Portfolio Update

The information contained in this release was correct as at 30 April 2024.  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 April 2024 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	0.1	1.8	6.1	-21.1	25.1
Share price	0.3	-2.2	1.7	-29.8	17.8
Benchmark*	1.9	2.8	2.0	-16.0	12.5

Sources: BlackRock and Deutsche Numis

*With effect from 15 January 2024 the Numis Smaller Companies plus AIM (excluding Investment Companies) Index changed to the Deutsche Numis Smaller Companies plus AIM (excluding Investment Companies).

At month end
Net asset value capital only:	647.14p
Net asset value incl. income:	654.03p
Share price	589.00p
Discount to cum income NAV	9.9%
Net yield1:	2.5%
Total Gross assets2:	£603.0m
Net market exposure as a % of net asset value3:	112.6%
Ordinary shares in issue4:	92,198,864
2023 ongoing charges (excluding performance fees)5,6:	0.54%
2023 ongoing charges ratio (including performance fees)5,6,7:	0.87%

1. Calculated using the Interim Dividend declared on 07 July 2023 paid on 29 August 2023, together with the Final Dividend declared on 05 February 2024 paid on 28 March 2024

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 11,011,000 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 2023.

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 2023.

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	35.6
Consumer Discretionary	19.1
Financials	15.6
Technology	6.5
Basic Materials	6.5
Telecommunications	3.7
Health Care	2.1
Consumer Staples	1.9
Energy	1.2
Real Estate	1.1
Communication Services	0.9
Net Current Assets	5.8
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Total	100.0
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Country Weightings	% of Total Assets
United Kingdom	91.1
United States	4.5
Ireland	1.8
Australia	0.8
France	0.7
Switzerland	0.5
Canada	0.5
Netherlands	0.4
Sweden	-0.3
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Total	100.0
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Market Exposure (Quarterly)
	31.05.23 %	31.08.23 %	30.11.23 %	29.02.24 %
Long	111.7	112.7	111.3	117.9
Short	3.6	4.5	3.8	3.2
Gross exposure	115.3	117.2	115.1	121.1
Net exposure	108.1	108.2	107.5	114.7

Ten Largest Investments
Company	% of Total Gross Assets
Oxford Instruments	3.1
Breedon	3.0
Gamma Communications	2.9
Grafton Group	2.7
4imprint Group	2.7
Rotork	2.5
Hill & Smith Holdings	2.5
WH Smith	2.4
IntegraFin	2.3
Tatton Asset Management	2.2

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

The Company returned 0.1% in April, underperforming its benchmark, the Deutsche Numis Smaller Companies + AIM (excluding Investment Companies Index, which returned 1.9%.1

Markets were mixed over April with most global equity markets recording losses while the FTSE 100 Index was up nearly 2.5%. As for UK small & mid-caps, they also managed to deliver a small positive return. April provided markets quite a lot to grapple with, from rising tensions in the Middle East to various puts and takes in inflation and economic data. The sharp recalibration of rate cut expectations in April generally provided a headwind to “growth” and reignited the reflation trade which provided a stylistic headwind to performance. We think the underlying portfolio navigated this style shift reasonably well, but frustratingly, the underperformance in the month is more reflective a few individual stock disappointments, something we hope is an aberration and not the start of a trend.

Starting with the positive contributors to performance, the single biggest success in April was our short in a UK listed semiconductor company which issued a large profit warning due to an accelerated transition away from China (their biggest region) as well as a change in revenue recognition for long term contracts. Our concerns regarding accounting, capital intensity and weak free cashflow generation remain and so we have maintained our short. M&A (mergers and acquisitions) activity levels in the UK market remain elevated and the second biggest contributor to performance was from our long position in Lok’nStore which received a bid from Belgian self-storage business Shurgard. The third biggest contributor was Luceco, a UK small cap industrial company which rallied on a resilient trading update. Management have managed the downturn in RMI (renovation, maintenance and improvement) markets well in the past couple of years and the company is now well positioned for any recovery which we think is not reflected in either consensus forecasts or the share price with the shares trading on a high single digit FCF (free cash flow) yield.

Turning to the detractors, the biggest detractor was our long position in WH Smith, the global travel retailer, which fell on results which were in line with expectations but showed a slight slowdown in revenue growth in the key US market. While the slowdown is slightly worse than anticipated, it was at least partly caused by lost sales from store refurbishments which are transitory issues and should reverse shortly. Meanwhile, the company continues to win a large number of tenders for new space and win significant market share. The shares have now de-rated to under 12x price to earnings, a discount to industry peers who have performed worse, and a discount to larger retailers who are focused exclusively on the UK and in much more challenged categories. Shares in YouGov continued to drift lower in April, following the release of results in March which showed a slowdown in the core data products business. Shares in Dunelm fell after the company reported a slightly softer demand environment in March, albeit this was somewhat offset by a better-than-expected gross margin helped by lower freight costs. The well documented wet weather will certainly have had a negative impact so trying to get a grip on the true underlying demand environment is tricky. However, this is a business which an outstanding track record of winning market share and we think is well placed to benefit from any improvement in the consumer or indeed the weather!

April was a challenging month for markets and the portfolio, and while it is frustrating to report a month of underperformance, we do not believe that the stock specific setbacks during the month will result in a permanent loss of capital or are signs of any flawed investment thesis. We maintain the view that the portfolio is well set, with a large exposure to some very undervalued shares, and a compelling opportunity set. The net of the portfolio is around 110% while the gross is around 115%.

We thank shareholders for your ongoing support.

1Source: BlackRock as at 30 April 2024

28 May 2024

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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