Final Results

30 January 2009 THE THROGMORTON TRUST PLC Announcement of results in respect of the year ended 30 November 2008 The Chairman, Richard Bernays, comments: Investment Manager BlackRock Investment Management (UK) Limited ("BlackRock") has been the Investment Manager of the Company since 1 July 2008 and was appointed following a detailed review by the Board. BlackRock has considerable expertise in, and commitment to, the investment trust sector and a strong track record in the smaller companies sector. The Board also chose to adopt a differentiated and innovative approach to the Company's future which was approved by shareholders at an Extraordinary General Meeting ("EGM") held on 11 September 2008. In summary, the proposals provided for the following: - Adoption of a modified and innovative Investment Policy to allow the Company to have up to 30% of its net assets invested in a portfolio of contracts for difference ("CFD") to provide both long and short exposure to UK small and mid cap equities; - An initial tender offer for up to 40% of the Company's issued share capital on a tender pool basis with a 2% exit charge; and - Ongoing discount control involving regular tender offers and share buybacks. Interim payments amounting to 90 pence per share have now been paid in respect of the initial tender and the amount remaining in the tender pool is estimated to amount to 15.49 pence per share, as at 27 January 2009. Given the current market conditions and the resultant liquidity constraints, the liquidation of the tender pool is ongoing and the final distribution to exiting shareholders has therefore been deferred until late March 2009. Performance During the year to 30 November 2008, UK equities remained exceptionally volatile with the UK small-cap sector experiencing a severe de-rating. A worsening economic outlook and a collapse in confidence across all sectors of industry during the year led to expectations of a significant recession in the UK and sharply impacted the prospects for UK smaller companies. Managing the Company's portfolio under such market conditions has been challenging and at the year end the net asset value per continuing share ("NAV") had declined by 51.3% whilst the share price fell by 58.0%. By comparison, the Hoare Govett Smaller Companies plus AIM (ex Investment Companies) Index fell by 49.0%. Under the terms of the management agreement with BlackRock, any outperformance of the benchmark index from 11 September onwards will give rise to a performance fee. For the current year a fee of £ 377,000 has been generated. At 28 January 2009, the Company's NAV had increased by 4.6% and the share price by 19.5% since 30 November 2008, compared with an increase in the benchmark of 2.3%. From the commencement of the new portfolio approach on 11 September 2008 until 30 November 2008 the CFD portfolio generated positive returns for shareholders amounting to £2,255,000. The short CFD positions performed particularly well. Gross assets in the CFD portfolio ranged from 2.2% to 28.4% of NAV in the period with an average of 21.4%. Given the sensitivity of the CFD portfolio only limited disclosure has been provided in line with industry practice. Revenue return and dividends Revenue return per share for the year amounted to 3.85 pence compared with 1.54 pence for the previous year, a rise of 150.0%. This increase is largely attributable to the change in allocation of management fees and finance costs between revenue and capital and the refund of VAT received in the year details of which are given below. The Directors are proposing a final dividend of 1.85 pence per share together with a special dividend of 3.00 pence per share making a total dividend for the year of 5.40 pence per share representing an increase of 145.5% on the previous year. The final and special dividends are payable on 1 May 2009 to shareholders on the Company's register on 3 April 2009 (ex dividend date is 1 April 2009). Exiting shareholders should note that under the terms of the Circular dated 1 August 2008 (the "Circular"), their shares have been acquired with all rights attaching thereto on or after the tender closing date, including the right to receive all dividends. Exiting shareholders will therefore not be entitled to the dividends referred to above. Tender offers Following shareholder approval at the EGM the Directors of the Company now have the discretion to make semi-annual tender offers for up to 20% of the Company's issued share capital in August and February of each year. The initial tender offer closed on 9 September 2008 and was for up to 40% of shares in issue. It was oversubscribed with 60,741,753 shares, (44.3% of the shares in issue) being tendered. It was announced on 15 January 2009 that the Board had decided that in light of the current exceptional market circumstances, and that the previous tender pool is yet to be fully realised, it would be against the interests of shareholders as a whole to implement the next tender offer, due in February. The Board is committed to recommencing regular tender offers when markets permit. Under the terms of the Circular the next possible tender offer is as at 1 September 2009 and an announcement in this regard will be made in due course. Discount and share buybacks The Directors recognise the importance to investors of ensuring that any discount of the Company's share price to its underlying NAV is as small as possible. Accordingly, the Directors monitor the discount closely and will consider share repurchases in the market if the discount to NAV widens significantly. In the year under review the Company purchased 2,806,404 shares for cancellation for a total consideration of £3,771,000. This represented 2% of the Company's issued share capital as at 1 December 2007. The Directors have the authority from shareholders to buy back up to 14.99% of the Company's issued share capital. This authority expires at the forthcoming Annual General Meeting ("AGM") on 19 March 2009 when a resolution will be put to shareholders to renew it. Debenture Stock The Directors determined that it would be in the interests of the Company to repay the remaining £17,169,000 of the £19,118,645 12 5⁄16 per cent. Debenture Stock 2010 (the "Stock") which it was considered represented expensive debt for the Company. At a meeting of the Company's Stockholders held on 26 August 2008, Stockholders approved a proposal to amend the conditions of the Stock to provide the Company with the option to redeem it early on the terms and conditions contained in a tender offer memorandum dated 31 July 2008. Holders of outstanding Stock were invited to tender their stock for repurchase by the Company. All stock tendered in the offer was accepted for repurchase and following exercise of an issuer call in respect of Stock not tendered all Stock that remained outstanding was redeemed on 3 September 2008. Additionally, on 31 July 2008 the Company's subsidiary, T.T. Finance PLC announced an offer to holders of its outstanding £15,000,000 115⁄16 per cent. Guaranteed Debenture Stock 2018 to tender such stock for repurchase on the terms contained in a tender offer memorandum. On 26 August 2008 following a meeting of Stockholders T.T. Finance PLC announced that it had accepted for repurchase all tendered stock and had chosen to exercise an issuer call in respect of all outstanding stock not tendered. The overall impact of the repayment of the Stock was to reduce the Company's NAV by approximately 5%. Refund of VAT An amount of £5.5 million was received from AXA Framlington Investment Management Limited ("AXA"), the former investment manager, in respect of AXA's claim against HM Revenue and Customs ("HMRC") for the recovery of VAT paid for the periods from 1989 to 1996 and 2001 to 2007 on management fees charged to the Company. This payment, the value of which had not, on the grounds of uncertainty, previously been recognised as an asset by the Company, was included in the NAV calculations with effect from the close of business on 20 November. It is estimated that this resulted in an uplift of approximately 4 pence per share to the Company's NAV for both continuing and exiting shareholders. Additional claims remain outstanding in respect of the recovery of VAT, including a claim against HMRC for payment of interest, but there is insufficient certainty relating to the outcomes to accrue further amounts at this time. Directorate It is with much regret that I report that Simon Stevens has decided to retire as a Director of the Company at the forthcoming AGM. Simon has been a Director of the Company since 1999 and his experience has been invaluable to his fellow Directors. I would like to thank him on behalf of the Board for his outstanding contribution to the Company. BlackRock Savings Plan and ISA I am pleased to report that the Company's shares are now available through the BlackRock Savings Plan and ISA. Shareholders who would like further information on these products should call BlackRock free of charge on 0800 44 55 22. Investors in the AXA Framlington Select Investment Trust Share Plan have been notified of AXA's intention to terminate the plan. Any investors in the AXA Plan who wish to transfer their Throgmorton shares free of charge into the BlackRock Savings Plan should contact BlackRock on the number above at least 72 hours in advance of the AXA deadline of 24 April 2009. Outlook The immediate outlook for the UK and many other leading economies is poor. However, Governments around the world have taken unprecedented actions to stimulate the economies and inject liquidity. Stockmarkets do look forward and we believe much of the bad economic news is now priced into equities. Later in 2009 we may begin to see stockmarkets looking forward to recovery. We are confident that our commitment to good quality growth companies combined with the opportunities provided by the CFD portfolio will reward shareholders as the cycle begins to turn upwards. Interim Management Report and Responsibility Statement The Chairman's statement above and the Investment Managers' Report following give details of important events which have occurred during the period and their impact on the financial statements. 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 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 particular 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 section 842 of the ICTA. 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 section 842 are not breached. The results are reported to the Board at each meeting. - 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 produces an annual SAS70 report which is reviewed by its auditors and gives assurance regarding the effective operation of controls. - Financial risks - The Company's investment activities expose it to a variety of financial risks that include market price risk, foreign currency risk and interest rate risk. The Company has approximately 26% of is portfolio invested in AIM traded securities, and, by the very nature of its investment objective, largely invests in smaller companies, and liquidity in these securities can from time to time become constrained, making these investments difficult to realise at or near published prices, giving rise to additional liquidity risk. This is taken into consideration by the Directors when determining the valuation of these holdings. There are also risks linked to the Company's use of derivative transactions including CFDs. Related party transactions Details of related party transactions are set out below. The investment management fee for the year charged by BlackRock was £508,000 (2007: £nil). In addition a performance fee was payable of £377,000. At the year end, an amount of £377,000 was outstanding in respect of these fees (2007: £nil). The investment management fee charged by AXA during the year was £1,177,000 (2007: £2,504,000). The Company's prime broker, Merrill Lynch International, is associated with BlackRock. At the year end, the Company held cash of £3,708,000 with the prime broker. The Company also had an investment in BlackRock's Institutional Cash Fund of £9,999,000 at the year end. Directors' responsibility statement The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations. Company law requires the Directors to prepare financial statements for each financial year. Under that law they have prepared the financial statements in accordance with applicable laws and UK Accounting Standards (UK Generally Accepted Accounting Practice). The Directors are required to ensure that the financial statements give a true and fair view of the affairs of the Company as at the end of each financial year and of the profit or loss of the Company for that period. In preparing those financial statements, the Directors are required to: - select suitable accounting policies and then apply them consistently; - make judgements and estimates that are reasonable and prudent; and - state whether applicable UK accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements. The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 1985. They have general responsibility for taking such steps as are reasonably available to safeguard the assets of the Company and to prevent and detect fraud and other irregularities. Under applicable law and regulations, the Directors are also responsible for preparing a Directors' Report, Directors' Remuneration Report and Corporate Governance Statement that comply with that law and those regulations. The Directors confirm to the best of their knowledge and belief that: - the financial statements, prepared in accordance with applicable UK accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and - the Annual Report includes a fair view of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that the Company faces. Commenting upon the outlook for the Company, Mike Prentis and Richard Plackett of BlackRock Investment Management (UK) Limited, the Investment Manager, note: Market review and overall investment performance The last year has been a difficult and eventful one for stockmarkets and the Company. Having fallen by a little less than 10% in the first half of the Company's year, UK smallcap indices began to fall more sharply in July, whilst September and October were particularly savage months with markets collapsing. At the macro level, initially the focus was on the banking system, with various household names in the US and UK failing, being wholly or partially nationalised, or being forced into hastily agreed takeovers. Most Western banks had become overleveraged by historical standards and the quality of their assets, especially mortgage backed securities and similar debt instruments, began to look highly dubious as real estate prices began to fall sharply. The interbank lending market virtually ground to a halt, and as banks struggled to reduce gearing, credit availability became very limited. The prime focus then shifted to the global economy; published data showed that the UK, US and some other developed economies had seen a fall in GDP in the third quarter. It also became clear that emerging markets had not decoupled and their GDP growth was also slowing rapidly. A number of more highly indebted emerging markets saw sharp declines in their currencies and in certain cases have sought help from the International Monetary Fund. Resources prices fell sharply as demand slowed, with the oil price falling more than 60% from its May peak, and dramatic falls also being seen in the price of base metals. Governments have responded aggressively, not only by rescuing the banking system, but also by aggressive interest rate cuts, increasing public spending and reducing taxes. This has taken place across the world from the US to the UK and to China. The Company's portfolio has suffered in line with markets and has experienced a sharp fall in its NAV per share. BlackRock assumed management responsibility for the Company's portfolio from 1 July. Our immediate priorities were to raise cash to repay the Company's two debentures, and to restructure the portfolio to introduce more of the companies which we favour. The logic for repaying the debentures was not just that they had coupons of over 10%, but also because we wanted to obtain gearing through a proposed CFD portfolio, which we believe has more opportunity to add value than conventional gearing, particularly in falling markets. The debentures were repaid at a premium which holders required to persuade them all to sell; the immediate impact was to reduce the Company's NAV by just over 5% in late August 2008. In restructuring the portfolio our aim was to sell all stocks which we did not like and also to reduce the relatively high proportion of the portfolio which was comprised of illiquid and often early stage microcaps. In addition to repaying the debentures, we reinvested the proceeds from sales in companies which meet our requirements for core holdings, many of which are more liquid, smaller mid cap companies. At the same time we visited major shareholders to discuss our investment approach and plans and to outline their options as far as the tender process was concerned. It was disappointing that 44% of the Company's shares were tendered, although probably unsurprising given the slump we were seeing in markets; this triggered the maximum tender of 40% of the equity. 40% of every holding was transferred into the tender pool and we then sought to sell these holdings. Naturally the impact of such sales from the tender pool on the continuing pool was significant, creating a marked short term drag on investment performance. Whilst over 90% of the tender pool has now been realised, the process of realising some of the smallest capitalisation holdings has been more protracted than we originally expected, and is still not complete. There were two pieces of good news. Firstly, the CFD portfolio was established once approved by shareholders in mid September. This has performed well, and has added just over £2 million to the Company's NAV during the two and a half months of the year it was in existence. Secondly, we received the VAT refund referred to by the Chairman. Portfolio performance Stripping out the negative impact of the repayment of debentures at a premium, and the positive impact of the VAT refund, the long only portfolio fell by 39.9% during the 5 month period of BlackRock's tenure. This compares with a fall of 41.2% in the HGSC plus AIM index excluding investment companies, the benchmark index during the period. Largest falls were seen in the resource sectors with the oil and gas producers sector falling by 59.3% and the mining companies sector by 74.5%. Within these sectors we had some very disappointing performers notably Albidon, down 94.0% on sharply lower nickel prices and cash concerns despite having brought its Munali nickel mine into production within a few months of schedule, Cambrian Mining down 89.2% on a weakening coal price, production below expectations and debt refinancing concerns, and International FerroMetals, down 85.1%, on collapsing demand for ferrochrome. Exploration companies were particularly hard hit with Faroe Petroleum, a company with an interesting North Sea exploration programme falling 67.1%. Although these are large falls, we were slightly underweight the resources sectors so that overall these sectors did not cause any relative underperformance. Industrials also fell sharply although they performed slightly ahead of the benchmark. With emerging markets, especially China, slowing much faster than expected, demand for raw materials has fallen and companies supplying the resources sectors have suffered badly. Fenner, one of our largest holdings at the half year, supplies conveyor belting which is used largely in the coal industry. Although much of its output is aftermarket related, its shares fell 70.0% in anticipation of a slowdown in activity, and in recognition of the fact that Fenner had geared up by making a few significant debtfunded acquisitions. We have now completed the sale of our holding. Dyson, a speciality chemicals company fell 85.9% on weakening demand from the automotive sector and relatively high debt; the shares are highly illiquid. Sharp share price falls were not limited to poorer quality stocks; Aveva, a world leading supplier of software to help design and manage large infrastructure projects, saw its shares fall 65.9% as the markets took note of the extent to which it has generated initial software licence fees from China and other emerging markets in recent years. Aveva has a very strong balance sheet and we retain our longer term belief in this company. In relative terms two of the best contributions during the period came from wealth managers Rensburg Sheppards and Rathbone Brothers. Their share prices have benefitted from the banning of short selling of financial companies; however we see both as a good way of playing an eventual recovery in markets. Strong performances also came from several recently acquired core holdings, Connaught, Spirax-Sarco and Babcock International. Vectura, a biotechnology company which has licensed some of its technology to big pharmaceutical companies such as Novartis, also contributed well. We continued to see some mergers and acquisitions activity with bids for NetStore and Abacus. Activity We have considerably reduced the proportion of the portfolio which is invested in sub £100 million market capitalisation companies. We have specifically sought to deploy the proceeds of sales into more liquid midcaps, and this helps counterbalance the remaining weighting in microcaps. We have bought many of our favoured core holdings including, amongst larger new holdings, aerospace and defence companies Ultra Electronics, Chemring and Qinetic, engineering companies Spirax-Sarco and Rotork, pet healthcare company Dechra Pharmaceuticals, outsourcing companies Connaught, Mitie, Mouchel and Xchanging, wealth manager Brewin Dolphin, and speciality chemicals manufacturer Victrex. These are all well managed market leading companies which are well differentiated from competitors, protected by effective barriers to entry, which have real pricing power and can demonstrate clear records of earnings growth and cash generation giving them strong balance sheets. Gearing Following the repayment of the debentures in September, the Company has no financial gearing. However, the Company is exposed to the market through the CFD portfolio, the aggregate long and short positions of which amount to approximately 28% of net asset value. The exposure of the Company to the markets on a net basis, ie the aggregate of the long portfolio, and long CFD portfolio less the short CFD portfolio, at the year end was just under 100% of net asset value. The CFD portfolio The CFD portfolio represents long and short positions taken within a master agreement. At the year end the CFD portfolio comprised 72 positions. The long positions are mainly in our preferred core holdings, companies such as Ultra Electronics and Rotork. The short positions are in companies which in some way we see as flawed. Their qualities are in many ways the opposite of the qualities we insist on in our core holdings. For example in some cases we see management as too optimistic, the companies as being essentially commoditised without pricing power, the balance sheets weak and over leveraged, the financial record being poor or erratic. In most cases our short positions have already proved profitable. Portfolio positioning We are focussed mainly on good quality growth companies. In particular we have been keen to include in the portfolio companies which we know well, run by management we regard highly, which are truly differentiated and have the ability to maintain organic growth and margins, and which have no, or minimal, debt. We have also favoured more liquid stocks. Despite this naturally cautious approach, trading prospects are now far more difficult to assess for many companies given the rapid fall off of GDP growth in many countries. Even for some of the strongest companies, earnings forecasts for 2009 and probably also 2010 are almost certainly too high; usually the market has anticipated an earnings downgrade although when they do materialise it is rare for this go unpunished. We are meeting more cyclical companies, developing a short list of companies we may want to buy into when we feel we are close to a turning point in economies and markets, and we have started to buy small positions in some of these in recent weeks, examples include Savills and Mothercare. From a sector point of view we are most overweight technology and industrials, and most underweight consumer services and consumer goods. Our technology holdings generally combine strong franchises with robust balance sheets. Much of our industrials exposure is to engineering companies selling worldwide but with good emerging market sales growth. With slowing GDP growth in China and other emerging markets these types of stocks have been sold off aggressively. We believe that when world economies recover, Asian economies will resume their secular growth. Slowing emerging markets have also impacted the resources sectors. We maintain a marginal underweight position in these sectors as these are more commoditised than high quality industrial stocks. We expect many companies dependent on the UK consumer will find current trading very difficult, and that trading conditions will deteriorate further early in 2009. We will probably remain underweight these stocks for some time, and through the CFD portfolio remain short. Outlook Markets remain highly uncertain. This is hardly surprising since even companies which so far have continued to trade well are being met with considerable scepticism. Management teams are feeling more uncertain having met with investors, with investors trying to assess when revenues will start to weaken, how marked will be the fall and what scope there is to cut costs. Gloom seems quite pervasive at present, and it remains unclear how the mood of investors will be lifted. We had a short rally in late October but this quickly petered out, and a further rally in December. We expect rallies over the next few quarters but these are likely to be short lived. There is no doubt we are now in the third quarter of a recession, and typically recessions last for about 6 quarters. Given the actions being taken by governments around the world, there is little reason to suppose the current recession should be materially longer than past recessions, although it is rather alarming that most large economies have entered recession at broadly the same time. Typically stockmarkets bottom in the first half of recessions and recovery is anticipated a few quarters ahead. This could point to better times ahead in the second half of 2009. Fifty Largest Investments as at 30 November 2008 Market value % of Prospective Company £'000 total PE ratio* Business activity portfolio Rathbone Brothers 2,125 2.3 12.1 Private client fund management Endace# 1,905 2.1 15.3 Design and manufacture of network monitoring interface products that can test and analyze telecommunications and network equipment Connaught 1,843 2.0 16.1 Services to improve the quality of social housing Ultra Electronics 1,820 2.0 15.1 Design, development and Holdings manufacture of electronic and electromechanical systems for the defence and aerospace markets Spirax-Sarco 1,801 1.9 10.9 Design and manufacture of Engineering steam management systems Chemring Group 1,734 1.9 12.0 Manufacture of products for the global defence, security and safety markets Rensburg Sheppards 1,680 1.8 7.4 Private client fund management Umeco 1,674 1.8 7.0 Supply of composite materials primarily used in aeroplanes Rotork 1,598 1.7 11.9 Design and assembly of actuators for industrial valves Dechra 1,555 1.7 15.1 Development, manufacture and Pharmaceuticals supply of veterinary products SDL 1,551 1.7 10.5 Supply of multilingual translation software and translation services Victrex 1,475 1.6 11.2 Manufacture and supply of PEEK thermoplastic Domino Printing 1,430 1.6 7.4 Manufacturer of inkjet and Sciences laser commercial printers London Capital Group 1,314 1.4 10.3 Provision of online Holdings# spreadbetting and foreign exchange trading Babcock 1,239 1.4 10.1 Provision of engineering International Group support services Emerald Energy 1,217 1.3 8.2 Exploration and production of oil and gas Mitie 1,202 1.3 12.6 Buildings and infrastructure support services Fidessa 1,162 1.3 14.6 Development and marketing of financial trading software Aveva 1,128 1.2 9.7 Development and marketing of engineering computer software Micro Focus 1,124 1.2 11.6 Provision of software International solutions Brewin Dolphin 909 1.0 11.5 Fund management and Holdings stockbroking City Of London 907 1.0 7.7 Management of investment funds Investment Group# primarily invested in emerging markets ITE Group 897 1.0 5.7 Organisation of trade exhibitions and conferences Dmatek 857 0.9 7.4 Provision of electronic tagging products Kier Group 838 0.9 8.6 House building, construction and project management Mouchel Group 831 0.9 10.1 Provision of road, rail and other infrastructure services BATM Advanced 820 0.9 5.6 Development and production of Communications data and telecommunications products Xchanging 795 0.9 17.2 Provision of outsourcing services for the insurance and financial markets Abcam# 794 0.9 18.9 Production and distribution of research-grade antibodies and associated products Paypoint 786 0.9 13.7 Supply of convenient cash payment and money transfer solutions Intercytex# 759 0.8 n/a Use of proprietary cell therapy technology to develop innovative products to restore and regenerate skin Research Now# 736 0.8 12.1 Provision of international online fieldwork and panel specialists Cohort# 706 0.8 12.9 Provision of comprehensive advisory and technical services across the defence, security and associated sectors Qinetiq 703 0.8 13.0 Provision of research, technical advice, technology solutions and services to customers in core markets of defence and security Plant Health Care# 688 0.8 n/a Development and marketing of natural agrichemical products Alterian 677 0.7 5.8 Design and supply of integrated marketing software WSP Group 655 0.7 5.2 Engineering design, planning and project management Keller Group 648 0.7 4.6 Provision of solutions to ground engineering problems and refurbishment projects Chloride Group 623 0.7 11.4 Design and manufacture of uninterruptible power solutions Spectris 617 0.7 5.9 Development and marketing of precision instruments and controls Synergy Healthcare 605 0.7 10.1 Provision of medical and health related support services Avocet Mining# 583 0.6 7.2 Gold exploration and production Vectura Group 579 0.6 n/a Design and supply of inhaled pharmaceutical products System C Healthcare# 577 0.6 10.6 Provision of information systems and services to the healthcare sector Hardy Underwriting 568 0.6 7.2 Provision of specialist Bermuda insurer / reinsurer operating within Lloyd's of London Fenner 566 0.6 5.0 Manufacturer of heavyweight belting using PVC, fabric and steel reinforced rubber BRIT Insurance 565 0.6 7.9 Provision of general insurance Holdings and reinsurance Hiscox 562 0.6 10.0 Provision of specialist insurance PV Crystalox Solar 546 0.6 9.0 Manufacture of multicrystalline silicon ingots and wafers, the key component in solar power systems Dana Petroleum 502 0.6 6.2 Exploration and production of gas and oil 50 largest investments 51,476 56.1 Remaining investments 23,339 25.4 Total continuing pool investments 74,815 81.5 Tender pool investments 16,131 17.6 UK equity portfolio 90,946 99.1 CFD portfolio** 866 0.9 Total investments 91,812 100.0 * Prospective PE ratio derived using late 2008 analyst estimates and relates to the next set of full year results for each company. ** CFDs are disclosed under current assets and liabilities on the Balance Sheet. No individual positions (long or short) would, if physically held, exceed 1% of total investments. # Traded on the Alternative Investment Market of the London Stock Exchange. 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. The Company also held units in BlackRock's Institutional Cash Fund with a total value of £9,999,000 (10.9% of the portfolio). Of this, £6,505,000 was held within the tender pool pending payment of the third tender distribution, and the balance of £3,494,000 was held in the continuing portfolio. Distribution of Investments as at 30 November 2008 % of total Sector portfolio Oil & Gas Producers 5.6 Oil Equipment Services & 1.4 Distribution Alternative Energy 0.6 ------- Oil & Gas 7.6 ------- Chemicals 3.1 Industrial Metals & Mining 0.7 Mining 3.0 ------- Basic Materials 6.8 ------- Construction & Materials 2.0 Aerospace & Defence 9.0 Electronic & Electrical Equipment 5.9 Industrial Engineering 7.2 Support Services 8.9 ------- Total Industrials 33.0 ------- Household Goods & Home Construction 0.7 Personal Goods 0.6 ------- Consumer Goods 1.3 ------- Health Care Equipment & Services 1.7 Pharmaceuticals & Biotechnology 6.4 ------- Health Care 8.1 ------- General Retailers 0.3 Media 2.4 Travel & Leisure 0.5 ------- Consumer Services 3.2 ------- Fixed Line Telecommunications 0.4 Mobile Telecommunications 0.6 ------- Telecommunications 1.0 ------- Cash Equivalents 10.9 ------- Non-life Insurance 2.6 Real Estate Investment Services 1.3 Real Estate Investment Trusts 0.8 Financial Services 8.4 ------- Financials 13.1 ------- Software & Computer Services 10.8 Technology Hardware & Equipment 2.9 ------- Technology 13.7 ------- Electricity 0.2 ------- Utilities 0.2 ------- Warrants 0.2 ------- Contracts for difference 0.9 ------- Total 100.0 ------- Analysis of the UK listed and AIM traded portfolio Index % of portfolio FTSE Small Cap 13.7% FTSE Fledgling 4.4% FTSE 250 55.3% AIM 26.6% Distribution of contracts for difference portfolio % % % % Long Short Net Gross Sector exposure* exposure* exposure* exposure* Basic materials 2.7 - 2.7 2.7 Consumer goods 2.3 -7.5 -5.2 9.8 Consumer services 2.7 -12.2 -9.5 14.9 Financials 3.8 -5.3 -1.5 9.1 Health care 2.3 - 2.3 2.3 Industrials 29.2 -19.0 10.2 48.2 Oil & gas 1.6 - 1.6 1.6 Technology 8.4 -3.0 5.4 11.4 ------ ------ ------ ------ Total 53.0 -47.0 6.0 100.0 ------ ------ ------ ------ Positions 26 46 - 72 ------ ------ ------ ------ * % of CFD portfolio. Income Statement for the year ended 30 November 2008 Revenue Revenue Capital Capital return return return return Total Total 2008 2007 2008 2007 2008 2007 Notes £'000 £'000 £'000 £'000 £'000 £'000 Losses on investments held at fair value through profit or loss - - (125,374) (7,536) (125,374) (7,536) Income from investments 3 4,565 5,081 - - 4,565 5,081 Net return on contracts for differences 34 - 2,221 - 2,255 - Other income 3 679 1,115 - - 679 1,115 Investment management and performance fees 4 (422) (1,422) (1,640) (1,422) (2,062) (2,844) Write back of prior years' VAT 4 2,284 - 3,254 - 5,538 - Operating expenses 5(a) (428) (429) (1,399) - (1,827) (429) ----- ----- ------- ------ ------- ----- Net return/(loss) before finance costs and taxation 6,712 4,345 (122,938) (8,958) (116,226) (4,613) Premium on early - - (10,297) - (10,297) - redemption of debenture stocks Finance costs 7 (798) (1,983) (2,174) (1,905) (2,972) (3,888) Change in tender offer provision (1,062) - 14,954 - 13,892 - -------- -------- -------- -------- -------- -------- Return/(loss) on ordinary activities before taxation 4,852 2,362 (120,455) (10,863) (115,603) (8,501) ----- ----- ------- ------ ------- ----- Tax on ordinary activities (4) (14) - - (4) (14) ----- ----- ------- ------ ------- ----- Return/(loss) on ordinary activities after taxation 4,848 2,348 (120,455) (10,863) (115,607) (8,515) ----- ----- ------- ------ ------- ----- Return/(loss) per ordinary share 9 3.85p 1.54p (95.63p) (7.14p) (91.78p) (5.60p) ----- ----- ------- ------ ------- ----- The total column of this statement represents the Income Statement of the Company. The supplementary revenue and capital return columns are both prepared under guidance published by the AIC. The Company had no recognised gains or losses other than those disclosed in the Income Statement and the Reconciliation of Movements in Shareholders' Funds. All items in the above statement derive from continuing operations. No operations were acquired or discontinued during the year. Reconciliation of Movements in Shareholders' Funds Share Capital Share premium redemption Capital Revenue Note capital account reserve reserve reserve Total £'000 £'000 £'000 £'000 £'000 £'000 For the year ended 30 November 2008 At 30 November 2007 7,003 35,272 8,187 216,860 5,192 272,514 (Loss)/return for the year - - - (120,455) 4,848 (115,607) Transfer of assets to tender pool - - - (74,439) - (74,439) Shares purchased and 10 cancelled (140) - 140 (3,771) - (3,771) Proceeds from shares sold through mix and 10 match facility - - - 1,453 - 1,453 Dividends paid (see 8 (a) below) - - - - (3,121) (3,121) ------- -------- ------- -------- ------- --------- At 30 November 2008 6,863 35,272 8,327 19,648 6,919 77,029 ------- -------- ------- -------- ------- --------- For the year ended 30 November 2007 At 30 November 2006 8,179 35,272 7,011 269,808 5,942 326,212 (Loss)/return for the - - - (10,863) 2,348 (8,515) year Shares repurchased 10 (1,176) - 1,176 (42,085) - (42,085) and cancelled Dividends paid (see 8 - - - - (3,098) (3,098) (b) below) ------- -------- ------- ---------- ------- ---------- At 30 November 2007 7,003 35,272 8,187 216,860 5,192 272,514 ------- -------- ------- ---------- ------- ---------- a. Final dividend of 1.70p per share for the year ended 30 November 2007, declared on 12 February 2008 and paid on 27 March 2008 and interim dividend of 0.55p per share for the six months ended 31 May 2008, declared on 16 July 2008 and paid on 12 September 2008. b. Final dividend of 1.50p per share for the year ended 30 November 2006, declared on 22 February 2007 and paid on 5 April 2007 and interim dividend of 0.50p per share for the six months ended 31 May 2007, declared on 9 August 2007 and paid on 4 September 2007. Balance Sheet as at 30 November 2008 Notes 30 30 November November 2008 2007 £'000 £'000 Fixed assets Investments held at fair value through profit or loss 93,042 299,446 ------ ------- Current assets Debtors 1,457 1,051 Contracts for differences 3,893 - Cash 3,790 11,304 ------ ------- 9,140 12,355 ------ ------- Creditors - amounts falling due within one year Other creditors (22,126) (7,118) Amounts due in respect of the contracts for differences (3,027) - ------ ------- Total creditors falling due within one year (25,153) (7,118) ------ ------- Net current (liabilities)/assets (16,013) 5,237 ------ ------- Total assets less current liabilities 77,029 304,683 Creditors - amounts falling due after more than one year - (32,169) ------ ------- Net assets 77,029 272,514 ------ ------- Capital and reserves Share capital 10 6,863 7,003 Share premium account 11 35,272 35,272 Capital redemption reserve 11 8,327 8,187 Capital reserve 11 19,648 216,860 Revenue reserve 11 6,919 5,192 ------ ------- Total equity shareholders' funds 77,029 272,514 ====== ====== Net asset value per ordinary share 12 93.54p 194.57p ====== ====== Cash Flow Statement for the year ended 30 November 2008 Year Year ended ended 30 30 November November 2008 2007 Note £'000 £'000 Net cash inflow from operating activities 5(b) 8,171 2,819 ------- ------- Servicing of finance (3,061) (3,810) Capital expenditure and financial investment Purchase of investments (155,456) (102,652) Proceeds from sale of investments 233,127 147,910 ------- ------- Net cash inflow from capital expenditure and financial investment 77,671 45,258 ------- ------- Equity dividends paid (3,121) (3,098) ------- ------- Net cash inflow before financing 79,660 41,169 ------- ------- Financing Purchase of ordinary shares (2,683) (41,805) Distributions to tender shareholders (42,020) - Redemption of Debenture stock (42,466) - ------- ------- Net cash outflow from financing (87,169) (41,805) ------- ------- Decrease in cash in the year (7,509) (636) ====== ====== 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 842 of the Income and Corporation Taxes Act 1988. 2. Accounting policies The policies set out below have been applied consistently throughout the year. (a) Basis of preparation The Directors, having considered the nature and liquidity of the portfolio and the Company's investment objective and the Company's income and expenditure, are satisfied that the Company has adequate resources to continue in operational existence for the foreseeable future. For this reason they continue to adopt the going concern basis in preparing the financial statements. Ongoing annual expenses (excluding performance fees) are approximately 1.2% net of assets. The Company's financial statements have been prepared in accordance with UK Generally Accepted Accounting Practice ("UK GAAP") and with the Statement of Recommended Practice "Financial Statements of Investment Trust Companies" ("SORP") reissued in December 2005. All of the Company's operations are of a continuing nature. The Company's financial statements are presented in Sterling, which is the currency of the primary economic environment in which the Company operates. All values are rounded to the nearest thousand pounds (£'000) except where otherwise stated. (b) Consolidation The subsidiaries of The Throgmorton Trust PLC have not been consolidated as they are immaterial in the context of the parent Company's accounts. As a result the Company's financial statements present information about it as an individual undertaking and not about its group. (c) Tender On 11 September 2008, the shareholders approved a tender offer for up to 40 per cent. of the Company's issued share capital, which was fully subscribed. Given the period of time over which the realisation of the tender proceeds is taking place, at the year end the tendered shares had not been bought back and cancelled or taken into treasury by the Company, with the result that the Company's total issued share capital at 30 November 2008 was 137,251,872, of which 82,351,197 related to continuing shareholders and 54,900,675 related to exiting shareholders. On 11 September 2008, the effective date of the tender, a liability was set up on the Balance Sheet reflecting the amounts owing to shareholders in relation to tendered shares, with the debit being offset against the Company's capital reserve. This provision represented the outstanding balance of assets in the tender pool, less any relevant provisions for tender costs, including legal and broker's advice in relation to the tender. Any gains or losses on tender pool investments between 11 September and the balance sheet date have been allocated to capital in the Income Statement and any income received has been allocated to revenue in the Income Statement. As such gains and losses and income in relation to the tender pool assets are included for the purposes of determining the final tender offer price, they have been included in the measurement of the Company's liability in respect of the tendered shares at the year end. Movements in this liability have been recorded in the Income Statement and allocated to revenue and capital on a basis consistent with the gains, losses and income giving rise to them. (d) Presentation of Income Statement 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 Income Statement between items of a revenue and capital nature has been presented alongside the Income Statement. In accordance with the Company's status as a UK investment company under section 833 of the Companies Act 2006, net capital returns may not be distributed by way of dividend. (e) Investments designated as held at fair value through profit or loss The Company's investments are classified as held at fair value through profit or loss in accordance with FRS 26 - 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. 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. Unquoted investments are valued by the Directors at fair value using International Private Equity and Venture Capital Association Guidelines. Investments in subsidiary undertakings are included at net asset value which represents their fair value. These policies apply to all current and non current asset investments of the Company. (f) 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 Income Statement. They are recognised as capital and are shown in the capital column of the Income Statement if they are of a capital nature, and are recognised as revenue and shown in the revenue column of the Income Statement if they are of a revenue nature. To the extent any gains or losses are of a mixed revenue and capital nature, they are apportioned between revenue and capital accordingly. (g) Segmental reporting The Directors are of the opinion that the Company is engaged in a single segment of business being investment business. (h) Income Dividends receivable on equity shares are treated as revenue for the year 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. Provision is made for any dividends not expected to be received. Fixed returns on non equity securities are recognised on an effective interest rate basis. Interest income and expenses are accounted for on an accruals basis. (i) Expenses All expenses are accounted for on an accruals basis. Expenses have been treated as revenue 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; - with effect from 1 December 2007 the investment management fee has been allocated 75% to capital reserve - realised and 25% to the revenue account in line with the Board's expected long term split of returns, in the form of capital gains and income respectively, from the investment portfolio; - performance fees are allocated wholly to capital reserve, as performance is predominantly generated through capital returns of the investment portfolio; - reorganisation costs and costs relating to the tender offer have been allocated wholly to capital; - the incumbent Investment Manager, BlackRock, has agreed to waive future investment management fees of £1,068,000 which includes AXA's termination fee of £444,000 and other costs relating to the change of management and restructuring of the Company of £624,000. The value of this fee waiver benefit is being amortised over the 24 month initial term of the investment management agreement, which is terminable on 6 months' notice after an initial 18 month period, and has been allocated to capital. (j) Finance costs Finance costs are accounted for in accordance with the effective interest rate method. With effect from 1 December 2007 finance costs are allocated, insofar as they relate to the financing of the Company's investments, 75% to capital reserve - realised and 25% to the revenue account, in line with the Board's expected long term split of returns, in the form of capital gains and income respectively, from the investment portfolio. (k) Taxation Deferred tax is recognised in respect of all temporary differences at the balance sheet date, where transactions or events that result in an obligation to pay more tax in the future or right to pay less tax in the future have occurred at the balance sheet date. This is subject to deferred tax 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 tax for the accounting period. (l) Dividends payable In accordance with FRS 21 final dividends are not accrued in the financial statements unless they have been approved by shareholders before the balance sheet date. Interim and special dividends are recognised in the financial statements when they are paid. (m) Cash Cash comprises cash in hand and demand deposits. 3. Income 2008 2007 £'000 £'000 Investment income: UK listed dividends 4,217 4,817 Dividends from subsidiaries - 150 Overseas listed dividends 348 114 ------- ------- 4,565 5,081 ------- ------- Other income: Deposit interest 614 1,088 Management fees from subsidiaries - 10 Underwriting commission 65 17 ------- ------- Total 5,244 6,196 ------- ------- Total income comprises: Dividends 4,565 5,081 Interest 614 1,088 Other income 65 27 ------- ------- 5,244 6,196 ------- ------- 4. Investment management and performance fees 2008 2008 2008 2007 2007 2007 Revenue Capital Total Revenue Capital Total return return £'000 return return £'000 £'000 £'000 £'000 £'000 Investment management fees - AXA 294 883 1,177 1,252 1,252 2,504 Investment management fees - BlackRock 128 380 508 - - - Performance fees - 377 377 - - - VAT - - - 170 170 340 ----- ----- ----- ----- ----- ----- 422 1,640 2,062 1,422 1,422 2,844 Write back of prior years' VAT (2,284) (3,254) (5,538) - - - ----- ----- ----- ----- ----- ----- Total (1,862) (1,614) (3,476) 1,422 1,422 2,844 ----- ----- ----- ----- ----- ----- Until 30 June 2008, the Company was managed by AXA. The management fee was levied at a rate of 0.775% per annum on the Company's net assets, adjusted for non current liabilities. From 1 July, when BlackRock was appointed as Investment Manager, the management fee became levied at a rate of 0.7% per annum of gross assets of the long only portfolio, plus the total exposure within the Company's CFD portfolio to both long and short positions. In addition, a performance fee is payable equivalent to 12.5% of the excess return of the Company's total return NAV performance for the year over the benchmark return, capped at 4.99% of the gross asset value of the Company's long only portfolio, plus the gross value of equities, long and short, to which the Company is exposed through its CFD portfolio. Performance fees have been wholly allocated to capital reserve - realised as the performance has been predominantly generated through capital returns of the investment portfolio. At 30 November 2008, a performance fee of £377,000 is payable to the Investment Manager for the period from 11 September 2008. The Company had not contracted to pay a performance fee in 2007. BlackRock have agreed to waive the management fees payable to the Company up to the level of transition and restructuring costs of £1,068,000. This fee waiver benefit has been amortised over the initial period of the management contract of 24 months. A credit of £225,000 has been applied to termination and transition costs in the capital column of the income statement - further details are given in note 5. 5. Operating activities 2008 2008 2008 2007 2007 2007 Revenue Capital Total Revenue Capital Total return return £'000 return return £'000 £'000 £'000 £'000 £'000 (a) Other Operating expenses Auditors'remuneration: - audit services 40 - 40 28 - 28 - non audit services - 20 20 14 - 14 Registrar's fee 40 - 40 33 - 33 Directors remuneration 117 - 117 112 - 112 Termination and reorganisation costs - 1,379 1,379 - - - Other administrative costs 231 - 231 242 - 242 --- ----- ----- --- ---- --- 428 1,399 1,827 429 - 429 --- ----- ----- --- ---- --- 2008 2007 The Company's total expense ratio ("TER"), calculated as a percentage of average net assets and using expenses, excluding interest costs and VAT written back, after relief of taxation and excluding reorganisation costs and performance fees was: 1.2% 1.1% An amount before VAT of £20,000 was payable to the Company's auditors for assurance services provided in respect of the tender offer. The Company incurred termination and reorganisation costs of £1,068,000 in the period. These included a termination fee to AXA of £444,000, broker's fees of £411,000, legal costs of £176,000 and other general costs of £37,000. BlackRock have agreed to meet these costs in full by way of a management fee waiver, the benefit of which is being amortised over the initial 24 month term of the management contract. Consequently an amount of £225,000 has been offset against total expenses of £1,068,000 resulting in a net charge to operating expenses attributed to capital of £843,000. In addition, the Company incurred legal fees of £240,000 and brokers fees of £296,000 in relation to the restructuring in the year. In total this amounts to termination and reorganisation costs of £ 1,379,000 disclosed in the table above. (b) Reconciliation of net return before finance costs and taxation to net cash flow from operating activities 2008 2007 £'000 £'000 Net loss before finance costs and taxation (116,226) (4,613) Add capital losses 122,938 8,958 ----- ----- Net return before finance costs and taxation 6,712 4,345 Decrease in accrued income 241 - (Increase)/decrease in debtors of a revenue nature (321) 95 Increase/(decrease) in creditors 1,328 (96) Expenses charged to capital (3,039) (1,511) VAT write back to capital 3,254 - Overseas withholding tax suffered (4) (14) ----- ----- Net cash inflow from operating activities 8,171 2,819 ----- ----- 6. Directors emoluments The aggregate emoluments of the Directors, excluding VAT, where applicable, for the year ended 30 November 2008 were £117,000 (2007: £112,000). The emoluments of the Chairman, who was also the highest paid Director were £30,000 (2007: £ 30,000). The Company does not have a share option scheme or any incentive scheme. No pension contributions were made in respect of the Directors. There were no employees other than the Directors. 7. Finance costs 2008 2008 2007 2007 Revenue Capital 2008 Revenue Capital 2007 return return Total return return Total £'000 £'000 £'000 £'000 £'000 £'000 Debenture interest 403 1,208 1,611 1,057 1,057 2,114 Overdraft interest 15 - 15 - - - Interest payable to subsidiaries 380 966 1,346 926 848 1,774 ----- ------- ------- ------ ------ ------ 798 2,174 2,972 1,983 1,905 3,888 ----- ------- ------- ------ ------ ------ Finance costs are allocated 25/75 between revenue and capital to reflect the Directors' expected long term split of returns from the investment portfolio. This represents a change in basis of allocation from the prior year, when expenses were allocated 50/50 between revenue and capital. Interest payable to subsidiaries relates mainly to the loan in respect of the debenture financing. The debentures were redeemed in the year. 8. Dividends Dividends paid or proposed 2008 2007 on equity shares: Register date Payment date £'000 £'000 2006 final of 1.50p 2 March 2007 5 April 2007 - 2,367 2007 interim of 0.50p 17 August 2007 4 September 2007 - 731 2007 final of 1.70p 29 February 2008 27 March 2008 2,366 - 2008 interim of 0.55p 8 August 2008 12 September 2008 755 - ----- ----- 3,121 3,098 ----- ----- The Directors have proposed a final dividend of 1.85p per share (2007: 1.70p) together with a special dividend of 3.00p per share (2007: nil) making a total dividend for the year of 5.40p per share (2007: 2.20p). The dividends will be paid, subject to shareholder approval on 1 May 2009, to shareholders on the Company's register on 3 April 2009. The proposed final and special dividends have not been included as liabilities 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 842 of the Income and Corporation Taxes Act 1988 and section 832 of the Companies Act, and the amounts proposed meet the relevant requirements as set out in this legislation. 2008 2007 £'000 £'000 Dividends paid or proposed on equity shares: Interim paid 0.55p (2007: 0.50p) 755 731 Final proposed of 1.85p* (2007: 1.70p) 1,523 2,367 Special dividend of 3.00*p (2007: nil) 2,471 - ------- ------ 4,749 3,098 ------- ------ *based upon 82,351,197 ordinary shares in issue attributable to continuing shareholders. 9. Return/(loss) per ordinary share 2008 2007 Net revenue return attributable to continuing ordinary shareholders (£'000) 4,848 2,348 Net capital loss attributable to continuing ordinary shareholders (£'000) (120,455) (10,863) ---------- ---------- Total loss (£'000) (115,607) (8,515) ---------- --------- Equity shareholders' funds (£'000) 77,029 272,514 ---------- --------- The weighted average number of ordinary shares 125,966,485 152,150,218 in issue during the period, on which the return per ordinary share was calculated, was: The actual number of ordinary shares in issue 82,351,197 140,058,276 at the end of each period, on which the net asset value was calculated, was: A further 54,900,675 shares remained in issue at the year end in relation to shares tendered but not yet repurchased in full. It is anticipated that the final proceeds from tender realisations will be paid in late March 2009 and these shares will be repurchased and taken into treasury or cancelled at this point. The Company made provision for its liability in respect of tendered shares on 11 September 2008. Since this date capital and revenue returns on the tender pool assets have been recorded in the Income Statement and offset by an equal and opposite change in the measurement of the tender share liability. For the purposes of calculating the weighted average number of ordinary shares and returns per share, the 54,900,675 tendered shares have been deducted with effect from 11 September 2008. 2008 2008 2007 2007 Revenue Capital 2008 Revenue Capital 2007 return return Total return return Total p p p p p p Return/(loss) per share Calculated on weighted average number of ordinary shares 3.85 (95.63) (91.78) 1.54 (7.14) (5.60) ----- ------- ------- ----- ------- -------- Net asset value per share 93.54 194.57 ----- ------- ------- ------ ------ -------- 10. Share capital Ordinary shares Ordinary shares - Continuing -Tender shares Total shares number number shares number (nominal) (nominal) (nominal) £'000 Authorised share capital comprised: Ordinary shares of 5p each 460,000,000 - 460,000,000 23,000 ----------- ---------- ----------- ------ Allotted, issued and fully paid: Shares in issue at 30 November 2007 140,058,276 - 140,058,276 7,003 Shares tendered (54,900,675) 54,900,675 - - Shares purchased and cancelled (2,806,404) - (2,806,404) (140) ----------- ---------- ----------- ------ At 30 November 2008 82,351,197 54,900,675 137,251,872 6,863 ----------- ---------- ----------- ------ During the year 2,806,404 ordinary shares were purchased and cancelled (2007: 23,522,593). The total cost of purchasing these shares was £3,771,000 (2007: £ 42,085,000). In addition, under the tender offer, 54,900,675 shares were successfully tendered. The tender offer also included provision for a `mix and match' facility, whereby any shares tendered in excess of 40% of the Company's issued share capital could be sold on to incoming investors to the extent demand existed in the market. In the event, 1,127,000 shares were sold on through the mix and match facility with a NAV of £1,529,000 at the calculation date, for proceeds of £1,453,000 (representing a 5% reduction to cover exit costs, as set out in the Circular). The number of ordinary shares in issue at the year end was 137,251,872. 11. Reserves Share Share Capital Capital Capital premium redemption reserve reserve Revenue account reserve realised unrealised reserve £'000 £'000 £'000 £'000 £'000 At 1 December 2007 35,272 8,187 202,992 13,868 5,192 Movement during the year: Shares repurchased - 140 (3,771) - - Proceeds from shares sold through mix and match - - 1,453 - - facility Revenue return for the year - - - - 4,814 Transfer to tender pool - - (74,439) - - Change in value of liability due to tender shareholders - - 14,954 - - Premium on redemption of debenture stocks - - (10,297) - - Losses on realisation of investments - - (46,525) - - Change in unrealised appreciation - - - (78,844) - Losses on foreign currency transactions - - (5) - - Gains on CFDs - returns on - - 1,355 866 34 contracts for differences Finance costs, investment management and performance fee charged to capital after taxation and VAT written back - - (1,959) - - Dividends paid during the year - - - - (3,121) ------ ----- ------ ------- ----- At 30 November 2008 35,272 8,327 83,758 (64,110) 6,919 ------ ----- ------ ------- ----- 12. Net asset value per share 2008 2007 £'000 £'000 Continuing shares Net assets attributable to shareholders 77,029 272,514 The number of ordinary shares in issue at the end of each year, on which the net asset value per share is calculated: 82,351,197 140,058,276 Net asset value per share 93.54p 194.57p Ordinary share price 62.75p 152.00p ----------- ----------- Exiting shares Liability attributable to tendering and mix and match shareholders 17,768 - Shares attributable to tendering shareholders 54,900,675 - Shares attributable to mix and match shareholders 1,127,000 - ----------- ----------- Total shares in respect of which proceeds are payable from the tender pool 56,027,675 - Net asset value per share 31.71p - ----------- ----------- As described in note 10, the tender offer included provision for a `mix and match' facility, whereby any shares tendered in excess of 40% of the Company's issued share capital could be sold on to incoming investors to the extent demand existed in the market. In the event, 1,127,000 shares were sold on through the mix and match facility with a NAV at the calculation date of £ 1,529,000, for proceeds of £1,453,000. Under the terms of the tender offer, incoming investors who purchased shares under this facility were required to pay all proceeds over to the Company's broker, UBS, who paid these on to the Company. These proceeds were then allocated to the tender pool and formed part of the cash proceeds to be paid to exiting shareholders. 13. Publication of non statutory accounts The financial information contained in this announcement does not constitute statutory accounts as defined in section 435 of the Companies Act 2006. The 2008 annual report and financial statements will be filed with the Registrar of Companies after the Annual General Meeting. The report of the auditors for the year ended 30 November 2008 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 for the year ended 30 November 2007, which have been filed with the Registrar of Companies. The report of the auditors on the accounts contained no qualification or statement under section 498 of the Companies Act. 14. Annual Report Copies of the annual report will be sent to members shortly and will be available from the registered office, c/o The Company Secretary, The Throgmorton Trust PLC, 33 King William Street, London EC4R 9AS. This report will also be available on the BlackRock Investment Management website at www.blackrock.co.uk/its. 15. Annual General Meeting The Annual General Meeting of the Company will be held at 33 King William Street, London EC4R 9AS on Thursday, 19 March 2009 at 12:30 p.m. 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 William Clutterbuck, The Maitland Consultancy Tel: 020 7379 5151 30 January 2009 33 King William Street London EC4R 9AS

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