Final Results

THE THROGMORTON TRUST PLC Annual Report 30 November 2011 Performance Record Financial Highlights As at As at 30 November 30 November Change 2011 2010 % Assets Net assets (£'000) 147,774 127,296 +16.1(1) Net asset value per share 202.07p 212.80p -5.0 - with income reinvested - - -3.8 Ordinary share price (mid-market) 170.00p 163.00p +4.3 - with income reinvested - - +5.9 Subscription share price (mid-market) n/a 24.25p - Year ended Year ended 30 November 30 November Change 2011 2010 % Revenue Net revenue after taxation (£'000) 2,078 1,931 +7.6 Revenue return per ordinary share 3.29p 2.85p +15.4 Dividends - Interim 0.60p 0.58p +3.4 - Final 2.55p 2.42p +5.4 Total dividends paid and payable in respect of the year ended 30 November 3.15p 3.00p +5.0 1. The change in net assets is attributable to the conversion of 13,310,612 subscription shares at a price of 146.00 pence per share resulting in an inflow of £19,434,000 and market movements. Chairman's Statement Performance In the year to 30 November 2011 stock markets have been volatile, driven by concerns over the high levels of debt, particularly in Greece, Italy and Spain and the long term future of the Euro. Against this background the Company's net asset value per share ("NAV") returned -3.8% before adjusting for the impact of the exercise of the subscription shares and +2.9% after adjusting for the impact. In comparison the benchmark index returned -3.1%. Since the year end the NAV has increased by 11.9%. During the year ended 30 November 2011, the Company's share price rose by 4.3%. Since 30 November 2011, the share price has risen a further 7.5% to 182.75p per share. The UK smaller companies sector has remained out of favour resulting in the majority of trusts in the sector trading at a significant discount. Your Company has not been immune from this and in the last year has continued to trade at a discount which we believe is unjustified in the light of the Company's performance. Performance fee Under the terms of the management agreement with BlackRock Investment Management (UK) Limited ("BlackRock"), any outperformance of the benchmark index from 11 September 2008 and subsequent periods will give rise to a performance fee. For the year ended 30 November 2011 the performance fee amounted to £1,822,000. Details of the performance fee calculation are provided in note 4. Following a review of the performance fee, full details of which are provided in the Directors' Report of the Annual Report, a new basis for calculating the performance fee has been adopted for the financial year which commenced on 1 December 2011. Under the provisions, which the Board believes to be a more equitable method of calculation, the performance fee is capped at 3.5% and a new sliding scale cap has been introduced to apply in performance periods in which the NAV decreases (but still outperforms the benchmark). The new methodology is to be applied for the financial year commencing 1 December 2011 and for future performance periods. Revenue return and dividends Revenue return per share for the year amounted to 3.29 pence compared with 2.85 pence for the previous year, an increase of 15.4%. The Directors are proposing an increased final dividend of 2.55 pence per share making a total dividend for the year of 3.15 pence per share representing an increase of 5.0% on the previous year. The final dividend is payable on 5 April 2012 to shareholders on the Company's register on 24 February 2012 (ex dividend date is 22 February 2012). Subscription shares During the year the Company issued a total of 13,310,612 ordinary shares, following the conversion of subscription shares into ordinary shares for a total consideration of £19,434,000. The final opportunity for subscription shareholders to exercise their subscription share rights was 31 October 2011. Subsidiary companies T.T. Finance PLC and The Third Throgmorton Trust Limited, the Company's subsidiaries have not traded for some considerable time. We intend to wind-up the companies during 2012. The Board I will be standing down as Chairman at the forthcoming Annual General Meeting ("AGM"), having joined the Board in 2002 and subsequently been appointed as Chairman in March 2005. After the AGM I shall hand over the chair to Crispin Latymer. Crispin joined the Board in 2007 and has provided wise and trusted counsel, I am confident he will be an excellent Chairman. Much has changed during my time on the Board. I am certain that BlackRock, the Investment Manager since 1 July 2008, will continue to serve the Company well. I am also confident that the Company's unique investment strategy, which combines a conventional portfolio of UK small and mid cap equities with the ability to invest a proportion of assets in CFDs, enabling the Investment Manager to have both long and short exposure, will continue to work to the benefit of shareholders Annual General meeting The Annual General Meeting of the Company will be held at BlackRock's new offices at 12 Throgmorton Avenue, London EC2N 2DL on Thursday, 22 March 2012 at 11.00 a.m. The Investment Manager will be making a presentation to shareholders on the Company's progress and the outlook for the smaller companies sector. Outlook We expect that as a consequence of the continuing uncertain macro-economic conditions markets will continue to be volatile. Despite this unhelpful environment, we have structured our portfolio to be invested in market leading, differentiated companies often exposed to emerging markets where we expect growth to be stronger than in developed markets. The Investment Manager intends to continue investing in high quality companies with strong cash flows and exposure to overseas earnings. We also expect that our CFD portfolio will provide the opportunity to add value in these volatile markets. We consider that the positioning of the portfolio is well structured to take advantage of market trends, and we expect this to benefit shareholders over the longer term. Richard Bernays Chairman 13 February 2012 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 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 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. 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 and BMLI each produce a Service Organisation Controls report which is reviewed by their auditors 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 34.3% 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 18 in the Annual Report, together with a summary of the policies for managing these risks and liquidity and credit risks. Related party transactions The related party transaction with BlackRock Investment Management (UK) Limited is set out in the Directors' Report on pages 16 and 17 of the Annual Report. The related party transactions with Directors are set out in the Directors' Report on page 18 of the Annual Report and the Directors' Remuneration report on pages 22 and 23 of the Annual Report. The investment management fee for the year charged by BlackRock was £1,277,000 (2010: £997,000). In addition a performance fee was payable of £1,822,000 (2010: £6,117,000). At the year end, an amount of £2,136,000 was outstanding in respect of these fees (2010: £7,362,000). The Company had an investment in BlackRock's Institutional Cash Fund of nil (2010: £721,000) at the year end. 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 £33,000, the Chairman of the Audit and Management Engagement Committee receives an annual fee of £ 23,000 and each other Director receives an annual fee of £20,000. The annual remuneration for the year that commenced 1 December 2011 remains unchanged. All five members of the Board hold shares in the Company. Richard Bernays holds 48,000 ordinary shares, Simon Beart holds 27,208 ordinary shares, Lord Latymer holds 7,631 ordinary shares, Eric Stobart holds 14,452 ordinary shares and Harry Westropp holds 24,000 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 28,285 ordinary shares (including 5,891 ordinary shares held by Mrs Beart), Lord Latymer holds 7,810 ordinary shares and Mr Stobart holds 14,800 ordinary shares. 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 and belief that: - the financial statements, prepared in accordance with IFRS as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit/(loss) of the Company and 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 Richard Bernays Chairman 13 February 2012 Investment Manager's Report Market review and overall investment performance Stock markets lost momentum towards the end of February 2011 and have remained nervous and volatile since, with a particularly heavy sell off in August 2011. The main reason for investor concern has been the high level of indebtedness of several European countries, most particularly Greece, Italy and Spain. These, and other European countries, have had to rollover recently maturing debt at much higher than expected interest rate levels. Austerity programs have been set out by various European governments and are in the process of being enacted. These will reduce growth rates in the short term, and the combination of various countries taking the same measures at the same time could lead to wider problems. Chinese growth rates could, for instance, be impacted by a sharp slowdown in the Eurozone. Not all the news has been bad; indeed recent newsflow from the USA has been more encouraging, with stronger growth and some job creation. However, the US also has a need to reduce its debt. There has certainly been plenty for investors to worry about, with the natural result that equity markets have sold off. In such nervous times small and midcap companies tend to underperform, despite the fundamental competitive, market and balance sheet strength of many. Over the longer term small and midcap companies have handsomely outperformed their larger counterparts, and at some stage this will begin to happen again. The Company's NAV per share with income re-invested fell by 3.8% to 202.07p, which compares to a fall in the benchmark of 3.1%. Performance was distorted by the conversion of 13.3 million subscription shares into ordinary shares at 146p per share. This is a reflection of the growth in the NAV over the 2 years that the subscription shares have been in issue. Adjusting for the effect of this, the NAV increased during the year by 2.9%, 6.0% ahead of the benchmark. Performance review Both the long only portfolio and the CFD portfolio added value during the year. The long only portfolio generated an underlying return of 0.8%, very modest but reasonable compared to the fall in the benchmark of 3.1%. The CFD portfolio generated net gains of just under £4 million, retaining its successful record of adding value in all types of market conditions. Looking at the long only portfolio, stock selection represented the major part of outperformance. Our biggest relative contributors were Oxford Instruments, Hargreaves Services, Sierra Rutile and Hamworthy. Oxford Instruments have shown great success at supplying industrial and research customers worldwide with equipment to enable them to analyse materials down to the atomic level. Margins and profits have grown strongly and should continue to increase. Recently published interims showed organic revenue growth of 30%, EPS up 62%. We had an excellent meeting with management who remain confident that they can cope well with the uncertain wider economic environment. Hargreaves Services mine, import and process coal in the UK, and sell it into UK and European markets. Their low risk approach has worked well, and growth opportunities continue to look attractive. Sierra Rutile mine rutile in Sierra Leone. The operations are improving and the rutile price has strengthened significantly. The company attracted a bid from its largest shareholder, and we decided to sell rather than stay invested in what had become a quoted subsidiary of the bidder. Hamworthy attracted a bid from Wartsila. We have long liked the company and its excellent CEO, but the recommended bid looked likely to go through at the offer price so we sold in the market. Other strong contributors in the year included housebuilders Bellway and Galliford Try, online security company Endace, online marketing company Burst Media, aircraft component supplier Senior, online payments provider Planet Payment, and speciality chemicals manufacturer Elementis. The biggest disappointments in relative terms were our holdings in Immunodiagnostic Systems, IQE and Hutchison China Meditech. Immunodiagnostic Systems supplies equipment and consumables to allow labs to test the degree to which human samples contain certain substances, in particular vitamin D. Their iSYS platform is being rolled out in Europe and the US, and is increasingly seen as an easy to use platform enabling a growing number of important tests to be carried out. However recently growth rates have slowed, competition has increased and prices have come under pressure. We still believe the company has a good offering, but growth prospects look less assured than we had believed. IQE had been a strong performer in the prior period and its shares have come off as concerns have gathered about the strength of the semiconductor cycle. It saw some destocking and earnings estimates were reduced. However its success is driven predominantly by the level of global smartphone sales, and we expect growth to resume in due course. Hutchison China Meditech has, thus far, failed to license the lead drug developed by its China based biotech business. The company is continuing to work on this, and sales of both prescription and over the counter pharmaceutical products throughout China continue to grow well. In December it announced a global collaboration agreement with AstraZeneca to co-develop and commercialise a novel cancer therapy; the initial payment to Hutchison China Meditech is US$20 million. Other disappointing holdings included Namakwa Diamonds, Eastern Platinum, Gulfsands, Caretech and Alterian. With the exception of Eastern Platinum, where we expect production growth to resume, and which has substantial, long life reserves and is well funded, these holdings have been sold. Sector allocation made a reasonable contribution to relative performance. Our most successful sector positions were being underweight oil and gas producers, and being overweight software companies (such as Endace and Fidessa) and industrial engineering companies (such as Hamworthy and Spirax-Sarco Engineering). The CFD portfolio performed well and achieved both strong gains on the long CFDs and also good gains on the shorts. The long CFDs typically mirror our larger long only portfolio holdings. Short positions are in companies we regard as flawed or selling into very challenged markets. We are, for instance, short of companies selling to the UK Government and also food producers. In both cases companies operating in these sectors have to deal with increasingly demanding buyers. Activity In the spring of 2011, we decided to try to reduce risk given the growing macro concerns referred to earlier. We were also concerned by the increasingly consensual positioning of portfolios across our sector, namely the big overweight positioning most funds seemed to have in international industrial companies. We sold the industrial companies in which we had lower conviction, such as Cookson and Morgan Crucible, and Spectris, which was at the upper end of our universe in market capitalisation terms. We decided to hold onto companies such as Spirax-Sarco, Rotork, Oxford Instruments and Renishaw, all of which are core holdings, and many very interesting smaller electronics and international engineering companies. We used the proceeds to buy several domestically focussed companies notably housebuilders Berkeley Group and Bovis Homes, to supplement our existing holding in Bellway, and retailers Majestic Wine and Dunelm. We regard the management of each of these companies highly and believe all are well placed medium term. We continued to look for interesting companies more focussed on emerging markets, and added a holding in Ocean Wilsons, the main activities of which are the operation of ports in Brazil and the ownership of a fleet of tugboats which are operated at most of Brazil's ports, supporting its trade with the rest of the world and giving it a great opportunity to service the needs of Brazil's fast growing offshore oil industry. As markets fell sharply in August we stepped up the de-risking process. In particular we sold a number of higher risk smaller holdings, some in the resources sector, other holdings where our conviction was not high enough for nervous markets, and a few holdings which had higher levels of debt than we would usually accept, and which is only appropriate in better markets. During the year under review the positioning of the CFD portfolio was changed from two-thirds long in the spring to being neutral in the autumn. The Company's net exposure to the market reduced from approximately 110% to approximately 100%, and subsequently increased to its current level of 104%. Portfolio Positioning We retain our usual preference for the higher quality and more internationally focussed sectors, including electronics, software, engineering, healthcare and chemicals. Within these we have added to core holdings where we have seen good value and believe the immediate outlook to remain robust. Typically these companies are run by management we know well and have proved themselves in a variety of market conditions. The companies themselves have strong market shares, pricing power derived often from some technological or branding advantage, a record of growing organically, increasing earnings and turning profits into cash. Most of these companies gained significant market share in the last recession and are well placed to do so again in difficult times. Importantly, these also have strong balance sheets, often with significant net cash. Outlook Markets have been nervous for some time given the slowing macro-economic background, albeit that earnings downgrades in the market in recent months have been lower than might have been expected six months ago. A clear solution to the Euro problem is critical to markets regaining confidence. Our expectation is that growth in developing economies will slow but remain good, part driven by their own domestic consumer spending. We expect developed markets growth to remain very sluggish, negative in parts of the Eurozone, but improving in the US. Our approach of having a portfolio of market leading, differentiated companies often with good levels of sales into emerging markets should benefit us when confidence in stock markets starts to rebuild. When we feel confidence is starting to build we will be able to switch the CFD portfolio balance to increase our net exposure to equity markets. Markets rallied in January, and this could be a sign that confidence is starting to return. Mike Prentis and Richard Plackett BlackRock Investment Management (UK) Limited 13 February 2012 Fifty Largest Investments as at 30 November 2011 Market % of value net Prospective Company £'000 assets PE ratio* Description Oxford Ordinary 3,900 3.7 17.6 Design and manufacture of Instruments shares scientific instruments Long CFD 1,628 position Aveva Group Ordinary 3,175 2.9 23.5 Development and marketing of shares engineering computer Long CFD 1,163 software position Senior Ordinary 2,350 2.4 12.5 Manufacture and supply of shares components for the aerospace Long CFD 1,191 and automotive sectors position Booker Ordinary 2,086 2.2 17.3 Wholesale of grocery shares products Long CFD 1,150 position Spirax-Sarco Ordinary 2,242 2.2 15.0 Design and manufacture of Engineering shares steam management systems Long CFD 954 position Fidessa 3,189 2.2 21.0 Development and marketing of group financial trading connectivity software Hargreaves 3,115 2.1 9.5 Mining, importing, Services # processing and supply of coal and related products ITE Group Ordinary 2,490 2.0 12.6 Organisation of trade shares exhibitions in Russia and Long CFD 504 other FSU countries position Abcam # Ordinary 1,994 2.0 24.0 Production and distribution shares of research grade antibodies Long CFD 907 and associated products position Bellway 2,788 1.9 13.7 Housebuilding Rotork Ordinary 1,701 1.8 18.9 Engineering, manufacturing shares and design of valve Long CFD 904 actuators position Victrex Ordinary 1,777 1.7 13.0 Manufacture and supply of shares PEEK thermoplastic products Long CFD 756 position Ashtead Ordinary 1,592 1.7 19.5 Hire of plant, predominantly Group shares in the US Long CFD 923 position Fenner 2,370 1.6 12.9 Manufacture and supply of conveyors, seals and other products Domino Ordinary 1,553 1.6 13.9 Manufacture of inkjet and Printing shares laser commerical printers Sciences Long CFD 807 position Bovis Homes Ordinary 1,400 1.6 28.0 Housebuilding shares Long CFD 953 position Elementis 2,331 1.6 10.7 Manufacture of speciality chemicals Rathbone Ordinary 1,479 1.6 14.8 Private client fund management Brothers shares Long CFD 838 position Shaftesbury Ordinary 1,384 1.5 37.1 Investment in London West shares End real estate Long CFD 878 position City of 2,173 1.5 11.4 Management of investment London funds primarily invested in Investment emerging markets Group Avocet Ordinary 1,341 1.5 12.9 Gold exploration and Mining # shares 1.5 12.9 production Long CFD 828 position Berkeley 2,118 1.4 13.5 Development of residential Group property Yule Catto 2,115 1.4 9.1 Manufacture of speciality chemicals Howden 2,034 1.4 8.6 Design and manufacture of Joinery fitted kitchens Great 1,966 1.3 47.1 Investment in and Portland development of London West Estates End property Hyder 1,944 1.3 8.5 Provision of engineering Consulting design services Restaurant 1,917 1.3 13.8 Operation of branded Group restaurants Inchcape 1,732 1.2 8.6 Distribution and retail of cars and aftermarket services Faroe 1,684 1.1 25.7 Exploration for oil and gas Petroleum # offshore UK and Norway Workspace 1,681 1.1 20.0 Supply of flexible workspace to businesses in London Alternative 1,680 1.1 12.6 Supply of communications Networks # solutions to corporate customers Galliford 1,666 1.1 9.3 Housebuilding and Try construction Xaar Ordinary 1,066 1.1 23.1 Design and manufacture of shares ink jet printers Long CFD 591 position Cineworld 1,564 1.1 10.4 Operation of cinemas in the UK Endace # 1,542 1.0 44.8 Design and manufacture of solutions to monitor data networks Blinkx # Ordinary 1,132 1.0 37.9 Supply of video technology shares and an online catalogue to Long CFD 377 enable video to be viewed position Headlam 1,490 1.0 10.6 Distribution of carpets and other floor coverings Cove Energy # 1,381 0.9 - Exploration for oil & gas offshore East Africa Hutchinson China 1,255 0.9 - Development and supply of traditional Meditech # Chinese medicines to the Chinese market Petra Diamonds # 1,252 0.9 10.6 Mining and production of diamonds LSL Property 1,223 0.8 10.4 Provision of residential property services Services Next Fifteen 1,219 0.8 8.8 Provision of digital communications Communications # services Paypoint 1,205 0.8 12.8 Provision of payments solutions Andor Technology # 1,182 0.8 23.2 Development and manufacture of scientific imaging products Ricardo 1,181 0.8 13.3 Provision of engineering services Gooch & Housego # 1,159 0.8 10.5 Manufacture of precision optical components Consort Medical 1,159 0.8 10.8 Manufacture of drug delivery devices Immunodiagnostic 1,158 0.8 9.1 Development and supply of diagnostic Systems # testing systems Avon Rubber 1,154 0.8 10.6 Production of safety masks and diary related products JKX Oil & Gas 1,139 0.8 5.8 Development and production of oil and gas in the Ukraine and Russia 50 largest 104,780 70.9 investments * 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 2010 Market % value of net Company £'000 assets Oxford Ordinary 1,817 2.2 Instruments shares Long CFD 979 position Aveva Group Ordinary 2,867 3.0 shares Long CFD 957 position Senior Ordinary 1,248 1.5 shares Long CFD 704 position Booker Ordinary 810 1.3 shares Long CFD 826 position Spirax-Sarco Ordinary 2,457 2.6 Engineering shares Long CFD 809 position Fidessa group 2,710 2.1 Hargreaves 1,575 1.2 Services ITE Group Ordinary 1,873 1.8 shares Long CFD 374 position Abcam Ordinary 2,456 2.6 shares Long CFD 870 position Bellway 1,513 1.2 Distribution of Investments as at 30 November 2011 % of long % of long % of short % of only CFD CFD net asset Sector portfolio portfolio portfolio value Oil & Gas Producers 6.6 0.0 0.0 6.6 Oil Equipment, Services & 0.5 0.0 -0.2 0.3 Distribution ---- --- --- ---- Oil & Gas 7.1 0.0 -0.2 6.9 ---- --- --- ---- Chemicals 5.2 0.5 0.0 5.7 Industrial Metals & Mining 6.9 0.8 0.0 7.7 ---- --- --- ---- Basic Materials 12.1 1.3 0.0 13.4 ---- --- --- ---- Construction & Materials 1.1 0.2 -0.9 0.4 Aerospace & Defense 1.6 1.3 -0.6 2.3 General Industrials 0.8 0.0 -0.1 0.7 Electronic & Electrical 7.1 2.5 -1.4 8.2 Equipment Industrial Engineering 5.7 1.2 -0.6 6.3 Industrial Transportation 1.2 0.0 -0.6 0.6 Support Services 9.4 2.1 -2.8 8.7 ---- --- --- ---- Total Industrials 26.9 7.3 -7.0 27.2 ---- --- --- ---- Food Producers 0.2 0.0 -0.8 -0.6 Household Goods & Home 5.5 0.6 -0.2 5.9 Construction ---- --- --- ---- Consumer Goods 5.7 0.6 -1.0 5.3 ---- --- --- ---- Health Care Equipment & 2.5 0.0 -0.3 2.2 Services Pharmaceuticals & Biotechnology 4.2 0.6 -0.7 4.1 Food & Drug Retailers 1.9 0.8 -0.5 2.2 ---- --- --- ---- Health Care 8.6 1.4 -1.5 8.5 ---- --- --- ---- General Retailers 5.3 0.2 -2.3 3.2 Media 5.7 0.7 0.0 6.4 Travel & Leisure 4.1 0.0 -0.7 3.4 ---- --- --- ---- Consumer Services 15.1 0.9 -3.0 13.0 ---- --- --- ---- Mobile Telecommunications 0.0 0.0 -0.2 -0.2 Fixed Line Telecommunications 1.4 0.0 -0.4 1.0 ---- --- --- ---- Telecommunications 1.4 0.0 -0.6 0.8 ---- --- --- ---- Gas, Water & Multiutilities 0.3 0.0 0.0 0.3 ---- --- --- ---- Utilities 0.3 0.0 0.0 0.3 ---- --- --- ---- Real Estate Investment & 2.2 0.5 0.0 2.7 Services Real Estate Investment Trusts 3.4 0.6 0.0 4.0 Financial Services 5.7 0.5 0.0 6.2 ---- --- --- ---- Financials 11.3 1.6 0.0 12.9 ---- --- --- ---- Software & Computer Services 9.1 1.6 -0.2 10.5 Technology Hardware & Equipment 0.7 0.5 0.0 1.2 ---- --- --- ---- Technology 9.8 2.1 -0.2 11.7 ---- ---- ---- ----- Total Investments 98.3 15.2 -13.5 100.0 ---- ---- ---- ----- Portfolio by main index membership at 30 November 2011 - Gross Basis(1) Index % of portfolio FTSE 250 50.7 FTSE AIM 28.4 FTSE Small Cap 17.3 Other 1.6 FTSE Fledgling 2.0 Source: BlackRock. 1. Long and short CFD portfolios in aggregate plus long portfolio. Portfolio by main index membership at 30 November 2011 - Net Basis(2) Index % of portfolio FTSE 250 42.8 FTSE AIM 34.3 FTSE Small Cap 18.4 Other 2.0 FTSE Fledgling 2.5 Source: BlackRock. 2. Long CFD portfolio less short CFD portfolio plus long portfolio. Market capitalisation as at 30 November 2011 % of net portfolio Long Positions £1bn + 16.5 £400m - £1bn 42.2 £100m - £400m 36.0 £0 - 100m 18.8 Short Positions £1bn + -1.6 £400m - £1bn -8.4 £100m - £400m -3.4 £0 - 100m -0.1 Source: BlackRock. Position size as at 30 November 2011 % of net portfolio Long Positions £0m - £1m 36.3 £1m - £2m 31.4 £2m + 45.7 Short Positions £0m - £1m -12.4 £1m - £2m -1.0 Source: BlackRock. Historical Record Assets Total Issued assets less Equity Mid-market Year to share current Long term shareholders' NAV per price per 30 capital liabilities borrowing funds share Change share November £m £m £m £m p % p 2011 4.0 147.8 - 147.8 202.1 -5.0 170.0 2010 3.5 127.3 - 127.3 212.8 +47.5 163.0 2009 4.2 106.9 - 106.9 144.3 +54.2 115.8 2008 6.9 77.0(1) - 77.0 93.5 -51.9(4) 62.8 2007 7.0 304.7 32.2 272.5 194.6(2) -2.4 152.0 2006 8.2 358.4 32.2 326.2 199.4(2) +16.2 164.3 2005 9.1 345.6(2) 32.2(2) 313.4(2) 171.6(2,3) +27.8 142.0 2004 11.5 340.7(3) 32.2(3) 308.6(3) 134.3(2,3) +28.0 110.3 2003 11.6 277.6 34.1 243.4 104.9(2) +35.4 84.0 2002 11.9 229.0 45.1 183.8 77.5 -24.9 59.0 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 Net revenue Revenue after return Dividends Year to taxation per share per share 30 November £m p p 2011 2.1 3.29 3.15 2010 1.9 2.85 3.00 2009 3.1 3.86 2.75(5) 2008 4.8 3.85 2.40(5) 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 2002 3.1 1.29 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 2011 Revenue Revenue Capital Capital Total Total 2011 2010 2011 2010 2011 2010 Notes £'000 £'000 £'000 £'000 £'000 £'000 (Losses)/ gains on investments held at fair value through profit or loss - - (522) 41,570 (522) 41,570 Net returns on contracts for difference 26 212 3,964 7,029 3,990 7,241 Income from investments held at fair value through profit or loss 3 2,727 2,380 - - 2,727 2,380 Other income 3 24 4 - - 24 4 ----- ----- ----- ------ ----- ------ Total revenue 2,777 2,596 3,442 48,599 6,219 51,195 ----- ----- ----- ------ ----- ------ Investment management and performance fees 4 (320) (249) (2,779) (6,865) (3,099) (7,114) Other expenses 5 (378) (399) - 329 (378) (70) ----- ----- ----- ------ ----- ------ Total operating expenses (698) (648) (2,779) (6,536) (3,477) (7,184) ----- ----- ----- ------ ----- ------ Net return before finance costs and taxation 2,079 1,948 663 42,063 2,742 44,011 Finance costs (5) (2) - - (5) (2) Change in tender offer provision - (7) - (174) - (181) ----- ----- ----- ------ ----- ------ Return on ordinary activities before taxation 2,074 1,939 663 41,889 2,737 43,828 ----- ----- ----- ------ ----- ------ Taxation on ordinary activities 4 (8) - - 4 (8) ----- ----- ----- ------ ----- ------ Net return for the year after taxation 2,078 1,931 663 41,889 2,741 43,820 ===== ===== ===== ====== ===== ====== Earnings per ordinary share - basic 7 3.29p 2.85p 1.05p 61.74p 4.34p 64.59p ===== ===== ===== ====== ===== ====== 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 return of the Company for the year was £2,741,000 (2010: £43,820,000). The Group does not have any other recognised gains or losses. The net return for the year disclosed above represents the Group's total comprehensive income. Statements of Changes in Equity for the year ended 30 November 2011 Share Capital Share premium Special redemption Capital Revenue capital account reserve reserve reserves reserve Total Group Notes £'000 £'000 £'000 £'000 £'000 £'000 £'000 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: 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 (a) below) 6 - - - - - (1,848) (1,848) ----- ------ ------ ------ ------ ----- ------- At 30 November 2011 4,026 21,049 35,272 11,905 69,339 6,183 147,774 ----- ------ ------ ------ ------ ----- ------- For the year ended 30 November 2010 At 30 November 2009 4,224 35,272 - 11,114 48,954 7,353 106,917 Total Comprehensive Income: Profit for the year - - - - 41,889 1,931 43,820 Transactions with owners, recorded directly to equity: Exercise of subscription shares 61 2,147 - - - - 2,208 Cancellation of treasury shares (791) - - 791 - - - Cancellation of share premium account - (35,272) 35,272 - - - - Transfer of assets to tender pool - - - - (22,197) - (22,197) Dividends paid and declared (see (b) below) 6 - - - - - (3,452) (3,452) ----- ------ ------ ------ ------ ----- ------- At 30 November 2010 3,494 2,147 35,272 11,905 68,646 5,832 127,296 ----- ------ ------ ------ ------ ----- ------- Company 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: 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 (a) below) 6 - - - - - (1,848) (1,848) ----- ------ ------ ------ ------ ----- ------- At 30 November 2011 4,026 21,049 35,272 11,905 70,737 4,785 147,774 ----- ------ ------ ------ ------ ----- ------- For the year ended 30 November 2010 At 30 November 2009 4,224 35,272 - 11,114 50,432 5,875 106,917 Total Comprehensive Income: Profit for the year - - - - 41,892 1,928 43,820 Transactions with owners, recorded directly to equity: Exercise of subscription shares 61 2,147 - - - - 2,208 Cancellation of treasury shares (791) - - 791 - - - Cancellation of share premium account - (35,272) 35,272 - - - - Transfer of assets to tender pool - - - - (22,197) - (22,197) Dividends paid and declared (see (b) below) 6 - - - - - (3,452) (3,452) ----- ------ ------ ------ ------ ----- ------- At 30 November 2010 3,494 2,147 35,272 11,905 70,127 4,351 127,296 ===== ====== ====== ====== ====== ===== ======= a. 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, 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. b. Final dividend of 2.20p per share and special dividend of 2.00p per share for the year ended 30 November 2009, declared on 29 January 2010 and paid on 26 March 2010 and interim dividend of 0.58p per share for the year ended 30 November 2010, declared on 20 July 2010 and paid on 31 August 2010. Statement of Financial Position as at 30 November 2011 Group Company Group Company 2011 2011 2010 2010 Notes £'000 £'000 £'000 £'000 Non current assets Investments held at fair value through profit or loss 145,444 147,162 134,627 136,428 ------- ------- ------- ------- Current assets Other receivables 228 228 619 619 Amounts due in respect of contracts for difference 815 815 8,066 8,066 Cash 4,619 4,115 1,256 653 ------- ------- ------- ------- 5,662 5,158 9,941 9,338 ------- ------- ------- ------- Total assets 151,106 152,320 144,568 145,766 Current liabilities Other payables (2,734) (3,948) (9,307) (10,505) Collateral pledged in respect of contracts for difference (598) (598) (7,965) (7,965) ------- ------- ------- ------- (3,332) (4,546) (17,272) (18,470) ------- ------- ------- ------- Net assets 147,774 147,774 127,296 127,296 ======= ======= ======= ======= Equity attributable to equity holders Share capital 8 4,026 4,026 3,494 3,494 Share premium account 9 21,049 21,049 2,147 2,147 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 69,339 70,737 68,646 70,127 Revenue reserve 9 6,183 4,785 5,832 4,351 ------- ------- ------- ------- Total equity shareholders' funds 147,774 147,774 127,296 127,296 ======= ======= ======= ======= Net asset value per ordinary share - undiluted 7 202.07p 202.07p 212.80p 212.80p ======= ======= ======= ======= Net asset value per ordinary share - diluted 7 202.07p 202.07p 200.64p 200.64p ======= ======= ======= ======= Consolidated Cash Flow Statement for the year ended 30 November 2011 2011 2011 2010 2010 Group Company Group Company £'000 £'000 £'000 £'000 Operating activities Profit before taxation 2,737 2,737 43,828 43,828 Add back interest paid 204 204 165 165 Gains on investments held at fair value through profit or loss including transaction costs (3,653) (3,570) (48,603) (48,606) Net movement on foreign exchange 1 1 4 4 Sales of investments held at fair value through profit or loss 86,883 86,883 95,694 95,694 In specie transfer of assets to tendering shareholders - - (7,793) (7,793) Purchases of investments held at fair value through profit or loss (86,796) (86,796) (81,828) (81,828) Increase in other receivables (42) (42) (27) (27) Decrease/(increase) in amounts due from brokers 413 413 (228) (228) (Decrease)/increase in amounts due to brokers (739) (739) 646 646 (Decrease)/increase in other payables (5,218) (5,202) 6,390 6,805 ------ ------- ------- ------- Net cash (outflow)/ inflow from operating activities before interest and taxation (6,210) (6,111) 8,248 8,660 ------ ------- ------- ------- Interest paid (204) (204) (165) (165) Taxation recovered on overseas income 5 5 - - ------ ------- ------- ------- Net cash (outflow)/ inflow from operating activities (6,409) (6,310) 8,083 8,495 ------ ------- ------- ------- Financing activities Distributions to tender shareholders /tender costs paid (562) (562) (14,286) (14,286) Proceeds from exercise of subscription shares 19,434 19,434 2,208 2,208 Subscription share issue costs paid (5) (5) (250) (250) Refund of unclaimed dividends 121 121 - - Dividends paid (1,848) (1,848) (3,452) (3,452) ------ ------- ------- ------- Net cash inflow/ (outflow) from financing activities 17,140 17,140 (15,780) (15,780) ------ ------- ------- ------- Increase/(decrease) in cash and cash equivalents 10,731 10,830 (7,697) (7,285) Effect of foreign exchange rate changes (1) (1) (4) (4) ------ ------- ------- ------- Change in cash and cash equivalents 10,730 10,829 (7,701) (7,289) Cash and Cash equivalents at the start of year (6,709) (7,312) 992 (23) ------ ------- ------- ------- Cash and cash equivalents at the end of the year 4,021 3,517 (6,709) (7,312) ------ ------- ------- ------- Comprised of: Cash 4,619 4,115 1,256 653 Collateral pledged in respect of contracts for difference (598) (598) (7,965) (7,965) ------ ------- ------- ------- Total 4,021 3,517 (6,709) (7,312) ====== ======= ======= ======= 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. 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. 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. 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. 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 1 January 2013, 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 Company. 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 Company's financial assets are measured at fair value through profit or loss. IFRS 9 (2009) 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 2013 but is not yet approved by the EU. Earlier application is permitted. The Company does not plan to adopt this standard early. (b) Consolidation The consolidated financial statements incorporated 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 2011. 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 833 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 Company'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 Company 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 securitiesare 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 44 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 Company'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 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. 3. Income 2011 2010 £'000 £'000 Investment Income: UK listed dividends 2,578 2,161 Overseas listed dividends 145 219 Scrip dividend 4 - ----- ----- 2,727 2,380 ----- ----- Other income: Deposit interest 5 2 Underwriting commission 19 2 ----- ----- 24 4 ----- ----- Total 2,751 2,384 ===== ===== Total income comprises: Dividends 2,727 2,380 Interest 5 2 Other income 19 2 ----- ----- 2,751 2,384 ===== ===== 4. Investment management and performance fees 2011 2010 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Investment management fee 320 957 1,277 249 748 997 Performance fee - 1,822 1,822 - 6,117 6,117 --- ----- ----- ---- ----- ----- Total 320 2,779 3,099 249 6,865 7,114 === ===== ===== ==== ===== ===== 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 Hoare Govett Smaller Companies plus AIM (excluding Investment Companies) Index. Details of the Company's investment management agreement with BlackRock are given on pages 16 and 17 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 2011, there was a performance fee payable to the Investment Manager of £1,822,000 (2010: £6,117,000). The net total return performance which has been disclosed in the key performance indicators on page 14 of the Annual Report includes the subscription share reinvestment, assuming the subscription share entitlement per share was sold and the proceeds reinvested on the first day of trading, on this basis the outperformance of the NAV against the benchmark is 6.0%. This reinvestment factor has been excluded from the calculation of the total return for the purposes of calculating the performance fee. In addition, as defined in the management agreement, the accounting adjustments relating to subscription share dilution and the basic management fee have also been applied to the performance computation. After adjusting for these factors, and including the impact of the reinvestment of dividends paid in the period, the cum-income, total return NAV used to calculate the performance fee amounted to 223.12p (2010: 231.14p), generating outperformance of 8.0% (2010: 34.3%) above the benchmark index and a performance fee of £1,822,000 (2010: £6,117,000). 5. Other operating activities 2011 2010 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 (a) Other operating expenses Auditors' remuneration: - audit services 28 - 28 28 - 28 - other audit services 5 - 5 9 - 9 Registrar's fee 37 - 37 55 - 55 Directors' remuneration 116 - 116 100 - 100 Termination costs - - - - (329) (329) Other administrative costs 192 - 192 207 - 207 --- --- --- --- --- --- 378 - 378 399 (329) 70 === === === === === === The Company's total expense ratio ("TER"), calculated as a percentage of average net assets and using expenses, excluding performance fee, interest costs and any VAT, written back, after relief of taxation was: 1.2% 1.2% ==== ==== Auditors'remuneration - other audit services comprised £5,000 which relates to the interim review (2010: £5,000 interim review and £4,000 services in respect of the conversion to IFRS). 6. Dividends Dividends paid or proposed on 2011 2010 equity shares: Record date Payment date £'000 £'000 2009 final of 2.20p 19 February 2010 26 March 2010 - 1,631 2009 special of 2.00p 19 February 2010 26 March 2010 - 1,482 2010 interim of 0.58p 31 August 2010 30 July 2010 - 339 2010 final of 2.42p 18 February 2011 25 March 2011 1,471 - 2011 interim of 0.60p 31 August 2011 5 August 2011 377 - ----- ----- 1,848 3,452 ===== ===== The Directors have proposed a final dividend of 2.55p per share (2010: final 2.42p). The dividends will be paid, subject to shareholders approval on 5 April 2012, to shareholders on the Company's register on 24 February 2012. 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: 2011 2010 £'000 £'000 Dividends paid or proposed on equity shares: Interim paid 0.60p (2010: 0.58p) 377 339 Final proposed of 2.55p (2010: 2.42p)* 1,865 1,471 ----- ----- 2,242 1,810 ===== ===== * based upon 73,130,326 (2010: 60,797,273) ordinary shares. 7. Consolidated return and net asset value per ordinary share Revenue and capital returns per share are shown below and have been calculated using the following: 2011 2010 Net revenue return attributable to ordinary shareholders (£'000) 2,078 1,931 Net capital return attributable to ordinary shareholders (£'000) 663 41,889 ------- ------- Total equity attributable to ordinary shareholders (£'000) 2,741 43,820 ======= ======= Total equity (£'000) 147,774 127,296 ------- ------- The weighted average number of ordinary shares in issue during each year, on which the return per ordinary share was calculated, was 63,219,746 67,839,455 ---------- ---------- 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 59,819,714 ---------- ---------- Actual number of subscription shares in issue at the year end - 13,310,612 ---------- ---------- Return per share Revenue earnings per share 3.29p 2.85p Capital earnings per share 1.05p 61.74p ---------- ---------- Total earnings per share 4.34p 64.59p ========== ========== Net asset value per share 202.07p 212.80p ---------- ---------- Ordinary share price 170.00p 163.00p Subscription share price - 24.25p ========== ========== 8. Share capital Ordinary Subscription shares Treasury shares Total in issue shares in issue shares number number number number £'000 Allotted, called up and fully paid share capital comprised: Ordinary shares of 5p each: At 1 December 2010 59,819,714 7,400,000 13,310,612 80,530,326 3,494 Subscription shares of 1p each: Conversion of subscription shares into ordinary shares 13,310,612 - (13,310,612) - 532 ---------- --------- ---------- ---------- ----- At 30 November 2011 73,130,326 7,400,000 - 80,530,326 4,026 ========== ========== =========== ========== ====== No ordinary shares were purchased or cancelled in the year (2010: nil). During the year the Company issued 13,310,612 (2010: 1,512,289) ordinary shares following the conversion of 13,310,612 (2010: 1,512,289) subscription shares into ordinary shares for a total consideration of £19,434,000 (2010: £2,208,000). The subscription shares were allotted as a bonus issue to ordinary shareholders on 30 September 2009, on the basis of one subscription share for every five ordinary shares. Each subscription share conferred the right but not the obligation to subscribe for one ordinary share, at a pre-determined price of 146p per ordinary share. The final opportunity for subscription shareholders to exercise their interest in subscription shares was 31 October 2011. The ordinary shares (including new ordinary shares issued as a result of the exercise of subscription share rights) 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. The subscription shares did not carry the right to receive any dividends and do not have any voting rights. There were no restrictions on the transfer of the subscription shares. 9. Reserves Capital reserve Capital (arising on reserve revaluation Share Capital (arising on of premium Special redemption investments investments Revenue account reserve reserve sold) held) reserve Group £'000 £'000 £'000 £'000 £'000 £'000 At 1 December 2010 2,147 35,272 11,905 29,726 38,920 5,832 Movement during the year: Revenue return for the year - - - - - 2,052 Exercise of subscription shares 18,902 - - - - - Write back of share issue costs - - - 30 - - Gains on realisation of investments - - - 16,217 - - Change in investment holding gains - - - - (16,738) - Losses on foreign currency transactions - - - (1) - - Gains/ (losses) on contracts for difference - - - 11,215 (7,251) 26 Finance costs, investment management and performance fee charged to capital after taxation - - - (2,779) - - Refund of unclaimed dividends - - - - - 121 Dividends paid during the year - - - - - (1,848) ------ ------ ------ ------ ------ ------- At 30 November 2011 21,049 35,272 11,905 54,408 14,931 6,183 ====== ====== ====== ====== ====== ======= Capital reserve Capital (arising on reserve revaluation Share Capital (arising on of premium Special redemption investments investments Revenue account reserve reserve sold) held) reserve Company £'000 £'000 £'000 £'000 £'000 £'000 At 1 December 2010 2,147 35,272 11,905 29,726 40,401 4,351 Movement during the year: Revenue return for the year - - - - - 2,135 Exercise of subscription shares 18,902 - - - - - Write back of share issue costs - - - 30 - - Gains on realisation of investments - - - 16,217 - - Change in investment holding gains - - - - (16,821) - Losses on foreign currency transactions - - - (1) - - Gains/ (losses) on contracts for difference - - - 11,215 (7,251) 26 Finance costs, investment management and performance fee charged to capital after taxation - - - (2,779) - - Refund of unclaimed dividends - - - - - 121 Dividends paid during the year - - - - - (1,848) ------ ------ ------ ------ ------ ------ At 30 November 2011 21,049 35,272 11,905 54,408 16,329 4,785 ====== ====== ====== ====== ====== ===== 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 2011 annual report and financial statements will be filed with the Registrar of Companiesshortly. The report of the Auditor for the year ended 30 November 2011 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 2010, 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 13 February 2012. 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 Thursday, 22 March 2012 at 11:00 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 13 February 2012 12 Throgmorton Avenue London EC2N 2DL

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