Half-yearly Report

The Throgmorton Trust PLC Half Yearly Financial Report 31 May 2012 Objective - 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. Unique Structure - Conventional long only portfolio; and - Contracts for difference portfolio; approximately 30% of the Company's net assets may be invested in contracts for difference ("CFD"). A CFD is a contract, which allows the Company to profit from share price movements over a defined period. This allows the Company to take advantage of price movements without owning the underlying stock. Benchmark - Hoare Govett Smaller Companies plus AIM (excluding Investment Companies) Index to 9 April 2012 and Numis Smaller Companies plus AIM (excluding Investment Companies) Index from 10 April 2012. Performance Record Financial Highlights As at As at 31 May 30 November 2012 2011 Change Attributable to ordinary shareholders (unaudited) (audited) % Assets Net assets (£'000) 156,048 147,774 5.6 Net asset value per share 213.38p 202.07p 5.6 - with income reinvested - - 6.8 Ordinary share price (mid-market) 174.25p 170.00p 2.5 - with income reinvested - - 3.9 Benchmark index* 7,079.97 6,798.37 4.1 For the six For the six months ended months ended 31 May 31 May 2012 2011 Change (unaudited) (unaudited) % Revenue Net revenue profit after taxation (£'000) 1,089 951 14.5 Revenue earnings per ordinary share 1.49p 1.57p -5.1 Dividend per ordinary share Interim 0.62p 0.60p 3.3 * Hoare Govett Smaller Companies plus AIM (excluding investment companies) Index to 9 April 2012 and Numis Smaller Companies plus AIM (excluding Investment Companies) Index from 10 April 2012. Chairman's Statement Performance In my first half yearly report to you as Chairman, I am pleased to report that for the six months ended 31 May 2012, the Company's net asset value per share ("NAV") increased by 6.8%. By comparison, the Company's benchmark returned 4.1% (all percentages calculated on a total return basis). The long only portfolio generated an underlying profit of 7.6%, before accounting for the Company's management and administration costs. The CFD portfolio generated a net gain of £0.9 million on the same basis, retaining its successful record of adding value in all types of market conditions. In general, electronics, chemicals and software companies 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 have remained volatile with continuing macro-economic uncertainty driven by the Eurozone crisis and concerns about slowing growth rates in both China and the US. Since the period end the Company's diluted NAV has increased by 2.2% compared to a rise in the benchmark of 2.1%. Revenue earnings and dividends The Company's revenue earnings per share for the period amounted to 1.49 pence compared with 1.57 pence for the corresponding period in the previous year. This reduction is primarily due to the dilution arising from further share issues, since income during the period increased satisfactorily. The Board is pleased to declare an interim dividend of 0.62 pence per share (2011: 0.60 pence per share) payable on 24 August 2012 to shareholders on the register on 27 July 2012 (ex-dividend date is 25 July 2012). Board Following the AGM held in March 2012 Richard Bernays stepped down as the Chairman and a non-executive Director, I would like to thank Richard for his outstanding contribution to the Company since his appointment in 2002. During his period as Chairman, Richard steered the Company through significant changes which have benefited shareholders substantially. The Company is now well positioned to take advantage of opportunities for further growth. We are very pleased to welcome Jean Matterson to the Board with effect from 10 July 2012. Jean has extensive investment experience and is the Chief Investment Officer of Rossie House Investment Management. She is also the Chairman of Pacific Horizon Investment Trust plc and previously served on the Board of Dunedin Income Growth Investment Trust PLC between 1997 and 2011, where she was a member of the Audit Committee and was Senior Independent Director from 1997 until 2010. Benchmark index The Company was benchmarked against the Hoare Govett Smaller Companies plus AIM (excluding Investment Companies) Index from the start of the financial year until 10 April 2012 when it was renamed the Numis Smaller Companies plus AIM (excluding Investment Companies) Index. Prospects Uncertainty about the future of the Eurozone has impacted investment and consumer demand in Europe, and there are now some signs that the momentum of economic growth has slowed in the US and in China. On a more positive note, the recent fall in the price of oil should help corporate margins and consumers' cash flow. Company balance sheets are also generally now much stronger than at the start of the financial crisis. In this environment our managers will continue to focus on companies with strong positions in their respective markets and proven management teams. Even if the outlook for economic growth currently appears lacklustre, the valuation of smaller companies overall is now undemanding by historic standards and provides scope for progress. Crispin Latymer Chairman 13 July 2012 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; - Market; - Financial; and - Stability of the Eurozone. The Board reported on the first six principal risks and uncertainties faced by the Company in the Annual Report and Financial Statements for the year ended 30 November 2011. A detailed explanation can be found in the Directors' Report on pages 15 and 16 and in note 18 on pages 48 to 53 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. In the view of the Board an additional uncertainty to those outlined in the Annual Report and Financial Statements now exists; as at 31 May 2012, approximately 0.02% of the Company's investment portfolio by value are companies listed in the Eurozone. In addition, other companies in the portfolio trade with, and are located in, the Eurozone. As at the date of this document it is unclear to what extent the economies and political structures of the Eurozone member countries may be affected by the financial crisis within the Eurozone or that the Euro as a currency in its current form will continue. The Eurozone debt crisis remains a concern and may have a material impact on the global economic climate which could in turn have an adverse effect on the companies in which we invest. 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 10. The related party transactions with the Directors are set out in note 10. 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 13 July 2012 and the above responsibility statement was signed on its behalf by the Chairman. Crispin Latymer For and on behalf of the Board 13 July 2012 Investment Manager's Report Market review and overall investment performance Stockmarkets remained highly volatile during the first half of the financial year. Optimism in the early part of the year was replaced by renewed nervousness that Greece would default on its debts, and a rescue package had to be put in place to recapitalise Spanish banks. Investors also had concerns about the slowing of the Chinese economy and tensions in the Middle East. These uncertainties took their toll on stockmarkets which fell heavily in May. Unsurprisingly smaller, less liquid stocks, were hit hardest as sellers found it difficult to find buyers. We have generally aimed to hold approximately 20% of the portfolio value in companies with high potential and a market capitalisation of up to £100 million however share prices in these companies underperformed. During the period the Company's NAV per share increased by 6.8% to 213.38p, by comparison the benchmark returned 4.1%, whilst the FTSE 100 Index increased by 3.3% (all percentages with income reinvested). Performance review Both the long only portfolio and the CFD portfolio added value during the period. The long only portfolio generated an underlying profit of 7.6%, before accounting for the Company's management and administration costs, compared to a rise in the benchmark of 4.1%. The CFD portfolio generated a net gain of £0.9 million on the same basis, retaining its successful record of adding value in all types of market conditions. The CFD portfolio performed well and achieved strong gains on the long CFDs. These were partly offset by losses on the shorts. The long CFDs generally mirror our larger long only portfolio holdings, although the long CFDs included a position in Umeco which was not held in the long only portfolio. Umeco was bid for during the period. In the long only portfolio both sector allocation and stock selection were positive, with the former being more significant. Our overweight positions in electronics, chemicals and software companies all contributed well to relative performance. Looking at stock selection, the most significant positive contributors to relative performance were our holdings in Hutchison China Meditech, Collins Stewart Hawkpoint, Providence Resources, Oxford Instruments and St Modwen Properties. Hutchison China Meditech announced a global licensing and co-development agreement with AstraZeneca for a novel therapy for the treatment of cancer. Collins Stewart Hawkpoint announced a takeover from Canaccord at a significant premium. Providence Resources drilled an appraisal well on its 80% owned Barryroe oil discovery offshore Ireland, and flowed light oil and gas at a rate in excess of 6,000 barrels of oil equivalent per day, a very encouraging result. Oxford Instruments continued to trade well with strong organic sales growth, especially of new products, and further margin improvements, combined with strong positive cash flow. St Modwen Properties announced that it had continued to trade well with good sales of residential development land, and that its joint venture with Vinci was the preferred bidder for the significant New Covent Garden regeneration contract. On the negative side the largest detractors from relative performance were our holdings in Hargreaves Services, Blinkx and Immunodiagnostic Systems. Hargreaves Services announced that they had encountered problems driving out a new face at the underground coal mine at Maltby. This will delay mining this part of the mine by several months, and the lack of revenue during this period will reduce profits in its new financial year. We like the company and its management because it has had considerable success in increasing the range, scale and geographical spread of its activities in a low risk way. Sadly the risks inherent in deep mining cannot be totally mitigated and we hope this will prove to be a one-off issue, management certainly can see no prior similar issue in the mine's long history. Blinkx announced continued strong revenue growth but has not communicated its strategy well following two recent acquisitions. Additionally there is a perception that its largest shareholder may look to sell its holding. Immunodiagnostic Systems supply equipment and consumables to allow labs to test the degree to which human samples contain certain substances, in particular vitamin D. Their iSYS platform is being rolled out in Europe and the US, and is increasingly seen as an easy to use platform enabling a growing number of important tests to be carried out. However, growth rates have slowed, competition has increased and prices have come under pressure. We still believe the company has a good offering, but growth prospects look less assured than we had previously believed. Activity Activity in the portfolio has been fairly limited during the period. Early in the financial year, when markets were rather brighter, and with gathering tensions in the Middle East, we decided to close our underweight position in oil & gas producers, adding small holdings in Valiant Petroleum and Salamander Energy, both existing oil producers. We also sold our holding in Cove Energy, which was bid for by Shell; we re-invested the proceeds in Ophir Energy, exploring, like Cove, off the coasts of Africa; and Coastal Energy, on oil producer mainly producing, like Salamander, offshore Thailand. Bid activity in our portfolio was fairly muted during the period save for bids for Collins Stewart Hawkpoint, Cove Energy and Umeco. However there have been various bids in our universe, generally for lower quality businesses than we have been prepared to hold. Portfolio Positioning We continue to seek exposure to high quality companies exposed to the faster growing parts of the world. From a sector point of view we are most overweight in the electronics, chemicals, healthcare and engineering sectors. Our large holdings are usually core holdings and run by management that we know well who have proved themselves in a variety of market conditions. Most of these companies outperform in difficult times, although they do not always sail through unscathed. Importantly, these companies also have strong balance sheets, often with significant net cash. The core holdings are companies with strong market share, pricing power derived often from some technological or branding advantage, a record of growing organically, increasing earnings and turning profits into cash. Within the CFD portfolio our positioning is largely unchanged, although the net long position was reduced as markets fell in May. We remain long of high quality growth stocks similar in nature to the core holdings in the long only portfolio, and short of businesses we see as vulnerable in terms of their market positions and balance sheets, especially retailers, food producers and suppliers to Government. Outlook Markets are likely to remain volatile until a clear cut resolution has been found to the problems of the Eurozone. We seem to be no closer to a resolution of these problems and have little clarity on how agreement can be reached between the many interested parties. Alongside this, data from other major economies has been generally weaker and confidence seems to be slipping away. None of this is good for stockmarkets, especially investing in smaller companies. However, it is at times like these that good buying opportunities arise for those with a medium term perspective. Over the very long term, and over most medium term timescales, shares in smaller companies have significantly outperformed their larger counterparts. Often as confidence starts to rebuild, shares in smaller companies tend to perform strongly. The leading stocks in such a rally tend to be amongst the riskiest but as confidence builds further, higher quality growth stocks tend to start to perform well. Our portfolio is mainly composed of these kinds of stocks. Trading newsflow from our portfolio has generally been good over the last few months, although we have had some disappointments. Since the period end we have seen an increase in mergers and acquisition activity again, with bids for holdings WSP and Nautical Petroleum. We expect this to be an important feature of our market and portfolio for some time. Equity markets look attractive relative to Government bonds, and also attractive relative to cash deposits which look likely to remain low yielding. Many small and mid-cap stocks have excellent growth prospects and are sensibly valued. We believe that confidence is likely to rebuild, although not without some setbacks, and stockmarkets are likely to move higher over the next few years. Our portfolio should perform well in this scenario. Mike Prentis and Richard Plackett BlackRock Investment Management (UK) Limited 13 July 2012 Twenty Largest Investments Market % of value net Company £'000 assets Description Oxford Instruments Ordinary 4,625 Design and manufacture of shares scientific instruments Long CFD 1,353 3.8 position Booker Ordinary 2,984 Wholesaler for grocery shares products Long CFD 1,334 2.8 position Victrex Ordinary 2,971 Manufacture and supply of PEEK shares thermoplastic products Long CFD 1,175 2.7 position Senior Ordinary 2,691 Manufacture and supply of shares components for the aerospace and Long CFD 1,364 2.6 automotive sectors position Aveva Group Ordinary 2,570 Development and marketing of shares engineering computer software Long CFD 1,229 2.4 position Bellway Ordinary 2,860 Housebuilding shares Long CFD 866 2.4 position Ashtead Group Ordinary 2,414 Hire of plant, predominantly shares in the US Long CFD 1,152 2.3 position Howden Joinery Ordinary 2,408 Design and manufacture of shares kitchens sold to local builders Long CFD 976 2.2 position ITE Group Ordinary 2,358 Organisation of trade shares exhibitions in Russia and other FSU Long CFD 955 2.1 countries position Spirax-Sarco Ordinary 1,926 Design and manufacture of Engineering shares steam management systems Long CFD 1,033 1.9 position Elementis Ordinary 2,668 1.7 Manufacture of additives that shares enhance the feel, flow and finish of everyday products Rathbone Brothers Ordinary 1,680 Private client fund management shares Long CFD 933 1.7 position Domino Printing Ordinary 1,919 Manufacture of inkjet and shares laser commercial printers Long CFD 631 1.6 position Abcam* Ordinary 1,540 Production and distribution of shares research grade antibodies and associated Long CFD 983 1.6 products position Fidessa Ordinary 2,450 1.6 Development and marketing of shares financial trading and connectivity software Yule Catto Ordinary 2,409 1.5 Manufacture of speciality shares chemicals City of London Ordinary Management of investment funds Investment Group shares primarily invested in 2,301 1.5 emerging markets Faroe Petroleum* Ordinary 1,800 Exploration for oil and gas shares offshore UK and Norway Long CFD 465 1.5 position Rotork Ordinary 1,131 Engineering, manufacturing and shares design of valve actuators Long CFD 1,015 1.4 position Renishaw Ordinary 1,418 Design and manufacture of shares instruments used for calibration purposes Long CFD 692 1.3 position ------ ---- 20 Largest 63,279 40.6 Investments ------ ---- * Traded on the Alternative Investment Market of the London Stock Exchange All investments are in equity shares unless otherwise stated. The market value of the CFD position represents the gross market value exposure of the CFD position at 31 May 2012. 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 2012 % of long % of long % of short only CFD CFD % of total Sector portfolio portfolio portfolio portfolio Oil & Gas Producers 8.4 0.3 0.0 8.7 Oil Equipment, Services & Distribution 1.4 0.0 -0.1 1.3 Chemicals 6.3 0.7 0.0 7.0 Industrial Metals & Mining 0.3 0.0 -0.1 0.2 Mining 6.0 0.6 0.0 6.6 Construction & Materials 1.4 1.3 -0.8 1.9 Aerospace & Defense 1.6 1.5 -0.5 2.6 General Industrials 1.2 0.0 -0.4 0.8 Electronic & Electrical Equipment 8.0 2.9 -1.2 9.7 Industrial Engineering 4.1 1.4 -0.3 5.2 Industrial Transportation 1.8 0.0 -0.5 1.3 Support Services 8.7 2.1 -2.4 8.4 Beverages 0.0 0.0 -0.2 -0.2 Food Producers 0.2 0.0 -0.4 -0.2 Household Goods & Home Construction 3.5 0.0 -0.2 3.3 Personal Goods 0.3 0.0 -0.1 0.2 Health Care Equipment & Services 3.1 0.0 -0.2 2.9 Pharmaceuticals & Biotechnology 3.8 0.6 0.0 4.4 Food & Drug Retailers 2.4 0.8 -0.6 2.6 General Retailers 4.3 0.3 -2.3 2.3 Media 4.7 0.9 0.0 5.6 Travel & Leisure 4.4 0.0 -1.1 3.3 Fixed Line Telecommunications 1.4 0.0 -0.4 1.0 Gas, Water & Multiutilities 0.3 0.0 0.0 0.3 Real Estate Investment & Services 2.9 0.4 0.0 3.3 Real Estate Investment Trusts 1.3 0.5 0.0 1.8 Financial Services 5.4 0.6 0.0 6.0 Software & Computer Services 7.2 1.4 -0.2 8.4 Technology Hardware & Equipment 0.8 0.5 0.0 1.3 ---- ---- ----- ----- Total Investments 95.2 16.8 -12.0 100.0 ---- ---- ----- ----- Analysis of the UK and AIM traded portfolio Gross Basis (1) % FTSE 250 47.3 FTSE AIM 28.6 FTSE Small Cap 20.3 FTSE Fledgling 1.1 Other 2.7 Net Basis (2) % FTSE 250 38.7 FTSE AIM 34.7 FTSE Small Cap 21.9 FTSE Fledgling 1.3 Other 3.4 Source: BlackRock. 1. Long and short CFD positions in aggregate plus long portfolio. 2. Long CFD portfolio less short CFD portfolio plus long portfolio. Market capitalisation as at 31 May 2012 £0 to £100m £100m to £400m £400m to £1bn £1bn+ Short positions % of portfolio -0.1% -3.2% -6.0% -2.7% Long positions % of portfolio 18.7% 40.1% 32.2% 21.0% Source: BlackRock. Position size as at 31 May 2012 £0 to £1m £1m to £2m £2m+ Short positions % of portfolio -11.2% -0.8% - Long positions % of portfolio 34.7% 36.7% 40.6% Source: BlackRock. Consolidated Statement of Comprehensive Income for the six months ended 31 May 2012 Revenue £'000 Capital £'000 Total £'000 Year Year Year Six months ended ended Six months ended ended Six months ended ended Notes 31.05.12 31.05.11 30.11.11 31.05.12 31.05.11 30.11.11 31.05.12 31.05.11 30.11.11 (unaudited) (unaudited) (audited) (unaudited) (unaudited) (audited) (unaudited) (unaudited) (audited) Gains/ (losses) on investments held at fair value through profit or loss - - - 9,692 21,367 (522) 9,692 21,367 (522) Net profit on contracts for difference (43) 75 26 892 3,600 3,964 849 3,675 3,990 Income from investments held at fair value through profit or loss 3 1,559 1,256 2,727 - - - 1,559 1,256 2,727 Other income 3 3 19 24 - - - 3 19 24 ----- ----- ----- ------ ------ ----- ------ ------ ----- Total revenue 1,519 1,350 2,777 10,584 24,967 3,442 12,103 26,317 6,219 ----- ----- ----- ------ ------ ----- ------ ------ ----- Investment management and performance fees 4 (183) (160) (320) (1,542) (1,476) (2,779) (1,725) (1,636) (3,099) Other operating expenses 5 (247) (239) (378) - - - (247) (239) (378) ----- ----- ----- ------ ------ ----- ------ ------ ----- Total operating expenses (430) (399) (698) (1,542) (1,476) (2,779) (1,972) (1,875) (3,477) ----- ----- ----- ------ ------ ----- ------ ------ ----- Net profit before finance costs and taxation 1,089 951 2,079 9,042 23,491 663 10,131 24,442 2,742 Finance costs - (4) (5) - - - - (4) (5) ----- ----- ----- ------ ------ ----- ------ ------ ----- Profit on ordinary activities before taxation 1,089 947 2,074 9,042 23,491 663 10,131 24,438 2,737 Taxation on ordinary activities - 4 4 - - - - 4 4 ----- ----- ----- ------ ------ ----- ------ ------ ----- Net profit on ordinary activities after taxation 8 1,089 951 2,078 9,042 23,491 663 10,131 24,442 2,741 ====== ====== ====== ====== ====== ===== ======= ======= ====== Earnings per ordinary share - basic 8 1.49p 1.57p 3.29p 12.36p 38.73p 1.05p 13.85p 40.30p 4.34p ====== ====== ====== ====== ====== ===== ======= ======= ====== Earnings per ordinary share - diluted 8 1.49p 1.51p 3.29p 12.36p 37.23p 1.05p 13.85p 38.74p 4.34p ====== ====== ====== ====== ====== ===== ======= ======= ====== 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 profit of the Company for the period was £10,131,000 (six months ended 31 May 2011: £24,442,000; year ended 30 November 2011: £2,741,000). The Group had no recognised gains or losses other than those disclosed in the Consolidated Statement of Comprehensive Income. The net profit for the periods disclosed above represents the Group's Total Comprehensive Income. Details of dividends paid and payable at the balance sheet date are given in note 6. Consolidated Statement of Changes in Equity for six months ended 31 May 2012 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 2012 (unaudited) At 30 November 2011 4,026 21,049 35,272 11,905 69,339 6,183 147,774 Total Comprehensive Income: Net profit for the period - - - - 9,042 1,089 10,131 Transactions with owners, recorded directly to equity: Refund of unclaimed dividends - - - - - 8 8 Dividends paid* - - - - - (1,865) (1,865) ----- ------ ------ ------ ------ ----- ------- At 31 May 2012 4,026 21,049 35,272 11,905 78,381 5,415 156,048 ----- ------ ------ ------ ------ ----- ------- 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: Net profit 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 year ended 30 November 2011 (audited) At 30 November 2010 3,494 2,147 35,272 11,905 68,646 5,832 127,296 Total Comprehensive Income: Net profit for the year - - - - 663 2,078 2,741 Transactions with owners, recorded directly to equity: Exercise of subscription shares 532 18,902 - - - - 19,434 Write back of share issue costs - - - - 30 - 30 Refund of unclaimed dividends - - - - - 121 121 Dividends paid and declared*** - - - - - (1,848) (1,848) ----- ------ ------ ------ ------ ----- ------- At 30 November 2011 4,026 21,049 35,272 11,905 69,339 6,183 147,774 ----- ------ ------ ------ ------ ----- ------- * Final dividend of 2.55p per share for the year ended 30 November 2011, declared on 13 February 2012 and paid on 5 April 2012. ** 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 2.42p per share for the year ended 30 November 2010, declared on 4 February 2011 and paid on 25 March 2011 and interim dividend of 0.60p per share for the year ended 30 November 2011, declared on 27 July 2011 and paid on 31 August 2011. Consolidated Statement of Financial Position as at 31 May 2012 31 May 31 May 30 November 2012 2011 2011 £'000 £'000 £'000 Notes (unaudited) (unaudited) (audited) Non current assets Investments held at fair value through profit or loss 158,036 155,409 145,444 ------- ------- ------- Current assets Other receivables 800 2,170 228 Amounts due in respect of contracts for difference 77 9,564 815 Cash held on margin deposit with brokers 3,489 4 21 Cash 1,906 613 4,598 ------- ------- ------- 6,272 12,351 5,662 ------- ------- ------- Total assets 164,308 167,760 151,106 Current liabilities Other payables (5,752) (3,820) (2,734) Collateral received in respect of contracts for difference (2,439) (8,638) (598) Amounts due in respect of contracts for difference (69) (567) - ------- ------- ------- (8,260) (13,025) (3,332) ------- ------- ------- Net assets 156,048 154,735 147,774 ======= ======= ======= Equity attributable to equity holders Called-up share capital 9 4,026 3,616 4,026 Share premium account 21,049 6,493 21,049 Special reserve 35,272 35,272 35,272 Capital redemption reserve 11,905 11,905 11,905 Capital reserves 78,381 92,137 69,339 Revenue reserve 5,415 5,312 6,183 ------- ------- ------- Total equity shareholders' funds 156,048 154,735 147,774 ======= ======= ======= Net asset value per ordinary share - undiluted 8 213.38p 246.08p 202.07p ======= ======= ======= Net asset value per ordinary share - diluted 8 213.38p 232.05p 202.07p ======= ======= ======= Consolidated Cash Flow Statement for the six months ended 31 May 2012 Six months Six months ended ended Year ended 31 May 31 May 30 November 2012 2011 2011 £'000 £'000 £'000 (unaudited) (unaudited) (audited) Net cash inflow/(outflow) from operating activities 792 (4,309) (6,409) ----- ----- ----- Financing activities Proceeds from exercise of subscription shares - 4,468 19,434 Subscription share issue costs paid - - (5) Distributions to tender shareholders - - (562) Refund of unclaimed dividends 8 - 121 Dividends paid (1,865) (1,471) (1,848) ----- ----- ----- Net cash (outflow)/inflow from financing (1,857) 2,997 17,140 ----- ----- ----- (Decrease)/increase in cash and cash equivalents (1,065) (1,312) 10,731 Effect of foreign exchange rate changes - - (1) ----- ----- ----- Change in cash and cash equivalents (1,065) (1,312) 10,730 Cash and cash equivalents at the start of period 4,021 (6,709) (6,709) ----- ----- ----- Cash and cash equivalents at the end of the period 2,956 (8,021) 4,021 ===== ===== ===== Comprised of: Cash 1,906 613 4,598 Cash held on margin deposit with brokers 3,489 4 21 Collateral received in respect of contracts for difference (2,439) (8,638) (598) ----- ----- ----- Total 2,956 (8,021) 4,021 ===== ===== ===== 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 2012 2011 2011 £'000 £'000 £'000 (unaudited) (unaudited) (audited) Operating activities Net profit before taxation 10,131 24,438 2,737 Add back interest paid 149 92 204 Gains on investments and contracts for differences held at fair value through profit or loss including transaction costs (10,758) (25,066) (3,653) Net movement on foreign exchange - - 1 Sales of investments held at fair value through profit or loss 36,280 47,218 86,883 Purchases of investments held at fair value through profit or loss (37,307) (43,865) (86,796) Increase in other receivables (243) (293) (42) (Increase)/decrease in amounts due from brokers (320) (1,289) 413 Increase/(decrease) in amounts due to brokers 1,160 313 (739) Increase/(decrease) in other payables 1,849 (5,781) (5,218) ------- ------ ------ Net cash inflow/(outflow) from operating activities before interest and taxation 941 (4,233) (6,210) ------- ------ ------ Interest paid (149) (92) (204) Taxation recovered on overseas income - 16 5 ------- ------ ------ Net cash inflow/(outflow) from operating activities 792 (4,309) (6,409) ======= ====== ====== Notes to the Financial Statements for the six months ended 31 May 2012 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 2011 (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. 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. 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. 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 2012 2011 2011 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Investment income: UK listed dividends 1,468 1,207 2,578 Overseas listed dividends 91 49 145 Scrip dividend - - 4 ----- ----- ----- 1,559 1,256 2,727 ----- ----- ----- Other income: Deposit interest 3 1 5 Underwriting commission - 18 19 ----- ----- ----- 3 19 24 ----- ----- ----- Total 1,562 1,275 2,751 ===== ===== ===== 4. Investment management and performance fees Six months ended Six months ended Year ended 31 May 2012 31 May 2011 30 November 2011 (unaudited) (unaudited) (audited) Revenue Capital Total Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Investment management fee 183 549 732 160 480 640 320 957 1,277 Performance fee - 993 993 - 996 996 - 1,822 1,822 --- ----- ----- --- ----- ----- --- ----- ----- Total 183 1,542 1,725 160 1,476 1,636 320 2,779 3,099 === ===== ===== === ===== ===== === ===== ===== 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, under the provisions of the new performance fee arrangements effective 1 December 2011, BlackRock is entitled to a performance fee of 12.5% of any net asset value (total return) outperformance against the Benchmark index*. The performance fee is subject to a high watermark and is capped at 3.5% and a sliding scale cap has been introduced to apply in performance periods during which the NAV decreases (but still outperforms the benchmark). Any excess performance fee over the capped amount for the performance period shall neither be paid nor carried forward. Details of the Company's investment management agreement with BlackRock are given on pages 16 and 17 of the Company's annual report for the year ended 30 November 2011. The investment management fee is allocated 75% to the capital column and 25% to the revenue column of the Consolidated Statement of Comprehensive Income in line with the Board's expected long term split of returns, in the form of capital gains and income respectively, from the investment portfolio. A performance fee of £993,000 was accrued for the six months ended 31 May 2012 (six months ended 31 May 2011: £996,000; year ended 30 November 2011: £1,822,000). 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. * Hoare Govett Smaller Companies plus AIM (excluding investment companies) Index to 9 April 2012 and Numis Smaller Companies plus AIM (excluding investment companies) Index from 10 April 2012. 5. Other operating expenses Six months Six months Year ended ended ended 31 May 31 May 30 November 2012 2011 2011 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Auditors' remuneration - audit services 14 14 28 - other services* 5 5 5 Registrar's fee 19 19 37 Directors' remuneration 54 58 116 Other administration costs 155 143 192 --- --- --- 247 239 378 === === === * Other audit services relate to the review of the half yearly financial report. 6. Dividend The Board has declared an interim dividend of 0.62p per share (2011: 0.60p) payable on 31 August 2012 to shareholders on the register at close of business on 5 August 2012. 7. Cash and cash equivalents In the half yearly financial report for the six months ended 31 May 2012, cash balances disclosed in the Statement of Financial Position have been further analysed between cash held on margin deposit with brokers (amounting to £3,489,000) and cash at bank of £1,906,000. The comparatives for prior period cash balances have also been updated to provide this additional analysis; cash held on margin deposit with brokers amounted to £4,000 at 31 May 2011 and £21,000 at 30 November 2011 respectively. 8. Consolidated earnings and net asset value per ordinary share Revenue and capital earnings per share are shown below and have been calculated using the following: Six months Six months ended ended Year ended 31 May 31 May 30 November 2012 2011 2011 (unaudited) (unaudited) (audited) Net revenue profit attributable to ordinary shareholders (£'000) 1,089 951 2,078 Net capital profit attributable to ordinary shareholders (£'000) 9,042 23,491 663 ------- ------ ------- Total earnings attributable to ordinary shareholders (£'000) 10,131 24,442 2,741 ======= ======= ======= Total equity shareholders' funds (£'000) 156,048 154,735 147,774 Ordinary shares The weighted average number of ordinary shares in issue during the period on which the undiluted earnings per ordinary share was calculated, was: 73,130,326 60,655,511 63,219,746 ---------- ---------- ---------- The weighted average number of ordinary shares in issue during the period on which the diluted earnings per ordinary share was calculated, was: 73,130,326 63,102,014 63,219,746 ---------- ---------- ---------- The actual number of ordinary shares in issue at the end of each period on which the undiluted net asset value was calculated, was*: 73,130,326 62,879,817 73,130,326 ---------- ---------- ---------- The actual 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 73,130,326 73,130,326 ---------- ---------- ---------- Actual number of subscription shares in issue at the end of the period was: - 10,250,509 - ---------- ---------- ---------- Undiluted Revenue earnings per share 1.49p 1.57p 3.29p Capital earnings per share 12.36p 38.73p 1.05p ------ ------ ------ Total earnings per share 13.85p 40.30p 4.34p ====== ====== ====== Net asset value per share 213.38p 246.08p 202.07p ====== ====== ====== Diluted Revenue earnings per share 1.49p 1.51p 3.29p Capital earnings per share 12.36p 37.23p 1.05p ------ ------ ------ Total earnings per share 13.85p 38.74p 4.34p ====== ====== ====== Net asset value per share 213.38p 232.05p 202.07p ====== ====== ====== Ordinary share price (mid-market) 174.25p 199.50p 170.00p Subscription share price (mid-market) - 47.75p - ====== ====== ====== * The Company did not have any dilutive securities at 31 May 2012 and 30 November 2011. 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. 9. Share capital Ordinary shares in Treasury Total Nominal issue shares shares value number number number £'000 Allotted, called-up and fully paid share capital comprised: Ordinary shares of 5p each ---------- --------- ---------- ----- At 1 December 2011 73,130,326 7,400,000 80,530,326 4,026 ---------- --------- ---------- ----- At 31 May 2012 73,130,326 7,400,000 80,530,326 4,026 ========== ========= ========== ===== There was no change in share capital during the period. 10. 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. Six months Six months Year ended ended ended 31 May 31 May 30 November 2012 2011 2011 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Investment Management fee payable 1,044 640 314 Performance fee accrued 2,821 996 1,822 ----- ----- ----- 3,865 1,636 2,136 ----- ----- ----- The final performance fee for the full year to 30 November 2012 will not crystallise and fall due until the calculation date of 30 November 2012. As at 31 May 2012, the Board consisted of four non-executive Directors, all of whom were considered to be independent. Ms Matterson was appointed as an additional non-executive Director on 10 July 2012. None of the Directors has a service contract with the Company. The compensation payable to key management personnel in respect of short term employment benefits is £54,000 (six months ended 31 May 2011: £58,000; year ended 30 November 2011: £116,000) which is paid by the Company to its Directors. 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 31 May 2012, the period end all four members of the Board held shares in the Company as set out below: Ordinary shares Simon Beart* 30,634 Crispin Latymer 23,232 Eric Stobart** 15,598 Harry Westropp 24,000 *including 7,111 shares held by Mrs Beart **including 3,211 shares held by Mrs Stobart Since the period end there have been a number of changes to the Directors' share interests. At the date of this report Mr Beart holds 31,194 shares (including 7,401 shares held by Mrs Beart), Lord Latymer holds 23,318 shares and Mr Stobart holds 15,886 shares (including 3,499 shares held by Mrs Stobart). 11. Contingent liabilities There were no contingent liabilities at 31 May 2012 (31 May 2011: nil and 30 November 2011: nil). 12. 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 2012 and 31 May 2011 has not been audited. The information for the year ended 30 November 2011 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. 13. Annual results The Board expects to announce the annual results for the year ending 30 November 2012, as prepared under IFRS, in February 2013. 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 2013, with the Annual General Meeting being held in March 2013. 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 2012 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 2012 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 13 July 2012 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 13 July 2012 12 Throgmorton Avenue London EC2N 2DL 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. 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.

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