Half-yearly Report
The Throgmorton Trust PLC
Half Yearly Financial Report 31 May 2011
The Throgmorton Trust PLC
The Company's objective is to provide shareholders with capital growth and an
attractive total return by investing predominantly in UK smaller companies
which are traded on the main market of the London Stock Exchange or on AIM.
Key Features
- Investment in small/midcap portfolio
- Approximately 30% of the Company's net assets may be invested in a Contracts
for Difference portfolio
- Benchmarked against the Hoare Govett Smaller Companies plus AIM (excluding
Investment Companies) Index
- Progressive dividend policy
- Currently exposed to companies with significant revenue from Asia Pacific,
the Americas and Emerging Markets
Performance Record
Financial Highlights
As at As at
31 May 30 November
2011 2010 Change
Attributable to ordinary shareholders (unaudited) (audited) %
Assets
Net assets (£'000)* 154,735 127,296 +21.6
Undiluted net asset value per ordinary
share 246.08p 212.80p +15.6
- with income reinvested +16.8
Diluted net asset value per ordinary
share 232.05p 200.64p +15.7
- with income reinvested +16.9
Ordinary share price (mid-market) 199.50p 163.00p +22.4
- with income reinvested +23.9
Subscription share price (mid-market) 47.75p 24.25p +96.9
Hoare Govett Smaller Companies plus AIM
(excluding Investment Companies) Index 7,985.08 7,017.87 +13.8
For the six For the six
months ended months ended
31 May 31 May
2011 2010 Change
(unaudited) (unaudited) %
Revenue
Net revenue return after taxation
(£'000) 951 1,013 -6.1
Return per ordinary share - basic 1.57p 1.37p +14.6
Return per ordinary share - diluted 1.51p 1.37p +10.2
Dividend per ordinary share
Interim 0.60p 0.58p +3.4
* The change in net assets is attributable to the cash receivable on the
conversion of subscription shares and market movements.
Chairman's Statement
Performance
I am pleased to report that for the six months ended 31 May 2011, the Company's
diluted net asset value per share ("NAV") increased by 16.9% whilst the share
price rose by 23.9%. By comparison, the Hoare Govett Smaller Companies plus AIM
(excluding Investment Companies) Index increased by 13.8% (all percentages
calculated in sterling terms with income reinvested). The long portfolio and
the CFD portfolio contributed £22.6 million and £3.7 million respectively to
performance over the period. In general, industrial and technology stocks
performed well on the long side. Further information on investment performance
is given in the Investment Manager's Report.
Over the six month period, equity markets were mixed. The period saw political
instability in North Africa and the Middle East, the earthquake and tsunami in
Japan, concerns about slowing growth rates in both China and the US and further
worries about the debt levels of certain European countries.
Despite these concerns UK smaller companies stocks have performed relatively
well and have again outperformed large capitalisation stocks over the period.
Since the period end the Company's diluted NAV has increased by 1.3% and the
share price has decreased by 0.6%.
Revenue return and dividends
The undiluted revenue return per share for the period amounted to 1.57 pence
compared with 1.37 pence for the corresponding period in the previous year, a
rise of 14.6%. The Board is pleased to declare an interim dividend of 0.60
pence per share (2010: 0.58 pence per share) payable on 31 August 2011 to
shareholders on the register on 5 August 2011 (ex-dividend date is 3 August
2011).
Subscription shares
During the period and up to the date of this report, the Company has issued a
total of 3,060,103 ordinary shares, following the conversion of 3,060,103
subscription shares into ordinary shares for total proceeds of £4,468,000. At
the date of this report, the Company had 62,879,817 ordinary shares and
10,250,509 subscription shares in issue.
Shareholders will have two further opportunities to subscribe for all or any of
the ordinary shares to which their subscription shares relate on each of
31 July and 31 October 2011 at 146 pence per share. As at 26 July 2011 the
Company's diluted NAV was 235.02 pence per share and the share price was
198.25 pence per share compared with the exercise price of 146 pence per share.
Prospects
The concerns highlighted above provide some uncertainty, and markets look set
to remain volatile over the remaining months of the financial year. However,
the combination of upgrades to our portfolio's earnings expectations and likely
M&A activity encourage us to remain cautiously optimistic. In the meantime, we
consider that our CFD portfolio gives us the opportunity to benefit from any
volatility in markets.
Richard Bernays
Chairman
27 July 2011
Interim Management Report and Responsibility Statement
The Chairman's Statement and the Investment Manager's Report give details of
the important events which have occurred during the period and their impact on
the financial statements.
Principal risks and uncertainties
The principal risks faced by the Company can be divided into various areas as
follows:
- Performance;
- Income/dividend;
- Regulatory;
- Operational; and
- Financial.
The Board reported on the principal risks and uncertainties faced by the
Company in the Annual Report and Financial Statements for the year ended
30 November 2010. A detailed explanation can be found in the Directors' Report
on pages 14 and 15 and in note 18 on pages 45 to 50 of the Annual Report and
Financial Statements which are available on the website maintained by the
Investment Manager, BlackRock Investment Management (UK) Limited, at
www.blackrock.co.uk/thrg.
In the view of the Board, there have not been any changes to the fundamental
nature of these risks since the previous report and these principal risks and
uncertainties are equally applicable to the remaining six months of the
financial year as they were to the six months under review.
The Company may utilise both exchange traded and over-the-counter derivatives,
including but not limited to CFDs, as part of its investment policy. These
instruments can be highly volatile and potentially expose investors to a higher
risk of loss. Further details of the risk factors associated with the use of
such derivatives can be found on pages 49 and 50 of the Annual Report and
Financial Statements.
Related party transactions
The Investment Manager is regarded as a related party and details of the
management fees payable are set out in note 4 and note 9. The related party
transactions with the Directors are set out in note 9.
Directors' responsibility statement
The Disclosure and Transparency Rules ("DTR") of the UK Listing Authority
require the Directors to confirm their responsibilities in relation to the
preparation and publication of the Interim Management Report and Financial
Statements.
The Directors confirm to the best of their knowledge that:
- the condensed set of financial statements contained within the half yearly
financial report has been prepared in accordance with International Accounting
Standard 34 `Interim Financial Reporting'; and
- the interim management report, together with the Chairman's Statement and
Investment Manager's Report, include a fair review of the information required
by 4.2.7R and 4.2.8R of the FSA's Disclosure and Transparency Rules.
The half yearly financial report was approved by the Board on 27 July 2011 and
the above responsibility statement was signed on its behalf by the Chairman.
Richard Bernays
For and on behalf of the Board
27 July 2011
Investment Manager's Report
Market review and overall investment performance
After a firm start to the financial year, markets lost momentum towards the end
of February. Investors have had various reasons to worry: initially the unrest
in the Middle East and North Africa which caused the oil price to rise sharply,
and then the earthquake and tsunami in Japan and the implications of these
events on industrial production. Later, concerns resurfaced about the high
level of indebtedness of several European countries and the steps they would
need to take to gain further international financial support. Recent economic
data from the US suggest that the US economy is failing to recover
convincingly. All of these factors have created uncertainty for equity
investors and markets have been directionless and nervous.
The Company's diluted NAV per share rose by 16.9% to 232.05p, which compares to
an increase in the benchmark of 13.8%. Ignoring the dilutive effects of the
conversion of just over 3 million subscription shares to ordinary shares during
the period, the NAV per share rose by 19.2%. Over the same period, the FTSE 100
Index increased by 8.3% (all figures calculated in sterling terms with income
reinvested).
Portfolio performance
Our strongest performance again came in the electronic & electrical equipment
sector, where stocks such as Renishaw and Oxford Instruments continued to
contribute significantly to relative performance. These, and others we hold in
the sector, are well run, world leading companies which have invested heavily
in research and development and have products in demand throughout the world,
especially in China. In a similar vein our holdings in the industrial
engineering sector did well, as did some of our holdings in the software
sector, in particular our holdings in Fidessa, Blinkx and System C, which was
taken over, and Kofax. Regrettably, our holding in Alterian did not meet
revenue and profit expectations and we sold it.
We remained significantly underweight in the travel & leisure sector during the
period and this proved profitable. We were also underweight in the oil & gas
producers sector and this worked well, but the benefit was negated by poor
stock selection because our holdings in Cove Energy, Gulfsands and Encore Oil
all underperformed. Cove had little newsflow during the period. Gulfsands
operates in Syria and the unrest in the country led to a sharp fall in
Gulfsands' share price; we have significantly reduced the size of our holding.
Encore Oil's long successful drilling record came to an end and this caused the
market to worry about the scale of its North Sea reserves; fortunately we had
taken considerable profit on our holding at higher share price levels.
We were overweight in the mining sector throughout the period and share prices
in this sector were hit as uncertainty dominated. Eastern Platinum's first
quarter production figures were poor and the mine was disrupted as the
workforce sought higher wages, a not uncommon event in the sector in recent
months. By contrast Petra Diamonds has continued to operate well, helped by the
strong diamond prices and was a major contributor to performance.
The CFD portfolio generated net gains of £3.7 million during the period,
maintaining its consistent record since inception in September 2008. The gains
were entirely due to the long CFD portfolio, with the short CFD portfolio
having made a small loss in the period. Performance of the long CFD portfolio
was strongly helped by positions in Blinkx, Renishaw and Brammer.
Activity
It is clear that UK small and mid cap investors have been heavily overweight in
international industrials for some time and this has been a successful stance.
However, it would appear that this position is now being partly unwound and
industrials are being sold. In recent months we have reduced our exposure to
industrials by selling holdings in Cookson, Morgan Crucible and Spectris. We
prefer holdings such as Spirax-Sarco Engineering, Oxford Instruments and
Renishaw, which remain large holdings. We took money out of several other
holdings, because valuations were beginning to look quite high, but in general
we feel the valuations of our portfolio holdings remain attractive relative to
their growth prospects.
We reduced our underweight UK consumer position; in particular we reduced our
substantial underweight exposure to housebuilders, buying holdings in two South
East focused groups, Berkeley Group and Bovis Homes. We also bought holdings in
two retailers, Majestic Wine and Dunelm. We expect that the recovery in the UK
economy will be more clearly entrenched in 2012 and this should help to rebuild
consumer confidence. However, we still expect weak GDP growth relative to many
other parts of the world.
We have continued to look for international growth stocks, especially those
exposed to more reliably growing emerging markets. In April we added a holding
in International Personal Finance and Oceans Wilson in May. Oceans Wilson is
the holding company for Wilson Sons, a long established port operator and port
services business in Brazil. It stands to benefit from the increasing
investment in Brazil's offshore oil industry and eventual increased oil
production.
We have seen a continuation in bid activity during the period, with holdings in
System C and Burst Media being acquired. Activity has been less intense than
during 2010, probably due to current worries about the strength of the global
economy.
Portfolio positioning
Our portfolio positioning has not changed significantly but the size of some of
our sector positions has been reduced. The portfolio is still built around good
quality growth companies which we know well, run by management we regard
highly, which are truly differentiated and have the ability to maintain organic
growth and margins, which generate cash and have strong balance sheets.
Our largest overweight sector positions remain in electronics, software and
international engineering companies. We remain underweight in real estate,
leisure companies, especially pub and gaming companies, food producers and
retailers.
The CFD portfolio long positions are invariably in our core holdings, but the
aggregate of our long only position and long CFD position rarely exceed 3.0% of
net assets at the individual stock level. Our short CFD positions are in
companies which we see as flawed, operating in commoditised, highly competitive
industries, such as food producers, or facing structural challenges. Our
individual short positions are small and liquid. The CFD portfolio was net long
throughout the period, but the net long was reduced in the Spring.
Outlook
After the strong run in markets over the last two years we have entered a
slightly nervous period. There are plenty of political and economic problems to
worry about around the world. It is hard to assess how the high level of
indebtedness of certain Eurozone economies will ultimately be managed, and this
has led to heightened concerns over the last month or so. However, we do not
expect a collapse in world GDP growth, more a hiccup in the strengthening of
global growth. Having met management of many of our large holdings in recent
weeks, most are trading very strongly and are confident of coping well despite
these uncertainties. Accordingly, we see this as a time to stick with our
highest conviction stocks and sector positions. We think there is a realistic
prospect of better share price performances in the Autumn. Additionally, the
significant variation in the prospects of different companies and sectors offers
opportunities on both sides of the CFD portfolio.
Mike Prentis and Richard Plackett
BlackRock Investment Management (UK) Limited
27 July 2011
Twenty Largest Investments
Market % of
value total
Company £'000 portfolio Business activity
Oxford Instruments Ordinary shares 2,704 Design and manufacture of
Long CFD position 1,274 2.5 scientific instruments
Aveva Group Ordinary shares 2,763 Development and marketing of engineering
Long CFD position 1,063 2.5 computer software
Fidessa group 3,741 2.4 Development and marketing of financial trading
connectivity software
Abcam* Ordinary shares 2,324 Production and distribution of research
Long CFD position 1,063 2.2 grade antibodies and associated products
Domino Printing Ordinary shares 2,210 Manufacture of inkjet and laser commercial
Long CFD position 1,087 2.1 printers
Spirax-Sarco Engineering Ordinary shares 2,064 Design and manufacture of steam management
Long CFD position 997 2.0 systems
Senior Ordinary shares 1,728 Manufacture and supply of components for
Long CFD position 1,207 1.9 the aerospace and automotive sectors
Victrex Ordinary shares 1,941 Manufacture and supply of PEEK
Long CFD position 971 1.9 thermoplastic products
ITE Group Ordinary shares 2,267 Organisation of trade exhibitions in
Long CFD position 620 1.9 Russia and other FSU countries
Avocet Mining* Ordinary shares 1,642
Long CFD position 1,157 1.8 Gold exploration and production
Blinkx* Ordinary shares 2,073 Supply of video technology and an online
Long CFD position 705 1.8 catalogue to enable video to be viewed
Renishaw Ordinary shares 1,838 Design and manufacture of instruments used for
Long CFD position 938 1.8 calibration purposes
City of London 2,526 1.6 Management of investment funds primarily invested
in emerging markets
Hargreaves Services* 2,439 1.6 Mining, importing, processing and supply of coal
and related products
Hutchison China Meditech* 2,402 1.5 Development and supply of traditional Chinese
medicines to the Chinese market
Bellway 2,396 1.5 Housebuilding
Rotork Ordinary shares 1,468 Engineering, manufacturing and design of valve
Long CFD position 862 1.5 actuators
Rathbone Brothers Ordinary shares 1,405
Long CFD position 905 1.5 Private client fund management
Booker Ordinary shares 1,015
Long CFD position 1,035 1.3 Wholesale of grocery products
Elementis 1,822 1.2 Manufacture of specialty chemicals
20 Largest Investments 56,652 36.5
* Traded on the Alternative Investment Market ("AIM") of the London Stock
Exchange
All investments are in equity shares unless otherwise stated.
Disclosure of the Company's smaller holdings would not add materially to
shareholders' understanding of the Company's portfolio structure and priority
investment themes, hence only the 20 largest investments have been disclosed.
Distribution of Investments
as at 31 May 2011
% of long % of long % of short % of
only CFD CFD total
Sector portfolio portfolio portfolio portfolio
Oil & Gas Producers 6.8 0.2 0.0 7.0
Oil Equipment, Services & Distribution 0.5 0.3 0.0 0.8
Chemicals 3.5 0.6 0.0 4.1
Industrial Metals & Mining 1.1 0.0 0.0 1.1
Mining 7.9 1.0 -0.4 8.5
Construction & Materials 1.2 0.4 -0.7 0.9
Aerospace & Defence 1.1 1.3 -0.3 2.1
General Industrials 0.5 0.0 -0.4 0.1
Electronic & Electrical Equipment 6.6 3.4 -0.7 9.3
Industrial Engineering 6.4 1.1 0.0 7.5
Industrial Transportation 1.4 0.0 -0.6 0.8
Support Services 8.4 1.7 -2.9 7.2
Food Producers 0.7 0.0 -1.1 -0.4
Household Goods & Home Construction 3.6 0.5 -0.2 3.9
Health Care Equipment & Services 1.9 0.0 -0.3 1.6
Pharmaceuticals & Biotechnology 5.1 0.7 -0.6 5.2
Food & Drug Retailers 1.1 0.6 -0.5 1.2
General Retailers 3.9 0.0 -1.8 2.1
Media 5.3 0.8 0.0 6.1
Travel & Leisure 3.9 0.0 -0.9 3.0
Fixed Line Telecommunications 0.8 0.0 -0.7 0.1
Mobile Telecommunications 0.2 0.0 0.0 0.2
Gas, Water & Multiutilities 0.3 0.0 0.0 0.3
Real Estate Holding & Development 1.5 0.0 0.0 1.5
Real Estate Services 0.7 0.7 0.0 1.4
Industrial & Office REITs 1.0 0.0 0.0 1.0
Retail REITs 0.4 0.6 0.0 1.0
Specialty REITs 0.2 0.0 0.0 0.2
Financial Services 7.6 1.3 -0.3 8.6
Equity Investment Instruments 0.0 0.0 0.0 0.0
Software & Computer Services 9.9 1.7 -0.4 11.2
Technology Hardware & Equipment 2.1 0.5 -0.2 2.4
Total Investments 95.6 17.4 -13.0 100.0
Analysis of the UK and AIM traded portfolio
Gross Basis (1)
%
FTSE 250 43.2
FTSE AIM 32.2
FTSE Small Cap 19.3
FTSE Fledgling 2.8
Other 2.5
Net Basis (2)
%
FTSE 250 32.0
FTSE AIM 39.7
FTSE Small Cap 21.7
FTSE Fledgling 3.5
Other 3.1
Source: BlackRock.
1. Long and short CFD portfolios in aggregate plus long portfolio.
2. Long CFD portfolio less short CFD portfolio plus long portfolio.
Market capitalisation as at 31 May 2011
£0 to £100m £100m to £400m £400m to £1bn £1bn+
Short positions % of portfolio -0.1% -1.8% -5.8% -2.8%
Long positions % of portfolio 13.5% 32.7% 26.6% 16.8%
Source: BlackRock.
Position size as at 31 May 2011
£0 to £1m £1m to £2m £2m+
Short positions % of portfolio -9.2% -1.1%
Long positions % of portfolio 36.6% 25.2% 27.9%
Source: BlackRock.
Consolidated Statement of Comprehensive Income
for the six months ended 31 May 2011
Revenue £'000 Capital £'000 Total £'000
Six months ended Year ended Six months ended Year ended Six months ended Year ended
31.05.11 31.05.10 30.11.10 31.05.11 31.05.10 30.11.10 31.05.11 31.05.10 30.11.10
Notes (unaudited)(unaudited)(audited)(unaudited)(unaudited)(audited)(unaudited)(unaudited)(audited)
Gains on
investments held
at fair value
through profit or
loss - - - 21,367 10,102 41,570 21,367 10,102 41,570
Net return on
contracts for
difference 75 80 212 3,600 3,079 7,029 3,675 3,159 7,241
Income from
investments held
at fair value
through profit or
loss 3 1,256 1,262 2,380 - - - 1,256 1,262 2,380
Other income 3 19 4 4 - - - 19 4 4
----- ----- ----- ------ ------ ------ ------ ------ ------
Total revenue 1,350 1,346 2,596 24,967 13,181 48,599 26,317 14,527 51,195
----- ----- ----- ------ ------ ------ ------ ------ ------
Investment
management and
performance fees 4 (160) (127) (249) (1,476) (1,512) (6,865) (1,636) (1,639) (7,114)
Other operating
expenses 5 (239) (203) (399) - 285 329 (239) 82 (70)
----- ----- ----- ------ ------ ------ ------ ------ ------
Total operating
expenses (399) (330) (648) (1,476) (1,227) (6,536) (1,875) (1,557) (7,184)
----- ----- ----- ------ ------ ------ ------ ------ ------
Net return before
finance costs and
taxation 951 1,016 1,948 23,491 11,954 42,063 24,442 12,970 44,011
Finance costs (4) (1) (2) - - - (4) (1) (2)
Change in tender
offer provision - - (7) - - (174) - - (181)
----- ----- ----- ------ ------ ------ ------ ------ ------
Return on
ordinary
activities before
taxation 947 1,015 1,939 23,491 11,954 41,889 24,438 12,969 43,828
Taxation on
ordinary
activities 4 (2) (8) - - - 4 (2) (8)
----- ----- ----- ------ ------ ------ ------ ------ ------
Net return on
ordinary
activities after
taxation 7 951 1,013 1,931 23,491 11,954 41,889 24,442 12,967 43,820
----- ----- ----- ------ ------ ------ ------ ------ ------
Earnings per
ordinary share -
basic 7 1.57p 1.37p 2.85p 38.73p 16.12p 61.74p 40.30p 17.49p 64.59p
----- ----- ----- ------ ------ ------ ------ ------ ------
Earnings per
ordinary share -
diluted 7 1.51p 1.37p 2.85p 37.23p 16.12p 61.74p 38.74p 17.49p 64.59p
===== ===== ===== ====== ====== ====== ====== ====== ======
The total column of this statement represents the Consolidated Statement of
Comprehensive Income, prepared in accordance with International Financial
Reporting Standards ("IFRS"), as adopted by the European Union. The
supplementary revenue and capital columns are both prepared under guidance
published by the Association of Investment Companies ("AIC"). All items in the
above statement derive from continuing operations. No operations were acquired
or discontinued during the period. All income is attributable to the equity
holders of The Throgmorton Trust PLC. There are no minority interests.
The net return of the Company for the period was £24,442,000 (six months ended
31 May 2010: £12,967,000; year ended 30 November 2010: £43,820,000). The Group
had no recognised gains or losses other than those disclosed in the
Consolidated Statement of Comprehensive Income and the Statement of Changes in
Equity. The net return for the period disclosed above represents the Company's
Comprehensive Income.
Consolidated Statement of Changes in Equity
for six months ended 31 May 2011
Share Capital
Share premium Special redemption Capital Revenue
capital account reserve reserve reserves reserve Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
For the six months
ended 31 May 2011
(unaudited)
At 30 November 2010 3,494 2,147 35,272 11,905 68,646 5,832 127,296
Total Comprehensive
Income:
Return for the period - - - - 23,491 951 24,442
Transactions with
owners, recorded
directly to equity:
Subscription shares
exercised 122 4,346 - - - - 4,468
Dividends paid* - - - - - (1,471) (1,471)
----- ----- ------ ------ ------ ----- -------
At 31 May 2011 3,616 6,493 35,272 11,905 92,137 5,312 154,735
----- ----- ------ ------ ------ ----- -------
For the six months
ended 31 May 2010
(unaudited)
At 30 November 2009 4,224 35,272 - 11,114 48,954 7,353 106,917
Total Comprehensive
Income:
Return for the period - - - - 11,954 1,013 12,967
Transactions with
owners, recorded
directly to equity:
Subscription shares
exercised 2 69 - - - - 71
Dividends paid** - - - - - (3,113) (3,113)
----- ----- ------ ------ ------ ----- -------
At 31 May 2010 4,226 35,341 - 11,114 60,908 5,253 116,842
----- ----- ------ ------ ------ ----- -------
For the year ended 30
November 2010 (audited)
At 30 November 2009 4,224 35,272 - 11,114 48,954 7,353 106,917
Total Comprehensive
Income:
Return for the year - - - - 41,889 1,931 43,820
Transactions with
owners, recorded
directly to equity:
Subscription shares
exercised 61 2,147 - - - - 2,208
Cancellation of
treasury shares (791) - - 791 - - -
Cancellation of share
premium account - (35,272) 35,272 - - - -
Transfer of assets to
tender pool - - - - (22,197) - (22,197)
Dividends paid*** - - - - - (3,452) (3,452)
----- ----- ------ ------ ------ ----- -------
At 30 November 2010 3,494 2,147 35,272 11,905 68,646 5,832 127,296
----- ----- ------ ------ ------ ----- -------
* Final dividend of 2.42p per share for the year ended 30 November 2010,
declared on 4 February 2011 and paid on 25 March 2011.
** Final dividend of 2.20p per share and special dividend of 2.00p per share
for the year ended 30 November 2009, declared on 29 January 2010 and paid on
26 March 2010.
*** Final dividend of 2.20p per share and special dividend of 2.00p per share
for the year ended 30 November 2009, declared on 29 January 2010 and paid on
26 March 2010 and interim dividend of 0.58p per share for the six months ended
31 May 2010, declared on 20 July 2010 and paid on 31 August 2010.
Statement of Financial Position
as at 31 May 2011
31 May 31 May 30 November
2011 2010 2010
£'000 £'000 £'000
Notes (unaudited) (unaudited) (audited)
Non current assets
Investments held at fair value
through profit or loss 155,409 117,551 134,627
------- ------- -------
Current assets
Other receivables 2,170 854 619
Amounts due in respect of
contracts for difference 9,564 5,609 8,066
Cash 895 950 1,256
------- ------- -------
12,629 7,413 9,941
------- ------- -------
Total assets 168,038 124,964 144,568
Current liabilities
Other payables (3,820) (3,004) (9,307)
Collateral pledged in respect
of contracts for difference (8,916) (5,002) (7,965)
Amounts due in respect of
contracts for difference (567) (116) -
------- ------- -------
(13,303) (8,122) (17,272)
------- ------- -------
Net assets 154,735 116,842 127,296
======= ======= =======
Equity attributable to equity
holders
Share capital 8 3,616 4,226 3,494
Share premium account 6,493 35,341 2,147
Special reserve 35,272 - 35,272
Capital redemption reserve 11,905 11,114 11,905
Capital reserves 92,137 60,908 68,646
Revenue reserve 5,312 5,253 5,832
------- ------- -------
Total equity shareholders'
funds 154,735 116,842 127,296
======= ======= =======
Net asset value per ordinary
share - undiluted 7 246.08p 157.54p 212.80p
======= ======= =======
Net asset value per ordinary
share - diluted 7 232.05p 155.63p 200.64p
======= ======= =======
Consolidated Cash Flow Statement
for the six months ended 31 May 2011
Six months Six months
ended ended Year ended
31 May 31 May 30 November
2011 2010 2010
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Net cash (outflow)/inflow from
operating activities before
financing (4,309) (1,760) 8,083
----- ----- ------
Financing activities
Proceeds from exercise of
subscription shares 4,468 71 2,208
Subscription share issue costs paid - (241) (250)
Distributions to tender shareholders - - (14,286)
Dividends paid (1,471) (3,113) (3,452)
----- ----- ------
Net cash inflow/(outflow) from
financing 2,997 (3,283) (15,780)
----- ----- ------
Decrease in cash and cash
equivalents (1,312) (5,043) (7,697)
Effect of foreign exchange rate
changes - (1) (4)
----- ----- ------
Change in cash and cash equivalents (1,312) (5,044) (7,701)
Cash and cash equivalents at the
start of period (6,709) (23) 992
Subsidiary cash balances at the
start of the period - 1,015 -
----- ----- ------
Cash and cash equivalents at the end
of the period (8,021) (4,052) (6,709)
===== ===== ======
Comprised of:
Cash 895 950 1,256
Collateral pledged in respect of
contracts for difference (8,916) (5,002) (7,965)
----- ----- ------
Total (8,021) (4,052) (6,709)
===== ===== ======
Reconciliation of Net Income before Finance Costs and Taxation to Net Cash Flow
from Operating Activities
Six months Six months
ended ended Year ended
31 May 31 May 30 November
2011 2010 2010
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Operating activities
Profit before taxation 24,438 12,969 43,828
Add back interest paid 92 85 165
Gains on investments held at fair
value through profit or loss including
transaction costs (25,066) (13,265) (48,603)
Net movement on foreign exchange - (1) 4
Sales of investments held at fair
value through profit or loss 47,218 31,394 95,694
Purchases of investments held at fair
value through profit or loss (43,865) (33,360) (81,828)
In specie transfer of assets to
tendering shareholders - - (7,793)
Increase in other receivables (293) (11) (27)
Increase in amounts due from brokers (1,289) (478) (228)
Increase/(decrease) in amounts due to
brokers 313 (33) 646
(Decrease)/increase in other payables (5,781) 1,045 6,390
Scrip dividends included in investment
income - (14) -
----- ----- -----
Net cash (outflow)/inflow from
operating activities before interest
and taxation (4,233) (1,669) 8,248
----- ----- -----
Interest paid (92) (85) (165)
Tax on income 16 (6) -
----- ----- -----
Net cash (outflow)/inflow from
operating activities (4,309) (1,760) 8,083
===== ===== =====
Notes to the Financial Statements
for the six months ended 31 May 2011
1. Principal activity
The principal activity of the Company is that of an investment trust company
within the meaning of sub-sections 1158-1165 of the Corporation Tax Act 2010.
The Company has two subsidiaries, The Third Throgmorton Trust Limited, the
principal activity of which was investment dealing in shares and other
investments and T.T. Finance PLC which acted as a financing subsidiary.
2. Basis of preparation
The half yearly financial report has been prepared using the same accounting
policies as set out in the Company's annual report and financial statements for
the year ended 30 November 2010 (which were prepared in accordance with IFRS as
adopted by the European Union and as applied in accordance with the provisions
of the Companies Act 2006), and in accordance with International Accounting
Standard 34. 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 January 2009 is compatible with
IFRS, the financial statements have been prepared in accordance with the
guidance set out in the SORP. These comprise standards and interpretations of
the International Accounting Standards and Standard Interpretations Committee
as approved by the International Accounting Standards Committee that remain in
effect, to the extent that IFRS have been adopted by the European Union.
The functional currency of the Group is UK pounds sterling as this is the
currency of the primary economic environment in which the Group operates.
Accordingly, the financial statements are presented in UK pounds sterling.
3. Income
Six months Six months Year
ended ended ended
31 May 31 May 30 November
2011 2010 2010
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Investment income:
UK listed dividends 1,207 1,145 2,161
Overseas listed dividends 49 117 219
----- ----- -----
1,256 1,262 2,380
----- ----- -----
Other income:
Deposit interest 1 1 2
Underwriting commission 18 3 2
----- ----- -----
19 4 4
----- ----- -----
Total 1,275 1,266 2,384
===== ===== =====
4. Investment management and performance fees
Six months ended Six months ended Year ended
31 May 2011 31 May 2010 30 November 2010
(unaudited) (unaudited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Investment management
fee 160 480 640 127 381 508 249 748 997
Performance fee - 996 996 - 1,131 1,131 - 6,117 6,117
--- ----- ----- --- ----- ----- --- ----- -----
Total 160 1,476 1,636 127 1,512 1,639 249 6,865 7,114
=== ===== ===== === ===== ===== === ===== =====
The terms of the investment management agreement with BlackRock provide for a
basic management fee, payable quarterly in arrears, of 0.7% per annum on the
gross asset value of the Company's long only portfolio plus the gross value of
the underlying equities, long and short, to which the Company is exposed to
derivatives through its CFD portfolio. In addition, BlackRock is entitled to a
performance fee of 12.5% of any net asset value (total return) outperformance
against the Hoare Govett Smaller Companies plus AIM (excluding Investment
Companies) Index. The performance fee is subject to a high watermark such that,
if in a performance period the Company underperforms the Index, in a future
performance period a performance fee is only payable on the net asset value
return that represents the net outperformance. In addition, the performance fee
in any performance period will be capped at 4.99% of the average value of the
Company's assets.
The investment management fee is allocated 75% to the capital column and 25% to
the revenue column of the Consolidated Statement of Comprehensive Income. A
performance fee of £996,000 was accrued for the six months ended 31 May 2011
(six months ended 31 May 2010: £1,131,000; year ended 30 November 2010:
£6,117,000). The performance fees have been wholly allocated to the capital
column of the Consolidated Statement of Comprehensive Income, as performance
has been predominantly generated through the capital returns of the investment
portfolio.
5. Other operating expenses
Six months Six months Year
ended ended ended
31 May 31 May 30 November
2011 2010 2010
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Auditors' remuneration
- audit services 14 14 28
- other services* 5 11 9
Registrar's fee 19 32 55
Directors' remuneration 58 50 100
Other administration costs 143 96 207
--- --- ---
239 203 399
=== === ===
* Other audit services for the period ended 31 May 2011 relate to the review of
the interim financial statements.
6. Dividend
The Board has declared an interim dividend of 0.60p per share (2010: 0.58p)
payable on 31 August 2011 to shareholders on the register at close of business
on 5 August 2011.
7. Consolidated return and net asset value per ordinary share
31 May 31 May 30 November
2011 2010 2010
(unaudited) (unaudited) (audited)
Net revenue return attributable to
ordinary shareholders (£'000) 951 1,013 1,931
Net capital return attributable to
ordinary shareholders (£'000) 23,491 11,954 41,889
------ ------- -------
Total earnings attributable to
ordinary shareholders (£'000) 24,442 12,967 43,820
======= ======= =======
Total equity shareholders' funds
(£'000) 154,735 116,842 127,296
------- ------- -------
Ordinary shares
The weighted average number of
ordinary shares in issue during the
period on which the earnings per
ordinary share was calculated, was: 60,655,511 74,128,494 67,839,455
---------- ---------- ----------
The weighted average number of
ordinary shares in issue during the
period on which the diluted
earnings per ordinary share was
calculated, was: 63,102,014 74,128,494 67,839,455
---------- ---------- ----------
The actual number of ordinary
shares in issue at the end of each
period on which the undiluted net
asset value was calculated, was*: 62,879,817 74,164,475 59,819,714
---------- ---------- ----------
The number of ordinary shares in
issue at the end of each period on
which the diluted net asset value
was calculated, was*: 73,130,326 88,939,009 73,130,326
---------- ---------- ----------
Number of subscription shares in
issue at the end of the period was: 10,250,509 14,774,534 13,310,612
---------- ---------- ----------
Undiluted
Revenue earnings per share 1.57p 1.37p 2.85p
Capital earnings per share 38.73p 16.12p 61.74p
------- ------- -------
Total earnings per share 40.30p 17.49p 64.59p
======= ======= =======
Net asset value per share 246.08p 157.54p 212.80p
======= ======= =======
Diluted
Revenue earnings per share 1.51p 1.37p 2.85p
Capital earnings per share 37.23p 16.12p 61.74p
------- ------- -------
Total earnings per share 38.74p 17.49p 64.59p
======= ======= =======
Net asset value per share 232.05p 155.63p 200.64p
======= ======= =======
Ordinary share price (mid-market) 199.50p 134.75p 163.00p
Subscription share price
(mid-market) 47.75p 8.05p 24.25p
======= ======= =======
* The diluted net asset value per share at 31 May 2011 is calculated by
adjusting equity shareholders' funds for consideration receivable on the
exercise of 10,250,509 subscription shares, at the exercise price of 146p per
share and dividing by the total number of shares that would have been in issue
at 31 May 2011, had all the subscription shares been exercised.
8. Share capital
Continuing Treasury Subscription Total Nominal
shares shares shares shares value
number number number number £'000
Allotted, called-up and
fully paid share
capital comprised:
Ordinary shares of 5p
each
At 1 December 2010 59,819,714 7,400,000 13,310,612 80,530,326 3,494
Subscription shares of
1p each:
Subscription shares
exercised 3,060,103 - (3,060,103) - 122
---------- ---------- ---------- ---------- ----------
At 31 May 2011 62,879,817 7,400,000 10,250,509 80,530,326 3,616
========== ========== ========== ========== ==========
During the period the Company issued a total of 3,060,103 ordinary shares,
following the conversion of 3,060,103 subscription shares for a total
consideration of £4,468,000. At the date of this report, the Company has
62,879,817 ordinary shares (excluding 7,400,000 shares currently held in
treasury) and 10,250,509 subscription shares in issue.
The subscription shares were allotted as a bonus issue to ordinary shareholders
on 30 September 2009, on the basis of one subscription share for every five
ordinary shares. Each subscription share confers the right but not the
obligation to subscribe for one ordinary share at a pre-determined price of
146p per ordinary share. The 10,250,509 subscription shares now in issue are
exercisable on 31 July and 31 October 2011, after which the rights of the
subscription shares will lapse.
The ordinary shares (including new ordinary shares issued as a result of the
exercise of subscription share rights) carry the right to receive any dividends
and have one voting right per ordinary share. There are no restrictions on the
voting rights of the ordinary shares or on the transfer of ordinary shares.
The subscription shares do not carry the right to receive any dividends and do
not have any voting rights. There are no restrictions on the transfer of
subscription shares.
9. Related party disclosure
BlackRock Investment Management (UK) Limited ("BlackRock") provides management
and administration services to the Company under a contract which is terminable
on six months' notice. Details of the fees receivable by BlackRock in relation
to these services are set out in note 4.
The investment management fee for the six months ended 31 May 2011 amounted to
£640,000 (six months ended 31 May 2010: £508,000 and the year ended 30 November
2010: £997,000). In addition, a performance fee of £996,000 was accrued (six
months ended 31 May 2010: £1,131,000; year ended 30 November 2010: £6,117,000).
At the period end, an amount of £1,636,000 was outstanding in respect of these
fees (six months ended 31 May 2010: £802,000; year ended 30 November 2010: £
7,362,000).
The Board consists of five non-executive Directors, all of whom are considered
to be independent by the Board. None of the Directors has a service contract
with the Company. With effect from 1 December 2010, the Chairman receives an
annual fee of £33,000, the Chairman of the Audit Committee receives an annual
fee of £23,000 and each of the other Directors receives an annual fee of
£20,000.
At the period end all five members of the Board held shares in the Company as
set out below:
Ordinary Subscription
shares shares
Richard Bernays 40,000 8,000
Simon Beart 20,358 2,715
Crispin Latymer 6,293 810
Eric Stobart 11,400 2,064
Harry Westropp 20,000 4,000
10. Contingent liabilities
There were no contingent liabilities at 31 May 2011 (2010: nil).
11. Publication of non statutory accounts
The financial information contained in this half yearly financial report does
not constitute statutory accounts as defined in section 435 of the Companies
Act 2006. The financial information for the six months ended 31 May 2011 and 31
May 2010 has not been audited.
The information for the year ended 30 November 2010 has been extracted from the
latest published audited financial statements, which have been filed with the
Registrar of Companies. The report of the auditors on those financial
statements contained no qualification or statement under sections 498(2) or (3)
of the Companies Act 2006.
12. Annual results
The Board expects to announce the annual results for the year ending 30
November 2011, as prepared under IFRS, in mid January 2012. Copies of the
results announcement can be obtained from the Secretary on 020 7743 3000. The
annual report should be available by the beginning of February 2012, with the
Annual General Meeting being held in March 2012.
Independent Review Report
to The Throgmorton Trust PLC
Introduction
We have been engaged by the Company to review the condensed set of financial
statements in the half yearly financial report for the six month period ended
31 May 2011 which comprises the Consolidated Statement of Comprehensive Income,
Consolidated Statement of Changes in Equity, Consolidated Statement of
Financial Position, Consolidated Cash Flow Statement, Reconciliation of Net
Income before Taxation to Net Cash Flow from Operating Activities, and the
related notes. We have read the other information contained in the half yearly
financial report and considered whether it contains any apparent misstatements
or material inconsistencies with the condensed set of financial statements.
This report is made solely to the Company in accordance with guidance contained
in International Standard on Review Engagements (UK and Ireland) 2410 "Review
of Interim Financial Information Performed by the Independent Auditor of the
Entity" issued by the Auditing Practices Board. To the fullest extent permitted
by law, we do not accept or assume responsibility to anyone other than the
Company, for our work, for this report, or for the conclusions we have formed.
Directors' responsibilities
The half yearly financial report is the responsibility of, and has been
approved by, the Directors. The Directors are responsible for preparing the
half yearly financial report in accordance with the Listing Rules of the
Financial Services Authority.
As disclosed in note 1, the annual financial statements of the Company are
prepared in accordance with International Financial Reporting Standards
("IFRS") as adopted by the European Union and as applied in accordance with the
provisions of the Companies Act 2006. The condensed set of financial statements
included in this half yearly financial report has been prepared in accordance
with the Accounting Standards Board Statement "Half Yearly Financial Reports".
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half yearly financial report based on our
review.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half yearly
financial report for the six month period ended 31 May 2011 is not prepared, in
all material respects, in accordance with the Accounting Standards Board
Statement "Half Yearly Financial Reports" and the Disclosure and Transparency
Rules of the United Kingdom's Financial Services Authority.
Ernst & Young LLP
London
27 July 2011
For further information, please contact:
Jonathan Ruck Keene, Managing Director, Investment Companies, BlackRock
Investment Management (UK) Limited
Tel: 020 7743 2178
Mike Prentis, Fund Manager, BlackRock Investment Management (UK) Limited
Tel: 020 7743 2312
Emma Phillips, Media & Communication, BlackRock Investment Management (UK)
Limited
Tel: 020 7743 2922
27 July 2011
33 King William Street
London EC4R 9AS
END
The Half Yearly Financial Report will also be available on the BlackRock
Investment Management website at http://www.blackrock.co.uk/content/groups/
uksite/documents/literature/blk047265.pdf.pdf. Neither the contents of the
Manager's website nor the contents of any website accessible from hyperlinks on
the Manager's website (or any other website) is incorporated into, or forms
part of, this announcement.
END
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