Final Results
Throgmorton Trust PLC
30 January 2003
THE THROGMORTON TRUST PLC
PRELIMINARY ANNOUNCEMENT
FOR THE YEAR ENDED 30 NOVEMBER 2002
• Continued outperformance in difficult markets
• Net Asset Value per ordinary share 77.5p (2001:103.2p) see table below
• Final dividend 1.0p (2001:1.0p) making a total of 1.5p (2001:1.5p)
NET ASSET VALUE
30.11.2002 30.11.2001 Year on year
% change
The Throgmorton Trust PLC 77.5p 103.2p -24.9
(loan stock not converted)
FTSE SmallCap (ex Inv. Cos.) 1,914.5 2,600.2 -26.4
FTSE All-Share 2,003.0 2,514.1 -20.3
THE CHAIRMAN, LORD STEWARTBY, COMMENTED:
After a very disappointing stock market performance in the two previous years,
2002 turned out even worse, and deterioration has continued in the current year.
The cumulative effect of accounting scandals, disappointing profits, anxiety
about international security and deferment of hopes of economic recovery led to
further sharp falls in stock markets. Although the small companies sector
suffered badly in these conditions, I can again report that, during the period
under review, both the portfolio and the net asset value of the Trust performed
better than the SmallCap Index. The policy of concentrating on companies with
good management and a strong balance sheet has again contributed to the relative
performance of the portfolio, in exceptionally difficult conditions.
Net asset value
At 30 November 2002 the net asset value was 77.5p per share against 103.2p at
the end of the previous November. The decline in the Trust's net asset value per
share over the twelve months of 24.9 per cent compares with a fall of 26.4 per
cent in the FTSE SmallCap Index (excluding Investment Companies). Over the same
period the FTSE All Share Index declined by 20.3 per cent, as increasing
aversion to risk on the part of investors, combined with the greater illiquidity
of shares in smaller companies, resulted in a worse performance by the Small Cap
sector than by the market overall.
The net asset value of the Trust suffered, in a falling market, from the
relatively high level of gearing. Thus, although the portfolio itself
outperformed the SmallCap Index by as much as 6.5 per cent, outperformance in
terms of net asset value was limited to 1.5 per cent. When market levels
recover, the gearing should, of course, have a favourable impact on net asset
value.
Revenue and Dividend
The net revenue of the Trust, after tax, was £3.1 million, compared with £3.4
million in 2001. As I explained a year ago, lower income was to be expected
following the maturity of the Munder loan notes and conversion of the Halladale
preference shares, both of which had provided a significant contribution to the
revenue account. Nevertheless, the directors recommend a final dividend of 1.0p
per share, making a total of 1.5p for the year, both unchanged from 2001.
Although the decline in revenue this year leaves the dividend uncovered by
current earnings, the Trust and its financing subsidiaries have a total of more
than £6 million in distributable reserves going forward. The directors
accordingly do not anticipate any need for a reduction in the dividend for the
current year.
The board
Mr Peter Courtney, who has been a director since 1990, is not seeking
re-election at the Annual General Meeting in March. The Trust had entered the
1990s with a material number of unquoted holdings, including trading
subsidiaries and associates, and in difficult economic conditions Mr Courtney,
as Finance Director, played a key role in helping to restore the company to its
original purpose as an orthodox investment trust specialising in quoted smaller
companies. On behalf of the board I would like to take this opportunity to
record our gratitude to him for the very significant contribution that he has
made to our affairs.
We are pleased to welcome to the board Mr Harry Westropp who has long experience
of the small company sector. After beginning his career at Lazard Brothers in
the 1960s Mr Westropp, who is currently chairman of Abacus Group plc, has served
on the boards of several small to mid-sized companies, both private and quoted.
Outlook
In recent weeks the mood among investors has become exceptionally nervous and
this has resulted in a renewed bout of weakness in the markets. There has rarely
been a time when economic prospects have been so difficult to fathom. In the
United Kingdom, which has so far avoided some of the worst pitfalls, there needs
to be more constraint on the rate of growth of personal indebtedness, and calmer
conditions in the housing market. Abroad, the possibility of war in Iraq, fears
of more terrorist activity and other tensions elsewhere have created a lack of
confidence and an uncertain background for business, as the main trading nations
hesitantly look forward to economic recovery. After three very difficult years,
during which much retrenchment and reconstruction has had to be undertaken by
companies, it may seem optimistic to suggest that by the end of 2003 some modest
improvement in economic activity should at last become more evident,
particularly in the United States on which the rest of the world remains heavily
dependent. A year ago I said that smaller companies should be well placed to
benefit from recovery in the domestic economy. That view still holds good,
although the timescale is proving to be considerably more extended than many had
hoped.
Lord Stewartby
Chairman
30 January 2003
The Throgmorton Trust PLC
Preliminary statement for the year ended 30 November 2002
Revenue Account
for the year ended 30 November 2002 2001
£000s (unaudited) £000s (audited)
£000s £000s
Income from fixed asset investments
Franked income 5,741 6,476
Unfranked income 1,056 806
6,797 7,282
Other income
Interest receivable 281 675
Fees and commissions 99 135
380 810
Gross Income 7,177 8,092
Expenses and interest
Management fee 1,181 1,604
Administration expenses 291 322
Interest payable 2,582 2,611
4,054 4,537
Net revenue from ordinary activities before 3,123 3,555
taxation
Tax on net revenue from ordinary activities 58 196
Net revenue from ordinary activities after 3,065 3,359
taxation
Dividends
Ordinary shares:
Interim 1,186 1,192
Final 2,373 2,355
3,559 3,547
Transfer from reserves (494) (188)
Earnings per share - basic 1.29p 1.40p
- diluted 1.41p 1.51p
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 2002
Balance Sheet
as at 30 November 2002 2001
£000s (unaudited) £000s (audited)
£000s £000s
Fixed asset investments
Listed
United Kingdom 220,396 276,984
Overseas 41 40
Subsidiary undertakings 3,186 3,743
223,623 280,767
Current assets
Debtors 1,357 1,680
Cash at bank 8,572 13,354
9,929 15,034
Creditors:
Amounts falling due within one year
Amounts owed to subsidiary undertakings 1,512 1,907
Sundry creditors 714 1,189
Proposed dividend on ordinary shares 2,373 2,373
4,599 5,469
Net current assets 5,330 9,565
Total assets less current liabilities 228,953 290,332
Creditors:
Amounts falling due after one year
Debentures, convertible debt and loans (45,126) (45,126)
Net assets 183,827 245,206
Capital and reserves
Called up share capital 11,863 11,886
Share premium account 35,272 35,272
Capital reserves
Capital redemption reserve 3,327 3,304
Revaluation reserve (43,514) 8,062
Realised capital profits 173,259 133,072 182,568 193,934
Revenue reserve 3,620 4,114
Total equity shareholders' funds 183,827 245,206
Net asset value per share 77.48p 103.15p
Approved by the board of directors and signed on their behalf by Lord Stewartby
30 January 2003
The Throgmorton Trust PLC
Preliminary statement for the year ended 30 November 2002
Statement of Total Recognised Gains and Losses
Year to 30 November 2002
(unaudited)
Revenue Capital Total
£000s £000s £000s
Realised gains and losses - (5,569) (5,569)
Unrealised gains and losses - (51,576) (51,576)
Income 7,177 - 7,177
Management fee (1,181) (1,181) (2,362)
Other expenses (291) - (291)
Net return before finance costs and taxation 5,705 (58,326) (52,621)
Interest payable and similar charges (2,582) (2,425) (5,007)
Return on ordinary activities before taxation 3,123 (60,751) (57,628)
Tax on ordinary activities (58) 58 -
Return on ordinary activities after taxation
attributable to equity shareholders
3,065 (60,693) (57,628)
Dividends in respect of equity shares (3,559) - (3,559)
Transfer from reserves (494) (60,693) (61,187)
Return per ordinary share
- basic 1.29p (25.58p) (24.29p)
- assuming conversion of loan stock 1.41p (24.51p) (23.10p)
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 2002
Statement of Total Recognised Gains and Losses (Continued)
Year to 30 November 2001
(audited)
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
attributable to equity shareholders 3,359 (28,182) (24,823)
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)
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 2002
Reconciliation of Movements in Shareholders' Funds
for the year ended 30 November 2002 2001
(unaudited) (audited)
£000s £000s
Net surplus revenue for distribution 3,065 3,359
Dividends (3,559) (3,547)
Net transferred from reserves (494) (188)
Conversion of loan stock - 5
Non distributable capital deficit (60,693) (28,182)
Repurchase of ordinary shares (369) (10,146)
Release of provision for previous subsidiary undertaking 177 -
Net reduction to shareholders' funds (61,379) (38,511)
Opening shareholders' funds 245,206 283,717
Closing shareholders' funds 183,827 245,206
The Throgmorton Trust PLC
Preliminary statement for the year ended 30 November 2002
Cash Flow Statement
for the year ended 30 November 2002 2001
(unaudited) (audited)
£000s £000s
Operating activities
Cash received from investments 6,722 7,095
Interest received 281 675
Underwriting commission 89 146
Management fee (1,312) (1,626)
Cash paid to and on behalf of the directors (98) (99)
Other cash payments (222) (251)
Net cash inflow from operating activities 5,460 5,940
Servicing of finance
Interest paid - revenue (2,582) (2,611)
Taxation - (302)
Taxation paid
Capital expenditure and financial investment
Purchase of investments (77,614) (164,869)
Sale of investments 77,690 184,658
Capital management fee (1,312) (1,626)
Interest charged to capital (2,424) (2,425)
Net payments to subsidiaries (72) (738)
Net cash (outflow)/inflow from investing activities (3,732) 15,000
Dividends
Dividends paid - equity shares (3,559) (3,646)
Net cash (outflow)/inflow before financing (4,413) 14,381
Financing
Repurchase of ordinary shares (369) (10,156)
Net cash outflow from financing (369) (10,156)
(Decrease)/increase in cash (4,782) 4,225
The financial information set out in the announcement does not constitute the
company's statutory accounts for the years ended 30 November 2002 or 2001. The
financial information for the year ended 30 November 2001 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 2002 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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