Portfolio Update
THE THROGMORTON TRUST PLC
All information is at 30 NOVEMBER 2008 and unaudited.
Performance at month end is calculated on a cum income basis
One Three One Three
Month Months Year Years
Net asset value# -3.3% -35.2% -48.8% -41.9%
Net asset value* -3.3% -35.2% -51.4% -44.8%
Share price -17.4% -48.7% -58.0% -54.1%
HGSC plus AIM (ex Inv Cos) -5.6% -38.5% -49.0% -38.1%
# NAV prior to costs of repaying the debentures early
* NAV after costs of repaying the debentures early
Sources: BlackRock and Datastream
At month end
Net asset value Capital only: 89.51p
Net asset value incl Income: 93.35p
Share price: 62.75p
Discount to Capital only NAV: 29.9%
Net yield: 3.6%
Total assets: £76.9m**
Gearing: Nil
Ordinary shares in continuing pool: 82,351,197
** Includes current year revenue.
Ten Largest Sector
Weightings^ % of total assets
Software & Computer Services 11.7
Support Services 10.4
Financial Services 9.8
Aerospace & Defence 9.8
Industrial Engineering 7.1
Pharmaceuticals & Biotechnology 6.3
Oil & Gas Producers 5.7
Electronic & Electrical Equipment 5.5
Chemicals 3.1
Nonlife Insurance 3.1
----
Total 72.5
====
Ten Largest Equity Investments(in alphabetical order)
Company^
Chemring
Connaught
Dechra Pharmaceuticals
Endace
Rathbone Brothers
Rensburg Sheppards
Rotork
Spirax-Sarco Engineering
Ultra Electronics
Umeco
^ Excludes 4.6% held in ML Institutional Liquidity Units
Commenting on the markets, Mike Prentis and Richard Plackett, representing the
Investment Manager noted:
During November markets continued to be affected by nervousness about the state
of the world economy; resources prices have fallen further. The Company's NAV
fell by 3.3%, whilst the benchmark index fell by 5.6%. By way of comparison the
FTSE100 fell by 2.0%. The NAV benefitted from the refund of VAT on management
fees; excluding this the NAV fell by 5.9%. The CFD portfolio performed well,
however the long only portfolio underperformed as we pushed harder to complete
the portfolio restructuring process.
In relative terms, the best stock contributions came from Babcock
International, Chemring, Spirax-Sarco, Connaught and Kier, all core holdings
bought by us since 1 July 2008. We have met the managements of Babcock and
Chemring in recent weeks and they are confident about trading prospects.
Chemring put out a positive pre-close statement, Babcock good interims. We also
met Kier management where conditions on the housing side remain challenging but
Kier has a very strong balance sheet and does not need to discount as
aggressively as some competitors. Visibility is good on the growing support
services side and in construction. Spirax-Sarco management have demonstrated
their confidence by regular share buybacks. Connaught, like Chemring and
Babcock, has excellent revenue visibility.
The worst relative performers during the month were Aveva, Endace, Dyson and
Fenner, all longstanding portfolio constituents. We are fans of Aveva and its
management, however the shares fell 33% during the month despite good interims
showing earnings up 66%; the market is concerned that its exposure to the
shipping, oil & gas and power sectors will lead to lower initial license fees
during 2009. Although Aveva have yet to see this, it does remain probable. We
continue to see Aveva as a world class company, and are taking a medium term
view. Earnings downgrades are likely although much of this is probably now in
the price; medium term we expect Aveva shares to be much higher. Endace shares
fell when the Chairman elected to sell some of his shares at a discount; we
believe he was a forced seller. We like Endace and its executive team, and the
company continues to grow strongly. Dyson warned on profits and has significant
exposure to the ailing automotive sector. Fenner shares have been very weak
over the last few months. The market is concerned by likely cutbacks in capex
by mining companies following falls in commodity prices. Fenner is bound to be
affected by these concerns, although a significant part of its sales are
consumables and should be more resilient. However, it has geared up at the
wrong time in the cycle; we have now completed the sale of our holding.
New holdings in the month included Care UK, JKX Oil & Gas and Alternative
Networks. Care UK delivered satisfactory results, good cash flow and the
valuation now looks attractive. It supplies both primary and secondary care,
and owns and operates surgical centres, homes for the elderly and disabled, and
supplies domiciliary care. JKX Oil & Gas supply primarily gas in the Ukraine.
Gas volumes are growing well, and prices are increasing towards Western
European levels. Alternative Networks provides telecoms solutions for corporate
users. It has again generated strong earnings growth, converted profits into
cash and remains well set and an inexpensive stock.
We reduced the size of a number of holdings, and completed the sale of others
such as TGE Marine, IP Group and Charles Taylor Consulting, where we are not
enthusiastic, and Axon which is subject to an agreed bid.
The CFD portfolio has generated positive returns to date, with the short CFD
positions performing particularly well.
Latest information is available by typing www.blackrock.co.uk/its on the
internet, "BLRKINDEX" on Reuters, "BLRK" on Bloomberg or "8800" on Topic 3 (ICV
terminal).
18 December 2008
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