Final Results

BlackRock Throgmorton Trust plc
Annual Results Announcement for the year ended 30 November 2016

PERFORMANCE RECORD

FINANCIAL HIGHLIGHTS

	As at  30 November 2016	As at  30 November 2015	Change  %
Assets
Net assets (£’000)	301,547	286,343	+5.3
Net asset value per share	412.34p	391.55p	+5.3
– with income reinvested	–	–	+7.3
Ordinary share price (mid-market)	325.00p	339.50p	-4.3
– with income reinvested	–	–	-2.1
Numis Smaller Companies excluding AIM (excluding Investment Companies) Index	18,157.95	17,086.77	+6.3

	As at  30 November 2016	As at  30 November 2015	Change  %
Revenue
Net revenue return after taxation (£’000)	5,723	5,911	-3.2
Revenue return per ordinary share	7.83p	8.08p	-3.1
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Dividends
– Interim	1.25p	1.10p	+13.6
– Final	6.25p	5.60p	+11.6
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Total dividends paid and payable in respect of the year ended 30 November	7.50p	6.70p	+11.9
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OVERVIEW AND PERFORMANCE

HISTORICAL RECORD

ASSETS

Year to 30 November	Equity shareholders’ funds £m	NAV per share p	Total return %	Mid-market price per share p
2016	301.5	412.3	+7.3	325.0
2015	286.3	391.6	+23.2	339.5
2014	235.5	322.0	-1.1	270.0
2013	240.8	329.2	+40.1	290.0
2012	174.1	238.0	+19.4	193.3
2011	147.8	202.1	-3.9	170.0
2010	127.3	212.8	+51.7	163.0
2009	106.9	144.3	+63.7	115.8
2008	77.01	93.5	-51.43	62.8
2007	272.5	194.62	-1.6	152.0
2006	326.2	199.42	+15.4	164.3
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Compound annual growth rate over the ten year period	–	7.5%	–	7.1%
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1.  Reduction from a tender offer and reorganisation of the Company in 2008, as well as market movements.
2.  Prior charges at par.
3.  Includes £5.5 million in respect of the write-back of prior years’ VAT.

REVENUE

Year to 30 November	Net revenue after taxation5  £m	Revenue return per share5	Dividends per share p
2016	5.7	7.83	7.50
2015	5.9	8.08	6.70
2014	3.8	5.19	4.40
2013	3.7	4.99	4.00
2012	2.7	3.64	3.32
2011	2.1	3.29	3.15
2010	1.9	2.85	3.00
2009	3.1	3.86	2.754
2008	4.8	3.85	2.404
2007	2.3	1.54	2.20
2006	3.3	1.84	2.00
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Compound annual growth rate over the ten year period	–	15.6%	14.1%
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4.  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.
5.  Net revenue after taxation and revenue return per share for the years ended 30 November 2013 and 2012 relate to the parent company and for the years up to 30 November 2011, related to the Group including subsidiary companies.

CHAIRMAN’S STATEMENT

PERFORMANCE

During the year to 30 November 2016, the Company’s Net Asset Value per share (NAV) returned 7.3% compared with a return of 6.3% from the Company’s benchmark, the Numis Smaller Companies excluding AIM (excluding Investment Companies) Index, both on a total return basis. Further information on the performance of the portfolio can be found in the Investment Manager’s report.

This modest outperformance of the benchmark index should be viewed in the context of what has been a particularly volatile year for UK equity markets. It is also important to consider the Company’s NAV and share price performance over a longer period than just one year. During the five year period to 30 November 2016, NAV and share price returns have been 118.9% and 107.7% respectively. This compares very favourably to the benchmark index return over the same period of 81.2%. However, when we compare the Company’s NAV performance to the wider UK stock market, the Company’s five year NAV return of 118.9% represents a substantial and gratifying outperformance of 63.5% over the FTSE All-Share Index return of 55.4% over the same period. This demonstrates the ability of smaller companies to outperform their larger counterparts over the medium to longer term.

Since the year end and up to the close of business on 8 February 2017, the NAV has risen by 10.8%, compared to the benchmark index return which rose by 8.2%. (All figures in sterling terms with income reinvested.)

MARKET OVERVIEW

The year under review has been challenging for both domestic and world markets and was characterised by sustained political and macroeconomic uncertainty. Market volatility remained high throughout the year, reflecting concern around global growth, particularly in China as it seeks to rebalance its economy. The unprecedented and sustained low interest rate environment, volatility in oil prices, the Federal Reserve’s decision on when and to what extent to raise US interest rates and, more recently, concerns over the impact of President-elect Trump’s unexpected victory in the US presidential elections ensured market uncertainty persisted.

The UK electorate’s historic vote in June to leave the European Union came as a surprise to many. Stock markets fell sharply in the days following the announcement, with the FTSE 250 hit hardest due to its greater domestic exposure. Markets have since recovered and the detrimental impact of the vote on the UK economy, as forecast by many, has yet to materialise. The depreciation of sterling since the date of the referendum has also been beneficial to stock market investors given that UK listed companies derive around two thirds of their earnings overseas. However, this currency depreciation is likely to result in inflationary pressure, increasing operating costs for UK smaller companies and an increase in the cost of living for consumers. This may be reflected in decreased consumer spending as we enter 2017.

In August of this year, the Bank of England reduced interest rates for the first time since 2009, down from 0.5% to 0.25%, and announced a further £60 billion in government bond purchases following similar degrees of quantitative easing by other European central banks. Government bond yields remain at record lows and the bond purchase programme has only exacerbated this situation. Although supportive of the economy, it remains to be seen whether this monetary stimulus will filter down and materially benefit the ‘real’ economy.

REVENUE RETURN AND DIVIDENDS

The revenue return per share for the year amounted to 7.83 pence per share, compared with 8.08 pence per share for the previous year, a marginal decrease of 3.1%.

During this past year we have seen a 15% increase in dividends (excluding specials) from our portfolio companies. However, the level of special dividends received this year has fallen compared to the prior year. Special dividends, by their nature, are non-recurring and the amount of special dividends received in the current financial year decreased by 67%.

On 6 February 2017 the Directors declared a proposed final dividend of 6.25 pence per share for the year ended 30 November 2016. This, together with the interim dividend of 1.25 pence paid on 19 August 2016, gives a total dividend for the year of 7.50 pence per share, an increase of 11.9% on the total dividend distributed to shareholders last year. This dividend will be paid on 29 March 2017, subject to shareholder approval at the AGM, to shareholders on the Company’s register on 17 February 2017. The ex-dividend date is 16 February 2017.

POLICY ON DISCOUNT MANAGEMENT

During the year to 30 November 2016, the Company’s share price discount to NAV ranged between 4.6% and 22.0%, ending the year at 21.2%. The UK Smaller Companies sector has historically traded at a significant discount to NAV and the Company’s average discount to NAV since 1 July 2008 (the date BlackRock became Manager of the Company) has been 16.2%.

The Board recognises the importance to shareholders that the Company’s share price should not, in normal market conditions, trade at an excessive discount to NAV and, where deemed to be in the interests of shareholders, the Board may exercise the Company’s share buy back authorities to encourage a narrowing of the discount.

The Board carefully monitors the level of discount of the Company's shares, and that of the peer group.  It is aware that some trusts have taken action, including introducing measures to encourage a narrowing of the discount.  The Board intends to consult and discuss with shareholders a number of potential options designed to assist with this, including reviewing the quantum and timing of the dividend paid to shareholders. However, we believe that the best way of addressing the discount over the medium to longer term is to continue to generate strong NAV total return performance and also to create demand for the Company’s shares in the secondary market through broadening awareness of the benefits of the Company’s unique structure.

BOARD COMPOSITION

As part of the Board’s succession plan, a search and selection process was initiated during the year, which culminated in the appointment of two new non-executive Directors. I am delighted to welcome Christopher Samuel and Andrew Pegge to the Board, who were appointed on 1 June and 29 November respectively. Mr Samuel and Mr Pegge bring with them a wealth of industry experience and financial sector expertise, further strengthening the existing Board. Information on their background, and that of all Directors, can be found in their biographies on pages 21 and 22 of the Annual Report and Financial Statements.

As I mentioned in my statement to the half-yearly report earlier this year, Mr Stobart will retire from the Board with effect from the conclusion of this year’s AGM and Mr Greenlees will succeed him as Chairman of the Company’s Audit Committee. I would like to take this opportunity to place on record the Board’s gratitude for Mr Stobart’s invaluable contribution to the success of the Company during his tenure. We wish him well for the future.

Having been Chairman of the Company since March 2012, following my appointment to the Board in March 2007, I shall retire from the Board in July 2017 after the publication of the Company’s interim results. As part of the Board’s succession plan, Christopher Samuel will succeed me as Chairman of the Board with effect from the date of my retirement. Mr Samuel has extensive investment company experience and financial sector expertise and I have no doubt that he will provide strong leadership of the Board and the Company going forward.

ANNUAL GENERAL MEETING

The Company’s Annual General Meeting will be held on Wednesday, 22 March 2017 at 11.00 a.m. at the offices of BlackRock at 12 Throgmorton Avenue, London EC2N 2DL. Details of the business of the meeting are set out in the Notice of Annual General Meeting on pages 77 to 80 of the Annual Report and Financial Statements. The Portfolio Managers will make a presentation to shareholders on the Company’s progress and the outlook for the year ahead. Shareholders who are unable to attend the AGM in person will be able to watch it via a live stream. Further information on how to register for this is set out on page 74 of the Annual Report and Financial Statements.

OUTLOOK

In his autumn statement to Parliament, the Chancellor of the Exchequer announced that the Office of Budget Responsibility had revised its UK growth forecasts for the coming year, down from 2.2% to 1.4%. In February 2017 the forecast was raised to 2% following improving economic data.  Overall growth is expected to remain positive and levels of employment in the UK are expected to rise over the next five years. In response to the outcome of the EU Referendum, the UK Government has committed to additional spending on major infrastructure, focusing on areas that it believes will boost productivity and competitiveness. The Government has also agreed to reduce the rate of corporation tax to 17% by 2020, all of which should be supportive of the economy. However, there remains concern that the present lack of clarity on the terms of the UK’s exit may deter investment in the short term.

Against this backdrop, your portfolio managers will seek to identify opportunities to add to existing holdings or to introduce new stocks to the portfolio which they believe are well positioned to benefit as the economy adjusts post Brexit. Their fundamental strategy has not changed and they continue to seek companies with robust business models, strong cash flows and favourable industry characteristics, led by management teams capable of ‘self-help’. The focus remains on bottom–up stock selection, assembling a portfolio of individual companies which, taken as a whole, should provide capital growth and an attractive total return, regardless of short term economic fluctuations. Your Board is fully supportive of this approach.

Crispin Latymer
Chairman
10 February 2017

INVESTMENT MANAGER'S REPORT

MARKET REVIEW AND OVERALL INVESTMENT PERFORMANCE

This has been a volatile year, heavily influenced by the impact of the UK’s vote to leave the EU. This was a shock result and markets reacted very negatively following the announcement. However, markets have subsequently recovered well, helped by the forecast that UK GDP growth will slightly exceed 2% in 2016 and indications that the UK economy appears to be in good health. UK stock markets have also benefited from the extent of overseas earnings of UK listed companies and the fall in Sterling relative to the US Dollar. The FTSE 100 is generally considered to derive about 75% of its earnings from overseas; for our portfolio the figure is approximately 50%.

PERFORMANCE REVIEW

The Company’s NAV per share increased by 7.3% to 412.3p on a total return basis. This compares to an increase in the benchmark index of 6.3% and the FTSE 100 of 11.1%.

2016 was a strong year for the CFD portfolio, adding 2.5% to the NAV. The long CFDs generated 2.6%, helped by some of the portfolio’s key holdings delivering, and whilst the performance of the short CFD book was -0.1% it should be noted that three of the top fifteen contributors to the CFDs year-end performance were indeed shorts, and the flat performance from the short book should be viewed in the context of a rising market, with the benchmark delivering a 6.3% return.

As mentioned earlier, 2016 proved an eventful year, dominated by big global macro events. The CFD portfolio has always tried to focus on the “micro”, and whilst there will always be global events of significance that can augment or detract from performance, the advantage of investing in UK small and mid sized companies and our investment process, means that stock and industry outcomes can dominate. 2016 is a case in point. This was another year where the long CFD portfolio’s largest holdings delivered (JD Sports, MicroFocus, RPC Group, CVS Group) responding to several positive trading updates through the course of the year. We still own all of these, with the exception of MicroFocus which we had to sell on it entering the FTSE 100, and remain very confident on their prospects entering 2017. As for the short book, the fact that three of the portfolio’s biggest contributors are shorts, reminds us of the dispersion of returns within small and mid-caps and the value in identifying companies and industries facing structural pressures. Whilst the performance of the short book, in aggregate, was -0.1%, we think this is a strong outcome in the face of a rising market.

Within the long only portfolio we saw excellent performances from a number of our holdings with Fevertree Drinks, JD Sports, CVS Group, Hill & Smith, 4imprint and Accesso Technology each contributing more than 0.5% to relative performance. Fevertree continues to grow strongly, helped by a focus on new product development and good international distribution. Fevertree is competing effectively in a large global market in which it still has a small share for its superior premium mixers. JD Sports has continued to show strong like-for-like growth in its UK stores, helped by good relationships with the global brands whose products it sells. It has opened more large stores in European cities and most recently its first store in Malaysia. We expect further growth both from existing stores and as JD expands its international footprint.

CVS Group continues to trade strongly, with most recent disclosed like-for-like sales growth of 6.3%. It has continued to carry out acquisitions of veterinary practices and ancillary activities, recently expanding into the Netherlands. Hill & Smith is benefiting from increased infrastructure spending, especially road widening. It has a good presence in the UK and the US, both countries where it is believed infrastructure spending is likely to increase. 4imprint has completed its US factory expansion and is ready to grow further in the US; strong US GDP growth should encourage its customers to maintain or increase their spending on promotional products, and 4imprint should continue to win market share. Accesso have continued to win new customers for its ticketing and virtual queuing solutions, and these are being rolled out globally.

Other investments which performed strongly in the year include Keywords, shares in which more than doubled, Trifast and Scapa Group.

The biggest headwind to relative performance in the long only portfolio was our underweight position in mining stocks. Several previously FTSE 100 mining stocks joined our benchmark in January 2016 and have subsequently performed very strongly, for example Evraz and Vedanta. Share prices of both more than trebled during the year, our underweight sector position detracted 3.4% from relative performance over the financial year.

The other major headwind was BREXIT and the impact that this had on UK domestic consumer and real estate stocks. Our holding in Topps Tiles detracted 0.8% during the year and holdings in Lookers and Vertu also proved painful. These stocks have all been savagely de-rated in expectation of tougher times ahead. Our holding in Workspace detracted 0.7% from relative performance; its shares are now trading at a discount to NAV of more than 20% despite the fact that it offers tenants flexible space at a time when they may be reluctant to commit to conventional longer leases. Workspace’s occupancy remains high, rents remain low, loan to value is historically low, and its portfolio is valued on a conservative passing yield.

ACTIVITY

During the second half of the financial year complete disposals included long only portfolio holdings in Lavendon, following an approach from a private Belgian company, and Hutchison China Meditech, which has been a huge success over the years. We also reduced a number of other holdings, in many cases to cut back our aggregate UK exposure; these include our holdings in Rathbones, Redrow and Ted Baker. We trimmed our holding in Fevertree after a sustained strong run; in Vectura, following its all share merger with Skyepharma, in which we were previously invested; and Senior, given tougher trading conditions.

We added a few small companies on IPO, notably Premier Asset Management, which is mainly focused on multi-asset funds, and Warpaint, a designer of fashion cosmetics for younger women. We added holdings in Trifast, which has grown strongly and is increasingly international, and Hiscox, the specialist insurer with an excellent long term track record and growing US business. We also added to holdings in Morgan Sindall, which we see as well exposed to increased UK spending on infrastructure including social housing, and St Modwen which trades at a large discount to NAV which we think is harsh.

Turning to the CFD portfolio, activity has been fairly limited in the long CFD book, the two significant events being the full disposal of our holding in MicroFocus as it entered the FTSE 100, and the purchase of Melrose in the second half of the year, which is now a top 5 holding in the CFD portfolio. The short book has seen greater portfolio turnover as it has always been more catalyst driven. In the last few months new ideas have been introduced in the short book, targeting opportunities where we believe there could be revenue shortfalls and cost pressures – notably in the areas of small and mid-cap technology where we believe IT budgets are very sensitive to fragile business confidence, and in consumer services where several companies are facing a triple whammy of wage pressures, rising sourcing costs and increased business rates.

PORTFOLIO POSITIONING

Relative to our benchmark index, we remain most overweight consumer discretionary stocks, including companies such as JD Sports, Cineworld and Headlam. These are companies which have strong market positions and very capable management. Should they see a UK referendum impact at some stage we would expect them to fare much better than their competitors. We are also significantly overweight healthcare with holdings such as CVS Group, Dechra Pharmaceuticals and Advanced Medical Solutions. The latter two holdings are very international and have long life products. CVS is defensive in that pet owners are unlikely to cut back spending on their pets materially in tougher times. We expect CVS to continue to gain market share. We are also increasingly exposed to UK infrastructure spending through holdings such as Marshalls, Morgan Sindall and Costain, another small new addition. We are also more exposed to defence markets through holdings in Avon Rubber, Cohort and Ultra Electronics. We are underweight financials, real estate, consumer staples and energy.

With regard to the positioning structure of the CFD portfolio, the emphasis has been and remains on identifying stock and industry specific outcomes, and therefore invests with little benchmark awareness. Clearly, not owning indebted commodity exposed names has cost the fund performance in 2016. However, the high conviction holdings in both the long and short books have delivered, which has been the key driver of returns this year. The long book remains exposed to specific investment cases we think can deliver over and above short term fluctuations in the economic and business cycles. The short book continues to target companies that are over-earning and/or operating in industries undergoing structural pressures.

OUTLOOK

2016 has been a year of uncertainty and we expect it to be followed by a further year of uncertainty with a new US President, BREXIT negotiations getting underway, and political elections in Continental Europe. This could lead to nervous and volatile markets which will continue to provide the CFD portfolio with interesting opportunities, both long and short. Within the long only portfolio we have good exposure to overseas markets and our UK focused holdings are either defensive or leaders in their field, well placed to cope with challenges and gain further market share. The management teams we are invested behind are very capable and the balance sheets of the companies they manage are generally very strong. We feel our portfolio is well placed for a continuation of current uncertainties.

Mike Prentis and Dan Whitestone
BlackRock Investment Management (UK) Limited
10 February 2017

STRATEGIC REPORT

The Directors present the Strategic Report of the Company for the year ended 30 November 2016.

PRINCIPAL ACTIVITY

The Company carries on business as an investment trust and its principal activity is portfolio investment.

OBJECTIVE

The Company’s objective is to provide shareholders with capital growth and an attractive total return through investment primarily in UK smaller and mid-capitalisation companies listed on the main market of the London Stock Exchange.

STRATEGY, BUSINESS MODEL, INVESTMENT POLICY AND INVESTMENT PROCESS

The Company invests in accordance with the objective given above. The Board is collectively responsible to shareholders for the long term success of the Company and is its governing body. There is a clear division of responsibility between the Board and the Manager, BlackRock Fund Managers Limited (BFM). Matters for the Board include setting the Company’s strategy, including its investment objective and policy, setting limits on gearing (both bank borrowings and the effect of derivatives), capital structure, governance, and appointing and monitoring of performance of service providers, including the Manager.

The Company’s business model follows that of an externally managed investment trust, therefore the Company does not have any employees and outsources its activities to third party service providers, including the Manager who is the principal service provider.

The management of the investment portfolio and the administration of the Company have been contractually delegated to the Manager. The Manager, operating under guidelines determined by the Board, has direct responsibility for the decisions relating to the day-to-day running of the Company and is accountable to the Board for the investment, financial and operating performance of the Company.

Other service providers include the Depositary, BNY Mellon Trust & Depositary (UK) Limited, the Fund Accountant, Bank of New York Mellon (International) Limited, and the Registrar, Computershare Investor Services PLC. Details of the contractual terms with third party service providers are set out in the Directors’ Report.

INVESTMENT POLICY

The Company’s performance is measured against the Numis Smaller Companies excluding AIM (excluding Investment Companies) Index (the Index).

The Company may hold up to 25% of its gross assets, at the time of acquisition, in equities or collective investment vehicles traded on the AIM market of the London Stock Exchange.

The Investment Manager, BdlackRock Investment Management (UK) Limited (BIM (UK)), may invest in companies outside the Index without restriction subject to the limits noted above.

In addition to holding a conventional long only portfolio of UK smaller and mid-capitalisation equities, the Company will hold approximately 30% of its net assets in a portfolio of contracts for difference (CFD) and/or comparable equity derivatives which provide both long and short exposure. Under normal circumstances, the long only portfolio is expected to comprise 100% of the Company’s net assets. Therefore, the Company can have gross exposure of 130% of net assets, albeit that some of this exposure may represent short positions.

Portfolio risk will be mitigated by investment in a diversified portfolio of companies. No more than 5% of the Company’s gross assets at the time of acquisition, may be invested in any one single company excluding holdings in cash or money market funds where up to 10% of the Company’s gross assets may be held. The Company will not invest more than 10% of its gross assets, at the time of the acquisition, in other listed closed-ended investment funds, unless such companies have a stated investment policy not to invest more than 15% of their gross assets in other listed closed-ended investment funds, in which case the limit is 15% of gross assets.

The Board’s policy is that net gearing, borrowing less cash, should not exceed 20% of gross assets. However, the Company is geared primarily through its CFD portfolio.

No material change will be made to the investment objective and policy without shareholder approval.

INVESTMENT PROCESS

A unique feature of the Company is that it has two potential sources of performance. A traditional long only portfolio and a long/short portfolio comprising CFDs, representing approximately 30% of the Company’s net assets.

Notwithstanding recent positive returns from UK small and mid-cap companies, the sector has demonstrated considerable volatility over the past 20 years. The chart on page 10 of the Annual Report and Financial Statements shows the annual performance of the FTSE 250 Index since 1986 together with the extent of the maximum decline in the Index during each of those years. Such an environment provides an attractive opportunity to add value via CFDs, instruments which can exploit share price moves whether up or down. During 2016, this facility added approximately 2.5% to performance and 18.7% since inception on 11 September 2008.

As the maximum short CFD exposure is 30% of net assets, the Company will at all times retain a significant exposure to the market.

In the course of their research the Portfolio Managers come across companies which they judge are likely to underperform; the ability to use short CFDs therefore significantly enhances the opportunity to make money for shareholders. This is not possible in a conventional or long only portfolio.

When markets are expected to rise in the medium term, the CFD strategy is to generate additional market exposure through ensuring that the long portfolio exceeds the short portfolio in a range between 0% to 10% of the net assets of the Company. Rising or ‘bull’ markets have historically (in the UK) persisted for longer than falling or ‘bear’ markets. A typical net market exposure might therefore be between 100% and 110%. This is lower than the ‘gross exposure’, which is the combination of the long only portfolio, and the short and long CFDs added together expressed as a % of net assets.

BULL MARKET POSITIONING – % OF NAV (130% GROSS EXPOSURE)

Long CFDs	20%
Long Only Portfolio	100%
Short CFDs	10%
Net Market Exposure	110%

BEAR MARKET POSITIONING LIMIT – % OF NAV (130% GROSS EXPOSURE)

Long Only Portfolio	100%
Short CFDs	30%
Net Market Exposure	70%

In a recessionary environment the Portfolio Managers have the flexibility to reduce market exposure to – at the maximum of its ‘least exposed’ level – around 70%.

If successfully implemented this strategy would provide some cushioning of the Company’s performance in falling markets.

PERFORMANCE

The Investment Manager’s report includes a review of the main developments during the year, together with information on investment activity within the Company’s portfolio.

RESULTS AND DIVIDENDS

The results for the Company are set out in the Statement of Comprehensive Income on page 47 of the Annual Report and Financial Statements. The total profit for the year, after taxation, was £20,213,000 (2015: a profit of £54,325,000) of which the revenue return amounted to £5,723,000 (2015: £5,911,000), and a capital profit of £14,490,000 (2015: £48,414,000).

Details of the dividends declared in respect of the year are set out in the Chairman’s Statement.

KEY PERFORMANCE INDICATORS

At each Board meeting, the Directors consider a number of performance measures to assess the Company’s success in achieving its objectives. The key performance indicators (KPIs) used to measure the progress and performance of the Company over time, which are comparable to those reported by other investment trusts, are set out below.

	Year ended  30 November 2016	Year ended  30 November 2015
Change in net asset value1	7.3%	23.2%
Change in ordinary share price2	(2.1%)	27.7%
Change in benchmark3	6.3%	11.9%
Discount to cum income net asset value	21.2%	13.3%
Revenue return per share	7.83p	8.08p
Total dividend per share	7.50p	6.70p
Ongoing charges1	1.1%	1.1%
Ongoing charges4	1.3%	2.3%

1.  Calculated in accordance with the Association of Investment Companies (AIC) guidelines.
2.  Calculated on a mid to mid basis with income reinvested.
3.  Numis Smaller Companies excluding AIM (excluding Investment Companies) Index.
4.  Calculated as a percentage of average net assets for the year and using expenses, including performance fees and interest costs.

The Board monitors the KPIs at each meeting. Additionally, it regularly reviews a number of indices and ratios to understand the impact on the Company’s relative performance of the various components such as asset allocation and stock selection. This includes an assessment of the Company’s performance and ongoing charges against its peer group of investment trusts with similar investment objectives.

The Directors recognise that it is in the long term interests of shareholders that the Company’s shares do not trade at a significant discount to their prevailing NAV. In the year under review the discount to NAV of the ordinary shares on a cum income basis has ranged between 4.6% and 22.2%, with the average being 16.2%. The shares ended the year at a discount of 21.2% on a cum income basis.

Your Board believes that the best way of addressing the discount over the longer term is to continue to generate good performance and to create demand for the Company’s shares in the secondary market through broadening awareness of the Company’s unique structure. The Board will also be seeking to renew the authority from shareholders to buy back shares when it believes that it is in the interests of shareholders to do so, having taken into account all relevant factors including the size of the Company and the liquidity of its shares.

PRINCIPAL RISKS

The Company is exposed to a variety of risks and uncertainties and the Board has in place a robust process to identify, assess and monitor the principal risks faced by the Company. A core element of this process is the Company’s risk register, which identifies the risks facing the Company and the likelihood and potential impact of each risk, together with the controls established for mitigation. A residual risk rating is calculated for each risk which allows the effect of any mitigating procedures to be reflected in the register. The principal risks and uncertainties faced by the Company during the financial year, together with the potential effects, controls and mitigating factors, are set out below:

PRINCIPAL RISK		MITIGATION/CONTROL
INVESTMENT PERFORMANCE The Board is responsible for: -    setting the investment policy to fulfil the Company’s objectives; and -    monitoring the performance of the Company’s Investment Manager and the strategy adopted. An inappropriate policy or strategy may lead to: -    poor performance compared to the Company’s benchmark, peer group or shareholder expectations; -    a widening discount to NAV; -    a reduction or permanent loss of capital; and -    dissatisfied shareholders and reputational damage.		To manage these risks the Board: -    regularly reviews the Company’s investment mandate and long term strategy; -    has set, and regularly reviews, the investment guidelines and has put in place appropriate limits on levels of gearing and the use of derivatives; -    receives from the Investment Manager a regular explanation of stock selection decisions, portfolio gearing and any changes in gearing and the rationale for the composition of the investment portfolio; -    receives from the Investment Manager regular reporting on the portfolio’s exposure through derivatives, including the extent to which the portfolio is geared in this manner and the value of any short positions;  and -    monitors the maintenance of an adequate spread of investments in order to minimise the risks associated with particular sectors, based on the diversification requirements inherent in the Company’s investment policy.
MARKET RISK Market risk arises from changes to the prices of the Company’s investments. It represents the potential loss the Company might suffer through holding investments whose prices decline.		The Board carefully considers diversification of the portfolio, 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.
INCOME/DIVIDEND RISK The amount of dividends and future dividend growth will depend on the performance of 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. The Company also has a revenue reserve and powers to pay dividends from capital which could potentially be used to support the Company’s dividend if required.
FINANCIAL RISK The Company’s investment activities expose it to a variety of financial risks that include market risk, foreign currency risk and interest rate risk. At 30 November 2016, the Company had approximately 26.3% of its gross asset value invested in AIM traded equity 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.		The Company is not materially exposed to foreign currency and interest rate risk. For mitigation of market risk, see above. There are also risks linked to the Company’s use of derivative transactions including CFDs. Details are disclosed in note 12 on pages 58 and 59 of the Annual Report and Financial Statements, together with a summary of the policies for managing and controlling these risks in note 17 of the Annual Report and Financial Statements.
OPERATIONAL RISK   In common with most other investment trust companies, the Company has no employees. The Company therefore relies upon the services provided by the Manager, Bank of New York Mellon Trust & Depositary (UK) Limited (the Depositary) and the Bank of New York Mellon (International) Limited, (the Fund Accountant) who maintains the Company’s accounting records. Failure by any service provider to carry out its obligations to the Company could have a material adverse effect on the Company’s performance. Disruption to the accounting, payment systems or custody records, as a result of a cyber-attack or otherwise, could impact the monitoring and reporting of the Company’s financial position. The security of the Company’s assets, dealing procedures, accounting records and maintenance of regulatory and legal requirements, depend on the effective operation of these systems.		The Board reviews the overall performance of the Manager, Investment Manager and all other third party service providers and compliance with the investment management agreement on a regular basis. The Fund Accountant’s and the Manager’s internal control processes are regularly tested and monitored throughout the year and are evidenced through their Service Organisation Control (SOC 1) reports, which are subject to review by an Independent Service Assurance Auditor. The SOC 1 reports provide assurance in respect of the effective operation of internal controls.   The Company’s assets are subject to a strict liability regime and in the event of a loss of financial assets held in custody, the Depositary must return assets of an identical type or the corresponding amount, unless able to demonstrate that the loss was a result of an event beyond its reasonable control.   The Board considers succession arrangements for key employees of the Manager and the Investment Manager and receives reports on the business continuity arrangements for the Company’s key service providers. The Board also receives regular reports from BlackRock’s internal audit function.
LEGAL AND REGULATORY RISK The Company has been accepted by HM Revenue & Customs as an investment trust, subject to continuing to meet the relevant eligibility conditions, and 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. Any breach of the relevant eligibility conditions could lead to the Company losing its investment trust status and being subject to corporation tax on capital gains realised within the Company’s portfolio. In such event the investment returns of the Company may be adversely affected. Any serious breach could result in the Company and/or the Directors being fined or the subject of criminal proceedings or the suspension of the Company’s shares which would in turn lead to a breach of the Corporation Tax Act 2010. Amongst other relevant laws and regulations, the Company is required to comply with the provisions of the Companies Act 2006, the Alternative Investment Fund Managers’ Directive, the Market Abuse Act, the UK Listing Rules and the Disclosure & Transparency Rules.		The Investment Manager monitors investment movements, the level of forecast income and expenditure and the amount of proposed dividends, if any, to ensure that the provisions of Chapter 4 of Part 24 of the Corporation Tax Act 2010 are not breached and the results are reported to the Board at each meeting. Following authorisation under the Alternative Investment Fund Managers’ Directive (AIFMD), the Company and its appointed Alternative Investment Fund Manager (AIFM) are subject to the risks that the requirements of this Directive are not correctly complied with. The Board and the AIFM also monitor changes in government policy and legislation which may have an impact on the Company. Compliance with the accounting standards applicable to quoted companies and those applicable to investment trusts are also regularly monitored to ensure compliance. The Company Secretary and the Company’s professional advisers monitor developments in relevant laws and regulations and provide regular reports to the Board in respect of the Company’s compliance.
COUNTERPARTY RISK The potential loss that the Company could incur if a counterparty is unable (or unwilling) to perform on its commitments. The Company’s investment policy also permits the use of both exchange-traded and over-the-counter derivatives (including contracts for difference).		Due diligence is undertaken before contracts are entered into and exposures are diversified across a number of counterparties. The Board reviews the controls put in place by the Investment Manager to monitor and to minimise counterparty exposure, which include intra-day monitoring of exposures to ensure that these are within set limits. The Depository is liable for restitution for the loss of financial instruments held in Custody, unless it is able to demonstrate that the loss was due to an event beyond its reasonable control.

The risk register, its method of preparation and the operation of key controls in the Manager’s and third party service providers’ systems of internal control are reviewed on a regular basis by the Audit Committee. In order to gain a more comprehensive understanding of the Manager’s and other third party service providers’ risk management processes and how these apply to the Company’s business, the Audit Committee periodically receives presentations from BlackRock’s Internal Audit and Risk & Quantitative Analysis teams. Where produced, the Audit Committee also reviews SOC 1 reports from the Company’s service providers.

As required by the UK Corporate Governance Code, the Board has undertaken a robust assessment of the principal risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity. The principal risks have been described above and on pages 11 to 13 of the Annual Report and Financial Statements, together with an explanation of how they are managed and mitigated. The Board will continue to assess these risks on an ongoing basis.

VIABILITY STATEMENT

The Directors have assessed the prospects of the Company over a longer period than the 12 months referred to by the “Going Concern” guidelines.

The Board conducted this review for the period up to the AGM in 2022, being a five year period from the date that this Annual Report will be approved by shareholders. This is generally the investment holding period investors consider while investing in the smaller companies sector. In making this assessment the Board has considered the following factors:

-    the Company’s principal risks as described above and as set out on pages 11 to 13 of the Annual Report and Financial Statements;
-    the impact of a significant fall in UK equity markets on the value of the Company’s investment portfolio;
-    the ongoing relevance of the Company’s investment objective; and
-    the level of demand for the Company’s shares.

The Directors have also considered the Company’s revenue and expense forecasts and the fact that expenses and liabilities are relatively stable. The Company also has a portfolio of investments which provides a level of cash receipts in the form of dividends and which are considered to be relatively realisable if required.

The Directors reviewed the assumptions and considerations underpinning the Company’s existing going concern assertion which are based on:

-    processes for monitoring costs;
-    key financial ratios;
-    evaluation of risk management and controls;
-    compliance with the investment objective;
-    the Company’s ability to meet its liabilities as they fall due;
-    portfolio risk profile;
-    share price discount to NAV;
-    gearing; and
-    counterparty exposure and liquidity risk.

The Company has a relatively liquid portfolio and largely fixed overheads (excluding performance fees) which comprise a very small percentage of net assets (1.1%). In addition, effective from 1 June 2015, the performance fee cap in the event that the NAV total return over the annual performance period is zero or positive was reduced from 2% to 1% of the Performance Fee Market Value and effective from 1 December 2015, the applicable percentage to be applied to the outperformance of the NAV total return over the benchmark return was reduced from 12.5% to 10%. Therefore, the Board has concluded that the Company would be able to meet its ongoing operating costs as they fall due.

The Board has also considered the current and potential future impact on the Company of the UK’s decision to leave the European Union following the referendum held in June of this year. It has concluded that the Company’s business model and strategy are not threatened by this event and therefore it does not believe that it represents a principal risk to the Company.

In reaching this conclusion the Board considered whether this event has, or would be likely to have, a significant impact on the Company’s activities and whether or not the Investment Manager would be impeded in achieving its investment objectives as a result of the impact of the leave vote. The Board also considered the impact of potential changes in law, regulation, foreign exchange and taxation. However, due to the complexity and general lack of information available at present, it is challenging to accurately assess the future impact of UK’s exit from the European Union. Therefore, the Board intends to closely monitor the situation as it develops and will regularly reappraise its position.

Based on the results of their analysis, the Directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment.

FUTURE PROSPECTS

The Board’s main focus is on the achievement of capital growth and the future of the Company is dependent upon the success of the investment strategy. The outlook for the Company is discussed in the Chairman’s Statement and in the Investment Manager’s Report.

SOCIAL, COMMUNITY AND HUMAN RIGHTS ISSUES

As an investment trust, the Company has no direct social or community responsibilities. However, the Company believes that it is in shareholders’ interests to consider human rights issues, environmental, social and governance factors when selecting and retaining investments. Details of the Company’s policy on socially responsible investment are set out on page 36 of the Annual Report and Financial Statements.

MODERN SLAVERY ACT

As an investment vehicle the Company does not provide goods or services in the normal course of business, and does not have customers. Accordingly, the Directors consider that the Company is not required to make any slavery or human trafficking statement under the Modern Slavery Act 2015. The Board considers the Company’s supply chain, dealing predominantly with professional advisers and service providers in the financial services industry, to be low risk in relation to this matter.

GLOBAL GREENHOUSE GAS EMISSIONS FOR THE PERIOD 1 DECEMBER 2015 TO 30 NOVEMBER 2016

The Company has no greenhouse gas emissions to report from its operations, nor does it have responsibility for any other emissions producing sources under the Companies Act 2006 (Strategic Report and Directors’ Reports) Regulations 2013.

DIRECTORS, EMPLOYEES AND GENDER REPRESENTATION

The Directors of the Company on 30 November 2016, all of whom – with the exception of Mr Samuel and Mr Pegge who were appointed during the year – held office throughout the year, are set out on pages 21 and 22 of the Annual Report and Financial Statements. The Board recognises the importance of having a range of experienced Directors who, both individually and collectively, possess a suitable balance of skills, knowledge and diversity to enable it to fulfil its obligations. As at 30 November 2016, the Board consisted of six men and one woman.

The Company has no employees and all of its Directors are non-executive. Therefore, there are no disclosures to be made in respect of employees.

The information on pages 16 to 20 of the Annual Report and Financial Statements including the Investment Manager’s Report forms part of this Strategic Report.

The Strategic Report was approved by the Board at its meeting on 10 February 2017.

By order of the Board
Kevin Mayger, for and on behalf of
BlackRock Investment Management (UK) Limited
Company Secretary
10 February 2017

RELATED PARTY TRANSACTIONS

BlackRock Fund Managers Limited (“BFM”) was appointed as the Company’s Alternative Investment Fund Manager (AIFM) with effect from 2 July 2014. BFM has (with the Company’s consent) delegated certain portfolio and risk management services, and other ancillary services, to BIM (UK). Details of the fees payable to BFM are set out in note 4. Transaction and relationship details are set out in the Director’s Report on pages 23 to 28 of the Annual Report and Financial Statements.

The investment management fee due to BFM for the year ended 30 November 2016 amounted to £2,483,000 (2015: £2,381,000). A performance fee accrued for the year ended 30 November 2016 amounted to £768,000 (2015: £3,401,000). At the year end, £656,000 was outstanding in respect of the management fee (2015: £1,233,000) and £768,000 (2015: £3,401,000) in respect of the performance fee.

In addition to the above services, BlackRock has provided the Company with marketing services. The total fees paid or payable for these services for the year ended 30 November 2016 amounted to £92,000 including VAT (2015: £41,000). Marketing fees of £113,000 (2015: £135,000) were outstanding at 30 November 2016.

The Company had an investment in BlackRock’s Institutional Cash Series plc - Sterling Liquidity Fund of £5,390,000 at 30 November 2016 (2015: £2,216,000), which is a money market fund managed by BlackRock Group.

The related party transactions with Directors are set out in the Directors’ Remuneration Report on pages 29 to 32 of the Annual Report and Financial Statements. At 30 November 2016, an amount of £12,000 (2015: £nil) was payable to Directors in respect of their annual fees.

The Board consists of seven 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. For the year ended 30 November 2016, the Chairman received an annual fee of £36,000, the Chairman of the Audit and Management Engagement Committee received an annual fee of £27,000 and each other Director received an annual fee of £24,000. 

As at 30 November 2016, all members of the Board held shares in the Company with the exception of Mr Pegge who joined the Board on 29 November 2016. Lord Latymer held 33,295 ordinary shares, Simon Beart held 41,433 ordinary shares (including 12,928 ordinary shares held by Mrs Beart), Eric Stobart held 24,893 ordinary shares (including 12,506 ordinary shares held by Mrs Stobart), Loudon Greenlees held 10,000 ordinary shares, Jean Matterson held 46,000 ordinary shares and Christopher Samuel held 6,500 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. As at the date of this report Lord Latymer holds 33,378 ordinary shares and Mr Beart holds 41,988 ordinary shares (including 13,217 ordinary shares held by Mrs Beart). All other shareholdings remain unchanged.

STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE ANNUAL REPORT AND FINANCIAL STATEMENTS

The Directors are responsible for preparing the Annual Report and Financial Statements, the Directors’ Remuneration Report and the financial statements in accordance with applicable United Kingdom law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law, the Directors are required to prepare the financial statements in accordance with IFRS as adopted by the European Union. Under Company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.

In preparing these financial statements, the Directors are required to:

-    present fairly the financial position, financial performance and cash flows of the Company;
-    select suitable accounting policies in accordance with IAS8: Accounting Policies, Changes in Accounting Estimates and Errors and then apply them consistently;
-    present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;
-    make judgements and estimates that are reasonable and prudent;
-    state whether the financial statements have been prepared in accordance with IFRS as adopted by the European Union, subject to any material departures disclosed and explained in the financial statements;
-    provide additional disclosures when compliance with the specific requirements in IFRS as adopted by the European Union is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Company’s financial position and financial performance; and
-    prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are also responsible for preparing the Strategic Report, the Directors’ Report, the Directors’ Remuneration Report and the Corporate Governance Statement in accordance with the Companies Act 2006 and applicable regulations, including the requirements of the Listing Rules and the Disclosure and Transparency Rules. The Directors have delegated responsibility to the Investment Manager and the AIFM for the maintenance and integrity of the Company’s corporate and financial information included on BlackRock’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Each of the Directors, whose names are listed on pages 21 and 22 of the Annual Report and Financial Statements, confirms to the best of his or her knowledge that:

-    the financial statements, which have been prepared in accordance with IFRS as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and net return of the Company; and
-    the Annual Report and Financial Statements include a fair review 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 it faces.

The 2014 UK Corporate Governance Code also requires Directors to ensure that the Annual Report and Financial Statements are fair, balanced and understandable. In order to reach a conclusion on this matter, the Board has requested that the Audit Committee advise on whether it considers that the Annual Report and Financial Statements fulfils these requirements. The process by which the Committee has reached these conclusions is set out in the Audit Committee’s report on pages 38 to 41 of the Annual Report and Financial Statements. As a result, the Board has concluded that the Annual Report and Financial Statements for the year ended 30 November 2016, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company’s position, performance, business model and strategy.

For and on behalf of the Board
Crispin Latymer
Chairman
10 February 2017

FIFTY LARGEST INVESTMENTS AS AT 30 NOVEMBER 2016

Company		Market value  £’000	% of net  assets	Description
CVS Group*	Ordinary Shares Long CFD position	8,460 1,990	3.5	Operation of veterinary surgeries
4imprint Group	Ordinary Shares Long CFD position	8,108 1,502	3.2	Supply of promotional merchandise in the US
JD Sports Fashion	Ordinary Shares Long CFD position	5,471 2,763	2.7	Retail supply of sports and leisure footwear and clothing
Dechra Pharmaceuticals	Ordinary Shares Long CFD position	5,956 1,529	2.5	Development and supply of pharmaceutical and other products focused on the veterinary market
Hill & Smith	Ordinary Shares Long CFD position	5,957 612	2.2	Production of infrastructure products and supply of galvanizing services
Avon Rubber	Ordinary Shares	6,152	2.0	Production of safety masks and dairy related products
Accesso Technology*	Ordinary Shares Long CFD position	4,243 1,200	1.8	Development and supply of ticketing and virtual queuing solutions
Cineworld Group	Ordinary Shares Long CFD position	3,607 1,772	1.8	Operation of cinemas
Workspace Group	Ordinary Shares Long CFD position	4,841 423	1.7	Supply of flexible workspace to businesses in London
Restore*	Ordinary Shares Long CFD position	3,992 844	1.6	Management of business information in both paper and digital form
Advanced Medical Solutions*	Ordinary Shares Long CFD position	3,916 884	1.6	Development and manufacture of wound care and closure products
Johnson Service Group*	Ordinary Shares Long CFD position	2,958 1,741	1.6	Provision of textile related services
Savills	Ordinary Shares Long CFD position	3,943 697	1.5	Provision of property services
Marshalls	Ordinary Shares Long CFD position	3,979 546	1.5	Manufacturing and sale of concrete stone paving and related products
Headlam Group	Ordinary Shares	4,434	1.5	Distribution of carpets and other floor coverings
Fevertree Drinks*	Ordinary Shares Long CFD position	3,670 488	1.4	Development and sale of soft drinks and mixers
RPC Group	Ordinary Shares Long CFD position	1,462 2,486	1.3	Designing and manufacturing of plastic packaging
KAZ Minerals	Ordinary Shares	3,828	1.3	Copper mining
Bodycote	Ordinary Shares	3,734	1.2	Provision of thermal processing services
Trifast	Ordinary Shares	3,676	1.2	Manufacturing and distribution of industrial fastenings
Scapa*	Ordinary Shares Long CFD position	2,699 922	1.2	Manufacturing of adhesive products
Fuller Smith & Turner	Ordinary Shares Long CFD position	3,101 413	1.1	Ownership and operation of pubs mainly in the London area
Ocean Wilsons	Ordinary Shares	3,353	1.1	Port servicing and related manufacturing
Costain Group	Ordinary Shares Long CFD position	1,795 1,521	1.1	Provision of engineering solutions for energy, water and transportation applications
Centamin	Ordinary Shares	3,189	1.1	Mineral exploration, development and mining
Sanne	Ordinary Shares Long CFD position	2,450 728	1.0	Provision of corporate, fund and private client administration, reporting and fiduciary services
Hansteen Holdings	Ordinary Shares	3,099	1.0	Ownership of industrial property
888 Holdings	Ordinary Shares Long CFD position	2,391 703	1.0	Provision of online gaming entertainment and solutions
St. Modwen Properties	Ordinary Shares	3,091	1.0	Investment and development of property
Petra Diamonds	Ordinary Shares	3,078	1.0	Diamond mining
Hiscox	Ordinary Shares Long CFD position	2,527 546	1.0	Provision of insurance services
Polar Capital Holdings*	Ordinary Shares	3,024	1.0	Provision of investment management services
Robert Walters	Ordinary Shares	2,989	1.0	Provision of specialist recruitment services
Next Fifteen Communications*	Ordinary Shares	2,965	1.0	Provision of digital communication products and services
Big Yellow	Ordinary Shares	2,963	1.0	Provision of self storage services
Saga	Ordinary Shares Long CFD position	2,124 787	1.0	Supply of financial services to older persons
Safestore Holdings	Ordinary Shares Long CFD position	2,208 685	1.0	Ownership and operation of self storage facilities
Wilmington	Ordinary Shares	2,888	1.0	Provision of professional services and publications
YouGov*	Ordinary Shares Long CFD position	2,019 828	1.0	Provision of research and consultancy services
Keywords Studios*	Ordinary Shares	2,813	0.9	Provision of services to the global video games industry
GB Group*	Ordinary Shares	2,801	0.9	Development and supply of identity verification solutions
Topps Tiles	Ordinary Shares Long CFD position	2,487 257	0.9	Sourcing and retail of ceramic tiles
Photo-Me International	Ordinary Shares Long CFD position	1,913 817	0.9	Provision of photo booths and instant vending equipment
Cairn Energy	Ordinary Shares	2,685	0.9	Exploration for oil
Diploma	Ordinary Shares	2,680	0.9	Provision of specialised technical products and services
Novae	Ordinary Shares Long CFD position	1,913 746	0.9	Provision of insurance and reinsurance services
Morgan Sindall	Ordinary Shares	2,644	0.9	Supply of office fit out, construction and urban regeneration services
City of London Investment Group	Ordinary Shares	2,559	0.8	Provision of investment management services
Tyman	Ordinary Shares	2,544	0.8	Manufacturing and supply of window and door components
Melrose Industries	Long CFD position	2,526	0.8	Purchasing and improvement of manufacturing businesses
		--------	--------
50 largest investments		200,335	66.3
		--------	--------

*Traded on the Alternative Investment Market (AIM) of the London Stock Exchange.

Net portfolio is calculated as long only equity portfolio plus long CFD portfolio less short CFD portfolio. All investments are in equity shares unless otherwise stated.

At 30 November 2016, the Company did not hold any equity interest representing more than 3% of any company’s share capital. A list of the Company’s long only equity portfolio and long CFD portfolio is available on the Company’s website.

2015 COMPARATIVE FOR TEN LARGEST INVESTMENTS

Company		30 November 2015  Market Value  £’000	% of net assets
CVS Group	Ordinary shares Long CFD position	6,414 1,711	2.8
4imprint Group	Ordinary shares Long CFD position	6,436 1,682	2.8
Workspace Group	Ordinary shares Long CFD position	5,612 1,493	2.5
Rathbone Brothers	Ordinary shares Long CFD position	5,838 1,059	2.4
JD Sports Fashion	Ordinary shares Long CFD position	4,416 2,435	2.4
Savills	Ordinary shares Long CFD position	5,368 654	2.1
Topps Tiles	Ordinary shares Long CFD position	5,045 966	2.1
Avon Rubber	Ordinary shares	5,937	2.1
Ted Baker	Ordinary shares Long CFD position	4,864 806	2.0
Dechra Pharmaceuticals	Ordinary shares Long CFD position	4,442 786	1.8

FAIR VALUE AND GROSS MARKET EXPOSURE OF INVESTMENTS

Portfolio	Fair value1  £'000	Gross market  exposure2  £'000	Gross market exposure as  a % of net assets3  2016	Gross market exposure  as a % of net assets3  2015
Equity investments (excluding BlackRock’s Institutional Cash Fund) and CFDs	297,072	297,072	98.5	100.3
Total long CFD positions	1,875	56,467	18.7	14.9
Total short CFD positions	30	(23,260)	(7.7)	(9.2)
	--------	--------	--------	--------
Total Investments	298,977	330,279	109.5	106.0
Cash and cash equivalents4	119	(31,184)	(10.3)	(5.7)
BlackRock’s Institutional Cash Fund4	5,390	5,390	1.8	0.8
Other net current liabilities	(2,939)	(2,938)	(1.0)	(1.1)
	--------	--------	--------	--------
Net assets	301,547	301,547	100.0	100.0
	--------	--------	--------	--------

1.  Fair value is determined as follows:
–   Listed and AIM quoted investments are valued at bid prices where available, otherwise at published price quotations.
–   The sum of the fair value column for the CFD contracts totalling represents the fair valuation of all the CFD contracts, which is determined based on the difference between the purchase price and value of the underlying shares in the contract (in effect the unrealised gains/(losses) on the exposed positions). The cost of purchasing the securities held through long CFD positions directly in the market would have amounted to £54,592,000 at the time of purchase, and subsequent market rises in prices have resulted in unrealised gains on the CFD contracts of £1,875,000, resulting in the value of the total market exposure to the underlying securities rising to £56,467,000 as at 30 November 2016. The notional price of selling the securities to which exposure was gained via the short CFD positions would have been £23,290,000 at the time of entering into the contract, and subsequent price changes have resulted in unrealised gains on the short CFD positions of £30,000 and the value of the market exposure of these investments decreasing to £23,260,000 at 30 November 2016. If the short position had been closed on 30 November 2016 this would have resulted in a gain of £30,000 for the Company.
2.  Market exposure in the case of equity investments is the same as fair value. In the case of CFDs it is the market value of the underlying shares to which the portfolio is exposed via the contract.
3.  % based on the total market exposure.
4.  The gross market exposure column for Cash and Cash Fund investments has been adjusted to assume the Company purchased direct holdings rather than exposure being gained through CFDs.

PORTFOLIO BY MAIN INDEX MEMBERSHIP AT 30 NOVEMBER 2016

	Gross Basis1	Net Basis2
FTSE 250	36.7%	33.5%
FTSE Small Cap	25.2%	29.2%
FTSE AIM	26.3%	26.1%
Other	7.5%	6.6%
International	3.9%	4.2%
FTSE Fledgling	0.4%	0.4%

Source: BlackRock.

1.  Long and short CFD portfolios in aggregate plus long only equity portfolio excluding investment in BlackRock’s Institutional Cash Series plc – Sterling Liquidity Fund.
2.  Long CFD portfolio less short CFD portfolio plus long only equity portfolio excluding investment in BlackRock’s Institutional Cash Series plc – Sterling Liquidity Fund.

MARKET CAPITALISATION AS AT 30 NOVEMBER 2016

	Long positions (including the long only portfolio and the long CFD portfolio)	Short positions
£1bn+	27.5%	-2.9%
£400m to £1bn	36.7%	-2.5%
£100m to £400m	38.9%	-1.6%
£0m to £100m	4.0%	-0.1%

Source: BlackRock.

POSITION SIZE AS AT 30 NOVEMBER 2016
 

	Long positions (including the long only portfolio and the long CFD portfolio)	Short positions
£2m+	60	–
£1m to £2m	72	-1
£0m to £1m	80	-67

Source: BlackRock.

FINANCIAL STATEMENTS

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 NOVEMBER 2016

	Notes	Revenue  2016 £'000	Revenue  2015  £'000	Capital  2016  £'000	Capital  2015  £'000	Total  2016  £'000	Total  2015  £'000
Income from investments	3	6,794	6,363	–	–	6,794	6,363
Net income from contracts for difference	3	76	582	–	–	76	582
Other income	3	1	15	–	–	1	15
		--------	--------	--------	--------	--------	--------
Total revenue		6,871	6,960	–	–	6,871	6,960
		--------	--------	--------	--------	--------	--------
Profit on investments held at fair value through profit or loss		–	–	10,419	42,983	10,419	42,983
Loss on foreign exchange		–	–	(24)	(1)	(24)	(1)
Net gains from contracts for difference and futures		–	–	6,746	10,645	6,746	10,645
		--------	--------	--------	--------	--------	--------
Total		6,871	6,960	17,141	53,627	24,012	60,587
		--------	--------	--------	--------	--------	--------
Expenses
Investment management and performance fees	4	(621)	(595)	(2,630)	(5,187)	(3,251)	(5,782)
Other operating expenses	5	(519)	(442)	(18)	(22)	(537)	(464)
		--------	--------	--------	--------	--------	--------
Total operating expenses		(1,140)	(1,037)	(2,648)	(5,209)	(3,788)	(6,246)
		--------	--------	--------	--------	--------	--------
Net profit before finance costs and taxation		5,731	5,923	14,493	48,418	20,224	54,341
Finance costs		(1)	(1)	(3)	(4)	(4)	(5)
		--------	--------	--------	--------	--------	--------
Net profit on ordinary activities before taxation		5,730	5,922	14,490	48,414	20,220	54,336
Taxation		(7)	(11)	–	–	(7)	(11)
		--------	--------	--------	--------	--------	--------
Profit for the year		5,723	5,911	14,490	48,414	20,213	54,325
		========	========	========	========	========	========
Earnings per ordinary share	7	7.83p	8.08p	19.81p	66.21p	27.64p	74.29p
		========	========	========	========	========	========

The total columns of this statement represents the 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.

The Company does not have any other comprehensive income. The net profit for the year disclosed above represents the Company’s total comprehensive income.

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 NOVEMBER 2016

	Notes	Called up  share  capital  £’000	Share  premium  account  £’000	Special  reserve  £’000	Capital  redemption  reserve  £’000	Capital  reserves  £’000	Revenue  reserve  £’000	Total  £’000
For the year ended 30 November 2016
At 30 November 2015		4,026	21,049	35,272	11,905	204,521	9,570	286,343
Total comprehensive income:
Net profit for the year		–	–	–	–	14,490	5,723	20,213
Transactions with owners, recorded directly to equity:
Dividends paid (see (a) below)	6	–	–	–	–	–	(5,009)	(5,009)
		--------	--------	--------	--------	--------	--------	--------
At 30 November 2016		4,026	21,049	35,272	11,905	219,011	10,284	301,547
		--------	--------	--------	--------	--------	--------	--------
For the year ended 30 November 2015
At 30 November 2014		4,026	21,049	35,272	11,905	156,107	7,096	235,455
Total comprehensive income:
Net profit for the year		–	–	–	–	48,414	5,911	54,325
Transactions with owners, recorded directly to equity:
Dividends paid (see (b) below)	6	–	–	–	–	–	(3,437)	(3,437)
		--------	--------	--------	--------	--------	--------	--------
At 30 November 2015		4,026	21,049	35,272	11,905	204,521	9,570	286,343
		--------	--------	--------	--------	--------	--------	--------

(a) Final dividend of 5.60p per share for the year ended 30 November 2015, declared on 12 February 2016 and paid on 5 April 2016 and interim dividend of 1.25p per share for the year ended 30 November 2016, declared on 18 July 2016 and paid on 19 August 2016.

(b) Final dividend of 3.60p per share for the year ended 30 November 2014, declared on 13 February 2015 and paid on 7 April 2015 and interim dividend of 1.10p per share for the year ended 30 November 2015, declared on 24 July 2015 and paid on 21 August 2015.

STATEMENT OF FINANCIAL POSITION AS AT 30 NOVEMBER 2016

	Notes	2016  £’000	2015  £’000
Non current assets
Investments held at fair value through profit or loss		297,072	287,220
		--------	--------
Current assets
Other receivables		1,346	3,066
Derivative financial assets held at fair value through profit or loss		1,934	1,118
Cash held on margin deposit with brokers		152	–
Cash and cash equivalents		5,509	2,344
		--------	--------
		8,941	6,528
		--------	--------
Total assets		306,013	293,748
		--------	--------
Current liabilities
Other payables		(3,024)	(6,171)
Derivative financial liabilities held at fair value through profit or loss		(19)	–
Collateral held in respect of contracts for difference		(1,423)	(1,234)
		--------	--------
		(4,466)	(7,405)
		--------	--------
Net assets		301,547	286,343
		--------	--------
Equity attributable to equity holders
Called up share capital	8	4,026	4,026
Share premium account	9	21,049	21,049
Special reserve	9	35,272	35,272
Capital redemption reserve	9	11,905	11,905
Capital reserves	9	219,011	204,521
Revenue reserve	9	10,284	9,570
		--------	--------
Total equity	7	301,547	286,343
		--------	--------
Net asset value per share	7	412.34p	391.55p
		========	========

The financial statements on pages 47 to 69 of the Annual Report and Financial Statements were approved and authorised for issue by the Board of Directors on 10 February 2017 and signed on its behalf by Lord Latymer, Chairman.

BlackRock Throgmorton Trust plc
Registered in England, No. 00594634

CASH FLOW STATEMENT FOR THE YEAR ENDED 30 NOVEMBER 2016

	2016  £’000	2015  £’000
Operating activities
Net profit before taxation*	20,220	54,336
Add back finance costs	4	5
Gains on investments and derivatives held at fair value through profit or loss including transaction costs	(17,512)	(54,030)
Net movement on foreign exchange	24	1
Sales of investments held at fair value through profit or loss	110,936	111,259
Purchases of investments held at fair value through profit or loss	(110,369)	(119,248)
Realised gains on closure of contracts for difference	35,038	34,676
Realised losses on closure of contracts for difference	(28,282)	(23,849)
Realised losses on closure of futures contracts	(461)	–
Collateral received/(pledged) in respect of contracts for difference	37	(511)
Decrease/(increase) in other receivables	65	(23)
Decrease in amounts due from brokers	1,655	1,355
Increase/(decrease) in amounts due to brokers	106	(2,753)
(Decrease)/increase in other payables	(3,253)	3,138
	--------	--------
Net cash inflow from operating activities before interest and taxation	8,208	4,356
	--------	--------
Interest paid	(3)	(5)
Taxation paid	(7)	(11)
	--------	--------
Net cash inflow from operating activities before financing activities	8,198	4,340
	--------	--------
Financing activities
Dividends paid	(5,009)	(3,437)
	--------	--------
Net cash outflow from financing activities	(5,009)	(3,437)
	--------	--------
Increase in cash and cash equivalents	3,189	903
Effect of foreign exchange rate changes	(24)	(1)
	--------	--------
Change in cash and cash equivalents	3,165	902
Cash and cash equivalents at the start of year	2,344	1,442
	--------	--------
Cash and cash equivalents at the end of the year	5,509	2,344
	--------	--------
Comprised of:
Cash at bank	119	128
BlackRock's Institutional Cash Series plc – Sterling Liquidity Fund	5,390	2,216
	--------	--------
	5,509	2,344
	--------	--------

* Includes dividends and interest received in the year of £6,364,000 and £1,000 (2015: £6,304,000 and nil) respectively.

NOTES TO THE FINANCIAL STATEMENTS

1. PRINCIPAL ACITIVITY

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.

2. ACCOUNTING POLICIES

The principal accounting policies adopted by the Company are set out below.

(a) Basis of preparation

The financial statements have been prepared under the historical cost convention modified by revaluation of financial assets and financial liabilities held at fair value through profit or loss and in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union, International Financial Reporting Interpretations Committee interpretations and as applied in accordance with the provisions of the Companies Act 2006. All of the Company’s operations are of a continuing nature. The Company’s financial statements are presented in sterling because that is the currency of the Company’s share capital, the currency of the investment portfolio, the currency of the country in which the majority of shareholders reside and the currency in which the shareholders’ dividend distributions will be made. All values are rounded to the nearest thousand pounds (£’000) except where otherwise indicated.

Insofar as the Statement of Recommended Practice (SORP) for investment trust companies and venture capital trusts, issued by the Association of Investment Companies (AIC), revised in November 2014, is compatible with IFRS, the financial statements have been prepared in accordance with guidance set out in the SORP.

A number of new standards, amendments to standards and interpretations are effective for annual periods beginning on or after 1 December 2015, and have not been applied when preparing these financial statements (major changes and new standards issued are detailed below). None of these are expected to have a significant effect on the measurement of the amounts recognised in the financial statements of the Company.

IFRS 9 Financial Instruments (2014) replaces IAS 39 and deals with a package of improvements including principally a revised model for classification and measurement of financial instruments, a forward looking expected loss impairment model and a revised framework for hedge accounting. In terms of classification and measurement the revised standard is principles based depending on the business model and nature of cash flows. Under this approach instruments are measured at either amortised cost or fair value. Under IFRS 9 equity and derivative investments will be held at fair value because they fail the ‘solely payments of principal and interest’ test and debt investments will be held at fair value because the business model is to manage them on a fair value basis. The scope of the fair value option is reduced within IFRS 9. The standard is effective from 1 January 2018 with earlier application permitted. The Company does not plan to early adopt this standard.

Amendments to IAS 1 (effective 1 January 2016) requires changes to the presentation of financial instruments. The amendments are not expected to have a significant effect on the measurement of amounts recognised in the financial statements of the Company.

Amendments to IAS 7 – Disclosure Initiative Statement of Cash Flows (effective 1 January 2017). The amendments are not expected to have a significant effect on the presentation of the Cash flow statement within the financial statements of the Company.

IFRS 15 – Revenue from Contracts with Customers (effective 1 January 2018) specifies how and when an entity should recognise revenue and enhances the nature of revenue disclosures. Given the nature of the Company’s revenue streams from financial instruments the provisions of this standard are not expected to be applicable.

(b) Presentation of 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 Statement of Comprehensive Income between items of revenue and capital nature have been presented alongside the Statement of Comprehensive Income.

(c) 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.

Any unquoted investments are valued by the Directors at fair value using International Private Equity and Venture Capital Valuation Guidelines.

Changes in the value of investments held at fair value through profit or loss and gains and losses on disposal are recognised in the Statement of Comprehensive Income as ‘Gains/(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.

(d) Derivatives

The Company’s derivatives are classified as at fair value through profit or loss – held for trading. The Company holds long and short positions in contracts for difference (CFD) and index futures which are held at fair value based on the bid prices of the underlying securities in respect of long positions, and the offer prices of the underlying securities in respect of short positions.

Derivatives are held at fair value based on the bid prices of the underlying securities in respect of long positions, and the offer prices of the underlying securities in respect of short positions, which the Company is exposed to through the use of contracts for difference (CFD) and index futures. Profits and losses on derivative transactions are recognised in the Statement of Comprehensive Income. They are recognised as capital and are shown in the capital column of the Statement of Comprehensive Income if they are of a capital nature and are recognised as revenue and shown in the revenue column of the Statement of Comprehensive Income if they are of a revenue nature. To the extent that any profits or losses are of a mixed revenue and capital nature, they are apportioned between revenue and capital accordingly.

(e) Segmental reporting

The Directors are of the opinion that the Company is engaged in a single segment of business being investment business.

(f) 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.

Special dividends are treated as a capital receipt or revenue receipt depending on the facts or circumstances of each particular case.

Interest income is recognised on an accruals basis.

(g) Expenses

All expenses, including finance costs, are accounted for on an accruals basis. Expenses have been charged wholly to the revenue column of the Statement of Comprehensive Income, except as follows:

-    expenses which are incidental to the acquisition or disposal of investments are charged to the capital column of the Statement of Comprehensive Income. Details of transaction costs on the purchases and sales of investments are disclosed in note 11 on page 58 of the Annual Report and Financial Statements.

-    expenses are treated as capital where a connection with the maintenance or enhancement of the value of the investments can be demonstrated.

-    the investment management fee has been allocated 75% to the capital column and 25% to the revenue column of the Statement of Comprehensive Income 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 have been allocated 100% to the capital column of the Statement of Comprehensive Income, as performance has been predominantly generated through capital returns of the investment portfolio.

(h) Finance costs and bank overdrafts

Finance costs are accounted for on an accruals 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 Statement of Comprehensive Income, 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. Bank overdrafts are recorded as the net proceeds received.

(i) Taxation

The tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on the taxable profit for the period. Taxable profit differs from net profit as reported in the Statement of Comprehensive Income because it excludes items of income or expenses that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company’s liability for current tax is calculated using tax rates that were applicable at the balance sheet date.

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.

Deferred taxation is recognised in respect of all temporary differences that have originated but not reversed at the financial reporting date, where transactions or events that result in an obligation to pay more taxation in the future or right to 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. Deferred taxation assets and liabilities are measured at the rates applicable to the legal jurisdictions in which they arise.

(j) Dividends payable

Under IFRS Interim dividends are recognised when paid to shareholders. Final dividends, if any, are only recognised after they have been approved by shareholders.

(k) 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.

The Company’s investment in BlackRock’s Institutional Cash Series plc – Sterling Liquidity Fund of £5,390,000 (2015: £2,216,000) is managed as part of the Company’s cash management policy and, accordingly, this investment along with purchases and sales of this investment has been classified in the Statement of Financial Position and Cash Flow Statement as cash and cash equivalents. The comparative figures in the Statement of Financial Position and Cash Flow Statement have been restated.

(l) Other receivables and other payables

Other receivables and other payables do not carry any interest and are short term in nature and are accordingly stated at their nominal value.

(m) Foreign currency translation

Transactions involving foreign currencies are converted at the rate ruling at the date of the transaction. Foreign currency monetary assets and liabilities are translated into sterling at the rate ruling on the financial reporting date.

Foreign exchange differences arising on translation are recognised in the Statement of Comprehensive Income as a revenue or capital item depending on the income or expense to which they relate.

3. INCOME

	2016  £’000	2015  £’000
Investment income:
UK listed dividends	5,835	5,139
UK listed dividends – special	403	878
UK scrip dividend	36	14
Overseas listed dividends	474	332
Overseas listed dividends – special	46	–
	-----	-----
	6,794	6,363
Income from contracts for difference	76	582
	-----	-----
	6,870	6,945
	-----	-----
Other income:
Deposit interest	1	–
Underwriting commission	–	15
	-----	-----
Total income	6,871	6,960
	=====	=====

Special dividends of £131,000 have been recognised in capital (2015: nil).

4. INVESTMENT MANAGEMENT AND PERFORMANCE FEES

	2016 Revenue  £’000	2016 Capital  £’000	2016 Total  £’000	2015 Revenue  £’000	2015 Capital  £’000	2015 Total  £’000
Investment management fee	621	1,862	2,483	595	1,786	2,381
Performance fee	–	768	768	–	3,401	3,401
	----	-----	-----	----	-----	-----
Total	621	2,630	3,251	595	5,187	5,782
	====	====	====	===	====	====

Performance fees have been wholly allocated to the capital column of the Statement of Comprehensive Income as the performance has been predominantly generated through capital returns from the investment portfolio. As at 30 November 2016, the performance fee payable to the Investment Manager amounted to £768,000 (2015: £3,401,000).

A summary of the investment management agreement with details of the fees paid to the Investment Manager are disclosed in the Directors’ Report on pages 23 and 24 of the Annual Report and Financial Statements.

5. OTHER OPERATING EXPENSES

	2016  £’000	2015  £’000
Allocated to revenue:
Custody fee	7	7
Auditor’s remuneration:
– audit services	36	34
– other assurance services	6	6
Registrar’s fee	33	31
Broker fees	37	39
Depositary fees	39	37
Marketing fees	126	151
Marketing fee accrual written back	(34)	(110)
Directors’ emoluments	150	139
Other administrative costs	119	108
	----	----
	519	442
	----	----
Allocated to capital:
Transaction charges	18	22
	----	----
	18	22
	----	----
The Company's ongoing charges, calculated as a percentage of average net assets for the year and using expenses, excluding performance fee and finance costs, were:	1.1%	1.1%
	----	----
The Company's ongoing charges, calculated as a percentage of average net assets for the year and using expenses, including performance fee and finance costs, were:	1.3%	2.3%
	====	====

Auditor’s remuneration for other assurance services comprised £6,000 relating to the interim review (2015: £6,000).

6. DIVIDENDS

	Record date	Payment date	2016  £’000	2015  £’000
Dividends paid on equity shares:
2014 final of 3.60p	27 February 2015	7 April 2015	–	2,633
2015 interim of 1.10p	7 August 2015	21 August 2015	–	804
2015 final of 5.60p	26 February 2016	5 April 2016	4,095	–
2016 interim of 1.25p	29 July 2016	19 August 2016	914	–
			-----	-----
			5,009	3,437
			====	====

The Directors have recommended a final dividend of 6.25p per share (2015: final 5.60p). The dividend will be paid on 29 March 2017, subject to shareholders’ approval on 22 March 2017, to shareholders on the Company’s register on 17 February 2017. Under IFRS the proposed final dividend has not been recognised as a liability in these financial statements as final dividends are only recognised in the financial statements when they have been approved by shareholders, and interim dividends are not recognised until they are paid. They are also debited directly to revenue reserves.

The total dividends payable in respect of the year ended 30 November 2016 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:

	2016  £’000	2015  £’000
Dividends paid or proposed on equity shares:
Interim paid 1.25p (2015: 1.10p)	914	804
Final proposed of 6.25p (2015: 5.60p)*	4,571	4,095
	------	-----
	5,485	4,899
	====	====
*Based upon 73,130,326 (2015: 73,130,326) ordinary shares at 10 February 2017.

7. EARNINGS AND NET ASSET VALUE PER ORDINARY SHARE

Revenue and capital earnings per share are shown below and have been calculated using the following:

	2016	2015
Net revenue profit attributable to ordinary shareholders (£’000)	5,723	5,911
Net capital profit attributable to ordinary shareholders (£’000)	14,490	48,414
	-------	-------
Total profit attributable to ordinary shareholders (£’000)	20,213	54,325
	======	======
Total equity attributable to shareholders (£’000)	301,547	286,343
	-------	-------
The weighted average number of ordinary shares in issue during each year, on which the return per ordinary share was calculated was:	73,130,326	73,130,326
	----------	----------
The actual number of ordinary shares in issue at the end of the year on which the net asset value was calculated was:	73,130,326	73,130,326
	========	========
Earnings per share
Revenue earnings per share	7.83p	8.08p
Capital earnings per share	19.81p	66.21p
	-------	-------
Total earnings per share	27.64p	74.29p
	======	======
Net asset value per share	412.34p	391.55p
	-------	-------
Ordinary share price (mid-market)	325.00p	339.50p
	======	======

The Company does not have any dilutive securities.

8. CALLED UP SHARE CAPITAL

	Ordinary  shares in  issue number	Treasury  shares  number	Total  shares  number	£’000
Allotted, called up and fully paid share capital comprised:
Ordinary shares of 5p each:
At 1 December 2015	73,130,326	7,400,000	80,530,326	4,026
	----------	--------	----------	------
At 30 November 2016	73,130,326	7,400,000	80,530,326	4,026
	=========	========	=========	=====

No ordinary shares were issued, purchased or cancelled in the year (2015: nil).

The ordinary shares carry the right to receive any dividends and have one voting right per ordinary share. There are no restrictions on the voting rights of the ordinary shares or on the transfer of ordinary shares.

9. SHARE PREMIUM AND RESERVES

	Share  premium  account  £’000	Special  reserve  £’000	Capital  redemption  reserve  £’000	Capital  reserve  (arising on  investments sold)  £’000	Capital  reserve (arising  on revaluation of  investments held)  £’000	Revenue  reserve  £’000
At 1 December 2015	21,049	35,272	11,905	139,835	64,686	9,570
Movement during the year:
Net profit for the year after taxation	–	–	–	–	–	5,723
Gains on realisation of investments	–	–	–	8,726	–	–
Exchange (losses)/gains	–	–	–	(25)	1	–
Change in investment holding gains	–	–	–	–	1,693	–
Gains on contracts for difference taken to capital	–	–	–	6,409	788	–
(Losses)/profit on futures taken to capital	–	–	–	(461)	10	–
Finance costs, investment management and performance fee charged to capital after taxation	–	–	–	(2,651)	–	–
Dividends paid during the year	–	–	–	–	–	(5,009)
	-------	-------	-------	-------	-------	-------
At 30 November 2016	21,049	35,272	11,905	151,833	67,178	10,284
	======	======	======	======	======	======

10. VALUATION OF FINANCIAL INSTRUMENTS

Financial assets and financial liabilities are either carried in the Statements of Financial Position at their fair value (investment and derivatives) or at an amount which is a reasonable approximation of fair value (due from brokers, dividends and interest receivable, due to brokers, accruals, cash at bank and bank overdrafts). IFRS 13 requires the Company to classify fair value measurements using a fair value hierarchy that reflects the significance of inputs used in making the measurements. The valuation techniques used by the Company are explained in the accounting policies note 2(c) to the Financial Statements.

Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair value measurement of the relevant asset as follows.

The fair value hierarchy has the following levels:

Level 1 – Quoted market price in an active market for an identical instrument. These include exchange traded derivatives. A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis.

Level 2 – Valuation techniques used to price securities based on observable inputs. This category includes quoted prices for similar instruments in markets that are considered less than active; or other valuation techniques where all significant inputs are directly or indirectly observable from market data.

Valuation techniques used for non-standardised instruments such as futures, options, currency swaps and other over-the-counter derivatives include the use of comparable recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, option pricing models and other valuation techniques commonly used by market participants making the maximum use of market inputs.

As at the year end the CFDs were valued using the underlying equity bid price and the contract price at the inception of the CFD trade or at the trade reset date. There have been no changes to the valuation technique since the previous year or as at the date of this report.

Level 3 – Valuation techniques using significant unobservable inputs. This category includes all instruments where the valuation technique includes inputs not based on observable data and the unobservable inputs could have a significant impact on the instrument’s valuation. This category includes instruments that are valued based on quoted prices for similar instruments where significant unobservable adjustments or assumptions are required to reflect differences between the instruments and instruments for which there is no active market. The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety.

For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a Level 3 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgement, considering factors specific to the asset or liability.

The investment manager considers observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.

Contracts for difference have been classified as Level 2 investments as their valuation has been based on market observable inputs represented by the underlying quoted securities to which these contracts expose the Company.

The table below sets out fair value measurements using the IFRS 13 fair value hierarchy.

Financial assets/(liabilities) at fair value through profit or loss  at 30 November 2016	Level 1  £’000	Level 2  £’000	Level 3  £’000	Total  £’000
Assets:
Equity investments	297,072	–	–	297,072
Contracts for difference (gross exposure on long positions)	–	56,467	–	56,467
Liabilities:
Index futures – (gross exposure on short positions)	–	(2,452)	–	(2,452)
Contracts for difference (gross exposure on short positions)	–	(23,260)	–	(23,260)
	----------	---------	-----------	-----------
	297,072	30,755	–	327,827
	======	=====	======	======

Financial assets/(liabilities) at fair value through profit or loss  at 30 November 2015	Level 1  £’000	Level 2  £’000	Level 3  £’000	Total  £’000
Assets:
Equity investments	287,220	–	–	287,220
Contracts for difference (gross exposure on long positions)	–	42,580	–	42,580
Liabilities:
Contracts for difference (gross exposure on short positions)	–	(26,256)	–	(26,256)
	----------	---------	-----------	-----------
	287,220	16,324	–	303,544
	======	=====	======	======

There were no transfers between levels for financial assets and financial liabilities during the year recorded at fair value as at 30 November 2016 and 30 November 2015. The Company did not hold any level 3 securities throughout the financial year or as at 30 November 2016 (2015: nil).

11. CONTINGENT LIABILITIES

There were no contingent liabilities at 30 November 2016 (2015: nil).

12. 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 2016 Annual Report and Financial Statements will be filed with the Registrar of Companies shortly.

The report of the Auditor for the year ended 30 November 2016 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 BlackRock Throgmorton Trust plc for the year ended 30 November 2015, which have been filed with the Registrar of Companies.  The report of the Auditor on those financial statements contained no qualification or statement under section 498 of the Companies Act.

This announcement was approved by the Board of Directors on 10 February 2017.

13. ANNUAL REPORT

Copies of the Annual Report and Financial Statements will be sent to members shortly and will be available from the registered office, c/o The Company Secretary, BlackRock Throgmorton Trust plc, 12 Throgmorton Avenue, London EC2N 2DL. 

14. ANNUAL GENERAL MEETING

The Annual General Meeting of the Company will be held at 12 Throgmorton Avenue, London EC2N 2DL on Wednesday, 22 March 2017 at 11.00 a.m.

ENDS

The Annual Report will also be available on the BlackRock website at blackrock.co.uk/thrg.  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:

Mark Johnson, Managing Director, Closed End Funds, BlackRock Investment Management (UK) Limited
Tel: [phone]

Mike Prentis, BlackRock Investment Management (UK) Limited
Tel: [phone]

Dan Whitestone, BlackRock Investment Management (UK) Limited
Tel: [phone]

Press Enquiries:

Lucy Horne, Lansons Communications – Tel:  [phone]
E-mail:  [e-mail]

10 February 2017

12 Throgmorton Avenue
London EC2N 2DL