Portfolio Update

The information contained in this release was correct as at 31 August 2022.  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 August2022 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	-6.5	-9.4	-38.8	8.0	23.4
Share price	-11.0	-10.6	-44.1	2.6	38.2
Benchmark*	-3.9	-8.7	-22.6	13.9	6.6

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:	599.45p
Net asset value incl. income:	606.83p
Share price	565.00p
Discount to cum income NAV	6.9%
Net yield1:	1.9%
Total Gross assets2:	£617.6m
Net market exposure as a % of net asset value3:	97.9%
Ordinary shares in issue4:	101,770,678
2021 ongoing charges (excluding performance fees)5,6:	0.57%
2021 ongoing charges ratio (including performance fees)5,6,7:	1.38%

1. Calculated using the 2022 interim dividend declared on 20 July 2022 and paid on 26 August 2022, together with the 2021 final dividend declared on 07 February 2022 and paid on 31 March 2022.

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 1,439,186 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 2021.

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
Industrials	28.5
Consumer Discretionary	20.8
Financials	12.8
Health Care	7.1
Technology	6.4
Consumer Staples	4.1
Telecommunications	3.0
Energy	1.4
Basic Materials	0.6
Communication Services	0.4
Net Current Assets	14.9
	-----
Total	100.0
	=====
Country Weightings	% of Total Assets
United Kingdom	93.6
United States	4.0
France	1.7
Australia	0.8
Germany	-0.1
	-----
Total	100.0
	=====

Market Exposure (Quarterly)
	30.11.21 %	28.02.22 %	31.05.22 %	31.08.22 %
Long	121.3	121.8	104.8	102.0
Short	2.7	2.3	3.3	4.1
Gross exposure	123.9	124.1	108.1	106.1
Net exposure	118.6	119.5	101.5	97.9

Ten Largest Investments
Company	% of Total Gross Assets
RS Group	3.6
CVS Group	3.1
Watches of Switzerland	3.0
Gamma Communications	3.0
Oxford Instruments	2.8
Auction Technology Group	2.6
WH Smith	2.5
Ergomed	2.4
Computacenter	2.4
4imprint Group	2.3

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

The Company returned -6.5%¹ during August, while the Numis Smaller Companies plus AIM (excluding Investment Trusts) benchmark fell -3.9%¹. Underperformance during the month was driven by the long book while our short book made a small positive contribution to relative performance.

For the first half of August stock markets continued to rise/stabilise, but then fell back sharply at the end of the month as energy prices rose again (notably gas and electricity prices in Europe rather than global oil prices) and then as the Federal Reserve Chair, Jerome Powell made another particularly hawkish speech inferring large rate rises could still happen. This speech then catalysed a sell-off in equities and by the end of August most indices were down for the month – for instance the FTSE 250 Index was down circa 5%. As a counterpoint, the energy heavy and large cap FTSE 100 Index was down only 1%.

As has been the case recently the volatile nature of share prices means that contributors one month can flip the next. The largest detractor was therefore the holding in Auction Technology Group, which reversed gains from the prior month, despite no deterioration in trading and the company recently reporting strong results with a very positive outlook for this year. Other notable detractors were SigmaRoc and Watches of Switzerland which fell on no stock specific news. Shares in XP Power fell after the company warned that full year results would come in at the lower end of analyst expectations due to supply chain challenges impacting their ability to deliver to customers and in turn the timing of booking revenues.

There was a broad mix on the positive side during August. The largest contributor was the holding in RS Group whose shares had been supported by good results in July and then made a small acquisition in early August with attractive characteristics. The second largest contributor was the long position in 4imprint which had extremely strong results and uplifted profit expectations for the second time this year as their marketing is stimulating demand growth. The third largest contributor was a short in a UK building products group which fell after a weak update prompting analyst downgrades to forecasts.

Overall, the particularly hawkish speech from Powell was clearly a disappointment to the market given the already lower rates of inflation witnessed in the July CPI (Consumer Price Index) print as well as the observably lower oil price. However, we do not think his speech will fundamentally change the nature of the positioning we have taken and expressed in recent correspondence. Whilst the consumer undoubtedly faces some challenges, we must be mindful that not all consumer shares are equal, and amidst this turbulent market and uncertain backdrop there are several compelling valuations for differentiated consumer shares that have strong product offerings and market share potential despite near term demand pressures.  There are a number of consumer facing shares on single digit price to earnings ratios, with high FCF (free cash flow) yields and where a sizeable percentage of market capitalisation is in net cash.

We remain confident in the holdings in the portfolio, which are well financed businesses, with enduring long term organic growth prospects that will use this period to enhance their position to win more market share. And while we wait for this to play out, we take comfort from the increasing number of company buybacks we are witnessing as Management teams retire their equity at current valuations, and furthermore the scale of M&A activity that we are witnessing in the UK market as strategic buyers take advantage of the depressed valuations and discount offered from weakness in Sterling. The gross is around 101% and the net is 98%.  We thank shareholders for your ongoing support.

¹Source: BlackRock as at 31 August 2022

20 September 2022

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.