REG-BlackRock Throg Tst: Portfolio Update

Blackrock Throgmorton TrustAnnouncement

17/08/2018 15:05

BLACKROCK THROGMORTON TRUST PLC (LEI: 5493003B7ETS1JEDPF59)
 

All information is at 31 July 2018 and unaudited.
Performance at month end is calculated on a cum income basis

                      One     Three     One    Three     Five  
                    Month    months    year    years    years  
                         %         %       %        %        % 
 Net asset value       0.6       7.7    20.4     66.5    123.5 
 Share price          -0.7       5.3    29.1     78.5    135.8 
 Benchmark*            0.3       1.1     4.6     27.9     60.8 

Sources: BlackRock and Datastream

*With effect from 22 March 2018 the Numis Smaller Companies plus AIM
(excluding Investment Companies) Index replaced the Numis Smaller Companies
excluding AIM (excluding Investment Companies) Index as the Company’s
benchmark. The five year period indices have been blended to reflect this.

 At month end                                                                   
 Net asset value capital only:                                          608.08p 
 Net asset value incl. income:                                          616.94p 
 Share price                                                            556.00p 
 Discount to cum income NAV                                                9.9% 
 Net yield (1):                                                            1.6% 
 Total Gross assets (2):                                                £451.2m 
 Net market exposure as a % of net asset value (3):                      107.6% 
 Ordinary shares in issue (4):                                       73,130,326 
 2017 ongoing charges* (excluding performance fees) (5,6):                 0.9% 
 2017 ongoing charges* ratio (including performance fees) (5,6,7):         2.2% 

*Ongoing Charges: The management fee rate reductions, as detailed in the notes
below, will impact management fees in 2017 and onwards.   The impact of the
new fee arrangements, assuming the same level of performance from the manager
and assuming all other charges remain the same, would be to reduce the level
of Ongoing Charges borne by the Company.
1. Calculated using the 2017 interim dividend declared on 24 July 2017 and the
2017 final dividend declared on 12 February 2018 and paid on 29 March 2018.
2. Includes current year revenue and excludes gross exposure through contracts
for difference.
3. Long positions less short positions as a percentage of net asset value.
4. Excluding 7,400,000 shares held in treasury.
5. Calculated as a percentage of average net assets and using expenses,
excluding performance fees and interest costs for the year ended 30 November
2017.
6. With effect from 1 August 2017 the base management fee was reduced from
0.70% to 0.35% of gross assets per annum.
7. Effective 1st December 2017 the annual performance fee arrangements for the
Company have changed.  The annual performance fee is now calculated using
performance data on an annualised rolling two year basis (previously, one
year) and the maximum annual performance fee payable is effectively reduced to
0.90% of two year rolling average month end gross assets (from 1% of average
annual gross assets over one year). Additionally, the Company now accrues this
fee at a rate of 15% of outperformance (previously 10%). The maximum annual
total fees (comprising the base management fee of 0.35% and a potential 
performance fee of 0.90%) will therefore fall to 1.25% of average month end
gross assets on a two year rolling basis (from 1.70% of average annual gross
assets).

 Sector Weightings    % of Total Assets 
                                        
 Industrials                       32.3 
 Financials                        22.8 
 Consumer Services                 16.8 
 Technology                         8.6 
 Health Care                        7.7 
 Consumer Goods                     7.3 
 Basic Materials                    3.4 
 Oil & Gas                          1.0 
 Net current assets                 0.1 
                                  ----- 
 Total                            100.0 
                                  ===== 

   

 Market Exposure (Quarterly)                                 
                                                             
                  31.08.17   30.11.17   28.02.18   31.05.18  
                          %          %          %          % 
 Long                 115.3      116.9      119.6      115.9 
 Short                  5.8        6.3        8.4       10.0 
 Gross exposure       121.1      123.2      128.0      125.9 
 Net exposure         109.5      110.6      111.2      105.9 

   

 Ten Largest Investments                          
                                                  
 Company                  % of Total Gross Assets 
                                                  
 Ascential                                    3.2 
 Dechra Pharmaceuticals                       2.8 
 Fever-Tree Drinks                            2.7 
 Hiscox                                       2.6 
 SSP                                          2.4 
 Robert Walters                               2.3 
 Bodycote                                     2.3 
 Workspace Group                              2.3 
 4imprint Group                               2.2 
 CVS Group                                    2.1 

Commenting on the markets, Dan Whitestone, representing the Investment Manager
noted:

During July the Company’s NAV per share rose by 0.6%* to 616.94p on a cum
income basis, outperforming our benchmark index which rose by 0.3%*; the FTSE
100 Index rose 1.5%* (all performance figures are in sterling terms with
income reinvested).

The Company continued to deliver outperformance over the benchmark during
July, with both the long and short book contributing positively. Within the
long book a number of holdings responded well to positive trading updates,
whilst in the short book the Company continued to benefit from stock specific
successes.

Shares in 4imprint rose after the company delivered better than expected
results for the first half of the year. Investment in brand marketing has
resulted in a strong increase in new customers, exceeding management’s
expectations, and the outlook for the second half of the year looks positive.
Shares in SSP Group responded well to a positive third quarter trading update
showing strong like-for-like sales growth helped by the continued rise in air
travel. Self-help initiatives, for example in procurement disciplines and
range rationalisation continue to drive improvements in gross margins,
resulting in further upgrades. Other notable contributors included Draper
Esprit, Lonza and Advanced Medical Solutions which all performed well in
response to positive company specific updates.

Our short position in a UK technology company, where we have significant
concerns about the company’s ability to monetise its product offering, was
among the top contributors during the month. This company remains heavily loss
making with significant cash burn, and its shares subsequently fell by more
than 20% in July.

The largest detractor was cyber security business Sophos, which fell after the
company disappointed the market with lower than expected billings growth.
After a prolonged period of consistent “beat and raise” updates, two of
the last three updates have been disappointing. We have been reducing the
position earlier in the year, and have reduced further this month in response
to another disappointment in the company’s renewal rate which challenges our
investment thesis. The second largest detractor was from Ascential, which fell
on the news of a slowdown in one of its recently acquired business, despite
beating results at every line at a group level. We’ve discussed the moving
parts with Management at some length on their roadshow and it remains one of
our larger holdings.

Our view on the current environment, the economic cycle and therefore the
Company’s positioning hasn’t changed. Towards the end of the month the
market experienced a mini reversal which saw a number of our holdings give
back some recent performance. These events often create opportunities for us
to add to our holdings in companies, where we see significant runways of
earnings growth, at more attractive prices. We therefore took the opportunity
during the month to add to Hiscox, Bodycote and Howden Joinery.

*Source: BlackRock as at 31 July 2018

17 August 2018

ENDS

Latest information is available by typing www.blackrock.co.uk/thrg on the
internet, "BLRKINDEX" on Reuters, "BLRK" on Bloomberg or "8800" on Topic 3
(ICV terminal).  Neither the contents of the Manager’s website nor the
contents of any website accessible from hyperlinks on the Manager’s website
(or any other website) is incorporated into, or forms part of, this
announcement.



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