REG-BlackRock Throg Tst: Half-year Report <Origin Href="QuoteRef">THRG.L</Origin> - Part 1
24/07/2017 07:35
BlackRock Throgmorton Trust plc
(Legal Entity Identifier: 5493003B7ETS1JEDPF59)
Information disclosed in accordance with Article 5 Transparency Directive and
DTR 4.2
Half Yearly Financial Report for period ended 31 May 2017
PERFORMANCE RECORD
Financial Highlights
Attributable to ordinary shareholders 31 May 2017 (unaudited) 30 November 2016 (audited) Change %
Assets
Net assets £381.53m £301.55m +26.5
Net asset value per share 521.71p 412.34p +26.5
– with income reinvested +28.3
Ordinary share price (mid-market) 436.00p 325.00p +34.2
– with income reinvested +36.4
Numis Smaller Companies excluding AIM (excluding Investment Companies) Index 21,545.19 18,157.95 +18.7
For the six months ended 31 May 2017 (unaudited) For the six months ended 31 May 2016 (unaudited) Change %
Revenue
Net revenue return after taxation (£'000) 3,977 2,743 +45.0
Revenue return per ordinary share 5.44p 3.75p +45.1
------ ------ ------
Dividend per ordinary share
Interim 2.00p 1.25p +60.0
====== ====== =====
CHAIRMAN’S STATEMENT
PERFORMANCE
For the six months ended 31 May 2017 the Company’s net asset value per share
(NAV) returned 28.3% compared with a return of 18.7% for the Numis Smaller
Companies excluding AIM (excluding Investment Companies) Index. The FTSE
All-Share Index returned 13.6% over the same period (all figures in sterling
terms with income reinvested). It is encouraging to see that the portfolio has
performed strongly, outperforming the benchmark index by 9.6% and generating a
return of more than twice that of the wider UK stock market (as measured by
the FTSE All-Share Index). Further information on portfolio activity, the
factors that contributed to performance during the period and the outlook for
the second half of the financial year are set out in the Investment
Manager’s Report.
PERFORMANCE RECORD TO 31 MAY 2017 (WITH INCOME REINVESTED)
Benchmark (with income reinvested) Share price (with income reinvested) NAV per share (with income reinvested) – undiluted
1 Year change % 23.9% 34.0% 35.1%
3 Year change % 34.6% 58.4% 63.4%
5 Year change % 106.4% 172.6% 162.8%
Since 1 July 2008 change % (1) 140.8% 288.1% 312.7%
(1) Date of BlackRock's appointment as Manager.
Since the period end and up to the close of business on 20 July 2017, the NAV
has fallen by 1.8%, and the benchmark index has fallen by 1.2%. (All figures
in sterling terms with income reinvested.)
REVENUE RETURN AND DIVIDENDS
The revenue return per share for the period amounted to 5.44 pence compared to
3.75 pence earned during the comparative period last year. This is an increase
of 45.1% and results from increases in the level of both the ordinary and
special dividends received during the period. The Board is pleased to declare
an interim dividend of 2.00 pence per share (2016: 1.25 pence per share)
payable on 23 August 2017 to shareholders on the register on 4 August 2017
(ex-dividend date is 3 August 2017).
MARKET OVERVIEW
The period under review was characterised by stronger performance with
episodes of market volatility. Sentiment in the UK has been dominated by
political uncertainty with some highly publicised political rhetoric from the
initial negotiations on the terms of the UK’s exit from the European Union
(EU). The negative effect of the uncertainty around Brexit was tempered
somewhat by the outcome of the Dutch and French elections, as victories by
both moderate candidates were well received by the market, helping to quell
some of the political risk present. It was somewhat pleasing, therefore, that
the International Monetary Fund twice revised its UK growth forecast upwards
in the period.
The Brexit process officially began on 29 March 2017 as Article 50 of the
Lisbon Treaty was triggered. The Prime Minister’s intention to do so had
been well communicated and the market’s reaction was somewhat muted. On 18
April the Government called a snap general election to be held on 8 June and
Sterling rallied against both the US Dollar and the Euro. It was anticipated
that a Conservative victory with an increased majority would strengthen the
UK’s negotiating position with the EU. However, the outcome of the general
election was not as expected, with no party commanding an outright majority
and resulting in a hung parliament. Sterling fell on this result but has since
stabilised. The Conservatives remain as the largest party and have since
formed a minority government with the support of the Democratic Unionist Party
(DUP) enacted through a confidence and supply agreement. The agreement reached
with the DUP is likely to strengthen the UK Government’s ability to
negotiate effectively with the EU on the terms of the UK’s exit and which
markets may view as a positive development under the circumstances.
In the US, President Trump’s victory in the US Presidential elections saw
markets rally in anticipation of promised protectionist policies, business
friendly corporation tax cuts, streamlined regulation and increased
infrastructure investment. The Federal Reserve increased interest rates in
March and June of this year following improving economic data. However, more
recent data has been mixed and the ability of the Trump administration to
implement their policies has come into question with certain policies only
partially delivered and others abandoned entirely.
INVESTMENT MANAGEMENT ARRANGEMENTS
As I mentioned in the Company’s Annual Report for the year to 30 November
2016, although performance has been strong in both relative and absolute terms
– as set out in the performance chart above – the Company’s shares have
persistently traded at a significant discount to NAV. Although this discount
has not been out of line with the overall sector, the Board felt it important
to consult with major shareholders and the Company’s advisors on this issue.
As announced to the market on 24 July 2017, following shareholder consultation
and negotiation with the Manager, the Board has agreed a revised management
fee structure. I am pleased to report that with effect from 1 August 2017, the
annual management fee will be calculated at 0.35% of month end gross assets
(previously 0.70% of month end gross assets), representing a 50% reduction.
Effective 1 December 2017, the performance fee will increase from 10% to 15%
of any NAV total return outperformance over the benchmark and will be
calculated on a 2 year rolling average basis which will be applied to average
gross assets over two years. With effect from 1 December 2017, the total
management and performance fees paid to BlackRock will be subject to a maximum
aggregate cap of 1.25% of average gross assets over a two year period. The
Board believes that the new fee structure is appropriately aligned to the
Company’s activities, investment objective and shareholder interests. The
low base fee minimises the costs borne by shareholders whilst the performance
fee is designed to reward the Manager at a level acceptable to shareholders
for the generation of superior performance. The Board believes that these
changes will result in improved performance, further enhancing shareholder
return, increasing the Company’s attractiveness and potentially narrowing
the discount at which the Company’s shares trade in the market, thereby
increasing liquidity for shareholders. Further information on management and
performance fees during the period can be found in note 4.
In addition, the Board has amended the investment parameters within which the
Manager must operate, increasing the existing maximum permitted exposure to
equities or collective investment vehicles traded on the AIM market of the
London Stock Exchange from 25% of gross assets (at the time of acquisition) to
35% of gross assets (at the time of acquisition). The rationale for this
change is that we increasingly find that many more companies are choosing to
remain on the AIM Market rather than seeking a Main Market listing. The change
is being made to afford the investment managers greater flexibility to
continue to hold strongly performing AIM stocks where it would otherwise be
necessary to divest when the aggregate portfolio exposure limit of 25% was
reached.
The Board intends to continue its review of the Company’s investment
strategy and this may result in a further increase to the AIM exposure limit.
If deemed to be appropriate, this change would be undertaken in tandem with a
change to the Company’s benchmark index, the Numis Smaller Companies ex AIM
(excluding Investment Companies) Index to the Numis Smaller Companies plus AIM
(excluding Investment Companies) Index to reflect the portfolio’s greater
potential AIM market exposure. The changes being considered would, in
aggregate, require shareholder approval in a general meeting. Therefore,
should the Board reach a decision on these matters, suitable resolutions would
be put to shareholders seeking your approval at the Company’s Annual General
Meeting (AGM) which is expected to be held in March 2018.
The changes being contemplated would be made with the intention of optimising
investment performance and would not represent a significant shift in the
Company’s investment approach, with the focus remaining on providing
shareholders with capital growth and an attractive total return by investing
in UK smaller and mid-capitalisation companies.
BOARD COMPOSITION
As I mentioned in my Chairman’s Statement to the Annual Report, I have been
Chairman of the Company since March 2012, following my appointment to the
Board in March 2007. I believe it is now the right time to step down both as
Chairman of the Board and as a Director. I will therefore retire from the
Board with effect from 24 July 2017. As previously announced, as part of the
Board’s succession plans, Christopher Samuel will succeed me as Chairman of
the Board with effect from the date of my retirement. Mr Samuel has extensive
investment company experience and financial sector expertise and I have no
doubt that he will provide strong and diligent leadership of this Company,
ensuring that it continues to achieve its objective of providing shareholders
with capital growth and an attractive total return.
OUTLOOK
Overall, the outlook for the UK and global economy appears to be generally
positive, with improving economic data generated by the UK, Europe and the US.
However, there are still a number of significant risks and headwinds present,
not least the effect of US President Trump’s protectionist policies and the
impact of sustained uncertainty around Brexit negotiations. In the UK,
economists have forecast rising inflation and a fall in consumer spending as
the effect of Sterling’s depreciation and the rise in import costs are
passed on to the UK consumer through price increases. With UK inflation now
above the Bank of England’s 2% target, a rise in interest rates this year
may be seen, although any increase is expected to be gradual to avoid
unsettling markets.
Against this backdrop, our investment managers will continue to seek to
identify opportunities to add to existing holdings or to introduce new stocks
into the portfolio which appear well positioned to benefit as the economy
adjusts. The investment strategy is unchanged, focusing on companies with
robust business models, strong cash flows and favourable industry
characteristics, led by management teams capable of ‘self-help’. The
investment process remains focused on bottom-up stock selection, assembling a
portfolio of individual companies which, taken as a whole, should provide
capital growth and an attractive total return, regardless of short term
economic fluctuations. Your Board is fully supportive of this approach.
Crispin Latymer
Chairman
24 July 2017
INTERIM MANAGEMENT REPORT AND RESPONSIBILITY STATEMENT
The Chairman’s Statement and the Investment Manager’s report give details
of the important events which have occurred during the period and their impact
on the financial statements.
PRINCIPAL RISKS AND UNCERTAINTIES
The principal risks faced by the Company can be divided into various areas as
follows:
*
Performance;
*
Market;
*
Income/dividend;
*
Financial;
*
Operational; and
*
Regulatory
The Board reported on the principal risks and uncertainties faced by the
Company in the Annual Report and Financial Statements for the year ended 30
November 2016. A detailed explanation can be found in the Strategic Report on
pages 11 to 14 and in note 17 on pages 60 to 69 of the Annual Report and
Financial Statements which are available on the website maintained by
BlackRock at blackrock.co.uk/thrg.
In the view of the Board, there have been no changes to the fundamental nature
of the principal risks and uncertainties since the previous report and these
are equally applicable to the remaining six months of the financial year as
they were to the six months under review.
RELATED PARTY DISCLOSURE AND TRANSACTIONS WITH THE INVESTMENT MANAGER
BlackRock Fund Managers Limited (BFM) was appointed as the Company’s AIFM
with effect from 2 July 2014. BFM has (with the Company’s consent) delegated
certain portfolio and risk management services, and other ancillary services,
to BlackRock Investment Management (UK) Limited (BIM (UK)). Both BFM and BIM
(UK) are regarded as related parties under the Listing Rules. Details of the
fees payable are set out in note 4 and note 10.
The related party transactions with the Directors are set out in note 11.
GOING CONCERN
The Directors are satisfied that the Company has adequate resources to
continue in operational existence for the foreseeable future (being a period
of at least 12 months from the date that this half yearly financial report is
approved) and is financially sound. For this reason, they continue to adopt
the going concern basis in preparing the financial statements. The Company has
a portfolio of investments which is considered to be readily realisable and is
able to meet all of its liabilities from its assets and the income generated
from these assets. Ongoing charges (excluding performance fee and finance
costs) for the year ended 30 November 2016 were approximately 1.1% of net
assets.
DIRECTORS’ RESPONSIBILITY STATEMENT
The Disclosure and Transparency Rules (DTR) of the UK Listing Authority
require the Directors to confirm their responsibilities in relation to the
preparation and publication of the Interim Management Report and Financial
Statements.
The Directors confirm to the best of their knowledge that:
*
the condensed set of financial statements contained within the half yearly
financial report has been prepared in accordance with International Accounting
Standard 34 ‘Interim Financial Reporting’; and
*
the Interim Management Report, together with the Chairman’s Statement and
Investment Manager’s report, include a fair review of the information
required by 4.2.7R and 4.2.8R of the FCA’s Disclosure and Transparency
Rules.
The half yearly financial report has been reviewed by the Company’s Auditor.
The half yearly financial report was approved by the Board on 24 July 2017 and
the above responsibility statement was signed on its behalf by the Chairman.
Crispin Latymer
For and on behalf of the Board
24 July 2017
INVESTMENT MANAGER’S REPORT
for the six months ended 31 May 2017
MARKET REVIEW AND OVERALL INVESTMENT PERFORMANCE
The first half of our financial year corresponded to a period of strong
markets. Markets performed well despite numerous political uncertainties
including tensions involving North Korea, the French Presidential election and
at the end of the period, the calling of a surprise general election in the
UK. Global GDP growth has been firm with notable signs of improvement in the
EU, although UK GDP growth slowed in the first quarter.
PERFORMANCE REVIEW
The Company’s NAV per share has performed well in the first six months of
the financial year, increasing by 28.3% to 521.71p on a total return basis.
This compares to an increase in the benchmark of 18.7% and the FTSE 100 of
13.1%.
Both the long only equity and the long/short portfolios contributed positively
during the period. The long/short book contributed 3.1% to NAV.
Starting with the long/short portfolio, it was encouraging to see that despite
the strong market return which acted as a headwind for the short book, one of
the top three positive contributors to the performance of the total Company
return was from one of our short positions where a restructuring resulted in a
significant writedown of the company’s assets.
Other notable contributors in the long/short portfolio included Melrose
Industries and JD Sports. Melrose has demonstrated strong progress in profit
growth as the timing and magnitude of improvements at Nortek, its recent
acquisition, continue ahead of the original plan. JD Sports delivered
excellent full year results with earnings per share up 55%, helped by strong
like-for-like sales growth in the UK. European development accelerated with 54
additional JD Fascia stores opened and the first stores opened in Asia. JD
Sports operates with net cash and continues to look well placed.
Turning to the long-only equity portfolio, the largest positive contributors
to performance were our holdings in Warpaint, Morgan Sindall, Fever-Tree and
Dechra Pharmaceuticals. Warpaint reported a 24% increase in 2016 earnings and
announced a maiden final dividend of 1.5p and we believe the outlook for the
company remains good. The shares have performed well since IPO and the outlook
for the company remains strong. Morgan Sindall’s recent AGM statement showed
continued strong trading across the group resulting in further broker upgrades
while Fever-Tree continues to grow strongly, reporting 73% organic revenue
growth in 2016. Dechra Pharmaceuticals’ interim results for the 6 months to
December came in ahead of expectations, with the integration of recent
acquisitions supplementing strong revenue growth from existing operations.
Our holding in plastic packaging engineer RPC was the largest detractor during
the period. RPC fell as the market grew concerned around the company’s
acquisition strategy following the announced acquisition of Letica for $490m
funded by a 1 for 4 rights issue. RPC’s management have an excellent track
record and remain ambitious.
ACTIVITY
Within the long only equity portfolio we have been increasing the
concentration of the portfolio by adding to our highest conviction positions
and reducing the total number of holdings.
We sold our holding in Hansteen after it announced the sale of its Continental
European operations and the holding in Topps Tiles which has seen weakening
like-for-like sales since the EU referendum.
We have added positions in a number of best in class mid-cap companies, which
the Company has held in the past including Berkeley Group, Derwent London,
Bellway and Rightmove.
We purchased a new holding in Countryside Properties. Countryside builds
houses both on land owned or controlled by itself, and also on land owned by
public bodies including local authorities. The latter approach avoids the need
to buy land in these situations and helps Countryside generate good returns on
investment on such long term developments, and also provides visibility of
revenues. We believe the Company looks set for good earnings growth.
We continue to find opportunities in initial public offerings, and recently
took part in the IPOs of Medica, UP Global Sourcing and Xafinity. Medica is a
leading independent UK provider of radiology reporting delivering more than
1.3 million reports per annum, mainly to the NHS. UP Global Sourcing is a
leading product development, sourcing and merchandising company owning brands
such as Salter, Russell Hobbs, Beldray and Constellation. Xafinity is a UK
specialist in pensions actuarial, consulting and administration, providing a
wide range of advisory and compliance services to over 550 pension scheme
clients.
We have also used strong share price performance to take some profits in a
number of long term holdings which have performed well and where valuations
are now quite high. Our view on many of these companies remains unchanged and
we would add to many of these on any setback.
Within the long/short portfolio, a few new holdings have been added from
promising IPOs, as outlined above. We’ve also been increasing our short
positions in certain UK domestics in recent months, where we see scope for
disappointment in valuation, rising risks to earnings and cashflow from
falling demand and rising costs pressures. Recent political events leading to
more uncertainty will continue to exert further pressure on some of these
business models.
PORTFOLIO POSITIONING
Relative to our benchmark index we remain overweight media companies,
housebuilders, construction companies, industrial engineers and miners. Our
media stocks include 4imprint and Next Fifteen which are both heavily US and
business to business focused. Our housebuilders include Bellway and Berkeley
Group. Within the construction sector our holdings having a more
infrastructure and public housing focus, including Morgan Sindall, Marshalls
and Costain. Our engineering holdings include Hill & Smith, Avon Rubber,
Bodycote, Gooch & Housego and Trifast. All these companies are very
internationally focused and generally supplying attractive end markets.
We remain underweight support services companies, food producers, software
companies and challenger banks.
We estimate that around half of the revenues of our portfolio originate in the
UK and these include defensive consumer companies such as CVS Group and
Cineworld. More cyclical consumer companies include JD Sports and Headlam.
Within the long/short portfolio, there has been little change to the overall
shape of the portfolio, because we believe the key shares and sectors where we
see good long investment opportunities are the same, and the short book still
targets the same areas that we see as generating unsustainable returns or
under structural or cyclical pressure. The long book remains exposed to
specific investment cases, often where companies have harnessed the power and
convenience of technology in a capital light model that disrupts mature profit
pools. Many of our short positions are within Consumer Services, either facing
structural headwinds (digital disruption, low cost or specialised formats) or
cyclical pressures (weakening consumer demand, rising costs).
OUTLOOK
Markets have remained firm based on generally good economic data around the
world, however the most recent UK GDP growth has been weaker than expected,
whilst wage growth remains lower than inflation. Political developments have
continued to be at the forefront, with the unexpected call for a snap general
election in the UK and subsequent outcome of a hung parliament.
The unexpected result in the election has undoubtedly increased the
uncertainty around Brexit negotiations and may have an impact on business
investment decisions and could damage consumer confidence.
Meanwhile, valuations are not cheap and although earnings growth has been good
for many of our holdings, and they remain well set, an increasingly large
number of companies trade on more than 20 times forecast earnings. Given this
and the potential for further political surprise or economic setback, the
share prices of UK small and mid-caps may find it difficult to make further
progress over the coming months.
Despite these concerns, we believe our portfolio is suitably diversified and
comprised of many market-leading businesses, run by strong management teams
and is therefore well placed for the current environment, although it could
suffer in any de-rating or momentum correction. We also have the additional
benefit through the long/short portfolio to short companies with weaker
fundamentals and to vary our overall exposure to the market.
Mike Prentis and Dan Whitestone
BlackRock Investment Management (UK) Limited
24 July 2017
TWENTY LARGEST INVESTMENTS
as at 31 May 2017
Company Market value £’000 % of net assets Description
CVS Group* Ordinary shares Long CFD position 10,141 2,768 3.4 Operation of veterinary surgeries
Dechra Pharmaceuticals Ordinary shares Long CFD position 9,070 1,604 2.8 Development and supply of pharmaceutical and other products focused on the veterinary market
4imprint Group Ordinary shares Long CFD position 7,835 1,484 2.4 Supply of promotional merchandise in the US
JD Sports Fashion Ordinary shares Long CFD position 6,509 2,518 2.4 Retail supply of sports and leisure footwear and clothing
Cineworld Group Ordinary shares Long CFD position 6,332 2,336 2.3 Operation of cinemas
Ascential Ordinary shares Long CFD position 4,963 2,454 1.9 Connection of businesses through international exhibitions and festivals
Hill & Smith Ordinary shares Long CFD position 6,683 719 1.9 Production of infrastructure products and supply of galvanizing services
Big Yellow Ordinary shares 7,355 1.9 Provision of self-storage services
Ibstock Ordinary shares Long CFD position 5,879 1,402 1.9 Manufacture of clay bricks and concrete products
Bellway Ordinary shares Long CFD position 6,373 756 1.9 UK housebuilding
Berkeley Group Holdings Ordinary shares Long CFD position 5,713 1,393 1.9 Development of residential property in London
Derwent London Ordinary shares Long CFD position 5,947 952 1.8 Development and ownership of office property in Central and North London
Avon Rubber Ordinary shares 6,734 1.8 Production of safety masks and dairy related products
Accesso Technology* Ordinary shares Long CFD position 5,039 1,468 1.7 Development and supply of ticketing and virtual queuing solutions
Advanced Medical Solutions* Ordinary shares Long CFD position 5,542 888 1.7 Development and manufacture of wound care and closure products
Melrose Industries Ordinary shares Long CFD position 2,330 3,944 1.7 Purchase and improvement of manufacturing businesses
Workspace Group Ordinary shares Long CFD position 5,717 542 1.6 Supply of flexible workspace to businesses in London
Johnson Service Group* Ordinary shares Long CFD position 4,227 1,966 1.6 Provision of textile related services
Bodycote Ordinary shares Long CFD position 5,579 504 1.6 Provision of thermal processing services
Marshalls Ordinary shares Long CFD position 5,084 965 1.6 Manufacture and sale of concrete stone paving and related products
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20 largest investments 151,715 39.8
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* Traded on the Alternative Investment Market (AIM) of the London Stock
Exchange.
At 31 May 2017, the Company did not hold any equity interest representing more
than 3% of each investee company’s share capital.
A list of the Company’s long only equity portfolio and long CFD portfolio is
available on the Company’s website.
ANALYSIS OF INVESTMENTS
as at 31 May 2017
Portfolio Fair value (1) £’000 Gross market exposure (2) £’000 Gross market exposure as a % of net assets
Equity investments 374,659 374,659 98.2
-------- -------- --------
Total long CFD positions 1,799 74,865 19.6
-------- -------- --------
Total short CFD positions (415) (23,250) (6.1)
-------- -------- --------
Short index futures position (209) (3,663) (1.0)
-------- -------- --------
Total Investments 375,834 422,611 110.7
-------- -------- --------
Cash and cash equivalents (3) 8,452 (38,325) (10.0)
-------- -------- --------
Other net current liabilities (2,757) (2,757) (0.7)
-------- -------- --------
Net assets 381,529 381,529 100.0
======== ======== ========
1. Fair value is determined as follows:
– Listed and AIM quoted investments are valued at bid prices where
available, otherwise at published price quotations.
– The sum of the fair value column above includes CFD and futures
contracts at their fair value, which is determined based on the difference
between the purchase price and value of the underlying shares in the contract
(in effect the unrealised gains/(losses) on the exposed positions). The cost
of purchasing the securities held through long CFD positions directly in the
market would have amounted to £73,066,000 at the time of purchase, and
subsequent market rises in prices have resulted in unrealised gains on the CFD
contracts of £1,799,000 resulting in the value of the total market exposure
to the underlying securities rising to £74,865,000 as at 31 May 2017. The
notional price of selling the securities to which exposure was gained via the
short CFD and index futures positions would have been £22,835,000 and
£3,454,000 respectively at the time of entering into the contract, and
subsequent price increases have resulted in unrealised losses on the short CFD
and index futures positions of £415,000 and £209,000 respectively and the
value of the market exposure of these investments increasing to £23,250,000
and £3,663,000 respectively at 31 May 2017. If the short positions had been
closed on 31 May 2017 this would have resulted in a loss of £624,000 for the
Company.
2. Market exposure in the case of equity investments is the same as fair
value. In the case of CFDs and futures it is the market value of the
underlying shares to which the portfolio is exposed via the contract.
3. Cash and cash equivalents include investment in BlackRock’s Institutional
Cash Series plc – Sterling Liquidity Fund of £8,370,000. The gross market
exposure column for Cash and cash equivalents has been adjusted to assume the
Company purchased direct holdings rather than exposure being gained through
CFDs or futures.
DISTRIBUTION OF INVESTMENTS
as at 31 May 2017
Sector equity portfolio % long CFD portfolio % short CFD & future portfolio % net portfolio %
Oil & Gas
Oil & Gas Producers 2.3 – (0.1) 2.2
Oil Equipment, Services & Distribution – 0.1 – 0.1
------ ------ ------ -----
2.3 0.1 (0.1) 2.3
------ ------ ------ -----
Basic Materials
Chemicals 2.2 0.4 (0.3) 2.3
Industrial Metals & Mining 0.6 – – 0.6
Mining 3.8 – – 3.8
------ ------ ------ -----
6.6 0.4 (0.3) 6.7
------ ------ ------ -----
Industrials
Construction & Materials 8.1 2.1 – 10.2
Aerospace & Defence 2.6 – – 2.6
General Industrials 2.5 0.8 – 3.3
Electronic & Electrical Equipment 1.3 0.6 (0.4) 1.5
Industrial Engineering 4.4 0.7 (0.3) 4.8
Industrial Transportation 2.0 0.2 (0.1) 2.1
Support Services 5.7 1.5 (1.0) 6.2
------ ------ ------ -----
26.6 5.9 (1.8) 30.7
------ ------ ------ -----
Consumer Goods
Beverages 0.9 0.2 (0.1) 1.0
Food Producers – – (0.1) (0.1)
Household Goods & Home Construction 8.7 1.5 – 10.2
Leisure Goods 1.0 0.2 – 1.2
Personal Goods 1.1 0.1 (0.1) 1.1
------ ------ ------ -----
11.7 2.0 (0.3) 13.4
------ ------ ------ -----
Health Care
Health Care Equipment & Services 2.0 0.2 – 2.2
Pharmaceuticals & Biotechnology 2.5 0.4 – 2.9
------ ------ ------ -----
4.5 0.6 – 5.1
------ ------ ------ -----
Consumer Services
Food & Drug Retailers – 0.4 (0.5) (0.1)
General Retailers 6.1 2.2 (0.6) 7.7
Media 8.9 2.1 (0.2) 10.8
Travel & Leisure 5.1 2.1 (0.9) 6.3
------ ------ ------ -----
20.1 6.8 (2.2) 24.7
------ ------ ------ -----
Financials
Banks – 0.2 – 0.2
Financial Services 5.0 0.4 (0.9) 4.5
Non-life Insurance 0.9 0.5 (0.1) 1.3
Real Estate Investment & Services 2.0 0.2 – 2.2
Real Estate Investment Trusts 4.9 0.5 – 5.4
------ ------ ------ -----
12.8 1.8 (1.0) 13.6
------ ------ ------ -----
Technology
Software & Computer Services 3.6 0.5 (0.4) 3.7
Technology Hardware & Equipment – – (0.2) (0.2)
------ ------ ------ -----
3.6 0.5 (0.6) 3.5
------ ------ ------ -----
Total Investments 88.2 18.1 (6.3) 100.0
===== ===== ===== =====
The above percentages are calculated based on the portfolio at 31 May 2017.
The net portfolio is calculated as long only equity portfolio plus long CFD
portfolio less short CFD portfolio.
ANALYSIS OF THE PORTFOLIO
Gross Basis (1) Net Basis (2)
FTSE 250 44.1% 44.5%
FTSE AIM 27.6% 29.8%
FTSE Small Cap 21.2% 21.8%
Other 7.1% 3.9%
Source: BlackRock.
1. Long and short CFD portfolio in aggregate plus futures and long only equity
portfolio excluding investments in BlackRock's Institutional Cash Series plc
– Sterling Liquidity Fund.
2. Long CFD portfolio less short CFD portfolio and futures portfolio plus long
only equity portfolio excluding investments in BlackRock's Institutional Cash
Series plc – Sterling Liquidity Fund.
MARKET CAPITALISATION AS AT 31 MAY 2017
Long positions (including the long equity portfolio and long CFD portfolio) Short positions
£1bn+ 45.1% -2.1%
£400m-£1bn 29.9% -2.5%
£100m-£400m 31.4% -0.9%
£0m-£100m 0.0% -0.9%
Source: BlackRock.
Weighted average market capitalisation as at 31 May 2017: £1,091.3 million
(Benchmark Index: £919.7 million).
POSITION SIZE AS AT 31 MAY 2017
Long positions (including the long equity portfolio and long CFD portfolio) Short positions
£2m+ 85 -1
£1m-2m 51 -2
£0m-£1m 50 -42
Source: BlackRock.
STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 31 May 2017
Notes Revenue £’000 Capital £’000 Total £’000
Six months ended 31.05.17 (unaudited) Six months ended 31.05.16 (unaudited) Year ended 30.11.16 (audited) Six months ended 31.05.17 (unaudited) Six months ended 31.05.16 (unaudited) Year ended 30.11.16 (audited) Six months ended 31.05.17 (unaudited) Six months ended 31.05.16 (unaudited) Year ended 30.11.16 (audited)
Income from investments held at fair value through profit or loss 3 4,335 3,313 6,794 – – – 4,335 3,313 6,794
Net income from contracts for difference 3 254 (20) 76 – – – 254 (20) 76
Other income 3 13 – 1 – – – 13 – 1
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total revenue 4,602 3,293 6,871 – – – 4,602 3,293 6,871
-------- -------- -------- -------- -------- -------- -------- -------- --------
Profit on investments held at fair value through profit or loss – – – 76,456 517 10,419 76,456 517 10,419
Loss on foreign exchange – – – (40) – (24) (40) – (24)
Net profit from contracts for difference – – – 9,887 3,040 6,746 9,887 3,040 6,746
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total 4,602 3,293 6,871 86,303 3,557 17,141 90,905 6,850 24,012
-------- -------- -------- -------- -------- -------- -------- -------- --------
Expenses
Investment management and performance fees 4 (377) (306) (621) (5,718) (1,152) (2,630) (6,095) (1,458) (3,251)
Operating expenses 5 (236) (238) (519) (8) (8) (18) (244) (246) (537)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total operating expenses (613) (544) (1,140) (5,726) (1,160) (2,648) (6,339) (1,704) (3,788)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net profit on ordinary activities before finance costs and taxation 3,989 2,749 5,731 80,577 2,397 14,493 84,566 5,146 20,224
Finance costs – – (1) (1) (2) (3) (1) (2) (4)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net profit on ordinary activities before taxation 3,989 2,749 5,730 80,576 2,395 14,490 84,565 5,144 20,220
Taxation (12) (6) (7) – – – (12) (6) (7)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Profit for the period 7 3,977 2,743 5,723 80,576 2,395 14,490 84,553 5,138 20,213
-------- -------- -------- -------- -------- -------- -------- -------- --------
Earnings per ordinary share 7 5.44p 3.75p 7.83p 110.18p 3.28p 19.81p 115.62p 7.03p 27.64p
======== ======== ======== ======== ======== ======== ======== ======== ========
The total column of this statement represents the Statement of Comprehensive
Income, prepared in accordance with International Financial Reporting
Standards (IFRS), as
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