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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Blackrock Throgmorton Trust Plc | LSE:THRG | London | Ordinary Share | GB0008910555 | ORD 5P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -3.00 | -0.51% | 587.00 | 584.00 | 587.00 | 590.00 | 584.00 | 587.00 | 166,380 | 16:35:10 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Unit Inv Tr, Closed-end Mgmt | -10.2M | -15.75M | -0.1654 | -35.49 | 559.07M |
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TIDMTHRG
BlackRock Throgmorton Trust plc
(Legal Entity Identifier: 5493003B7ETS1JEDPF59)
Information disclosed in accordance with Article 5 Transparency Directive and
DTR 4.2
Half Yearly Financial Report for period ended 31 May 2017
PERFORMANCE RECORD
Financial Highlights
31 May 2017 30 November 2016 Change
Attributable to ordinary shareholders (unaudited) (audited) %
Assets
Net assets GBP381.53m GBP301.55m +26.5
Net asset value per share 521.71p 412.34p +26.5
- with income reinvested +28.3
Ordinary share price (mid-market) 436.00p 325.00p +34.2
- with income reinvested +36.4
Numis Smaller Companies excluding AIM 21,545.19 18,157.95 +18.7
(excluding Investment Companies) Index
For the six For the six
months ended months ended
31 May 2017 31 May 2016 Change
(unaudited) (unaudited) %
Revenue
Net revenue return after taxation (GBP'000) 3,977 2,743 +45.0
Revenue return per ordinary share 5.44p 3.75p +45.1
------ ------ ------
Dividend per ordinary share
Interim 2.00p 1.25p +60.0
====== ====== =====
CHAIRMAN'S STATEMENT
PERFORMANCE
For the six months ended 31 May 2017 the Company's net asset value per share
(NAV) returned 28.3% compared with a return of 18.7% for the Numis Smaller
Companies excluding AIM (excluding Investment Companies) Index. The FTSE
All-Share Index returned 13.6% over the same period (all figures in sterling
terms with income reinvested). It is encouraging to see that the portfolio has
performed strongly, outperforming the benchmark index by 9.6% and generating a
return of more than twice that of the wider UK stock market (as measured by the
FTSE All-Share Index). Further information on portfolio activity, the factors
that contributed to performance during the period and the outlook for the
second half of the financial year are set out in the Investment Manager's
Report.
PERFORMANCE RECORD TO 31 MAY 2017 (WITH INCOME REINVESTED)
NAV per share
Benchmark Share price (with income
(with income (with income reinvested) -
reinvested) reinvested) undiluted
1 Year change % 23.9% 34.0% 35.1%
3 Year change % 34.6% 58.4% 63.4%
5 Year change % 106.4% 172.6% 162.8%
Since 1 July 2008 change %1 140.8% 288.1% 312.7%
1 Date of BlackRock's appointment as Manager.
Since the period end and up to the close of business on 20 July 2017, the NAV
has fallen by 1.8%, and the benchmark index has fallen by 1.2%. (All figures in
sterling terms with income reinvested.)
REVENUE RETURN AND DIVIDS
The revenue return per share for the period amounted to 5.44 pence compared to
3.75 pence earned during the comparative period last year. This is an increase
of 45.1% and results from increases in the level of both the ordinary and
special dividends received during the period. The Board is pleased to declare
an interim dividend of 2.00 pence per share (2016: 1.25 pence per share)
payable on 23 August 2017 to shareholders on the register on 4 August 2017
(ex-dividend date is 3 August 2017).
MARKET OVERVIEW
The period under review was characterised by stronger performance with episodes
of market volatility. Sentiment in the UK has been dominated by political
uncertainty with some highly publicised political rhetoric from the initial
negotiations on the terms of the UK's exit from the European Union (EU). The
negative effect of the uncertainty around Brexit was tempered somewhat by the
outcome of the Dutch and French elections, as victories by both moderate
candidates were well received by the market, helping to quell some of the
political risk present. It was somewhat pleasing, therefore, that the
International Monetary Fund twice revised its UK growth forecast upwards in the
period.
The Brexit process officially began on 29 March 2017 as Article 50 of the
Lisbon Treaty was triggered. The Prime Minister's intention to do so had been
well communicated and the market's reaction was somewhat muted. On 18 April the
Government called a snap general election to be held on 8 June and Sterling
rallied against both the US Dollar and the Euro. It was anticipated that a
Conservative victory with an increased majority would strengthen the UK's
negotiating position with the EU. However, the outcome of the general election
was not as expected, with no party commanding an outright majority and
resulting in a hung parliament. Sterling fell on this result but has since
stabilised. The Conservatives remain as the largest party and have since formed
a minority government with the support of the Democratic Unionist Party (DUP)
enacted through a confidence and supply agreement. The agreement reached with
the DUP is likely to strengthen the UK Government's ability to negotiate
effectively with the EU on the terms of the UK's exit and which markets may
view as a positive development under the circumstances.
In the US, President Trump's victory in the US Presidential elections saw
markets rally in anticipation of promised protectionist policies, business
friendly corporation tax cuts, streamlined regulation and increased
infrastructure investment. The Federal Reserve increased interest rates in
March and June of this year following improving economic data. However, more
recent data has been mixed and the ability of the Trump administration to
implement their policies has come into question with certain policies only
partially delivered and others abandoned entirely.
INVESTMENT MANAGEMENT ARRANGEMENTS
As I mentioned in the Company's Annual Report for the year to 30 November 2016,
although performance has been strong in both relative and absolute terms - as
set out in the performance chart above - the Company's shares have persistently
traded at a significant discount to NAV. Although this discount has not been
out of line with the overall sector, the Board felt it important to consult
with major shareholders and the Company's advisors on this issue.
As announced to the market on 24 July 2017, following shareholder consultation
and negotiation with the Manager, the Board has agreed a revised management fee
structure. I am pleased to report that with effect from 1 August 2017, the
annual management fee will be calculated at 0.35% of month end gross assets
(previously 0.70% of month end gross assets), representing a 50% reduction.
Effective 1 December 2017, the performance fee will increase from 10% to 15% of
any NAV total return outperformance over the benchmark and will be calculated
on a 2 year rolling average basis which will be applied to average gross
assets over two years. With effect from 1 December 2017, the total management
and performance fees paid to BlackRock will be subject to a maximum aggregate
cap of 1.25% of average gross assets over a two year period. The Board believes
that the new fee structure is appropriately aligned to the Company's
activities, investment objective and shareholder interests. The low base fee
minimises the costs borne by shareholders whilst the performance fee is
designed to reward the Manager at a level acceptable to shareholders for the
generation of superior performance. The Board believes that these changes will
result in improved performance, further enhancing shareholder return,
increasing the Company's attractiveness and potentially narrowing the discount
at which the Company's shares trade in the market, thereby increasing liquidity
for shareholders. Further information on management and performance fees during
the period can be found in note 4.
In addition, the Board has amended the investment parameters within which the
Manager must operate, increasing the existing maximum permitted exposure to
equities or collective investment vehicles traded on the AIM market of the
London Stock Exchange from 25% of gross assets (at the time of acquisition) to
35% of gross assets (at the time of acquisition). The rationale for this change
is that we increasingly find that many more companies are choosing to remain on
the AIM Market rather than seeking a Main Market listing. The change is being
made to afford the investment managers greater flexibility to continue to hold
strongly performing AIM stocks where it would otherwise be necessary to divest
when the aggregate portfolio exposure limit of 25% was reached.
The Board intends to continue its review of the Company's investment strategy
and this may result in a further increase to the AIM exposure limit. If deemed
to be appropriate, this change would be undertaken in tandem with a change to
the Company's benchmark index, the Numis Smaller Companies ex AIM (excluding
Investment Companies) Index to the Numis Smaller Companies plus AIM (excluding
Investment Companies) Index to reflect the portfolio's greater potential AIM
market exposure. The changes being considered would, in aggregate, require
shareholder approval in a general meeting. Therefore, should the Board reach a
decision on these matters, suitable resolutions would be put to shareholders
seeking your approval at the Company's Annual General Meeting (AGM) which is
expected to be held in March 2018.
The changes being contemplated would be made with the intention of optimising
investment performance and would not represent a significant shift in the
Company's investment approach, with the focus remaining on providing
shareholders with capital growth and an attractive total return by investing in
UK smaller and mid-capitalisation companies.
BOARD COMPOSITION
As I mentioned in my Chairman's Statement to the Annual Report, I have been
Chairman of the Company since March 2012, following my appointment to the Board
in March 2007. I believe it is now the right time to step down both as Chairman
of the Board and as a Director. I will therefore retire from the Board with
effect from 24 July 2017. As previously announced, as part of the Board's
succession plans, Christopher Samuel will succeed me as Chairman of the Board
with effect from the date of my retirement. Mr Samuel has extensive investment
company experience and financial sector expertise and I have no doubt that he
will provide strong and diligent leadership of this Company, ensuring that it
continues to achieve its objective of providing shareholders with capital
growth and an attractive total return.
OUTLOOK
Overall, the outlook for the UK and global economy appears to be generally
positive, with improving economic data generated by the UK, Europe and the US.
However, there are still a number of significant risks and headwinds present,
not least the effect of US President Trump's protectionist policies and the
impact of sustained uncertainty around Brexit negotiations. In the UK,
economists have forecast rising inflation and a fall in consumer spending as
the effect of Sterling's depreciation and the rise in import costs are passed
on to the UK consumer through price increases. With UK inflation now above the
Bank of England's 2% target, a rise in interest rates this year may be seen,
although any increase is expected to be gradual to avoid unsettling markets.
Against this backdrop, our investment managers will continue to seek to
identify opportunities to add to existing holdings or to introduce new stocks
into the portfolio which appear well positioned to benefit as the economy
adjusts. The investment strategy is unchanged, focusing on companies with
robust business models, strong cash flows and favourable industry
characteristics, led by management teams capable of 'self-help'. The investment
process remains focused on bottom-up stock selection, assembling a portfolio of
individual companies which, taken as a whole, should provide capital growth and
an attractive total return, regardless of short term economic fluctuations.
Your Board is fully supportive of this approach.
Crispin Latymer
Chairman
24 July 2017
INTERIM MANAGEMENT REPORT AND RESPONSIBILITY STATEMENT
The Chairman's Statement and the Investment Manager's report give details of
the important events which have occurred during the period and their impact on
the financial statements.
PRINCIPAL RISKS AND UNCERTAINTIES
The principal risks faced by the Company can be divided into various areas as
follows:
* Performance;
* Market;
* Income/dividend;
* Financial;
* Operational; and
* Regulatory
The Board reported on the principal risks and uncertainties faced by the
Company in the Annual Report and Financial Statements for the year ended 30
November 2016. A detailed explanation can be found in the Strategic Report on
pages 11 to 14 and in note 17 on pages 60 to 69 of the Annual Report and
Financial Statements which are available on the website maintained by BlackRock
at blackrock.co.uk/thrg.
In the view of the Board, there have been no changes to the fundamental nature
of the principal risks and uncertainties since the previous report and these
are equally applicable to the remaining six months of the financial year as
they were to the six months under review.
RELATED PARTY DISCLOSURE AND TRANSACTIONS WITH THE INVESTMENT MANAGER
BlackRock Fund Managers Limited (BFM) was appointed as the Company's AIFM with
effect from 2 July 2014. BFM has (with the Company's consent) delegated certain
portfolio and risk management services, and other ancillary services, to
BlackRock Investment Management (UK) Limited (BIM (UK)). Both BFM and BIM (UK)
are regarded as related parties under the Listing Rules. Details of the fees
payable are set out in note 4 and note 10.
The related party transactions with the Directors are set out in note 11.
GOING CONCERN
The Directors are satisfied that the Company has adequate resources to continue
in operational existence for the foreseeable future (being a period of at least
12 months from the date that this half yearly financial report is approved) and
is financially sound. For this reason, they continue to adopt the going concern
basis in preparing the financial statements. The Company has a portfolio of
investments which is considered to be readily realisable and is able to meet
all of its liabilities from its assets and the income generated from these
assets. Ongoing charges (excluding performance fee and finance costs) for the
year ended 30 November 2016 were approximately 1.1% of net assets.
DIRECTORS' RESPONSIBILITY STATEMENT
The Disclosure and Transparency Rules (DTR) of the UK Listing Authority require
the Directors to confirm their responsibilities in relation to the preparation
and publication of the Interim Management Report and Financial Statements.
The Directors confirm to the best of their knowledge that:
* the condensed set of financial statements contained within the half yearly
financial report has been prepared in accordance with International
Accounting Standard 34 'Interim Financial Reporting'; and
* the Interim Management Report, together with the Chairman's Statement and
Investment Manager's report, include a fair review of the information
required by 4.2.7R and 4.2.8R of the FCA's Disclosure and Transparency
Rules.
The half yearly financial report has been reviewed by the Company's Auditor.
The half yearly financial report was approved by the Board on 24 July 2017 and
the above responsibility statement was signed on its behalf by the Chairman.
Crispin Latymer
For and on behalf of the Board
24 July 2017
INVESTMENT MANAGER'S REPORT
for the six months ended 31 May 2017
MARKET REVIEW AND OVERALL INVESTMENT PERFORMANCE
The first half of our financial year corresponded to a period of strong
markets. Markets performed well despite numerous political uncertainties
including tensions involving North Korea, the French Presidential election and
at the end of the period, the calling of a surprise general election in the UK.
Global GDP growth has been firm with notable signs of improvement in the EU,
although UK GDP growth slowed in the first quarter.
PERFORMANCE REVIEW
The Company's NAV per share has performed well in the first six months of the
financial year, increasing by 28.3% to 521.71p on a total return basis. This
compares to an increase in the benchmark of 18.7% and the FTSE 100 of 13.1%.
Both the long only equity and the long/short portfolios contributed positively
during the period. The long/short book contributed 3.1% to NAV.
Starting with the long/short portfolio, it was encouraging to see that despite
the strong market return which acted as a headwind for the short book, one of
the top three positive contributors to the performance of the total Company
return was from one of our short positions where a restructuring resulted in a
significant writedown of the company's assets.
Other notable contributors in the long/short portfolio included Melrose
Industries and JD Sports. Melrose has demonstrated strong progress in profit
growth as the timing and magnitude of improvements at Nortek, its recent
acquisition, continue ahead of the original plan. JD Sports delivered excellent
full year results with earnings per share up 55%, helped by strong
like-for-like sales growth in the UK. European development accelerated with 54
additional JD Fascia stores opened and the first stores opened in Asia. JD
Sports operates with net cash and continues to look well placed.
Turning to the long-only equity portfolio, the largest positive contributors to
performance were our holdings in Warpaint, Morgan Sindall, Fever-Tree and
Dechra Pharmaceuticals. Warpaint reported a 24% increase in 2016 earnings and
announced a maiden final dividend of 1.5p and we believe the outlook for the
company remains good. The shares have performed well since IPO and the outlook
for the company remains strong. Morgan Sindall's recent AGM statement showed
continued strong trading across the group resulting in further broker upgrades
while Fever-Tree continues to grow strongly, reporting 73% organic revenue
growth in 2016. Dechra Pharmaceuticals' interim results for the 6 months to
December came in ahead of expectations, with the integration of recent
acquisitions supplementing strong revenue growth from existing operations.
Our holding in plastic packaging engineer RPC was the largest detractor during
the period. RPC fell as the market grew concerned around the company's
acquisition strategy following the announced acquisition of Letica for $490m
funded by a 1 for 4 rights issue. RPC's management have an excellent track
record and remain ambitious.
ACTIVITY
Within the long only equity portfolio we have been increasing the concentration
of the portfolio by adding to our highest conviction positions and reducing the
total number of holdings.
We sold our holding in Hansteen after it announced the sale of its Continental
European operations and the holding in Topps Tiles which has seen weakening
like-for-like sales since the EU referendum.
We have added positions in a number of best in class mid-cap companies, which
the Company has held in the past including Berkeley Group, Derwent London,
Bellway and Rightmove.
We purchased a new holding in Countryside Properties. Countryside builds houses
both on land owned or controlled by itself, and also on land owned by public
bodies including local authorities. The latter approach avoids the need to buy
land in these situations and helps Countryside generate good returns on
investment on such long term developments, and also provides visibility of
revenues. We believe the Company looks set for good earnings growth.
We continue to find opportunities in initial public offerings, and recently
took part in the IPOs of Medica, UP Global Sourcing and Xafinity. Medica is a
leading independent UK provider of radiology reporting delivering more than 1.3
million reports per annum, mainly to the NHS. UP Global Sourcing is a leading
product development, sourcing and merchandising company owning brands such as
Salter, Russell Hobbs, Beldray and Constellation. Xafinity is a UK specialist
in pensions actuarial, consulting and administration, providing a wide range of
advisory and compliance services to over 550 pension scheme clients.
We have also used strong share price performance to take some profits in a
number of long term holdings which have performed well and where valuations are
now quite high. Our view on many of these companies remains unchanged and we
would add to many of these on any setback.
Within the long/short portfolio, a few new holdings have been added from
promising IPOs, as outlined above. We've also been increasing our short
positions in certain UK domestics in recent months, where we see scope for
disappointment in valuation, rising risks to earnings and cashflow from falling
demand and rising costs pressures. Recent political events leading to more
uncertainty will continue to exert further pressure on some of these business
models.
PORTFOLIO POSITIONING
Relative to our benchmark index we remain overweight media companies,
housebuilders, construction companies, industrial engineers and miners. Our
media stocks include 4imprint and Next Fifteen which are both heavily US and
business to business focused. Our housebuilders include Bellway and Berkeley
Group. Within the construction sector our holdings having a more infrastructure
and public housing focus, including Morgan Sindall, Marshalls and Costain. Our
engineering holdings include Hill & Smith, Avon Rubber, Bodycote, Gooch &
Housego and Trifast. All these companies are very internationally focused and
generally supplying attractive end markets.
We remain underweight support services companies, food producers, software
companies and challenger banks.
We estimate that around half of the revenues of our portfolio originate in the
UK and these include defensive consumer companies such as CVS Group and
Cineworld. More cyclical consumer companies include JD Sports and Headlam.
Within the long/short portfolio, there has been little change to the overall
shape of the portfolio, because we believe the key shares and sectors where we
see good long investment opportunities are the same, and the short book still
targets the same areas that we see as generating unsustainable returns or under
structural or cyclical pressure. The long book remains exposed to specific
investment cases, often where companies have harnessed the power and
convenience of technology in a capital light model that disrupts mature profit
pools. Many of our short positions are within Consumer Services, either facing
structural headwinds (digital disruption, low cost or specialised formats) or
cyclical pressures (weakening consumer demand, rising costs).
OUTLOOK
Markets have remained firm based on generally good economic data around the
world, however the most recent UK GDP growth has been weaker than expected,
whilst wage growth remains lower than inflation. Political developments have
continued to be at the forefront, with the unexpected call for a snap general
election in the UK and subsequent outcome of a hung parliament.
The unexpected result in the election has undoubtedly increased the uncertainty
around Brexit negotiations and may have an impact on business investment
decisions and could damage consumer confidence.
Meanwhile, valuations are not cheap and although earnings growth has been good
for many of our holdings, and they remain well set, an increasingly large
number of companies trade on more than 20 times forecast earnings. Given this
and the potential for further political surprise or economic setback, the share
prices of UK small and mid-caps may find it difficult to make further progress
over the coming months.
Despite these concerns, we believe our portfolio is suitably diversified and
comprised of many market-leading businesses, run by strong management teams and
is therefore well placed for the current environment, although it could suffer
in any de-rating or momentum correction. We also have the additional benefit
through the long/short portfolio to short companies with weaker fundamentals
and to vary our overall exposure to the market.
Mike Prentis and Dan Whitestone
BlackRock Investment Management (UK) Limited
24 July 2017
TWENTY LARGEST INVESTMENTS
as at 31 May 2017
Market value % of net
Company GBP'000 assets Description
CVS Group* Ordinary shares 10,141 3.4 Operation of veterinary
Long CFD position 2,768 surgeries
Dechra Pharmaceuticals Ordinary shares 9,070 2.8 Development and supply of
Long CFD position 1,604 pharmaceutical and other
products focused on the
veterinary market
4imprint Group Ordinary shares 7,835 2.4 Supply of promotional
Long CFD position 1,484 merchandise in the US
JD Sports Fashion Ordinary shares 6,509 2.4 Retail supply of sports
Long CFD position 2,518 and leisure footwear and
clothing
Cineworld Group Ordinary shares 6,332 2.3 Operation of cinemas
Long CFD position 2,336
Ascential Ordinary shares 4,963 1.9 Connection of businesses
Long CFD position 2,454 through international
exhibitions and festivals
Hill & Smith Ordinary shares 6,683 1.9 Production of
Long CFD position 719 infrastructure products
and supply of galvanizing
services
Big Yellow Ordinary shares 7,355 1.9 Provision of self-storage
services
Ibstock Ordinary shares 5,879 1.9 Manufacture of clay bricks
Long CFD position 1,402 and concrete products
Bellway Ordinary shares 6,373 1.9 UK housebuilding
Long CFD position 756
Berkeley Group Ordinary shares 5,713 1.9 Development of residential
Holdings Long CFD position 1,393 property in London
Derwent London Ordinary shares 5,947 1.8 Development and ownership
Long CFD position 952 of office property in
Central and North London
Avon Rubber Ordinary shares 6,734 1.8 Production of safety masks
and dairy related
products
Accesso Technology* Ordinary shares 5,039 1.7 Development and supply of
Long CFD position 1,468 ticketing and virtual
queuing solutions
Advanced Medical Ordinary shares 5,542 1.7 Development and
Solutions* Long CFD position 888 manufacture of wound care
and closure products
Melrose Industries Ordinary shares 2,330 1.7 Purchase and improvement
Long CFD position 3,944 of manufacturing
businesses
Workspace Group Ordinary shares 5,717 1.6 Supply of flexible
Long CFD position 542 workspace to businesses in
London
Johnson Service Group* Ordinary shares 4,227 1.6 Provision of textile
Long CFD position 1,966 related services
Bodycote Ordinary shares 5,579 1.6 Provision of thermal
Long CFD position 504 processing services
Marshalls Ordinary shares 5,084 1.6 Manufacture and sale of
Long CFD position 965 concrete stone paving and
related products
------- ------
20 largest investments 151,715 39.8
====== =====
* Traded on the Alternative Investment Market (AIM) of the London Stock
Exchange.
At 31 May 2017, the Company did not hold any equity interest representing more
than 3% of each investee company's share capital.
A list of the Company's long only equity portfolio and long CFD portfolio is
available on the Company's website.
ANALYSIS OF INVESTMENTS
as at 31 May 2017
Fair Gross market Gross market
value1 exposure2 exposure
Portfolio GBP'000 GBP'000 as a % of net assets
Equity investments 374,659 374,659 98.2
-------- -------- --------
Total long CFD positions 1,799 74,865 19.6
-------- -------- --------
Total short CFD positions (415) (23,250) (6.1)
-------- -------- --------
Short index futures position (209) (3,663) (1.0)
-------- -------- --------
Total Investments 375,834 422,611 110.7
-------- -------- --------
Cash and cash equivalents3 8,452 (38,325) (10.0)
-------- -------- --------
Other net current liabilities (2,757) (2,757) (0.7)
-------- -------- --------
Net assets 381,529 381,529 100.0
======== ======== ========
1. Fair value is determined as follows:
- Listed and AIM quoted investments are valued at bid prices where available,
otherwise at published price quotations.
- The sum of the fair value column above includes CFD and futures contracts
at their fair value, which is determined based on the difference between the
purchase price and value of the underlying shares in the contract (in effect
the unrealised gains/(losses) on the exposed positions). The cost of purchasing
the securities held through long CFD positions directly in the market would
have amounted to GBP73,066,000 at the time of purchase, and subsequent market
rises in prices have resulted in unrealised gains on the CFD contracts of GBP
1,799,000 resulting in the value of the total market exposure to the underlying
securities rising to GBP74,865,000 as at 31 May 2017. The notional price of
selling the securities to which exposure was gained via the short CFD and index
futures positions would have been GBP22,835,000 and GBP3,454,000 respectively at
the time of entering into the contract, and subsequent price increases have
resulted in unrealised losses on the short CFD and index futures positions of GBP
415,000 and GBP209,000 respectively and the value of the market exposure of these
investments increasing to GBP23,250,000 and GBP3,663,000 respectively at 31 May
2017. If the short positions had been closed on 31 May 2017 this would have
resulted in a loss of GBP624,000 for the Company.
2. Market exposure in the case of equity investments is the same as fair value.
In the case of CFDs and futures it is the market value of the underlying shares
to which the portfolio is exposed via the contract.
3. Cash and cash equivalents include investment in BlackRock's Institutional
Cash Series plc - Sterling Liquidity Fund of GBP8,370,000. The gross market
exposure column for Cash and cash equivalents has been adjusted to assume the
Company purchased direct holdings rather than exposure being gained through
CFDs or futures.
DISTRIBUTION OF INVESTMENTS
as at 31 May 2017
short CFD
equity long CFD & future net
portfolio portfolio portfolio portfolio
Sector % % % %
Oil & Gas
Oil & Gas Producers 2.3 - (0.1) 2.2
Oil Equipment, Services & - 0.1 - 0.1
Distribution
------ ------ ------ -----
2.3 0.1 (0.1) 2.3
------ ------ ------ -----
Basic Materials
Chemicals 2.2 0.4 (0.3) 2.3
Industrial Metals & Mining 0.6 - - 0.6
Mining 3.8 - - 3.8
------ ------ ------ -----
6.6 0.4 (0.3) 6.7
------ ------ ------ -----
Industrials
Construction & Materials 8.1 2.1 - 10.2
Aerospace & Defence 2.6 - - 2.6
General Industrials 2.5 0.8 - 3.3
Electronic & Electrical 1.3 0.6 (0.4) 1.5
Equipment
Industrial Engineering 4.4 0.7 (0.3) 4.8
Industrial Transportation 2.0 0.2 (0.1) 2.1
Support Services 5.7 1.5 (1.0) 6.2
------ ------ ------ -----
26.6 5.9 (1.8) 30.7
------ ------ ------ -----
Consumer Goods
Beverages 0.9 0.2 (0.1) 1.0
Food Producers - - (0.1) (0.1)
Household Goods & Home 8.7 1.5 - 10.2
Construction
Leisure Goods 1.0 0.2 - 1.2
Personal Goods 1.1 0.1 (0.1) 1.1
------ ------ ------ -----
11.7 2.0 (0.3) 13.4
------ ------ ------ -----
Health Care
Health Care Equipment & Services 2.0 0.2 - 2.2
Pharmaceuticals & Biotechnology 2.5 0.4 - 2.9
------ ------ ------ -----
4.5 0.6 - 5.1
------ ------ ------ -----
Consumer Services
Food & Drug Retailers - 0.4 (0.5) (0.1)
General Retailers 6.1 2.2 (0.6) 7.7
Media 8.9 2.1 (0.2) 10.8
Travel & Leisure 5.1 2.1 (0.9) 6.3
------ ------ ------ -----
20.1 6.8 (2.2) 24.7
------ ------ ------ -----
Financials
Banks - 0.2 - 0.2
Financial Services 5.0 0.4 (0.9) 4.5
Non-life Insurance 0.9 0.5 (0.1) 1.3
Real Estate Investment & 2.0 0.2 - 2.2
Services
Real Estate Investment Trusts 4.9 0.5 - 5.4
------ ------ ------ -----
12.8 1.8 (1.0) 13.6
------ ------ ------ -----
Technology
Software & Computer Services 3.6 0.5 (0.4) 3.7
Technology Hardware & Equipment - - (0.2) (0.2)
------ ------ ------ -----
3.6 0.5 (0.6) 3.5
------ ------ ------ -----
Total Investments 88.2 18.1 (6.3) 100.0
===== ===== ===== =====
The above percentages are calculated based on the portfolio at 31 May 2017. The
net portfolio is calculated as long only equity portfolio plus long CFD
portfolio less short CFD portfolio.
ANALYSIS OF THE PORTFOLIO
Gross Basis1 Net Basis2
FTSE 250 44.1% 44.5%
FTSE AIM 27.6% 29.8%
FTSE Small Cap 21.2% 21.8%
Other 7.1% 3.9%
Source: BlackRock.
1. Long and short CFD portfolio in aggregate plus futures and long only equity
portfolio excluding investments in BlackRock's Institutional Cash Series plc -
Sterling Liquidity Fund.
2. Long CFD portfolio less short CFD portfolio and futures portfolio plus long
only equity portfolio excluding investments in BlackRock's Institutional Cash
Series plc - Sterling Liquidity Fund.
MARKET CAPITALISATION AS AT 31 MAY 2017
Long positions (including
the long equity portfolio
and long CFD portfolio) Short positions
GBP1bn+ 45.1% -2.1%
GBP400m-GBP1bn 29.9% -2.5%
GBP100m-GBP400m 31.4% -0.9%
GBP0m-GBP100m 0.0% -0.9%
Source: BlackRock.
Weighted average market capitalisation as at 31 May 2017: GBP1,091.3 million
(Benchmark Index: GBP919.7 million).
POSITION SIZE AS AT 31 MAY 2017
Long positions (including
the long equity portfolio
and long CFD portfolio) Short positions
GBP2m+ 85 -1
GBP1m-2m 51 -2
GBP0m-GBP1m 50 -42
Source: BlackRock.
STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 31 May 2017
Revenue GBP'000 Capital GBP'000 Total GBP'000
Six Six Six Six Six Six
months months Year months months Year months months Year
ended ended ended ended ended ended ended ended ended
Notes 31.05.17 31.05.16 30.11.16 31.05.17 31.05.16 30.11.16 31.05.17 31.05.16 30.11.16
(unaudited) (unaudited) (audited) (unaudited) (unaudited) (audited) (unaudited) (unaudited) (audited)
Income from 3 4,335 3,313 6,794 - - - 4,335 3,313 6,794
investments
held at fair
value
through
profit or
loss
Net income 3 254 (20) 76 - - - 254 (20) 76
from
contracts
for
difference
Other income 3 13 - 1 - - - 13 - 1
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total 4,602 3,293 6,871 - - - 4,602 3,293 6,871
revenue
-------- -------- -------- -------- -------- -------- -------- -------- --------
Profit on - - - 76,456 517 10,419 76,456 517 10,419
investments
held at fair
value
through
profit or
loss
Loss on - - - (40) - (24) (40) - (24)
foreign
exchange
Net profit - - - 9,887 3,040 6,746 9,887 3,040 6,746
from
contracts
for
difference
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total 4,602 3,293 6,871 86,303 3,557 17,141 90,905 6,850 24,012
-------- -------- -------- -------- -------- -------- -------- -------- --------
Expenses
Investment 4 (377) (306) (621) (5,718) (1,152) (2,630) (6,095) (1,458) (3,251)
management
and
performance
fees
Operating 5 (236) (238) (519) (8) (8) (18) (244) (246) (537)
expenses
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total (613) (544) (1,140) (5,726) (1,160) (2,648) (6,339) (1,704) (3,788)
operating
expenses
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net profit 3,989 2,749 5,731 80,577 2,397 14,493 84,566 5,146 20,224
on ordinary
activities
before
finance
costs and
taxation
Finance - - (1) (1) (2) (3) (1) (2) (4)
costs
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net profit 3,989 2,749 5,730 80,576 2,395 14,490 84,565 5,144 20,220
on ordinary
activities
before
taxation
Taxation (12) (6) (7) - - - (12) (6) (7)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Profit for 7 3,977 2,743 5,723 80,576 2,395 14,490 84,553 5,138 20,213
the period
-------- -------- -------- -------- -------- -------- -------- -------- --------
Earnings per 7 5.44p 3.75p 7.83p 110.18p 3.28p 19.81p 115.62p 7.03p 27.64p
ordinary
share
======== ======== ======== ======== ======== ======== ======== ======== ========
The total column of this statement represents the Statement of Comprehensive
Income, prepared in accordance with International Financial Reporting Standards
(IFRS), as adopted by the European Union (EU). The supplementary revenue and
capital columns are both prepared under guidance published by the Association
of Investment Companies (AIC). All items in the above statement derive from
continuing operations. No operations were acquired or disposed of during the
period.
The Company does not have any other comprehensive income. The net profit
disclosed above represents the Company's total comprehensive income.
STATEMENT OF CHANGES IN EQUITY
for the six months ended 31 May 2017
Called up Share Capital
share premium Special redemption Capital Revenue
capital account reserve reserve reserves reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
For the six months ended
31 May 2017 (unaudited)
At 30 November 2016 4,026 21,049 35,272 11,905 219,011 10,284 301,547
Total comprehensive income:
Net profit for the period - - - - 80,576 3,977 84,553
Transactions with owners,
recorded directly to equity:
Dividends paid* - - - - - (4,571) (4,571)
-------- -------- -------- -------- -------- -------- --------
At 31 May 2017 4,026 21,049 35,272 11,905 299,587 9,690 381,529
-------- -------- -------- -------- -------- -------- --------
For the six months ended
31 May 2016 (unaudited)
At 30 November 2015 4,026 21,049 35,272 11,905 204,521 9,570 286,343
Total comprehensive income:
Net profit for the period - - - - 2,395 2,743 5,138
Transactions with owners,
recorded directly to equity:
Dividends paid** - - - - - (4,095) (4,095)
-------- -------- -------- -------- -------- -------- --------
At 31 May 2016 4,026 21,049 35,272 11,905 206,916 8,218 287,386
-------- -------- -------- -------- -------- -------- --------
For the year ended
30 November 2016 (audited)
At 30 November 2015 4,026 21,049 35,272 11,905 204,521 9,570 286,343
Total comprehensive income:
Net profit for the year - - - - 14,490 5,723 20,213
Transactions with owners,
recorded directly to equity:
Dividends paid*** - - - - - (5,009) (5,009)
-------- -------- -------- -------- -------- -------- --------
At 30 November 2016 4,026 21,049 35,272 11,905 219,011 10,284 301,547
-------- -------- -------- -------- -------- -------- --------
* Final dividend of 6.25p per share for the year ended 30 November 2016,
declared on 17 February 2017 and paid on 29 March 2017.
** Final dividend of 5.60p per share for the year ended 30 November 2015,
declared on 12 February 2016 and paid on 5 April 2016.
*** Final dividend of 5.60p per share for the year ended 30 November 2015,
declared on 12 February 2016 and paid on 5 April 2016 and interim dividend of
1.25p per share for the year ended 30 November 2016, declared on 18 July 2016
and paid on 19 August 2016.
The transaction costs incurred on the acquisition and disposal of investments
are included within the capital reserves. Purchase and sale costs amounted to GBP
337,000 and GBP91,000 respectively for the period ended 31 May 2017 (six months
ended 31 May 2016: GBP250,000 and GBP64,000; year ended 30 November 2016: GBP492,000
and GBP129,000).
STATEMENT OF FINANCIAL POSITION
as at 31 May 2017
31 May 2017 31 May 2016 30 November 2016
GBP'000 GBP'000 GBP'000
Notes (unaudited) (unaudited) (audited)
Non current assets
Investments held at fair value 9 374,659 285,676 297,072
through profit or loss
-------- -------- --------
Current assets
Other receivables 7,158 1,961 1,346
Cash and cash equivalents 8,452 2,331 5,509
Cash held on margin deposit with 414 - 152
brokers
Derivative financial assets held at 3,213 1,411 1,934
fair value through profit or loss
-------- -------- --------
19,237 5,703 8,941
-------- -------- --------
Total assets 393,896 291,379 306,013
-------- -------- --------
Current liabilities
Other payables (7,887) (2,633) (3,024)
Collateral held in respect of (2,442) (1,360) (1,423)
contracts for difference
Derivative financial liabilities held (2,038) - (19)
at fair value through profit or loss
-------- -------- --------
(12,367) (3,993) (4,466)
-------- -------- --------
Net current assets 6,870 1,710 4,475
-------- -------- --------
Net assets 381,529 287,386 301,547
====== ====== ======
Equity attributable to equity holders
Called up share capital 8 4,026 4,026 4,026
Share premium account 21,049 21,049 21,049
Capital redemption reserve 11,905 11,905 11,905
Special reserve 35,272 35,272 35,272
Capital reserves 299,587 206,916 219,011
Revenue reserve 9,690 8,218 10,284
====== ====== ======
Total equity 7 381,529 287,386 301,547
====== ====== ======
Net asset value per ordinary share 7 521.71p 392.98p 412.34p
====== ====== ======
CASH FLOW STATEMENT
for the six months ended 31 May 2017
Six months ended Six months ended Year ended
31 May 2017 31 May 2016 30 November 2016
GBP'000 GBP'000 GBP'000
(unaudited) (unaudited) (audited)
Net cash inflow from operating activities 7,781 4,312 8,663
----- ----- -----
Financing activities
Interest paid on CFDs (226) (227) (462)
Interest paid (1) (3) (3)
Dividends paid (4,571) (4,095) (5,009)
----- ----- -----
Net cash outflow from financing activities (4,798) (4,325) (5,474)
----- ----- -----
Increase/(decrease) in cash and cash 2,983 (13) 3,189
equivalents
Effect of foreign exchange rate changes (40) - (24)
----- ----- -----
Change in cash and cash equivalents 2,943 (13) 3,165
Cash and cash equivalents at the start of 5,509 2,344 2,344
period
----- ----- -----
Cash and cash equivalents at the end of the 8,452 2,331 5,509
period
===== ===== =====
Comprised of:
Cash at bank 82 255 119
BlackRock's Institutional Cash Series plc - 8,370 2,076 5,390
Sterling Liquidity Fund
----- ----- -----
8,452 2,331 5,509
===== ===== =====
RECONCILIATION OF NET PROFIT BEFORE TAXATION TO NET CASH FLOW FROM OPERATING
ACTIVITIES
for the six months ended 31 May 2017
Six months ended Six months ended Year ended
31 May 2017 31 May 2016 30 November 2016
GBP'000 GBP'000 GBP'000
(unaudited) (unaudited) (audited)
Operating activities
Net profit before taxation 84,565 5,144 20,220
Add back interest paid on CFDs 226 227 462
Add back finance cost 1 3 4
Profits on investments and CFDs held at fair (86,514) (3,759) (17,512)
value through profit or loss (including
transaction costs)
Net losses on foreign exchange 40 - 24
Sales of investments held at fair value 91,950 56,366 110,936
through profit or loss
Purchases of investments held at fair value (93,081) (54,307) (110,369)
through profit or loss
Realised losses on closure of CFDs (11,393) (13,719) (28,282)
Realised gains on closure of CFDs 22,396 16,670 35,038
Net realised losses on closure of futures (205) - (461)
Collateral received in respect of CFDs 1,019 126 189
Net movement in cash held on margin deposit (262) - (152)
with brokers
(Increase)/decrease in other receivables (1,376) (495) 65
(Increase)/decrease in amounts due from (4,436) 1,602 1,655
brokers
Increase in amounts due to brokers 364 172 106
Increase/(decrease) in other payables 4,499 (3,712) (3,253)
Taxation paid (12) (6) (7)
------ ------ ------
Net cash inflow from operating activities 7,781 4,312 8,663
====== ====== ======
NOTES TO THE FINANCIAL STATEMENTS
for the six months ended 31 May 2017
1. PRINCIPAL ACTIVITY
The principal activity of the Company is that of an investment trust company
within the meaning of section 1158 of the Corporation Tax Act 2010.
2. BASIS OF PREPARATION
The half yearly financial statements have been prepared using the same
accounting policies as set out in the Company's Annual Report and Financial
Statements for the year ended 30 November 2016 which were prepared in
accordance with International Financial Reporting Standards (IFRS) as adopted
by the European Union and applied in accordance with International Accounting
Standard 34, 'Interim Financial Reporting'.
Insofar as the Statement of Recommended Practice (SORP) for investment trust
companies and venture capital trusts issued by the Association of Investment
Companies (AIC), revised in November 2014 is compatible with IFRS, the
Financial Statements have been prepared in accordance with the guidance set out
in the SORP.
The Company's investment in BlackRock's Institutional Cash Series plc -
Sterling Liquidity Fund of GBP8,370,000 (31 May 2016: GBP2,076,000; 30 November
2016: GBP5,390,000) is managed as part of the Company's cash management policy
and, accordingly, at 30 November 2016 this investment along with purchases and
sales of this investment has been classified in the Statement of Financial
Position and Cash Flow Statement as cash and cash equivalents. The comparative
figures as at 31 May 2016 in the Statement of Financial Position and for the
six months period ended 31 May 2016 in the Cash Flow Statement have been
amended to reflect this change.
3. INCOME
Six months ended Six months ended Year ended
31 May 2017 31 May 2016 30 November 2016
GBP'000 GBP'000 GBP'000
(unaudited) (unaudited) (audited)
Investment income:
UK listed dividends 2,984 2,662 5,835
UK listed dividends - special 326 294 403
UK scrip dividends 17 11 36
Overseas listed dividends 831 346 474
Overseas listed dividends - special 177 - 46
------ ------ ------
4,335 3,313 6,794
------ ------ ------
Income from contracts for difference 254 (20) 76
------ ------ ------
254 (20) 76
------ ------ ------
Interest receivable and other income:
Deposit interest - - 1
Underwriting commission 13 - -
------ ------ ------
13 - 1
------ ------ ------
Total income 4,602 3,293 6,871
===== ===== =====
Dividends and interest received in the period amounted to GBP3,233,000 and GBPnil
(six months ended 31 May 2016: GBP2,975,000 and GBPnil; year ended 30 November
2016: GBP6,364,000 and GBP1,000) respectively.
4. INVESTMENT MANAGEMENT AND PERFORMANCE FEES
Six months ended Six months ended Year ended
31 May 2017 31 May 2016 30 November 2016
(unaudited) (unaudited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Investment management 377 1,131 1,508 306 917 1,223 621 1,862 2,483
fee
Performance fee - 4,587 4,587 - 235 235 - 768 768
----- ----- ----- ----- ----- ----- ----- ----- -----
Total 377 5,718 6,095 306 1,152 1,458 621 2,630 3,251
===== ===== ===== ===== ===== ===== ===== ===== =====
BlackRock Fund Managers Limited (BFM) provides management and administration
services to the Company under a contract which is terminable on six months'
notice.
Up to 31 July 2017, the terms of the existing investment management agreement
with BFM provide for a basic management fee, payable quarterly in arrears, of
0.7% per annum on the gross asset value of the Company's long only portfolio
plus the gross value of the underlying equities, long and short (Performance
Fee Market Value), to which the Company is exposed through the CFD portfolio.
In addition, BFM is entitled to a performance fee of 10% of the net asset value
(total return) outperformance against the Numis Companies excluding AIM
(excluding Investment Companies) Index (the benchmark index) subject to a cap
of 1% of Performance Fee Market Value.
The investment management fee is allocated 75% to the capital column and 25% to
the revenue column of the Statement of Comprehensive Income in line with the
Board's expected long term split of returns, in the form of capital gains and
income, respectively, from the investment portfolio. A performance fee of GBP
4,587,000 was accrued for the six months ended 31 May 2017 (six months ended 31
May 2016: GBP235,000; year ended 30 November 2016: GBP768,000). The performance fee
has been wholly allocated to the capital column of the Statement of
Comprehensive Income, as performance has been predominantly generated through
the capital returns on the investment portfolio.
As announced on 24 July 2017, the Company has agreed revised management and
performance fee arrangements with BFM which are effective from 1 August 2017
for management fees and from 1 December 2017 for performance fees and the
aggregate cap on total fees. For further details, refer to the Chairman's
Statement.
5. OTHER OPERATING EXPENSES
Six months ended Six months ended Year ended
31 May 2017 31 May 2016 30 November 2016
GBP'000 GBP'000 GBP'000
(unaudited) (unaudited) (audited)
Allocated to revenue:
Custody fee 3 4 7
Auditor's remuneration:
- audit services 18 18 36
- other assurance services 6 6 6
Registrar's fee 14 16 33
Broker fees 19 19 37
Depositary fees 23 19 39
Marketing fees 50 64 126
Marketing fee accrual written back (41) (34) (34)
Directors' emoluments 87 68 150
Other administrative costs 57 58 119
-------- -------- --------
236 238 519
-------- -------- --------
Allocated to capital:
Transaction charges 8 8 18
-------- -------- --------
244 246 537
======== ======== ========
6. DIVIDS
The Board has declared an interim dividend of 2.00p per share payable on 23
August 2017 to shareholders on the register at 4 August 2017 (six months ended
31 May 2016, interim dividend of 1.25p per share paid on 19 August 2016 to
shareholders on the register at 29 July 2016.) This dividend has not been
accrued in the financial statements for the six months ended 31 May 2017 as,
under IFRS, interim dividends are not recognised until paid. Dividends are
debited directly to reserves.
7. EARNINGS AND NET ASSET VALUE PER ORDINARY SHARE
Total revenue and capital returns and per share are shown below and have been
calculated using the following:
Six months ended Six months ended Year ended
31 May 2017 31 May 2016 30 November 2016
GBP'000 GBP'000 GBP'000
(unaudited) (unaudited) (audited)
Net revenue profit attributable to ordinary 3,977 2,743 5,723
shareholders (GBP'000)
Net capital profit attributable to ordinary 80,576 2,395 14,490
shareholders (GBP'000)
-------- -------- --------
Total profit attributable to ordinary 84,553 5,138 20,213
shareholders (GBP'000)
-------- -------- --------
Equity shareholders' funds (GBP'000) 381,529 287,386 301,547
-------- -------- --------
The weighted average number of ordinary shares 73,130,326 73,130,326 73,130,326
in issue during each period, on which the
return per ordinary share was calculated was:
-------- -------- --------
The actual number of ordinary shares in issue 73,130,326 73,130,326 73,130,326
at the end of each period, on which the net
asset value per ordinary share was calculated
was:
-------- -------- --------
Returns per share:
Revenue earnings per ordinary share 5.44p 3.75p 7.83p
Capital profit per ordinary share 110.18p 3.28p 19.81p
-------- -------- --------
Total earnings per ordinary share 115.62p 7.03p 27.64p
======== ======== ========
As at As at As at
31 May 2017 31 May 2016 30 November 2016
(unaudited) (unaudited) (audited)
Net asset value per ordinary share - basic and 521.71p 392.98p 412.34p
diluted
-------- -------- --------
Ordinary share price 436.00p 332.00p 325.00p
======== ======== ========
The Company does not have any dilutive securities.
8. CALLED UP SHARE CAPITAL
Ordinary
shares in Treasury Total Nominal
issue shares shares value
number number number GBP'000
Allotted, called up and fully
paid share capital comprised:
Ordinary shares of 5p each:
At 1 December 2016 and 31 May 73,130,326 7,400,000 80,530,326 4,026
2017
There has been no change in the Company's share capital during the period or as
at the date of this report.
9. VALUATION OF FINANCIAL INSTRUMENTS
Financial assets and financial liabilities are either carried in the Statement
of Financial Position at their fair value (investments and derivatives) or at
an amount which is a reasonable approximation of fair value (due from brokers,
dividends and interest receivable, due to brokers, accruals, cash at bank and
bank overdrafts). IFRS 13 requires the Company to classify fair value
measurements using a fair value hierarchy that reflects the significance of
inputs used in making the measurements. The valuation techniques used by the
Company are explained in the accounting policies note 2(c) and 2(d) as set out
in the Company's Annual Report and Financial Statements for the year ended
30 November 2016.
Categorisation within the hierarchy has been determined on the basis of the
lowest level input that is significant to the fair value measurement of the
relevant asset.
The fair value hierarchy has the following levels:
Level 1 - Quoted market price in an active market for an identical instrument.
A financial instrument is regarded as quoted in an active market if quoted
prices are readily and regularly available from an exchange, dealer, broker,
industry group, pricing service, or regulatory agency, and those prices
represent actual and regularly occurring market transactions on an arm's length
basis.
Level 2 - Valuation techniques used to price securities based on observable
inputs. Valuation techniques used for non-standardised financial instruments
such as options, currency swaps and other over-the-counter derivatives, include
the use of comparable recent arm's length transactions, reference to other
instruments that are substantially the same, discounted cash flow analysis,
option pricing models and other valuation techniques commonly used by market
participants making the maximum use of market inputs.
Level 3 - Valuation techniques using significant unobservable inputs other than
quoted prices within Level 1. This category includes all instruments where the
valuation technique includes inputs not based on observable market data and
unobservable inputs could have a significant impact on the instrument's
valuation. This category includes instruments that are valued based on quoted
prices for similar instruments where significant unobservable adjustments or
assumptions are required to reflect differences between the instruments and
instruments for which there is no active market. The level in the hierarchy
within the fair value measurement is categorised in its entirety is determined
on the basis of the lowest level input that is significant to the fair value
measurement.
If a fair value measurement uses observable inputs that require significant
adjustment based on unobservable inputs, that measurement is a Level 3
measurement. Assessing the significance of a particular input to the fair value
measurement in its entirety requires judgement, considering factors specific to
the asset or liability.
The Investment Manager considers observable data to be that market data that is
readily available, regularly distributed or updated, reliable and verifiable,
not proprietary, and provided by independent sources that are actively involved
in the relevant market.
There has been no change to the valuation techniques during the period under
review or as at the date of this report.
CFDs have all been classified as Level 2 investments as their valuation has
been based on market observable inputs represented by the market prices of the
underlying quoted securities to which these contracts expose the Company and
relevant foreign currency exchange rates.
The table below sets out fair value measurements using IFRS 13 fair value
hierarchy.
Financial assets/(liabilities) Level 1 Level 2 Level 3 Total
at fair value through profit or GBP'000 GBP'000 GBP'000 GBP'000
loss at 31 May 2017
Assets:
Equity investments 374,659 - - 374,659
Contracts for difference - long - 74,865 - 74,865
(gross exposure)
Liabilities:
Index futures - short (gross - (3,663) - (3,663)
exposure)
Contracts for difference - short - (23,250) - (23,250)
(gross exposure)
-------- -------- -------- --------
374,659 47,952 - 422,611
======== ======== ======== ========
Financial assets at fair value Level 1 Level 2 Level 3 Total
through profit or loss at 31 May GBP'000 GBP'000 GBP'000 GBP'000
2016
Assets:
Equity investments 285,676 - - 285,676
Contracts for difference - long - 44,988 - 44,988
(gross exposure)
Liabilities:
Index futures - short (gross - - - -
exposure)
Contracts for difference - short - (24,038) - (24,038)
(gross exposure)
-------- -------- -------- --------
285,676 20,950 - 306,626
======== ======== ======== ========
Financial assets/(liabilities) Level 1 Level 2 Level 3 Total
at fair value through profit or GBP'000 GBP'000 GBP'000 GBP'000
loss at 30 November 2016
Assets:
Equity investments 297,072 - - 297,072
Contracts for difference - long - 56,467 - 56,467
(gross exposure)
Liabilities:
Index futures - short (gross - (2,452) - (2,452)
exposure)
Contracts for difference - short - (23,260) - (23,260)
(gross exposure)
-------- -------- -------- --------
297,072 30,755 - 327,827
======== ======== ======== ========
There were no transfers between levels for financial assets and financial
liabilities during the period recorded at fair value as at 31 May 2017, 31 May
2016 and 30 November 2016. The Company did not hold any level 3 securities
throughout the financial period under review or as at 31 May 2017, 31 May 2016
or 30 November 2016.
10. TRANSACTIONS WITH THE AIFM AND INVESTMENT MANAGER
BlackRock Fund Managers Limited (BFM) was appointed as the Company's
Alternative Investment Fund Manager (AIFM) with effect from 2 July 2014. BFM
has (with the Company's consent) delegated certain portfolio and risk
management services, and other ancillary services, to Blackrock Investment
Management (UK) Limited (BIM (UK)).
The investment management fee due to BFM for the six months ended 31 May 2017
amounted to GBP1,508,000 (six months ended 31 May 2016: GBP1,223,000; year ended
30 November 2016: GBP2,483,000). In addition the performance fee accrued for the
six months ended 31 May 2017 amounted to GBP4,587,000 (six months ended 31 May
2016: GBP235,000; year ended 30 November 2016: GBP768,000).
At the period end GBP1,508,000 was outstanding in respect of the investment
management fee (31 May 2016: GBP607,000; 30 November 2016: GBP656,000) and GBP
4,587,000 was accrued in respect of performance fees (31 May 2016: GBP235,000; 30
November 2016: GBP768,000). Any final performance fee for the full year ending 30
November 2017 will not crystallise and fall due until the calculation date of
30 November 2017.
In addition to the above services, the Manager provides the Company with
marketing services. The total fees paid or payable for these services for the
six months to 31 May 2017 amounted to GBP9,000 including VAT (six months ended 31
May 2016: GBP30,000; year ended 30 November 2016: GBP92,000). Marketing fees of GBP
37,000 including VAT (31 May 2016: GBP165,000; 30 November 2016: GBP113,000) were
outstanding at 31 May 2017.
The Company has an investment in BlackRock's Institutional Cash Series plc -
Sterling Liquidity Fund of GBP8,370,000 at 31 May 2017 (31 May 2016: GBP2,076,000;
30 November 2016: GBP5,390,000).
11. RELATED PARTY DISCLOSURE
The Board consisted of six non-executive Directors at 31 May 2017, all of whom
are considered to be independent by the Board. Mr Stobart retired with effect
from 22 March 2017 and Mr Greenlees succeeded him as Chairman of the Audit
Committee on this date. The Chairman receives an annual fee of GBP36,000, the
Chairman of the Audit Committee receives an annual fee of GBP28,000 and each
other Director receives an annual fee of GBP24,000.
As at 31 May 2017 an amount of GBP13,000 (31 May 2016: GBP11,000; 30 November 2016:
GBP12,000) was outstanding in respect of Directors' fees.
At the period end and at 20 July 2017, the interests of the Directors in the
ordinary shares of the Company were as follows:
Ordinary shares Ordinary shares
31 May 2017 20 July 2017
Crispin Latymer 31,369 31,404
Simon Beart 43,522 1 43,869 2
Loudon Greenlees 10,000 10,000
Jean Matterson 46,000 46,000
Christopher Samuel 6,500 6,500
Andrew Pegge Nil Nil
1. Including 13,964 shares held by Mrs Beart.
2. Including 14,137 shares held by Mrs Beart.
12. CONTINGENT LIABILITIES
There were no contingent liabilities at 31 May 2017, 31 May 2016 or 30 November
2016.
13. PUBLICATION OF NON STATUTORY ACCOUNTS
The financial information contained in this half-yearly financial report does
not constitute statutory accounts as defined in section 435 of the Companies
Act 2006. The financial information for the six months ended 31 May 2017 and 31
May 2016 has not been audited.
The information for the year ended 30 November 2016 has been extracted from the
latest published audited financial statements, which have been filed with the
Registrar of Companies. The report of the Auditor on those financial statements
contained no qualification or statement under sections 498(2) or 498(3) of the
Companies Act 2006.
14. ANNUAL RESULTS
The Board expects to announce the annual results for the year ending 30
November 2017 in February 2018. Copies of the results announcement can be
obtained from the Secretary on 020 7743 3000 or by email at:
cosec@blackrock.com. The Annual Report and Financial Statements should be
available by the beginning of February 2018, with the Annual General Meeting
expected to be held in March 2018.
=--------------------------------------------------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT REVIEW REPORT TO BLACKROCK THROGMORTON TRUST PLC
INTRODUCTION
We have been engaged by the Company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 31 May
2017 which comprises the Statement of comprehensive income, Statement of
changes in equity, Statement of financial position, Cash flow statement,
Reconciliation of net profit before taxation to net cash flow from operating
activities and the related notes 1 to 14. We have read the other information
contained in the half-yearly financial report and considered whether it
contains any apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
This report is made solely to the Company in accordance with guidance contained
in International Standard on Review Engagements 2410 (UK and Ireland) "Review
of Interim Financial Information Performed by the Independent Auditor of the
Entity" issued by the Auditing Practices Board. To the fullest extent permitted
by law, we do not accept or assume responsibility to anyone other than the
Company, for our work, for this report, or for the conclusions we have formed.
DIRECTORS' RESPONSIBILITIES
The half yearly financial report is the responsibility of, and has been
approved by, the Directors. The Directors are responsible for preparing the
half-yearly financial report in accordance with the Disclosure and Transparency
Rules of the United Kingdom's Financial Conduct Authority.
As disclosed in note 2, the annual financial statements of the Company are
prepared in accordance with IFRSs as adopted by the European Union. The
condensed set of financial statements included in this half yearly financial
report has been prepared in accordance with International Accounting Standard
34, "Interim Financial Reporting", as adopted by the European Union.
OUR RESPONSIBILITY
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review.
SCOPE OF REVIEW
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
CONCLUSION
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 31 May 2017 is not prepared, in all
material respects, in accordance with International Accounting Standard 34 as
adopted by the European Union and the Disclosure and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
Ernst & Young LLP
London
24 July 2017
=--------------------------------------------------------------------------------------------------------------------------------------------------------------------------
For further information, please contact:
Simon White, Managing Director, Investment Companies, BlackRock Investment
Management (UK) Limited
Tel: 020 7743 5284
Mike Prentis, Fund Manager, BlackRock Investment Management (UK) Limited
Tel: 020 7743 2312
Press enquiries:
Lucy Horne, Lansons Communications - Tel: 020 7294 3689
E-mail: lucyh@lansons.com
24 July 2017
12 Throgmorton Avenue
London EC2N 2DL
END
The Half Yearly Financial Report will also be available on the BlackRock
website at http://www.blackrock.co.uk/thrg. 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.
END
(END) Dow Jones Newswires
July 24, 2017 02:30 ET (06:30 GMT)
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