Portfolio Update

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 Month	Three months	One year	Three years	Five 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 yield1:	1.9%
Total Gross assets2:	£380.0m
Net market exposure as a % of net asset value3:	92.6%
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 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
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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.

¹Source: 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.