REG-BlackRock Throg Tst: Portfolio Update

Blackrock Throgmorton TrustAnnouncement

13/02/2019 15:35

BLACKROCK THROGMORTON TRUST PLC (LEI: 5493003B7ETS1JEDPF59)
 

All information is at 31 January 2019 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       5.4      -1.8    -6.9     45.0     62.1 
 Share price          12.1       3.2     2.3     59.7     70.6 
 Benchmark*            5.4      -1.9    -9.4     23.6     25.0 

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 performance of the indices have been blended to reflect this.

 At month end                                                                  
 Net asset value capital only:                                         509.93p 
 Net asset value incl. income:                                         519.69p 
 Share price                                                           490.00p 
 Discount to cum income NAV                                               5.7% 
 Net yield (1):                                                           1.9% 
 Total Gross assets (2):                                               £380.0m 
 Net market exposure as a % of net asset value (3):                      92.6% 
 Ordinary shares in issue (4):                                      73,130,326 
 2018 ongoing charges (excluding performance fees) (5,6):                 0.6% 
 2018 ongoing charges ratio (including performance fees) (5,6,7):         1.3% 

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 exposure less short exposure 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
2018.
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 
                                        
 Consumer Services                 24.2 
 Financials                        22.5 
 Industrials                       21.0 
 Technology                        10.0 
 Health Care                        8.4 
 Consumer Goods                     5.1 
 Basic Materials                    2.8 
 Telecommunications                 0.7 
 Net current assets                 5.3 
                                  ----- 
 Total                            100.0 
                                  ===== 

   

 Market Exposure (Quarterly)                                 
                                                             
                  28.02.18   31.05.18   31.08.18   30.11.18  
                          %          %          %          % 
 Long                 119.6      115.9      119.4      103.7 
 Short                  8.4       10.0        9.6       10.5 
 Gross exposure       128.0      125.9      129.0      114.2 
 Net exposure         111.2      105.9      109.8       93.2 

   

 Ten Largest Investments                          
                                                  
 Company                  % of Total Gross Assets 
                                                  
 SSP                                          3.1 
 Aveva                                        2.9 
 Dechra Pharmaceuticals                       2.9 
 Ascential                                    2.8 
 YouGov                                       2.7 
 Craneware                                    2.7 
 Integrafin                                   2.6 
 4imprint Group                               2.5 
 Workspace Group                              2.4 
 Bodycote                                     2.2 

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

During January the Company’s NAV per share rose by 5.4% to 509.93p on a cum
income basis, performing inline with our benchmark index, the Numis Smaller
Companies plus AIM (excluding Investment Companies) Index, which also rose by
5.4%(1); the large cap FTSE 100 Index rose by 3.6%(1) (all performance figures
are in sterling terms with income reinvested).

Against the backdrop of strengthening equity markets globally, the Company
performed in-line with our benchmark index during the month. Having de-risked
meaningfully in the fourth quarter by reducing both the gross and net
exposures, we continue to believe it is prudent to remain marginally below
normal levels given the potential for increased volatility to persist for some
time.

The largest stock specific detractors during the month were Gear4Music and
Hiscox. Gear4music is the UK’s leading online retailer of musical
instruments, a company that has consistently demonstrated very strong
profitable sales growth. The update in January revealed further impressive
sales growth, but at the expense of gross margin due to irrational competitor
pricing and Gear4music’s desire to maintain share with the strategic view
that their scale will enable them to recover gross margins in the future. This
was a disappointing update, especially as we had a very encouraging meeting
with the Management recently and discussed the gross margin profile at length,
and the shares reacted accordingly, falling c.65%. Insurer Hiscox fell during
the month despite no stock specific newsflow. The shares were a relative
outperformer during the fourth quarter, therefore we would attribute some of
the fall to more of a style reversal, while strengthening sterling is also a
headwind to the business which is heavily US focused.

On the positive side the largest contributors were JD Sports and Workspace
Group. Shares in JD Sports rose in response to a very strong trading update
with like-for-like (LFL) sales accelerating across the globe. We have limited
exposure to retailers within the long book, however we view JD Sports as a
differentiated winner, seeing positive LFL sales in the UK (on top of previous
positive years), double-digit LFLs across Europe, and over 5% in the US and
all without sacrificing their gross margin. We bought JD Sports, a company
that we know well, in December and the shares have been a top contributor to
performance since purchase. Workspace, the flexible workspace operator,
performed well in response to a strong trading update, while also receiving a
further boost from the rally in UK domestic companies. Other notable
contributors included Dechra Pharmaceuticals, Craneware and Aveva, which
reversed some of the falls which heavily impacted growth shares in recent
months.

With reporting season upon us and February a busy month of news-flow we hope
stock specific outcomes will dominate share price moves and we will be on the
right side. Company outlook statements will be key, and hopefully provide us
with clearer insights into industry and market structure developments.

(1)Source: BlackRock as at 31 January 2019

13 February 2019

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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