Auditors' remuneration - audit services 14 14 28 - other services* 5 11 9 Registrar's fee 19 32 55 Directors' remuneration 58 50 100 Other administration costs 143 96 207 --- --- --- 239 203 399 === === === * Other audit services for the period ended 31 May 2011 relate to the review of the interim financial statements. 6. Dividend The Board has declared an interim dividend of 0.60p per share (2010: 0.58p) payable on 31 August 2011 to shareholders on the register at close of business on 5 August 2011. 7. Consolidated return and net asset value per ordinary share 31 May 31 May 30 November 2011 2010 2010 (unaudited) (unaudited) (audited) Net revenue return attributable to ordinary shareholders (£'000) 951 1,013 1,931 Net capital return attributable to ordinary shareholders (£'000) 23,491 11,954 41,889 ------ ------- ------- Total earnings attributable to ordinary shareholders (£'000) 24,442 12,967 43,820 ======= ======= ======= Total equity shareholders' funds (£'000) 154,735 116,842 127,296 ------- ------- ------- Ordinary shares The weighted average number of ordinary shares in issue during the period on which the earnings per ordinary share was calculated, was: 60,655,511 74,128,494 67,839,455 ---------- ---------- ---------- The weighted average number of ordinary shares in issue during the period on which the diluted earnings per ordinary share was calculated, was: 63,102,014 74,128,494 67,839,455 ---------- ---------- ---------- The actual number of ordinary shares in issue at the end of each period on which the undiluted net asset value was calculated, was*: 62,879,817 74,164,475 59,819,714 ---------- ---------- ---------- The number of ordinary shares in issue at the end of each period on which the diluted net asset value was calculated, was*: 73,130,326 88,939,009 73,130,326 ---------- ---------- ---------- Number of subscription shares in issue at the end of the period was: 10,250,509 14,774,534 13,310,612 ---------- ---------- ---------- Undiluted Revenue earnings per share 1.57p 1.37p 2.85p Capital earnings per share 38.73p 16.12p 61.74p ------- ------- ------- Total earnings per share 40.30p 17.49p 64.59p ======= ======= ======= Net asset value per share 246.08p 157.54p 212.80p ======= ======= ======= Diluted Revenue earnings per share 1.51p 1.37p 2.85p Capital earnings per share 37.23p 16.12p 61.74p ------- ------- ------- Total earnings per share 38.74p 17.49p 64.59p ======= ======= ======= Net asset value per share 232.05p 155.63p 200.64p ======= ======= ======= Ordinary share price (mid-market) 199.50p 134.75p 163.00p Subscription share price (mid-market) 47.75p 8.05p 24.25p ======= ======= ======= * The diluted net asset value per share at 31 May 2011 is calculated by adjusting equity shareholders' funds for consideration receivable on the exercise of 10,250,509 subscription shares, at the exercise price of 146p per share and dividing by the total number of shares that would have been in issue at 31 May 2011, had all the subscription shares been exercised. 8. Share capital Continuing Treasury Subscription Total Nominal shares shares shares shares value number number number number £'000 Allotted, called-up and fully paid share capital comprised: Ordinary shares of 5p each At 1 December 2010 59,819,714 7,400,000 13,310,612 80,530,326 3,494 Subscription shares of 1p each: Subscription shares exercised 3,060,103 - (3,060,103) - 122 ---------- ---------- ---------- ---------- ---------- At 31 May 2011 62,879,817 7,400,000 10,250,509 80,530,326 3,616 ========== ========== ========== ========== ========== During the period the Company issued a total of 3,060,103 ordinary shares, following the conversion of 3,060,103 subscription shares for a total consideration of £4,468,000. At the date of this report, the Company has 62,879,817 ordinary shares (excluding 7,400,000 shares currently held in treasury) and 10,250,509 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 right but not the obligation to subscribe for one ordinary share at a pre-determined price of 146p per ordinary share. The 10,250,509 subscription shares now in issue are exercisable on 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 subscription shares. 9. Related party disclosure BlackRock Investment Management (UK) Limited ("BlackRock") provides management and administration services to the Company under a contract which is terminable on six months' notice. Details of the fees receivable by BlackRock in relation to these services are set out in note 4. The investment management fee for the six months ended 31 May 2011 amounted to £640,000 (six months ended 31 May 2010: £508,000 and the year ended 30 November 2010: £997,000). In addition, a performance fee of £996,000 was accrued (six months ended 31 May 2010: £1,131,000; year ended 30 November 2010: £6,117,000). At the period end, an amount of £1,636,000 was outstanding in respect of these fees (six months ended 31 May 2010: £802,000; year ended 30 November 2010: £ 7,362,000). 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. With effect from 1 December 2010, the Chairman receives an annual fee of £33,000, the Chairman of the Audit Committee receives an annual fee of £23,000 and each of the other Directors receives an annual fee of £20,000. At the period end all five members of the Board held shares in the Company as set out below: Ordinary Subscription shares shares Richard Bernays 40,000 8,000 Simon Beart 20,358 2,715 Crispin Latymer 6,293 810 Eric Stobart 11,400 2,064 Harry Westropp 20,000 4,000 10. Contingent liabilities There were no contingent liabilities at 31 May 2011 (2010: nil). 11. Publication of non statutory accounts The financial information contained in this half yearly financial report does not constitute statutory accounts as defined in section 435 of the Companies Act 2006. The financial information for the six months ended 31 May 2011 and 31 May 2010 has not been audited. The information for the year ended 30 November 2010 has been extracted from the latest published audited financial statements, which have been filed with the Registrar of Companies. The report of the auditors on those financial statements contained no qualification or statement under sections 498(2) or (3) of the Companies Act 2006. 12. Annual results The Board expects to announce the annual results for the year ending 30 November 2011, as prepared under IFRS, in mid January 2012. Copies of the results announcement can be obtained from the Secretary on 020 7743 3000. The annual report should be available by the beginning of February 2012, with the Annual General Meeting being held in March 2012. Independent Review Report to The Throgmorton Trust PLC Introduction We have been engaged by the Company to review the condensed set of financial statements in the half yearly financial report for the six month period ended 31 May 2011 which comprises the Consolidated Statement of Comprehensive Income, Consolidated Statement of Changes in Equity, Consolidated Statement of Financial Position, Consolidated Cash Flow Statement, Reconciliation of Net Income before Taxation to Net Cash Flow from Operating Activities, and the related notes. We have read the other information contained in the half yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the condensed set of financial statements. This report is made solely to the Company in accordance with guidance contained in International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our work, for this report, or for the conclusions we have formed. Directors' responsibilities The half yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half yearly financial report in accordance with the Listing Rules of the Financial Services Authority. As disclosed in note 1, the annual financial statements of the Company are prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006. The condensed set of financial statements included in this half yearly financial report has been prepared in accordance with the Accounting Standards Board Statement "Half Yearly Financial Reports". Our responsibility Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half yearly financial report based on our review. Scope of review We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half yearly financial report for the six month period ended 31 May 2011 is not prepared, in all material respects, in accordance with the Accounting Standards Board Statement "Half Yearly Financial Reports" and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority. Ernst & Young LLP London 27 July 2011 For further information, please contact: Jonathan Ruck Keene, Managing Director, Investment Companies, BlackRock Investment Management (UK) Limited Tel: 020 7743 2178 Mike Prentis, Fund Manager, BlackRock Investment Management (UK) Limited Tel: 020 7743 2312 Emma Phillips, Media & Communication, BlackRock Investment Management (UK) Limited Tel: 020 7743 2922 27 July 2011 33 King William Street London EC4R 9AS END The Half Yearly Financial Report will also be available on the BlackRock Investment Management website at http://www.blackrock.co.uk/content/groups/ uksite/documents/literature/blk047265.pdf.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. END

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