REG-BlackRock Throg Tst: Portfolio Update

Blackrock Throgmorton TrustAnnouncement

28/04/2023 17:00

The information contained in this release was correct as at 31 March 2023. 
Information on the Company’s up to date net asset values can be found on the
London Stock Exchange Website at:

https://www.londonstockexchange.com/exchange/news/market-news/market-news-home.html. 

BLACKROCK THROGMORTON TRUST PLC (LEI: 5493003B7ETS1JEDPF59)
 

All information is at 31 March2023 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      -5.2      -0.4   -17.6     39.6     19.2 
 Share price          -7.9      -0.5   -21.4     31.7     31.5 
 Benchmark*           -5.7      -0.6   -13.4     45.2      7.0 

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:                                          602.53p 
 Net asset value incl. income:                                          606.77p 
 Share price                                                            582.00p 
 Discount to cum income NAV                                                4.1% 
 Net yield (1):                                                            1.9% 
 Total Gross assets (2):                                                £612.6m 
 Net market exposure as a % of net asset value (3):                      106.7% 
 Ordinary shares in issue (4):                                      100,952,948 
 2022 ongoing charges (excluding performance fees) (5,6):                 0.54% 
 2022 ongoing charges ratio (including performance fees) (5,6,7):         0.54% 

1. Calculated using the 2022 interim dividend declared on 20 July 2022 and
paid on 26 August 2022, together with the 2022 final dividend declared on 10
February 2023 and paid on 31 March 2023.

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 2,256,916 shares held in treasury.

5. The Company’s ongoing charges are calculated as a percentage of average
daily net assets and using the management fee and all other operating
expenses, excluding performance fees, finance costs, direct transaction
charges, VAT recovered, taxation and certain other non-recurring items for the
year ended 30 November 2022.

6. With effect from 1 August 2017 the base management fee was reduced from
0.70% to 0.35% of gross assets per annum. The Company’s ongoing charges are
calculated as a percentage of average daily net assets and using the
management fee and all other operating expenses, including performance fees,
but excluding finance costs, direct transaction charges, VAT recovered,
taxation and certain other non-recurring items for the year ended 30 November
2022.

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 management 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                           33.9 
 Consumer Discretionary                22.9 
 Financials                            16.0 
 Technology                             7.3 
 Health Care                            4.1 
 Consumer Staples                       4.1 
 Telecommunications                     3.0 
 Basic Materials                        1.6 
 Energy                                 1.6 
 Communication Services                 1.2 
 Real Estate                            0.4 
 Net Current Assets                     3.9 
                                      ----- 
 Total                                100.0 
                                      ===== 
                                            
 Country Weightings       % of Total Assets 
                                            
 United Kingdom                        93.8 
 United States                          3.0 
 France                                 1.9 
 Australia                              0.7 
 Ireland                                0.6 
                                            
                                      ----- 
 Total                                100.0 
                                      ===== 

   

 Market Exposure (Quarterly)                                 
                                                             
                  31.05.22   31.08.22   30.11.22   28.02.22  
                          %          %          %          % 
 Long                 104.8      102.0      105.8      110.3 
 Short                  3.3        4.1        2.5        2.3 
 Gross exposure       108.1      106.1      108.3      112.6 
 Net exposure         101.5       97.9      103.3      108.0 

   

 Ten Largest Investments                          
                                                  
 Company                  % of Total Gross Assets 
                                                  
 Gamma Communications                         3.0 
 Breedon                                      3.0 
 Watches of Switzerland                       2.9 
 WH Smith                                     2.9 
 4imprint Group                               2.9 
 Diploma                                      2.8 
 CVS Group                                    2.8 
 Grafton Group                                2.8 
 YouGov                                       2.7 
 RS Group                                     2.6 
                                                  

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

The Company returned -5.2% in March, outperforming the Numis Smaller Companies
plus AIM (excluding Investment Companies) benchmark index, which fell
-5.7%.(1)

March was a turbulent month, starting with the failure of Silicon Valley Bank
(SVB) and the ensuing chaos in banking markets globally. We think the main
issues are largely confined to US regional banks who had not adequately
managed their interest rate risk or had an unusual concentration in
non-insured deposits rather than a global systemic issue. We are closely
watching the data for any impact on credit provision in the US, US consumer
spending and any signs of broader financial stress. So far, we aren’t seeing
anything that would cause us to change our view and overall positioning, but
we are cognisant this could change. The UK small & mid-cap index was once
again a victim of the market volatility, selling off sharply.

Against the volatile market backdrop, there was a clear trend that quality
companies with market leading positions can continue to deliver great results.
4imprint, which has been a top performer over the last year, once again
reported impressive results showing 45% revenue growth year on year, while
profits before tax rose by more than 240%. What’s more, these results
demonstrate the company’s ability to win share within its highly fragmented
end market, something that we believe will continue for the foreseeable
future. Shares in Breedon moved higher after the company reported better than
expected results and announced plans to move its listing from AIM to the main
market. Games Workshop rose in response to a solid update, with Management
reiterating recent performance in-line with their expectations.

The largest detractor during the month came from a short position in a
consumer goods company which rose after the company reiterated full year
expectations. Shares in Hunting were weak as macro concerns drove the oil
price lower during March. The shares were also subject to broker downgrades
given the increased downside risks after a period of strong performance.
Shares in Next Fifteen weakened during the month on no stock specific news
flow.

The continued weakness in the small & mid cap market is particularly
frustrating given what we see as a gradual improvement in both macro-economic
data and in trading across many companies that we speak to. We have just
finished UK reporting season and the team collectively did over 70 company
meetings in the month of March alone. We lost count of the times we heard
things along the lines of “demand firmer than feared”, “Q1 running
ahead”, “more confidence in the business”. This is spanning both core
holdings and companies we don’t own. Long standing positions like Grafton
and Gamma Communications have both delivered impressive updates in recent
weeks but have continued to de-rate despite upgrades, so we continue to add as
we see such an attractive risk/reward.

Looking into H2 there are some grounds for optimism as household disposable
cash flow growth may accelerate as the year-on-year impact of energy bills
rising fades and wage growth continues. The Government has already committed
to not raising the energy price cap beyond April and more importantly
wholesale prices are now at a level where suppliers are looking to attract new
customers again. National living wage rises are going through this month and
companies we speak to say wage pressures in their businesses are continuing
(though at a lower level than last year). These factors have led Goldman Sachs
and others to begin upgrading their forecasts for UK household cashflow from
+2% to +5% with a bias to the second half. For context, the average level of
household cashflow growth in the past 10 years on their measure is just under
4%. The backdrop is still tough overall, but there are reasons for optimism,
juxtaposed against the persistent negative views that dominate headlines. The
picture we see is one of a gradual recovery from the mini budget induced
trough, and with many UK small and mid-cap companies reflecting a further
slowdown in economic activity on already depressed valuations, we think
risk/reward opportunity is compelling. It is of no surprise to us that M&A
activity has picked up in recent weeks, and we think Private Equity will
continue to be opportunistic and take advantage of the valuations on offer in
the public markets. The gross of the Portfolio is current around 109% and the
net is 106%. We thank shareholders for your ongoing support.

(1)Source: BlackRock as at 31 March 2023

28 April 2023

ENDS

Latest information is available by typing www.blackrock.com/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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