Final Results
Throgmorton Trust PLC
24 January 2002
THE THROGMORTON TRUST PLC
PRELIMINARY ANNOUNCEMENT
FOR THE YEAR ENDED 30 NOVEMBER 2001
• Continued outperformance in difficult markets
• Net Asset Value per Ordinary share 103.2p (2000:114.3p) see table below
• Final dividend 1.0p (2000:1.0p)
NET ASSET VALUE
30.11.2001 30.11.2000 Year on year
% change
The Throgmorton Trust PLC 103.2p 114.3p -9.7
(loan stock not converted)
FTSE SmallCap (ex Inv. Cos.) 2,600.2 3,157.7 -17.7
FTSE All-Share 2,514.1 2,945.1 -14.6
THE CHAIRMAN, LORD STEWARTBY, COMMENTED:
Chairman's Statement
Like 2000, the year 2001 proved disappointing for stock markets, which displayed
continued weakness and volatility as economic growth slackened throughout the
world. These trends were already in place before the terrorist attacks on
September 11 in the United States caused a major shock to confidence and
activity, the consequences of which continue to reverberate. Against this very
difficult background I am nevertheless pleased to report that during the twelve
months to 30 November 2001, the first full year in which the Trust's portfolio
was managed to its new specification without an income requirement, it performed
substantially better in a declining market than either the SmallCap or the All
Share Index over the same period.
Net asset value
At 30 November 2001 the net asset value was 103.2p per share against 114.3p at
the end of the previous November. The decline in the Trust's net asset value
over the twelve months of 9.7 per cent compares with falls of 17.7 per cent in
the FTSE SmallCap Index (excluding Investment Companies) and of 14.6 per cent in
the FTSE All Share Index.
Revenue and Dividend
The net revenue of the Trust, after tax, was £3.4 million, compared with £4.5
million in the previous year, closely reflecting a reduction in income received
of £1.2 million. As I explained a year ago, lower income was to be expected
following changes in the portfolio, as higher yielding investments have been
replaced by growth stocks with a lower yield.
The directors recommend a final dividend of 1.0p per share, making a total for
the year of 1.5p, both unchanged from the previous year. The final dividend, if
approved at the Annual General Meeting, will be paid on 25 March 2002 to
shareholders entered on the register of members on 8 February 2002.
During 2002 it is probable that the Trust's revenue will decline further. This
is largely due to the fact that £10.6 million worth of loan notes, received from
Munder Capital Management as part of the consideration for the sale in 1996 of
the Trust's 49 per cent holding in Framlington, matured in October 2001, and the
proceeds have been invested in quoted securities at a much lower yield. The
directors do not, however, anticipate any need for a reduction in the dividend
for the current year, since the company has substantial revenue reserves from
which any shortfall can be met.
Investment Policy
Since shareholders approved the change of objective in 2000, the managers have
been free to concentrate primarily on capital performance, without a requirement
for increasing income. This has enabled them to focus more on sectors and
companies with the greatest potential for future growth, where yields on
individual stocks are often lower. The new approach is described more fully in
the Manager's Review hereafter. It is gratifying to record that in each of the
three six month periods since the reorganisation of the portfolio was completed
the performance of the Trust's net asset value has been better than that of the
benchmark index. This has been achieved despite the adverse impact of gearing in
a period of declining markets.
With the maturity of the Munder loan notes and the AIM listing last April of
Halladale plc, in which the Trust had previously held convertible preference
shares, there are now no material unquoted securities remaining. It is our
policy to run a broadly based portfolio of quoted stocks, suited to the needs of
investors who wish to have a general exposure to smaller companies without the
undue volatility that often comes from heavy concentration in particular
sectors.
As described in the report of the Directors, a new management contract on
improved terms was concluded with the managers on the recommendation of the
Management Engagement Committee, effective from 1 December 2001.
The Board
Mr Michael Orr, who has been a director since 1990, is not seeking re-election
at the Annual General Meeting in March. On behalf of the Board, I would like to
take this opportunity to record our appreciation of his valuable contribution to
our affairs, and to wish him well.
We are pleased to welcome to the Board Mr Richard Bernays, currently chairman of
Martin Currie Income and Growth Trust and a non-executive director of other
listed investment companies, who has spent more than thirty years in the
investment management field. We look forward to benefiting from his wide
knowledge and experience.
Outlook
So far the United Kingdom has avoided most of the economic problems affecting
the USA, Japan and Continental Europe. With interest rates around the world at
historically low levels the prospect for 2002 is a little better than it was for
the last two years. It does, however, remain heavily dependent upon expected
recovery in America, and it would probably be too optimistic to expect an early
return to previous levels of growth. Provided that the United Kingdom can
continue to avoid the worst of the international slowdown, smaller companies
should be well placed to benefit from a recovery in the domestic economy.
24 January 2002
The Throgmorton Trust PLC
Preliminary statement for the year ended 30 November 2001
Revenue Account
for the year ended 30 November 2001 2000
(unaudited) (audited)
£000s £000s £000s £000s
Income from fixed asset investments
Franked income 6,476 8,045
Unfranked income 806 859
7,282 8,904
Other income
Interest receivable 675 302
Fees and commissions 135 93
810 395
Gross Income 8,092 9,299
Expenses and interest
Management fee 1,604 1,734
Administration expenses 322 309
Interest payable 2,611 2,616
4,537 4,659
Net revenue from ordinary activities before 3,555 4,640
taxation
Tax on net revenue from ordinary activities 196 166
Net revenue from ordinary activities after taxation 3,359 4,474
Dividends
Ordinary shares
- Interim: 1,192 1,294
- Final: 2,355 2,472
3,547 3,766
Transfer (from)/to reserves (188) 708
Earnings per share - basic 1.40p 1.70p
- diluted 1.51p 1.79p
The revenue account is the profit and loss account of the company.
All revenue is derived from continuing operations.
No operations were acquired or discontinued during the year.
The Throgmorton Trust PLC
Preliminary statement for the year ended 30 November 2001
Balance Sheet
as at 30 November 2001 2000
(unaudited) (audited)
£000s £000s £000s £000s
Fixed asset investments
Listed
United Kingdom 276,984 313,479
Overseas 40 39
Subsidiary undertakings 3,743 3,285
Other - 10,800
280,767 327,603
Current assets
Debtors 1,680 589
Cash at bank 13,354 9,130
15,034 9,719
Creditors:
Amounts falling due within one year
Trade creditors - 2,570
Amounts owed to subsidiary undertakings 1,907 1,900
Sundry creditors 1,189 1,536
Proposed dividend on ordinary shares 2,373 2,472
5,469 8,478
Net current assets 9,565 1,241
Total assets less current liabilities 290,332 328,844
Creditors:
Amounts falling due after one year
Debentures, convertible debt and loans (45,126) (45,127)
Total net assets 245,206 283,717
Capital and reserves
Called up share capital 11,886 12,414
Share premium account 35,272 35,267
Capital reserves
Capital redemption reserve 3,304 2,776
Revaluation reserve 8,062 52,839
Realised capital profits 182,568 176,119
193,934 231,734
Revenue reserve 4,114 4,302
Total equity shareholders' funds 245,206 283,717
Net asset value per share 103.15p 114.28p
The Throgmorton Trust PLC
Preliminary statement for the year ended 30 November 2001
Statement of Total Recognised Gains and Losses
Year to 30 November 2001
(unaudited)
Revenue Capital Total
£000s £000s £000s
Realised gains and losses - 20,427 20,427
Unrealised gains and losses - (44,777) (44,777)
Income 8,092 - 8,092
Management fee (1,604) (1,604) (3,208)
Other expenses (322) - (322)
Net return before finance costs and taxation 6,166 (25,954) (19,788)
Interest payable and similar charges (2,611) (2,424) (5,035)
Return on ordinary activities before taxation 3,555 (28,378) (24,823)
Tax on ordinary activities (196) 196 -
Return on ordinary activities after taxation 3,359 (28,182) (24,823)
attributable to equity shareholders
Dividends in respect of equity shares (3,547) - (3,547)
Transfer from reserves (188) (28,182) (28,370)
Return per ordinary share
- basic 1.40p (11.74p) (10.34p)
- assuming conversion of loan stock 1.51p (11.17p) (9.66p)
Year to 30 November 2000
(audited)
Revenue Capital Total
£000s £000s £000s
Realised gains and losses - 47,010 47,010
Unrealised gains and losses - (50,476) (50,476)
Income 9,299 - 9,299
Management fee (1,734) (1,734) (3,468)
Other expenses (309) - (309)
Net return before finance costs and taxation 7,256 (5,200) 2,056
Interest payable and similar charges (2,616) (2,424) (5,040)
Return on ordinary activities before taxation 4,640 (7,624) (2,984)
Tax on ordinary activities (166) 163 (3)
Return on ordinary activities after taxation 4,474 (7,461) (2,987)
attributable to equity shareholders
Dividends in respect of equity shares (3,766) - (3,766)
Transfer to/(from) reserves 708 (7,461) (6,753)
Return per ordinary share
- basic 1.70p (2.84p) (1.14p)
- assuming conversion of loan stock 1.79p (2.60p) (0.81p)
The Revenue column of this statement is the summary profit and loss account of
the company. All revenue and capital items in this statement derive from
continuing operations. No operations were acquired or discontinued in the year.
The Throgmorton Trust PLC
Preliminary statement for the year ended 30 November 2001
Cash Flow Statement
for the year ended 30 November 2001 2000
(unaudited) (audited)
£000s £000s
Operating activities
Cash received from investments 7,095 10,037
Interest received 675 321
Underwriting commission 146 60
Management fee (1,626) (1,767)
Cash paid to and on behalf of the directors (99) (120)
Other cash payments (251) (203)
Net cash inflow from operating activities 5,940 8,328
Servicing of finance
Interest paid - revenue (2,611) (2,261)
Taxation
Taxation paid (302) (33)
Capital expenditure and financial investment
Purchase of investments (164,869) (136,557)
Sale of investments 184,658 183,137
Capital management fee (1,626) (1,767)
Interest charged to capital (2,425) (2,425)
Net payments to subsidiaries (738) -
Net cash inflow from investing activities 15,000 42,388
Dividends
Dividends paid - equity shares (3,646) (5,610)
Net cash inflow before financing 14,381 42,812
Financing
Repurchase of ordinary shares (10,156) (37,725)
Net cash outflow from financing (10,156) (37,725)
Increase in cash 4,225 5,087
The Throgmorton Trust PLC
Preliminary statement for the year ended 30 November 2001
Reconciliation of Movements in Shareholders' Funds
for the year ended 30 November 2001 2000
(unaudited) (audited)
£000s £000s
Net surplus revenue for distribution 3,359 4,474
Dividends (3,547) (3,766)
Net transferred (from)/to reserves (188) 708
Conversion of loan stock 5 -
Non distributable capital deficit (28,182) (7,461)
Repurchase of ordinary shares (10,146) (37,641)
Net reduction to shareholders' funds (38,511) (44,394)
Opening shareholders' funds 283,717 328,111
Closing shareholders' funds 245,206 283,717
The financial information set out in the announcement does not constitute the
company's statutory accounts for the years ended 30 November 2001 or 2000. The
financial information for the year ended 30 November 2000 is derived from the
statutory accounts for that year which have been delivered to the Registrar of
Companies. The auditors reported on those accounts; their report was unqualified
and did not contain a statement under s237(2) or (3) Companies Act 1985. The
statutory accounts for the year ended 30 November 2001 will be finalised on the
basis of the financial information presented by the directors in this
preliminary announcement and will be delivered to the Registrar of Companies
following the company's annual general meeting.
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