REG-BlackRock Throg Tst: Portfolio Update

Blackrock Throgmorton TrustAnnouncement

18/09/2018 09:40

BLACKROCK THROGMORTON TRUST PLC (LEI: 5493003B7ETS1JEDPF59)
 

All information is at 31 August 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      -0.1       3.0    17.5     69.1    120.9 
 Share price          -1.7       1.6    25.2     73.2    124.0 
 Benchmark*           -0.3      -0.4     3.5     30.4     58.0 

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:                                          607.08p 
 Net asset value incl. income:                                          613.88p 
 Share price                                                            544.00p 
 Discount to cum income NAV                                               11.4% 
 Net yield (1):                                                            1.7% 
 Total Gross assets (2):                                                £448.9m 
 Net market exposure as a % of net asset value (3):                      109.8% 
 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 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 2018 interim dividend declared on 26 July 2018 and
paid on 29 August 2018, together with 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 is 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%) are therefore 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                       31.1 
 Financials                        21.5 
 Consumer Services                 17.9 
 Technology                         9.5 
 Health Care                        7.9 
 Consumer Goods                     7.7 
 Basic Materials                    3.2 
 Oil & Gas                          1.0 
 Net current assets                 0.2 
                                  ----- 
 Total                            100.0 
                                  ===== 

   

 Market Exposure (Quarterly)                                 
                                                             
                  30.11.17   28.02.18   31.05.18   31.08.18  
                          %          %          %          % 
 Long                 116.9      119.6      115.9      119.4 
 Short                  6.3        8.4       10.0        9.6 
 Gross exposure       123.2      128.0      125.9      129.0 
 Net exposure         110.6      111.2      105.9      109.8 

   

 Ten Largest Investments                          
                                                  
 Company                  % of Total Gross Assets 
                                                  
 Ascential                                    3.2 
 Dechra Pharmaceuticals                       3.0 
 Fever-Tree Drinks                            2.9 
 Bodycote                                     2.8 
 Hiscox                                       2.7 
 SSP                                          2.5 
 4imprint Group                               2.4 
 Robert Walters                               2.4 
 Workspace Group                              2.3 
 YouGov                                       2.2 

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

During August the Company’s NAV per share fell by 0.1%* to 613.88p,
outperforming our benchmark, the Numis Smaller Companies plus AIM (excluding
Investment Companies) Index, which fell by 0.3%*; the large cap FTSE 100 Index
fell by 3.3%* (all performance figures are in sterling terms with income
reinvested).

August was a challenging month for UK equities with Brexit fears, escalating
trade tensions and disorder in Emerging Markets clouding the outlook for
global growth. This was also a month where the Company was on the wrong end of
a couple of disappointing updates, notably CVS Group and Hill & Smith. Despite
these stock specific “set backs” and a negative market backdrop, the
Company was still able to outperform the benchmark during August due to some
strong stock specific updates elsewhere in the portfolio, as discussed
below. 

Performance during the month was driven by the long book whilst short
positions in aggregate were a modest detractor.

Shares in small-cap wine producer Chapel Down rose on expectations of a good
harvest given exceptional weather conditions this year, and also on news that
respected wine industry players are buying into the company. Insurance
provider Hiscox delivered positive interim results, beating expectations and
provided a positive outlook statement, reinforcing our conviction in the long
term investment case. 4imprint Group continued to rise following strong
results announced in July, while the strength of the US dollar provides a
further benefit to a business which generates almost all of its revenues in
the US. We also saw a very strong performance from Xero, an Australian listed
accounting software business which we’ve discussed in previous
communications. Other notable contributors included premium mixer supplier
Fever-Tree which continued to be in demand during the month and e-learning
provider Learning Technologies.

The Company suffered two stock specific disappointments during the month.
First, Hill & Smith fell after the company reported a fall in first half
profits as a result of short-term project delays in the UK’s road programme.
The second was CVS Group, a UK veterinary practice business, which fell in
response to reporting a small miss against full year expectations on the back
of severe weather earlier in the year, but more importantly some recently
acquired practices performing below expectations. The second point is the one
that matters and the most undermining to our investment case built in part on
CVS’s management’s continued ability to leverage their network to acquire
strategically. We spoke with CVS’s management on the day to gain a better
understanding of the issues, and they believe these issues have been resolved
with application of tighter controls. Whilst disappointing, we still believe
CVS remain well placed to further consolidate the highly fragmented UK
veterinary market whilst also benefiting from structural growth in veterinary
spending.

In terms of portfolio activity, we’ve added new positions in Boku and
Craneware, whilst increasing our exposure to existing holdings in Howden
joinery, Impax Asset Management, Bodycote and Robert Walters. Overall, no real
change to portfolio positioning.

*Source: BlackRock as at 31 August 2018

18 September 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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