OCTOBER 2017 Key risk factors Capital at Risk. All financial investments involve an element of risk. Therefore, the value of your investment and the income from it will vary and your initial investment amount cannot be guaranteed and your capital may be at risk. The Company s investments may be subject to liquidity constraints, which mean that shares may trade less frequently and in small volumes, for instance in smaller companies. As a result, changes in the value of investments may be more unpredictable. In certain cases, it may not be possible to sell the security at or near the last market price quoted or at a value considered to be fair. Derivatives may be used substantially for complex investment strategies. These include the creation of short positions where the Investment Manager artificially sells an investment it does not own. Derivatives can also be used to generate exposure to investments greater than the net asset value of the Company. Investment Managers refer to this practice as obtaining market leverage or gearing. As a result, a small positive or negative movement in stock markets will have a larger impact on the value of these derivatives than owning the investments. The use of derivatives in this manner may have the effect of increasing the overall risk profile of the Company. Approximately 30 of the Company s net assets may be invested in Contracts for Difference ( CFDs ). Please refer to the glossary for a fuller definition blackrock.co.uk/thrg BlackRock Throgmorton Trust plc Company objective To provide shareholders with capital growth and an attractive total return through investment primarily in UK smaller companies and mid-capitalisation companies listed on the main market of the London Stock Exchange. Annual performance to the last quarter end (as at 30 September) 30/09/16 30/09/17 30/09/15 30/09/16 Cumulative performance (as at 31/10/17) 30/09/14 30/09/15 30/09/13 30/09/14 30/09/12 30/09/13 Net asset value 31.3 10.4 19.6 5.7 34.0 Share price 34.8 4.0 20.0-0.1 52.4 Benchmark 1 20.2 8.6 9.9 3.5 27.9 Sterling 1M 3M 1Y 3Y 5Y Net asset value 4.3 6.5 40.6 84.9 150.1 Share price 4.5 5.5 48.0 79.2 160.2 Benchmark 1 2.1 3.9 24.4 47.6 92.0 The figures shown relate to past performance. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. The above Net Asset Value (NAV) performance statistics are based on an NAV with income included with any income reinvested on the ex-dividend date, net of ongoing charges and any applicable performance fee. Share price performance figures are calculated on a mid market basis in sterling terms with income reinvested on the ex-dividend date. A fuller definition of ongoing charges, which includes the annual management fee, is given in the Glossary. Details of the management and performance fees are given in the fund information table overleaf. The performance of the Company s portfolio, or NAV performance, is not the same as share price performance and shareholders may not realise returns which are the same as NAV performance. The latest performance data can be found on the BlackRock Investment Management (UK) Limited website at blackrock.co.uk/thrg. Source: BlackRock, Datastream 1 The Company s benchmark is the Numis Smaller Companies excluding AIM (excluding Investment Companies) Index.
Sector allocations (as at 31/10/17) of total assets Industrials 34.8 Financials 18.6 Consumer Services 16.8 Consumer goods 11.4 Basic materials 7.6 Health care 5.7 Technology 4.7 Oil & gas 2.6 Net current assets (2.2) 100.0 Fund information (as at 31/10/17) Net asset value (capital only) 545.06p Net asset value (inc. income) 225.71p Share price 461.00p Discount to NAV (including income) 16.6 Net market exposure as a of net asset value (long positions less short positions) Net yield (Calculated using 2017 interim declared on 24 July 2017 and final dividend paid on 6 February 2017) Total gross assets (including current year revenue and excluding the gross exposure through contracts for difference) 111.4 1.8 404.2m Allocations are as of date shown and do not necessarily represent current or future portfolio holdings. Issued capital ordinary shares (excluding 7,400,000 shares in treasury) 73,130,326 BlackRock Throgmorton Trust plc will not invest more than 15 of its gross assets in other closed-ended listed investment funds. BlackRock Throgmorton Trust plc is traded on the London Stock Exchange and dealing may only be through a member of the Exchange. Top 10 investments (as at 31/10/17) Company of total gross assets CVS Group 3.2 Dechra Pharmaceuticals 2.8 4imprint Group 2.7 Ibstock 2.3 Hill & Smith 2.2 Accesso Technology 2.2 Robert Walters 2.1 Melrose Industrials 2.1 Johnson Service Group 2.0 Big Yellow 2.0 Holdings are as at the date shown and do not necessarily represent current or future portfolio holdings. Reference to the names of each company mentioned in this communication are merely for explaining the investment strategy, and should not be construed as investment advice or investment recommendation of those companies. A full disclosure of portfolio investments for the Company as at 30 June 2017 has been made available on the Company s website at the link given below: https://www.blackrock.com/uk/individual/literature/pol icies/throgmorton-portfolio-disclosure.pdf 2016 ongoing charges ratio (1), (2) 1.1 2016 ongoing charges (including performance fees ) (1), (2), (3) 1.3 Ongoing Charges: The recently announced management fee rate reductions, as detailed in the notes below, will impact management fees in 2017 and onwards. As a result, the 2016 Ongoing Charge figures above should not be used as a guide to future costs. The impact of the new fee arrangements, assuming the same level of performance from the manager and assuming all other charges remain the same, would be to reduce the level of Ongoing Charges borne by the trust. (1) Calculated as a percentage of average net assets and using expenses, excluding performance fees and interest costs for the year ended 30 November 2016. (2) With effect from 1 August 2017 the base management fee was reduced from 0.70 to 0.35 of gross assets per annum. (3) Effective 1st December 2017 the annual performance fee arrangements for the Company will change. The annual performance fee will be calculated using performance data on an annualised rolling two year basis (previously, one year) and the cap on annual performance fees will be reduced to 0.9 of two year rolling average month end gross assets (from 1 of average annual gross assets over one year). Additionally, the Company will accrue this fee at a rate of 15 of outperformance (from 10). The maximum annual total fee (comprising the base management fee and the performance fee) will therefore fall to 1.25 of average month end gross assets on a two year rolling basis (from 1.70 of average annual gross assets).
Comments from the portfolio managers: Please note that the commentary below includes historic information in respect of the performance of portfolio investments, index performance data and the Company s NAV and share performance. The figures shown relate to past performance. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. Activity during October included new purchases in XP Power, a leading provider of power solutions, and Equiniti, which provides complex administration and payment services to a range of organisations. We further reduced some of our domestic exposed holdings and added to holdings which generate. Sources: BlackRock, Datastream, Bloomberg and BNY Mellon as at 31 October 2017. During October the Company s NAV per share rose by 4.3 to 552.71p on a cum income basis whilst our benchmark (the Numis Smaller Companies excluding AIM (excluding Investment Companies) Index) rose by 2.1; the FTSE 100 Index returned 1.6 (all performance figures are with income reinvested and net of ongoing charges and any applicable performance fees). Stock selection was the primary driver of outperformance during the month while sector allocation detracted modestly. The largest positive contributor to performance during the month was our holding in wound closure and care product developer Advanced Medical Solutions (AMS). The shares rallied after the company announced they had entered into a licensing agreement with Organogenesis Inc for its PHMB wound dressing. Under the agreement Organogenesis will have exclusive licence in the US to the patent, and in exchange AMS will receive $2.5m upfront and annual royalties until the patent expires in 2026. Shares in ticketing and virtual queuing solutions provider Accesso continued to rise following the strong interim results announced in September. The attraction market remains relatively early in the move towards electronic and mobile commerce and Accesso s market leading technology is becoming increasingly central to its customers propositions, leveraging software and data to improve guest experience while driving operator profitability. Keywords Studios, the leading outsourced partner to the video game industry, performed well after announcing an earnings accretive acquisition during the month. Whilst short positions were a modest detractor in October, with a number of our shorts rising on the back of the market rise, we continued to deliver stock specific successes in the short book, notably a profit warning from an LED lighting company suffering from outsourcing challenges. Information correct as at 24 November 2017 unless otherwise stated. Any opinions or forecasts represent an assessment of the market environment at a specific time and are not intended to be a forecast of future events or a guarantee of future results. This information should not be relied upon by the reader as research, investment advice or a recommendation. The specific companies identified and described above do not represent all of the companies purchased or sold, and no assumptions should be made that the companies identified and discussed were or will be profitable. This should not be construed as investment advice or an investment recommendation of those companies. Next Fifteen Communications detracted during the month. The company reported good results showing continued growth in its first half (6 months end 31 July 2017) and a solid start to the second half, however the shares came under pressure as poor news flow from peers in the sector was unhelpful for investor sentiment, despite very little direct read across to Next Fifteen.
Key company details Fund characteristics: Launch date December 1962 Date BlackRock took 1 July 2008 over management Dealing currency Association of Investment Companies sector (AIC) Benchmark Traded Management: Alternative investment fund manager (with effect from 2 July 2014) Portfolio managers Annual Management fee Performance fee Sterling UK Smaller Companies Numis Smaller Companies excluding AIM (ex Investment Companies) London Stock Exchange BlackRock Fund Managers Limited Mike Prentis & Dan Whitestone 0.35 per annum on gross assets (the annual management fee forms part of the ongoing charge as disclosed in the Fund Information section) 10 of any outperformance of the net asset value total return (before management and performance fees) against the benchmark index. The performance fee cap in the event that the NAV Return over the annual performance period is zero or positive is 1 of the Performance Fee Market Value. (With effect from 1 December 2017 the performance fee arrangements will be changed. Please see footnote 3 of the Fund Information section for further details). Financial calendar: Year end Results announced Annual General Meeting Dividends paid 30 November July (half yearly) February (final) March August (interim) April (final) Ordinary share codes: ISIN GB0008910555 Sedol 0891055 Bloomberg THRG:LN Reuters THRG.L Ticker THRG/LON Market exposure The table below shows the gross and net exposure of the Company on a quarterly basis. See glossary for further information. Market exposure quarterly 30/11/16 28/02/17 31/05/17 31/08/17 Long 116.9 121.4 117.3 115.3 Short 8.5 6.7 6.1 5.8 Gross exposure 125.4 128.1 123.4 121.1 Net exposure 108.4 114.7 111.2 109.5
Glossary of terms ALTERNATIVE INVESTMENT MARKET (AIM) AIM is the London Stock Exchange s international market for smaller growing companies. The AIM market has no restrictions on market capitalisation, and financial reporting is more flexible than for companies listed on the main market of the London Stock Exchange. CFD (Contracts for Difference) Under a CFD contract the seller undertakes to pay to the buyer the difference between the current value of an asset and its value at a specified end date; this may be a positive or negative amount dependant on how the price has moved. A CFD contract may be used to profit from the price of the underlying asset falling as well as rising; if the buyer enters into a contract where the transaction will generate a profit if the price of the underlying holding falls, this is called a short position. A CFD contract also enables the Company to take advantage of price movements by paying only a small margin and without the cost outlay of purchasing the underlying stock. CFD contracts are not without risks. They may generate losses as well as profits if the price of the underlying asset moves in an unfavourable direction. CFDs also involve counterparty risk the risk the CFD provider or another counterparty to a trade fails to fulfil their obligations and liquidity risk, which means market conditions/the mechanics of trading could alter in such a way that trades cannot be made. DISCOUNT/PREMIUM Investment trust shares frequently trade at a discount or premium to NAV. This occurs when the share price is less than (a discount) or more than (a premium) the NAV. The discount or premium is the difference between the share price (based on mid-market share prices) and the NAV, expressed as a percentage of the NAV. Discounts and premiums are mainly the consequence of supply and demand for the shares on the stock market. GEARING Investment companies can borrow to purchase additional investments. This is called gearing. It allows investment companies to take advantage of a long-term view on a sector or to take advantage of a favourable situation or a particularly attractive stock without having to sell existing investments. LONG AND SHORT POSITIONS Holding a long position in a security means that the holder owns the security or has gained exposure to the security via a CFD contract in the expectation that the stock will rise in value in the future. A short position. Generally refers to an arrangement to sell at a future date a stock that is not currently owned by the investor. Investors who sell short believe the price of the stock will decrease in value. If the price drops, they can buy the stock at the lower price and make a profit. If the price of the stock rises and they buy it back later at the higher price, a loss will be incurred. CFD contracts may be used to take short positions. MARKET EXPOSURE Gross exposure is calculated by adding the long and short positions together. For example, if the Company has 120 long exposure through a combination of securities and long CFDs and 10 held in short CFDs it has a gross exposure of 130. Net exposure refers to the exposure of the Company when the short positions are deducted from total long exposure. For example, if the Company has 120 long exposure through securities and CFDs and 10 short exposure through CFD positions the net exposure is 110; this measurement provides a guide to the net directional market exposure and takes into account the fact that long and short positions can often offset one another when the market moves in a particular direction NAV (Net Asset Value) A company s undiluted NAV is its available shareholders funds divided by the number of shares in issue (excluding treasury shares), before making any adjustment for any potentially dilutive securities which the Company may have in issue, such as subscription shares, convertible bonds or treasury shares. A diluted NAV is calculated on the assumption that holders of any convertibles have converted, subscription shares have been exercised and treasury shares are re-issued at the mid-market price, to the extent that the NAV per share is higher than the price of each of these shares or securities and that they are 'in the money'. The aim is to ensure that shareholders have a full understanding of the potential impact on the Company s NAV if these instruments had been exercised on a particular date. NET YIELD The net yield is calculated using total dividends declared in the last 12 months (as at date of this factsheet) as a percentage of month end share price. Gearing works by magnifying the company s performance. If a company gears up and then markets rise and the returns on the investments outstrip the costs of borrowing, the overall returns to investors will be even greater. But if markets fall and the performance of the assets in the portfolio is poor, then losses suffered by the investor will also be magnified.
Glossary of terms Continued ONGOING CHARGES RATIO Ongoing charges () = Annualised ongoing charges Average undiluted net asset value in the period Ongoing charges are those expenses of a type which are likely to recur in the foreseeable future, whether charged to capital or revenue, and which relate to the operation of the investment company as a collective fund, excluding the costs of acquisition/disposal of investments, financing charges and gains/losses arising on investments. Ongoing charges are based on costs incurred in the year as being the best estimate of future costs and include the annual management fee. The impact of the recently agreed new management fee arrangements, assuming the same level of performance from the manager and assuming all other charges remain the same, would be to reduce the level of Ongoing Charges borne by the trust. Category: UK Smaller Companies Effective date: 9 February 2017.. BlackRock Throgmorton Trust is one of Money Observer s Rated Funds for 2017. Money Observer s Rated Funds recognise open-ended funds and closedended investment companies that have demonstrated consistent outperformance or that have been chosen as ideal routes into specific markets and sectors in the current investment environment. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. NMPI Status The Company currently conducts its affairs so that its securities can be recommended by IFAs (Independent Financial Adviser) to ordinary retail investors in accordance with the FCA's (Financial Conduct Authority) rules in relation to non-mainstream pooled investments (NMPI) and intends to continue to do so for the foreseeable future. The securities are excluded from the FCA's restrictions which apply to non-mainstream pooled investment because they are shares in an investment trust. Important Information BlackRock has not considered the suitability of this investment against your individual needs and risk tolerance. To ensure you understand whether this product is suitable, please read the Key Features document or Key information Document (KID) (when implemented) and the current Annual and Half Yearly Financial Reports which are available on blackrock.co.uk/thrg and which provide more information about the risk profile of the investment. Investment Trusts will provide the KID by 1 January 2018. We recommend you seek independent professional advice prior to investing. If after reading this factsheet you have any questions or would like any additional information, please contact your financial adviser or speak to our Investor Services Team. The purpose of this factsheet is to provide summary information concerning the Company and does not constitute a recommendation to buy or sell its shares. If you are in any doubt as to the suitability of any of our funds for your investment needs, please contact your Financial Adviser. The Company s shares are traded on the London Stock Exchange and dealing may only be through a member of the Exchange. The Company has appointed BlackRock Fund Managers Limited as its Alternative Investment Fund Manager. SEDOLTM is a trademark of the London Stock Exchange plc and is used under licence. Issued by BlackRock Investment Management (UK) Limited (authorised and regulated by the Financial Conduct Authority). Registered office: 12 Throgmorton Avenue, London, EC2N 2DL. Registered in England No. 2020394. Tel: 020 7743 3000. For your protection, telephone calls are usually recorded. BlackRock is a trading name of BlackRock Investment Management (UK) Limited. 2017 BlackRock, Inc. All Rights reserved. BLACKROCK, BLACKROCK SOLUTIONS, ishares, BUILD ON BLACKROCK, SO WHAT DO I DO WITH MY MONEY and the stylized i logo are registered and unregistered trademarks of BlackRock, Inc. or its subsidiaries in the United States and elsewhere. All other trademarks are those of their respective owners.