REG-BlackRock Throg Tst: Portfolio Update

Blackrock Throgmorton TrustAnnouncement

23/05/2023 11:45

The information contained in this release was correct as at 30 April 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 30 April2023 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       4.0      -1.9    -8.5     27.6     19.1 
 Share price           2.1      -5.2    -7.6     18.1     21.7 
 Benchmark*            2.9      -2.6    -9.4     32.0      4.7 

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:                                          624.38p 
 Net asset value incl. income:                                          630.99p 
 Share price                                                            594.00p 
 Discount to cum income NAV                                                5.9% 
 Net yield (1):                                                            1.9% 
 Total Gross assets (2):                                                £635.9m 
 Net market exposure as a % of net asset value (3):                      106.9% 
 Ordinary shares in issue (4):                                      100,777,948 
 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 2,431,916 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                           32.5 
 Consumer Discretionary                24.0 
 Financials                            16.1 
 Technology                             7.9 
 Health Care                            4.3 
 Consumer Staples                       4.2 
 Telecommunications                     3.1 
 Energy                                 1.5 
 Communication Services                 1.5 
 Basic Materials                        1.5 
 Real Estate                            0.4 
 Net Current Assets                     3.0 
                                      ----- 
 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                         3.1 
 Watches of Switzerland                       3.0 
 WH Smith                                     2.9 
 CVS Group                                    2.9 
 Grafton Group                                2.7 
 Breedon                                      2.7 
 4imprint Group                               2.7 
 Ergomed                                      2.6 
 Diploma                                      2.6 
 Oxford Instruments                           2.5 
                                                  

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

The Company rose by 4.0% in April, outperforming the benchmark, the Numis
Smaller Companies +AIM excluding Investment Companies Index, which returned
2.9%.(1)

During April, markets recovered some of the losses of March as the impact of
US bank failures continued to dominate headlines. First Republic became the
latest casualty and was sold to JP Morgan (via FDIC receivership) at the end
of the month. We continue to monitor the impact these failures may have on
credit tightening and any corresponding impact on the real economy, as we
triangulate between third party data in addition to probing companies in our
interactions with them. So far, the majority of corporate news-flow in UK
small and medium sized companies has been encouraging, where many companies
continue to show broad based strength in earnings relative to low
expectations. In many ways this is a continuation of the theme of the last
nine months, with lots of headline macro concerns offset by broadly positive
corporate news flow amongst our investments as demand holds up better than
feared and companies continue to win share.

The surge in M&A (mergers & acquisitions) activity in the UK small & mid-cap
market was a key driver of performance during April. The biggest contributor
to performance was Dechra Pharmaceuticals which announced it had received a
possible cash offer from EQT for a c.50% premium to its closing share price,
albeit only a modest premium to where they raised money only a few months ago
to acquire a pipeline of veterinary drugs which will accelerate growth in FY24
and beyond, which the Board would is prepared to recommend. Due to the
sensitivities surrounding this, there is little we can comment publicly on
now. Veterinary services company CVS Group was another top contributor during
the month, with the shares rising off the back of the Dechra bid. Another
holding in the portfolio, Numis Corporation, also received a cash bid during
the month, with Deutsche Bank offering a 72% premium.

The biggest detractor during the month was Breedon, which despite delivering a
very strong Q1 update in April, fell on the back of a technical situation
where IHT (Inheritance Tax) funds needed to sell their shares ahead of Breedon
joining the main market on 17th May. Breedon had recently announced they were
delisting from AIM and joining the FTSE 250 Index. We have used this weakness
to continue to add to our position. Shares in both Diploma and 4imprint both
fell despite no negative stock specific newsflow.

Overall, April was another difficult month to navigate but the portfolio has
continued to show promise, with generally a strong set of results across the
long book, helped by some stock specific wins in the short book. Very few of
the detractors are in response to specific negative developments and generally
are where the market is concerned over the very short term at the expense of
the medium to long term, and this we view as opportunity rather than a threat.
Moreover, we have long argued that there remains compelling value in UK
mid-caps, and considering recent bids and continued bid speculation, we think
Private Equity agree and are armed with significant dry powder to take
advantage. A challenge for us will be to ensure we don’t let the significant
disconnect of valuations from strong fundamentals and runway of cashflow
growth enable others to realise the inherent value on offer in our home
market, denying us of compelling future returns just for a cash bid today. We
have continued to take advantage of the valuations disconnect that we see in
UK mid-cap shares, and the Company’s net is now around 109%.

(1)Source: BlackRock as at 30 April 2023

23 May 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.



Copyright (c) 2023 PR Newswire Association,LLC. All Rights Reserved