Portfolio Update

The information contained in this release was correct as at 31 January 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 31 January2023 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	5.6	14.7	-20.2	0.3	24.1
Share price	7.1	14.6	-22.8	-4.3	41.0
Benchmark*	5.0	10.0	-12.4	5.5	8.4

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:	639.52p
Net asset value incl. income:	651.86p
Share price	635.00p
Discount to cum income NAV	2.6%
Net yield1:	1.7%
Total Gross assets2:	£659.1m
Net market exposure as a % of net asset value3:	104.8%
Ordinary shares in issue4:	101,113,864
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 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 2,096,000 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 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	32.7
Consumer Discretionary	23.0
Financials	13.9
Technology	6.0
Health Care	4.4
Consumer Staples	4.2
Telecommunications	3.0
Energy	1.9
Basic Materials	1.1
Information Technology	1.1
Real Estate	0.4
Communication Services	0.4
Net Current Assets	7.9
	-----
Total	100.0
	=====
Country Weightings	% of Total Assets
United Kingdom	93.6
United States	3.3
France	2.0
Australia	0.6
Netherlands	0.5
	-----
Total	100.0
	=====

Market Exposure (Quarterly)
	28.02.22 %	31.05.22 %	31.08.22 %	30.11.22 %
Long	121.8	104.8	102.0	105.8
Short	2.3	3.3	4.1	2.5
Gross exposure	124.1	108.1	106.1	108.3
Net exposure	119.5	101.5	97.9	103.3

Ten Largest Investments
Company	% of Total Gross Assets
Oxford Instruments	3.3
WH Smith	3.0
Watches of Switzerland	3.0
Gamma Communications	3.0
4imprint Group	2.9
RS Group	2.9
CVS Group	2.8
Breedon	2.6
Diploma	2.5
Ergomed	2.5

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

The Company returned 5.6% in January, outperforming our benchmark, the Numis Smaller Companies plus AIM (excluding Investment Companies) Index, which rose 5.0%.¹ Equity markets have had a strong start to 2023. As is often the case there is rarely one single determining factor but a combination of China reopening, falling headline and core inflation in the US, as well as several positive corporate updates, all contributed to the increased optimism that a soft landing is not out of reach. In recent updates we have shared our thoughts on inflation, and we take comfort from the developments in January with further falls in energy prices, consumer goods and core services excluding shelter surprising on the downside.  On the other hand, jobs growth slowed further but still showed resilience as the unemployment rate fell unexpectedly to 3.5%, reverting to a historic low. Labour costs slowed for the third consecutive quarter, signalling that wage inflation is potentially starting to roll over despite a tight labour market, adding further fuel to the fire that interest rate hikes are nearing the peak. Specifically, within the UK, small and mid-cap shares performed strongly buoyed by consumer shares in particular where we saw much better updates than had been feared. Indeed, the relentless negative commentary surrounding the UK outlook we now think of positively given the potential for further upside surprises from UK Corporate PLC.

Watches of Switzerland was the largest contributor during the month. There was no stock specific news, but the shares recouped nearly all of December’s losses (it was the biggest detractor to performance in December despite publishing very strong results which we discussed last month). Grafton shares rallied after a very positive update in January confirming a solid finish to the year with revenues growing 9% and profit growth exceeding market expectations. Trends in the final two months of the year were better than expected, particularly in Ireland, although the volume performance in the UK also improved at the end of the year. Whilst we acknowledge the near-term cyclical risk at Grafton, we believe the business to have a strong competitive market position, a long track record of share gains which we see continuing, and of course a very strong net cash balance sheet. Shares in Dunelm rose after the company reported positive growth in both online and in store sales, with upgrades to full-year profits guidance.

On the negative side, two of the largest detractors were Ergomed and YouGov, both which provided decent trading updates but the shares fell marginally during the course of the month. Ergomed reported very strong trading across all divisions for the 12 months to 31 December 2022, with a positive outlook as its order book continues to grow, providing a high level of revenue visibility in the coming years. YouGov also provided a trading update highlighting continued growth across most divisions and regions, particularly in the US. The company continues to invest in its technology and remains “cautiously optimistic” in the full year outlook despite the challenging macroeconomic environment. Shares in Auction Technology Group has been relatively weak after a slightly mixed trading update at the end of last year, and in the absence of a large beat, the shares have been negatively impacted.

We continue to look to the year ahead with cautious optimism. In general, corporate updates are continuing to deliver positive surprises, particularly where expectations are so low (notably UK consumer and light industrial) which leaves the door wide open for further positive surprises in our mind. We also take some comfort that in recent weeks we’ve seen strong corporate/ financial delivery rewarded with rising share prices, unlike most of last year, which bodes well for our investment process more generally and indeed our long book. A combination of rising share prices and changing industry patterns and customer behaviour has given us more confidence in the opportunity set within the short book. As a consequence of the above, we’ve been adding new positions (both long and short) to the Trust in recent weeks. We don’t think the next few months will be easy, but we feel increasingly more confident on our positioning and process. The gross of the Company remains c.105% with the net around 102%. We thank shareholders for their ongoing support.

¹Source: BlackRock as at 31 January 2023

20 February 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.