Final Results

THE THROGMORTON TRUST PLC Annual Report 30 November 2012 Performance Record Financial Highlights As at As at 30 November 30 November Change 2012 2011 % Assets Net assets (£'000) 174,067 147,774 +17.8 Net asset value per share 238.02p 202.07p +17.8 - with income reinvested +19.4 Ordinary share price (mid-market) 193.25p 170.00p +13.7 - with income reinvested +15.6 ======= ======= ===== Year ended Year ended 30 November 30 November Change 2012 2011 % Revenue Net revenue after taxation (£'000) 2,564 2,078 +23.4 Revenue return per ordinary share 3.51p 3.29p +6.7 ------- ------- ----- Dividends - Interim 0.62p 0.60p +3.3 - Final 2.70p 2.55p +5.9 ------- ------- ----- Total dividends paid and payable in respect of the year ended 30 November 3.32p 3.15p +5.4 ======= ======= ===== Chairman's Statement Performance In this my inaugural annual report to shareholders as Chairman, I am pleased to report that your Company has performed well despite the challenging market background. The Company's net asset value per share ("NAV") returned 19.4% compared with a return of 16.5% for the benchmark, the Numis Smaller Companies plus AIM (excluding investment companies) Index. Since the year end the NAV has increased by 10.4% (all figures in sterling terms with income reinvested). During the year ended 30 November 2012, the Company's share price rose by 15.6%. Since 30 November 2012, the share price has risen by a further 11.1% to 214.75 pence per share (all figures in sterling terms with income reinvested). For much of the year under review, markets have been volatile although sentiment began to improve in the summer amid much needed support from policy makers in the US, Europe, Japan and China Small and midcap stocks performed well during the financial year with the FTSE 250 Index increasing by 20.6% compared to a rise of 10.7% in the FTSE 100 Index. By contrast, AIM was disappointing with the AIM All-Share Index rising only by 0.4% (all figures in sterling terms with income reinvested). Revenue return and dividends Revenue return per share for the year amounted to 3.51 pence compared with 3.29 pence for the previous year, an increase of 6.7%. The Directors are proposing an increased final dividend of 2.70 pence per share. This together with the interim dividend of 0.62 pence paid on 24 August 2012 makes a total dividend for the year of 3.32 pence per share compared with the 3.15 pence per share paid in respect of the financial year ended 30 November 2011. The final dividend is payable on 4 April 2013 to shareholders on the Company's register on 22 February 2013 (ex-dividend date is 20 February 2013). Annual General meeting The Annual General Meeting of the Company will be held at BlackRock's offices at 12 Throgmorton Avenue, London EC2N 2DL on Wednesday, 20 March 2013 at 10.00 a.m. The Investment Manager will make a presentation to shareholders on the Company's progress and the outlook for the smaller companies sector. Proposed change to the Articles of Association As a result of recent changes to tax rules, onshore investment companies are now permitted to pay out accumulated realised capital profits in the form of dividends. While the Directors have no present intention of making use of such powers, they believe it prudent to provide the Company with the necessary flexibility to do so should it prove appropriate in the future. A resolution seeking to amend the Company's Articles of Association, as set out in the Notice of Annual General Meeting, will be proposed at the 2013 Annual General Meeting. Subsidiary companies T.T. Finance PLC and The Third Throgmorton Trust Limited, the Company's subsidiaries have not traded for some considerable time and the companies are being wound up. The Alternative Investment Fund Managers Directive The implementation of the Alternative Investment Fund Managers Directive will require all investment trusts to appoint either an Alternative Investment Fund Manager ("AIFM") or become an AIFM themselves. They will also be required to appoint an independent Depositary. The latter is likely to fulfil a broader role than that currently performed by the custodian, and will be obliged to ensure that funds comply with the relevant rules on portfolio composition and diversification. We expect the implementation of the Directive will be effective from 22 July 2013 although it is currently anticipated that the FSA will permit a transitional period of one year within which UK AIFMs must seek authorisation. The Board will be taking independent advice on the consequences for the Company and will inform shareholders once we have decided on the most appropriate course of action. Outlook Whilst policy makers have moved to provide much needed support to global markets and this has helped to lift some of the gloom, there still remain a number of unresolved structural issues which could return to dampen investor confidence in the months ahead. However, your Board and the Investment Manager believe that there are many attractive opportunities available for longer term investment in the current environment. Indeed, a continuation of the challenging economic environment may well provide scope for many of the companies in our portfolio to gain market share at the expense of their less well managed, and less well financed, competitors. In respect of the latter, it may also provide shorting opportunities for our CFD portfolio. Crispin Latymer Chairman 8 February 2013 Principal risks The key risks faced by the Company are set out below. The Board regularly reviews and agrees policies for managing each risk, as summarised below. Performance risk - The Board is responsible for deciding the investment strategy to fulfil the Company's objective and for monitoring the performance of the Investment Manager. An inappropriate strategy may lead to poor performance. To manage this risk the Investment Manager provides an explanation of significant stock selection decisions and the rationale for the composition of the investment portfolio. The Board monitors and maintains an adequate spread of investments in order to minimise the risks associated with factors specific to individual companies and sectors, based on the diversification requirements inherent in the Company's investment policy. Income/dividend risk - The amount of dividends and future dividend growth will depend on the Company's underlying portfolio. Any change in the tax treatment of the dividends or interest received by the Company may reduce the level of dividends received by shareholders. The Board monitors this risk through the receipt of detailed income forecasts and considers the level of income at each meeting. Regulatory risk - The Company operates as an investment trust in accordance with Chapter 4 of Part 24 of the Corporation Tax Act 2010. As such, the Company is exempt from capital gains tax on the profits realised from the sale of its investments. The Investment Manager monitors investment movements, the level and type of forecast income and expenditure and the amount of half yearly dividends to ensure that the provisions of Chapter 4 of Part 24 of the Corporation Tax Act 2010 are not breached. The results are reported to the Board at each meeting. The Company must also comply with the provisions of the Companies Act 2006 and, as its shares are admitted to the Official List, the UKLA Listing Rules, the Disclosure and Transparency Rules and the Prospectus Rules. A breach of the Companies Act 2006 could result in the Company and/or the Directors being fined or the subject of criminal proceedings. A breach of the UKLA Listing Rules could result in the Company's shares being suspended from listing, which in turn would breach the requirements of Chapter 4 of Part 24 of the Corporation Tax Act 2010. The Board relies on the services of its professional advisers and its Company Secretary to ensure compliance with all relevant regulations. The Company Secretary has stringent compliance procedures in place and monitors regulatory developments and changes. Operational risk - In common with most other investment trust companies, the Company has no employees. The Company therefore relies upon the services provided by third parties and is dependent on the control systems of the Investment Manager and the Company's other service providers. The security, for example, of the Company's assets, dealing procedures, accounting records and maintenance of regulatory and legal requirements, depend on the effective operation of these systems. These are regularly tested and monitored and an internal control report, which includes an assessment of risks together with procedures to mitigate such risks, is prepared by the Investment Manager and reviewed by the Audit Committee at least twice a year. The Investment Manager, BNYM, BMLI and Deutsche Bank each produce a Service Organisation Controls report which is reviewed by their auditor and gives assurance regarding the effective operation of controls. The reports are also reviewed by the Audit Committee on an annual, or in the case of BNYM a quarterly basis. Market risk - Market risk arises from volatility in the prices of the Company's investments. It represents the potential loss the Company might suffer through holding investments in the face of negative market movements. The Board considers asset allocation, stock selection, unquoted investments and levels of gearing on a regular basis and has set investment restrictions and guidelines which are monitored and reported on by the Investment Manager. The Board monitors the implementation and results of the investment process with the Investment Manager. Financial risks - The Company's investment activities expose it to a variety of financial risks that include foreign currency risk and interest rate risk. The Company has approximately 28.8% of its net portfolio value invested in AIM traded securities, and, by the very nature of its investment objective, largely invests in smaller companies. Liquidity in these securities can from time to time become constrained, making these investments difficult to realise at or near published prices. There are also risks linked to the Company's use of derivative transactions including CFDs. Further details are disclosed in note 13 on page 44 of the annual report, together with a summary of the policies for managing these risks and liquidity and credit risks. As at the date of this report it is unclear to what extent the economies and the political structures of the Eurozone member countries may be affected by the financial crisis within the Eurozone or that the Euro as a currency in its current form will continue. Third party risk - The Company has no employees and the Directors have all been appointed on a non-executive basis. The Company must therefore rely upon the performance of third party service providers to perform its executive functions. In particular, the Investment Manager, the Administrator, the Registrar, the Custodian and their respective delegates, if any, will perform services that are integral to the Company's operations and financial performance. The Company, and where appropriate the Investment Manager, undertake extensive due diligence prior to the appointment of any third party service provider in order to mitigate this risk. Terms of appointment are agreed in advance and service level agreements are put in place with providers to ensure that a high level of service is provided. Failure by any service provider to carry out its obligations to the Company in accordance with the terms of its appointment, to exercise due care and skill, or to perform its obligations to the Company at all as a result of insolvency, bankruptcy or other causes could have a material adverse effect on the Company's performance and returns to holders of ordinary shares. The termination of the Company's relationship with any third party service provider or any delay in appointing a replacement for such service provider, could materially disrupt the business of the Company and could have a material adverse effect on the Company's performance and returns to holders of ordinary shares. Related party transactions The related party transaction with BlackRock Investment Management (UK) Limited is set out in the Directors' Report on pages 17 and 18 of the annual report. The investment management fee for the year charged by BlackRock was £1,476,000 (2011: £1,277,000). In addition a performance fee was payable of £1,261,000 (2011: £1,822,000). At the year end, an amount of £2,007,000 was outstanding in respect of these fees (2011: £2,136,000). The related party transactions with Directors are set out in the Directors' Report, Directors' Remuneration Report and note 6 to the financial statements on pages 17 and 18, 22 and 23 and 40 of the annual report respectively. 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. The Chairman receives an annual fee of £34,000, the Chairman of the Audit and Management Engagement Committee receives an annual fee of £25,000 and each other Director receives an annual fee of £22,000. As at 30 November 2012, all five members of the Board held shares in the Company. Lord Latymer held 28,851 ordinary shares, Simon Beart held 33,786 ordinary shares (including 8,739 ordinary shares held by Mrs Beart), Eric Stobart held 17,226 ordinary shares (including 4,839 ordinary shares held by Mrs Stobart), Harry Westropp held 24,000 ordinary shares and Jean Matterson held 12,000 ordinary shares. All of the holdings of the Directors are beneficial. Since the year end there have been a number of changes to the Directors' share interests. At the date of this report Mr Beart holds 34,976 ordinary shares (including 9,482 ordinary shares held by Mrs Beart), Lord Latymer holds 28,994 ordinary shares and Mr Stobart holds 17,701 ordinary shares, (including 5,314 ordinary shares held by Mrs Stobart). All other shareholdings remain unchanged. Statement of Directors' Responsibilities In accordance with Disclosure and Transparency Rule 4.1.12, the Directors also confirm to the best of their knowledge that: - the financial statements, which have been prepared in accordance with IFRS as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and net return of the Group; and - this Annual Report includes a fair view of the development and performance of the business and the position of the Company and the Group, together with a description of the principal risks and uncertainties that it faces. For and on behalf of the Board of Directors Crispin Latymer Chairman 8 February 2013 Investment Manager's Report Market review and overall investment performance Stockmarkets have remained uncertain during the financial year. Optimism in the early part of the year was replaced by renewed nervousness that Southern European countries would not be able to service their debts. Investors also had concerns about the slowing of the Chinese economy and tensions in the Middle East. These uncertainties took their toll on stockmarkets which fell heavily in May 2012. More recently confidence has started to recover as many of the macro-economic uncertainties look to be past their worst. US private sector growth has been quite strong with the housing market showing clear signs of recovery. Chinese GDP growth has been slipping for a number of quarters, but hopes are that it has now bottomed and we may even see acceleration in growth. The European economy still looks weak, but this is well understood by markets. This return of confidence helped markets and enabled us to finish our financial year robustly. During the period under review the Company's NAV per share rose by 19.4% to 237.99 pence; the benchmark returned 16.5%, whilst the FTSE 100 Index increased by 10.7%. Performance review Long only portfolio stock selection and sector allocation were both positive, and good net gains were again achieved in the CFD portfolio. Looking at stock selection, the most significant positive contributors to relative performance included a number of our core holdings, notably those in Ashtead, Oxford Instruments, Howden Joinery, St Modwen Properties, Paypoint, Consort Medical and Bellway. The relative contributions from Ashtead and Oxford Instruments were particularly strong, and the share prices of both Ashtead and St Modwen properties more than doubled during the year. On the negative side the largest detractors from relative performance were our holdings in Hargreaves Services and Avocet Mining. Hargreaves Services announced that they had encountered problems driving out a new face at the underground coal mine at Maltby. Avocet Mining announced that their Inata mine had experienced what they believe will be temporarily lower grades of gold, and reduced production guidance. We have reduced our holdings in these companies. Sector allocation benefitted from our overweight sector positions in electronics, software and housebuilding companies, and our underweight position in food producers. These gains were reduced by our underweight position in retailers which performed surprisingly well, and by our overweight position in health care equipment companies which were a little too defensive. The CFD portfolio added £2.2 million of value over the year. Net gains of £5.2 million were achieved on the long CFDs, with strong individual performances from our CFDs in Ashtead, Oxford Instruments, Howden Joinery and Umeco, and one significant disappointment, Avocet Mining. The short CFDs lost £3.1 million net in rising markets with losses on several short positions in the general retailers sector, but some good gains elsewhere. Since implementing the CFD strategy in September 2008, the CFD portfolio has generated cumulative net gains of £16.8 million. Activity We continued to add holdings which we decided were good quality and offering attractive upside. Examples included holdings in Devro, Young & Co's Brewery and Coastal Energy. Devro is the world's leading supplier of collagen casings for food, used by customers mainly in the production of a wide variety of sausages. Global protein consumption is expected to continue to increase especially in emerging markets. Young & Co own a high quality estate of predominantly London pubs, mainly aimed at the premium end of the market. Coastal Energy is an international oil and gas exploration and production company with assets in Thailand; oil production exceeds 24,000 barrels of oil per day and has been growing strongly. Bid activity in our portfolio has again been a feature with bids for WSP and Nautical Petroleum, although neither were large holdings. Towards the end of the year we decided to start to reduce the number of holdings in the long only portfolio. This reflected both a feeling that market conditions had improved and it was safer to concentrate our portfolio slightly more, and also a feeling that the bottom end of the market in terms of market capitalisation had underperformed, especially many AIM listed smaller companies, and that our portfolio was overexposed to these companies. Portfolio Positioning We have taken a fairly defensive stance during the year given the uncertain global economic backdrop. We have maintained exposure to high quality, well managed and well financed companies. We reduced exposure to some holdings that are more capital spending orientated, and thus vunerable to delayed decision making in uncertain times. We have looked at the composition of the long only portfolio and its performance in recent years by segment. It is clear we have achieved good relative contribution from stock selection whether the stocks were FTSE 250, FTSE Smallcap or AIM constituents. However, we have been considerably overweight AIM stocks since early 2009 and AIM has significantly underperformed the FTSE 250 Index. Although our AIM stock selection has been good our AIM portfolio has struggled to keep up with the FTSE 250. Whilst we believe that many of our AIM holdings are very interesting growth companies and have the potential to perform strongly in more confident markets, they are however unlikely to start to perform well in the early stages of recovery. We have therefore been selling those that we believe are most likely to lag, and redeploying the capital in rather larger capitalisation companies which we expect to perform better in a market rally. Although we felt cautious during the year we have retained our net long position in the CFD portfolio. Towards the end of the financial year we began to increase our net long position. This reflects our view that many of the problems that are regularly aired are macro-economic, and that our long only/ long CFD holdings are typically able to benefit in such times at the expense of less well run, less well financed competitors. Outlook Now that the US Presidential election is out of the way, attention has focussed on the US fiscal cliff. In December the required cuts to public spending were not agreed but deferred to later this month. This looks likely to remain quite a political battle, with any further delays leading to a fall in business confidence. Recently the US private sector has been growing more strongly. In the UK economic growth is likely to be at best slow whilst structural issues are addressed. In China we believe GDP growth has stabilised, and will almost certainly continue at levels well ahead of major developed nations. In Europe we still need to see resolution to funding issues, but increasingly these seem like old worries. We suspect the macro-economic fog is beginning to thin, and eventually asset allocators may turn more positive on equities, given their value relative to bonds is very attractive compared to recent history. Mike Prentis and Richard Plackett BlackRock Investment Management (UK) Limited 8 February 2013 Fifty Largest Investments as at 30 November 2012 Company Market % of Prospective value net PE £'000 assets ratio* Description Bellway Ordinary 4,317 shares Long CFD 1,247 3.2 12.9 House building position ------- ---- ----- Howden Joinery Ordinary 4,027 Design and manufacture Group shares of kitchens sold to local builders Long CFD 1,395 3.1 12.5 position ------- ---- ----- Oxford Ordinary 3,533 Designs and Instruments shares manufacture of tools and systems to analyse Long CFD 1,591 2.9 19.7 and manipulate matter position at the atomic level ------- ---- ----- Senior Ordinary 3,871 Manufacture and supply Engineering shares of components for the aerospace and Long CFD 1,212 2.9 12.0 automotive sectors position ------- ---- ----- Aveva Group Ordinary 3,325 Development and shares marketing of engineering computer Long CFD 1,510 2.8 27.2 software position ------- ---- ----- Ashtead Group Ordinary 3,934 shares Long CFD 870 2.8 16.1 Hires of plant, position predominantly in the US ------- ---- ----- Booker Group Ordinary 3,247 shares Long CFD 1,174 2.5 22.1 Wholesale of grocery position products ------- ---- ----- Restaurant Ordinary 2,473 Group shares Long CFD 1,150 2.1 16.4 Operation of branded position restaurants ------- ---- ----- ITE Group Ordinary 2,614 Organisation of trade shares exhibitions in Russia and other FSU Long CFD 976 2.1 11.7 countries position ------- ---- ----- Workspace Ordinary 3,051 Supply of flexible Group shares workspace to businesses in London Long CFD 293 1.9 24.9 position ------- ---- ----- Dunelm Group Ordinary 2,504 shares Long CFD 615 1.8 16.4 Home furnishings position retailer ------- ---- ----- AZ Electronic 3,005 1.7 16.1 Produces specialty Material chemical materials to circuit and flat panel manufacturers ------- ---- ----- Abcam# Ordinary 1,999 Production and shares distribution of research grade Long CFD 901 1.7 22.4 antibodies and position associated products ------- ---- ----- Rathbone Ordinary 1,778 Brothers shares Long CFD 932 1.6 15.7 Private client fund position management ------- ---- ----- Keller Group Ordinary 1,709 shares Long CFD 656 1.4 14.5 International ground position engineering specialist ------- ---- ----- Paypoint 2,322 1.3 19.4 Provision of payment solutions ------- ---- ----- Inchcape 2,304 1.3 11.6 Distribution and retail of cars and aftermarket services ------- ---- ----- Bovis Homes Ordinary 1,174 Group shares Long CFD 1,112 1.3 19.6 House building position ------- ---- ----- Consort 2,284 1.3 14.9 Manufacturer of drug Medical delivery devices ------- ---- ----- Coastal Energy 2,236 1.3 9.7 Exploration and production of oil and natural gas in South East Asia ------- ---- ----- Faroe Ordinary 1,740 Exploration for oil Petroleum# shares and gas offshore UK and Norway Long CFD 411 1.2 30.1 position ------- ---- ----- Hyder 2,137 1.2 9.2 Provision of Consulting engineering design services ------- ---- ----- Galliford Try 2,126 1.2 10.5 House building and construction ------- ---- ----- Fidessa Group 2,109 1.2 18.2 Development and marketing of financial trading and connectivity software ------- ---- ----- St Modwen 2,097 1.2 21.5 Property investment Properties and development ------- ---- ----- Devro 2,094 1.2 15.2 Produces manufactured casings for food industry ------- ---- ----- Headlam Group 2,052 1.2 12.3 Distribution of carpets and other floor coverings ------- ---- ----- Blinkx# Ordinary 1,606 Supply of video shares technology and an online catalogue to Long CFD 337 1.1 27.8 enable video clips to position be viewed ------- ---- ----- Xaar Ordinary 1,206 Design and manufacture shares of industrial printheads used in Long CFD 669 1.1 17.9 inkjet printers position ------- ---- ----- Avon Rubber 1,823 1.0 11.8 Production of safety masks and dairy related products ------- ---- ----- Hunting Ordinary 1,338 shares Long CFD 407 1.0 14.6 Oil and gas services position ------- ---- ----- Clarkson 1,710 1.0 14.6 Shipbroking and related activities ------- ---- ----- ITHACA Energy 1,651 1.0 7.7 Exploration for oil and gas in the North Sea ------- ---- ----- City of London 1,608 0.9 10.7 Management of Investment investment funds Group primarily invested in emerging markets ------- ---- ----- Cineworld 1,583 0.9 12.5 Operation of cinemas Group in the UK ------- ---- ----- Hargreaves 1,547 0.9 5.1 Mining, importing, Services# processing and supply of coal and related products ------- ---- ----- UTV Media 1,532 0.9 7.7 Broadcasting and media company ------- ---- ----- Paragon Group 1,529 0.9 10.1 Lending services of Companies ------- ---- ----- Renishaw Ordinary 1,178 Design and manufacture shares of instruments used for calibration Long CFD 336 0.9 18.3 purposes position ------- ---- ----- Elementis 1,512 0.9 17.3 Manufacture of additives that enhance the feel, flow and finish of everyday products ------- ---- ----- Lookers 1,498 0.9 11.0 Motor vehicle distributor ------- ---- ----- Fuller Smith & Ordinary 1,119 Turner shares Long CFD 377 0.9 17.8 Beer brewer, and pub position operator ------- ---- ----- Polar Capital 1,478 0.8 16.7 Investment management ------- ---- ----- Hutchison 1,470 0.8 - Development and supply China Meditech# of traditional Chinese medicines to the Chinese market ------- ---- ----- Salamander 1,458 0.8 37.5 Exploration and Energy production of oil and gas, focused on South East Asia ------- ---- ----- Gemfields 1,450 0.8 18.1 Mining and sale of emeralds and other coloured precious stones ------- ---- ----- Anite 1,416 0.8 18.3 Supplies software globally in telecommunications and travel markets ------- ---- ----- Vectura Group 1,388 0.8 - Developing inhaled therapies for respiratory diseases ------- ---- TT Electronics 1,388 0.8 10.8 Manufacture of electronic and electrical components ------- ---- ----- Majestic Wine 1,363 0.8 16.6 Operator of wine warehouse chain ------- ---- ----- 50 largest investments 122,084 70.1 ------- ---- In addition, the Company has long only equity investments in 106 companies and 57 long and short CFD positions at the year end. The long CFD positions in the table above state the market value of the securities underlying the long CFD positions. * Prospective PE ratio derived using late 2011 analyst estimates and relates to the next set of full year results for each company. # 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 fifty largest investments have been disclosed. Comparative for ten largest investments Company 2011 Market value % of £'000 net assets Bellway 2,788 1.9 Howden Joinery Group 2,034 1.4 Oxford Instruments Ordinary shares 3,900 3.7 Long CFD position 1,628 Senior Engineering Ordinary shares 2,350 2.4 Long CFD position 1,191 Aveva Group Ordinary shares 3,175 2.9 Long CFD position 1,163 Ashtead Group Ordinary shares 1,592 1.7 Long CFD postion 923 Booker Group Ordinary shares 2,086 2.2 Long CFD position 1,150 Restaurant Group 1,917 1.3 ITE Group Ordinary shares 2,490 2.0 Long CFD position 504 Workspace Group 1,681 1.1 Distribution of Investments as at 30 November 2012 Sector % of % % % long of of of equity long short net only CFD CFD asset portfolio portfolio portfolio value Oil & Gas Producers 6.2 0.2 0.0 6.4 Oil Equipment, Services & Distribution 0.9 0.2 0.0 1.1 Oil & Gas 7.1 0.4 0.0 7.5 ----- ---- ----- ----- Chemicals 5.6 0.7 0.0 6.3 Basic Resources 5.0 0.2 -0.1 5.1 Basic Materials 10.6 0.9 -0.1 11.4 ----- ---- ----- ----- Construction & Materials 2.1 0.4 -0.7 1.8 Aerospace & Defence 2.1 0.7 -0.3 2.5 General Industrials 1.0 0.0 -0.3 0.7 Electronic & Electrical Equipment 5.3 2.1 -1.1 6.3 Industrial Engineering 0.7 0.9 -0.4 1.2 Industrial Transportation 2.2 0.0 -0.4 1.8 Support Services 8.6 1.7 -2.7 7.6 Total Industrials 22.0 5.8 -5.9 21.9 ----- ---- ----- ----- Food & Beverage 1.6 0.0 -0.4 1.2 Personal & Household Goods 4.7 1.3 -0.5 5.5 Consumer Goods 6.3 1.3 -0.9 6.7 ----- ---- ----- ----- Health Care Equipment and Services 3.1 0.0 -0.3 2.8 Pharmaceuticals & Biotechnology 4.8 0.5 -0.3 5.0 Health Care Equipment and Services 7.9 0.5 -0.6 7.8 ----- ---- ----- ----- Food & Drug Retailers 2.5 0.6 -0.6 2.5 General Retailers 6.7 0.6 -1.3 6.0 Media 4.8 0.9 0.0 5.7 Travel & Leisure 5.7 0.8 -0.7 5.8 Consumer Services 19.7 2.9 -2.6 20.0 ----- ---- ----- ----- Fixed Line Telecommunications 1.2 0.0 -0.2 1.0 Telecommunications 1.2 0.0 -0.2 1.0 ----- ---- ----- ----- Gas, Water & Multiutilities 0.3 0.0 0.0 0.3 Utilities 0.3 0.0 0.0 0.3 ----- ---- ----- ----- Real Estate Investment & Services 3.1 0.4 0.0 3.5 Real Estate Investment Trusts 1.9 0.7 0.0 2.6 Financial Services 6.8 0.5 0.0 7.3 Financials 11.8 1.6 0.0 13.4 ----- ---- ----- ----- Software & Computer Services 7.1 1.4 0.0 8.5 Technology Hardware & Equipment 1.0 0.5 0.0 1.5 Technology 8.1 1.9 0.0 10.0 ----- ---- ----- ----- Total investments 95.0 15.3 -10.3 100.0 ===== ==== ===== ===== The above percentages are calculated based on the net portfolio at 30 November 2012. The net portfolio is calculated as long equity portfolio plus long CFD portfolio less short CFD portfolio. Portfolio by main index membership at 30 November 2012 - Gross Basis(1) Index % of portfolio FTSE 250 56.2 FTSE AIM 23.9 FTSE Small Cap 15.7 Other 2.9 FTSE Fledgling 1.3 Source: BlackRock. 1. Long and short CFD portfolios in aggregate plus long portfolio. Portfolio by main index membership at 30 November 2012 - Net Basis(2) Index % of portfolio FTSE 250 49.7 FTSE AIM 28.8 FTSE Small Cap 16.7 Other 3.2 FTSE Fledgling 1.6 Source: BlackRock. 2. Long CFD portfolio less short CFD portfolio plus long only portfolio. Market capitalisation as at 30 November 2012 % of net portfolio Long Positions £1bn + 27.6 £400m - £1bn 34.9 £100m - £400m 34.3 £0 - 100m 13.5 Short Positions £1bn + -2.3 £400m - £1bn -5.8 £100m - £400m -2.1 £0 - 100m -0.1 Source: BlackRock. Position size as at 30 November 2012 % of net portfolio Long Positions £0m - £1m 33.8 £1m - £2m 40.6 £2m + 35.9 Short Positions £0m - £1m -9.8 £1m - £2m -0.5 Source: BlackRock. Historical Record Assets Year to 30 November Total assets Mid-market less Long Equity NAV price current term sharehodlers' per per liabilities borrowing funds share Change share £m £m £m p % p 2012 174.1 - 174.1 238.0 +17.8 193.3 2011 147.8 - 147.8 202.1 -5.0 170.0 2010 127.3 - 127.3 212.8 +47.5 163.0 2009 106.9 - 106.9 144.3 +54.2 115.8 2008 (1) 77.0 - 77.0 93.5 (4) -51.9 62.8 2007 304.7 32.2 272.5 (2) 194.6 -2.4 152.0 2006 358.4 32.2 326.2 (2) 199.4 +16.2 164.3 2005 (2) 345.6 (2) 32.2 (2) 313.4 (2,3) 171.6 +27.8 142.0 2004 (3) 340.7 (3) 32.2 (3) 308.6 (2,3) 134.3 +28.0 110.3 2003 277.6 34.1 243.4 (2) 104.9 +35.4 84.0 1. Reduction from a tender offer and reorganisation of the Company in 2008, as well as market movements. 2. Prior charges at par. 3. Restated for changes in accounting policies: the principal changes were to value investments at bid (previously mid) market value and to account for dividends in the period in which they are paid. 4. Includes £5.5 million in respect of the write-back of prior years' VAT. Revenue Year to 30 November Net Revenue revenue return Dividends after per per taxation share share £m p p 2012 2.6 3.51 3.32 2011 2.1 3.29 3.15 2010 1.9 2.85 3.00 2009 3.1 3.86 (5) 2.75 2008 4.8 3.85 (5) 2.40 2007 2.3 1.54 2.20 2006 3.3 1.84 2.00 2005 3.2 1.58 1.75 2004 3.6 1.55 1.60 2003 3.3 1.40 1.50 5. Dividends per share do not include special dividends of 2.00 pence per share paid in 2009 and 3.00 pence per share paid in 2008. Consolidated Statement of Comprehensive Income for the year ended 30 November 2012 Revenue Revenue Capital Capital Total Total 2012 2011 2012 2011 2012 2011 Notes £'000 £'000 £'000 £'000 £'000 £'000 Gains/(losses) on investments held at fair value through profit or loss - - 26,521 (522) 26,521 (522) Net returns on contracts for difference (52) 26 1,870 3,964 1,818 3,990 Income from investments held at fair value through profit or loss 3 3,382 2,727 - - 3,382 2,727 Other income 3 9 24 - - 9 24 ----- ----- ------ ----- ------ ----- Total revenue 3,339 2,777 28,391 3,442 31,730 6,219 ----- ----- ------ ----- ------ ----- Investment management and performance fees 4 (369) (320) (2,368) (2,779) (2,737) (3,099) Other expenses 5 (404) (378) - - (404) (378) ----- ----- ------ ----- ------ ----- Total operating expenses (773) (698) (2,368) (2,779) (3,141) (3,477) ----- ----- ------ ----- ------ ----- Net profit before finance costs and taxation 2,566 2,079 26,023 663 28,589 2,742 Finance costs (2) (5) - - (2) (5) ----- ----- ------ ----- ------ ----- Profit on ordinary activities before taxation 2,564 2,074 26,023 663 28,587 2,737 ----- ----- ------ ----- ------ ----- Taxation credit/ (charge) on ordinary activities - 4 - - - 4 ----- ----- ------ ----- ------ ----- Net profit for the year after taxation 2,564 2,078 26,023 663 28,587 2,741 ===== ===== ====== ===== ====== ===== Earnings per ordinary share - basic and diluted 7 3.51p 3.29p 35.58p 1.05p 39.09p 4.34p ===== ===== ====== ===== ====== ===== 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 year. All income is attributable to the equity holders of The Throgmorton Trust PLC. There are no minority interests. The net profit of the Company for the year was £28,587,000 (2011: £2,741,000). The Group does not have any other recognised gains or losses. The net profit for the year disclosed above represents the Group's total comprehensive income. Statements of Changes in Equity for the year ended 30 November 2012 Group Called up Share Capital share premium Special redemption Capital Revenue capital account reserve reserve reserves reserve Total Notes £'000 £'000 £'000 £'000 £'000 £'000 £'000 For the year ended 30 November 2012 At 30 November 2011 4,026 21,049 35,272 11,905 69,339 6,183 147,774 Total Comprehensive Income: Net profit for the year - - - - 26,023 2,564 28,587 Transactions with owners, recorded directly to equity: Write back of share issue costs - - - - 6 - 6 Write back of subscription share issue costs - - - - 10 - 10 Refund of unclaimed dividends - - - - - 8 8 Dividends paid and declared (see (a) below) 6 - - - - - (2,318) (2,318) ----- ------ ------ ------ ------ ----- ------- At 30 November 2012 4,026 21,049 35,272 11,905 95,378 6,437 174,067 ----- ------ ------ ------ ------ ----- ------- For the year ended 30 November 2011 At 30 November 2010 3,494 2,147 35,272 11,905 68,646 5,832 127,296 Total Comprehensive Income: Net profit for the year - - - - 663 2,078 2,741 Transactions with owners, recorded directly to equity: Exercise of subscription shares 532 18,902 - - - - 19,434 Write back of share issue costs - - - - 30 - 30 Refund of unclaimed dividends - - - - - 121 121 Dividends paid and declared (see (b) below) 6 - - - - - (1,848) (1,848) ----- ------ ------ ------ ------ ----- ------- At 30 November 2011 4,026 21,049 35,272 11,905 69,339 6,183 147,774 ----- ------ ------ ------ ------ ----- ------- Company For the year ended 30 November 2012 At 30 November 2011 4,026 21,049 35,272 11,905 70,737 4,785 147,774 Total Comprehensive Income: Net profit for the year - - - - 25,927 2,660 28,587 Transactions with owners, recorded directly to equity: Write back of share issue costs - - - - 6 - 6 Write back of subscription share issue costs - - - - 10 - 10 Refund of unclaimed dividends - - - - - 8 8 Dividends paid and declared (see (a) below) 6 - - - - - (2,318) (2,318) ----- ------ ------ ------ ------ ----- ------- At 30 November 2012 4,026 21,049 35,272 11,905 96,680 5,135 174,067 ----- ------ ------ ------ ------ ----- ------- For the year ended 30 November 2011 At 30 November 2010 3,494 2,147 35,272 11,905 70,127 4,351 127,296 Total Comprehensive Income: Net profit for the year - - - - 580 2,161 2,741 Transactions with owners, recorded directly to equity: Exercise of subscription shares 532 18,902 - - - - 19,434 Write back of share issue costs - - - - 30 - 30 Refund of unclaimed dividends - - - - - 121 121 Dividends paid and declared (see (b) below) 6 - - - - - (1,848) (1,848) ----- ------ ------ ------ ------ ----- ------- At 30 November 2011 4,026 21,049 35,272 11,905 70,737 4,785 147,774 ===== ====== ====== ====== ====== ===== ======= a. Final dividend of 2.55p per share for the year ended 30 November 2011, declared on 22 February 2012 and paid on 5 April 2012, interim dividend of 0.62p per share for the year ended 30 November 2012, declared on 13 July 2012 and paid on 24 August 2012. b. 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 and interim dividend of 0.60p per share for the year ended 30 November 2011, declared on 27 July 2011 and paid on 31 August 2011. Statements of Financial Position as at 30 November 2012 Group Company Group Company 2012 2012 2011 2011 Notes £'000 £'000 £'000 £'000 Non current assets Investments held at fair value through profit or loss 173,933 175,555 145,444 147,162 ------- ------- ------- ------- Current assets Other receivables 590 590 228 228 Amounts due in respect of contracts for difference 377 377 815 815 Cash held on margin deposit with broker - - 21 21 Cash 2,012 390 4,598 4,094 ------- ------- ------- ------- 2,979 1,357 5,662 5,158 ------- ------- ------- ------- Total assets 176,912 176,912 151,106 152,320 Current liabilities Other payables (2,543) (2,543) (2,734) (3,948) Collateral pledged in respect of contracts for difference (302) (302) (598) (598) ------- ------- ------- ------- (2,845) (2,845) (3,332) (4,546) ------- ------- ------- ------- Net assets 174,067 174,067 147,774 147,774 ======= ======= ======= ======= Equity attributable to equity holders Called up share capital 8 4,026 4,026 4,026 4,026 Share premium account 9 21,049 21,049 21,049 21,049 Special reserve 9 35,272 35,272 35,272 35,272 Capital redemption reserve 9 11,905 11,905 11,905 11,905 Capital reserves 9 95,378 96,680 69,339 70,737 Revenue reserve 9 6,437 5,135 6,183 4,785 Total equity shareholders' funds 174,067 174,067 147,774 147,774 ======= ======= ======= ======= Net asset value per ordinary share 7 238.02p 238.02p 202.07p 202.07p ======= ======= ======= ======= Cash Flow Statements for the year ended 30 November 2012 2012 2012 2011 2011 Group Company Group Company £'000 £'000 £'000 £'000 Operating activities Net profit before taxation 28,587 28,587 2,737 2,737 Add back interest paid 299 299 204 204 Gains on investments and contracts for difference held at fair value through profit or loss including transaction costs (28,690) (28,594) (3,653) (3,570) Net movement on foreign exchange - - 1 1 Sales of investments held at fair value through profit or loss 84,256 84,256 78,397 78,397 Purchases of investments held at fair value through profit or loss (86,224) (86,224) (89,735) (89,735) Net realised gains on contracts for difference 2,607 2,607 11,425 11,425 Decrease/(increase) in other receivables 12 12 (42) (42) (Increase)/decrease in amounts due from brokers (361) (361) 413 413 Increase/(decrease) in amounts due to brokers 37 37 (739) (739) Decrease in other payables (212) (1,426) (5,218) (5,202) ----- ----- ----- ----- Net cash inflow/(outflow) from operating activities before interest and taxation 311 (807) (6,210) (6,111) ----- ----- ----- ----- Interest paid (299) (299) (204) (204) Taxation recovered on overseas income (13) (13) 5 5 ----- ----- ----- ----- Net cash outflow from operating activities (1) (1,119) (6,409) (6,310) ----- ----- ----- ----- Financing activities Distributions to tender shareholders/ tender costs paid - - (562) (562) Proceeds from exercise of subscription shares - - 19,434 19,434 Subscription share issue costs paid - - (5) (5) Refund of unclaimed dividends 8 8 121 121 Dividends paid (2,318) (2,318) (1,848) (1,848) ----- ----- ----- ----- Net cash (outflow)/inflow from financing activities (2,310) (2,310) 17,140 17,140 ----- ----- ----- ----- (Decrease)/Increase in cash and cash equivalents (2,311) (3,429) 10,731 10,830 Effect of foreign exchange rate changes - - (1) (1) ----- ----- ----- ----- Change in cash and cash equivalents (2,311) (3,429) 10,730 10,829 Cash and Cash equivalents at the start of year 4,021 3,517 (6,709) (7,312) ----- ----- ----- ----- Cash and cash equivalents at the end of the year 1,710 88 4,021 3,517 ----- ----- ----- ----- Comprised of: Cash held on margin deposit with broker - - 21 21 Cash 2,012 390 4,598 4,094 Collateral pledged in respect of contracts for difference (302) (302) (598) (598) ----- ----- ----- ----- Total 1,710 88 4,021 3,517 ===== ===== ===== ===== Notes to the Financial Statements 1. Principal activity The principal activity of the Company is that of an investment trust company within the meaning of section 1158 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. Neither company traded during the year and procedure for winding up these subsidiaries has commenced. 2. Accounting policies The policies set out below have been applied consistently throughout the year. (a) Basis of preparation The financial statements of the Group have been 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. 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. Insofar as the Statement of Recommended Practice ("SORP"), revised in January 2009, is compatible with IFRS, the financial statements have been prepared in accordance with guidance set out in the SORP for investment trust companies and venture capital trusts issued by the AIC. 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. All values are rounded to the nearest thousand pounds (£'000) except where otherwise stated. A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after December 2012, and have not been applied in preparing these financial statements. None of these are expected to have a significant effect on the measurement of the amounts recognised in the financial statements of the Group. However, IFRS 9 "Financial Instruments" issued in November 2009 will change the classification of financial assets, but is not expected to have an impact on the measurement basis of the financial assets since the majority of the Group's financial assets are measured at fair value through profit or loss. IFRS 9 (effective 1 January 2015) deals with classification and measurement of financial assets and its requirements represent a significant change from the existing requirements in IAS 39 in respect of financial assets. The standard contains two primary measurement categories for financial assets: at amortised cost and fair value. A financial asset would be measured at amortised cost if it is held within a business model whose objective is to hold assets in order to collect contractual cash flows, and the asset's contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal outstanding. All other financial assets would be measured at fair value. The standard eliminates the existing IAS 39 categories of "held to maturity", "available for sale" and "loans and receivables". The standard is effective for annual periods beginning on or after 1 January 2015 but is not yet approved by the EU. Earlier application is permitted. The Company does not plan to adopt this standard early. IFRS 10 Consolidated Financial Statements (effective 1 January 2013) establishes a single control model that applies to all entities including special purpose entities. The changes introduced by IFRS 10 will require management to exercise significant judgement to determine which entities are controlled, and therefore are required to be consolidated by a parent. The standard is not likely to have any impact on the Group. IFRS 11 Joint Arrangements (effective 1 January 2013) removes the option to account for jointly controlled entities (JCEs) using proportionate consolidation. This is not applicable to the Group as it holds no interests in joint arrangements. IFRS 12 Disclosure of Involvement with Other Entities (effective 1 January 2013) now requires additional disclosures that relate to an entity`s interests in subsidiaries, joint arrangements, associates and structured entities. The Board is reviewing the standard to determine its effect on the Group and Company financial statements. IFRS 13 Fair Value measurement (effective 1 January 2013) establishes a single source of guidance under IFRS for all fair value measurements. It does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under IFRS when fair value is required or permitted. The Group is currently assessing the impact that this standard will have on its financial position and performance. (b) Consolidation The consolidated financial statements incorporate the financial statements of the Company and its subsidiary undertakings, T.T. Finance PLC and The Third Throgmorton Trust Limited, made up to 30 November 2012. The Company has taken advantage of the exemption provided under section 408 of the Companies Act 2006 not to publish its individual Statement of Comprehensive Income and related notes. All of the Group's operations are of a continuing nature. (c) Presentation of Consolidated Statement of Comprehensive Income In order to reflect better the activities of an investment trust company and in accordance with guidance issued by the AIC, supplementary information which analyses the Consolidated Statement of Comprehensive Income between items of a revenue and a capital nature has been presented alongside the Consolidated Statement of Comprehensive Income. In accordance with the Company's status as a UK investment company under section 533 of the Companies Act 2006 and section 1158 of the Corporation Tax Act 2010, net capital returns may not be distributed by way of dividend. (d) Investments held at fair value through profit or loss The Group's investments are classified as held at fair value through profit or loss in accordance with IAS 39 "Financial Instruments: Recognition and Measurement" and are managed and evaluated on a fair value basis in accordance with its investment strategy. All investments are designated upon initial recognition as held at fair value through profit or loss. Purchases of investments are recognised on a trade date basis. The sales of assets are recognised at the trade date of the disposal. Proceeds are measured at fair value, which is regarded as the proceeds of sale less any transaction costs. The fair value of the long only portfolio is the bid price of the securities, without deduction for estimated future selling costs. Under IFRS, the investments in the subsidiaries are carried at fair value which is deemed to be the total equity of the subsidiaries. Unquoted investments are valued by the Directors at fair value using International Private Equity and Venture Capital Valuation Guidelines. These policies apply to all current and non current asset investments of the Company and Group. Changes in the value of investments held at fair value through profit or loss and gains and losses on disposal are recognised in the Consolidated Statement of Comprehensive Income as "Gains or losses on investments held at fair value through profit or loss". Also included within this heading are transaction costs in relation to the purchase or sale of investments. (e) Derivatives Derivatives are held at fair value based either on traded prices or Directors' fair valuation to the extent that traded prices are unavailable. Gains and losses on derivative transactions are recognised in the Consolidated Statement of Comprehensive Income. They are recognised as capital and are shown in the capital column of the Consolidated Statement of Comprehensive Income if they are of a capital nature, and are recognised as revenue and shown in the revenue column of the Consolidated Statement of Comprehensive Income if they are of a revenue nature. To the extent that any gains or losses are of a mixed revenue and capital nature, they are apportioned between revenue and capital accordingly. (f) Segmental reporting The Directors are of the opinion that the Group is engaged in a single segment of business being investment business. (g) Income Dividends receivable on equity shares are recognised on an ex-dividend basis. Where no ex-dividend date is available, dividends receivable on or before the year end are treated as revenue for the year. Provisions are made for any dividends not expected to be received. Fixed returns on non equity securities are recognised on a time apportionment basis so as to reflect the effective yield of the security. Special dividends are treated as a capital receipt or revenue receipt depending on the facts or circumstances of each particular case. Interest income and expenses are accounted for on an accruals basis. (h) Expenses All expenses, including finance costs, are accounted for on an accruals basis. Expenses have been charged wholly to the revenue column of the Consolidated Statement of Comprehensive Income, except as follows: - expenses including finance costs which are incidental to the acquisition or disposal of investments are included within the cost of the investments. Details of transaction costs on the purchases and sales of investments are disclosed in note 11 on page 43 of the annual report. - the investment management fee has been allocated 75% to the capital column and 25% to the revenue column of the Consolidated Statement of Comprehensive Income in line with the Board's expected long term split of returns, in the form capital gains and income respectively, from the investment portfolio. - performance fees have been allocated 100% to the capital column of the Consolidated Statement of Comprehensive Income, as performance has been predominantly generated through capital returns of the investment portfolio. (i) Finance costs Finance costs are accounted for on an accrual basis. Finance costs are allocated, insofar as they relate to the financing of the Group's investments, 75% to the capital column and 25% to the revenue column of the Consolidated Statement of Comprehensive Income, in line with the Board's expected long term split of returns, in the form capital gains and income respectively, from the investment portfolio. (j) Taxation The tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on the taxable profit for the period. Taxable profit differs from net profit as reported in the Consolidated Statement of Comprehensive Income because it excludes items of income or expenses that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company's liability for current tax is calculated using tax rates that were applicable at the balance sheet date. Deferred taxation is recognised in respect of all temporary differences at the financial reporting date, where transactions or events that result in an obligation to pay more taxation in the future or right to pay less taxation in the future have occurred at the financial reporting date. This is subject to deferred taxation assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the temporary differences can be deducted. Where expenses are allocated between capital and revenue any tax relief in respect of the expenses is allocated between capital and revenue returns on the marginal basis using the Company's effective rate of corporation taxation for the accounting period. (k) Dividends payable Under IFRS, final dividends, should not be accrued in the financial statements unless they have been approved by shareholders before the financial reporting date. Interim dividends should not be accrued in the financial statements unless they have been paid. Dividends payable to equity shareholders are recognised in the Statement of Changes in Equity when they have been approved by shareholders in the case of a final dividend, or paid in the case of an interim dividend, and have become a liability of the Company. (l) Cash and cash equivalents Cash comprises cash in hand and demand deposits. Cash equivalents are short term, highly liquid investments, that are readily convertible to known amounts of cash and that are subject to an insignificant risk of changes in value. In the Statements of Financial Position and Cash Flow Statements, cash balances have been further analysed between cash held on margin deposit with brokers. The comparatives for prior year cash balances have also been updated to provide this additional analysis; cash held on margin deposit with brokers amounted to £21,000 at 30 November 2011 for the Group and Company. 3. Income 2012 2011 £'000 £'000 Investment Income: UK listed dividends 3,208 2,578 Overseas listed dividends 174 145 Scrip dividend - 4 ----- ----- 3,382 2,727 ----- ----- Other income: Deposit interest 9 5 Underwriting commission - 19 ----- ----- 9 24 ----- ----- Total 3,391 2,751 ===== ===== Total income comprises: Dividends 3,382 2,727 Interest 9 5 Other income - 19 ----- ----- 3,391 2,751 ===== ===== 4. Investment management and performance fees 2012 2011 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Investment management fee 369 1,107 1,476 320 957 1,277 Performance fee - 1,261 1,261 - 1,822 1,822 --- ----- ----- --- ----- ----- Total 369 2,368 2,737 320 2,779 3,099 === ===== ===== === ===== ===== 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 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 plus AIM (excluding Investment Companies) Index (the "Benchmark Index"). Details of the Company's investment management agreement with BlackRock are given on page 16 of the annual report. Performance fees have been wholly allocated to the capital column of the Consolidated Statement of Comprehensive Income as the performance has been predominantly generated through capital returns from the investment portfolio. As at 30 November 2012, there was a performance fee payable to the Investment Manager of £1,261,000 (2011: £1,822,000). 5. Other operating activities 2012 2011 Total Total £'000 £'000 (a) Other operating expenses Auditor's remuneration: - audit services 28 28 - other audit services 5 5 Registrar's fee 32 37 Directors' remuneration 110 116 Other administrative costs 229 192 ---- ---- 404 378 ==== ==== The Company's ongoing charges, calculated as a percentage of average net assets for the year and using expenses, excluding performance fee and interest costs were: 1.1% 1.2% ==== ==== Auditor's remuneration - other audit services comprised £5,000 which relates to the interim review (2011: £5,000 interim review). 6. Dividends Dividends paid or Record Payment 2012 2011 proposed on equity date date £'000 £'000 shares: 2010 final of 2.42p 18 February 2011 25 March 2011 - 1,471 2011 interim of 0.60p 5 August 2011 31 August 2011 - 377 2011 final of 2.55p 24 February 2012 5 April 2012 1,865 - 2012 interim of 0.62p 27 July 2012 24 August 2012 453 - ----- ----- 2,318 1,848 ===== ===== The Directors have proposed a final dividend of 2.70p per share (2011: final 2.55p). The dividend will be paid on 4 April 2013, subject to shareholders' approval on 20 March 2013, to shareholders on the Company's register on 22 February 2013. The proposed final dividend has not been included as a liability in these financial statements as final dividends are only recognised in the financial statements when they have been approved by shareholders. The total dividends payable in respect of the year which form the basis of section 1158 of the Corporation Tax Act 2010 and section 833 of the Companies Act 2006, and the amounts proposed meet the relevant requirements as set out in this legislation and are as follows: 2012 2011 £'000 £'000 Dividends paid or proposed on equity shares: Interim paid 0.62p (2011: 0.60p) 453 377 Final proposed of 2.70p (2011: 2.55p)* 1,975 1,865 ----- ----- 2,428 2,242 ===== ===== * Based upon 73,130,326 (2011: 73,130,326) ordinary shares. 7. Consolidated earnings and net asset value per ordinary share Revenue and capital earnings per share are shown below and have been calculated using the following: 2012 2011 Net revenue profit attributable to ordinary shareholders (£'000) 2,564 2,078 Net capital profit attributable to ordinary shareholders (£'000) 26,023 663 ------- ------- Total profit attributable to ordinary shareholders (£'000) 28,587 2,741 ======= ======= Equity shareholders' funds (£'000) 174,067 147,774 ---------- ---------- The weighted average number of ordinary shares in issue during each year, on which the return per ordinary share was calculated, was 73,130,326 63,219,746 ---------- ---------- The number of ordinary shares in issue at the end of the year, on which the net asset value was calculated, was: 73,130,326 73,130,326 ---------- ---------- Return per share - basic and diluted Revenue earnings per share 3.51p 3.29p Capital earnings per share 35.58p 1.05p ------- ------- Total earnings per share 39.09p 4.34p ======= ======= Net asset value per share 238.02p 202.07p ------- ------- Ordinary share price 193.25p 170.00p ======= ======= The Company does not have any dilutive securities. 8. Called up share capital Ordinary shares in Treasury Total issue shares shares number number number £'000 Allotted, called up and fully paid share capital comprised: Ordinary shares of 5p each: At 1 December 2011 73,130,326 7,400,000 80,530,326 4,026 ---------- --------- ---------- ----- At 30 November 2012 73,130,326 7,400,000 80,530,326 4,026 ========== ========= ========== ===== No ordinary shares were issued, purchased or cancelled in the year (2011: nil). In 2011, 13,310,612 ordinary shares were issued on conversion of 13,310,612 subscription shares for a total consideration of £19,434,000. The ordinary shares 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. 9. Reserves Group Capital reserve Capital (arising reserve on (arising revaluation Share Capital on of premium Special redemption investments investments Revenue account reserve reserve sold) held) reserve £'000 £'000 £'000 £'000 £'000 £'000 At 1 December 2011 21,049 35,272 11,905 54,408 14,931 6,183 Movement during the year: Net profit for the year - - - - - 2,616 Gains on realisation of investments - - - 14,901 - - Change in investment holding gains - - - - 11,620 - Gains/(losses) on contracts for difference - - - 2,308 (438) (52) Finance costs, investment management and performance fee charged to capital after taxation - - - (2,368) - - Write back of share issue costs - - - 6 - - Write back of subscription share issue costs - - - 10 - - Refund of unclaimed dividends - - - - - 8 Dividends paid during the year - - - - - (2,318) ------ ------ ------ ------ ------ ----- At 30 November 2012 21,049 35,272 11,905 69,265 26,113 6,437 ====== ====== ====== ====== ====== ===== Company Capital reserve Capital (arising reserve on (arising revaluation Share Capital on of premium Special redemption investments investments Revenue account reserve reserve sold) held) reserve £'000 £'000 £'000 £'000 £'000 £'000 At 1 December 2011 21,049 35,272 11,905 54,408 16,329 4,785 Movement during the year: Net profit for the year - - - - - 2,712 Gains on realisation of investments - - - 14,901 - - Change in investment holding gains - - - - 11,524 - Gains/(losses) on contracts for difference - - - 2,308 (438) (52) Finance costs, investment management and performance fee charged to capital after taxation - - - (2,368) - - Write back of share issue costs - - - 6 - - Write back of subscription share issue costs - - - 10 - - Refund of unclaimed dividends - - - - - 8 Dividends paid during the year - - - - - (2,318) ------ ------ ------ ------ ------ ----- At 30 November 2012 21,049 35,272 11,905 69,265 27,415 5,135 ====== ====== ====== ====== ====== ===== 10. Publication of non statutory accounts The financial information contained in this announcement does not constitute statutory accounts as defined in the Companies Act 2006. The 2012 annual report and financial statements will be filed with the Registrar of Companies shortly. The report of the Auditor for the year ended 30 November 2012 contains no qualification or statement under section 498(2) or (3) of the Companies Act 2006. The comparative figures are extracts from the audited financial statements of The Throgmorton Trust PLC and its subsidiaries for the year ended 30 November 2011, which have been filed with the Registrar of Companies. The report of the Auditor on those accounts contained no qualification or statement under section 498 of the Companies Act. This announcement was approved by the Board of Directors on 8 February 2013. 11. Annual Report Members will be notified that the annual report is available shortly or if a hard copy has been requested this will be sent shortly. It will also be available from the registered office, c/o The Company Secretary, The Throgmorton Trust PLC, 12 Throgmorton Avenue, London EC2N 2DL. 12. Annual General Meeting The Annual General Meeting of the Company will be held at 12 Throgmorton Avenue, London EC2N 2DL on Wednesday, 20 March 2013 at 10:00 a.m. ENDS The Annual Report will also be available on the BlackRock Investment Management website at http://www.blackrock.co.uk/literature/annual-report/ the-throgmorton-trust-plc-annual-report.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. For further information, please contact: Jonathan Ruck Keene, Managing Director, Investment Companies, BlackRock Investment Management (UK) Limited Tel: 020 7743 2178 Mike Prentis, BlackRock Investment Management (UK) Limited Tel: 020 7743 2312 Richard Plackett, BlackRock Investment Management (UK) Limited Tel: 020 7743 4869 Emma Phillips, Media & Communication, BlackRock Investment Management (UK) Limited Tel: 020 7743 2922 8 February 2013 12 Throgmorton Avenue London EC2N 2DL END

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