annual report and financial statements 30 ......trust plc annual report and financial statements 30...

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2013

000308a-CEF ANN FEB14

blackrock.co.uk/thrg

BLACKROCK

THROGMORTON

TRUST PLC

ANNUAL REPORT AND FINANCIAL STATEMENTS 30 NOVEMBER 2013

000308a-CEF IT Throgmorton R&A Cover.indd 1 05/02/2014 16:41

A N N U A L R E P O R T A N D F I N A N C I A L S TAT E M E N T S 3 0 N O V E M B E R 2 0 1 3 [ 1 ]

BlackRock Throgmorton Trust plc

With effect from 1 December 2013

Objective

The Company’s objective is to provide shareholders with capital growth

and an attractive total return by investing primarily in UK smaller

companies and mid-capitalisation companies listed on the main market

of the London Stock Exchange.

Unique structure

Conventional long only portfolio; and

Contracts for difference (‘CFD’) portfolio of approximately 30% of the

Company’s net assets.

Benchmark

The Numis Smaller Companies excluding AIM (excluding Investment

Companies) Index (the ‘Index’).

A MEMBER OF THE ASSOCIATION OF

INVESTMENT COMPANIES

[ 2 ] B L A C K R O C K T H R O G M O R T O N T R U S T P L C

Contents

Overview

Performance record 3

Chairman’s statement 4

Historical record 5

Performance

Strategic r eport 6

Investment manager’s report 9

Fifty largest investments 11

Distribution of investments 14

Governance

Directors 16

Directors’ report 17

Directors’ remuneration report 23

Corporate governance statement 27

Statement of directors’ responsibilities 32

Report of the audit committee 33

Financial statements

Independent auditor’s report 36

Statement of comprehensive income 38

Statement of changes in equity 39

Statement of fi nancial position 40

Cash fl ow s tatement 41

Notes to the fi nancial s tatements 42

Additional information

Shareholder information 57

Analysis of ordinary shareholders 60

Management & administration 61

Annual general meeting

Notice of annual general meeting 62

Glossary 66


Overview

Performance record

FINANCIAL HIGHLIGHTSAs at

30 November

2013

As at

30 November

2012

Change

%

Assets

Net assets £240.8m £174.1m +38.3

Net asset value per share 329.21p 238.02p +38.3

– with income reinvested +40.1

Ordinary share price (mid-market) 290.00p 193.25p +50.1

– with income reinvested +52.3

Year ended

30 November

2013

Year ended

30 November

2012

Change

%

Revenue

Net revenue after taxation £3.7m £2.7m +37. 1

Revenue return per ordinary share 4.99p 3.64p +37. 1

Dividends

– Interim 0.75p 0.62p +21.0

– Final 3.25 p 2.70p + 20.4

Total dividends paid and payable in respect of

the year ended 30 November 4.00 p 3.32p + 20.5

PERFORMANCE FROM 30 NOVEMBER 2008 TO 30 NOVEMBER 2013

100

150

200

250

300

350

400

450

500

550

Share price performance NAV performance (total return)

Numis Smaller Companies plus AIM (excluding Investment Companies) Index (total return)

Nov 08 Nov 09 Nov 10 Nov 11 Nov 12 Nov 13

Total return performance record rebased to 100 at 30 November 2008.

Sources: BlackRock and Datastream.


Overview

Chairman’s statement

PERFORMANCEMarkets have made substantial progress during the financial

year under review, supported by better economic news from

the UK and the US in particular, and a reduction in the

perceived risks to the financial system.

Against this background I am pleased to be able to report a

very strong year for the Company over the twelve months to

30 November 2013, both in absolute and relative terms.

The Company’s net asset value per share (‘NAV’) returned

40.1% compared with a return of 31.6% for the Numis Smaller

Companies plus AIM (excluding investment companies) Index,

(the benchmark for the period under review). Over the same

period the share price increased by 52.3%. Since the year end

the NAV has increased by 5.8%. (All percentages in sterling

terms with income reinvested.)

This performance was achieved through a combination of

excellent returns from stock selection in the long only portfolio

and the CFD portfolio, where gains on the long CFDs

substantially exceeded losses on the short CFD positions.

Further details of the factors which have contributed to

performance are set out in the Investment Manager’s Report.

The Company has outperformed its benchmark in the year by

11.8 percentage points (after adjusting for fees and dividends

paid) which resulted in combined revenue and capital returns

of £75.5m for the year. Based on an average performance fee

market value of £266m, this has resulted in a performance fee

of £3.9m being payable.

REVENUE RETURN AND DIVIDENDSIt is pleasing to note that revenue return per share for the year

amounted to 4.99 pence compared with 3.64 pence for the

previous year, an increase of 37. 1%. The increase in revenue

arose from a combination of healthy dividend increases from

underlying portfolio companies, changes in the composition

of the portfolio and a higher incidence of special dividends

this year.

In recognition of this the Directors are proposing an increased

final dividend of 3.25 pence per share. This together with

the interim dividend of 0.75 pence paid on 23 August 2013

makes a total dividend for the year of 4.00 pence per share

compared with the 3.32 pence per share paid in respect of the

financial year ended 30 November 2012. The final dividend

is payable on 4 April 2014 to shareholders on the Company’s

register on 21 February 2014. The ex-dividend date is

1 9 February 2014.

BOARD OF DIRECTORSHarry Westropp, who has served on the Board since 2003,

will retire as a Director at the forthcoming AGM. I would like

to thank Harry on behalf of the Board for his outstanding

contribution and wise counsel to the Board over the last

10 years.

I am pleased to report that Loudon Greenlees has agreed to

join the Board in March 2014 and will also become a member

of the Audit, Management Engagement and Nomination

committees. Loudon is a qualified Chartered Accountant and

brings a wealth of commercial and financial experience gained

in the financial services sector. He is currently a non executive

director of Nevsky Capital LLP.

ANNUAL GENERAL MEETINGThe Annual General Meeting of the Company will be held

at BlackRock’s offices at 12 Throgmorton Avenue, London

EC2N 2DL on Wednesday, 26 March 2014 at 11.00 a.m. The

Investment Manager will make a presentation to shareholders

on the Company’s progress and the outlook for the smaller

companies sector.

COMPANY OBJECTIVE AND POLICY, BENCHMARK AND NAME CHANGEThe Company held a general meeting on 27 November 2013

at which shareholders resolved to change the Company’s

investment objective and policy, including the adoption of

a new benchmark, with effect from 1 December 2013.

Following approval of the revised investment policy the

Company’s investment management agreement was also

amended to reflect the lowering of the performance fee cap

with effect from 1 December 2013. The Company’s name was

also changed to BlackRock Throgmorton Trust plc on

29 November 2013. Further details of these changes are set

out in the Strategic Report on page 6 and in the Directors’

Report on page 17.

OUTLOOKThe pace of UK economic activity appears to have accelerated

markedly in recent months, supported by renewed strength in

the housing market and improving consumer confidence.

Against this, the still high levels of personal and government

indebtedness and the – at best very modest – growth in real

wages both suggest that any return to a more normal growth

trajectory could well take some time. Our Investment Manager

has in the past proved adept at identifying attractive smaller

companies with strong secular growth characteristics. This

ability, together with the added scope to hold both short and

long positions provided by our CFD portfolio, gives us

confi dence for the future.

CRISPIN LATYMERChairman

10 February 2014


Overview

Historical record

ASSETS

Year to

30 November

Equity shareholders’

funds

NAV

per share

Total

return

Mid-market

price per share

£m p % p

Compound annual growth rate over the

ten year period – 9.4% – 10.1%

2013 240.8 329.2 +40.1 290.0

2012 174.1 238.0 +19.4 193.3

2011 147.8 202.1 -3.9 170.0

2010 127.3 212.8 +51.7 163.0

2009 106.9 144.3 +63.7 115.8

2008 77.01 93.5 -51.44 62.8

2007 272.5 194.62 -1.6 152.0

2006 326.2 199.42 +15.4 164.3

2005 313.42 171.62,3 +29.1 142.0

2004 308.63 134.32,3 +31.8 110.3

1. Reduction from a tender offer and reorganisation of the Company in 2008, as well as market movements.2. Prior charges at par.3. Restated for changes in accounting policies: the principal changes were to value investments at bid (previously mid) market value and to account for dividends

in the period in which they are paid.4. Includes £5.5 million in respect of the write-back of prior years’ VAT.

REVENUE

Year to 30 November

Net revenue

after taxation6

Revenue return

per share6

Dividends

per share

£m p p

Compound annual growth rate over the

ten year period – 12.4% 9. 6%

2013 3.7 4.99 4.00

2012 2.7 3.64 3.32

2011 2.1 3.29 3.15

2010 1.9 2.85 3.00

2009 3.1 3.86 2.755

2008 4.8 3.85 2.405

2007 2.3 1.54 2.20

2006 3.3 1.84 2.00

2005 3.2 1.58 1.75

2004 3.6 1.55 1.60

5. Dividends per share do not include special dividends of 2.00 pence per share paid in 2009 and 3.00 pence per share paid in 2008.6. Net revenue after taxation and revenue return per share for the years ended 30 November 2013 and 2012 relate to the parent company and for the years up to

30 November 2011, related to the Group including subsidiary companies.


Performance

Strategic report

The Directors present the strategic report of the Company

for the year ended 30 November 2013.

PRINCIPAL ACTIVITYThe Company carries on business as an investment trust

and its principal activity is portfolio investment.

OBJECTIVE AND NAME CHANGE (WITH EFFECT FROM 1 DECEMBER 2013)The Company held a general meeting on 27 November 2013 at

which it was resolved to amend the Company’s investment

objective and policy principally through the adoption of a new

benchmark index to refl ect the focus on UK smaller and

mid-capitalisation companies. Under the authority provided

in the Articles of Association, the Directors also resolved to

change the Company’s name to BlackRock Throgmorton Trust

plc and to lower the cap on the Investment Manager’s

performance fee. These changes were effective on

29 November 2013 and 1 December 2013 respectively. Full

details are provided in the Director’s Report on page 17.

The Company’s objective is to provide shareholders with capital

growth and an attractive total return through investment

primarily in UK smaller and mid-capitalisation companies listed

on the main market of the London Stock Exchange.

STRATEGY, BUSINESS MODEL AND INVESTMENT POLICYThe Company’s performance is now measured against

the Numis Smaller Companies excluding AIM (excluding

investment companies) Index (the “Index”). Prior to

1 December 2013 performance was measured by reference

to the Numis Smaller Companies plus AIM (excluding

investment companies).

The Company may hold up to 25 per cent. of its gross assets, at

the time of acquisition, in equities or collective investment

vehicles traded on the AIM market of the London Stock Exchange

(previously there was a limit of 50% by value in AIM stocks).

The Investment Manager may invest in companies outside the

Index without restriction subject to the limits noted above.

In addition to holding a conventional long only portfolio of

UK smaller and mid-capitalisation equities, the Company will

hold approximately 30 per cent. of its net assets in a portfolio

of contracts for difference (“CFD”) and/or comparable equity

derivatives which provide both long and short exposure.

Under normal circumstances, the long only portfolio is

expected to comprise 100 per cent. of the Company’s net

assets. Therefore, the Company can have gross exposure of

130 per cent. of net assets, albeit that some of this exposure

represents short positions.

Portfolio risk will be mitigated by investment in a diversifi ed

portfolio of companies. No more than 5 per cent. of the

Company’s gross assets (previously 15 per cent.), at the time of

acquisition, may be invested in any one single company and

the Company will not invest more than 10 per cent. of its

gross assets, at the time of the acquisition, in other listed

closed-ended investment funds, unless such companies have

a stated investment policy not to invest more than 15 per cent.

of their gross assets in other listed closed-ended investment

funds, in which case the limit is 15 per cent. of gross assets.

The Board’s policy is that borrowing less cash should not

exceed 20 per cent. of gross assets. However, the Company

is geared primarily through its CFD portfolio.

No material change will be made to the amended investment

objective and policy without shareholder approval.

PERFORMANCEIn the year to 30 November 2013, the Company’s NAV per share

increased by 40.1% and the Ordinary share price rose

by 52.3%, (all percentages calculated in sterling terms with

income reinvested).

The Investment Manager’s report on pages 9 and 10 includes

a review of the main developments during the year, together

with information on investment activity within the

Company’s portfolio.

RESULTS AND DIVIDENDSThe results for the Company are set out in the Statement of

Comprehensive Income on page 38. The total return for the year,

after taxation, was £69,210,000 (2012: £28,587,000) of which

the revenue return amounted to £3,651,000(2012: £2,660,000),

and the capital return £65,559,000(2012: £25,927,000).

Details of the dividends declared in respect of the year are set

out in the Chairman’s statement on page 4.

KEY PERFORMANCE INDICATORSAt each Board meeting, the Directors consider a number of

performance measures to assess the Company’s success

in achieving its objectives. The key performance indicators

(‘KPIs’) used to measure the progress and performance of the

Company over time , which are comparable to those reported

by other investment trusts , are set out below.

Year ended

30 November

2013

Year ended

30 November

2012

Net asset value1 40.1% 19.4%

Ordinary share price2 52.3% 15.6%

Benchmark3 31.6% 16.5%

Discount to cum income

net asset value 11.9% 18.8%

Revenue return per share 4.99p 3.64p

Dividends 4.00 p 3.32p

Ongoing charges1 1.1% 1.1%

1. Calculated in accordance with the Association of Investment Companies (‘AIC’) guidelines.

2. Calculated on a mid to mid basis with income reinvested.3. Numis Smaller Companies plus AIM (excluding investment companies) Index.


The Board monitors the KPIs at each meeting. Additionally, it

regularly reviews a number of indices and ratios to understand

the impact on the Company’s relative performance of the

various components such as asset allocation and stock

selection. This includes an assessment of the Company’s

performance and ongoing charges against its peer group of

investment trusts with similar investment objectives.

The Directors recognise that it is in the long term interests of

shareholders that shares do not trade at a signifi cant discount

to their prevailing NAV. In the year under review the discount

to NAV of the ordinary shares on a cum income basis has

ranged between 6.6% and 20.4%, with the average being

14.4%. The shares ended the year at a discount of 11.9% on

a cum income basis.

Your Board believes that the best way of addressing the

discount over the longer term is to continue to generate good

performance and to create demand for the Company’s shares

in the secondary market through broadening awareness of

the Company’s unique structure. The Board will also be

seeking to renew the authority from shareholders to buy back

shares when it believes that it is in the interests of

shareholders to do so, having taken into account all relevant

factors including the size of the Company and the liquidity of

its shares.

PRINCIPAL RISKSThe 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 fulfi l the Company’s objective

and for monitoring the performance of the Investment

Manager and the implementation of the strategy. An

inappropriate strategy may lead to under performance

against the benchmark index and the Company’s peer

group. To manage this risk the Investment Manager

provides an explanation of signifi cant stock selection

decisions and the rationale for the composition of the

investment portfolio. The Board monitors the spread of

investments in order to minimise the risks associated

with factors specifi c to individual companies and sectors,

based on the diversifi cation requirements inherent in the

Company’s investment policy.

Market price risk – Market price risk arises from changes

to the prices of the Company’s investments. It represents

the potential loss the Company might suffer through holding

investments whose prices decline . The Board considers

diversifi cation of the portfolio, asset allocation, stock

selection, unquoted investments and levels of gearing on

a regular basis and has set investment restrictions and

guidelines which are monitored and reported on by

the Investment Manager. The Board monitors the

implementation and results of the investment process

with the Investment Manager.

Income/dividend risk – The amount of dividends and future

dividend growth will depend on the performance of the

Company’s underlying portfolio. Any change in the tax

treatment of the dividends or interest received by the

Company may reduce the level of dividends received by

shareholders. The Board monitors this risk through the

receipt of detailed income forecasts and considers the

level of income at each meeting.

Financial risks – The Company’s investment activities

expose it to a variety of fi nancial risks that include

foreign currency risk and interest rate risk. At 30 November

2013, the Company has approximately 26.6% of its net

portfolio value invested in AIM traded securities, and, by

the very nature of its investment objective, largely invests

in smaller companies. Liquidity in these securities can

from time -to -time become constrained, making these

investments diffi cult to realise at or near published

prices. There are also risks linked to the Company’s use of

derivative transactions including CFDs. Further details are

disclosed in note 13 on page 49, together with a summary

of the policies for managing these risks and liquidity and

credit risks.

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 and

custodian BNYM each produce a Service Organisation

Controls report (SOC 01), which are reviewed by their

auditor and gives assurance regarding the effective

operation of controls. The reports are also reviewed by

the Audit Committee on an annual basis, or in the case

of BNYM a quarterly basis. The Board also considers

succession arrangements for key employees of the

Investment Manager and the business continuity

arrangements for the Company’s key service providers.

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 profi ts realised from the sale

of its investments. The Investment Manager monitors

investment movements, the level of forecast income

and expenditure and the amount of dividends paid to

ensure that the provisions of Chapter 4 of Part 24 of the

Corporation Tax Act 2010 are not breached and the results

are reported to the Board at each meeting. The Board


Performance

Strategic report continued

and the Investment Manager also monitor changes in

government policy and legislation which may have an

impact on the Company.

FUTURE PROSPECTSThe Board’s main focus is on the achievement of capital

growth and the future of the Company is dependent upon

the success of the investment strategy. The outlook for the

Company is discussed in the Chairman’s Statement on page 4

and in the Investment Manager’s report on page 10.

DIRECTORS , EMPLOYEES AND GENDER REPRESENTATIONThe Directors of the Company on 30 November 2013, all of whom

held offi ce throughout the year, are set out in the corporate

governance statement on page 29. The Board consists of four

male Directors and one female Director. Mr Greenlees has

agreed to join the Board in March 2014. Mr Westropp will retire

at the Annual General Meeting on 26 March 2014.

The Company does not have any employees.

The following information on pages 9 to 15 including the

Investment Manager’s Report on pages 9 and 10 forms part of

this Strategic Report.

BY ORDER OF THE BOARDBLACKROCK INVESTMENT MANAGEMENT (UK) LIMITEDSecretary

10 February 2014


Performance

Investment manager’s report

PERFORMANCE FOR THE TWELVE MONTHS TO

30 NOVEMBER 2013

100

110

120

130

140

150

160

Nov 12 Jan 13 Mar 13 May 13 Sep 13Jul 13 Nov 13

Share price performance NAV performance

Numis Smaller Companies plus AIM

(excluding Investment Companies) Index

Total return performance record rebased to 100 at 30 November 20 12.


MARKET REVIEW AND OVERALL INVESTMENT PERFORMANCEDuring the fi nancial year stockmarkets moved steadily ahead.

Economic data from the UK has been rather better than

expected and GDP growth looks to be accelerating. In the US

the data from the private sector has also been supportive

and economic momentum looks to be building slowly. The

economies in Continental Europe seem to be stabilising,

especially in Germany. Data from Asia and emerging markets

has been mixed, some currencies have been under pressure

and overall sentiment seems to be weak. The main setback

that we saw in the period related to the likely earlier than

expected reduction in quantitative easing in the US and

ultimately the expectation of increases in interest rates in

due course.

Over the year the Company’s NAV per share returned 40.1% to

329.21p; the benchmark returned 31.6%, whilst the FTSE 100

Index returned 17.5%, (all percentages in sterling terms with

income reinvested).

PERFORMANCE REVIEWThe long only portfolio performed well helped by good stock

selection, and net gains of £3.2m were achieved in the CFD

portfolio. Signifi cant gains on the long CFDs substantially

exceeded losses on the short CFDs. Sector allocation in the

long only portfolio was slightly positive.

Looking at stock selection, the most signifi cant positive

contributors to relative performance were our holdings in

Xaar, Blinkx, Optimal Payments, Howden Joinery Group, Polar

Capital and Ashtead Group. Good contributions were also

made by other core holdings ITE Group, Booker Group and

Workspace Group. All of these companies, except Optimal

Payments and Polar Capital, are owned both in the long

only and the CFD portfolio.

Xaar, the leading manufacturer of printheads used in inkjet

printers, issued a number of positive trading updates

culminating in interim results which showed organic sales

growth of 78% and earnings per share which had more than

trebled. This performance is largely down to Xaar’s success

with the sales of its platform 3 inkjet heads, which are mainly

being sold to enable the decoration of ceramic tiles; Xaar has

taken signifi cant market share. The company remains well

positioned and is looking at other applications for its printheads.

We have held Xaar shares for many years, and through diffi cult

periods of trading, so it is very pleasing to see management

deliver such outstanding performance; shares in Xaar rose by

278% during the year.

Blinkx, the leading supplier of internet video search capability

and content, announced interim results to 30 September 2013

with revenues up by 36% and earnings up by 49%, another

strong performance. Optimal Payments is a leading online

payments provider, which released interim results showing

sharply higher profi ts and good cash generation, both are

expected to continue. Both Blinkx and Optimal Payments have

benefi ted from the growth of internet traffi c and the desire to

monetise this.

Howden Joinery Group has continued to gain market share

in the supply of good quality kitchens to the UK market,

focusing on local builders. Ashtead Group continues to

trade well in the US where it is the second largest plant hire

company. The company has benefi ted from the pick-up in the

new-build housing market in the US, and from having a well

invested fl eet. Like Howden Group it should continue to gain

market share. Polar Capital announced that assets under

management had grown strongly on the back of consistently

good investment performance and successful new

fund launches.

On the negative side the largest detractors from relative

performance were Ocado Group and Thomas Cook Group,

two companies which are constituents of our benchmark index

and whose shares performed very strongly over the year.

We did not own shares in Ocado Group. We did buy a holding

in Thomas Cook Group but not before its shares had already

risen signifi cantly. Amongst companies which we did own,

the biggest disappointment was AZ Electronic Materials.

The company announced that it had had a weaker start to the

year and expected this to continue into the second quarter;

earnings were downgraded, not for the fi rst time. We were

impatient and sold our holding. In December AZ Electronic

Materials was bid for by Merck at a good premium, by which

time we had sold.

[ 1 0 ] B L A C K R O C K T H R O G M O R T O N T R U S T P L C

Performance

Investment manager’s report continued

Turning to sector allocation, we benefi ted from our

overweight positions in housebuilders and food and drug

retailers, where we hold Booker Group, and our underweight

positions in oil & gas and mining shares. These gains were

reduced by our underweight position in support services which

performed well.

ACTIVITYWe participated in a number of IPOs and placings during the

year; in the second half these included Foxtons, the London

focused estate agent, and Judges Scientifi c, a designer of

precision instruments. We also took part in a placing in Tyman,

a company which manufactures door fi ttings and window

seals. The company is benefi ting from an increase in new

housebuilding activity in the US, and in due course will benefi t

from a pick-up in home improvements and repairs. Tyman

announced the purchase of Truth and with this, 60% of its

sales are now concentrated in North America.

We took profi ts in some non-core holdings exposed to

emerging markets given concerns about their short term

growth potential. We also added to our UK property exposure

where we saw good value after the pull back during the

early summer. We bought a holding in Quintain Estates and

reintroduced Shaftesbury to the portfolio. Both companies

give us further exposure to the London property market.

We also added a holding in Grainger, which is exposed to

rising UK house prices.

Towards the end of the year we took profi ts in a number of our

holdings with the largest market capitalisations and we are

looking to reinvest the proceeds into some of our favourite

smaller cap holdings.

PORTFOLIO POSITIONINGWe have sought to maintain good exposure to strong themes

notably the strengthening US and UK housing markets;

improving UK consumer confi dence , the strength of the

London economy , increasing fl ows into equities; leading

technologies; and the increasing use of advanced, often

online, payments.

We remain underweight the usual areas: support services,

especially suppliers to the Government, and food producers.

We also hold short positions in a number of stocks within

these sectors.

The portfolio remains well diversifi ed with just under 150

holdings in the long only portfolio the largest of which is

about 2.5% of net assets. All of our larger holdings are well

established companies. Positions in very small companies

are taken where we believe the upside is potentially very

attractive, but position sizing is small, recognising the greater

risk of disappointment.

OUTLOOKCompany newsfl ow has been generally good for UK

domestically exposed stocks, especially the housebuilders,

the better retailers and leisure and property companies. With

the stronger UK GDP growth we expect this to continue.

Industrial companies have had to contend with varying

demand levels around the world and the strength of sterling.

We expect 2014 to be a slightly easier year for most of our

industrial holdings. In the UK and the US, interest rates look

likely to rise over the next few years, but this will be in reaction

to stronger economic growth and so, arguably, should not be

bad for equities. However, in the short term we are seeing

greater volatility in markets.

Valuations are beginning to look full for more companies and

markets have moved up a long way. We think share prices

will be driven more by earnings growth in 2014 and further

earnings multiple expansion looks unlikely for many companies.

However, we do expect good earnings growth from our holdings

and this should be refl ected in share prices, although a repeat

of 2013’s performance is unlikely.

MIKE PRENTISRICHARD PLACKETTBlackRock Investment Management (UK) Limited

10 February 2014

A N N U A L R E P O R T A N D F I N A N C I A L S TAT E M E N T S 3 0 N O V E M B E R 2 0 1 3 [ 1 1 ]

Performance

Fifty largest investments as at 30 November 2013

Company

Market

value

£’000

% of net

assets

Prospective

PE ratio* Description

Bellway Ordinary shares

Long CFD position

5,693

1,695

3.1 16.1 House building

Senior Engineering Ordinary shares

Long CFD position

4,790

1,938

2.8 15.7 Manufacture and supply of components for the

aerospace and automotive sector

Booker Group Ordinary shares

Long CFD position

4,962

1,722

2.8 30.5 Wholesale of grocery products

ITE Group Ordinary shares

Long CFD position

4,626

1,540

2.6 15.2 Organisation of trade exhibitions in Russia and other

emerging markets

Xaar Ordinary shares

Long CFD position

4,301

1,824

2.5 26.2 Design and manufacture of industrial printheads used

in inkjet printers

Howden Joinery

Group

Ordinary shares

Long CFD position

4,385

1,712

2.5 20.7 Design and manufacture of kitchens sold to local builders

Workspace Group Ordinary shares

Long CFD position

4,936

1,010

2.5 36.9 Supply of fl exible workspace to businesses in London

Restaurant Group Ordinary shares

Long CFD position

3,479

1,730

2.2 20.5 Operation of branded restaurants

Oxford Instruments Ordinary shares

Long CFD position

3,830

1,376

2.2 23.7 Design and manufacture of tools and systems to analyse

and manipulate matter at the atomic level

Dunelm Group Ordinary shares

Long CFD position

3,840

900

2.0 20.9 Supply of home furnishings

Blinkx# Ordinary shares

Long CFD position

3,633

1,007

1.9 45.1 Supply of video technology and an online catalogue to

enable video clips to be viewed

Optimal Payments Ordinary shares 4,543 1.9 24.7 Provision of online payments solutions

Bovis Homes Group Ordinary shares

Long CFD position

2,611

1,752

1.8 17.0 House building

Ted Baker Ordinary shares

Long CFD position

2,690

1,503

1.7 32.5 Design and sale of fashion clothing globally

Victrex Ordinary shares

Long CFD position

2,895

1,273

1.7 18.1 Manufacture and supply of PEEK thermoplastic products

Rathbone Brothers Ordinary shares

Long CFD position

2,356

1,556

1.6 18.0 Private client fund management

SIG Ordinary shares

Long CFD position

2,204

1,549

1.6 20.5 Distribution of speciality building products in the UK

and Continental Europe

Hyder Consulting Ordinary shares 3,733 1.6 14.6 Provision of engineering design services

Polar Capital

Holdings#

Ordinary shares 3,684 1.5 18.7 Investment management

Aveva Group Ordinary shares

Long CFD position

1,854

1,680

1.5 23.9 Development and marketing of engineering computer

software

Avon Rubber Ordinary shares 3,445 1.4 16.0 Design and manufacture of protection masks and dairy

related consumable products

Elementis Ordinary shares 3,381 1.4 17.4 Manufacture of additives that enhances the feel, fl ow

and fi nish of everyday products

Big Yellow Ordinary shares

Long CFD position

2,182

1,197

1.4 23.3 Operation of self storage properties mainly in London

Abcam# Ordinary shares

Long CFD position

2,185

1,190

1.4 25.5 Production and distribution of research grade antibodies

and associated products

Headlam Group Ordinary shares 3,293 1.4 17.9 Distribution of carpets and other fl oor coverings

Keller Group Ordinary shares

Long CFD position

1,943

1,136

1.3 14.5 Provision of ground engineering solutions


Company

Market

value

£’000

% of net

assets

Prospective

PE ratio* Description

St Modwen

Properties

Ordinary shares 3,068 1.3 45.1 Property investment and development

Paypoint Ordinary shares

Long CFD position

2,551

509

1.3 19.5 Provision of payment solutions

Paragon Group Ordinary shares 3,012 1.3 12.1 Provisions of loans mainly to buy to let landlords

Thomas Cook Group Ordinary shares 3,006 1.2 13.9 Operation of holidays and tours

BlackRock

Institutional

Cash Fund

Units 2,923 1.2 – Money market fund

Fuller Smith & Turner Ordinary shares

Long CFD position

1,643

1,181

1.2 21.1 Ownership of pubs in the London area

Fidessa group Ordinary shares 2,723 1.1 28.0 Development and marketing of fi nancial trading and

connectivity software

Savills Ordinary shares 2,720 1.1 15.4 Provision of property services

Jupiter Fund

Management

Ordinary shares 2,688 1.1 14.6 Investment management

Shaftesbury Ordinary shares

Long CFD position

1,254

1,387

1.1 45.5 Ownership and management of retail and leisure property

in the West End of London

Ashtead Group Ordinary shares

Long CFD position

1,556

1,084

1.1 16.9 Hire of plant predominantly in the US

Lookers Ordinary shares 2,613 1.1 14.1 Supply of cars and after market parts and services

LSL Property

Services

Ordinary shares 2,586 1.1 16.1 Provision of residential property services

Galliford Try Ordinary shares 2,574 1.1 13.3 House building and construction

Telecom Plus Ordinary shares 2,510 1.0 38.5 Supply of telecom, gas, electricity and other utility

services

UTV Media Ordinary shares 2,427 1.0 15.1 Television and radio broadcasting

Close Brothers Ordinary shares 2,386 1.0 13.3 Provision of fi nancial services

Consort Medical Ordinary shares 2,322 1.0 20.6 Design and manufacture of drug delivery devices

Tyman Ordinary shares 2,316 1.0 17.4 Manufacture and supply of window and door components

Gooch & Housego Ordinary shares 2,296 0.9 19.0 Design and manufacture of precision optical components,

subsystems and instruments used to transmit and

measure light

James Fisher & Sons Ordinary shares 2,287 0.9 19.8 Provision of marine services

Dechra

Pharmaceuticals

Ordinary shares 2,253 0.9 20.3 Development and supply of pharmaceutical and other

products focused on the veterinary market

Faroe Petroleum# Ordinary shares

Long CFD position

1,860

363

0.9 15.8 Exploration for oil and gas offshore UK and Norway

Inchcape Ordinary shares 2,223 0.9 13.4 Distribution and retail of cars and aftermarket services

50 largest

investments

183,085 76.1

* Prospective PE ratio derived using late 2013 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 fi fty largest investments have been disclosed.

Performance

Fifty largest investments continued


COMPARATIVE FOR TEN LARGEST INVESTMENTS

Company

30 November 2012

Market value

£’000 % of net assets

Bellway Ordinary shares

Long CFD position

4,317

1,247

3.2

Senior Engineering Ordinary shares

Long CFD position

3,871

1,212

2.9

Booker Group Ordinary shares

Long CFD position

3,247

1,174

2.5

ITE Group Ordinary shares

Long CFD position

2,614

976

2.1

Xaar Ordinary shares

Long CFD position

1,206

669

1.1

Howden Joinery Group Ordinary shares

Long CFD position

4,027

1,395

3.1

Workspace Group Ordinary shares

Long CFD position

3,051

293

1.9

Restaurant Group Ordinary shares

Long CFD position

2,473

1,150

2.1

Oxford Instruments Ordinary shares

Long CFD position

3,533

1,591

2.9

Dunelm Group Ordinary shares

Long CFD position

2,504

615

1.8


Performance

Distribution of Investments as at 30 November 2013

Sector% of long only

portfolio% of long CFD

portfolio% of short CFD

portfolio% of

net asset value

Oil & Gas Producers 2.2 0.1 0.0 2.3

Oil Equipment, Services & Distribution 0.0 0.0 -0.7 -0.7

Oil & Gas 2.2 0.1 -0.7 1.6

Chemicals 2.6 0.6 -0.3 2.9

Industrial Metals & Mining 0.7 0.0 0.0 0.7

Mining 2.4 0.1 0.0 2.5

Basic Materials 5.7 0.7 -0.3 6.1

Construction & Materials 2.9 0.6 -0.8 2.7

Aerospace & Defence 2.2 0.8 -0.4 2.6

General Industrials 0.0 0.0 -0.9 -0.9

Electronic & Electrical Equipment 2.4 1.8 -1.0 3.2

Industrial Engineering 1.6 0.6 0.0 2.2

Industrial Transportation 2.5 0.0 -0.3 2.2

Support Services 5.9 2.4 -2.4 5.9

Total Industrials 17.5 6.2 -5.8 17.9

Beverages 0.4 0.0 -0.3 0.1

Food Producers 0.1 0.0 -0.4 -0.3

Leisure Goods 0.6 0.0 0.0 0.6

Household Goods & Home Construction 6.4 3.4 0.0 9.8

Consumer Goods 7.5 3.4 -0.7 10.2

Health Care Equipment and Services 2.1 0.0 -0.3 1.8

Pharmaceuticals & Biotechnology 4.3 0.9 0.0 5.2

Health Care Equipment and Services 6.4 0.9 -0.3 7.0

Food & Drug Retailers 2.5 2.1 -0.4 4.2

General Retailers 4.4 0.6 -0.9 4.1

Media 4.1 1.0 0.0 5.1

Personal Goods 1.7 0.6 -0.2 2.1

Travel & Leisure 7.6 1.9 -0.8 8.7

Consumer Services 20.3 6.2 -2.3 24.2

Fixed Line Telecommunications 1.7 0.0 -0.3 1.4

Mobile Telecommunications 0.0 0.0 -0.1 -0.1

Telecommunications 1.7 0.0 -0.4 1.3

Gas, Water & Multiutilities 0.4 0.0 0.0 0.4

Utilities 0.4 0.0 0.0 0.4

Real Estate Investment & Services 6.6 0.4 0.0 7.0

Real Estate Investment Trusts 1.9 2.0 0.0 3.9

Financial Services 11.4 0.6 0.0 12.0

Financials 19.9 3.0 0.0 22.9

Software & Computer Services 5.2 2.4 -0.4 7.2

Technology Hardware & Equipment 1.4 0.2 -0.4 1.2

Technology 6.6 2.6 -0.8 8.4

Total Investments 88.2 23.1 -11.3 100

The above percentages are calculated based on the portfolio at 30 November 2013. The net portfolio is calculated as long equity

portfolio plus long CFD portfolio less short CFD portfolio.


PORTFOLIO BY MAIN INDEX MEMBERSHIP AT 30 NOVEMBER 2013

FTSE 250 53.9%

FTSE AIM 22.7%

FTSE Fledgling 1.4%

FTSE Small Cap 17.7%

Other 4.3%

FTSE 250 48.6%

FTSE AIM 26.6%

FTSE Fledgling 1.8%

FTSE Small Cap 18.0%

Other 5.0%

Gross Basis1 Net Basis2

Source: BlackRock.

1. Long and short CFD portfolios in aggregate plus long only portfolio.

2. Long CFD portfolio less short CFD portfolio plus long only portfolio.

MARKET CAPITALISATION AS AT 30 NOVEMBER 2013 – NUMBER OF POSITIONS

Long positions (long only and long CFD)

-20.0 -10.0 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0

£0m to £100m

£100m to £400m

£400m to £1bn

£1bn to £3.5bn

Short positions

14

39

53

67

40

18

5

1

Source: BlackRock.

POSITION SIZE AT 30 NOVEMBER 2013 – NUMBER OF POSITIONS

Long positions (long only and long CFD)

-40.0 -20.0 0.0 20.0 40.0 60.0 80.0 100.0

£2m+

£1m to £2m

£0m to £1m

Short positions

36

42

73

84

2

Source: BlackRock.


Governance

Directors

Lord Latymer (Chairman) was appointed to the Board in

2007 and became Chairman of the Company in March

2012. He is Chairman of UCLH Charity, a trustee of the Astor

Foundation and a non-executive director of Manek Investment

Management Limited. He spent much of his career in banking

in London and New York, including periods at Bankers Trust,

Paine Webber and Coutts. He retired from Cazenove Capital

Management in 2009.

Simon Beart* was appointed to the Board in 2007. He is

a director of Guardian Security and was previously chief

executive of Revenue Assurance and Managed Support

Services plc since December 2007. Simon qualifi ed as a

chartered accountant in 1984 and acted as a fi nancial

adviser for a number of UK and US investment banks until

1992 when he co-founded the international packaging

supplier Britton Group plc.

Loudon Greenlees will be appointed to the Board in March

2014. He is an independent member of the Compliance, Risk

and Audit Committee of Nevsky Capital LLP. He was previously

Chief Financial Offi cer and Chief Operating Offi cer of Thames

River Capital from 1999 until 2007 and then Commercial

Director until May 2013, Prior to this he had been Group

Finance Director and Chief Operating Offi cer of Rothschild

Asset Management and Group Finance Director of Baring

Asset Management. He qualifi ed as a Chartered Accountant

in 1974.

Jean Matterson* was appointed to the Board in 2012.

She is a partner of Rossie House Investment Management

which specialises in private client portfolio management

with particular emphasis on investment trusts. She was

previously with Stewart Ivory & Co for 20 years, as an

investment manager and a director. She is chairman of Pacifi c

Horizon Investment Trust plc and was a director of Dunedin

Income Growth Investment Trust PLC between 1977 and 2011.

Eric St. C. Stobart* was appointed to the Board in 2004 and is

chairman of the Company’s Audit Committee. He spent most

of his career in merchant and commercial banking, lately as

Director of Public Policy and Regulation for Lloyds TSB Group

plc (now Lloyds Banking Group plc). He is a non-executive

director of Capita Managing Agency Limited, Utilico Investments

Limited and Ignis Asset Management Limited. He is also a

trustee of the Lloyds Bank Pension Schemes, chairing its

Investment and Funding Committee, Lloyds Your Tomorrow

Trustees, Anglian Water Group Pension Scheme, Dixons Retail

Pension Scheme and chairman of Lloyd’s Superannuation

Fund. He is a Chartered Accountant.

Harry Westropp* was appointed to the Board in 2003. He

began his career at Lazard Brothers & Co Limited before

moving into industry in 1972. Since that time he has acted as

chief executive or chairman to a number of small to mid-sized

industrial companies in both the private and quoted sectors

and remains a director of a number of industrial companies.

All the Directors are non-executive, independent of the Manager and members of the Management Engagement Committee

and the Nomination Committee.

* Member of the Audit Committee.


Governance

Directors’ report

The Directors present the Annual Report and Financial

Statements of the Company for the year ended

30 November 2013.

Status of the Company

In the opinion of the Directors, the Company has conducted its

affairs during the year under review, and subsequently, so as

to qualify as an investment trust for the purposes of Chapter 4

of Part 24 of the Corporation Tax Act 2010. The last accounting

period for which the Company has been treated as approved

as an investment trust by HM Revenue & Custom (‘HMRC’)

was for the year ended 30 November 2012. The Company has

already made a successful application under Regulation 5 of

the Investment Trust (Approved Company) (Tax) Regulations

2011 for investment trust status to apply to all accounting

periods starting on or after 1 December 2012.

This is subject to the Company continuing to meet the

eligibility conditions in section 1158 of the Corporation Tax Act

2010 and the ongoing requirements for approved companies

in Chapter 3 of Part 2 Investment Trust (Approved Company)

(Tax) Regulations 2011.

The Company is registered as an investment company as

defi ned in section 833 of the Companies Act 2006 and

operates as such.

The Company is not a close company within the meaning of

the provisions of the Corporation Tax Act 2010.

The Company’s ordinary shares are eligible for inclusion in

the stocks and shares component of an Individual Savings

Account (‘ISA’).

FACILITATING RETAIL INVESTMENTSThe Company currently conducts its affairs so that its

securities can be recommended by IFAs to ordinary retail

investors in accordance with the FCA’s rules in relation to

non-mainstream investment products and intends to continue

to do so for the foreseeable future.

The securities are excluded from the FCA’s restrictions which

apply to non-mainstream investment products because they

are shares in an investment trust.

INVESTMENT MANAGEMENT AND ADMINISTRATIONBlackRock Investment Management (UK) Limited (‘BlackRock’)

provides management services to the Company under a

contract which is terminable by either party on six months’

notice. BlackRock also acted as the Secretary and

Administrator of the Company throughout the year.

With effect from 1 December 2013, the benchmark index

used to measure the Company’s performance and for the

calculation of any performance fee changed to the Numis

Smaller Companies excluding AIM (excluding Investment

Companies) Index.

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 its CFD portfolio. BlackRock

is also entitled to a performance fee of 12.5% of any net

asset value (total return) outperformance against the

benchmark index. The payment of a performance fee is subject

to a cap as set out in the table below. Any excess performance

fee over the capped amount for the performance period is

neither paid nor carried forward.

Year ended

30 November

2014

Year ended

30 November

2013

NAV Return is zero

or positive

2.0% of Performance Fee

Market Value3.5% of Performance

Fee Market Value

NAV Return is negative

up to 5%

3.0% of Performance Fee Market Value

NAV Return is greater

than 5% negative up

to 10%



than 10% negative

up to 15%



than 15% negative


NAV Return is negative

1.0% of Performance Fee

Market Value

‘NAV Return’ is defi ned as the annualised percentage

difference between the value at risk of the Company

on the fi rst business day of the relevant Performance Period

and the Performance Fee Market Value per share (on an

undiluted basis) as at the last business day of the relevant

Performance Period. The value at risk and Gross Assets are

defi ned as the gross asset value of the long only portfolio

plus the gross value of the underlying equities, long and short,

to which the Company is exposed through derivatives

including CFDs.

‘Performance Fee Market Value’ is defi ned as the average

value of the Company shown in the Investment Manager’s

valuations as at the last Business Day of each calendar

month in the period preceding the relevant Calculation

Date (including uninvested cash and investments in all

In-House Funds).

At the year-end, any performance fee payable is adjusted to

refl ect the effect of any share buy backs, tenders and

subscription share exercises.


No penalty on termination of the investment management

agreement is payable by the Company in the event that six

months’ written notice is given to BlackRock. There are no

provisions relating to payment of fees in lieu of notice.

The Company contributes to a focused investment trust sales

and marketing initiative operated by BlackRock on behalf of

the investment trusts under its management, which

commenced on 1 November 2013. The Company’s contribution

to the consortium element of the initiative, which enables the

trusts to achieve effi ciencies by combining certain sales and

marketing activities, will represent 0.03% per annum of its net

assets (£235m) as at 31 October 2013 and this contribution is

matched by BlackRock. In addition, a budget of up to a further

0.04% of 31 October 2013 net assets has been allocated for

Company specifi c sales and marketing activity. For the year

ended 30 November 2013, £13,700 (excluding VAT) has been

accrued in respect of these initiatives. The purpose of the

programme overall is to ensure effective communication with

existing shareholders and to attract new shareholders to the

Company. This has the benefi ts of improving liquidity in the

Company’s shares and helps sustain the stock market rating

of the Company.

BlackRock is a subsidiary of BlackRock, Inc. which is a publicly

traded corporation on the New York Stock Exchange operating

as an independent fi rm. The PNC Financial Services Group, Inc.

has a signifi cant economic interest in BlackRock, Inc. PNC

Financial Services Group, Inc. is a US public company.

Bank of New York Mellon (International) Limited (‘BNYM’) is

the custodian of the Company’s assets. BNYM receives a fee

payable at rates dependent on the number of trades effected.

The custody agreement is terminable with 30 days notice

by either party. The Company transacts with multiple

counterparties for transacting in contracts for differences

(‘CFD’). At 30 November 2013, the Company had master

agreements with Bank of America Merrill Lynch, Credit Suisse,

Deutsche Bank and JPMorgan to enable the Company to gain

long and short exposure on individual securities through CFDs.

APPOINTMENT OF THE INVESTMENT MANAGERThe Board keeps the resources and performance of the

Investment Manager under review, and a review of the terms of

their engagement is undertaken annually. The Board believes

that the continuing appointment of the Investment Manager,

on the terms disclosed above is in the interests of shareholders

as a whole. The specialist nature of the Company’s investment

remit is, in the Board’s view, best served by the UK Smaller

Companies team at BlackRock, which has a proven track

record in successfully investing in this sector.

CHANGE OF CONTROLThere are no agreements which the Company is party to that

might be affected by a change in control of the Company.

VOTING POLICYBlackRock’s approach to voting at shareholder meetings,

engagement with companies and corporate governance is

framed within an investment context. BlackRock believes

that sound corporate governance practices by companies

contribute to their long term fi nancial performance and thus

to better risk-adjusted returns. BlackRock’s proxy voting

process is led by our Corporate Governance and Responsible

Investment team, located in fi ve offi ces around the world. In

addition to its own professional staff, the Corporate Governance

and Responsible Investment team draws upon the expertise

of BlackRock’s portfolio managers, researchers and other

internal and external resources globally.

BlackRock’s global corporate governance and engagement

principles are published on the website blackrock.com/

corporate/en-gb/about-us/responsible-investment/

responsible-investment-reports. The principles set out

BlackRock’s views on the overarching features of corporate

governance that apply in all markets. For each region,

BlackRock also publish market-specifi c policies, which are

updated every year to ensure they remain relevant.

The voting guidelines are principles-based and not prescriptive

because BlackRock believes that each voting situation

needs to be assessed on its merits. Voting decisions are

taken to support the outcome that BlackRock believe in their

professional judgment will best protect the economic interests

of their clients.

During the year under review, the Investment Manager voted

on 1,832 proposals at 164 general meetings on behalf of the

Company. At these meetings the Investment Manager voted

in favour of most resolutions, as should be expected when

investing in well run companies, but voted against 23

management resolutions and abstained on 20 resolutions.

Most of the votes against were in respect of resolutions to

approve a poorly structured remuneration package or on

capital raising requests which would have signifi cantly diluted

existing shareholders.

GOING CONCERNThe Directors, having considered the nature and liquidity of

the portfolio, the Company’s investment objective on page 6

and the Company’s projected income and expenditure, are

satisfi ed that the Company has adequate resources to continue

in operational existence for the foreseeable future. For this

reason, they continue to adopt the going concern basis in

preparing the fi nancial statements. Ongoing charges (excluding

any performance fees) are approximately 1.1% of net assets.

DIRECTORSThe biographies of the Directors of the Company, together with

that of Mr Greenlees who will join the Board on 26 March 2014,

are detailed on page 16.

Governance

Directors’ report continued


Details of the Directors’ interests in the ordinary shares of the

Company are set out in the Directors’ Remuneration Report

on page 26.

The Company’s Articles of Association provide that one third of

Directors retire by rotation each year and that each Director

shall retire and offer himself for re-election at intervals of no

more than three years. The Board may also appoint Directors

but any Director so appointed must stand for election by the

shareholders at the next Annual General Meeting. Directors

are also required to retire if they have served more than nine

years on the Board, but then may offer themselves for

annual re-election.

At the Annual General Meeting to be held in 2014, in accordance

with the Articles of Association, Mr Beart will retire by rotation

and offer himself for re-election. Mr Stobart will also retire and

offer himself for re-election, having served for more than nine

years as a Director of the Company and having been appointed

on 26 March 2014, Mr Greenlees will also offer himself for

election to the Board. Mr Westropp who has also served as a

Director of the Company for more than nine years, will retire

but will not offer himself for re-election.

There were no contracts subsisting during or at the end of the

year in which a Director of the Company is or was materially

interested and which is or was signifi cant in relation to the

Company’s business. None of the Directors has a service

contract with the Company. No Director is entitled to

compensation for loss of offi ce on the takeover of the Company.

CONFLICTS OF INTERESTThe Articles of Association refl ect the codifi cation of certain

Director’s duties arising from the Companies Act 2006 and in

particular the duty for Directors to avoid confl icts of interest.

The Board has put in place a framework in order for Directors

to report confl icts of interest or potential confl icts of interest.

All Directors have notifi ed the Company Secretary of any

situations, or potential situations where they consider that

they have or may have, a direct or indirect interest or duty

that confl icts or possibly confl icts with the interests of the

Company. The Board considers that the framework has worked

effectively throughout the year.

All new situations, or changes to previously reported situations

are reviewed on an individual basis and reviewed at each

meeting. Directors are also reminded at each meeting that

there remains a continuing obligation to notify the Company

Secretary of any new situations that may arise or any changes

that may occur to a previously notifi ed situation.

REMUNERATION REPORTThe Directors’ Remuneration Report is set out on pages 23

to 26. Ordinary resolutions to approve this report and also

to approve the remuneration policy as set out in the future

policy table on page 24 will be put to shareholders at the

forthcoming Annual General Meeting. Further details are

given on page 20.

SUBSTANTIAL SHARE INTERESTSAs at 30 November 2013, the Company had received notifi cation

in accordance with the FCA’s Disclosure and Transparency

Rule 5.1.2 R of the following interests in 3% or more of the

voting rights attaching to the Company’s issued share capital.

Number of

ordinary

shares

% of

issued

share

capital

Investec Wealth & Investment 12,250,988 16.8

Brewin Dolphin 4,023,531 5.5

Rathbone Brothers Plc 4,002,664 5.5

Sarasin & Partners 3,620,824 5.0

Prudential plc 3,477,605 4.8

City of Bradford Metropolitan District

Council 2,754,000 3.8

The Board is aware that as at 30 November 2013, 0.5% of the

Company’s ordinary share capital was held through the

BlackRock Investment Trust Savings Plan and ISA.

As at 30 January 2014, the Company had received notifi cation

in accordance with the FCA’s Disclosure and Transparency

Rule 5.1.2 R of the following interests in 3% or more of the

voting rights attaching to the Company’s issued share capital.

Number of

ordinary

shares

% of

issued

share

capital

Investec Wealth & Investment 12,411,163 17.0

Brewin Dolphin 4,023,531 5.5

Rathbone Brothers Plc 4,002,664 5.5

Sarasin & Partners 3,641,102 5.0

Prudential plc 3,477,605 4.8

City of Bradford Metropolitan District

Council 2,754,000 3.8

As at 30 January 2014, the Board is also aware that 0.5% of

the Company’s ordinary share capital is held through the

BlackRock Investment Trust Savings Plan and ISA.

No other shareholder has notifi ed an interest of 3% or more

in the Company’s shares up to 30 January 2014.

SHARE CAPITALDetails of the Company’s share capital and voting rights are

given in note 16 on page 65. Details of the voting rights in the

Company’s shares as at the date of this report are also given

in note 16 to the Notice of Annual General Meeting on page 65.

The ordinary shares carry the right to receive 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 the ordinary shares. There are no shares which

carry specifi c rights with regard to the control of the Company.

SHARE ISSUES AND REPURCHASESThe Company has the authority to purchase ordinary shares

in the market to be held in treasury or for cancellation and to

issue new ordinary shares for cash. No ordinary shares were

purchased or issued under either authority during the year.

The Directors consider that it is in the interests of shareholders

as a whole that the price of the ordinary shares refl ects, as

closely as possible, the NAV per share. The Directors will

consider the issue or repurchase of ordinary shares to

correct any supply/demand imbalance in the market. Any

such issues or repurchases will enhance the NAV per share

for continuing shareholders.

The latest authority to repurchase ordinary shares was granted

to Directors on 20 March 2013 and expires at the conclusion

of the Annual General Meeting in 2014. The Directors are

proposing that their authority to buy back shares to be held in

treasury, or for cancellation, and to issue new shares or sell

shares from treasury be renewed at the forthcoming Annual

General Meeting.

Although the Investment Manager implements the buy backs,

the policy and parameters are set by the Board and reviewed at

regular intervals. The Company intends to raise the cash needed

to fi nance the purchase of shares either by selling securities in

the Company’s portfolio or by short term borrowing.

TREASURY SHARESAs described above, the Company is authorised to purchase

its own ordinary shares to be held in treasury for reissue or

cancellation at a future date.

Treasury shares will only be reissued at prices at or above

the prevailing NAV per share thereby giving the Company the

ability to reissue shares quickly and cost effectively, improving

liquidity and providing the Company with additional fl exibility

in the management of its capital base. It also ensures a

positive overall effect for shareholders when shares are

bought back at a discount and then sold at a price at or above

the NAV per share. As at 30 November 2013, 7,400,000 ordinary

shares were held in treasury.

DERIVATIVE TRANSACTIONSThe Company has entered into contracts with JPMorgan Chase

Bank, N.A., Deutsche Bank AG and Merrill Lynch International

enabling it to take long and short positions through CFDs.

Further details are given in note 13 on page 49.

ALTERNATIVE INVESTMENT FUND MANAGERS’ DIRECTIVEThe Alternative Investment Fund Managers’ Directive (‘the

Directive’) is a European directive which seeks to reduce

potential systemic risk by regulating alternative investment

fund managers (‘AIFMs’). AIFMs are responsible for investment

products that fall within the category of Alternative Investment

Funds (‘AIFs’) and investment trusts are included in this. The

Directive was implemented on 22 July 2013 although it has

been confirmed that the Financial Conduct Authority (‘FCA’)

will permit a transitional period of one year within which UK

AIFMs must seek authorisation. The Board has taken, and will

continue to take independent advice on the consequences for

the Company and has decided in principle that BlackRock

Fund Managers Limited will be appointed as its AIFM in

advance of the end of the transitional period on 22 July 2014.

GLOBAL GREENHOUSE GAS EMISSIONS FOR THE PERIOD 1 DECEMBER 2012 TO 30 NOVEMBER 2013The Company has no greenhouse gas emissions to report from

its operations, nor does it have responsibility for any other

emissions producing sources under the Companies Act 2006

(Strategic Report and Directors’ Reports) Regulations 2013.

ARTICLES OF ASSOCIATIONAny amendments to the Company’s Articles of Association

must be made by special resolution.

ANNUAL GENERAL MEETINGThe following information to be discussed at the forthcoming

AGM is important and requires your immediate attention.

If you are in any doubt about the action you should take, you

should seek advice from your stockbroker, bank manager,

solicitor, accountant or other fi nancial adviser authorised

under the Financial Services and Markets Act 2000

(as amended).

If you have sold or transferred all of your ordinary shares in

the Company, you should pass this document, together with

any other accompanying documents including the form of

proxy, at once to the purchaser or transferee, or to the

stockbroker, bank or other agent through whom the sale

or transfer was effected, for onward transmission to the

purchaser or transferee.

Following the publication by the Department of business,

Innovation and skills (BIS) of fi nal remuneration disclosure

regulations effective from 1 October 2013, the Company’s

remuneration policy will be subject to a triennial binding

shareholder vote. The rest of the Directors’ remuneration

report will continue to be subject to an annual advisory vote.

These resolutions are included as items of ordinary business

as Resolutions 2 and 3 in the Notice of Annual General

Meeting on page 62 of the Annual Report.

Resolutions relating to the following items of special business

will be proposed at the forthcoming Annual General Meeting.

Resolution 10 Authority to allot shares:

The Directors may only allot shares for cash if authorised

to do so by shareholders in general meeting. This resolution

seeks authority for the Directors to allot shares for cash up

to an aggregate nominal amount of £182,825 per annum,

which is equivalent to 3,656,500 ordinary shares of 5p each

and represents 5% of the Company’s issued ordinary share

Governance



capital (excluding treasury shares) as at the date of the Notice

of the Annual General Meeting. This resolution will expire

at the conclusion of the next Annual General Meeting of the

Company to be held in 2015 unless renewed prior to that date

at an earlier general meeting.

Resolution 11 Authority to disapply pre-emption rights:

By law, Directors require specifi c authority from shareholders

before allotting new shares or selling shares out of treasury

for cash without fi rst offering them to existing shareholders

in proportion to their holdings.

Resolution 11 empowers the Directors to allot new shares

for cash or to sell shares held by the Company in treasury,

otherwise than to existing shareholders on a pro rata basis,

up to an aggregate nominal amount of £182,825 which is

equivalent to 3,656,500 ordinary shares of 5p each and

represents 5% of the Company’s issued ordinary share capital

excluding treasury shares as at the date of the Notice of

the Annual General Meeting. This resolution will expire at

the conclusion of the next Annual General Meeting of the

Company to be held in 2015 unless renewed prior to that date

at an earlier general meeting.

Resolution 12 Authority to buy back ordinary shares:

The resolution to be proposed will seek to renew the authority

granted to Directors enabling the Company to purchase its

own ordinary shares.

Purchases of ordinary shares will only be made through the

market for cash at prices below the prevailing NAV per

ordinary share. Under the Listing Rules of the Financial

Conduct Authority, the maximum price which can be paid shall

be the higher of (i) 5% above the average of the market values

of the ordinary shares for the fi ve business days immediately

preceding the date on which the purchase is made and (ii) the

higher of the price quoted for (a) the last independent trade of,

and (b) the highest current independent bid for, any number

of ordinary shares on the trading venue where the purchase

is carried out. In making purchases, the Company will deal

only with member fi rms of the London Stock Exchange. The

Directors are seeking authority to purchase up to 10,962,235

ordinary shares (being 14.99% of the issued ordinary share

capital excluding treasury shares as at the date of this report).

This authority, unless renewed at an earlier general meeting,

will expire at the conclusion of the next Annual General

Meeting of the Company to be held in 2015.

Any ordinary shares purchased pursuant to resolution 11 shall

be cancelled immediately upon completion of the purchase or

held, sold, transferred or otherwise dealt with as treasury shares

in accordance with the provisions of the Companies Act.

Resolution 13 Changes to the Company’s Articles

of Association:

Regulations implementing the Alternative Investment Fund

Managers Directive (‘AIFMD Regulations’) came into force

in the UK on 22 July 2013. The Board is proposing to make

amendments to the Articles of Association in response to

the AIFMD Regulations.

The principal changes proposed to be made to the Articles,

and their effect, are set out below.

(i) Net asset value

The Articles of Association will now provide that the net

asset value of the Company shall be calculated at least

annually and be disclosed to shareholders from time to

time in such manner as may be determined by the Board.

The amendment will have no bearing on current practice

and simply articulates the minimum requirements of the

AIFMD Regulations.

(ii) Accounts

The Articles of Association will now provide that the

Company’s Annual Report and Financial Statements

may be prepared either in accordance with generally

acceptable accounting principles of the UK or such other

international accounting standards as may be permitted

under the law of the UK. The amendment will have no

bearing on current practice and simply articulates the

minimum requirements of the AIFMD Regulations.

(iii) Information made available to shareholders

The AIFMD Regulations require that prior to any new or

existing investor making an investment in the Company

certain prescribed information is to be made available to

them. Therefore, the Articles of Association will include

language with the effect that such information shall be

made available to prospective and existing shareholders

from time to time in such manner as may be determined

by the Board (including, in certain cases, on the Company’s

website or by electronic notice).

(iv) Liability for loss of fi nancial assets held in custody

The AIFMD Regulations require that the Company has a

depositary. Under the AIFMD Regulations, the depositary

has strict liability for the loss of the Company’s fi nancial

assets in respect of which it has safekeeping duties.

This rule applies even where the depositary has delegated

the actual custody of an asset to another entity. The

Company may wish to hold assets in a country where the

depositary is required to use a local sub-custodian to

hold the relevant asset. The depositary may not wish the

Company to acquire or retain such an asset, unless it can

discharge its strict liability to the local sub-custodian.

A discharge of strict liability in these circumstances will

only be possible if the Company’s ‘rules or instruments

of incorporation’ (for example, the Articles of Association)

permit such a discharge. The Board is cognisant that

situations may arise where allowing the depositary to

discharge its strict liability will be commercially necessary.

An amendment to the Articles of Association is therefore

proposed with the effect of enabling the Board, should

the need arise and subject to applicable laws, to allow a

depositary to discharge its strict liability for loss of certain


of the Company’s assets. This proposed amendment

provides the Company with commercial fl exibility, and

the Board will exercise its discretion in the usual way in

determining whether or not to provide such a discharge.

(v) Valuation

In line with early guidance from the Financial Conduct

Authority, the Articles of Association will now provide

that valuation of the Company’s assets shall be performed

in accordance with prevailing accounting standards.

The Articles of Association showing changes to the Articles of

Association will be available for inspection at the Company’s

registered offi ce at 12 Throgmorton Avenue, London EC2N 2DL

from the date of this letter until the conclusion of the Annual

General Meeting. The full terms of the proposed amendments

to the Articles of Association will also be available for inspection

at the place of the forthcoming Annual General Meeting

for at least 15 minutes before and during that Annual

General Meeting.

RECOMMENDATIONThe Board considers that each of the resolutions is likely to

promote the success of the Company and is in the best

interests of the Company and its shareholders as a whole.

The Directors unanimously recommend that you vote in favour

of these resolutions as they intend to do in respect of their

own benefi cial holdings.

CORPORATE GOVERNANCEFull details are given in the Corporate Governance Statement

on pages 27 to 31. The Corporate Governance Statement forms

part of this Directors’ Report.

AUDIT INFORMATIONAs required by section 418 of the Companies Act 2006 the

Directors who held offi ce at the date of approval of this

Directors’ Report confi rm that, so far as they are aware, there

is no relevant audit information of which the Company’s

auditor is unaware; and each Director has taken all the steps

that he ought to have taken as a Director to make himself

aware of any relevant audit information and to establish that

the Company’s auditor is aware of that information.

AUDITORThe auditor Ernst & Young LLP, has indicated its willingness to

continue in offi ce and resolutions proposing its reappointment

and authorising the Directors to determine its remuneration

for the ensuing year will be submitted at the Annual

General Meeting.


10 February 2014

Governance



Governance

Directors’ remuneration report

The Board presents the Directors’ Remuneration Report for the

year ended 30 November 2013 which has been prepared in

accordance with sections 420-422 of the Companies Act 2006.

The report now comprises a remuneration policy report, which

is subject to a triennial binding shareholder vote, and a

remuneration policy implementation report, which will be

subject to an annual advisory vote. Resolutions to approve

both the remuneration policy report and the remuneration

policy implementation report will be put to shareholders at the

forthcoming annual general meeting.

The law requires the Company’s auditor to audit certain of the

disclosures provided. Where disclosures have been audited,

they are indicated as such. The auditors’ opinion is included

in their report on pages 36 and 37.

DIRECTORS’ REMUNERATION POLICY REPORTThe Board’s remuneration policy, as currently in force, is set

out in the future policy table on page 24 and will be subject to

a triennial binding vote, therefore an ordinary resolution to

approve this report will be put to shareholders at the

forthcoming annual general meeting. A key element is that

fees payable to Directors should refl ect the time spent

by them on the Company’s affairs, and should be suffi cient

to attract and retain individuals with suitable knowledge

and experience.

Following a review on 27 November 2013, the Board agreed to

maintain Directors remuneration at current levels as set out

in the future policy table on the following page.

REMUNERATION COMMITTEEThe Board as a whole fulfi ls the function of the Remuneration

Committee, and considers any change in the Directors’

remuneration policy. A separate Remuneration Committee

has therefore not been established. The Company’s

Directors are all non-executive and are independent of

the Investment Manager.

In determining Directors’ fees, a number of factors are

considered, including the average rate of infl ation during the

period since the last fee increase, the level of Directors’

remuneration for other investment trusts of a similar size as

well as the level and complexity of the Directors responsibilities.

To ensure fees are set at an appropriate level, the Secretary

provides a comparison of the Directors’ remuneration with

other investment trusts of a similar size and/or mandate

as well as taking into account any data published by the

Association of Investment Companies. This comparison,

together with consideration of any alteration in non-executive

Directors’ responsibilities, is used to review whether any

change in remuneration is necessary.

It is the Company’s policy that no Director shall be entitled

to any performance related remuneration, benefi ts in kind,

long term incentive schemes, share options, pensions or

other retirement benefi ts or, compensation for loss of offi ce.

Directors are entitled to claim expenses in respect of duties

undertaken on behalf of the Company.

The Company has no employees and consequently no

consideration is required to be given to employment

conditions elsewhere in setting Directors’ fees.

Remuneration/service contracts

The maximum remuneration of the Directors is determined

within the limits of the Company’s Articles of Association and

currently amounts in aggregate to £200,000. No element of the

Directors’ remuneration is performance related. The Company

has not awarded any share options or long-term performance

incentives to any of the Directors. None of the Directors has

a service contract with the Company or receive any non

cash benefi ts or pension entitlements. The terms of their

appointment are detailed in a letter sent to them when they

join the Board. These letters are available for inspection at

the registered offi ce of the Company.


FUTURE POLICY TABLE

Purpose and link to

strategy

Fees payable to Directors should be suffi cient to attract and retain individuals of high calibre with suitable knowledge

and experience. Those chairing the Board and key Committees should be paid higher fees than other Directors in

recognition of their more demanding roles. Fees should refl ect the time spent by Directors on the Company’s affairs

and the responsibilities borne by the Directors.

Description

Current levels of fi xed annual fee

Chairman – £34,000

Audit and Management Engagement Committee Chairman – £25,000

Directors – £22,000

All reasonable expenses to be reimbursed

Maximum

Remuneration consists of a fi xed fee each year, set in accordance with the stated policies.

The Company’s Articles of Association provide that until otherwise determined by the Company by Ordinary Resolution,

there shall be paid to the Directors (other than alternate Directors) such fees for their services in the offi ce of Director as the

Directors may determine (not exceeding in the aggregate an annual sum of £200,000 (subject to increase as provided below)

or such larger amount as the Company may by Ordinary Resolution decide) divided between the Directors as they agree.

In accordance with the provisions of the Company’s Articles of Association the Directors are also entitled to be repaid

all reasonable travelling, hotel and other expenses incurred by them respectively in or about the performance of their

duties as Directors including any expenses incurred in attending meetings of the Board or of Committees of the Board

or Annual General Meetings or General Meetings.

There is a limit of £10,000 in relation to the amount payable in respect of taxable benefi ts.

Op

era

tio

n

Fixed fee

element

The Board reviews the quantum of Directors’ pay each year to ensure this is in line with the level of Directors’

remuneration for other investment trusts of a similar size.

When considering any changes in fees, the Board will take into account wider factors such as the average rate

of infl ation over the period since the previous review, and the level and any change in complexity of the Directors’

responsibilities (including additional time commitments as a result of increased regulatory or corporate governance

requirements).

Taxable benefi ts

Taxable benefi ts comprise travel expenses incurred by the Directors in the course of travel to attend Board and

Committee meetings which are held at the Company’s registered offi ces in London, and which are reimbursed

by the Company and therefore treated as a benefi t in kind and are subject to tax and national insurance.

The Company’s policy in respect of this element of remuneration is that all reasonable costs of this nature will

be reimbursed as they are incurred.

It is the intention of the Board that the above policy on

remuneration will continue to apply for the next three fi nancial

years to 30 November 2017.

REMUNERATION POLICY IMPLEMENTATION REPORTThe Directors’ Remuneration Policy Implementation

Report is subject to an annual advisory vote and an ordinary

resolution to approve this report will be put to shareholders

at the annual general meeting. Shareholders have the

opportunity to express their views and raise any queries in

respect of remuneration policy at this meeting. To date, no

shareholders have commented in respect of

remuneration policy.

At the Company’s previous annual general meeting, held on

20 March 2013, 97.55% of votes cast were in favour of the

resolution to approve the Directors’ remuneration report in

respect of the year ended 30 November 2013.

Governance

Directors’ remuneration report continued


REMUNERATION IMPLEMENTATION REPORTA single fi gure for the total remuneration of each Director is set out in the table below for the years ended 30 November 2013 and 2012:

Year ended 30 November 2013 Year ended 30 November 2012

Base salary

£

Taxable

benefi ts

£

Total

£

Base salary

£

Taxable

benefi ts

£

Total

£

Crispin Latymer (Chairman)1 34,000 – 34,000 29,016 – 29,016

Richard Bernays7 – – – 10,202 – 10,202

Simon Beart2 22,000 – 22,000 20,000 – 20,000

Jean Matterson3 22,000 905 22,905 8,000 – 8,000

Eric Stobart4,6 25,000 – 25,000 23,000 – 23,000

Harry Westropp5 22,000 – 22,000 20,000 749 20,749

Total 125,000 905 125,905 110,218 749 110,967

1. Appointed to the Board in 2007 and became Chairman of the Company on 22 March 2012.2. Appointed as a Director on 29 March 2007.3. Appointed as a Director on 10 July 2012.4. Appointed as a Director on 11 November 2004 and as Chairman of the Audit Committee on 28 March 2006.5. Appointed as a Director on 1 January 2003.6. Including £3,000 (2012: £3,000) as Chairman of the Audit Committee.7. Retired 22 March 2012.

The information in the above table has been audited. The

amounts paid by the Company to the Directors were for

services as non-executive Directors.

As at 30 November 2013 there were no amounts payable

to Directors in respect of their annual fees (2012: nil).

RELATIVE IMPORTANCE OF SPEND ON REMUNERATIONAs the Company has no employees, the table above represents

the total remuneration costs and benefi ts paid by the Company.

To enable shareholders to assess the relative importance of

spend on remuneration, this has been shown in the chart below

compared with the Company’s total revenue, total operating

expenditure and dividend distributions.

RELATIVE IMPORTANCE OF SPEND ON DIRECTORS’

REMUNERATION

Total

revenue

Total

operating

expenses

Dividend

distributions

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2013

2012

Directors’

Total

Remuneration

£’0

00

No payments were made in the period to any past Directors

(2012: nil).

PERFORMANCEThe following graph compares the Company’s NAV and share

price total return with the total return on an equivalent

investment in the Hoare Govett Smaller Companies plus AIM

(excluding Investment Companies) Index until 9 April 2012 and

the Numis Smaller Companies plus AIM (excluding Investment

Companies) Index from 10 April to 30 November 2013. This

index has been selected for comparison purposes, as it has

been used as its benchmark against which performance was

measured during the year.


PERFORMANCE FROM 30 NOVEMBER 2008 TO

30 NOVEMBER 2013

0

100

200

300

400

500

600

Nov 08 Nov 09 Nov 10 Nov 11 Nov 12 Nov 13

Share price performance NAV performance

Numis Smaller Companies plus AIM

(excluding Investment Companies) Index

Total return performance record rebased to 100 at 30 November 2008.


SHAREHOLDINGSThe Board has not adopted a policy that Directors are required

to own shares in the Company, although at 30 November 2013,

all Directors are shareholders.

The interests of the Directors and those connected to them,

in the ordinary shares of the Company are set out in the

following table. The Company does not have a share option

scheme therefore none of the Directors has an interest in

share options. All of the Directors held offi ce throughout the

year under review.

30 January

2014

30 November

2013

30 November

2012

Ordinary

shares

Ordinary

shares

Ordinary

shares

Simon Beart 29,7125 39,0793 33,7861

Crispin Latymer 30,096 30,000 28,851

Jean Matterson 18,000 18,000 12,000

Eric Stobart 20,0546 19,7344 17,2262

Harry Westropp 24,000 24,000 24,000

1. Including 8,739 shares held by Mrs Beart.2. Including 4,839 shares held by Mrs Stobart.3. Including 11,589 shares held by Mrs Beart.4. Including 7,347 shares held by Mrs Stobart.5. Including 6,921 shares held by Mrs Beart.6. Including 7,667 shares held by Mrs Stobart.

The information in the table above has been audited.

All of the holdings of the Directors are benefi cial. Since the

year end there have been a number of changes to the

Directors’ share interests as shown in the table.

RETIREMENT OF DIRECTORSAll of the Company’s Directors are subject to retirement

by rotation in accordance with the Company’s Articles of

Association. Directors are appointed on an initial term covering

the period from the date of appointment until the fi rst Annual

General Meeting thereafter, at which they are required to

stand for election in accordance with the Articles of

Association. Subsequently, Directors retire by rotation in

accordance with the provisions of the Articles of Association.


10 February 2014

Governance

Directors’ remuneration report continued


Governance

Corporate governance statement

CHAIRMAN’S INTRODUCTIONCorporate Governance is one of the processes by which the

Board of Directors seeks to safeguard shareholders’ interests

and enhance shareholder value. Shareholders are empowered

to hold the Directors responsible for the stewardship of the

Company, delegating authority and responsibility to the

Directors to manage the Company on their behalf and holding

them accountable for its performance.

The Board is ultimately responsible for framing and executing

the Company’s strategy and for closely monitoring risks.

We aim to run our Company in a manner which is responsible

and consistent with our belief in honesty, transparency and

accountability. In our view, good governance means managing

our business well and engaging effectively with investors.

We consider the practice of good governance to be an

integral part of the way we manage the Company and we

are committed to maintaining high standards of fi nancial

reporting, transparency and business integrity.

As a UK-listed investment trust company our principal

reporting obligation is driven by the UK Corporate Governance

Code (the ‘UK Code’), issued by the Financial Reporting Council

in September 2012. However, as listed investment trust

companies differ in many ways from other listed companies,

the Association of Investment Companies has drawn up its

own set of guidelines, the AIC Code of Corporate Governance

(the ‘AIC Code’) issued in February 2013, which addresses the

governance issues relevant to investment companies and has

been approved by the Financial Reporting Council.

The UK Code is available from the Financial Reporting

Council’s website at frc.org.uk. The AIC Code is available from

the Association of Investment Companies at theaic.co.uk

This report, which forms part of the Directors’ Report,

explains how the Board deals with its responsibility, authority

and accountability.

CORPORATE GOVERNANCE COMPLIANCE STATEMENTThe Board has made the appropriate disclosures in this report

to ensure that the Company meets its continuing obligations.

The Board considers that the Company has complied with the

provisions contained within the UK Corporate Governance

Code throughout the accounting period under review, except

as explained below.

THE BOARDComposition

The Board currently consists of fi ve non-executive Directors all

of whom are considered by the Board to be independent of the

Company’s Investment Manager and free from any business or

other relationship which could materially interfere with the

exercise of their independent judgement. The provision of

the UK Code which relates to the combination of the role

of the chairman and chief executive does not apply as the

Company has no executive directors. The structure of the

Board is such that it is considered unnecessary to identify a

Senior Independent Director. The Directors’ biographies, on

page 16, demonstrate a breadth of investment knowledge,

business and fi nancial experience relevant to the Company’s

business which enables the Board to provide effective

strategic leadership and proper governance of the Company.

Diversity

The Board’s policy on diversity, including gender, is to take

this factor into account during the recruitment process.

However, the Board is committed to appointing the most

appropriate candidate, regardless of gender or other forms of

diversity. Therefore, no targets have been set against which

to report.

Directors’ appointment, retirement and rotation

In accordance with the Company’s Articles of Association, a

Director appointed during the year is required to retire and

seek election by shareholders at the next Annual General

Meeting. The Articles of Association also require that one

third of the Directors retire by rotation each year and seek

re-election at the Annual General Meeting. Notwithstanding

the provisions of the Articles of Association each Director

will also submit themself for re-election at least every three

years. Any Director who is not considered by the Board to be

independent of the Investment Manager or who has served

on the Board for more than nine years will be subject to

annual re-election.

The Board is of the view that length of service will not

necessarily compromise the independence or contribution of

directors of an investment trust company, where continuity

and experience can add signifi cantly to the strength of the

Board. It is considered that Mr Stobart and Mr Westropp, who

have both served as a Director for over nine years, continue to

be independent in both character and judgement. The Board

believes that there are no relationships or circumstances

giving rise to a confl ict of interest which are likely to affect

the judgement of any Director.

The Board recognises the value of succession planning,

refreshing the composition of the Board and the benefi ts

of diversity.

The Board did not employ the services of a search company in

the appointment of Mr Greenlees. Mr Greenlees was selected

by the Board from a list of contacts and his appointment was

fully considered by the Nomination Committee and

recommended to the Board.

Mr Greenlees is standing for election to the Board having

agreed to join the Board in March 2014.

The Directors retiring at the forthcoming Annual General

Meeting in 2014 are Mr Beart and Mr Stobart. Mr Stobart has

served as a Director of the Company for more than nine years

and is subject to annual re-election. Mr Westropp also retires,

having served as a Director of the Company for more than nine


years but will not be seeking reappointment. The Board has

considered the position of Mr Beart and Mr Stobart as part

of the evaluation process and believes that it would be in

the Company’s best interests for them to be proposed for

re-election, given their material level of contribution. The

Board also considered the position of Mr Greenlees and

believes that it would be in the Company’s best interests for

him to be proposed for election.

None of the Directors has a service contract with the Company.

The terms of their appointment are detailed in a letter sent to

them when they join the Board. These letters are available for

inspection at the registered offi ce of the Company and are

available at each Annual General Meeting.

Directors’ appointment, induction and training

When a new Director is appointed to the Board, he or she is

provided with all relevant information regarding the Company

and their duties and responsibilities as a Director. In addition,

a new Director will also spend some time with representatives

of the Investment Manager whereby he or she will become

familiar with the various processes which the Investment

Manager considers necessary for the performance of its

duties and responsibilities to the Company.

The Company’s policy is to encourage Directors to keep up to

date and attend training courses on matters which are directly

relevant to their involvement with the Company. The Directors

also receive regular briefi ngs from, amongst others the

auditor and the Company Secretary regarding any proposed

developments or changes in law or regulations that could

affect themselves or the Company.

The Board is supplied in a timely manner with information in

a form and of a quality appropriate to enable it to discharge

its duties. The Board determines strategic issues and all

operational matters of a material nature.

Directors’ liability insurance

The Company has maintained appropriate Directors’ Liability

Insurance cover throughout the year, in respect of legal action

against its Directors.

BOARD’S RESPONSIBILITIESThe Board currently has fi ve scheduled meetings each year

and may have additional meetings to consider strategy and

other issues. Between these meetings there is regular contact

with the Investment Manager.

The Board is responsible to shareholders for the overall

management of the Company. A formal schedule of matters

specifi cally reserved for decision by the Board has been

adopted. This includes the determination of investment policy,

any change in investment policy, any change to the investment

strategy, strategic gearing policy, policy on the buy back and

issue of shares, whether to hold shares in treasury, and

entering into any material contracts. The Board also sets

investment parameters, such as the maximum amount that

may be invested in any one company and the maximum

amount that can be invested in equities traded on the AIM

market. In addition, changes relating to the Company’s capital

structure, approval of circulars to shareholders and listing

particulars, relevant press releases and Stock Exchange

announcements along with any signifi cant change in accounting

policies or practices must also be approved by the Board.

The Directors also have access to the advice and services of

the Company Secretary, who is responsible to the Board for

ensuring that Board procedures are followed and that the

Company complies with applicable rules and regulations.

Where necessary, in the furtherance of their duties, the

Directors may seek independent professional advice at the

expense of the Company.

The Board has responsibility for ensuring that the Company

keeps proper accounting records which disclose with

reasonable accuracy at any time the fi nancial position of the

Company and which enable it to ensure that the fi nancial

statements comply with the Companies Act. It is the Board’s

responsibility to present a fair, balanced and understandable

assessment, which extends to half yearly and other price

sensitive public reports.

The Board is also responsible for safeguarding the assets

of the Company and for taking reasonable steps for the

prevention and detection of fraud and other irregularities.

EVALUATION OF THE BOARD AND ITS COMMITTEESThe Board reviews its performance formally on an annual

basis, together with that of its Committees.

An appraisal system has been agreed by the Board for the

evaluation of itself, its Committees and its individual Directors,

including the Chairman. The annual evaluation for the year

ended 30 November 2013 has been carried out. This took the

form of questionnaires followed by discussions to identify how

the effectiveness of its activities, policies or processes might be

enhanced. The results of the evaluation process were presented

to and discussed by the Board and it was agreed that the

current composition of the Board and its Committees refl ected

a suitable mix of skills and experience, and that the Board, as a

whole, and its Committees were functioning effectively.

DELEGATION OF RESPONSIBILITIESThe Board has delegated the following areas of responsibility:

Management and administration

The management of the investment portfolio and the

administration of the Company have been delegated to the

Investment Manager. The Investment Manager, operating under

guidelines determined by the Board, has direct responsibility

for decisions relating to the day to day running of the Company

and is accountable to the Board for the investment, fi nancial

and operating performance of the Company. Custody and

settlement services are provided by BNYM and Deutsche

Governance

Corporate governance statement continued


Bank AG, Bank of America Merrill Lynch, Crédit Suisse and

JP Morgan acted as CFD counterparties to the Company.

The Board has delegated the exercise of voting rights attaching

to the securities held in the portfolio to the Investment

Manager. Details of the Investment Manager’s approach to

voting is set out on page 18.

Committees of the Board

The Board has appointed a number of committees as set out

below. Copies of the terms of reference of each committee are

available on request from the Company’s registered offi ce, on

the BlackRock website at blackrock.co.uk/thrg and at each

Annual General Meeting.

AUDIT COMMITTEEThe Audit committee which is chaired by Eric Stobart consists

of all the Directors of the Company, except Lord Latymer.

Further details are provided in the Report of the Audit

Committee on pages 33 to 35.

NOMINATION COMMITTEEThe Nomination Committee which is chaired by Lord Latymer

comprises all of the independent Directors. It is responsible

for Board succession planning, and will take into account

the existing balance of relevant skills and experience when

selecting candidates for appointment to the Board.

Appointments of new Directors are made on a formalised

basis and the Committee will agree the selection criteria

and the method of selection, recruitment and appointment.

Board diversity, including gender will be taken into account

in establishing the criteria. The existing Directors will try to

idenfi ty suitable individuals from their range of contacts,

although other sources, including external search consultants,

may be used as required. The terms of reference of this

Committee are available on request and on the Investment

Manager’s website blackrock.co.uk/thrg under the ‘Further

Literature’ section and will also be available at each Annual

General Meeting. The Committee will meet at least once a year

and more regularly if required.

The Investment Manager has no role in the appointment of

directors to the Company and the fi nal decision is taken by

the Board; all such appointments are subject to confi rmation

by shareholders.

MANAGEMENT ENGAGEMENT COMMITTEEThe Management Engagement Committee which is chaired

by Lord Latymer, comprises the whole Board. Its function is

to review annually the terms of the management agreement

with the Investment Manager and the performance of the

Investment Manager and to make recommendations to

the Board.

ATTENDANCE RECORD

Formal

Board

Meetings

Audit

Committee

Meetings

Management

Engagement

Committee

Meeting

Nomination

Committee

Meeting

Number of

meetings held 5 3 1 1

Number of

meetings

attended:

Crispin Latymer 5 n/a 1 1

Simon Beart 5 3 1 1

Jean Matterson 5 3 1 1

Eric Stobart 4 3 1 1

Harry Westropp 4 2 1 1

REMUNERATION COMMITTEEThe remuneration of the Chairman and Directors is determined

by the Board. It is not considered necessary to have a separate

Remuneration Committee as the Directors are not employed

by and are not former employees of the Investment Manager.

The remuneration of the Chairman and Directors is reviewed

against the fees paid to directors of other specialist investment

trusts and investment trusts of a comparable size, as well as

taking account of any data published by the AIC.

INTERNAL CONTROLSThe Board is responsible for establishing and maintaining

the Company’s system of internal controls and for reviewing

their adequacy and effectiveness, for ensuring that fi nancial

information published or used within the business is reliable,

and for regularly monitoring compliance with regulations

governing the operation of investment companies. The Board

reviews the effectiveness of the internal control systems on an

ongoing basis to identify, evaluate and manage the Company’s

signifi cant risks. As part of that process, there are procedures

designed to capture and evaluate any failings or weaknesses

and should a matter be categorised by the Board as signifi cant,

procedures exist to ensure that necessary action is taken to

remedy the failing. The Board is not aware of any signifi cant

failings or weaknesses arising during the year under review.

Control of the risks identifi ed, covering fi nancial, operational,

compliance and risk management, is embedded in the

operations of the Investment Manager and the custodian

during the year under review. There is a monitoring and

reporting process to review these controls, which has been in

place throughout the year and up to the date of this report,

carried out by the Investment Manager’s corporate audit

department. This accords with the FRC’s ‘Internal control:

Review Guidance for Directors on the UK Corporate

Governance Code’.

The Investment Manager reports to the Company on its review

of internal controls, formally on a semi-annual basis. The

Audit Committee also receives a quarterly report from BNYM

and verbally at each Board and Audit Committee meeting, and

provides an annual report from the Investment Manager’s


reporting accountant on the control policies and procedures

in operation on the internal controls of its custodial operations

together with the opinion of their reporting accountant. The

Company does not have its own internal audit function, as all

the administration is delegated to the Investment Manager

and other third party service providers. This matter is kept

under review. The Board meets regularly with representatives

from the Investment Manager’s Internal Audit team and receives

a report on internal audit fi ndings relevant to the Company.

The Board recognises that these control systems can only be

designed to manage rather than to eliminate the risk of failure

to achieve business objectives, and to provide reasonable,

but not absolute, assurance against material misstatement

or loss, and relies on the operating controls established by

the Investment Manager and the custodian.

The Investment Manager prepares revenue forecasts and

management accounts which allow the Board to assess the

Company’s activities and review its performance at each

Board meeting.

The Board and the Investment Manager have agreed clearly

defi ned investment criteria, specifi ed levels of authority

and exposure limits. Reports on these issues, including

performance statistics and investment valuations, are

submitted to the Board at each meeting.

FINANCIAL REPORTINGThe Statement of Directors’ Responsibilities in respect of the

Financial Statements is set out on page 32, the Report of the

Independent Auditor’s Report on pages 36 and 37 and the

statement of going concern on page 18.

SOCIALLY RESPONSIBLE INVESTMENTThe Company currently invests primarily in securities of UK

smaller and mid capitalisation companies which are listed

on the main market of the London Stock Exchange. The Board

believes that it is important to invest in companies whose

boards act responsibly in respect of environmental, ethical

and social issues. The Investment Manager’s evaluation

procedure and fi nancial analysis of the companies within the

portfolio includes research and appraisal, and also takes into

account environmental policies and other business issues.

The Investment Manager is supportive of the UK Stewardship

Code, which sets out the responsibilities of institutional

shareholders in respect of investee companies.

The Investment Manager’s approach to the UK Stewardship

Code and policies on Socially Responsible Investment and

Corporate Governance are detailed on the website

blackrock.com/corporate/en-gb/about-us.

BRIBERY PREVENTION POLICYThe provision of bribes of any nature to third parties in order to

gain a commercial advantage is prohibited and is a criminal

offence. The Board has a zero tolerance policy towards bribery

and a commitment to carry out business fairly, honestly and

openly. The Board takes its responsibility to prevent bribery

by the Company’s Investment Manager on its behalf very

seriously and BlackRock has anti-bribery policies and

procedures in place which are high level, proportionate and

risk based. The Company’s service providers have been

contacted in respect of their anti-bribery policies and,

where necessary, contractual changes are made to existing

agreements in respect of anti-bribery provisions.

COMMUNICATION WITH SHAREHOLDERSAll shareholders have the opportunity to attend and vote at

the Annual General Meeting. The Notice of the Annual General

Meeting sets out the business of the Meeting and any special

business is explained in the Directors’ Report. The Notice of

Annual General Meeting and related papers are sent to

shareholders at least 20 working days before the meeting.

Separate resolutions are proposed for substantive issues.

Regular updates on performance are available to shareholders

on the website. The Investment Manager will review the

Company’s activities at the Annual General Meeting, where

the Directors, including the Chairman of the Board and the

Chairman of the Audit Committee and representatives of the

Investment Manager will be available to answer shareholders’

questions. Proxy voting fi gures are announced to the

shareholders at the Annual General Meeting and will be made

available on the Investment Manager’s website shortly after

the Meeting.

The Board discusses with the Investment Manager at each

Board meeting any feedback from meetings with shareholders,

and it also receives reports from its corporate broker.

There is a section within this report entitled ‘ Shareholder

Information’, on pages 57 to 59, which provides an overview of

useful information available to shareholders.

The Company’s report and fi nancial statements are also

published on blackrock.co.uk/thrg, which is the website

maintained by the Company’s Investment Manager, BlackRock

Investment Management (UK) Limited (‘BlackRock’). The work

undertaken by the auditor does not involve consideration of

the maintenance and integrity of the website and, accordingly,

the auditor accept no responsibility for any changes that have

occurred to the fi nancial statements since they were initially

presented on the website. Visitors to the website need to be

aware that legislation in the United Kingdom governing the

preparation and dissemination of the fi nancial statements

may differ from legislation in their jurisdiction.

Governance

Corporate governance statement continued


DISCLOSURE AND TRANSPARENCY RULESOther information required to be disclosed pursuant to the

Disclosure and Transparency Rules has been placed in the

Directors’ Report on pages 17 to 22 because it is information

which refers to events that have taken place during the course

of the year.

The following is a list of that information:

Substantial share interests;

Share capital;

Share issues;

Share repurchases; and

Greenhouse gas emissions.

In addition, information on Directors shareholdings are given

on page 26 of the Directors’ Remuneration Report.

BY ORDER OF THE BOARDCRISPIN LATYMERChairman

10 February 2014


Governance

Statement of directors’ responsibilities

The Directors are responsible for preparing the annual

report, the Directors’ Remuneration Report and the fi nancial

statements in accordance with applicable United Kingdom

law and regulations.

Company law requires the Directors to prepare fi nancial

statements for each fi nancial year. Under that law, the

Directors are required to prepare the fi nancial statements

under IFRS as adopted by the European Union. Under

Company law the Directors must not approve the fi nancial

statements unless they are satisfi ed that they give a true

and fair view of the state of affairs of the Company and of

the profi t or loss of the Company for that period.

In preparing these fi nancial statements, the Directors are

required to:

present fairly the fi nancial position, fi nancial performance

and cash fl ows of the Company;

select suitable accounting policies in accordance with

IAS 8: Accounting Policies, Changes in Accounting

Estimates and Errors and then apply them consistently;

present information, including accounting policies, in a

manner that provides relevant, reliable, comparable and

understandable information;

make judgements and estimates that are reasonable

and prudent;

state whether the fi nancial statements have been

prepared in accordance with IFRS as adopted by the

European Union, subject to any material departures

disclosed and explained in the fi nancial statements;

provide additional disclosures when compliance with the

specifi c requirements in IFRS as adopted by the European

Union is insuffi cient to enable users to understand the

impact of particular transactions, other events and

conditions on the Company‘s fi nancial position and

fi nancial performance; and

prepare the fi nancial statements on the going concern

basis unless it is inappropriate to presume that the

Company will continue in business.

The Directors are responsible for keeping adequate

accounting records that are suffi cient to show and explain

the Company’s transactions and disclose with reasonable

accuracy at any time the fi nancial position of the Company

and enable them to ensure that the fi nancial statements

comply with the Companies Act 2006.

They are also responsible for safeguarding the assets of

the Company and hence for taking reasonable steps for the

prevention and detection of fraud and other irregularities.

The Directors are also responsible for preparing the Strategic

Report, Directors’ Report, the Directors’ Remuneration Report

and the Corporate Governance Statement in accordance with

the Companies Act 2006 and applicable regulations, including

the requirements of the Listing Rules and the Disclosure

and Transparency Rules. The Directors have delegated

responsibility to the Investment Manager for the maintenance

and integrity of the Company’s corporate and fi nancial

information included on the Investment Manager’s website.

Legislation in the United Kingdom governing the preparation

and dissemination of fi nancial statements may differ from

legislation in other jurisdictions.

Each of the Directors as at the date of this report, whose

names are listed in the table on page 29, confi rm to the best of

their knowledge that:

the fi nancial statements, which have been prepared in

accordance with IFRS as adopted by the European Union,

give a true and fair view of the assets, liabilities, fi nancial

position and net return of the Company; and

the annual report includes a fair review of the development

and performance of the business and the position of the

Company, together with a description of the principal risks

and uncertainties that it faces.

The 2012 UK Corporate Governance Code also requires

Directors to ensure that the Annual Report and Financial

Statements are fair, balanced and understandable. In order to

reach a conclusion on this matter, the Board has requested

that the Audit Committee advise on whether it considers that

the Annual Report and Financial Statements fulfi ls these

requirements. The process by which the Committee has

reached these conclusions are set out in the Report of the

Audit Committee on pages 33 to 35. As a result, the Board has

concluded that the Annual Report and Financial Statements

for the year ended 30 November 2013, taken as a whole, is fair,

balanced and understandable and provides the information

necessary for shareholders to assess the Company’s

performance, business model and strategy.

FOR AND ON BEHALF OF THE BOARDCRISPIN LATYMERChairman

10 February 2014


Governance

Report of the audit committee

As Chairman of the Company’s Audit Committee I am pleased

to present the Committee’s fi rst formal report to shareholders

on the effectiveness of the external audit process and how this

has been assessed for the year ended 30 November 2013.

ROLE AND RESPONSIBILITIESThe Company has established a separately chaired Audit

Committee whose duties include considering and recommending

to the Board for approval the contents of the half yearly and

annual fi nancial statements, and providing an opinion as to

whether the Annual Report, taken as a whole, is fair, balanced

and understandable and provides the information necessary

for shareholders to assess the Company’s performance,

business model and strategy. The Committee also reviews

the external auditor’s report on the Annual Report and is

responsible for reviewing and forming an opinion on the

effectiveness of the external audit process and audit quality.

Other duties include reviewing the appropriateness of the

Company’s accounting policies, and ensuring the adequacy

of the internal control systems and standards. The Terms of

Reference of the Audit Committee are available on the website

at blackrock.co.uk/thrg.

The Audit Committee meets at least three times a year. Two of

the planned meetings are held prior to the Board meetings

to approve the half yearly and annual results and the

Committee receives information from the Investment

Manager’s corporate audit and compliance departments.

The third meeting is held primarily to review the Company’s

system of internal controls and those of its third party

service providers.

COMPOSITIONThe Committee consists of all the Directors of the Company,

except Lord Latymer, and operates within written terms of

reference detailing its scope and duties. The Board considers

that at least one member of the Audit Committee has

suffi cient recent and relevant fi nancial experience for the Audit

Committee to discharge its function effectively. The Directors’

biographies are given on page 16 of the Annual Report.

RESPONSIBILITIES AND REVIEW OF THE EXTERNAL AUDITDuring the year the principal activities of the Audit

Committee included:

considering and recommending to the Board for approval

the contents of the half yearly and annual fi nancial

statements and reviewing the external auditor’s

report thereon;

reviewing the scope, execution, results, cost effectiveness,

independence and objectivity of the external auditor;

reviewing and recommending to the Board for approval the

audit and non-audit fees payable to the external auditor

and the terms of their engagement;

reviewing and approving the external auditor’s plan for the

following fi nancial year, with a focus on the identifi cation

of areas of audit risk, and consideration of the

appropriateness of the level of audit materiality adopted;

reviewing the effi ciency of the external audit process and

the quality of the audit engagement partner and the audit

team, and making a recommendation to the Board with

respect to the reappointment of the auditor;

reviewing the role of the Board, the Investment

Manager and third party service providers in an effective

audit process;

considering the quality of the formal audit report

to shareholders;

reviewing the appropriateness of the Company’s

accounting policies; and

ensuring the adequacy of the internal control systems

and standards.

The Committee has also reviewed and accepted the

‘whistleblowing’ policy that has been put in place by the

Investment Manager under which its staff, in confi dence, can

raise concerns about possible improprieties in matters of

fi nancial reporting or other matters, in so far as they affect

the Company.

SIGNIFICANT ISSUES CONSIDERED REGARDING THE ANNUAL REPORT AND FINANCIAL STATEMENTSThe Audit Committee reviews the effectiveness of the

Company’s system of internal controls on an ongoing basis to

identify, evaluate and manage the Company’s signifi cant risks.

During the year, as part of this process, the Audit Committee

considered a number of signifi cant issues and areas of key

audit risk in respect of the Annual Report and Financial

Statements. The Audit Committee reviewed the external audit

plan at an early stage and concluded that the appropriate

areas of audit risk relevant to the Company had been

identifi ed and that suitable audit procedures had been put

in place to obtain reasonable assurance that the fi nancial

statements as a whole would be free of material misstatements.

The table on page 34 sets out the key areas of risk identifi ed

and also explains how these were addressed.


Significant issue How the issue was addressed

The accuracy of the valuation of the

investment portfolio

The Board reviews detailed portfolio valuations on a regular basis throughout the year and receives confi rmation from the Investment Manager that the pricing basis is appropriate, in line with relevant accounting standards as adopted by the Company and that the carrying values are materially correct.

The risk of misappropriation

of assets

The Audit Committee reviews reports from its service providers on key controls over assets of the Company. Any signifi cant issues are reported by the Investment Manager to the Audit Committee. The Investment Manager has put in place procedures to ensure that investments can only be made to the extent that the appropriate contractual and legal arrangements are in place to protect the Company’s assets.

The accuracy of the calculation of

management and performance fees

The Investment Manager reports to the Board on the calculation of any performance fee accruals that have been included in the Company’s NAV on a regular basis. The management fee and any performance fee are calculated in accordance with the contractual terms in the investment management agreement by the administrator, BNYM, and are reviewed in details by the Investment Manager and are also subject to an analytical review by the Board.

The risk that income is overstated,

incomplete or inaccurate through

failure to recognise proper income

entitlements or to apply the

appropriate accounting treatment

for recognition of income

The Board reviews income forecasts, including special dividends, and receives explanations from the Investment Manager for any variations or signifi cant movements from previous forecasts and prior year fi gures.

As the provision of portfolio valuation, fund accounting and

administration services is delegated to the Company’s

Investment Manager, BlackRock, who sub-delegate fund

accounting to a third party service provider, and the provision

of custody services is contracted to BNYM, the Audit

Committee has also reviewed the Service Organisation Control

Reports (SOC 01) and Audit and Assurance Faculty (AAF)

reports prepared by the Investment Manager, Custodian and

Fund Accountants to ensure that the relevant control

procedures are in place to cover these areas of risk as

identifi ed above and are adequate and appropriate and

have been designated as operating effectively by the

Reporting Accountants.

AUDITOR AND AUDIT TENUREThe Company’s current Auditor Ernst & Young LLP, has acted

in this role since 2009. The Audit Committee, in conjunction

with the Board, is committed to reviewing this appointment

on a regular basis to ensure that the Company is receiving an

optimal level of service. EU Audit Reform proposals are

currently under consideration. If these proposals are approved

it is expected that the Committee will need to adhere to

mandatory rotation of the Auditor. The Committee also

considers the risks associated with audit fi rms withdrawing

from the market and the relationship with the Company’s

auditor. The appointment of the Auditor is reviewed each year

and the audit partner changes at least every fi ve years. There

are no contractual obligations that restrict the Company’s

choice of auditors. Other audit service fees of £5,000

(excluding VAT) paid to Ernst & Young LLP, relate to their review

of the half yearly financial statements.

ASSESSMENT OF THE EFFICACY OF THE EXTERNAL AUDIT PROCESSTo assess the effectiveness of the external audit, members of

the Audit Committee work closely with BlackRock to obtain a

good understanding of the progress and effi ciency of the audit.

The Audit Committee has adopted a framework in its review of

the effectiveness of the external audit process and audit

quality. This includes a review of the following areas:

The quality of the audit engagement partner and the

audit team;

The expertise of the audit fi rm and the resources available

to it;

Identifi cation of areas of audit risk;

Planning, scope and execution of the audit;

Consideration of the appropriateness of the level of

audit materiality adopted;

The role of the Board, the Investment Manager and third

party service providers in an effective audit process;

Communications by the auditor with the Audit Committee;

How the auditor supports the work of the Audit Committee

and how the audit contributes added value;

A review of independence and objectivity of the audit

fi rm; and

The quality of the formal audit report to shareholders.

Governance

Report of the audit committee continued


Feedback in relation to the audit process and the effi cacy of

the Investment Manager in performing their role is also sought

from relevant involved parties, notably the audit partner and

team. The external auditor is invited to attend the Audit

Committee meetings at which semi-annual and annual

fi nancial statements are considered and at which they have

the opportunity to meet with the Audit Committee without

representatives of the Investment Manager being present.

The effectiveness of the Board and the Investment Manager in

the external audit process is assessed principally in relation to

the timely identifi cation and resolution of any process errors

or control breaches that might impact the Company’s NAVs

and accounting records. It is also assessed by reference to

how successfully any issues in respect of areas of accounting

judgement are identifi ed and resolved, the quality and

timeliness of papers analysing these judgements, the Board

and the Investment Manager’s approach to the value of

independent audit and the booking of any audit adjustments

arising and the timely provision of draft public documents for

review by the Auditor and the Audit Committee.

To form a conclusion with regard to the independence of the

external Auditor, the Audit Committee considers whether the

skills and experience of the auditor make them a suitable

supplier of any non audit services and whether there are

safeguards in place to ensure that there is no threat to their

objectivity and independence in the conduct of the audit

resulting from the provision of any such services. On an annual

basis, Ernst & Young LLP review the independence of their

relationship with the Company and report to the Audit

Committee, providing details of any other relationship with

the Investment Manager. As part of this review, the Audit

Committee also receives information about policies and

processes for maintaining independence and monitoring

compliance with relevant requirements from the Company’s

auditor, including information on the rotation of audit partners

and staff, the level of fees that the Company pays in proportion

to the overall fee income of the fi rm, and the level of related

fees, details of any relationships between the audit fi rm and

its staff and the Company as well as an overall confi rmation

from the auditor of their independence and objectivity. As a

result of their review, the Audit Committee has concluded

that Ernst & Young LLP is independent of the Company and

the Investment Manager.

CONCLUSIONS IN RESPECT OF THE ANNUAL REPORT AND FINANCIAL STATEMENTSThe production and the audit of the Company’s Annual

Report and Financial Statements is a comprehensive process

requiring input from a number of different contributors. One

of the key governance requirements of the Company’s Annual

Report and Financial Statements is that they are fair, balanced

and understandable. The Board has requested that the Audit

Committee advise on whether it considers that the Annual

Report and Financial Statements fulfi ls these requirements,

and if the Audit Committee has given consideration to

the following:

The comprehensive documentation that is in place setting

out the controls over the production of the Annual Report,

including the verifi cation processes in place for dealing

with the factual content;

The comprehensive reviews that are undertaken at

different levels in the production process of these

Financial Statements, by the Investment Manager, the

third party service providers responsible for accounting

services and the Audit Committee that aim to ensure

consistency and overall balance;

The controls that are in place at the Investment

Manager and third party service providers to ensure the

completeness and accuracy of the Company’s fi nancial

records and the security of the Company’s assets; and

The existence of satisfactory control reports that have

been reviewed and reported on by external accountants

to verify the effectiveness of the internal controls of the

Investment Manager and the Company’s third party service

providers (Service Organisation Control (SOC 01) reports

and Audit and Assurance Faculty (AAF) reports).

As a result of the work performed, the Audit Committee

has concluded that the Annual Report for the year ended

30 November 2013, taken as a whole, is fair, balanced and

understandable and provides the information necessary for

shareholders to assess the Company’s performance, business

model and strategy and has reported on these fi ndings to the

Board. The Board’s conclusion in this respect is set out in the

Statement of Directors’ Responsibilities on page 32.

ERIC STOBARTChairman

Audit Committee

10 February 2014



Independent auditor’s report to the members of BlackRock Throgmorton Trust plc

We have audited the fi nancial statements of BlackRock

Throgmorton Trust plc for the year ended 30 November 2013

which comprise the Statement of Comprehensive Income,

Statement of Changes in Equity, Statement of Financial

Position, Cash Flow Statement and the related notes 1 to 20 to

the Financial Statements. The fi nancial reporting framework

that has been applied in their preparation is applicable law

and International Financial Reporting Standards (IFRS) as

adopted by the European Union.

This report is made solely to the Company’s members,

as a body, in accordance with Chapter 3 of Part 16 of the

Companies Act 2006. Our audit work has been undertaken so

that we might state to the Company’s members those matters

we are required to state to them in an auditor’s report and for

no other purpose. To the fullest extent permitted by law, we do

not accept or assume responsibility to anyone other than the

Company and the Company’s members as a body, for our audit

work, for this report, or for the opinions we have formed.

RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITOR As explained more fully in the Statement of Directors’

Responsibilities set out on page 32, the Directors are

responsible for the preparation of the Company’s fi nancial

statements and for being satisfi ed that they give a true and

fair view. Our responsibility is to audit and express an opinion

on the Company’s fi nancial statements in accordance with

applicable law and International Standards on Auditing (UK

and Ireland). Those standards require us to comply with the

Auditing Practices Board’s Ethical Standards for Auditors.

SCOPE OF THE AUDIT OF THE FINANCIAL STATEMENTS An audit involves obtaining evidence about the amounts and

disclosures in the fi nancial statements suffi cient to give

reasonable assurance that the fi nancial statements are free

from material misstatement, whether caused by fraud or

error. This includes an assessment of whether the accounting

policies are appropriate to the Company’s circumstances and

have been consistently applied and adequately disclosed,

the reasonableness of signifi cant accounting estimates

made by the directors, and the overall presentation of the

fi nancial statements. In addition, we read all the fi nancial

and non-fi nancial information in the annual report to

identify material inconsistencies with the audited fi nancial

statements and to identify any information that is apparently

materially incorrect based on, or materially inconsistent with,

the knowledge acquired by us in the course of performing

the audit. If we become aware of any apparent material

misstatements or inconsistencies we consider the

implications for our report.

OPINION ON FINANCIAL STATEMENTS In our opinion:

the fi nancial statements give a true and fair view of the

state of the Company’s affairs as at 30 November 2013

and of its profi t for the year then ended;

have been properly prepared in accordance with IFRS as

adopted by the European Union; and

have been prepared in accordance with the requirements

of the Companies Act 2006.

OUR ASSESSMENT OF RISKS OF MATERIAL MISSTATEMENT We identifi ed the following risks of material misstatement

that had the greatest effect on the overall audit strategy and

the allocation of resources in the audit:

incorrect valuation of the investment portfolio, including

the incorrect application of exchange rates and an

assessment of stock liquidity;

incorrect calculation of management and performance

fees or that they were not calculated and recorded in

accordance with the investment management agreement;

misappropriation of the Company’s assets; and

incomplete or inaccurate income recognition through

the failure to recognise proper income entitlements.

OUR APPLICATION OF MATERIALITY We determined planning materiality for the Company to be

£2.4 million which is 1% of equity. This provided a basis

for determining the nature, timing and extent of our risk

assessment procedures, identifying and assessing the risk of

material misstatement and determining the nature, timing

and extent of further audit procedures.

On the basis of our risk assessments, together with our

assessment of the Company’s overall control environment,

our judgement was that overall performance materiality

(i.e. our tolerance for misstatement in an individual account

or balance) for the Company should be 75% of planning

materiality, namely £1.8 million. Our objective in adopting this

approach was to ensure that total detected and undetected

audit differences in all accounts did not exceed our planning

materiality level.

Given the importance of the distinction between revenue and

capital for the Company we have also applied a separate

performance materiality of £183,000 for the Income

Statement, being 5% of the return on ordinary activities

before taxation.


We agreed to report to the Committee all audit differences

in excess of £120,000, as well as differences below that

threshold that, in our view would warrant reporting on

qualitative grounds.

AN OVERVIEW OF THE SCOPE OF OUR AUDIT Our response to the risks identifi ed above was as follows:

We agreed a sample of year end prices to an independent

source;

We recalculated the management and performance fee for

the year to confi rm they were arithmetically accurate and

we checked that they were in accordance with the

investment management agreement;

We obtained independent confi rmation from the custodian

and bank of the investment portfolio and cash balances,

agreeing them to the books and records; and

We agreed a sample of dividends received from the

underlying fi nancial records to independent sources and

checked, on a sample basis, using independent sources,

that the Company had received the income to which it

was entitled.

OPINION ON OTHER MATTER PRESCRIBED BY THE COMPANIES ACT 2006 In our opinion

the information given in the Strategic Report and the

Directors’ Report for the fi nancial year for which the

fi nancial statements are prepared is consistent with

the fi nancial statements; and

the part of the Directors’ Remuneration Report to be

audited has been properly prepared in accordance with

the Companies Act 2006.

MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION We have nothing to report in respect of the following:

Under the ISAs (UK and Ireland), we are required to report to

you if, in our opinion, information in the Annual Report is:

materially inconsistent with the information in the audited

fi nancial statements; or

apparently materially incorrect based on, or materially

inconsistent with, our knowledge of the Company acquired

in the course of performing our audit; or

otherwise misleading.

In particular, we are required to consider whether we have

identifi ed any inconsistencies between our knowledge

acquired during the audit and the directors’ statement

that they consider the Annual Report is fair, balanced and

understandable and whether the Annual Report appropriately

discloses those matters that we communicated to the audit

committee which we consider should have been disclosed.

Under the Companies Act 2006 we are required to report to

you if, in our opinion:

adequate accounting records have not been kept by the

Company, or returns adequate for our audit have not been

received from branches not visited by us; or

the part of the Directors Remuneration Report to be

audited is not in agreement with the accounting records

and returns; or

certain disclosures of directors’ remuneration specifi ed

by law are not made; or

we have not received all the information and explanations

we require for our audit.

Under the Listing Rules we are required to review:

the directors’ statement, set out on page 18, in relation to

going concern; and

the part of the Corporate Governance Statement relating to

the Company’s compliance with the nine provisions of the

UK Corporate Governance Code specifi ed for our review; and

certain elements of the report to shareholders by the

Board on Directors’ remuneration.

RATAN ENGINEER (SENIOR STATUTORY AUDITOR)For and on behalf of Ernst & Young LLP

Statutory Auditor

London

10 February 2014



Statement of comprehensive income for the year ended 30 November 2013

Notes

Revenue

2013

Revenue

2012

Capital

2013

Capital

2012

Total

2013

Total

2012

£’000 £’000 £’000 £’000 £’000 £’000

Gains on investments held at fair value through profi t or loss 11 – – 67,573 26,425 67,573 26,425

Net returns on contracts for difference 13 (102) (52) 3,336 1,870 3,234 1,818

Exchange gains – – 3 – 3 –

Income from investments held at fair value through profi t or

loss 3 4,672 3,478 – – 4,672 3,478

Other income 3 1 9 – – 1 9

Total revenue 4,571 3,435 70,912 28,295 75,483 31,730

Investment management and performance fees 4 (466) (369) (5,337) (2,368) (5,803) (2,737)

Other expenses 5 (446) (404) (16) – (462) (404)

Total operating expenses (912) (773) (5,353) (2,368) (6,265) (3,141)

Net profi t before fi nance costs and taxation 3,659 2,662 65,559 25,927 69,218 28,589

Finance costs 7 – (2) – – – (2)

Profi t on ordinary activities before taxation 3,659 2,660 65,559 25,927 69,218 28,587

Taxation charge on ordinary activities 8 (8) – – – (8) –

Net profi t for the year after taxation 3,651 2,660 65,559 25,927 69,210 28,587

Earnings per ordinary share – basic and diluted 10 4.99p 3.64p 89.65p 35.45p 94.64p 39.09p

The total column of this statement represents the Statement of Comprehensive Income, prepared in accordance with International

Financial Reporting Standards (‘IFRS’), as adopted by the European Union. The supplementary revenue and capital columns are

both prepared under guidance published by the Association of Investment Companies (‘AIC’). All items in the above statement

derive from continuing operations. All income is attributable to the equity holders of BlackRock Throgmorton Trust plc.

The Company does not have any other recognised gains or losses. The net profi t disclosed above represents the Company’s total

comprehensive income.

The notes on pages 42 to 56 form part of these fi nancial statements.



Statement of changes in equity for the year ended 30 November 2013

Notes

Called up

share

capital

Share

premium

account

Special

reserve

Capital

redemption

reserve

Capital

reserves

Revenue

reserve Total

£’000 £’000 £’000 £’000 £’000 £’000 £’000

For the year ended 30 November 2013

At 30 November 2012 4,026 21,049 35,272 11,905 96,680 5,135 174,067

Total Comprehensive Income:

Net profi t for the year – – – – 65,559 3,651 69,210

Dividends paid and declared

(see (a) below) 9 – – – – – (2,523) (2,523)

At 30 November 2013 4,026 21,049 35,272 11,905 162,239 6,263 240,754

For the year ended 30 November 2012

At 30 November 2011 4,026 21,049 35,272 11,905 70,737 4,785 147,774

Total Comprehensive Income:

Net profi t for the year – – – – 25,927 2,660 28,587

Transactions with owners, recorded

directly to equity:

Write back of share issue costs – – – – 6 – 6

Write back of subscription share

issue costs – – – – 10 – 10

Refund of unclaimed dividends – – – – – 8 8

Dividends paid and declared

(see (b) below) 9 – – – – – (2,318) (2,318)

At 30 November 2012 4,026 21,049 35,272 11,905 96,680 5,135 174,067

a. Final dividend of 2.70p per share for the year ended 30 November 2012, declared on 8 February 2013 and paid on 4 April 2013, interim dividend of 0.75p per share for the year ended 30 November 2013, declared on 23 July 2013 and paid on 23 August 2013.

b. Final dividend of 2.55p per share for the year ended 30 November 2011, declared on 22 February 2012 and paid on 5 April 2012 and interim dividend of 0.62p per share for the year ended 30 November 2012, declared on 27 July 2012 and paid on 24 August 2012.




Statement of fi nancial position as at 30 November 2013

Notes

2013

£’000

2012

£’000

Non current assets

Investments held at fair value through profi t or loss 11 247,127 175,555

Current assets

Other receivables 14 1,012 590

Amounts due in respect of contracts for difference 13 736 377

Cash 1,098 390

2,846 1,357

Total assets 249,973 176,912

Current liabilities

Other payables 15 (7,355) (2,543)

Amounts payable in respect of contracts for difference 13 (1,035) –

Collateral pledged in respect of contracts for difference (829) (302)

(9,219) (2,845)

Net assets 240,754 174,067

Equity attributable to equity holders

Called up share capital 16 4,026 4,026

Share premium account 17 21,049 21,049

Special reserve 17 35,272 35,272

Capital redemption reserve 17 11,905 11,905

Capital reserves 17 162,239 96,680

Revenue reserve 17 6,263 5,135

Total equity shareholders’ funds 240,754 174,067

Net asset value per ordinary share 10 329.21p 238.02p

The fi nancial statements on pages 38 to 56 were approved and authorised for issue by the Board of Directors on 10 February 2014

and signed on its behalf by Crispin Latymer, Chairman.


Registered in England, No. 594634




Cash fl ow statement for the year ended 30 November 2013

2013

£’000

2012

£’000

Operating activities

Net profi t before taxation 69,218 28,587

Add back interest paid 279 299

Gains on investments and contracts for difference held at fair value through profi t or loss including

transaction costs (71,188) (28,594)

Exchange gains (3) –

Sales of investments held at fair value through profi t or loss 128,673 84,256

Purchases of investments held at fair value through profi t or loss (132,672) (86,224)

Net realised gains on contracts for difference 4,291 2,607

Decrease in other receivables 76 12

Increase in amounts due from brokers (514) (361)

Increase in amounts due to brokers 1,497 37

Increase/(decrease) in other payables 3,315 (1,426)

Net cash infl ow/(outfl ow) from operating activities before interest and taxation 2,972 (807)

Interest paid (279) (299)

Taxation recovered on overseas income 8 (13)

Net cash infl ow/(outfl ow) from operating activities 2,701 (1,119)

Financing activities

Refund of unclaimed dividends – 8

Dividends paid (2,523) (2,318)

Net cash outfl ow from fi nancing activities (2,523) (2,310)

Increase/(decrease) in cash and cash equivalents 178 (3,429)

Exchange movements 3 –

Cash and cash equivalents at the start of year 88 3,517

Cash and cash equivalents at the end of the year 269 88

Comprised of:

Cash 1,098 390

Collateral pledged in respect of contracts for difference (829) (302)

Total 269 88




Notes to the fi nancial statements

1. PRINCIPAL ACTIVITYThe 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 had two subsidiaries, The Third Throgmorton Trust Limited the principal activity of which was investment dealing in

shares and other securities and T.T. Finance PLC which acted as a fi nancing subsidiary. The Third Throgmorton Trust Limited was

put into member’s voluntary liquidation on 17 July 2013 and as at the year end the liquidation was in progress. T. T. Finance PLC

was struck off from the Companies House register on 26 November 2013. Both subsidiaries were immaterial.

2. ACCOUNTING POLICIESThe policies set out below have been applied consistently throughout the year.

(a) Basis of preparation

The fi nancial statements of the Company have been prepared in accordance with International Financial Reporting Standards

(‘IFRS’) as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006. 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’), revised in January 2009, is compatible

with IFRS, the fi nancial statements have been prepared in accordance with guidance set out in the SORP for investment trust

companies and venture capital trusts issued by the AIC.

As noted in note 1 above, as one of the subsidiaries has been struck off and the other subsidiary is in liquidation as at the year

end, these fi nancial statements are not prepared on a consolidated basis.

The functional currency of the Company is UK pounds sterling as this is the currency of the primary economic environment in

which the Company operates. All values are rounded to the nearest thousand pounds (£’000) except where otherwise stated.

A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after

December 2012, and have not been applied in preparing these fi nancial statements. None of these are expected to have a

signifi cant effect on the measurement of the amounts recognised in the fi nancial statements of the Company. However, IFRS 9

‘Financial Instruments’ issued in November 2009 will change the classifi cation of fi nancial assets, but is not expected to have

an impact on the measurement basis of the fi nancial assets since the majority of the Company’s fi nancial assets are measured

at fair value through profi t or loss.

IFRS 9 deals with classifi cation and measurement of fi nancial assets and its requirements represent a signifi cant change from

the existing requirements in IAS 39 in respect of fi nancial assets. The standard contains two primary measurement categories

for fi nancial assets: at amortised cost and fair value. A fi nancial asset would be measured at amortised cost if it is held within a

business model whose objective is to hold assets in order to collect contractual cash fl ows, and the asset’s contractual terms

give rise on specifi ed dates to cash fl ows that are solely payments of principal and interest on the principal outstanding. All other

fi nancial assets would be measured at fair value. The standard eliminates the existing IAS 39 categories of ‘held to maturity’,

‘available for sale’ and ‘loans and receivables’.

The standard has not yet been approved by the EU.

IFRS 10 Consolidated Financial Statements (effective 1 January 2014) establishes a single control model that applies to all

entities including special purpose entities. The changes introduced by IFRS 10 will require management to exercise signifi cant

judgement to determine which entities are controlled, and therefore are required to be consolidated by a parent. The standard

is not likely to have any impact on the Company.

IFRS 11 Joint Arrangements (effective 1 January 2014) removes the option to account for jointly controlled entities (JCEs) using

proportionate consolidation. This is not applicable to the Company as it holds no interests in joint arrangements.

IFRS 12 Disclosure of Involvement with Other Entities (effective 1 January 2014) now requires additional disclosures that relate

to an entity‘s interests in subsidiaries, joint arrangements, associates and structured entities. This standard is not expected to

apply to the Company as it does not invest in structured entities.


IFRS 13 Fair Value measurement (effective 1 January 2013) establishes a single source of guidance under IFRS for all fair value

measurements. It does not change when an entity is required to use fair value, but rather provides guidance on how to measure

fair value under IFRS when fair value is required or permitted.

There will be no material impact from these standards on the fi nancial position and performance of the Company given the

simplicity of the portfolio.

(b) Presentation of Statement of Comprehensive Income

In order to refl ect better the activities of an investment trust company and in accordance with guidance issued by the AIC,

supplementary information which analyses the Statement of Comprehensive Income between items of a revenue and a capital

nature has been presented alongside the Statement of Comprehensive Income.

(c) Investments held at fair value through profi t or loss

The Company’s investments are classifi ed as held at fair value through profi t 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 profi t or loss. Purchases of investments are

recognised on a trade date basis. The sales of assets are recognised at the trade date of the disposal. Proceeds are measured

at fair value, which is regarded as the proceeds of sale less any transaction costs.

The fair value of the long only portfolio is the bid price of the securities, without deduction for estimated future selling costs.

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.

Changes in the value of investments held at fair value through profi t or loss and gains and losses on disposal are recognised

in the Statement of Comprehensive Income as ‘Gains or losses on investments held at fair value through profi t or loss’. Also

included within this heading are transaction costs in relation to the purchase or sale of investments.

(d) 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 Statement of Comprehensive Income. They are

recognised as capital and are shown in the capital column of the Statement of Comprehensive Income if they are of a capital nature,

and are recognised as revenue and shown in the revenue column of the Statement of Comprehensive Income if they are of a revenue

nature. To the extent that any gains or losses are of a mixed revenue and capital nature, they are apportioned between revenue and

capital accordingly.

(e) Segmental reporting

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

(f) Income

Dividends receivable on equity shares are recognised on an ex-dividend basis. Where no ex-dividend date is available, dividends

receivable on or before the year end are treated as revenue for the year. Provisions are made for any dividends not expected to be

received. Fixed returns on non equity securities are recognised on a time apportionment basis so as to refl ect the effective yield

of the security.

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

particular case.

Interest income and expenses are accounted for on an accruals basis.


2. ACCOUNTING POLICIES continued

(g) Expenses

All expenses, including fi nance costs, are accounted for on an accruals basis. Expenses have been charged wholly to the revenue

column of the Statement of Comprehensive Income, except as follows:

expenses including fi nance costs which are incidental to the acquisition or disposal of investments are included within the

cost of the investments. Details of transaction costs on the purchases and sales of investments are disclosed in note 11 on

page 48.

the investment management fee has been allocated 75% to the capital column and 25% to the revenue column of the

Statement of Comprehensive Income in line with the Board’s expected long term split of returns, in the form capital gains

and income respectively, from the investment portfolio.

performance fees have been allocated 100% to the capital column of the Statement of Comprehensive Income, as

performance has been predominantly generated through capital returns of the investment portfolio.

(h) Finance costs

Finance costs are accounted for on an accruals basis. Finance costs are allocated, insofar as they relate to the fi nancing of the

Company’s investments, 75% to the capital column and 25% to the revenue column of the Statement of Comprehensive Income,

in line with the Board’s expected long term split of returns, in the form capital gains and income respectively, from the

investment portfolio.

(i) Taxation

The tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on the

taxable profi t for the period. Taxable profi t differs from net profi t as reported in the Statement of Comprehensive Income because

it excludes items of income or expenses that are taxable or deductible in other years and it further excludes items that are never

taxable or deductible. The Company’s liability for current tax is calculated using tax rates that were applicable at the balance

sheet date.

Deferred taxation is recognised in respect of all temporary differences at the fi nancial reporting date, where transactions or

events that result in an obligation to pay more taxation in the future or right to pay less taxation in the future have occurred at the

fi nancial reporting date. This is subject to deferred taxation assets only being recognised if it is considered more likely than not

that there will be suitable profi ts from which the future reversal of the temporary differences can be deducted.

Where expenses are allocated between capital and revenue any tax relief in respect of the expenses is allocated between capital

and revenue returns on the marginal basis using the Company’s effective rate of corporation taxation for the accounting period.

(j) Dividends payable

Under IFRS, fi nal dividends, should not be accrued in the fi nancial statements unless they have been approved by shareholders

before the fi nancial reporting date. Interim dividends should not be accrued in the fi nancial 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 fi nal dividend, or paid in the case of an interim dividend, and have become a liability of

the Company.

(k) Cash and cash equivalents

Cash comprises cash in hand and demand deposits. Cash equivalents are short term, highly liquid investments, that are readily

convertible to known amounts of cash and that are subject to an insignifi cant risk of changes in value.


Notes to the fi nancial statements continued


3. INCOME2013

£’000

2012

£’000

Investment Income:

UK listed dividends 4,202 3,204

Overseas listed dividends 237 174

Dividends from subsidiary company 233 100

4,672 3,478

Other income:

Deposit interest 1 9

1 9

Total 4,673 3,487

Total income comprises:

Dividends 4,672 3,478

Interest 1 9

4,673 3,487

4. INVESTMENT MANAGEMENT AND PERFORMANCE FEES2013 2012

Revenue

£’000

Capital

£’000

Total

£’000

Revenue

£’000

Capital

£’000

Total

£’000

Investment management fee 466 1,398 1,864 369 1,107 1,476

Performance fee – 3,939 3,939 – 1,261 1,261

Total 466 5,337 5,803 369 2,368 2,737

Performance fees have been wholly allocated to the capital column of the Statement of Comprehensive Income as the

performance has been predominantly generated through capital returns from the investment portfolio. As at 30 November 2013,

there was a performance fee payable to the Investment Manager of £3,939,000 (2012: £1,261,000).

Details of the investment management agreement are disclosed in the Directors’ Report on page s 17 and 18.

5. OTHER OPERATING ACTIVITIES2013

Total

£’000

2012

Total

£’000

(a) Other operating expenses

Auditor’s remuneration:

– audit services 28 28

– other assurance services 5 5

Registrar’s fee 27 32

Directors’ remuneration 125 110

Other administrative costs 261 229

446 404

The Company’s ongoing charges, calculated as a percentage of average net assets for the year and using

expenses, excluding performance fee and interest costs were: 1.1% 1.1%

Auditor’s remuneration for other assurance services comprised £5,000 which relates to the interim review (2012: £5,000 interim review).


6. DIRECTORS’ EMOLUMENTSThe aggregate emoluments of the Directors, excluding VAT, where applicable, for the year ended 30 November 2013 were

£125,000 (2012: £110,000). The emoluments of the Chairman, who was also the highest paid Director were £34,000 (2012: £33,000).

The Company does not have a share option scheme or any incentive scheme. No pension contributions were made in respect of

the Directors. The Company has no employees.

Details of the Directors’ emoluments are given in the Directors’ Remuneration Report on pages 23 to 26.

7. FINANCE COSTS2013 2012

Revenue

return

£’000

Capital

return

£’000

Total

£’000

Revenue

return

£’000

Capital

return

£’000

Total

£’000

Overdraft interest – – – 2 – 2

– – – 2 – 2

8. TAXATIONa) Analysis of charge for the year

2013 2012

Revenue

£’000

Capital

£’000

Total

£’000

Revenue

£’000

Capital

£’000

Total

£’000

Current taxation:

Overseas tax suffered (note 8(b)) 8 – 8 – – –

Total current tax 8 – 8 – – –

Total taxation charge (note 8(b)) 8 – 8 – – –

b) Factors affecting current taxation charge for the year

The taxation assessed for the year is lower than the standard rate of corporation taxation in the UK for a large company of

23.33% (2012: 24.70%). The differences are explained below:

2013 2012

Revenue

£’000

Capital

£’000

Total

£’000

Revenue

£’000

Capital

£’000

Total

£’000

Total profi t on ordinary activities before

taxation 3,659 65,559 69,218 2,660 25,927 28,587

Profi t on ordinary activities multiplied by

standard rate of corporation taxation at

23.33% (2012: 24.7%) 854 15,295 16,149 657 6,404 7,061

Effects of:

Non-taxable UK dividend income (1,035) – (1,035) (816) – (816)

Non-taxable overseas dividends (41) – (41) (43) – (43)

Overseas tax suffered 8 – 8 – – –

Non-allowable gains on investments held at

fair value through profi t and loss – (15,765) (15,765) – (6,527) (6,527)

Non-taxable gain on contracts for difference – (779) (779) – (461) (461)

Increase in excess management fees carried

forward 222 1,249 1,471 202 584 786

(846) (15,295) (16,141) (657) (6,404) (7,061)

Current taxation charge (note 8 (a)) 8 – 8 – – –




c) At 30 November 2013 the Company had net surplus management expenses of £54.8 million (2012: £48.6 million), a non-trade

loan relationship defi cit of £47.8 million (2012: £47.7 million) giving total unutilised losses of £102.6 million (2012: £96.3 million).

A deferred taxation asset has not been recognised in respect of these losses because the Company is not expected to generate

taxable income in a future period in excess of the deductible expenses of that future period and, accordingly, it is unlikely that the

Company will be able to reduce future taxation liabilities through the use of existing surplus expenses, loan relationship defi cits

or eligible unrelieved foreign taxation. There was an unrecognised deferred taxation asset of £21.5 million (2012: £22.5 million) at

the fi nancial reporting date.

Due to the Company’s ongoing intention to meet the conditions required to obtain approval under section 1158 of the Corporation

Tax Act 2010, it has not provided deferred taxation on capital gains or losses.

9. DIVIDENDS

Record date Payment date

2013

£’000

2012

£’000

Dividends paid or proposed on equity shares:

2011 fi nal of 2.55p 24 February 2012 5 April 2012 – 1,865

2012 interim of 0.62p 27 July 2012 24 August 2012 – 453

2012 fi nal of 2.70p 22 February 2013 4 April 2013 1,975 –

2013 interim of 0.75p 2 August 2013 23 August 2013 548 –

2,523 2,318

The Directors have proposed a fi nal dividend of 3.25 p per share (2012: fi nal 2.70p). The dividend will be paid on 4 April 2014,

subject to shareholders’ approval on 26 March 2014, to shareholders on the Company’s register on 21 February 2014. The

proposed fi nal dividend has not been included as a liability in these fi nancial statements as fi nal dividends are only recognised in

the fi nancial statements when they have been approved by shareholders.

The total dividends payable in respect of the year which form the basis of section 1158 of the Corporation Tax Act 2010 and

section 833 of the Companies Act 2006, and the amounts proposed meet the relevant requirements as set out in this legislation

and are as follows:

2013

£’000

2012

£’000

Dividends paid or proposed on equity shares:

Interim paid 0.75p (2012: 0.62p) 548 453

Final proposed of 3.25 p (2012: 2.70p)* 2,377 1,975

2,925 2,428

* Based upon 73,130,326 (2012: 73,130,326) ordinary shares.


10. EARNINGS AND NET ASSET VALUE PER ORDINARY SHARERevenue and capital earnings per share are shown below and have been calculated using the following:

2013 2012

Net revenue profi t attributable to ordinary shareholders (£’000) 3,651 2,660

Net capital profi t attributable to ordinary shareholders (£’000) 65,559 25,927

Total profi t attributable to ordinary shareholders (£’000) 69,210 28,587

Equity shareholders’ funds (£’000) 240,754 174,067

The weighted average number of ordinary shares in issue during each year, on which the return per ordinary

share was calculated was 73,130,326 73,130,326

The number of ordinary shares in issue at the end of the year, on which the net asset value was calculated was 73,130,326 73,130,326

Return per share – basic and diluted

Revenue earnings per share 4.99p 3.64p

Capital earnings per share 89.65p 35.45p

Total earnings per share 94.64p 39.09p

Net asset value per share 329.21p 238.02p

Ordinary share price 290.00p 193.25p

The Company does not have any dilutive securities.

11. INVESTMENTS HELD AT FAIR VALUE THROUGH PROFIT OR LOSS2013

£’000

2012

£’000

UK equity listed investments 180,129 126,361

BlackRock’s Institutional Cash Fund 2,923 719

AIM traded stocks 64,075 46,853

Total equity investments 247,127 173,933

Investments in subsidiary entities – 1,622

247,127 175,555

Valuation at 1 December 175,555 147,162

Investment holding gains at 1 December (27,038) (15,514)

Opening cost of equity investments 148,517 131,648

Acquisitions at cost 132,672 86,224

Disposals proceeds (128,673) (84,256)

Gains on sales 15,600 14,901

Cost at 30 November 168,116 148,517

Investment holding gains 79,011 27,038

Valuation at 30 November 247,127 175,555

During the year transaction costs of £523,000 (2013: £400,000) were incurred on the acquisition of investments. Costs relating to

disposals of investments during the year amounted to £127,000 (2012: £97,000). All transactions costs have been included within

capital reserves.

Gains on investments held at fair value through profi t or loss

2013

£’000

2012

£’000

Gains on sales 15,600 14,901

Changes in investment holdings gains 51,973 11,524

67,573 26,425




12. INVESTMENT IN SUBSIDIARY UNDERTAKINGSThe Company had two subsidiaries, The Third Throgmorton Trust Limited the principal activity of which was investment dealing in

shares and other securities and T.T. Finance PLC which acted as a fi nancing subsidiary. The Third Throgmorton Trust Limited was put

into member’s voluntary liquidation on 17 July 2013 and as at the year end the liquidation was in progress. T.T. Finance PLC was

struck off from the Companies House register on 26 November 2013. Both subsidiaries were immaterial. Therefore the fi nancial

statements are no longer prepared on a consolidated basis and Company only fi nancial statements have been produced.

13. DERIVATIVESWhilst the Company may use a variety of derivative contracts, the only derivatives entered into during the year were contracts

for difference under a master agreement with the Company’s CFD counterparties to enable the Company to gain long and short

exposure on individual securities through CFDs. CFDs are synthetic equities and are valued by reference to the underlying market

value of the corresponding security.

The sources of the return under the derivative contract (e.g. notional dividends, fi nancing costs, interest returns and capital

changes) are allocated to the revenue and capital accounts in accordance with the nature of the underlying source of income and

in accordance with the guidance given in the AIC SORP. Notional dividend income or expense arising on long or short positions

is apportioned wholly to the revenue account. Notional interest income on short positions is allocated wholly to the revenue

account. Notional interest expense on long positions is apportioned between revenue and capital in accordance with the Board’s

long term expected returns of the Company (currently determined to be 25% to the revenue account and 75% to capital account).

Changes in value relating to underlying price movements of securities in relation to CFD exposures are allocated to capital.

A summary of the various sources of return on these contracts is given in the table below.

2013 2012

Revenue

£’000

Capital

£’000

Total

£’000

Revenue

£’000

Capital

£’000

Total

£’000

Net realised gains – 4,291 4,291 – 2,607 2,607

Net unrealised gains relating to underlying

price movements – (676) (676) – (438) (438)

Notional dividend income on long positions 752 – 752 563 – 563

Notional dividend expense on short positions (769) – (769) (602) – (602)

Notional interest income on short positions 8 – 8 87 – 87

Notional interest expense on long positions (93) (279) (372) (100) (299) (399)

Total return on derivative contracts for the year (102) 3,336 3,234 (52) 1,870 1,818

The fair value of the CFDs at 30 November 2013 was negative £299,000 (2012: positive £377,000), comprising revaluation gains of

£736,000 (2012: £377,000) recorded in current assets and revaluation losses of £1,035,000 (2012: nil) recorded in current

liabilities. Net realised gains of £4,291,000 (2012: £2,607,000) comprised realised gains of £7,953,000 (2012: £5,863,000) and

realised losses of £3,662,000 (2012: £3,256,000).

14 . OTHER RECEIVABLES2013

£’000

2012

£’000

Sales for future settlement 889 375

Prepayments and accrued income 102 178

Taxation recoverable 21 37

1,012 590

15. OTHER PAYABLES2013

£’000

2012

£’000

Purchases for future settlement 1,722 225

Other payables 5,633 2,318

7,355 2,543


16. CALLED UP SHARE CAPITALOrdinary

shares

in issue

number

Treasury

shares

number

Total

shares

number £’000

Allotted, called up and fully paid share capital comprised:

Ordinary shares of 5p each:

At 1 December 2012 73,130,326 7,400,000 80,530,326 4,026

At 30 November 2013 73,130,326 7,400,000 80,530,326 4,026

No ordinary shares were issued, purchased or cancelled in the year (2012: nil).

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

on the voting rights of the ordinary shares or on the transfer of ordinary shares.

17. SHARE PREMIUM AND RESERVES

Company

Share

premium

account

£’000

Special

reserve

£’000

Capital

redemption

reserve

£’000

Capital

reserve

(arising on

investments

sold)

£’000

Capital

reserve

(arising on

revaluation of

investments

held)

£’000

Revenue

reserve

£’000

At 1 December 2012 21,049 35,272 11,905 69,265 27,415 5,135

Movement during the year:

Net profi t for the year – – – – – 3,651

Gains on realisation of investments – – – 15,600 – –

Exchange gains – – – 3 – –

Change in investment holding gains – – – – 51,973 –

Gains/(losses) on contracts for difference

taken to capital – – – 4,012 (676) –

Finance costs, investment management and

performance fee charged to capital after

taxation – – – (5,353) – –

Dividends paid during the year – – – – – (2,523)

At 30 November 2013 21,049 35,272 11,905 83,527 78,712 6,263

18. FINANCIAL RISK MANAGEMENT POLICIES AND PROCEDURESAs an investment trust, the Company invests in equities and other investments for the long term so as to achieve its investment

objective as stated on page 6. In pursuing its investment objective, the Company is exposed to a variety of risks that could result

in either a reduction in the Company’s net assets or a reduction in the revenue available for distribution by the way of dividends.

These fi nancial risks, including market risk (comprising currency risk, interest rate risk and market price risk), liquidity risk

and credit risk, and the Directors’ approach to the management of them, are set out below. The Investment Manager, in close

co-operation with the Board of Directors, co-ordinates the Company’s risk management. The objectives, policies and processes

for managing these risks are set out below and they have not changed from the previous accounting period.

(i) Market risk

The fair value or future cash fl ows of a fi nancial instrument held by the Company may fl uctuate due to changes in market prices.

This market risk comprises currency risk (see note 18(ii)), interest rate risk (see note 18(iii)) and market price risk (see note 18(iv)).

The Board of Directors reviews and agrees policies for managing these risks. The Investment Manager assesses the exposure to

market risk when making each investment decision, and monitors the overall level of market risk on the whole of the investment

portfolio on an ongoing basis.




(ii) Currency risk

As the Company’s objective is to achieve capital growth for shareholders through investment mainly in smaller UK quoted

companies, substantially all of the Company’s assets are sterling denominated. From time to time the Company may hold an

overseas line of stock to the extent that the underlying investment has exposure to the UK market, and consequently at any time

a very small proportion of the Company’s assets, liabilities and income may be denominated in currencies other than sterling

(the Company’s functional currency and that in which it reports its results).

There were no non-sterling denominated investments held within the Company’s portfolio at 30 November 2013 and

consequently no currency exposure in this respect.

(iii) Interest rate risk

Interest rate risk movements may affect:

the level of income receivable from fl oating rate securities and cash at bank and on deposit; and

the interest payable on the Company’s variable rate borrowings.

The effect of interest rate changes on the earnings of the companies held within the portfolio may have a signifi cant impact on

the valuation of the Company’s investments. Movements in interest rates will also have an impact on the valuation of the CFD

derivative contracts, see below for further details.

Management of the risk

The possible effects on fair value and cash fl ows that could arise as a result of changes in interest rates are taken into account

when making investment decisions and borrowing. The Company, generally, does not hold signifi cant cash balances, with short

term borrowings being used when required. The Company fi nances part of it activities through collateral pledged with the

CFD counterparties which is monitored by the Investment Manager.

Interest rate exposure

The exposure at 30 November 2013 of fi nancial assets and fi nancial liabilities, all due within one year, to interest rate risk is

shown in the table below within reference to:

fl oating interest rates – when the interest rate is due to be re-set; and

fi xed interest rates – when the fi nancial instrument is due for repayment.

2013

due within

one year

£’000

2012

due within

one year

£’000

Exposure to fl oating interest rates:

CFD derivative contracts

– Notional long positions 41,057 28,002

– Notional short positions (27,021) (18,875)

BlackRock’s Institutional Cash Fund 2,923 719

Cash at bank 1,098 390

Collateral pledged in respect of CFDs (829) (302)

The Company is exposed to interest rate risk on positions within the CFD portfolio. The Company incurs a charge based on LIBOR

plus 25 basis points for long positions and receives a benefi t based on LIBOR minus 35 basis points for short positions. Notional

interest is determined on a gross basis; i.e. for this purpose long and short positions or exposures within the master agreement

are not netted. Further details of notional interest arising in the year in relation to the CFD portfolio are given in note 13 on

page 49.

The Company has additional exposure to interest rate risk on its holding in the BlackRock Institutional Cash Fund (the

‘Institutional Cash Fund’). Interest received on this holding in the year was on average 0.31%. (2012: 0.50%).


18. FINANCIAL RISK MANAGEMENT POLICIES AND PROCEDURES continued

(iii) Interest rate risk continued

Interest received on cash balances, or paid on bank overdrafts respectively, was approximately 0.15% and 1.70% per annum.

(2012: 0.15% and 2.2%).

The Company has exposure to interest rate risk in respect of cash holdings attributable to the portfolio.

The above year end amounts are not representative of the exposure to interest rates during the year, as the level of exposure

changes as investments are made.

Interest rate sensitivity

Should a 0.5% interest rate variance occur the impact of this on the Company would be approximately £20,000 (2012: £5,500).

Therefore, on this basis the Company is not materially exposed to changes in interest rates.

(iv) Market price risk

Market price risks (i.e. changes in market prices other than those arising from interest rate risk or currency risk) may affect the

value of investments. The Company’s equity investments are susceptible to market price risk arising from uncertainties about

future prices of the investments. In addition the Company has exposure to market price risk relating to the positions within the

CFD portfolio.


The Board manages the risks inherent in the investment portfolio by ensuring full and timely access to relevant information from

the Investment Manager. The Board meets regularly and at each meeting reviews investment performance. The Board monitors

the Investment Manager’s compliance with the Company’s objectives and is directly responsible for investment strategy.

The Company’s exposure to other changes in market prices at 30 November 2013 on its equity investments, excluding its holding

in the cash fund, was £244,204,000 (2012: £173,214,000). The Company’s gross exposure to these price changes through its CFD

portfolio is £68,078,000 (2012: £46,877,000) (see note 18(xi)).

Concentration of exposure to market price risks

An analysis of the Company’s fi fty largest investments, and sector analysis, is shown on pages 11 to 13. At 30 November 2013,

this shows the majority of the investments’ value is in UK companies. Accordingly, there is concentration of exposure to the UK,

although it is recognised that an investment’s country of domicile or of listing does not necessarily equate to its exposure to the

economic conditions in that country.

Market price risk sensitivity

The sensitivity of the return after taxation for the year and the equity to an increase or decrease of 10% in the fair values of the

Company’s net assets is given below. This level of change is considered to be reasonably possible based on observation of current

market conditions. The sensitivity analysis is based on the Company’s equities and equity exposure through CFDs at each

reporting date, with all other variables held constant.

The impact of a 10% movement in the value of investments on the Company’s accounts is given in the table below:

2013 10% increase in value of investments 10% decrease in value of investments

Price sensitivity analysis

Capital

£’000

Revenue

£’000

Total

£’000

Capital

£’000

Revenue

£’000

Total

£’000

Equity portfolio 24,292 (43) 24,249 (24,292) 43 (24,249)

CFD portfolio 1,397 (3) 1,394 (1,397) 3 (1,394)

Total 25,689 (46) 25,643 (25,689) 46 (25,643)

2012 10% increase in value of investments 10% decrease in value of investments

Price sensitivity analysis

Capital

£’000

Revenue

£’000

Total

£’000

Capital

£’000

Revenue

£’000

Total

£’000

Equity portfolio 17,230 (30) 17,200 (17,230) 30 (17,200)

CFD portfolio 907 (2) 905 (907) 2 (905)

Total 18,137 (32) 18,105 (18,137) 32 (18,105)




(v) Liquidity risk

This is the risk that the Company will encounter diffi culty in meeting obligations associated with fi nancial liabilities.


The Company maintains a diversifi ed portfolio consisting almost entirely of securities which are listed on the Offi cial List and

admitted to trading on the main market of the London Stock Exchange, or are traded on the AIM. In general the Company does

not have holdings that are unduly large in individual securities. Nevertheless, the Company, by the very nature of its investment

objective, invests in smaller companies, and liquidity in such securities can, from time to time, become constrained, making

the investment diffi cult to realise at, or near, published market prices. The Investment Manager has regard to the liquidity of

individual securities when making investment decisions and the Company manages its liquid resources to ensure that suffi cient

cash is available to meet its contractual commitments.

The Board of Directors gives guidance to the Investment Manager as to the maximum amount of the Company’s resources that

should be invested in any one company. The policy is that the Company should remain fully invested in normal market conditions

and that short term borrowings be used to fund short term cash requirements.

Liquidity risk exposure

The remaining contractual maturities of the fi nancial liabilities at 30 November based on the earliest date on which payment can

be required were as follows:

2013

less than

three months

£’000

2012

less than

three months

£’000

Collateral pledged in respect of contracts for difference 829 302

Amounts payable in respect of contracts for differences 1,035 –

Other payables 7,355 2,543

The Directors are satisfi ed that the liquidity of the Company’s investment portfolio is suffi cient to meet its fi nancial liabilities.

(vi) Credit risk

The failure of the counterparty to a transaction to discharge its obligations under the transaction could result in the Company

suffering a loss.


The risk is managed as follows:

The Company only buys and sells through brokers which have been approved by the Investment Manager as an acceptable

counterparty. The creditworthiness of counterparties is reviewed by BlackRock’s Credit and Control Committee prior to

trading, and is monitored on an ongoing basis. Limits are set on the amount that may be due from any one broker.

The credit ratings of banks that the Company holds cash with are reviewed and monitored regularly by BlackRock’s

independent risk management team. Levels of cash on deposit are reviewed daily and any signifi cant amounts of surplus

cash are invested in stable NAV money market funds which aim to preserve capital and provide liquidity and yield.

Cash balances with the custodian are monitored daily and any signifi cant balances are invested into stable NAV money

market funds.

The credit position with the Company’s prime broker is reviewed daily by BlackRock and their independent risk

management team.

With the proposed investment strategy for the Company there is limited leverage (30% of gross assets of the long only

portfolio) and no intended physical stock loan.


18. FINANCIAL RISK MANAGEMENT POLICIES AND PROCEDURES continued

(vi) Credit risk continued

In summary, the exposure to credit risk at 30 November was:

2013 2012

£’000 Counterparty Credit rating £’000

Cash at bank 1,098 BNYM AA- (Standard & Poors) 390

Institutional Cash Fund 2,923 BlackRock AAA (Standard & Poors) 719

CFD portfolio 736

Deutsche Bank/Crédit

Suisse/ JPMorgan/ BMLI A (Standard & Poors) 377

Other receivables 1,012 Various Uninvested 590

5,769 2,076

The master agreement covering the CFD portfolio offers the right of set-off on a termination event with individual counterparties.

(vii) Fair values of fi nancial assets and fi nancial liabilities

Investments are held at fair value through profi t or loss. All current assets and liabilities are held in the Statement of Financial

Position at a reasonable approximation of fair value.

(viii) Fair value hierarchy disclosures

The table below sets out fair value measurements using the IFRS 7 fair value hierarchy.

Financial assets at fair value through profi t or loss

at 30 November 2013

Level 1

£’000

Level 2

£’000

Level 3

£’000

Total

£’000

Equity investments (including Institutional Cash Fund) 247,127 – – 247,127

Contracts for difference – revaluation losses – (1,035) – (1,035)

Contracts for difference – revaluation gains – 736 – 736

Total 247,127 (299) – 246,828

Financial assets at fair value through profi t or loss

at 30 November 2012

Level 1

£’000

Level 2

£’000

Level 3

£’000

Total

£’000

Equity investments (including Institutional Cash Fund) 175,555 – – 175,555

Contracts for difference – revaluation gains – 377 – 377

Total 175,555 377 – 175,932

(ix) Fair value hierarchy disclosures

Categorisation within the hierarchy has been determined on the basis of the lowest level input that is signifi cant to the fair value

measurement of the relevant asset as follows:

Level 1 – valued using quoted prices in active markets for identical assets.

Level 2 – valued by reference to valuation techniques using observable inputs other than quoted prices included in Level 1.

Level 3 – valued by reference to valuation techniques using inputs that are not based on observable market data.

The valuation techniques used by the Company are explained in the accounting policies note on page 43.




(x) Capital management policies and procedures

The Company’s capital management objectives are to:

to ensure it will be able to continue as a going concern; and

secure long term capital growth and an attractive total return primarily through investing in quoted securities in the UK,

as well as through investment in a portfolio of contracts for differences and/or comparable equity derivatives.

This is to be achieved through an appropriate balance of equity capital and gearing. The policy is that any leverage arising

through the Company’s CFD portfolio, should not exceed 30% of gross assets held in long only portfolio. Additionally net cash

borrowings should not exceed 20% of gross assets.

The Company’s total capital at 30 November 2013 was £240,754,000 (2012: £174,067,000).

(xi) Risks associated with derivatives

The Company may utilise both exchange traded and over-the-counter derivatives, including, but not limited to, CFDs, as part of

its investment policy. These instruments can be highly volatile and potentially expose investors to a higher risk of loss. The low

initial margin deposits normally required to establish a position in such instruments permit a high degree of leverage. As a result,

depending on the type of instrument, a relatively small movement in the price of a contract may result in a profi t or loss which is

high in proportion to the value of the net exposures in the underlying CFD positions. In addition, daily limits on price fl uctuations

and speculative position limits on exchanges may prevent prompt liquidation of positions resulting in potentially greater losses.

The Company’s current investment strategy specifi cally utilises CFDs. The Company limits the gross market exposure, and

therefore the leverage, of this strategy to approximately 30% of the Company’s long portfolio value. The CFDs utilised have a

linear performance to referenced stocks quoted on exchanges and therefore have a volatility profi le similar to the

underlying stocks.


Economic exposure through derivatives is restricted to approximately 30% of the gross asset value of the Company’s long only

portfolio. The gross value represents the aggregate of the long and short exposures without netting and so within this limit

market exposure may be signifi cantly less.

Exposures are monitored daily by BlackRock, and its independent risk management team. The Company’s Board also review

exposures regularly.

The CFD positions are diversifi ed, comprising 76 positions (2012: 78) as at 30 November 2013.

The gross underlying notional exposures within the CFD portfolio at 30 November 2013 were:

2013

£’000

% of long

only equity

portfolio

2012

£’000

% of long

only equity

portfolio

CFDs – gross exposure relating to short positions 27,021 10.9 18,875 10.8

CFDs – gross exposure relating to long positions 41,057 16.6 28,002 16.1

Gross economic exposure subject to a 30% restriction (see above) 68,078 27.5 46,877 26.9

Net market exposure 14,036 5.7 9,127 5.3

The economic exposures within the CFD portfolio can be closed out at any time by the Company with immediate effect.

Details of securities and exposures to market risk, interest rate risk and credit risk implicit within the CFD portfolio are given in

note 18(i), (iii) and (vi).


19. TRANSACTION WITH THE INVESTMENT MANAGERThe related party transaction with BlackRock Investment Management (UK) Limited is set out in the Directors’ Report on pages

17 and 18. The investment management fee for the year charged by BlackRock was £1,864,000 (2012: £1,476,000). In addition a

performance fee was payable of £3,939,000 (2012: £1,261,000). At the year end, an amount of £4,944,000 was outstanding in

respect of these fees (2012: £2,007,000).

In addition to the above services, with effect from 1 November 2013, BlackRock has provided the Company with marketing

services. The total fees paid or payable for these services for the year ended 30 November 2013 amounted to £16, 000 including

VAT (2012: nil) of which £16, 000 (2012: nil) was outstanding at 30 November 2013.

20. RELATED PARTY DISCLOSUREThe related party transactions with Directors are set out in notes 5 and 6 and in the Directors’ Remuneration Report on pages

23 to 26. At 30 November 2013, an amount of £10,417 (2012: £9,667) was payable to Directors in respect of their annual fees.

The Company had an investment in BlackRock’s Institutional Cash Fund of £2,923,000 at 30 November 2013 (2012: £719,000).





Shareholder information

FINANCIAL CALENDARThe timing of the announcement and publication of the

Company’s results may normally be expected in the months

shown below:

February

Annual results announced and annual report and fi nancial

statements published.

March

Annual General Meeting.

April

Final dividend paid.

July

Interim fi gures announced and half yearly fi nancial

report published.

September

Interim dividend paid.

DIVIDENDThe proposed fi nal dividend in respect of the year ended

30 November 2013 is 3.25 pence per share.

Ex-dividend date (shares transferred

without the dividend) 19 February 2014

Record date (last date for registering

transfers to receive the dividend) 21 February 2014

Dividend payment date 4 April 2014

PAYMENT OF DIVIDENDSCash dividends will be sent by cheque to the fi rst-named

shareholder at their registered address. Dividends may also be

paid direct into a shareholder’s bank account via BACSTEL-IP

(Bankers’ Automated Clearing Service – Telecom Internet

Protocol). This may be arranged by contacting the Company’s

registrar, Computershare Investor Services PLC, through their

secure website investorcentre.co.uk, on 0870 707 4016 or by

completing the Mandate Instructions section on the reverse of

your dividend counterfoil and sending this to the Company’s

registrar, Computershare. Tax vouchers will be sent to

shareholders at their registered address, unless other

instructions have been given, to arrive on the payment date.

DIVIDEND REINVESTMENT SCHEME (‘DRIP’)Shareholders may request that their dividends be used to

purchase further shares in the Company. Dividend reinvestment

forms may be obtained from Computershare Investor Services

PLC, through their secure website investorcentre.co.uk, or on

0870 707 4016. Shareholders who have already opted to have

their dividends reinvested do not need to reapply. The last date

for registering for this service for the forthcoming dividend is

14 March 2014.

SHARE PRICEThe Company’s mid-market ordinary share price is quoted

daily in The Financial Times and The Times under ‘Investment

Companies’ and in The Daily Telegraph under ‘Investment

Trusts’. The share price is also available on the BlackRock

website at blackrock.co.uk/thrg.

ISIN/SEDOL NUMBERSThe ISIN/SEDOL numbers and mnemonic codes for the

Company’s shares are:

Ordinary

shares

Subscription

shares

ISIN GB000891055 GB000B44STM29

SEDOL 0891055 B44STM2

Reuters Code THRG.L THGS.L

Bloomberg Code THRG:LN THGS:LN

SHARE DEALINGInvestors wishing to purchase more shares in the Company

or sell all or part of their existing holding may do so through

a stockbroker. Most banks also offer this service.

For existing shareholders the Company’s registrar, Computershare

Investor Services PLC, has both internet and telephone share

dealing services. To access the internet share dealing service,

log on to computershare.com/sharedealingcentre. The

telephone share dealing service is available on 0870 703 0084.

To use these services, you will need your shareholder reference

number, which is detailed on your certifi cate or form of proxy.

Shareholders who hold a share certifi cate which has been

issued by Capita Registrars should insert a ‘C’ before the

number quoted on the certifi cate.

Internet dealing – The fee for this service is 1% of the value of

each sale or purchase of shares (minimum £20 for nominee

trades and £30 for certifi cated trades). Stamp duty of 0.5% is

payable on purchases.

Telephone dealing – The fee for this service will be 1% of the

value of the transaction (plus £25 for nominee trades and

£35 for certifi cated trades). Stamp duty of 0.5% is payable

on purchases.

ELECTRONIC COMMUNICATIONSWe encourage you to play your part in reducing our impact on

the environment and elect to be notifi ed by email when your

shareholder communications become available online. This

means you will receive timely, cost-effective and greener

online annual reports, half yearly fi nancial reports and other

relevant documentation.



Shareholder information continued

Shareholders who opt for this service will receive an e-mail

from Computershare with a link to the relevant section of

the BlackRock website where the documents can be viewed

and downloaded.

Please submit your email address by visiting

investorcentre.co.uk/ecomms (you will need your

shareholder reference number, which is given on your

share certifi cate or tax voucher).

You will continue to receive a printed copy of these reports

if you have elected to do so. Alternatively, if you have not

submitted your email address nor have elected to receive

printed reports, we will write and let you know where you

can view these reports online.

ELECTRONIC PROXY VOTINGShareholders are able to submit their proxy votes

electronically via Computershare’s internet site at

eproxyappointment.com using a unique identifi cation PIN

which will be provided with voting instructions and the Notice

of Annual General Meeting.

CREST members who wish to appoint one or more proxies or give

an instruction through the CREST electronic proxy appointment

service may do so by using the procedures described in the

CREST manual. More details are set out in the notes on the

Form of Proxy and the Notice of Annual General Meeting.

CRESTThe Company’s shares have joined CREST, an electronic

system for uncertifi cated securities trading.

Private investors can continue to retain their share certifi cates

and remain outside the CREST system. Private investors are

able to buy and sell their holdings in the same way as they

did prior to the introduction of CREST, although there may be

differences in dealing charges.

NOMINEE CODEWhere shares are held in a nominee company name, the

Company undertakes:

to provide the nominee company with multiple copies of

shareholder communications, so long as an indication

of quantities has been provided in advance;

to allow investors holding shares through a nominee

company to attend general meetings, provided the correct

authority from the nominee company is available; and

that investors in the BlackRock Investment Trust Savings

Plan and ISA are automatically sent shareholder

communications, including details of general meetings,

together with a form of direction to facilitate voting and to

seek authority to attend.

Nominee companies are encouraged to provide the necessary

authority to underlying shareholders to attend the Company’s

general meetings.

PUBLICATION OF NAV/PORTFOLIO ANALYSISThe NAV per share of the Company is calculated daily, with

details of the Company’s investments and performance being

published monthly.

The daily NAV and monthly information are released

through the London Stock Exchange’s Regulatory News

Service and are available on the BlackRock website at

blackrock.co.uk/thrg and through the Reuters News Service

under the code ‘BLRKINDEX’, on page 8800 on Topic 3 (ICV

terminals) and under ‘BLRK’ on Bloomberg (monthly

information only).

ONLINE ACCESSOther details about the Company are also available on the

BlackRock website at blackrock.co.uk/thrg.

The fi nancial statements and other literature are published

on the BlackRock website. Visitors to the website need to be

aware that legislation in the United Kingdom governing the

preparation and dissemination of the fi nancial statements

may differ from legislation in their jurisdiction.

Shareholders can also manage their shareholding online by

using Investor Centre, Computershare’s secure website, at

investorcentre.co.uk.

To access Computershare’s website you will need your

shareholder reference number (SRN) which can be found on

paper or electronic communications you have previously

received from Computershare. Shareholders who hold a share

certifi cate which has been issued by Capita Registrars should

insert a ‘C’ before the shareholder reference number quoted on

the certifi cate.

Listed below are the most frequently used features of

the website.

Holding enquiry – view balances, values, history, payments

and reinvestments.

Payments enquiry – view your dividends and other

payment types.

Address change – change your registered address.

Bank details update – choose to receive your dividend

payment directly into your bank account instead of

by cheque.

e-Comms sign-up – choose to receive email notifi cation

when your shareholder communications become available

instead of paper communications.


Outstanding payments – reissue payments using the

online replacement service.

Downloadable forms – including dividend mandates,

stock transfer, dividend reinvestment and change of

address forms.

SAVINGS PLANThe Company participates in the BlackRock Investment

Trust Savings Plan, which facilitates both regular monthly

investments and occasional lump sum investments in the

Company’s ordinary shares. Shareholders who would like

information on the Savings Plan should call BlackRock free

on 0800 44 55 22.

STOCKS AND SHARES INDIVIDUAL SAVINGS ACCOUNTS (‘ISA’)ISAs are a tax-effi cient method of investment and the

Company’s shares are eligible investments within the

BlackRock Investment Trust stocks and shares Individual

Savings Account. Investors currently have an annual ISA

allowance of £11,520 and for the 2014/15 tax year investors

will have an annual allowance of £11,880. Details are available

from BlackRock by calling free on 0800 44 55 22.

SHAREHOLDER ENQUIRIESThe Company’s registrar is Computershare Investor Services

PLC. Certain details relating to your holding can be checked

through the Computershare Investor Centre website. As a

security check, specifi c information needs to be input

accurately to gain access to an individual’s account. This

includes the shareholder reference number, available from

either the share certifi cate, form of proxy or tax voucher or

other electronic communications previously received from

Computershare. Shareholders who hold a share certifi cate

which has been issued by Capita Registrars should insert a

‘C’ before the shareholder reference number quoted on

the certifi cate.

The address of the Computershare website is

investorcentre.co.uk. Alternatively please contact the registrar

on 0870 707 4016.

Changes of name or address must be notifi ed to the registrar

either through Computershare’s website, or in writing to:

Computershare Investor Services PLC, The Pavilions,

Bridgwater Road, Bristol BS99 6ZZ.

GENERAL ENQUIRIESEnquiries about the Company should be directed to:

The Secretary


12 Throgmorton Avenue

London EC2N 2DL

Telephone: 0800 44 55 22

Enquiries about the Savings Plan or ISA should be directed to:

Freepost RLTZ-KHUH-KZSB

BlackRock Investment Management (UK) Limited

PO Box 9036

Chelmsford CM99 2XD

Telephone: 0800 44 55 22



Analysis of ordinary shareholders 30 November 2013

BY TYPE OF HOLDER

Number of

shares

% of total

2013

% of total

2012

Number of

holders

% of total

2013

% of total

2012

Direct private investors 5,486,688 7.5 8.1 1,093 65.3 68.3

Banks and nominee companies 63,830,099 87.3 86.8 534 31.9 29.2

Others 3,813,539 5.2 5.1 46 2.8 2.5

73,130,326 100.0 100.0 1,673 100.0 100.0

BY SIZE OF HOLDING

Number of

shares

% of total

2013

% of total

2012

Number of

holders

% of total

2013

% of total

2012

1-10,000 4,352,580 6.0 10.2 1,307 78.1 77.7

10,001-100,000 7,257,262 9.9 6.1 278 16.6 17.5

100,001-1,000,000 27,460,043 37.5 29.7 73 4.4 3.8

1,000,001-5,000,000 27,417,855 37.5 45.2 14 0.8 0.9

Over 5,000,000 6,642,586 9.1 8.8 1 0.1 0.1

73,130,326 100.0 100.0 1,673 100.0 100.0



Management & administration

Registered Offi ce(Registered in England, No. 594634)


London EC2N 2DL

Investment ManagerBlackRock Investment Management (UK) Limited*


London EC2N 2DL

Secretary and AdministratorBlackRock Investment Management (UK) Limited*


London EC2N 2DL

Telephone: 020 7743 3000

RegistrarsComputershare Investor Services PLC*

The Pavilions

Bridgwater Road

Bristol BS99 6ZZ

Telephone: 0870 707 4016

AuditorErnst & Young LLP

1 More London Place

London SE1 2AF

Custodian and BankerBank of New York Mellon (International) Limited*

One Canada Square

London E14 5AL

StockbrokersOriel Securities*

125 Wood Street

London EC2V 7AN

SolicitorsStephenson Harwood

1 Finsbury Circus

London EC2M 7SH

Savings Plan and ISA AdministratorFreepost RLTZ – KHUH – KZSB

BlackRock Investment Management (UK) Limited*

PO Box 9036

Chelmsford CM99 2XD

Telephone: 0800 44 55 22

*Authorised and regulated by the Financial Conduct Authority.


Annual General Meeting

Notice of annual general meeting

Notice is hereby given that the fi fty seventh Annual General

Meeting of BlackRock Throgmorton Trust plc will be held at the

offi ces of BlackRock Investment Management (UK) Limited,

12 Throgmorton Avenue, London EC2N 2DL on Wednesday,

26 March 2014 at 11.00 a.m. for the purpose of considering

and, if thought fi t, passing the following resolutions (which will

be proposed in the case of resolutions 1 to 10, as ordinary

resolutions and, in the case of resolutions 11 to 13, as

special resolutions).

Resolution 2 is an advisory vote on the Directors’

Remuneration Report, excluding any content relating to the

proposed future remuneration policy as set out in the future

policy table on page 24. Resolution 3 is a new resolution

subject to a binding vote, required for the fi rst time this year as

a result of new remuneration disclosure regulations published

by the Department for Business, Innovation and Skills (BIS)

which are effective from 1 October 2013. As required under

the regulations, the Company is seeking approval in this

resolution for its remuneration policy as set out in the policy

table on page 24 of the Directors’ Remuneration Report. The

remuneration policy will take effect immediately on approval

by shareholders and will continue to apply for the next three

fi nancial years, unless amended by the Company in general

meeting at an earlier date.

ORDINARY BUSINESS1. To receive the report of the Directors and the fi nancial

statements for the year ended 30 November 2013, together

with the report of the auditor thereon.

2. To approve the Directors’ Remuneration Report for the year

ended 30 November 2013, excluding the Remuneration

Policy of the Company (as set out in the future policy table

on page 24).

3. To approve the Remuneration Policy of the Company for

the year ended 30 November 2013 as set out in the future

policy table in the Directors’ Remuneration Report on

page 24.

4. To declare a fi nal dividend of 3.25 pence per share.

5. To elect Mr Greenlees as a Director.

6. To re-elect Mr Beart as a Director.

7. To re-elect Mr Stobart as a Director.

8. To reappoint Ernst & Young LLP as auditor to the Company.

9. To authorise the Directors to determine the

auditor’s remuneration.

SPECIAL BUSINESSTo consider and, if thought fi t, pass the following resolution

as ordinary resolution:

10. That, in substitution for all existing authorities, the

Directors of the Company be and they are hereby generally

and unconditionally authorised pursuant to section 551

of the Companies Act 2006 (the ‘Act’), to exercise all the

powers of the Company to allot shares in the Company and

to grant rights to subscribe for or to convert any security

into shares in the Company (‘Securities’) up to an aggregate

nominal amount of £182,825, (being 5% of the aggregate

nominal amount of the issued share capital excluding

treasury shares of the Company at the date of this notice)

provided that this authority shall expire at the conclusion

of the next Annual General Meeting of the Company to be

held in 2015 but so that the Company may, before such

expiry, make any offer or agreement which would or might

require relevant securities to be allotted pursuant to any

such offer or agreement as if the authority hereby

conferred had not expired.

To consider and, if thought fi t, pass the following resolutions

as special resolutions:

11. That, in substitution for all existing authorities and subject

to the passing of resolution 10 above, the Directors of

the Company be and are hereby empowered pursuant to

sections 570 and 573 of the Companies Act 2006 (the ‘Act’)

to allot equity securities (as defi ned in section 560 of the

Act), including the grant of rights to subscribe for or to

convert securities into ordinary shares of the Company,

and to sell equity securities held by the Company as

treasury shares (as defi ned in section 724 of the Act) for

cash pursuant to the authority granted by resolution 10

above, as if section 561(1) of the Act did not apply to any

such allotments and sales of equity securities, provided

this authority:

(a) shall expire at the conclusion of the next Annual

General Meeting of the Company to be held in 2015,

except that the Company may before such expiry make

offers or agreements which would or might require

equity securities to be allotted or sold after such expiry

and notwithstanding such expiry the Directors may

allot and sell equity securities in pursuance of such

offers or agreements;

(b) shall be limited to allotment of equity securities and/or

sale of equity securities held in treasury for cash up

to an aggregate nominal amount of £182,825,

(representing 5% of the aggregate nominal amount of

the issued share capital, excluding treasury shares of

the Company at the date of this notice); and


(c) in the case of the allotment or sale of ordinary shares,

at a price of not less than the fully diluted net asset

value per share as close as practicable to the allotment

or sale.

12. That, in substitution for the Company’s existing authority

to make market purchases of ordinary shares of 5p in the

Company (‘ordinary shares’), the Company be and it is

hereby authorised in accordance with section 701 of the

Companies Act 2006 (the ‘Act’) to make market purchases

of ordinary shares (within the meaning of section 693 of

the Act), provided that:

(a) the maximum number of ordinary shares hereby

authorised to be purchased is 10,962,235, (being

14.99% of the Company’s issued ordinary share capital,

excluding treasury shares at the date of this notice);

(b) the minimum price (exclusive of expenses) which may

be paid for an ordinary share shall be 5p;

(c) the maximum price (exclusive of expenses) which may

be paid for a share shall be the higher of: (i) 5% above

the average of the market values of the ordinary shares

of that class for the fi ve business days immediately

preceding the date of purchase as derived from the

Daily Offi cial List of the London Stock Exchange; and

(ii) the higher of the price quoted for (a) the last

independent trade of; and (b) the highest current

independent bid for, any number of ordinary shares

on the trading venue where the purchase is carried

out; and

(d) unless renewed, the authority hereby conferred shall

expire at the conclusion of the next Annual General

Meeting of the Company to be held in 2015 save that

the Company may, prior to such expiry, enter into a

contract to purchase ordinary shares which will or

may be completed or executed wholly or partly after

such expiry.

All ordinary shares purchased pursuant to the above

authority shall be either:

(i) held, sold, transferred or otherwise dealt with as

treasury shares in accordance with the provisions

of the Act; or

(ii) cancelled immediately upon completion of

the purchase.

13. That with effect from the conclusion of the meeting the

Articles of Association produced to the meeting and

initialled by the Chairman of the meeting for the purpose of

identifi cation be adopted as the Articles of Association of

the Company in substitution for, and to the exclusion of,

the existing Articles of Association of the Company.

BY ORDER OF THE BOARDBLACKROCK INVESTMENT MANAGEMENT (UK) LIMITED 10 February 2014

Registered Offi ce:


London EC2N 2DL


Annual General Meeting

Notice of annual general meeting continued

Notes:

1. A member entitled to attend and vote at the meeting convened by the above Notice is also entitled to appoint one or more proxies to exercise

all or any of the rights of the member to attend, speak and vote in his place. A proxy need not be a member of the Company. If a member

appoints more than one proxy to attend the meeting, each proxy must be appointed to exercise the rights attached to a different share or

shares held by the member.

2. To appoint a proxy you may use the form of proxy enclosed with this annual report. To be valid, the form of proxy, together with the power of

attorney or other authority (if any) under which it is signed or notarially certifi ed or offi ce copy of the same, must be completed and returned

to the offi ce of the Company’s registrar in accordance with the instructions printed thereon as soon as possible and in any event by not later

than 11.00 a.m. on 24 March 2014. Amended instructions must also be received by the Company’s registrar by the deadline for receipt of

forms of proxy. Alternatively, you can vote or appoint a proxy electronically by visiting eproxyappointment.com. You will be asked to enter the

Control Number, the Shareholder Reference Number and PIN which are printed on the form of proxy. The latest time for the submission of

proxy votes electronically is 11.00 a.m. 24 March 2014.

3. Completion and return of the form of proxy will not prevent a member from attending the meeting and voting in person.

4. Any person receiving a copy of this Notice as a person nominated by a member to enjoy information rights under section 146 of the

Companies Act 2006 (a ‘Nominated Person’) should note that the provisions in Notes 1 and 2 above concerning the appointment of a proxy

or proxies to attend the meeting in place of a member, do not apply to a Nominated Person as only ordinary shareholders have the right to

appoint a proxy. However, a Nominated Person may have a right under an agreement between the Nominated Person and the member by

whom he or she was nominated to be appointed, or to have someone else appointed, as proxy for the meeting. If a Nominated Person has

no such proxy appointment right or does not wish to exercise it, he/she may have a right under such agreement to give instructions to the

member as to the exercise of voting rights at the meeting.

5. Nominated persons should also remember that their main point of contact in terms of their investment in the Company remains the member

who nominated the Nominated Person to enjoy the information rights (or perhaps the custodian or broker who administers the investment on

their behalf). Nominated Persons should continue to contact that member, custodian or broker (and not the Company) regarding any changes

or queries relating to the Nominated Person’s personal details and interest in the Company (including any administrative matter). The only

exception to this is where the Company expressly requests a response from the Nominated Person.

6. Pursuant to regulation 41 of the Uncertifi cated Securities Regulations 2001, only ordinary shareholders registered in the register of members

of the Company by not later than 6.00 p.m. two days prior to the time fi xed for the meeting shall be entitled to attend and vote at the meeting

in respect of the number of the ordinary shares registered in their name at such time. If the meeting is adjourned, the time by which a

person must be entered on the register of members of the Company in order to have the right to attend and vote at the adjourned meeting

is 6.00 p.m. two days prior to the time of adjournment. Changes to the register of members after the relevant times shall be disregarded in

determining the rights of any person to attend and vote at the meeting.

7. In the case of joint holders, the vote of the senior holder who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion

of the votes of the other joint holders and, for this purpose, seniority will be determined by the order in which the names stand in the register

of members of the Company in respect of the relevant joint holding.

8. Shareholders who hold their ordinary shares electronically may submit their votes through CREST, by submitting the appropriate and

authenticated CREST message so as to be received by the Company’s registrar not later than 48 hours before the start of the meeting.

Instructions on how to vote through CREST can be found by accessing the following website: euroclear.com/CREST. Shareholders are advised

that CREST and the internet are the only methods by which completed proxies can be submitted electronically.

9. If you are a CREST system user (including a CREST personal member) you can appoint one or more proxies or give an instruction to a proxy

by having an appropriate CREST message transmitted. To appoint one or more proxies or to give an instruction to a proxy (whether previously

appointed or otherwise) via the CREST system, CREST messages must be received by Computershare (ID number 3RA50) not later than

48 hours before the time appointed for holding the meeting. For this purpose, the time of receipt will be taken to be the time (as determined

by the timestamp generated by the CREST system) from which Computershare is able to retrieve the message. CREST personal members

or other CREST sponsored members should contact their CREST sponsor for assistance with appointing proxies via CREST. For further

information on CREST procedures, limitations and system timings please refer to the CREST manual. The Company may treat as invalid a

proxy appointment sent by CREST in the circumstances set out in Regulation 35(5)(a) of the Uncertifi cated Securities Regulations 2001.

10. Holders of ordinary shares through the Savings Schemes are entitled to attend and vote at the meeting if the voting instruction form, which is

enclosed with this document, is correctly completed and returned in accordance with the instructions printed thereon.

11. If the Chairman, as a result of a proxy appointments, is given discretion as to how the votes subject of those proxies are cast and voting

rights in respect of those discretionary proxies, when added to the interest in the Company’s securities already held by the Chairman, result

in the Chairman holding such number of voting rights that he has a notifi able obligation under the Disclosure and Transparency Rules, the

Chairman will make the necessary notifi cations to the Company and the Financial Conduct Authority. As a result, any member holding 3% or

more of the voting rights in the Company, who grants the Chairman a discretionary proxy in respect of some or all of those voting rights and

so would otherwise have a notifi cation obligation under the Disclosure and Transparency Rules, need not make a separate notifi cation to the

Company and Financial Conduct Authority.

12. Any questions relevant to the business of the meeting may be asked at the meeting by anyone permitted to speak at the meeting. A

shareholder may alternatively submit a question in advance by a letter addressed to the Company Secretary at the Company’s registered

offi ce. Under Section 319A of the Companies Act 2006, the Company must answer any question a shareholder asks relating to the business

being dealt with at the meeting, unless (i) answering the question would interfere unduly with the preparation for the meeting or involve the

disclosure of confi dential information; (ii) the answer had already been given on a website in the form of an answer to a question; or (iii) it is

undesirable in the interests of the Company or the good order of the meeting that the question be answered.

13. Any corporation which is a member can appoint one or more corporate representatives who may exercise on its behalf all of its powers as

a member provided that, if it is appointing more than one corporate representative, it does not do so in relation to the same shares. It is

therefore no longer necessary to nominate a designated corporate representative.


14. Under section 527 of the Companies Act 2006, members meeting the threshold requirements set out in that section have the right to require

the Company to publish on a website a statement setting out any matter relating to:

(i) the audit of the Company’s accounts (including the auditor’s report and the conduct of the audit) that are to be laid before the meeting; or

(ii) any circumstance connected with an auditor of the Company ceasing to hold offi ce since the previous meeting at which annual accounts

and reports were laid in accordance with section 437 of the Companies Act 2006.

The Company may not require the members requesting any such website publication to pay its expenses in complying with sections 527 or

528 of the Companies Act 2006. Where the Company is required to place a statement on a website under section 527 of the Companies Act

2006, it must forward the statement to the Company’s auditors not later than the time when it makes the statement available on the website.

The business which may be dealt with at the meeting includes any statement that the Company has been required under section 527 of the

Companies Act 2006 to publish on a website.

15. Under sections 338 and 338A of the Companies Act 2006, members meeting the threshold requirements in those sections have the right to

require the Company:

(i) to give, to members of the Company entitled to receive notice of the meeting, notice of a resolution which may properly be moved and is

intended to be moved at the meeting; and/or

(ii) to include in the business to be dealt with at the meeting any matter (other than a proposed resolution) which may be properly included in

the business.

A resolution may properly be moved or a matter may properly be included in the business unless:

(a) (in the case of a resolution only) it would, if passed, be ineffective (whether by reason of inconsistency with any enactment or the

Company’s constitution or otherwise);

(b) it is defamatory of any person; or

(c) it is frivolous or vexatious.

Such a request may be in hard copy form or in electronic form, and must identify the resolution of which notice is to be given or the matter to

be included in the business, must be authorised by the person or persons making it, must be received by the Company not later than

18 February 2013, being the date six clear weeks before the meeting, and (in the case of a matter to be included in the business only) must be

accompanied by a statement setting out the grounds for the request.

16. As at the date of this report, the Company’s issued share capital consisted of 73,130,326 ordinary shares of 5p each, excluding shares held in

treasury. Each ordinary share carries the right to one vote and therefore the total voting rights in the Company as at the date of this report

are 73,130,326.

17. Further information regarding the meeting which the Company is required by section 311A of the Companies Act 2006 to publish on a website

in advance of the meeting, can be accessed at blackrock.co.uk/thrg.

18. No service contracts exist between the Company and any of the Directors, who hold offi ce in accordance with letters of appointment and the

Articles of Association.


Glossary

NET ASSET VALUE PER SHARE (‘NAV’)This is the value of the Company’s assets attributable to one

ordinary share. It is calculated by dividing ‘total equity’ by the

total number of ordinary shares in issue (excluding treasury

shares). For example, as at 30 November 2013, total equity

was £240,754,000 and there were 73,130,326 ordinary shares

in issue (excluding treasury shares); the NAV was therefore

329.21p per ordinary share.

Total equity is calculated by deducting from the Company’s

total assets, its current and long term liabilities and provision

for liabilities and charges.

DISCOUNTInvestment trust shares frequently trade at a discount to NAV.

This occurs when the share price (based on the mid-market

share price) is less than the NAV. In this circumstance, the

price that an investor pays or receives for a share would be

less than the value attributable to it by reference to the

underlying assets. The discount is the difference between the

share price and the NAV, expressed as a percentage of the

NAV. For example, if the share price was 90p and the NAV

100p, the discount would be 10%.

PREMIUMA premium occurs when the share price (based on the

mid-market share price) is more than the NAV and investors

would therefore be paying more than the value attributable to

the shares by reference to the underlying assets. For example,

if the share price was 100p and the NAV 90p, the premium

would be 11.1%.

Discounts and premia are mainly the consequence of supply

and demand for the shares on the stock market.

STATEMENT OF FINANCIAL POSITION/BALANCE SHEETThe Statement of Financial Position is the primary statement

previously known as the Balance Sheet.

CONTRACTS FOR DIFFERENCE (‘CFD’)A CFD is a contract, which allows the Company to profi t from

share price movements over a defi ned period. This allows the

Company to take advantage of price movements without

owning the underlying stock.


Warning to Shareholders

SHARE FRAUD WARNINGShare fraud includes scams where investors are called out of the blue and offered shares

that often turn out to be worthless or non-existent, or an infl ated price for shares they own.

These calls come from fraudsters operating in ‘boiler rooms’ that are mostly based abroad.

While high profi ts are promised, those who buy or sell shares in this way usually lose

their money.

The Financial Conduct Authority (FCA) (formerly the Financial Services Authority (‘FSA’)) has

found most share fraud victims are experienced investors who lose an average of £20,000,

with around £200m lost in the UK each year.

PROTECT YOURSELFIf you are offered unsolicited investment advice, discounted shares, a premium price for shares

you own, or free company or research reports, you should take these steps before handing over

any money:

1. Get the name of the person and organisation contacting you.

2. Check the Financial Services Register via fca.org.uk to ensure they are authorised.

3. Use the details on the Financial Services Register to contact the fi rm.

4. Call the FCA Consumer Helpline on 0800 111 6768 if there are no contact details on the

Register or you are told they are out of date.

5. Search the FCA’s website list of unauthorised fi rms and individuals to avoid doing

business with.

6. REMEMBER: if it sounds too good to be true, it probably is!

If you use an unauthorised fi rm to buy or sell shares or other investments, you will not have

access to the Financial Ombudsman Service or Financial Services Compensation Scheme

(FSCS) if things go wrong.

REPORT A SCAMIf you are approached about a share scam you should tell the FCA using the share fraud

reporting form at fca.org.uk/consumers/scams, where you can fi nd out about the latest

investment scams. You can also call the Consumer Helpline on 0800 111 6768.

If you have already paid money to share fraudsters you should contact Action Fraud on

0300 123 2040

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000308a-CEF ANN FEB14

blackrock.co.uk/thrg

BLACKROCK

THROGMORTON

TRUST PLC

ANNUAL REPORT AND FINANCIAL STATEMENTS 30 NOVEMBER 2013

000308a-CEF IT Throgmorton R&A Cover.indd 1 05/02/2014 16:41

annual report and financial statements 30 ......trust plc annual report and financial statements 30...

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