TIDMTHRG TIDMTHRS
4 February 2011
THE THROGMORTON TRUST PLC
Announcement of results in respect of the year ended
30 November 2010
Financial Highlights
As at As at
30 November 30 November Change
2010 2009 %
Assets
Net assets (GBP'000) 127,296 106,917 +19.1(1)
Undiluted net asset 212.80p 144.26p +47.5
value per share
- with income +52.2
reinvested
Diluted net asset 200.64p 144.26p +39.1
value per share
- with income +43.5
reinvested
Ordinary share price 163.00p 115.75p +40.8
(mid-market)
- with income +46.4
reinvested
Subscription share 24.25p 8.00p +203.1
price (mid-market)
Year ended Year ended
30 November 30 November Change
2010 2009 %
Revenue
Net revenue after 1,931 3,105(2) -37.8
taxation (GBP'000)
Revenue return per 2.85p 3.86p(2) -26.2
ordinary share
Dividends
- Interim 0.58p 0.55p +5.5
- Final 2.42p 2.20p +10.0
- Special dividend nil 2.00p -
Total dividends paid
and payable in respect
of the year ended
30 November 3.00p 4.75p -36.8
(1) The change in net assets is attributable to the tender offer, conversion
of subscription shares and market movements.
(2) Includes the write back of interest on prior years' VAT, attributable to
shareholders.
Chairman's Statement
Performance
In the year under review the Company's undiluted net asset value per share
("NAV") increased by 52.2% (diluted NAV per share increased 43.5%) whilst the
share price rose by 46.4%. By comparison, the Hoare Govett Smaller Companies
plus AIM (excluding Investment Companies) Index (the "benchmark index")
increased by 23.4%. (All percentages calculated in sterling terms with income
reinvested).
Since the sharp decline in global economic activity, in late 2008 and the
subsequent instability in markets, your Company has enjoyed a second
consecutive year of excellent performance with an increase in the undiluted NAV
of 150.2% over the two years since 1 December 2008.
Under the terms of the management agreement with BlackRock Investment
Management (UK) Limited ("BlackRock"), any outperformance of the benchmark
index from 11 September 2008 and subsequent periods will give rise to a
performance fee. For the year ended 30 November 2010 the performance fee
amounted to GBP6,117,000. While this is a substantial fee, it is in respect of an
outstanding period of outperformance against our benchmark. Details of the
performance fee calculation are shown in note 4.
The portfolio is jointly managed by Mike Prentis, who has responsibility for
the long only portfolio, and Richard Plackett, who has responsibility for the
contracts for difference ("CFD") portfolio. I am sure that shareholders will
join me in congratulating Mike and Richard on such outstanding performance.
This was driven by good stock selection across a range of sectors including
the electronic and electrical equipment sectors, natural resources and pharmaceuticals.
Richard also made effective use of the Company's unique ability to go short as well
as long through its CFD portfolio. Further details are given in the Investment
Manager's Report.
I am also delighted to report that both Mike and Richard have recently been
recognised for their investment achievements with Mike winning the Investor of
the Year award at the Grant Thornton Quoted Companies Awards and Richard
winning the awards for Small Cap Equity and Long Term Performance - Equity
Strategies at the Eurohedge 2010 awards.
Since the year end the Company's undiluted NAV has increased by 15.7% and
the share price has increased by 19.2%.
Revenue return and dividends
Revenue return per share for the year amounted to 2.85 pence compared with 3.86
pence for the previous year, a decrease of 26.2%. This decrease is largely
attributable to prior year income being boosted by the receipt of interest on
VAT refunded amounting to 1.68 pence per share. After adjusting for this, total
revenue on a like for like basis had increased by 7.0%.
Last year, the Directors paid a special dividend of 2.00p representing the VAT
interest recovery. The Directors are proposing an increased final dividend of
2.42 pence per share making a total dividend for the year of 3.00 pence per
share representing an increase of 9.1% on the previous year (excluding last
year's special dividend). The final dividend is payable on 25 March 2011 to
shareholders on the Company's register on 18 February 2011 (ex dividend date is
16 February 2011).
Tender offers
As mentioned in my interim statement, the Company held a general meeting at
which shareholders approved proposals designed to:
- provide for a tender offer for up to 25% of the ordinary shares in issue on
12 April 2010, the record date (excluding ordinary shares held in treasury)
with a 9% exit charge and associated costs;
- authorise the Directors to make subsequent repurchases of up to 14.99% of the
ordinary shares in issue on the record date;
- remove the obligation of the Board to consider tender offers on a
twice-yearly basis; and
- cancel the Company's share premium account to provide additional
distributable reserves which may be required to allow the Company to undertake
the purchase of ordinary shares.
It was announced on 29 June 2010 that the tender offer had been
undersubscribed, with valid tenders received for 21.3% of the Company's
ordinary shares. It was therefore not necessary to implement the subsequent
repurchase of up to 14.99% of the ordinary shares in issue.
It is the current intention of the Board not to make further tender offers to
shareholders and to focus on increasing the size of the Company.
Subscription shares
On 1 October 2009 the Company allotted a total of 14,822,901 subscription
shares to shareholders on the Company's register on 30 September 2009, by way
of bonus issue, on the basis of one subscription share for every five ordinary
shares held at that date.
During the year the Company has issued a total of 1,512,289 ordinary shares,
following the conversion of subscription shares into ordinary shares for a
total consideration of GBP2,208,000. Following the latest conversion opportunity
on 31 January 2011, a further 977,559 ordinary shares were issued on 2 February
2011, subject to listing on 7 February 2011, for a total consideration of GBP
1,427,000 Following the listing of the additional shares, the Company will have
60,797,273 ordinary shares (excluding 7,400,000 shares currently held in
treasury) and 12,333,053 subscription shares in issue.
Subscription shareholders will have further opportunities to subscribe for all
or any of the ordinary shares to which their subscription shares relate on each
of 30 April, 31 July and 31 October 2011 at 146.00 pence per share. At the date
of this report the Company's diluted NAV is 228.01 pence and the share price is
194.25 pence compared with the exercise price of 146.00 pence per share.
Discount and share buybacks
The Directors recognise the importance to investors of ensuring that any
discount of the Company's share price to its underlying NAV is as small as
possible. Accordingly, the Directors monitor the discount closely and will
consider share repurchases in the market if the discount to NAV widens
significantly. In the year under review the Company did not purchase any shares
other than through the tender offers.
The Directors have the authority from shareholders to buy back up to 14.99% of
the Company's issued share capital. This authority expires at the forthcoming
Annual General Meeting ("AGM") on 11 March 2011 when a resolution will be put
to shareholders to renew it.
Outlook
We remain cautiously optimistic about the near term prospects for the smaller
companies sector which has performed well since the worst effects of the global
economic crisis. However, with good opportunities to purchase stocks at
attractive valuations, particularly those with exposure to higher growth in the
international markets and the consistent good performance of the CFD portfolio,
we expect to see the Company continue to deliver good returns for shareholders.
Richard Bernays
Chairman
4 February 2011
Principal risks
The key risks faced by the Company are set out below. The Board regularly
reviews and agrees policies for managing each risk, as summarised below.
Performance risk - The Board is responsible for deciding the investment
strategy to fulfil the Company's objective and monitoring the performance of
the Investment Manager. An inappropriate strategy may lead to poor performance.
To manage this risk the Investment Manager provides an explanation of
significant stock selection decisions and the rationale for the composition of
the investment portfolio. The Board monitors and maintains an adequate spread
of investments in order to minimise the risks associated with factors specific
to particular sectors, based on the diversification requirements inherent in
the Company's investment policy.
Income/dividend risk - The amount of dividends and future dividend growth will
depend on the Company's underlying portfolio. Any change in the tax treatment
of the dividends or interest received by the Company may reduce the level of
dividends received by shareholders. The Board monitors this risk through the
receipt of detailed income forecasts and considers the level of income at each
meeting.
Regulatory risk - The Company operates as an investment trust in accordance
with Chapter 4 of Part 24 of the Corporation Tax Act 2010. As such the Company
is exempt from capital gains tax on the profits realised from the sale of its
investments. The Investment Manager monitors investment movements, the level
and type of forecast income and expenditure and the amount of half yearly
dividends to ensure that the provisions of Chapter 4 of Part 24 of the
Corporation Tax Act 2010 are not breached. The results are reported to the
Board at each meeting.
Operational risk - In common with most other investment trust companies, the
Company has no employees. The Company therefore relies upon the services provided
by third parties and is dependent on the control systems of the Investment Manager
and the Company's other service providers. The security, for example, of the
Company's assets, dealing procedures, accounting records and maintenance of
regulatory and legal requirements, depend on the effective operation of these
systems. These are regularly tested and monitored and an internal control report,
which includes an assessment of risks together with procedures to mitigate such
risks, is prepared by the Investment Manager and reviewed by the Audit Committee
at least twice a year. The Investment Manager, BNYM and BMLI each produce an
annual SAS70 report which is reviewed by their auditors and gives assurance
regarding the effective operation of controls. The reports are also reviewed
by the Audit Committee.
Market risk - Market risk arises from volatility in the prices of the Company's
investments. It represents the potential loss the Company might suffer through
holding investments in the face of negative market movements. The Board considers
asset allocation, stock selection, unquoted investments and levels of gearing on
a regular basis and has set investment restrictions and guidelines which are
monitored and reported on by the Investment Manager. The Board monitors the
implementation and results of the investment process with the Investment Manager.
Financial risks - The Company's investment activities expose it to a variety of
financial risks that include foreign currency risk and interest rate risk. The
Company has approximately 39% of its portfolio invested in AIM traded
securities, and, by the very nature of its investment objective, largely
invests in smaller companies, and liquidity in these securities can from time
to time become constrained, making these investments difficult to realise at or
near published prices, giving rise to additional liquidity risk. This is taken
into consideration by the Directors when determining the valuation of these
holdings. There are also risks linked to the Company's use of derivative
transactions including CFDs.
Related party transactions
The investment management fee for the year charged by BlackRock was GBP997,000
(2009: GBP838,000). In addition a performance fee was payable of GBP6,117,000
(2009: GBP353,000). BlackRock agreed to waive management fees payable by the Company
up to the level of transition and restructuring costs of GBP1,068,000. At the year
end, an amount of GBP7,362,000 was outstanding in respect of management and
performance fees, net of the management fee waiver (2009: GBP905,000).
The Company's CFD counterparty BMLI, is associated with BlackRock. At the year
end, the Company had a cash balance of nil (2009: an overdrawn balance of
GBP40,000) with the CFD counterparty. The Company also had an investment in
BlackRock's Institutional Cash Fund of GBP721,000 (2009: GBP14,000) at the year
end.
The Board consists of five non-executive Directors, all of whom are considered
to be independent by the Board. None of the Directors has a service contract
with the Company. The Chairman receives an annual fee of GBP30,000, the Chairman
of the Audit and Management Engagement Committee receives an annual fee of
GBP19,000 and each other Director receives an annual fee of GBP17,000. Directors'
fees were last increased with effect from 1 December 2004. It is proposed that
with effect from 1 December 2010, the annual remuneration of the Chairman will be
increased to GBP33,000, the Chairman of the Audit and Management Engagement Committee
to GBP23,000 and the other Directors to GBP20,000. These increases are subject to
shareholders passing resolution 8 in respect of Directors' Remuneration at the
Annual General Meeting to be held on Friday 11 March 2011.
All five members of the Board hold shares in the Company. Richard Bernays holds
40,000 ordinary shares and 8,000 subscription shares, Simon Beart holds 21,019
ordinary shares (including 1,613 ordinary shares held by Mrs Beart) and 2,715
subscription shares, Lord Latymer holds 5,915 ordinary shares and 810 subscription
shares, Eric Stobart holds 10,803 ordinary shares and 2,064 subscription shares
and Harry Westropp holds 20,000 ordinary shares and 4,000 subscription shares.
Statement of Directors' Responsibilities
In accordance with Disclosure and Transparency Rule 4.1.12, the Directors also
confirm to the best of their knowledge and belief that:
- the financial statements, prepared in accordance with IFRS as adopted by the
European Union, give a true and fair view of the assets, liabilities, financial
position and profit/(loss) of the Company and the Group; and
- this Annual Report includes a fair view of the development and performance of
the business and the position of the Company and the Group, together with a
description of the principal risks and uncertainties that it faces.
For and on behalf of the Board of Directors
Richard Bernays
Chairman
4 February 2011
Investment Manager's Report
Market review and overall investment performance
Markets moved up over the course of the financial year, but not without the
occasional periods of volatility, especially during early summer. Confidence
that the global economy is in reasonable shape built during the year, but the
financial position of some European countries, the strength of recovery in the
US, the determination of Chinese authorities to slow down their high economic
growth rate, and the implications of UK public spending cuts, have all been
concerns for markets.
The Company's undiluted NAV increased by 52.2% to 212.80p (diluted NAV per
share increased by 43.5%), compared to an increase in the benchmark index of 23.4%.
We also significantly outperformed large capitalisation stocks; the FTSE 100
increased by only 6.5% over the year. (All percentages calculated in sterling terms
with income reinvested).
Portfolio performance
Our strongest performance came in the electronic and electrical equipment
sector, where stocks such as Domino Printing Sciences, Oxford Instruments and
Gooch & Housego all contributed significantly to relative performance. These
are all well run, world leading companies with well invested product ranges and
very international customer bases. Each company has traded increasingly well as
the year progressed and is well positioned for the future. The resources sector
also performed well for us. Within mining our best contributions came from
Western Coal and Eastern Platinum. Both benefitted from higher selling prices
and production levels; Western Coal also announced a takeover by a US company,
Walter Energy Corp. late in the year. Within the oil sector Encore Oil and Cove
Energy were our biggest successes. Encore had two important oil finds in the
North Sea, and Cove found gas in three deepwater wells offshore East Africa.
The pharmaceuticals and biotechnology sector was also a strong contributor;
Abcam and Hutchison China Meditech were our best sector performers. Both have
continued to trade well. Hutchison China Meditech continues to see strong
demand growth in China for its traditional medicines.
The main disappointment from a stock point of view was BATM. BATM's trading in
their telecoms division has been well behind expectations, with one of their
key customers itself losing market share mainly, we believe, to Chinese
competitors. We reduced our holding in the company.
Whilst most of our relative outperformance in the period came, as usual, from
stock selection, sector allocation was also positive. The three sectors that
contributed most were electronic & electrical equipment, industrial engineering
and mining. We were heavily overweight in each sector, and each outperformed
our benchmark index.
The CFD portfolio generated net gains of GBP7.2 million during the year,
maintaining its consistent record since the portfolio was put in place in
September 2008. The gains were entirely due to the long CFD portfolio, with the
short CFD portfolio breaking even in the year. In the context of a market which
rose, and a benchmark which rose by 23.4% during the year, we regard no overall
loss on the short CFD portfolio as a good performance.
Activity
We have seen a marked increase in bid activity during the year, with holdings
in Care UK, Rensburg Sheppards, Chloride, BSS Group, Bluebay Asset Management
and most recently Western Coal all receiving takeover bids. Outside our
portfolio holdings there were many other bids for companies in our investment
universe. This is a great time for corporate buyers to make strategic
acquisitions at prices that probably will not be achievable after a fuller
economic recovery.
We have generally seen better value at the smaller end of our investment
universe and so we have sold some of our holdings with market capitalisations
in excess of GBP1 billion where we have taken the view that upside was more
limited.
We have invested in a range of companies which are well positioned and
attractively valued. Some examples include Yule Catto, a polymers company which
derives over half of its revenues from the Asia Pacific region and other high
growth developing markets; and Mecom a publisher of local newspapers in
Continental Europe with a rapidly growing online business and resilient
subscription revenues. We are attracted to online business models given their
inherent scalability, and one new and highly successful business of this type
is Blinkx, where revenue growth is expected to remain strong. We also invested
in a few IPOs, including Supergroup whose share price has more than doubled
since the IPO, we have accordingly taken some profits.
Portfolio positioning
Our portfolio positioning has not changed materially. The portfolio is built
around good quality growth companies which we know well, are run by management
we regard highly, which are truly differentiated and have the ability to
maintain organic growth and margins, generate cash, and which have strong
balance sheets. These are our core holdings. We particularly like companies
with high levels of overseas earnings, especially from Asia Pacific, for
example, Spirax-Sarco and Hutchison China Meditech. We also like companies with
good revenue visibility or predictability, such as Abcam and ITE Group. A key
part of our strategy is to invest in companies with high levels of intellectual
property or strong brands, examples include Fidessa and Aveva; these are
protected by strong, sustainable barriers to entry and have real pricing power.
We generally prefer companies which have their own products, rather than
service companies; these tend to be able to scale more quickly.
We are always looking to invest in interesting new companies which have the
potential to become core holdings in the future. Inevitably new holdings start
off as small holdings in our portfolio until our confidence grows or until they
give cause for concern or fail to meet our expectation, in which case we
usually sell.
The CFD portfolio long positions are invariably in our core holdings, but the
aggregate of our long only position and long CFD position will not under normal
circumstances exceed 3.0% of net assets at the individual stock level. Our
short CFD positions are in companies we see as flawed, operating in
commoditised, highly competitive industries, such as food producers, or facing
structural challenges, for instance from internet based competitors. Our
individual short positions are small and liquid. The CFD portfolio was net long
throughout the year. The net long position was slightly reduced in the autumn;
at the end of the financial year it was approximately 6% net long.
Outlook
We are encouraged by the performance of our portfolio holdings over the last
year. Management of most of these companies are positive but cautious. Many are
well run businesses exposed to higher growth parts of the world such as the
Asia Pacific region and Brazil. Within developed markets data from the US has
been mixed but seems to be gradually improving, and Germany is faring well.
Europe generally looks set for an extended period of low growth relative to
other parts of the world. In the UK the coalition government is taking steps to
rebalance the economy which require austerity at both government and consumer
level. Whilst we contrinue to consider companies that give us good quality
exposure to UK consumers with low risk and attractive valuations, these are not
easy to find. On the whole therefore, our portfolio remains weighted towards quality,
international franchises.
Looking ahead we continue to believe that a carefully chosen portfolio of
smallcap and midcap companies should continue to outperform larger
capitalisation companies' indices. We expect the CFD portfolio to continue to
add value.
Mike Prentis and Richard Plackett
BlackRock Investment Management (UK) Limited
4 February 2011
Fifty Largest Investments
as at 30 November 2010
Market
value % of net Prospective
Company GBP'000 assets PE ratio* Description
Aveva Group Ordinary 2,867 Development and marketing
shares of engineering computer
Long CFD 957 3.0 26.1 software
position
Domino Printing Ordinary 2,614 Manufacture of inkjet and
Sciences shares laser commercial printers
Long CFD 898 2.8 15.3
position
Abcam # Ordinary 2,456 Production and
shares distribution of research
Long CFD 870 2.6 28.5 grade antibodies and
position associated products
Spirax Sarco Ordinary 2,457 Design and manufacture of
Engineering shares steam management systems
Long CFD 809 2.6 15.6
position
Oxford Ordinary 1,817 Design and manufacture of
Instruments shares scientific instruments
Long CFD 979 2.2 17.3
position
Fidessa group 2,710 2.1 17.3 Development and marketing
of financial trading
connectivity software
Rotork Ordinary 1,766 Engineering,
shares manufacturing and design
Long CFD 868 2.1 18.0 of valve actuators
position
Renishaw Ordinary 1,658 Design and manufacture of
shares instruments used for
Long CFD 817 1.9 18.0 calibration purposes
position
Victrex Ordinary 1,618 Manufacture and supply of
shares PEEK thermoplastic
Long CFD 837 1.9 16.3 products
position
Hutchison China 2,396 1.9 - Development and supply of
Meditech # traditional Chinese
medicines to the Chinese
market
ITE Group Ordinary 1,873 Organisation of trade
shares exhibitions in Russia and
Long CFD 374 1.8 14.0 other FSU countries
position
Spectris Ordinary 1,270 Development and marketing
shares of productivity enhancing
Long CFD 948 1.7 13.3 instrumentation and
position controls
Avocet Mining # Ordinary 1,633 Gold exploration and
shares production
Long CFD 561 1.7 11.7
position
IQE # 2,168 1.7 31.5 Manufacture and supply of
compound semiconductor
wafers
Cove Energy # 2,150 1.7 - Exploration for oil & gas
offshore East Africa
City of London 2,116 1.7 11.6 Management of investment
Investment Group funds primarily invested
in emerging markets
Rathbone Ordinary 1,498 Private client fund
Brothers shares management
Long CFD 612 1.7 15.5
position
Senior Ordinary 1,248 Manufacture and supply of
shares components for the
Long CFD 704 1.5 11.1 aerospace and automotive
position sectors
Western Coal # 1,949 1.5 9.3 Metallurgical and thermal
coal production
Gulfsands 1,750 1.4 8.0 Exploration and
Petroleum # production of oil in
Syria, other Middle
Eastern countries and
North Africa
Immunodiagnostic 1,717 1.4 21.0 Development and supply of
Systems # diagnostic testing
systems
Premier Farnell Ordinary 1,009 Design and distribution
shares of electronic components
Long CFD 664 1.3 15.7
position
Spirent Ordinary 831 Design and supply of
Communications shares telecoms testing systems
Long CFD 821 1.3 19.7
position
Robert Walters Ordinary 1,089 Provision of recruitment
shares services
Long CFD 547 1.3 18.7
position
Booker Ordinary 810 Wholesale of grocery
shares products
Long CFD 826 1.3 15.3
position
Brewin Dolphin 1,581 1.2 9.7 Fund management and
Holdings stockbroking
Eastern Platinum# 1,580 1.2 36.4 Exploration, development
and production of
platinum group metals
Hargreaves 1,575 1.2 6.8 Mining, importing,
Services # processing and supply of
coal and related products
Bellway 1,513 1.2 14.8 Housebuilding
Dialight Ordinary 971 Design and manufacture of
shares light emitting diode
Long CFD 470 1.1 18.4 solutions
position
Gooch & Housego# 1,411 1.1 19.2 Manufacture of precision
optical components
SDL Ordinary 634 Supply of multilingual
shares translation software and
Long CFD 745 1.1 18.2 translation services
position
Hyder Consulting 1,354 1.1 9.5 Provision of engineering
design services
Encore Oil # 1,339 1.1 - Exploration for oil & gas
in the North Sea
Keller Group Ordinary 1,017 Provision of ground
shares engineering solutions
Long CFD 285 1.0 9.0
position
Shaftesbury Ordinary 833 Investment in London West
shares End real estate
Long CFD 435 1.0 32.7
position
Xaar 1,173 0.9 25.7 Design and manufacture of
ink jet print heads
Alterian 1,159 0.9 15.1 Development and sale of
software to improve
customer communication and
marketing
Hargreaves 1,149 0.9 26.8 Provision of investment
Lansdown management services
Aurelian Oil & 1,124 0.9 - Exploration and
Gas # development of oil & gas
in Eastern Europe
Highland Gold 1,119 0.9 9.4 Production of gold in
Mining # Russia and the former
Soviet Union
Elementis 1,089 0.9 12.0 Manufacture of speciality
chemicals
Yule Catto 1,088 0.9 8.9 Manufacture of speciality
chemicals
Endace # 1,078 0.8 55.0 Design and manufacture of
solutions to monitor data
networks
Bahamas 1,062 0.8 - Exploration for oil & gas
Petroleum # in the Bahamas
Valiant 1,054 0.8 6.7 Exploration and production
Petroleum # of oil and gas in the
North Sea region
Petra Diamonds # 1,053 0.8 30.1 Production of diamonds
Intermediate Ordinary 620 Provision of mezzanine
Capital Group shares capital mainly to private
Long CFD 412 0.8 9.9 companies
position
Bowleven # 1,024 0.8 - Exploration and
development of oil & gas
offshore in West Africa
Inchcape 951 0.7 10.0 Distribution and retail of
cars and aftermarket
services
50 largest 89,460 70.3
investments
* Prospective PE ratio derived using late 2010 analyst estimates and relates to
the next set of full year results for each company.
# Traded on the Alternative Investment Market ("AIM") of the London Stock Exchange.
All investments are in equity shares unless otherwise stated.
Disclosure of the Company's smaller holdings would not add materially to
shareholders' understanding of the Company's portfolio structure and priority
investment themes, hence only the fifty largest investments have been
disclosed.
Comparative for Ten Largest Investments
2009 2009
Market %
value of net
Company GBP'000 assets
Aveva Group Ordinary 2,289
shares
Long CFD 1,007 3.1
position
Domino Printing Ordinary 1,930
Sciences shares
Long CFD 820 2.6
position
Abcam Ordinary 2,058
shares
Long CFD 920 2.8
position
Spirax Sarco Ordinary 1,616
Engineering shares
Long CFD 804 2.3
position
Oxford Instruments Ordinary 139
shares
Long CFD 348 0.5
position
Fidessa group 2,498 2.3
Rotork Ordinary 1,703
shares
Long CFD 1,105 2.6
position
Renishaw 557 0.5
Victrex Ordinary 1,780
shares
Long CFD 832 2.4
position
Hutchison China 1,217 1.1
Meditech
Distribution of Investments
as at 30 November 2010
% of % of
% of long % of long short net
only CFD CFD asset
Sector portfolio portfolio portfolio value
Oil & Gas Producers 10.4 4.4 0.0 11.7
Oil Equipment, 0.5 0.0 0.0 0.5
Services &
Distribution
Oil & Gas 10.9 4.4 0.0 12.2
Chemicals 2.9 4.0 0.0 3.7
Industrial Metals 1.4 0.0 0.0 1.5
Mining 9.1 4.4 0.0 10.4
Other Basic 0.3 0.0 0.0 0.3
Materials
Basic Materials 13.7 8.4 0.0 15.9
Construction & 1.3 1.3 -1.6 1.5
Materials
Aerospace & Defence 0.9 5.5 -8.0 1.3
General Industrials 0.5 0.0 -0.2 0.5
Electronic & 9.3 19.5 -4.4 12.7
Electrical Equipment
Industrial 7.4 7.9 0.0 9.1
Engineering
Industrial 0.5 0.0 -3.8 0.2
Transportation
Support Services 8.3 8.7 -34.7 7.6
Total Industrials 28.2 42.9 -52.7 32.9
Beverages 1.8 4.1 0.0 2.6
Food Producers 0.5 0.0 -9.1 -0.2
Household Goods & 1.8 3.2 -1.7 2.3
Home Construction
Consumer Goods 4.1 7.3 -10.8 4.7
Health Care 2.8 0.0 -4.2 2.6
Equipment & Services
Pharmaceuticals & 2.7 0.0 -4.3 2.5
Biotechnology
Food & Drug 0.6 3.9 -4.6 0.9
Retailers
Health Care 6.1 3.9 -13.1 6.0
General Retailers 3.2 0.0 -16.7 2.1
Media 5.1 1.8 0.0 5.7
Travel & Leisure 2.7 2.0 -2.4 3.0
Consumer Services 11.0 3.8 -19.1 10.8
Fixed Line 0.7 0.0 0.0 0.7
Telecommunications
Telecommunications 0.7 0.0 0.0 0.7
Electricity 0.6 0.0 0.0 0.6
Utilities 0.6 0.0 0.0 0.6
Non-life Insurance 0.4 0.0 0.0 0.4
Real Estate Holdings 0.9 2.6 0.0 1.4
& Development
Real Estate Services 0.5 0.0 0.0 0.5
Industrial & Office 1.0 0.0 0.0 1.1
REITs
Retail REITs 0.6 2.1 0.0 1.0
Speciality REITs 0.3 0.0 0.0 0.3
Financial Services 7.3 7.1 0.0 8.9
Equity Investment 0.2 0.0 0.0 0.2
Instruments
Financials 11.2 11.8 0.0 13.8
Software & Computer 10.0 11.8 -4.3 12.2
Services
Technology Hardware 3.5 5.7 0.0 4.6
& Equipment
Technology 13.5 17.5 -4.3 16.8
Total investments 100.0 100.0 -100.0 114.4
Analysis of the UK and AIM traded portfolio
Gross Basis (long and short CFD portfolios in aggregate plus long portfolio)
% of
Index portfolio
FTSE 250 40.3
FTSE AIM 34.7
FTSE Small Cap 18.8
Other 5.1
FTSE Fledgling 1.1
Net Basis (long CFD portfolio less short CFD portfolio plus long portfolio)
% of
Index portfolio
FTSE AIM 38.9
FTSE 250 34.8
FTSE Small Cap 19.2
Other 5.8
FTSE Fledgling 1.3
Market capitalisation as at 30 November 2010
% of net
Long Positions portfolio
GBP1bn + 16.2
GBP400m - GBP1bn 33.5
GBP100m - GBP400m 41.7
GBP0 - 100m 15.2
Short Positions
GBP1bn + -1.2
GBP400m - GBP1bn -3.6
GBP100m - GBP400m -1.7
GBP0 - 100m -0.1
Position size as at 30 November 2010
% of net
Long Positions portfolio
GBP0m - GBP1m 45.7
GBP1m - GBP2m 30.2
GBP2m + 30.6
Short Positions
GBP0m - GBP1m -6.5
Historical Record
Assets
Creditors:
amounts
Total falling
NAV Issued assets less due after Equity Mid-market
absolute share current more than shareholders(1) NAV per price per
Year to return capital liabilities one year funds share share
30 November % GBP'000 GBP'000 GBP'000 GBP'000 p p
2010 +47.5 3,494 127,296 - 127,296 212.8 163.0
2009 +54.2 4,224 106,917 - 106,917 144.3 115.8
2008 -51.94 6,863 77,029 - 77,029 93.5(1) 62.8
2007 -2.4 7,003 304,683 32,169 272,514 194.6(2) 152.0
2006 +16.2 8,179 358,381 32,169 326,212 199.4(2) 164.3
2005 +27.8 9,130 345,5532 32,169 313,3842 171.6(2,3) 142.0
2004 +28.0 11,488 340,7463 32,194 308,5523 134.3(2,3) 110.3
2003 +35.4 11,600 277,557 34,119 243,438 104.9(2) 84.0
2002 -24.9 11,863 228,953 45,126 183,827 77.5 59.0
2001 -9.7 11,886 290,332 45,126 245,206 103.2 81.0
1. Undiluted NAV per continuing share.
2. Prior charges at par.
3. Restated for changes in accounting policies: the principal changes were to
value investments at bid (previously mid) market value and to account for
dividends in the period in which they are paid.
4. Includes GBP5.5 million in respect of the write-back of prior years' VAT.
Revenue
Net
Total Revenue revenue Available Return Dividends
Year to gross finance Revenue before for per for
30 November revenue costs expenses taxation Taxation distribution share share
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 p p
2010 2,596 2 655 1,939 8 1,931 2.85 3.00
2009 4,896(5) 2 1,785 3,109 4 3,105 3.86 4.75
2008 7,562(6) 798 1,912 4,852 4 4,848 3.85 5.40
2007 6,196 1,983 1,851 2,362 14 2,348 1.54 2.20
2006 7,113 1,937 1,915 3,261 - 3,261 1.84 2.00
2005 7,064 1,973 1,898 3,193 - 3,193 1.58 1.75
2004 7,428 2,136 1,715 3,577 - 3,577 1.55 1.60
2003 7,383 2,550 1,510 3,323 - 3,323 1.40 1.50
2002 7,177 2,582 1,472 3,123 58 3,065 1.29 1.50
2001 8,092 2,611 1,926 3,555 196 3,359 1.40 1.50
5. Includes interest of GBP2,469,000 received in relation to the refund of prior
years' VAT. 2009 revenue has been restated following the Company's decision to
adopt IFRS.
6. Includes GBP2,284,000 in respect of the write-back of prior years' VAT.
Consolidated Statement of Comprehensive Income
for the year ended 30 November 2010
Revenue Revenue Capital Capital Total Total
2010 2009 2010 2009 2010 2009
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Gains on investments
held at fair value
through profit or loss - - 41,570 40,197 41,570 40,197
Net return on
contracts for
difference 212 142 7,029 1,305 7,241 1,447
Income from
investments held at
fair value through
profit or loss 3 2,380 2,232 - - 2,380 2,232
Other income 3 4 53 - - 4 53
Interest on write back
of prior years' VAT 3 - 2,469 - - - 2,469
----- ----- ------ ------ ------ ------
Total revenue 2,596 4,896 48,599 41,502 51,195 46,398
----- ----- ------ ------ ------ ------
Investment management
and performance fees 4 (249) (210) (6,865) (981) (7,114) (1,191)
Other expenses 5 (399) (565) 329 532 (70) (33)
----- ----- ------ ------ ------ ------
Total operating
expenses (648) (775) (6,536) (449) (7,184) (1,224)
----- ----- ------ ------ ------ ------
Net return before
finance costs and
taxation 1,948 4,121 42,063 41,053 44,011 45,174
Finance costs (2) (2) - - (2) (2)
Costs on redemption of
debenture stocks - - - (30) - (30)
Change in tender offer
provision (7) (1,010) (174) 1,111 (181) 101
----- ----- ------ ------ ------ ------
Return on ordinary
activities before
taxation 1,939 3,109 41,889 42,134 43,828 45,243
----- ----- ------ ------ ------ ------
Taxation on ordinary
activities (8) (4) - - (8) (4)
----- ----- ------ ------ ------ ------
Net return for the
year after taxation 1,931 3,105 41,889 42,134 43,820 45,239
----- ----- ------ ------ ------ ------
Earnings per ordinary
share - basic and
undiluted 7 2.85p 3.86p 61.74p 52.45p 64.59p 56.31p
----- ----- ------ ------ ------ ------
The total column of this statement represents the Consolidated Statement of
Comprehensive Income, prepared in accordance with IFRS, as adopted by the
European Union. The supplementary revenue and capital columns are both prepared
under guidance published by the Association of Investment Companies ("AIC").
All items in the above statement derive from continuing operations. No
operations were acquired or discontinued during the year. All income is
attributable to the equity holders of The Throgmorton Trust PLC. There are no
minority interests.
The net return of the Group for the year was GBP43,820,000 (2009: GBP45,239,000).
The change in tender offer provision represents the movement in the value of
the tender pool between the tender date and the final distribution date to
tendering shareholders. Of this change, the movement within the capital column
represents the change in market value of tendered investments since the tender
date, and the movement within the revenue column represents changes in income
on tendered investments that fell due to tendering shareholders. In addition
the movement in tender offer provision of GBP1,010,000 in 2009 included GBP967,000
relating to interest on VAT recovered in relation to prior years.
The Group does not have any other recognised gains or losses. The net return
for the year disclosed above represents the Group's Comprehensive Income.
Statement of Changes in Equity
for the year ended 30 November 2010
Share Capital
Share premium Special redemption Capital Revenue
capital account reserve reserve reserve reserve Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Group
For the year ended
30 November 2010
At 30 November 2009 4,224 35,272 - 11,114 48,954 7,353 106,917
Total Comprehensive
Income:
Return for the year - - - - 41,889 1,931 43,820
Transactions with
owners, recorded
directly to equity:
Exercise of
subscription shares 61 2,147 - - - - 2,208
Cancellation of
treasury shares (791) - - 791 - - -
Cancellation of share
premium account - (35,272) 35,272 - - - -
Transfer of assets to
tender pool - - - - (22,197) - (22,197)
Dividends paid and
declared (see (a)
below) 6 - - - - - (3,452) (3,452)
----- ----- ------ ------ ------ ----- -------
At 30 November 2010 3,494 2,147 35,272 11,905 68,646 5,832 127,296
----- ----- ------ ------ ------ ----- -------
For the year ended
30 November 2009
At 30 November 2008 6,863 35,272 - 8,327 17,872 8,695 77,029
Total Comprehensive
Income:
Return for the year - - - - 42,134 3,105 45,239
Transactions with
owners, recorded
directly to equity:
Exercise of
subscription shares 148 - - - (148) - -
Share issue costs - - - - (265) - (265)
Transfer of assets to
tender pool - - - - (10,639) - (10,639)
Shares repurchased
and cancelled (2,787) - - 2,787 - - -
Dividends paid and
declared (see (b)
below) 6 - - - - - (4,447) (4,447)
----- ----- ------ ------ ------ ----- -------
At 30 November 2009 4,224 35,272 - 11,114 48,954 7,353 106,917
----- ----- ------ ------ ------ ----- -------
Company
For the year ended
30 November 2010
At 30 November 2009 4,224 35,272 - 11,114 50,432 5,875 106,917
Total Comprehensive
Income:
Return for the year - - - - 41,892 1,928 43,820
Transactions with
owners, recorded
directly to equity:
Exercise of
subscription shares 61 2,147 - - - - 2,208
Cancellation of
treasury shares (791) - - 791 - - -
Cancellation of share
premium account - (35,272) 35,272 - - - -
Transfer of assets to
tender pool - - - - (22,197) - (22,197)
Dividends paid and
declared (see (a)
below) 6 - - - - - (3,452) (3,452)
----- ----- ------ ------ ------ ----- -------
At 30 November 2010 3,494 2,147 35,272 11,905 70,127 4,351 127,296
----- ----- ------ ------ ------ ----- -------
For the year ended
30 November 2009
At 30 November 2008 6,863 35,272 - 8,327 19,648 6,919 77,029
Total Comprehensive
Income:
Return for the year - - - - 41,836 3,403 45,239
Transactions with
owners, recorded
directly to equity:
Exercise of
subscription shares 148 - - - (148) - -
Share issue costs - - - - (265) - (265)
Transfer of assets to
tender pool - - - - (10,639) - (10,639)
Shares repurchased
and cancelled (2,787) - - 2,787 - - -
Dividends paid and
declared (see (b)
below) 6 - - - - - (4,447) (4,447)
----- ----- ------ ------ ------ ----- -------
At 30 November 2009 4,224 35,272 - 11,114 50,432 5,875 106,917
----- ----- ------ ------ ------ ----- -------
a. Final dividend of 2.20p per share and special dividend of 2.00p per share
for the year ended 30 November 2009, declared on 29 January 2010 and paid on
26 March 2010 and Interim dividend of 0.58p per share for the year ended
30 November 2010, declared on 20 July 2010 and paid on 31 August 2010.
b. Final dividend of 1.85p per share and special dividend of 3.00p per share
for the year ended 30 November 2008, declared on 1 April 2009 and paid on 1 May
2009 and Interim dividend of 0.55p per share for the year ended 30 November
2009, declared on 21 July 2009 and paid on 27 August 2009.
Statement of Financial Position
as at 30 November 2010
Notes 2010 2010 2009 2009
Group Company Group Company
GBP'000 GBP'000 GBP'000 GBP'000
Non current assets
Investments held at fair
value through profit or
loss 134,627 136,428 105,755 107,553
------- ------- ------- -------
Current assets
Other receivables 619 619 350 350
Amounts due in respect
of contracts for
difference 8,066 8,066 2,784 2,784
Cash 1,256 653 1,032 17
------- ------- ------- -------
9,941 9,338 4,166 3,151
------- ------- ------- -------
Total assets 144,568 145,766 109,921 110,704
Current liabilities
Other payables (9,307) (10,505) (2,222) (3,005)
Bank overdraft - - (40) (40)
Collateral pledged in
respect of contracts for
difference (7,965) (7,965) - -
Amounts due in respect
of contracts for
difference - - (742) (742)
------- ------- ------- -------
(17,272) (18,470) (3,004) (3,787)
------- ------- ------- -------
Net assets 127,296 127,296 106,917 106,917
------- ------- ------- -------
Equity attributable to
equity holders
Share capital 8 3,494 3,494 4,224 4,224
Share premium account 9 2,147 2,147 35,272 35,272
Special reserve 9 35,272 35,272 - -
Capital redemption 9 11,905 11,905 11,114 11,114
reserve
Capital reserves 9 68,646 70,127 48,954 50,432
Revenue reserve 9 5,832 4,351 7,353 5,875
------- ------- ------- -------
Total equity
shareholders' funds 127,296 127,296 106,917 106,917
======= ======= ======= =======
Net asset value per
ordinary share -
undiluted 7 212.80p 212.80p 144.26p 144.26p
======= ======= ======= =======
Net asset value per
ordinary share - diluted 7 200.64p 200.64p 144.26p 144.26p
======= ======= ======= =======
Consolidated Cash Flow Statement
For the year ended 30 November 2010
2010 2010 2009 2009
Group Company Group Company
GBP'000 GBP'000 GBP'000 GBP'000
Operating activities
Profit before taxation 43,828 43,828 45,243 45,243
Add back interest paid 165 165 303 303
Gains on investments held at fair
value through profit or loss
including transaction costs (48,603) (48,606) (41,501) (41,203)
Net movement on foreign exchange 4 4 (1) (1)
Net movement in investments held
at fair value through profit or
loss 95,694 95,694 116,922 116,922
In specie transfer of assets to
tendering shareholders (7,793) (7,793) - -
Purchases of investments held at
fair value through profit or loss (81,828) (81,828) (91,155) (91,155)
(Increase)/decrease in other
receivables (27) (27) 458 458
(Increase)/decrease in amounts due
from brokers (228) (228) 595 595
Increase/(decrease) in amounts due
to brokers 646 646 (167) (167)
Increase/(decrease) in other
payables 6,390 6,805 (1,410) (1,708)
Scrip dividends included in
investment income - - (5) (5)
------ ------ ------ ------
Net cash inflow from operating
activities before interest and
taxation 8,248 8,660 29,282 29,282
------ ------ ------ ------
Interest paid (165) (165) (303) (303)
Taxation on overseas income - - (10) (10)
------ ------ ------ ------
Net cash inflow from operating
activities 8,083 8,495 28,969 28,969
------ ------ ------ ------
Financing activities
Distributions to tender
shareholders (14,286) (14,286) (28,306) (28,306)
Proceeds from exercise of
subscription shares 2,208 2,208 - -
Subscription share issue costs
paid (250) (250) - -
Redemption of debenture stock - - (30) (30)
Dividends paid (3,452) (3,452) (4,447) (4,447)
------ ------ ------ ------
Net cash outflow from financing
activities (15,780) (15,780) (32,783) (32,783)
------ ------ ------ ------
Decrease in cash and cash
equivalents (7,697) (7,285) (3,814) (3,814)
Effect of foreign exchange rate
changes (4) (4) 1 1
------ ------ ------ ------
Change in cash and cash
equivalents (7,701) (7,289) (3,813) (3,813)
Cash and cash equivalents at the
start of the year 992 (23) 4,805 3,790
------ ------ ------ ------
Cash and cash equivalents at the
end of the year (6,709) (7,312) 992 (23)
------ ------ ------ ------
Comprised of:
Cash 1,256 653 1,032 17
Collateral pledged in respect of
contracts for difference (7,965) (7,965) - -
Bank overdraft - - (40) (40)
------ ------ ------ ------
Total (6,709) (7,312) 992 (23)
====== ====== ====== ======
Notes to the financial statements
1. Principal activity
The principal activity of the Company is that of an investment trust company
within the meaning of section 1158 of the Corporation Tax Act 2010.
The Company has two subsidiaries, The Third Throgmorton Trust Limited the
principal activity of which was investment dealing in shares and other
investments and T.T. Finance PLC which acted as a financing subsidiary.
2. Accounting policies
The policies set out below have been applied consistently throughout the year.
(a) Basis of preparation
The financial statements of the Group have been prepared in accordance with
IFRS as adopted by the European Union and as applied in accordance with the
provisions of the Companies Act 2006. Insofar as the Statement of Recommended
Practice ("SORP") for investment trust companies and venture capital trusts
issued by the AIC, revised in January 2009, is compatible with IFRS, the
financial statements have been prepared in accordance with guidance set out in
the SORP. Previously the financial statements were prepared in accordance with
UK Generally Accepted Accounting Practices. These comprise standards and
interpretations of the International Accounting Standards and Standard
Interpretations Committee as approved by the International Accounting Standards
Committee that remain in effect, to the extent that IFRS have been adopted by
the European Union.
The functional currency of the Group is UK pounds sterling as this is the
currency of the primary economic environment in which the Group operates. All
values are rounded to the nearest thousand pounds (GBP'000) except where
otherwise stated.
Group comparative results are presented for all primary statements with effect
from this annual reporting date being 30 November 2010.
(b) Consolidation
The consolidated financial statements incorporate the financial statements of
the Company and its subsidiary undertakings, T.T. Finance PLC and The Third
Throgmorton Trust Limited, made up to 30 November 2010. The Company has taken
advantage of the exemption provided under section 408 of the Companies Act 2006
not to publish its individual Statement of Comprehensive Income and related
notes. All of the Group's operations are of a continuing nature
(c) Presentation of Consolidated Statement of Comprehensive Income
In order to reflect better the activities of an investment trust company and in
accordance with guidance issued by the AIC, supplementary information which
analyses the Consolidated Statement of Comprehensive Income between items of a
revenue and a capital nature has been presented alongside the Consolidated
Statement of Comprehensive Income. In accordance with the Company's status as a
UK investment company under section 833 of the Companies Act 2006 and section
1158 of the Corporation Tax Act 2010, net capital returns may not be
distributed by way of dividend.
(d) Investments held at fair value through profit or loss
The Company's investments are classified as held at fair value through profit
or loss in accordance with IAS 39 - Financial Instruments: Recognition and
Measurement and are managed and evaluated on a fair value basis in accordance
with its investment strategy.
All investments are designated upon initial recognition as held at fair value
through profit or loss. Purchases of investments are recognised on a trade date
basis. The sales of assets are recognised at the trade date of the disposal.
Proceeds are measured at fair value, which is regarded as the proceeds of sale
less any transaction costs.
The fair value of the long only portfolio is the price of the securities,
without deduction for estimated future selling costs. Under IFRS, the
investments in the subsidiaries are carried at fair value which is deemed to be
the total equity of the subsidiaries.
Unquoted investments are valued by the Directors at fair value using
International Private Equity and Venture Capital Valuation Guidelines.
These policies apply to all current and non current asset investments of the
Company and the Group.
Changes in the value of investments held at fair value through profit or loss
and gains and losses on disposal are recognised in the Consolidated Statement
of Comprehensive Income as "Gains or losses on investments held at fair value
through profit or loss". Also included within this heading are transaction
costs in relation to the purchase or sale of investments.
(e) Derivatives
Derivatives are held at fair value based either on traded prices or Directors'
fair valuation to the extent that traded prices are unavailable. Gains and
losses on derivative transactions are recognised in the Consolidated Statement
of Comprehensive Income. They are recognised as capital and are shown in the
capital column of the Consolidated Statement of Comprehensive Income if they
are of a capital nature and are recognised as revenue and shown in the revenue
column of the Consolidated Statement of Comprehensive Income if they are of a
revenue nature. To the extent that any gains or losses are of a mixed revenue
and capital nature, they are apportioned between revenue and capital
accordingly.
(f) Segmental reporting
The Directors are of the opinion that the Company is engaged in a single
segment of business being investment business.
(g) Income
Dividends receivable on equity shares are recognised on an ex-dividend basis.
Where no ex-dividend date is available, dividends receivable on or before the
year end are treated as revenue for the year. Provisions are made for any
dividends not expected to be received. Fixed returns on non equity securities
are recognised on a time apportionment basis so as to reflect the effective
yield on the security.
Interest income is accounted for on an accruals basis.
(h) Expenses
All expenses, including finance costs, are accounted for on an accruals basis.
Expenses have been charged wholly to the revenue column of the Consolidated
Statement of Comprehensive Income, except as follows:
- expenses including finance costs which are incidental to the acquisition or
disposal of investments are included within the cost of the investments.
- the investment management fee has been allocated 75% to the capital column
and 25% to the revenue column of the Consolidated Statement of Comprehensive
Income in line with the Board's expected long term split of returns, in the
form of capital gains and income respectively, from the investment portfolio.
- performance fees have been allocated 100% to the capital column of the
Consolidated Statement of Comprehensive Income, as performance has been
predominantly generated through capital returns from the investment portfolio.
- BlackRock, has agreed to waive investment management fees of GBP1,068,000 which
includes AXA's termination fee of GBP444,000 and other costs relating to the
change of management and restructuring of the Company of GBP624,000. The value of
this fee waiver benefit has been amortised over the 24 month initial term of
the investment management agreement, which is terminable on 6 months notice
after an initial 18 month period, and has been allocated to capital. The fee
waiver was fully amortised during the year.
(i) Finance costs
Finance costs are accounted for on an accruals basis. Finance costs are
allocated, insofar as they relate to the financing of the Company's
investments, 75% to the capital column and 25% to the revenue column of the
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.
(j) Taxation
Deferred taxation is recognised in respect of all temporary differences at the
financial reporting date, where transactions or events that result in an
obligation to pay more tax in the future or right to pay less tax in the future
have occurred at the financial reporting date. This is subject to deferred tax
assets only being recognised if it is considered more likely than not that
there will be suitable profits from which the future reversal of the temporary
differences can be deducted.
Where expenses are allocated between capital and revenue any tax relief in
respect of the expenses is allocated between capital and revenue returns on the
marginal basis using the Company's effective rate of corporation tax for the
accounting period.
(k) Dividends payable
Under IFRS, final dividends, should not be accrued in the financial statements
unless they have been approved by shareholders before the financial reporting
date. Interim dividends should not be accrued in the financial statements
unless they have been paid.
Dividends payable to equity shareholders are recognised in the Statement of
Changes in Equity when they have been approved by shareholders in the case of a
final dividend or paid in the case of an interim dividend, and have become a
liability of the Company.
(l) Cash and cash equivalents
Cash comprises cash in hand and demand deposits. Cash equivalents are short
term, highly liquid investments, that are readily convertible to known amounts
of cash and that are subject to an insignificant risk of changes in value.
3. Income
2010 2009
GBP'000 GBP'000
Investment income:
UK listed dividends 2,161 1,963
Overseas listed dividends 219 269
----- -----
2,380 2,232
----- -----
Other income:
Deposit interest 2 20
Underwriting commission 2 33
----- -----
4 53
----- -----
Interest on VAT refunded - 2,469
----- -----
Total 2,384 4,754
----- -----
Total income comprises:
Dividends 2,380 2,232
Interest 2 20
Other income 2 33
Interest on VAT refunded - 2,469
----- -----
2,384 4,754
----- -----
4. Investment management and performance fees
2010 2010 2010 2009 2009 2009
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Investment
management fee 249 748 997 210 628 838
Performance fee - 6,117 6,117 - 353 353
--- ----- ----- --- --- -----
Total 249 6,865 7,114 210 981 1,191
--- ----- ----- --- --- -----
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
through the CFD portfolio. In addition, BlackRock is entitled to a performance
fee of 12.5% of any net asset value (total return) outperformance against the
Hoare Govett Small Companies plus AIM (ex 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.
Performance fees have been wholly allocated to the capital column of the
Consolidated Statement of Comprehensive Income as the performance has been
predominantly generated through capital returns from the investment portfolio.
As at 30 November 2010, there was a performance fee payable to the Investment
Manager of GBP6,117,000 (2009: GBP353,000).
The net asset value and share price performance with income reinvested which
have been disclosed in the financial highlights on page 1 include the
subscription share reinvestment, assuming the subscription share entitlement
per share was sold and the proceeds reinvested on the first day of trading.
This reinvestment factor has been excluded from the calculation of the total
return for the purposes of calculating the performance fee. In addition, the
accounting adjustments relating to the management fee waiver and the basic
management fee have also been excluded from the performance computation. After
adjusting for these factors, changes in capital structure, material inflows and
outflows and including the impact of the reinvestment of dividends paid in the
period, the cum income, total return NAV used to calculate the performance fee
amounted to 231.14p, generating outperformance of 34.3% above the benchmark
index and a performance fee of GBP6,117,000.
BlackRock has agreed to waive the management fees payable to the Company up to
the level of transition and restructuring costs of GBP1,068,000. This fee waiver
benefit has been amortised over the initial period of the management contract
of 24 months. A credit of GBP309,000 (2009: GBP532,000) has been applied to
termination costs in the capital column of the Consolidated Statement of
Comprehensive Income. The fee waiver was fully amortised during the year.
5. Other operating activities
2010 2010 2010 2009 2009 2009
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
(a) Other operating
expenses
Auditors'
remuneration:
- audit services(a) 28 - 28 28 - 28
- other services 9 - 9 25 - 25
Registrar's fee 55 - 55 41 - 41
Directors'
remuneration 100 - 100 106 - 106
Termination costs - (329) (329) - (532) (532)
Other administrative
costs 207 - 207 365 - 365
--- --- --- --- --- ---
399 (329) 70 565 (532) 33
--- --- --- --- --- ---
(a) Auditors' remuneration - other services comprised GBP9,000, of which GBP5,000
related to the interim review and GBP4,000 related to services in respect of the
conversion to IFRS. Fees of GBP25,000 (2009: GBP40,000) were also paid to Ernst &
Young in respect of non audit services provided in relation to the tender offer
(2009: tender offer and subscription share issue). These fees were charged
directly to the capital reserve in line with all other tender costs.
2010 2009
(b) The Company's total expense
ratio ("TER"), calculated as a
percentage of average net assets
and using expenses, excluding
performance fee, interest costs
and VAT written back (b): 1.2% 1.3%
(b) The Company's TER was calculated using total expenses of GBP1,396,000
(comprising of investment management fees totalling GBP997,000 and other operating
expenses of GBP399,000) and average net assets of GBP117,107,000.
BlackRock has agreed to waive the management fees payable by the Company up to
the level of transition and restructuring costs of GBP1,068,000. This fee waiver
benefit has been amortised over the initial period of the management contract
of 24 months. A credit of GBP309,000 (2009: GBP532,000) has been applied to termination
costs in the capital column of the Consolidated Statement of Comprehensive Income.
The fee waiver was fully amortised during the year.
6. Dividends
Payment 2010 2009
Record date date GBP'000 GBP'000
Dividends paid or proposed
on equity shares:
2008 final of 1.85p 3 April 2009 1 May 2009 - 1,523
2008 special of 3.00p 3 April 2009 1 May 2009 - 2,471
2009 interim of 0.55p 31 July 2009 27 August 2009 - 453
2009 final of 2.20p 19 February 2010 26 March 2009 1,631 -
2009 special of 2.00p 19 February 2010 26 March 2010 1,482 -
2010 interim of 0.58p 30 July 2010 31 August 2010 339 -
----- -----
3,452 4,447
----- -----
The Directors have proposed a final dividend of 2.42p per share (2009: Final
2.20p, special 2.00p). The dividends will be paid, subject to shareholders
approval on 25 March 2011, to shareholders on the Company's register on
18 February 2011. The proposed final dividend has not been included as a liability
in these financial statements as final dividends are only recognised in the
financial statements when they have been approved by shareholders.
The total dividends payable in respect of the year which form the basis of
section 1158 of the Corporation Tax Act 2010 and section 833 of the Companies
Act 2006, and the amounts proposed meet the relevant requirements as set out in
the legislation and are as follows:
2010 2009
GBP'000 GBP'000
Dividends paid or proposed
on equity shares:
Interim paid 0.58p (2009: 0.55p) 339 453
Final proposed of 2.42p* (2009: 2.20p) 1,471 1,631
Special dividend of 0.00p (2009: 2.00p) - 1,482
----- -----
1,810 3,566
----- -----
*based upon 60,797,273 ordinary shares.
7. Consolidated returnand net asset value per ordinary share
Revenue and capital returns per share are shown below and have been calculated
using the following:
2010 2009
Net revenue return attributable to continuing
ordinary shareholders (GBP'000) 1,931 3,105
Net capital return attributable to continuing
ordinary shareholders (GBP'000) 41,889 42,134
------- -------
Total equity attributable to continuing ordinary
shareholders (GBP'000) 43,820 45,239
------- -------
Total equity (GBP'000) 127,296 106,917
------- -------
The weighted average number of ordinary shares
in issue during each year, on which the return
per ordinary share was calculated, was: 67,839,455 80,343,189
The number of ordinary shares in issue at the
end of the year, on which the undiluted net
asset value was calculated, was: 59,819,714 74,116,108
The number of ordinary shares in issue at the
end of the year, on which the diluted net asset
value was calculated, was: 73,130,326 88,939,009
Actual number of subscription shares in
issue at the end of each year 13,310,612 14,822,901
Undiluted
Revenue earnings per share 2.85p 3.86p
Capital earnings per share 61.74p 52.45p
------- -------
Total earnings per share 64.59p 56.31p
------- -------
Net asset value per share 212.80p 144.26p
------- -------
Diluted
Revenue earnings per share 2.85p 3.86p
Capital earnings per share 61.74p 52.45p
------- -------
Total earnings per share 64.59p 56.31p
------- -------
Net asset value per share 200.64p 144.26p
------- -------
Ordinary share price 163.00p 115.75p
Subscription share price 24.25p 8.00p
======= =======
At the year end, the Company had in issue 13,310,612 subscription shares which
confer the right to subscribe at set times for all or any of the ordinary
shares to which the subscription shares relate at a price of 146p per share. As
the Company's NAV was in excess of the exercise price, the subscription shares
are considered to be dilutive and a fully diluted NAV per share was calculated
by adjusting the total equity for consideration receivable on the exercise of
all subscription shares in existence at the time. There was no dilution to the
earnings per share as the average share price of the ordinary shares was below
the exercise price of the subscription shares.
8. Share capital
Continuing Tender Treasury Subscription Total
ordinary shares shares number shares shares shares
in issue number number in issue number number GBP'000
Allotted, called up and
fully paid share capital
comprised:
Ordinary shares of
5p each:
At 1 December 2009 74,116,108 - 7,400,000 14,822,901 96,339,009 4,224
Shares cancelled from
treasury on
26 July 2010 - - (7,400,000) - (7,400,000) (370)
Tendered - July 2010 (15,808,683) 15,808,683 - - - -
Cancelled/transferred to
treasury on
30 July 2010 following
tender offer - (15,808,683) 7,400,000 - (8,408,683) (421)
---------- ---------- --------- ---------- ---------- -----
58,307,425 - 7,400,000 14,822,901 80,530,326 3,433
Subscription shares of
1p each:
Conversion of
subscription shares into
ordinary shares 1,512,289 - - (1,512,289) - 61
---------- ---------- --------- ---------- ---------- -----
1,512,289 - - (1,512,289) - 61
---------- ---------- --------- ---------- ---------- -----
At 30 November 2010 59,819,714 - 7,400,000 13,310,612 80,530,326 3,494
---------- ---------- --------- ---------- ---------- -----
With the exception of the July 2010 tender offer no ordinary shares were
purchased or cancelled in the year (2009: nil, with the exception of the August
2009 tender offer). On 26 July 2010, 7,400,000 ordinary treasury shares were
cancelled. On 30 July 15,808,683 ordinary shares were tendered and 8,408,683
shares were cancelled (2009: 8,235,089) and 7,400,000 shares were transferred
to treasury. 5,675,770 ordinary shares were purchased pursuant to the in specie
distribution and a further 10,132,913 ordinary shares were purchased under the
cash exit option. During the year the Company has issued a total of 1,512,289
ordinary shares, following the conversion of subscription shares into ordinary
shares for a total consideration of GBP2,208,000. Following the latest conversion
opportunity on 31 January 2011, a further 977,559 ordinary shares were issued
on 2 February 2011, subject to listing on 7 February 2011, for a total consideration
of GBP1,427,000. Following the listing of the additional shares, the Company will
have 60,797,273 ordinary shares (excluding 7,400,000 shares currently held in
treasury) and 12,333,053 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 rights but not the
obligation to subscribe for one ordinary share, at a pre-determined price of
146p per ordinary share, exercisable quarterly on 30 April, 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 the
subscription shares
9. Reserves
Group Capital
reserve
Capital (arising on
reserve revaluation
Share Capital (arising on of
premium Special redemption investments investments Revenue
account reserve reserve sold) held) reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 December 2009 35,272 - 11,114 41,372 7,582 7,353
Movement during the year:
Cancellation of treasury
shares - - 791 - - -
Revenue return for the
year - - - - - 1,719
Cancellation of share
premium account (35,272) 35,272 - - - -
Transfer to tender pool - - - (22,197) - -
Change in value of tender
pool - - - (174) - -
Exercise of subscription
shares 2,147 - - - - -
Gains on realisation of
investments - - - 16,260 - -
Change in investment
holding gains - - - - 25,314 -
Loss on foreign currency
transactions - - - (4) - -
Gains on contracts for
difference - - - 1,005 6,024 212
Finance costs, investment
management and
performance fee charged
to capital after taxation - - - (6,536) - -
Dividends paid during the
year - - - - - (3,452)
----- ------ ------ ------ ------ -----
At 30 November 2010 2,147 35,272 11,905 29,726 38,920 5,832
----- ------ ------ ------ ------ -----
Company Capital
reserve
Capital (arising on
reserve revaluation
Share Capital (arising on of
premium Special redemption investments investments Revenue
account reserve reserve sold) held) reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 December 2009 35,272 - 11,114 41,372 9,060 5,875
Movement during the year:
Cancellation of treasury
shares - - 791 - - -
Revenue return for the
year - - - - - 1,716
Cancellation of share
premium account (35,272) 35,272 - - - -
Transfer to tender pool - - - (22,197) - -
Change in value of tender
pool - - - (174) - -
Exercise of subscription
shares 2,147 - - - - -
Gains on realisation of
investments - - - 16,260 - -
Change in investment
holding gains - - - - 25,317 -
Loss on foreign currency
transactions - - - (4) - -
Gains on contracts for
difference - - - 1,005 6,024 212
Finance costs, investment
management and
performance fee charged
to capital after taxation - - - (6,536) - -
Dividends paid during the
year - - - - - (3,452)
----- ------ ------ ------ ------ -----
At 30 November 2010 2,147 35,272 11,905 29,726 40,401 4,351
----- ------ ------ ------ ------ -----
The special reserve arising on the cancellation of the share premium account
may be used as distributable profits for all purposes and in particular the
acquisition by the Company of its own ordinary shares.
10. Publication of non statutory accounts
The financial information contained in this announcement does not constitute
statutory accounts as defined in the Companies Act 2006. The 2010 annual report
and financial statements will be filed with the Registrar of Companies shortly.
The report of the Auditor for the year ended 30 November 2010 contains no
qualification or statement under section 498(2) or (3) of the Companies Act
2006.
The comparative figures are extracts from the audited financial statements of
The Throgmorton Trust PLC and its subsidiaries for the year ended 30 November
2009, which have been filed with the Registrar of Companies. The report of the
Auditor on those accounts contained no qualification or statement under section
498 of the Companies Act.
This announcement was approved by the Board of Directors on 4 February 2011.
11. Annual Report
Copies of the annual report will be sent to members shortly and will be
available from the registered office, c/o The Company Secretary, The
Throgmorton Trust PLC, 33 King William Street, London EC4R 9AS.
12. Annual General Meeting
The Annual General Meeting of the Company will be held at 33 King William
Street, London EC4R 9AS on Friday, 11 March 2011 at 12:00 p.m.
ENDS
The Annual Report will also be available on the BlackRock Investment Management
website at http://www.blackrock.co.uk/content/groups/uksite/documents/
literature/1111079283.pdf. Neither the contents of the Manager's website nor
the contents of any website accessible from hyperlinks on the Manager's website
(or any other website) is incorporated into, or forms part of, this
announcement.
For further information, please contact:
Jonathan Ruck Keene, Managing Director, Investment Companies, BlackRock
Investment Management (UK) Limited
Tel: 020 7743 2178
Mike Prentis, BlackRock Investment Management (UK) Limited
Tel: 020 7743 2312
Richard Plackett, BlackRock Investment Management (UK) Limited
Tel: 020 7743 4869
Emma Phillips, Media & Communication, BlackRock Investment Management (UK)
Limited
Tel: 020 7743 2922
Louise Dolan, FD
Tel: 020 7269 7192
4 February 2011
33 King William Street
London EC4R 9AS
END
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