Half-yearly Report

BlackRock Throgmorton Trust plc Half yearly Financial Report for period ending 31 May 2014 Performance record Financial Highlights Attributable to ordinary shareholders 31 30 May November 2014 2013 Change (unaudited) (audited) % Assets Net assets Â£244.9m Â£240.8m +1.7 Net asset value per share 334.88p 329.21p +1.7 - with income reinvested +2.7 Ordinary share price (mid-market) 291.38p 290.00p +0.5 - with income reinvested +1.5 Benchmark index* 16,004.84 15,368.52 +4.1 For For the the six six months months ended ended 31 31 May May 2014 2013 Change (unaudited) (unaudited) % Revenue Net revenue return after taxation Â£1.6m Â£1.7m -5.9 Revenue return per ordinary share 2.23p 2.36p -5.5 Revenue return per ordinary share# 2.23p 2.04p +9.3 Dividend per ordinary share ------ ------ ------ Interim 0.80p 0.75p +6.7 ====== ====== ====== * Numis Smaller Companies excluding AIM (excluding Investment Companies) Index from 1 December 2013. # Excluding one-off dividend from subsidiary company during the six months ended 31 May 2013. Chairman's statement Overview Equity markets began the period under review with cautious optimism. A shift in market sentiment in the US, driven by a loss of economic momentum largely due to the severe weather conditions and lacklustre consumer spending towards the end of January 2014, prompted global investors to become more risk averse. Some confidence returned in February but subdued global economic growth and tension in Ukraine continued to undermine more positive sentiment. Due to modest US growth the US Federal Reserve, whilst gradually reducing monthly bond purchases, is continuing to provide support. In the UK, the Bank of England has indicated an accelerated timing for a rise in bank rates. Conversely, in Europe, the European Central Bank has introduced deposit rates aimed at stemming the threat of deflation and underpinning economic growth. We are mindful therefore that a return to more normal interest rates, however much warning has been given in advance, could lead to further short term volatility in markets. Performance For the six months ended 31 May 2014, the Company's net asset value ("NAV") total return per share was +2.7% and the share price total return was +1.5%. By comparison, the Numis Smaller Companies excluding AIM (excluding Investment Companies) Index returned +4.1%*. The Company's underperformance relative to the benchmark was largely due to a combination of stock and sector allocations in both the long only and the Contracts for Difference ("CFD") portfolio. Further details on investment performance are given in the Investment Manager's Report. Since the end of May the Company's NAV has decreased by 3.6%* and the share price has decreased by 6.5%*, reflecting a widening of the discount alongside other smaller company trusts. * All percentages with income reinvested. Revenue earnings and dividends The revenue return per share for the period amounted to 2.23p (2013: 2.36p). The revenue return for the six months ended 31 May 2013 included a one-off dividend distribution of Â£233,000 from the subsidiary company. Excluding this one-off dividend, like for like revenue return increased by 9.3% compared to the previous period. The current period has benefited from the receipt of a number of special dividends. The Board is pleased to declare an interim dividend of 0.80 pence per share (2013: 0.75 pence per share) payable on 22 August 2014 to shareholders on the register on 1 August 2014 (ex-dividend date is 30 July 2014). Portfolio Manager Following the Board's announcement in early March that Richard Plackett, manager of the Company's CFD portfolio, had been granted a six month sabbatical by BlackRock Investment Management (UK) Limited with effect from 1 April 2014, Ralph Cox has assumed full responsibility for the CFD portfolio. Ralph has been manager of the BlackRock UK Smaller Companies Fund since August 2007 and has worked alongside Richard in managing that fund's CFD portfolio. He has also been co-manager of the BlackRock UK Emerging Hedge Fund Limited since May 2004. Ralph is supported by Dan Whitestone, a senior member of the BlackRock UK Small /Mid-cap Equity Team. Alternative Investment Fund Managers' Directive ("AIFMD") BlackRock Fund Managers Limited ("BFM") was authorised as an Alternative Investment Fund Manager ("AIFM") by the Financial Conduct Authority ("FCA") on 1 May 2014 and was appointed by the Board as the Company's AIFM under a new Investment Management Agreement on 2 July 2014. The new agreement enables the Board to continue to act independently of the AIFM and provides the appropriate balance between the Board's control over the Company, its investment policies and compliance with regulatory obligations. The Board has also appointed BNY Mellon Trust & Depositary (UK) Limited (the "Depositary") to act as the Company's depositary (as required by AIFMD) on the terms and conditions of a depositary agreement between the Company, BFM and the Depositary. Facilitating Retail Investments The Company currently conducts its affairs so that its securities can be recommended by independent financial advisers to ordinary retail investors in accordance with the FCA rules in relation to non-mainstream investment products and intends to continue to do so for the foreseeable future. The securities are excluded from the FCA's restrictions which apply to non-mainstream investment products because they are shares in an investment trust. Prospects The headwinds that have been a drag on markets in recent months remain. Our Portfolio Managers remain positive about the prospects for the portfolio holdings which have been selected for their strong balance sheets, well respected management teams and good earnings growth potential. Recent results announcements and newsflow from the portfolio holdings have been generally good, with those exposed to the UK economy faring particularly well. We expect the medium term trading environment to remain positive overall. Crispin Latymer Chairman 24 July 2014 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 ï¬nancial statements. Principal Risks and Uncertainties The principal risks faced by the Company can be divided into various areas as follows: - Performance; - Market price; - Income/dividend; - Financial; - Operational; and - Regulatory. 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 2013. A detailed explanation can be found in the Strategic Report on pages 7 and 8 and in note 18 on pages 50 to 55 of the Annual Report and Financial Statements which are available on the website maintained by BlackRock at 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 ï¬nancial year as they were to the six months under review. Related Party Disclosure and Transactions with the Investment Manager BlackRock Investment Management (UK) Limited ("BIM UK") acted as the Investment Manager until 2 July 2014 and is regarded as a related party under the Listing Rules. Details of the fees payable are set out in note 4 and note 9. BlackRock Fund Managers Limited was appointed as the Company's AIFM with effect from 2 July 2014. The related party transactions with the Directors are set out in note 10. Going concern The Directors are satisï¬ed that the Company has adequate resources to continue in operational existence for the foreseeable future and is ï¬nancially sound. For this reason, they continue to adopt the going concern basis in preparing the financial statements. The Company has a portfolio of investments which is considered to be readily realisable and is able to meet all of its liabilities from its assets and the income generated from these assets. Directors' responsibility statement The Disclosure and Transparency Rules ("DTR") of the UK Listing Authority require the Directors to conï¬rm their responsibilities in relation to the preparation and publication of the Interim Management Report and Financial Statements. The Directors conï¬rm to the best of their knowledge that: - the condensed set of ï¬nancial statements contained within the half yearly ï¬nancial report has been prepared in accordance with applicable UK Accounting Standards and the Accounting Standards Board's Statement 'Half Yearly Financial Reports'; 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 FCA's Disclosure and Transparency Rules. The half yearly ï¬nancial report was approved by the Board on 24 July 2014 and the above responsibility statement was signed on its behalf by the Chairman. Crispin Latymer For and on behalf of the Board 24 July 2014 Investment Manager's Report Six months ended 31 May 2014 Market Review During the first half of the financial year stock markets have generally moved ahead. From early March we began to see sustained profit taking in UK small and mid-cap companies. This had its roots in US technology stocks which sold off sharply as markets began to focus more closely on valuations which had got ahead of events. Smaller, and particularly mid-cap, companies came under pressure as investors began to reflect on the extent of their outperformance of larger companies in recent years. A combination of mid-cap selling by large cap equity fund managers and deleveraging by hedge funds led to a fall in share prices in our universe. This seems to have been more concentrated on the good companies owned by these large cap and hedge fund investors, and perversely in deleveraging, hedge funds also bought back short positions in lower quality companies. This made the period volatile for good quality small and mid-cap companies. Macro-economic data, especially in the UK, and results from our holdings have generally been good. During the six months the Company's NAV per share rose by 2.7%* to 334.88p and the benchmark rose by 4.1%*, whilst the FTSE 100 Index rose by 4.8%*. Performance Review The long only portfolio slightly underperformed the benchmark. Sector allocation was good but the relative contribution from stock selection was disappointing. The CFD portfolio sustained net losses of Â£2.6 million, the first loss in a six month period since 2009. Looking at stock selection, the most significant negative contributors to relative performance were our holdings in Blinkx, Hyder Consulting and ITE Group. We held long CFDs in Blinkx and ITE Group in addition to our long only portfolio holding. The fall in the Blinkx share price was caused by the publication of some research into the company's business model. Revenue growth has since slowed and we have sold our position. Hyder Consulting, a firm of consulting engineers, warned that profits for the year ended 31 March 2014 would fall short of expectations. This was mainly attributable to contract award delays in Australia, as the recently elected government decided on the best way to finance planned infrastructure projects, some of which Hyder is helping to design. Earnings forecasts were cut by an average of 20% for the current and following financial year. We regard Hyder Consulting management highly and recognise that this type of business can be lumpy. The shares are now valued at approximately 13 times historic earnings and 60% of sales, which we see as attractive in the current market and the balance sheet is strong. Although the shares of Hyder Consulting continue to have risks we feel the risk reward balance is skewed to the upside over the medium term. Recent full year results were in line with revised expectations, as was the outlook. Shares in ITE Group fell sharply given its exposure to Russia and the former Soviet Union, where it generates most of its revenues from the exhibitions it organises. The Russian invasion of the Crimea and tensions in Eastern Ukraine have had a negative impact on the share prices of companies exposed to this region. ITE Group has confirmed that its exhibitions in Russia and Ukraine have so far continued largely as planned. However, currency weakness is reducing both revenues and profits. Earnings have been downgraded but, post downgrades, the shares are now trading at 12.5 times current year earnings and the company has net cash on its balance sheet. This has been an excellent long term and high quality growth company and in time we expect this to be recognised again. On the positive side, both Optimal Payments and Canaccord Genuity contributed materially to relative outperformance. Optimal Payments announced full year results with revenues up by 41%. We met with management who remain positive about prospects for 2014 and especially 2015 when the opportunities in US online gaming should begin to benefit Optimal Payments significantly. Canaccord Genuity announced improved trading in both their broking and wealth management businesses, with strong performance in the three months ended December 2013 and March 2014. The Canaccord Genuity share price appreciated by 63% during the half year period. Sector allocation benefited from our lack of holdings in the non-life insurance sector. In particular the companies providing annuities suffered following the Chancellor's budget announcement that individuals would no longer be required to convert their pension funds into annuities. Our overweight sector position in general financials was also a significant positive contributor. Newsflow from the portfolio has generally been good with strong results from companies such as Victrex, Young & Co.'s Brewery, Paypoint, Aveva Group, Vertu, Telford Homes, Iomart, Paragon, Telecom Plus, Topps Tiles and Grainger over the last few months. However, these good results have not led to strong positive share price movements. Post the period end Xaar warned that full year profits would be below previous expectations and we have reduced our position. Losses in the CFD portfolio were split roughly equally between the long and short positions. With the market moving up slightly losses on the shorts were to be expected. The largest individual stock loss on a short position was less than 10% of the overall losses on the CFD portfolio during the period. The two largest losses on shorts were both fully closed out during the period. Losses of Â£1.3 million on the long CFD positions at the half year were disappointing. The largest loss was in relation to Blinkx, as mentioned previously, followed by losses on ITE Group, Xaar, Booker Group and Abcam. We regard these as good companies which have delivered excellent gains for us in the past. On the positive side our long CFD in Rathbones provided strong gains during the period. Activity We have been active during the period, taking profits mainly in a number of large mid-cap companies which had, in our view, become too highly rated. Our general approach has been to exit these stocks slowly and reinvest the proceeds into smaller companies. We used the proceeds from the sales of these stocks to gain greater exposure to companies benefiting from the gradual improvement in the economies of Continental Europe. We also added holdings in Boohoo, the online fashion clothing retailer, and Cambian, a leading provider of services to help severely disabled people. Both of these were investments via an IPO. We added holdings in several other companies during the period, including Skyepharma, a drug delivery company whose best-selling product is flutiform, a treatment for asthma, DX Services, a mail, parcels and logistics business, Incadea, a leading supplier of software to the global automotive retail and wholesale market, Parkmead, the North Sea focused oil and gas company set up by Tom Cross, former CEO of Dana Petroleum, and Tarsus Group, the exhibitions group which is quite heavily focused on emerging markets. In these and other new investments we have identified strong and ambitious management teams running businesses with considerable medium term potential. Portfolio Positioning There has been no significant change to our positioning. With regard to themes, we remain cautious about demand from emerging markets and foreign currency risks. That said, we have added to holdings exposed to a recovery in Continental Europe which we believe is still in its early stages. We are also more inclined to look to increase gradually exposure to emerging markets as opportunities arise. We are maintaining an exposure to UK domestic consumer stocks which are benefiting from the strong housing market and improving UK consumer confidence. However, we have taken profits in some stocks, including the sale of housebuilder Bellway. Our approach to risk remains key. We are disciplined with position sizes and, when choosing stocks to short we are focused not just on poor fundamentals but also the liquidity of the underlying shares. Outlook Over the past few months we have seen a reversal in the performance of momentum driven stocks with sustained profit-taking after extended rises. Large cap fund managers appear to have been sellers of mid-cap stocks. Newsflow from our holdings has generally continued to be positive with those largely exposed to the UK economy faring particularly well. This includes housebuilders such as Bovis Homes and other UK consumer exposed companies such as Restaurant Group and Lookers. We expect these and similar companies to continue to trade well. Share prices of housing related stocks have come under pressure as interest rates look set to rise. Many of the industrial companies and some software and media companies are very international and can expect demand levels to vary around the world. Trading prospects for these are no worse in 2014 than they were in 2013. However, the strength of sterling presents a headwind in 2014. We remain positive and convinced that over the medium term a well chosen portfolio of dynamic, small and mid-cap growth companies can outperform large caps, as has been the case over time. Mike Prentis and Ralph Cox BlackRock Investment Management (UK) Limited** 24 July 2014 * All percentages with income reinvested. **BlackRock Fund Managers Limited was appointed as the Alternative Investment Fund Manager on 2 July 2014. Prior to 2 July 2014, BlackRock Investment Management (UK) Limited had been the Investment Manager of the Company. Twenty largest investments as at 31 May 2014 Market % of value net Company Â£'000 assets Description Senior Ordinary shares 4,532 2.7 Manufacture and supply of Engineering components for the aerospace Long CFD 1,969 and automotive sector position Workspace Ordinary shares 4,465 2.3 Supply of flexible workspace to Group businesses in London Long CFD 1,232 position Elementis Ordinary shares 4,322 2.2 Manufacture of additives that enhances the feel, flow and Long CFD 1,074 finish of everyday products position Restaurant Ordinary shares 3,623 2.2 Operation of branded Group restaurants Long CFD 1,674 position Xaar Ordinary shares 3,420 2.0 Design and manufacture of industrial printheads used in Long CFD 1,576 inkjet printers position SIG Ordinary shares 3,336 1.9 Distribution of speciality building products in the UK and Long CFD 1,420 Continental Europe position Dunelm Group Ordinary shares 3,375 1.8 Supply of home furnishings Long CFD 1,147 position Optimal Ordinary shares 4,333 1.8 Provision of online payments Payments* solutions Bovis Homes Ordinary shares 2,604 1.8 Housebuilding Group Long CFD 1,707 position Rathbone Ordinary shares 2,415 1.7 Private client fund management Brothers Long CFD 1,852 position Ted Baker Ordinary shares 2,628 1.7 Design and sale of fashion clothing globally Long CFD 1,631 position Avon Rubber Ordinary shares 4,225 1.7 Design and manufacture of protection masks and dairy related consumable products Bodycote Ordinary shares 3,246 1.7 Provider of thermal processing services worldwide Long CFD 895 position Polar Ordinary shares 4,089 1.7 Investment management Capital Holdings* Tyman Ordinary shares 2,938 1.6 Manufacture and supply of window and door components Long CFD 1,063 position Victrex Ordinary shares 2,549 1.6 Manufacture and supply of PEEK thermoplastic products Long CFD 1,418 position Headlam Ordinary shares 3,825 1.6 Distribution of carpets and Group other floor coverings Big Yellow Ordinary shares 2,539 1.6 Operation of self storage Group properties mainly in London Long CFD 1,249 position Keller Group Ordinary shares 2,417 1.5 Provision of ground engineering solutions Long CFD 1,303 position Aveva Group Ordinary shares 1,875 1.5 Development and marketing of engineering computer software Long CFD 1,684 position ======= ======= 20 Largest investments 89,650 36.6 ======= ======= In addition, the Company had long only equity investments in 164 companies and 81 long and short CFD positions at 31 May 2014. The long CFD positions in the table above state the market value of the securities underlying the long CFD positions as at 31 May 2014. *Traded on the Alternative Investment Market ("AIM") of the London Stock Exchange. Net portfolio is calculated as long CFD portfolio less short CFD portfolio plus long only equity portfolio. All investments are in equity shares unless otherwise stated. A list of the Company's long only portfolio holdings and long CFD positions is available on the Company's website. Distribution of investments as at 31 May 2014 long long short only CFD CFD net portfolio portfolio portfolio portfolio % % % % Sector Oil & Gas Oil & Gas Producers 3.9 0.2 - 4.1 Oil Equipment, Services & Distribution - - (0.7) (0.7) ---- ---- ---- ----- 3.9 0.2 (0.7) 3.4 ---- ---- ---- ----- Basic Materials Chemicals 2.8 1.0 (0.2) 3.6 Industrial Metals & Mining 0.1 - - 0.1 Mining 3.6 0.1 - 3.7 ---- ---- ---- ----- 6.5 1.1 (0.2) 7.4 ---- ---- ---- ----- Industrials Construction & Materials 4.5 0.9 (0.5) 4.9 Aerospace & Defence 3.4 0.7 (0.3) 3.8 General Industrials - - (0.3) (0.3) Electronic & Electrical Equipment 3.8 1.5 (0.7) 4.6 Industrial Engineering 2.1 0.8 - 2.9 Industrial Transportation 3.5 - (0.3) 3.2 Support Services 11.4 2.3 (2.7) 11.0 ---- ---- ---- ----- 28.7 6.2 (4.8) 30.1 ---- ---- ---- ----- Consumer Goods Beverages 0.3 - (0.3) - Food Producers 0.1 - (0.5) (0.4) Household Goods & Home Construction 4.3 0.7 - 5.0 ---- ---- ---- ----- 4.7 0.7 (0.8) 4.6 ---- ---- ---- ----- Health Care Equipment & Services Health Care Equipment & Services 3.1 - (0.4) 2.7 Pharmaceuticals & Biotechnology 3.6 - - 3.6 ---- ---- ---- ----- 6.7 - (0.4) 6.3 ---- ---- ---- ----- Consumer Services Food & Drug Retailers 0.3 0.5 (0.4) 0.4 General Retailers 6.3 0.6 (1.3) 5.6 Media 4.9 0.8 (0.3) 5.4 Personal Goods 1.1 0.6 (0.6) 1.1 Travel & Leisure 5.3 1.6 (0.6) 6.3 ---- ---- ---- ----- 17.9 4.1 (3.2) 18.8 ---- ---- ---- ----- Telecommunications Fixed Line Telecommunications 1.9 - (0.3) 1.6 Mobile Telecommunications - - (0.2) (0.2) ---- ---- ---- ----- 1.9 - (0.5) 1.4 ---- ---- ---- ----- Financials Equity Investment Instruments 0.3 - - 0.3 Financial Services 8.3 0.7 - 9.0 Real Estate Investment & Services 6.1 0.5 - 6.6 Real Estate Investment Trusts 2.7 1.5 - 4.2 ---- ---- ---- ----- 17.4 2.7 - 20.1 ---- ---- ---- ----- Technology Software & Computer Services 6.7 0.9 (0.7) 6.9 Technology Hardware & Equipment 1.1 - (0.6) 0.5 ---- ---- ---- ----- 7.8 0.9 (1.3) 7.4 ---- ---- ---- ----- Other Other 0.5 - - 0.5 ---- ---- ---- ----- 0.5 - - 0.5 ---- ---- ---- ----- Total investments 96.0 15.9 (11.9) 100.0 ---- ---- ---- ----- The above percentages are calculated based on the net portfolio at 31 May 2014. The net portfolio is calculated as long equity portfolio plus long CFD portfolio less short CFD portfolio. Analysis of the Portfolio Gross Basis (1) FTSE 250 47.7% FTSE Small Cap 21.4% FTSE Fledgling 2.5% AIM 24.8% Other 3.6% Net Basis (2) FTSE 250 40.9% FTSE Small Cap 23.8% FTSE Fledgling 2.9% AIM 29.6% Other 2.8% Source: BlackRock. 1. Long and short CFD positions in aggregate plus long only equity portfolio. 2. Long CFD portfolio less short CFD portfolio plus long only equity portfolio. Market Capitalisation % of Short Long net portfolio positions positions* Â£0m-Â£100m -0.1% 7.4% Â£100m-Â£400m -1.7% 36.3% Â£400m-Â£1bn -4.7% 44.5% Â£1bn+ -5.4% 23.7% Source: BlackRock. *Long positions include the long only equity portfolio plus the long CFD portfolio. Statement of comprehensive income for the six months ended 31 May 2014 Revenue Â£'000 Capital Â£'000 Total Â£'000 Six Six Six Six Six Six months months Year months months Year months months Year ended ended ended ended ended ended ended ended ended 31.05.14 31.05.13 30.11.13 31.05.14 31.05.13 30.11.13 31.05.14 31.05.13 30.11.13 Notes (unaudited) (unaudited) (audited) (unaudited) (unaudited) (audited) (unaudited) (unaudited) (audited) Gains on investments held at fair value through profit or loss - - - 8,316 34,446 67,573 8,316 34,446 67,573 Net returns on contracts for difference 18 (112) (102) (2,574) 5,171 3,336 (2,556) 5,059 3,234 Exchange gains - - - 1 - 3 1 - 3 Income from investments held at fair value through profit or loss 3 2,189 2,234 4,672 - - - 2,189 2,234 4,672 Other income 3 2 3 1 - - - 2 3 1 ----- ----- ----- ----- ------ ------ ----- ------ ------ Total revenue 2,209 2,125 4,571 5,743 39,617 70,912 7,952 41,742 75,483 ----- ----- ----- ----- ------ ------ ----- ------ ------ Investment management and performance fees 4 (280) (215) (466) (841) (3,137) (5,337) (1,121) (3,352) (5,803) Other expenses 5 (290) (181) (446) (8) - (16) (298) (181) (462) ----- ----- ----- ----- ------ ------ ----- ------ ------ Total operating expenses (570) (396) (912) (849) (3,137) (5,353) (1,419) (3,533) (6,265) ----- ----- ----- ----- ------ ------ ----- ------ ------ Net profit before finance costs and taxation 1,639 1,729 3,659 4,894 36,480 65,559 6,533 38,209 69,218 Finance costs (2) - - (7) - - (9) - - ----- ----- ----- ----- ------ ------ ----- ------ ------ Profit on ordinary activities before taxation 1,637 1,729 3,659 4,887 36,480 65,559 6,524 38,209 69,218 Taxation charge on ordinary activities (3) (3) (8) - - - (3) (3) (8) ----- ----- ----- ----- ------ ------ ----- ------ ------ Net profit for the period after taxation 7 1,634 1,726 3,651 4,887 36,480 65,559 6,521 38,206 69,210 ----- ----- ----- ----- ------ ------ ----- ------ ------ Earnings per ordinary share - basic and diluted 7 2.23p 2.36p 4.99p 6.68p 49.88p 89.65p 8.91p 52.24p 94.64p ===== ===== ===== ===== ====== ====== ===== ====== ====== The total column of this statement represents the 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. All income is attributable to the equity holders of BlackRock Throgmorton Trust plc. The Company does not have any other recognised gains or losses. The net profit disclosed above represents the Company's total comprehensive income. Details of dividends paid and payable at the balance sheet date are given in note 6. Statement of changes in equity for the six months ended 31 May 2014 Called up Share Capital share premium Special redemption Captial Revenue capital account reserve reserve reserves reserve Total Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 For the six months ended 31 May 2014 (unaudited) At 30 November 2013 4,026 21,049 35,272 11,905 162,239 6,263 240,754 Total Comprehensive Income: Net profit for the period - - - - 4,887 1,634 6,521 Transactions with owners, recorded directly to equity: Dividends paid* - - - - - (2,377) (2,377) ----- ------ ------ ------ ------- ----- ------- At 31 May 2014 4,026 21,049 35,272 11,905 167,126 5,520 244,898 ----- ------ ------ ------ ------- ----- ------- For the six months ended 31 May 2013 (unaudited) At 30 November 2012 4,026 21,049 35,272 11,905 96,680 5,135 174,067 Total Comprehensive Income: Net profit for the period - - - - 36,480 1,726 38,206 Transactions with owners, recorded directly to equity: Dividends paid** - - - - - (1,975) (1,975) ----- ------ ------ ------ ------- ----- ------- At 31 May 2013 4,026 21,049 35,272 11,905 133,160 4,886 210,298 ----- ------ ------ ------ ------- ----- ------- For the year ended 30 November 2013 (audited) At 30 November 2012 4,026 21,049 35,272 11,905 96,680 5,135 174,067 Total Comprehensive Income: Net profit for the year - - - - 65,559 3,651 69,210 Transactions with owners, recorded directly to equity: Dividends paid and declared*** - - - - - (2,523) (2,523) ----- ------ ------ ------ ------- ----- ------- At 30 November 2013 4,026 21,049 35,272 11,905 162,239 6,263 240,754 ===== ====== ====== ====== ======= ===== ======= * Final dividend of 3.25p per share for the year ended 30 November 2013, declared on 10 February 2014 and paid on 4 April 2014. ** Final dividend of 2.70p per share for the year ended 30 November 2012, declared on 8 February 2013 and paid on 4 April 2013. *** Final dividend of 2.70p per share for the year ended 30 November 2012, declared on 8 February 2013 and paid on 4 April 2013 and interim dividend of 0.75p per share for the year ended 30 November 2013, declared on 23 July 2013 and paid on 23 August 2013. Statement of financial position as at 31 May 2014 31 31 30 May May November 2014 2013 2013 Â£'000 Â£'000 Â£'000 Notes (unaudited) (unaudited) (audited) Non current assets Investments held at fair value through profit or loss 246,685 214,859 247,127 ------- ------- ------- Current assets Other receivables 1,561 866 1,012 Amounts due in respect of contracts for difference 1,920 1,261 736 Cash 1,184 330 1,098 ------- ------- ------- 4,665 2,457 2,846 ------- ------- ------- Total assets 251,350 217,316 249,973 ------- ------- ------- Current liabilities Other payables (3,282) (5,732) (7,355) Collateral pledged in respect of contracts for difference (436) (1,286) (829) Amounts payable in respect of contracts for difference (2,734) - (1,035) ------- ------- ------- (6,452) (7,018) (9,219) ------- ------- ------- Net assets 244,898 210,298 240,754 ------- ------- ------- Equity attributable to equity holders Called up share capital 8 4,026 4,026 4,026 Share premium account 21,049 21,049 21,049 Special reserve 35,272 35,272 35,272 Capital redemption reserve 11,905 11,905 11,905 Capital reserves 167,126 133,160 162,239 Revenue reserve 5,520 4,886 6,263 ------- ------- ------- Total equity shareholders' funds 7 244,898 210,298 240,754 ------- ------- ------- Net asset value per ordinary share - basic and diluted 7 334.88p 287.57p 329.21p ======= ======= ======= Cash flow statement for the six months ended 31 May 2014 Six Six months months Year ended ended ended 31 31 30 May May November 2014 2013 2013 Â£'000 Â£'000 Â£'000 (unaudited) (unaudited) (audited) Net cash inflow/(outflow) from operating activities 2,863 (692) 2,701 ----- ----- ----- Financing activities Servicing of finance (9) - - Dividends paid (2,377) (1,975) (2,523) ----- ----- ----- Net cash outflow from financing activities (2,386) (1,975) (2,523) ----- ----- ----- Increase/(decrease) in cash and cash equivalents 477 (2,667) 178 Exchange movements 2 1 3 ----- ----- ----- Change in cash and cash equivalents 479 (2,666) 181 Cash and cash equivalents at the start of period 269 1,710 88 ----- ----- ----- Cash/(debt) and cash equivalents at the end of the period 748 (956) 269 ----- ----- ----- Comprised of: Cash 1,184 330 1,098 Collateral pledged in respect of contracts for difference (436) (1,286) (829) ----- ----- ----- Total 748 (956) 269 ===== ===== ===== Reconciliation of net income before finance costs and taxation to net cash flow from operating activities Six Six months months Year ended ended ended 31 31 30 May May November 2014 2013 2013 Â£'000 Â£'000 Â£'000 (unaudited) (unaudited) (audited) Operating activities Net profit before taxation 6,524 38,209 69,218 Add back interest paid 150 134 279 Gains on investments and contracts for difference held at fair value through profit or loss including transaction costs (5,888) (39,983) (71,188) Net movement on foreign exchange (2) (1) (3) Sales of investments held at fair value through profit or loss 101,072 55,170 128,673 Purchases of investments held at fair value through profit or loss (92,315) (61,421) (132,672) Net realised (loss)/gains on contracts for difference (1,913) 4,426 4,291 (Increase)/decrease in other receivables (352) (305) 76 (Increase)/decrease in amounts due from brokers (197) 23 (514) (Decrease)/increase in amounts due to brokers (496) 393 1,497 (Decrease)/increase in other payables (3,576) 2,790 3,315 ------- ------- ------- Net cash inflow/(outflow) from operating activities before interest and taxation 3,007 (565) 2,972 ------- ------- ------- Interest paid (150) (134) (279) Taxation on overseas income 6 7 8 ------- ------- ------- Net cash inflow/(outflow) from operating activities 2,863 (692) 2,701 ======= ======= ======= Notes to the financial statements for the six months ended 31 May 2014 1. Principal activity The principal activity of the Company is that of an investment trust company within the meaning of sections 1158-1165 of the Corporation Tax Act 2010. The Company had two subsidiaries, The Third Throgmorton Trust Limited, the principal activity of which was investment dealing in shares and other securities and T.T. Finance PLC which acted as a financing subsidiary. The Third Throgmorton Trust Limited was put into member's voluntary liquidation on 17 July 2013 and was liquidated on 25 April 2014. T.T. Finance PLC was struck off from the Companies House register on 26 November 2013. Both subsidiaries were immaterial. These financial statements are not prepared on a consolidated basis as the subsidiaries have been liquidated. The financial statements for the six months ended 31 May 2013 have been adjusted to reflect the financial results of the parent company. 2. Basis of preparation The half yearly financial report has been prepared using the same accounting policies set out in the Company's annual report and financial statements for the year ended 30 November 2013 (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. These comprise standards and interpretations of the International Accounting Standards and Standard Interpretations Committee as approved by the International Accounting Standards Committee that remains in effect, to the extent that IFRS have been adopted by the European Union. 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. The functional currency of the Company is UK pounds sterling as this is the currency of the primary economic environment in which the Company operates. Accordingly, the financial statements are presented in UK pounds sterling. 3. Income Six Six months months Year ended ended ended 31 31 30 May May November 2014 2013 2013 Â£'000 Â£'000 Â£'000 (unaudited) (unaudited) (audited) Investment income: UK listed dividends 2,032 1,813 4,202 Overseas listed dividends 157 188 237 Dividends from subsidiary company - 233 233 ----- ----- ----- 2,189 2,234 4,672 ----- ----- ----- Other income: Deposit interest 2 3 1 ----- ----- ----- 2 3 1 ----- ----- ----- Total 2,191 2,237 4,673 ===== ===== ===== 4. Investment management and performance fees Six months ended Six months ended Year ended 31 May 2014 31 May 2013 30 November 2013 (unaudited) (unaudited) (audited) Revenue Capital Total Revenue Capital Total Revenue Capital Total Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Investment management fee 280 841 1,121 215 645 860 466 1,398 1,864 Performance fee - - - - 2,492 2,492 - 3,939 3,939 --- --- ----- --- ----- ----- --- ----- ----- Total 280 841 1,121 215 3,137 3,352 466 5,337 5,803 === === ===== === ===== ===== === ===== ===== BlackRock Fund Managers Limited and previously BlackRock Investment Management (UK) Limited ("BlackRock") provides management and administration services to the Company under a contract which is terminable on six months' notice. 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 Numis Smaller Companies excluding AIM (excluding Investment Companies) Index (the "Benchmark Index"). The performance fee is subject to a cap at 2% of performance fee market value if the NAV return is zero or positive and a cap of 1% of performance fee market value if the NAV return is negative. Any excess performance fee over the capped amount for the performance period shall neither be paid nor carried forward. Full details of the Company's investment management agreement with BlackRock are given on page 17 of the Company's annual report for the year ended 30 November 2013. The investment management fee is allocated 75% to the capital column and 25% to the revenue column of the 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. No performance fee was accrued for the six months ended 31 May 2014 (six months ended 31 May 2013: Â£2,492,000; year ended 30 November 2013: Â£3,939,000). The performance fees have been wholly allocated to the capital column of the Statement of Comprehensive Income, as performance has been predominantly generated through the capital returns of the investment portfolio. 5. Other Operating expenses Six Six months months Year ended ended ended 31 31 30 May May November 2014 2013 2013 Â£'000 Â£'000 Â£'000 (unaudited) (unaudited) (audited) Auditors' remuneration - audit services 14 14 28 - other audit services* 6 5 5 Registrar's fee 11 12 27 Directors' remuneration 71 63 125 Marketing fees 99 - 16 Other administration costs 89 87 245 --- --- --- 290 181 446 --- --- --- Transaction charge - capital 8 - 16 --- --- --- 298 181 462 === === === * Other audit services relate to the review of the half yearly financial report. 6. Dividend The Board has declared an interim dividend of 0.80p per share (2013: 0.75p) payable on 22 August 2014 to shareholders on the register at the close of business on 1 August 2014. 7. Earnings and net asset value per ordinary share Revenue and capital earnings per share are shown below and have been calculated using the following: Six Six months months Year ended ended ended 31 31 30 May May November 2014 2013 2013 (unaudited) (unaudited) (audited) Net revenue profit attributable to ordinary shareholders (Â£'000) 1,634 1,726 3,651 Net capital profit attributable to ordinary shareholders (Â£'000) 4,887 36,480 65,559 ------- ------- ------- Total earnings attributable to ordinary shareholders (Â£'000) 6,521 38,206 69,210 ======= ======= ======= Total equity shareholders' funds (Â£'000) 244,898 210,298 240,754 ------- ------- ------- The weighted average number of ordinary shares in issue during the period on which the earnings per ordinary share was calculated was: 73,130,326 73,130,326 73,130,326 ---------- ---------- ---------- The actual 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 73,130,326 73,130,326 ---------- ---------- ---------- Revenue earnings per share 2.23p 2.36p 4.99p Capital earnings per share 6.68p 49.88p 89.65p ------- ------- ------- Total earnings per share 8.91p 52.24p 94.64p ======= ======= ======= Net asset value per share 334.88p 287.57p 329.21p ======= ======= ======= Ordinary share price 291.38p 243.50p 290.00p ======= ======= ======= * The Company does not have any dilutive securities. 8. Called up share capital Ordinary shares in Treasury Total Nominal issue shares shares value number number number Â£'000 Allotted, called up and fully paid share capital comprised: Ordinary shares of 5p each ---------- --------- ---------- ----- At 1 December 2013 73,130,326 7,400,000 80,530,326 4,026 ========== ========= ========== ===== At 31 May 2014 73,130,326 7,400,000 80,530,326 4,026 ========== ========= ========== ===== There was no change in the share capital during the period. 9. Transaction with the Investment Manager Details of the fees receivable by BlackRock in relation to these services are set out in note 4. Six Six months months Year ended ended ended 31 31 30 May May November 2014 2013 2013 Â£'000 Â£'000 Â£'000 (unaudited) (unaudited) (audited) Investment Management fees payable 1,121 860 1,005 Performance fees accrued - 3,753 3,939 ----- ----- ----- 1,121 4,613 4,944 ===== ===== ===== Any performance fee for the year to 30 November 2014 will not crystallise and fall due until the calculation date on 30 November 2014. No performance fee was outstanding at 31 May 2014 (31 May 2013: Â£3,753,000; 30 November 2013: Â£3,939,000). At period end, an amount of Â£1,121,000 (31 May 2013: Â£860,000; 30 November 2013: Â£1,005,000) was outstanding in respect of management fees. In addition to the above services, with effect from 1 November 2013 BlackRock has provided the Company with marketing services. The total fee paid or payable for these services for the period ended 31 May 2014 amounted to Â£99,000 including VAT (six months ended 31 May 2013: nil; year ended 30 November 2013: Â£16,000) of which Â£115,000 including VAT (six months ended 31 May 2013: nil; year ended 30 November 2013: Â£16,000) was outstanding at 31 May 2014. 10. Related party disclosure The Board consists of five non-executive Directors, all of whom are considered to be independent. None of the Directors has a service contract with the Company. The Chairman receives an annual fee of Â£34,000, the Chairman of the Audit Committee receives an annual fee of Â£25,000 and each of the other Directors receives an annual fee of Â£22,000. At 31 May 2014, the period end, all five members of the Board held shares in the Company as set out below: Ordinary Ordinary shares shares 31 24 May July 2014 2014 Crispin Latymer 30,601 30,654 Simon Beart 31,140* 31,492** Loudon Greenlees (appointed on 26 March 2014) 10,000 N/A Jean Matterson 29,000 29,000 Eric Stobart 20,782â€¡ 20,960â€¡â€¡ * Including 7,645 shares held by Mrs Beart. ** Including 7,830 shares held by Mrs Beart. â€¡ Including 8,395 shares held by Mrs Stobart. â€¡â€¡ Including 8,573 shares held by Mrs Stobart. 11. Contingent liabilities There were no contingent liabilities at 31 May 2014, 31 May 2013 or 30 November 2013. 12. 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 2014 and 31 May 2013 has not been audited. The information for the year ended 30 November 2013 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. 13. Annual results The Board expects to announce the annual results for the year ending 30 November 2014, as prepared under IFRS, in February 2015. Copies of the results announcement will be available from the Secretary on 020 7743 3000. The annual report should be available by the beginning of February 2015, with the Annual General Meeting being held in March 2015. Independent review report to BlackRock 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 months ended 31 May 2014 which comprises the Statement of Comprehensive Income, Statement of Changes in Equity, Statement of Financial Position, Cash Flow Statement, Reconciliation of Net Income before Finance Costs and 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 information in 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 2410 (UK and Ireland) "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 Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority. As disclosed in note 2, the annual financial statements of the Company are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union. 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 months ended 31 May 2014 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority. Ernst & Young LLP London 24 July 2014 For further information, please contact: Simon White, Managing Director, Investment Companies, BlackRock Investment Management (UK) Limited Tel: 020 7743 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 24 July 2014 12 Throgmorton Avenue London EC2N 2DL END The Half Yearly Financial Report will also be available on the BlackRock's website at http:// www.blackrock.co.uk/individual/literature/interim-report/ blackrock-throgmorton-trust-plc-interim-report.pdf. Neither the contents of the BlackRock's website nor the contents of any website accessible from hyperlinks on the BlackRock's website (or any other website) is incorporated into, or forms part of, this announcement. END

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