Portfolio Update

BLACKROCK THROGMORTON TRUST PLC (LEI: 5493003B7ETS1JEDPF59)
 

All information is at 31 March 2019 and unaudited.
Performance at month end is calculated on a cum income basis

	One Month	Three months	One year	Three years	Five years
Net asset value	2.5	10.5	-0.5	48.8	67.4
Share price	3.3	17.5	7.7	70.1	79.0
Benchmark*	0.4	7.0	-4.1	19.6	24.2

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:	535.24p
Net asset value incl. income:	537.33p
Share price	506.00p
Discount to cum income NAV	5.8%
Net yield1:	2.0%
Total Gross assets2:	£392.9m
Net market exposure as a % of net asset value3:	95.8%
Ordinary shares in issue4:	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 2018 final dividend declared on 12 February 2019 and paid on 28 March 2019.
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 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
Consumer Services	27.2
Financials	24.1
Industrials	20.0
Technology	8.8
Health Care	7.9
Consumer Goods	6.5
Basic Materials	2.7
Telecommunications	1.2
Net current assets	1.6
	-----
Total	100.0
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Market Exposure (Quarterly)
	31.05.18	31.08.18	30.11.18	28.02.19
Long	115.9	119.4	103.7	108.7
Short	10.0	9.6	10.5	14.9
Gross exposure	125.9	129.0	114.2	123.6
Net exposure	105.9	109.8	93.2	93.8

Ten Largest Investments
Company	% of Total Gross Assets
Dechra Pharmaceuticals	3.2
Aveva	3.1
SSP	3.1
4imprint Group	3.1
YouGov	3.0
Integrafin	2.7
JD Sports Fashion	2.7
Bodycote	2.5
Workspace Group	2.5
WH Smith	2.4

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

During March the Company’s NAV per share rose by 2.5% to 537.33p on a cum income basis, outperforming our benchmark index, the Numis Smaller Companies plus AIM (excluding Investment Companies) Index, which rose by 0.4% (all performance figures are in sterling terms with income reinvested).

Despite the ongoing challenging UK political backdrop and endless speculation on the outlook for global growth, the UK market rose and the Company delivered another month of outperformance versus our benchmark, reflecting some key stock and industry specific successes on both the long and short side.

The largest positive contributor to performance during the month came from our long position in 4imprint, a UK listed, but US focused, direct marketing business of promotional goods. The company reported very strong full year results with upgrades to forward guidance, which saw the shares rise by more than 20% and contributing more than 50bps to relative performance. This has been a long-term core holding for us and has been a strong contributor to performance for many years. It is the market leader in the US by some distance but has less than 4% market share despite compounding its revenues organically in the mid teens for over 10 years, reflecting not only the size of the market but just how fragmented the competitive set is.

On the short side we benefitted from our position in a UK contractor, which despite having completed an emergency fund raise in December has followed up in March with a series of negative updates, including restating its debt position once again. Its half-year results revealed a miss versus profit expectations, incremental contract provisions and significant cash outflows. We feel the company has yet to fully disclose the full extent of its troubles and we remain short.

The largest detractor was software business Craneware, which fell after reporting half-year results which met expectations, but did not beat expectations. As the shares appear expensive on face value, some share price consolidation is understandable, but these results do not alter our view of the long-term growth prospects for the business. This remains the market leader in the provision of procurement and cost analytics software for US hospitals.

In the comments above we have focused on three stocks in particular to highlight the importance of stock specifics in the current environment. Whether they are key contributors or detractors, focusing on company and industry fundamentals will be the driver of this Company’s returns. Thankfully during the month we have been on the right side of company updates in the vast majority of cases, and we could point to many other examples of companies that have continued to deliver, for example Robert Walters and Bodycote. We therefore continue to feel comfortable with the portfolio positioning. While the gross and net exposures remain lower than normal levels, reflecting the risks in the current environment, we believe the portfolio can continue to generate alpha driven by stock and industry specific outcomes, regardless of the wider macro environment.

¹Source: BlackRock as at 31 March 2019

29 April 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.