Final Results
THE THROGMORTON TRUST PLC
PRELIMINARY ANNOUNCEMENT
FOR THE YEAR ENDED 30 NOVEMBER 2004
• Continued strong outperformance by the Trust
• Net Asset Value per ordinary share 135.4p (2003:104.9p) see table below
• Increased final dividend 1.10p (2003:1.0p) making a total of 1.6p (2003:1.5p)
NET ASSET VALUE
30.11.2003 30.11.2004 Year on year 31.01.2005
% change
The Throgmorton Trust PLC 104.9p 135.4p +29.0 153.7p
FTSE SmallCap (ex Inv. 2,462.4 2,671.5 +8.5 2,869.9
Cos.)
FTSE All-Share 2,146.7 2,345.2 +9.2 2,441.2
THE CHAIRMAN, LORD STEWARTBY, COMMENTED:
In my last annual statement as Chairman I am pleased to be able to report to
shareholders on an outstandingly successful year. While the broader market made
satisfactory progress during 2004, the relevant indices, both for the SmallCap
sector and for the market as a whole, are still well short of where they stood
four years ago. It is therefore particularly gratifying that both the net asset
value and the share price of the Trust should have now reached record levels.
Portfolio and Net Asset Value
At 30 November 2004 net asset value per share stood at 135.4p against 104.9p at
the end of the previous November, a rise of 29.0 per cent. This compares with
an increase of 8.5 per cent in the FTSE SmallCap Index (excluding Investment
Companies). I am glad to be able to report that there have been further gains
in the Trust's net asset value in December and January, and that outperformance
against the indices has continued.
The Trust's portfolio consists of stocks with a spread of market
capitalisation, from the lower end of the MidCap index to the increasingly
important area of AIM, and is constructed so as to cover a broad range of
sectors. Nevertheless, as explained in the Managers' Review, there is strong
emphasis on individual stock selection, with regard to positive market
background, sound balance sheets, strong management and tight controls. In an
improving economy and a rising market this formula can bring exceptional
returns, as may be seen from the relative performance of the Trust over the
last two years, with a gain of 75 per cent in net asset value per share against
40 per cent and 17 per cent respectively by the SmallCap and All Share Indices.
Revenue and Dividend
With improved earnings in a number of sectors of the market many companies have
been increasing their dividends, with a consequent benefit to the Trust's
revenue account. When in 2000 shareholders approved the Board's proposal that a
new objective should be adopted for the Trust, dispensing with a reference to
income, the result was a rebalancing of the portfolio and a reduction in its
yield. Because of the substantial revenue reserves held both by the parent
company and by its financing subsidiaries, the Board then took the view that it
would be appropriate to set the Trust's dividend at 1.5p per share, even though
this was not fully covered by current revenue at the time. This level of
dividend was then maintained over the following three years, drawing on
reserves to a diminishing degree each year. With its revenue stream growing,
the Trust is now in a position to increase its dividend. The directors are
therefore proposing a final dividend of 1.1p per share (2003 : 1.0p), making a
total for the year of 1.6p (2003 : 1.5p), an increase of 6.7 per cent.
A Company Transformed
In stepping down from the chairmanship of the Trust after fifteen years, I am
confident that my successor inherits responsibility for a company in a sound
and flourishing condition, and justly now regarded as one of the leaders in its
field. In 1990 it had faced many difficulties: too much debt, incurred in
pursuit of a policy of diversification; much of the assets consisting of
illiquid and unquoted investments, the valuation of which was declining as the
economy deteriorated; and increasing strain on revenue as the profitability of
subsidiary and associate companies fell below what was needed to service
expensive borrowings. Understandably investor confidence in the company at that
time was low, and concerted action was needed to address its problems. Over the
following years the businesses of the subsidiaries and associates were
stabilised and the companies then sold or wound up, as market conditions
allowed; debt was reduced; and the shape of the portfolio was restored to an
orthodox form by disposal of residual unquoted holdings.
The final stage in the process came in 2000 when, as described above, the
decision was taken to alter the objective of the Trust so as to allow a lower
yield. That there is a trade-off between yield and capital growth is
illustrated by the performance of the Trust's net asset value in the four years
now completed since December 2000, when reorganisation of the portfolio had
been carried through. The Board wishes to express its appreciation to the
Manager for the excellent performance that has been achieved.
The Board
In November we were pleased to welcome to the Board Mr. Eric Stobart, FCA who
has been active for more than thirty years in corporate finance, investment and
related areas of financial markets. The intention is that during the current
year he should assume the chairmanship of the Audit Committee in succession to
Sir Victor Garland. We are grateful to Sir Victor for having filled this
responsible post with distinction for several years; he has agreed to seek
re-election as a director for one further year in order to provide continuity
during the period of transition.
At the end of the Annual General Meeting on 30 March I shall hand over as
chairman to Mr. Richard Bernays, whose experience and record well qualify him
for the task. It is proposed that I should remain on the Board for the time
being, in particular so as to be able to address a few remaining administrative
matters that derive from the Trust's former involvements as a holding company.
I should like to place on record my personal thanks to members of the Board,
both past and present, for their support and the contribution that they have
made in bringing the Company to the strong position that it holds today.
Outlook
Market conditions in 2004 were unusually favourable for the SmallCap sector.
Whether they will continue to be so in 2005 will be much influenced by the
level of consumer demand. While some cooling of the housing market is welcome,
a substantial reduction in property values would have wider repercussions for
investment. Some reservations should therefore be expressed about prospects for
the coming year, and it would be unrealistic to expect so strong a performance
as that of 2004. One of the main reasons why smaller companies performed so
well last year in relative as well as absolute terms is that their fortunes are
more dependent upon the domestic economy than is the case for larger companies.
Indeed, because of the international nature of much of their business the
earnings and valuation of larger companies have been adversely affected by the
prolonged weakness of the dollar, and at some point the exchange rate factor is
likely to reverse. Nevertheless, and even if some relative correction of this
kind takes place, in our view the outlook for selected small companies remains
positive so long as the economy continues to enjoy a reasonable rate of growth.
Lord Stewartby
Chairman
1 February 2005
The Throgmorton Trust PLC
Preliminary statement for the year ended 30 November 2004
Statement of Total Recognised Gains and Losses
Year to 30 November 2004
(unaudited)
Revenue Capital Total
£000s £000s £000s
Realised gains and losses - 29,830 29,830
Unrealised gains and losses - 43,880 43,880
Income 7,428 - 7,428
Management fee (1,333) (1,333) (2,666)
Other expenses (382) - (382)
Net return before finance costs and 5,713 72,377 78,090
taxation
Interest payable and similar (2,136) (2,014) (4,150)
charges
Premium paid on repurchase of - (683) (683)
debenture stock
Return on ordinary activities 3,577 69,680 73,257
before taxation
Tax on ordinary activities - - -
Return on ordinary activities after 3,577 69,680 73,257
taxation attributable to equity
shareholders
Dividends in respect of equity (3,676) - (3,676)
shares
Transfer (from)/to reserves (99) 69,680 69,581
Return per ordinary share
- basic 1.55p 30.25p 31.80p
The revenue column of this statement is the 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 2004
Statement of Total Recognised Gains and Losses (Continued)
Year to 30 November 2003
(audited)
Revenue Capital Total
£000s £000s £000s
Realised gains and losses - (2,199) (2,199)
Unrealised gains and losses - 69,913 69,913
Income 7,383 - 7,383
Management fee (1,138) (1,138) (2,276)
Other expenses (372) - (372)
Net return before finance costs and 5,873 66,576 72,449
taxation
Interest payable and similar (2,550) (2,425) (4,975)
charges
Premium paid on repurchase of - - -
debenture stock
Return on ordinary activities 3,323 64,151 67,474
before taxation
Tax on ordinary activities - - -
Return on ordinary activities after 3,323 64,151 67,474
taxation attributable to equity
shareholders
Dividends in respect of equity (3,494) - (3,494)
shares
Transfer (from)/to reserves (171) 64,151 63,980
Return per ordinary share
- basic 1.40p 27.09p 28.49p
The Revenue column of this statement is the 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 2004
Revenue Account
for the year ended 30 November £000s 2004 £000s 2003
(unaudited) (audited)
£000s £000s
Income from fixed asset investments 6,386 6,318
Franked income 832 580
Unfranked income
7,218 6,898
Other income 147 367
Interest receivable 63 118
Fees and commissions
210 485
Gross Income 7,428 7,383
Expenses and interest 1,333 1,138
Management fee 382 372
Administration expenses 2,136 2,550
Interest payable
(3,851) (4,060)
Net revenue from ordinary 3,577 3,323
activities (after taxation)
Dividends 1,149 1,186
Ordinary shares: 2,527 2,308
Interim
Final
(3,676) (3,494)
Transfer from reserves (99) (171)
Earnings per share - basic 1.55p 1.40p
The revenue account is a fuller version of 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 2004
Balance Sheet
as at 30 November £000s 2004 £000s 2003
(unaudited) (audited)
£000s £000s
Fixed asset investments 343,991 279,647
Listed 44 44
- United Kingdom 2,535 2,889
- Overseas
Subsidiary undertakings
346,570 282,580
Current assets 2,456 2,564
Debtors 123 -
Cash at bank
2,579 2,564
Creditors: 1,517 1,773
Amounts falling due within one year 1,055 1,248
Trade creditors 825 885
Amounts owed to subsidiary - 1,373
undertakings
2,527 2,308
Sundry creditors
Bank overdraft
Proposed dividend on ordinary
shares
(5,924) (7,587)
Net current liabilities (3,345) (5,023)
Total assets less current 343,225 277,557
liabilities
(32,194) (34,119)
Creditors:
Amounts falling due after one year
Debentures, convertible debt and
loans
Net assets 311,031 243,438
Capital and reserves 3,702 11,488 3,590 11,600
Called up share capital 70,279 35,272 26,399 35,272
Share premium account 186,940 260,921 163,128 193,117
Capital reserves 3,350 3,449
Capital redemption reserve
Revaluation reserve
Realised capital profits
Revenue reserve
Total equity shareholders' funds 311,031 243,438
Net asset value per share 135.37p 104.93p
Net asset value adjusted for 'fair 129.56p 99.39p
value' of debt
The Throgmorton Trust PLC
Preliminary statement for the year ended 30 November 2004
Reconciliation of Movements in Shareholders' Funds
for the year ended 30 November 2004 2003
(unaudited) (audited)
£000s £000s
Net surplus revenue for distribution 3,577 3,323
Dividends (3,676) (3,494)
Net transferred from reserves (99) (171)
Non distributable capital gain/(deficit) 69,680 64,151
Repurchase of ordinary shares (1,988) (4,369)
Net increase to shareholders' funds 67,593 59,611
Opening shareholders' funds 243,438 183,827
Closing shareholders' funds 311,031 243,438
The Throgmorton Trust PLC
Preliminary statement for the year ended 30 November 2004
Cash Flow Statement
for the year ended 30 November 2004 2003
(unaudited) (audited)
£000s £000s
Operating activities 6,974 6,506
Cash received from investments 147 367
Interest received 52 89
Underwriting commission (1,285) (1,089)
Management fee (98) (101)
Cash paid to and on behalf of the directors (329) (226)
Other cash payments
Net cash inflow from operating activities 5,461 5,546
Servicing of finance (2,136) (2,550)
Interest paid - revenue
Taxation 8 -
Taxation recovered
Capital expenditure and financial investment (111,745) (82,460)
Purchases of investments 121,181 91,841
Sales of investments (1,285) (1,089)
Capital management fee (2,014) (2,425)
Interest charged to capital 100 105
Net payments from subsidiaries
Net cash inflow from investing activities 6,237 5,972
Dividends (3,456) (3,559)
Dividends paid - equity shares
Net cash inflow before financing 6,114 5,409
Financing (2,010) (4,347)
Repurchase of ordinary shares
Repurchase of debenture stock (2,608) -
Repayment of convertible loan stock - (11,007)
Net cash outflow from financing (4,618) (15,354)
Increase/(decrease) in cash 1,496 (9,945)
Notes:
The financial information set out in the announcement does not constitute the
Company's statutory accounts for the years ended 30 November 2004 or 2003. The
financial information for the year ended 30 November 2003 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 2004 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.
The financial information has been prepared on the basis of the accounting
policies set out in the Company's financial statements for the year ended 30
November 2003.
The board has recommended the payment of a final dividend of 1.10p per share in
respect of the year ended 30 November 2004. Subject to approval by shareholders
at the Company's annual general meeting, the dividend will be paid on 5 April
2005 to shareholders on the register of the Company on 4 March 2005.
Tuesday, 1st October 2024
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