Keeping in touch
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Further information about the company can be found on our website at
www.blackrock.com/uk/thrg
.
General enquiries about the Company should be directed to the Company Secretary
at:
cosec@blackrock.com
.
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Register here to watch this year’s Annual General Meeting
For the benefit of shareholders who are unable to attend this year’s AGM in person,
we have arranged for the proceedings to be viewed via a webinar. You can register
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10 of
the Annual Report.
Financial
highlights
for the year ended 30 November 2023
£575.9m
Total net assets
▼
9.1%
16.56p
Revenue earnings per share
▲
27.9%
14.75p
Total dividends
+34.7%
5.2%
2
Share price outperformed
Benchmark Index
1
3.7%
2,3
NAV per share outperformed
Benchmark Index
1
579.00p
Ordinary share price
▼
0.8
1,2
600.72p
Net Asset Value (NAV) per share
▼
2.3
1,2
The above financial highlights are at 30 November 2023 and percentage
comparisons are against 30 November 2022.
¹
Mid-market share price, NAV performance and Benchmark Index are calculated in
Sterling terms with dividends reinvested. The Benchmark Index is the Numis Smaller
Companies plus AIM (excluding Investment Companies) Index.
²
Alternative Performance Measures, see Glossary on pages 135 to 138.
³
Calculated on NAV per ordinary share performance versus the Benchmark Index
performance, both with dividends reinvested.
Section 1: Overview and performance
1
Whilst Housebuilding and RMI (Repair, Maintenance and Improvement) had a
difficult 2023, we believe the recovery potential in both earnings and multiple is
substantial. Housebuilders M J Gleeson and Crest Nicholson, two additions to the
portfolio during the year, are amongst those who could be set to benefit from
changing market conditions.
2
BlackRock Throgmorton Trust plc
l
Annual Report and Financial Statements 30 November 2023
A member of the Association of Investment Companies
Further details about the Company, including the latest annual and half yearly financial reports, fact
sheets and stock exchange announcements, are available on the website at
www.blackrock.com/uk/thrg
.
Why BlackRock
Throgmorton
Trust plc?
Investment objective
The Company’s objective is to provide shareholders with long-term capital growth and an
attractive total return through investment primarily in UK smaller and mid-capitalisation
companies traded on the London Stock Exchange.
Reasons to invest
Outperforming asset class
The Company offers investors exposure
to primarily UK smaller and mid-
capitalisation companies, an asset
class that has historically outperformed
larger companies by 3.9%
1
per annum.
Active management
Smaller and mid-capitalisation
companies operate in a less efficient
and under-researched area of the
market, which makes it an attractive
environment for active managers.
Additional alpha
opportunities
The Company has an enhanced toolkit
for generating outperformance with the
ability to short companies that we find
unattractive, enabling the Company
to profit if their share prices fall. This
provides a differentiated source of
potential alpha.
Flexible market exposure
Leverage enables us to increase overall
gross market exposure whilst our ability
to hold short positions means we can
vary the net market exposure over time
with the aim of enhancing returns over
the long term.
Broader exposure
The Company is able to invest without
restriction in AIM listed companies, has
the ability to invest 15% of gross assets
in companies listed overseas and 2.5%
of net assets in unquoted companies.
This further expands our investment
universe and provides differentiation
from other trusts in the market.
Proven track record
Proven strategy with a long-term
track record of over 4.5% annualised
outperformance over our Benchmark
Index.
2
1
Source: Datastream. For the period 1955 to 2023, Numis Smaller Companies Index plus AIM (excluding Investment Companies)
Total Return Index (previously known as Hoare Govett). Barclays Equity Total Return (December 1955 to December 2006),
representative of smaller company performance. FTSE All-Share Total Return (January 2008 to May 2022), representative of larger
company performance.
2
Since BlackRock was appointed as Manager on 1 July 2008.
Section 1: Overview and performance
3
Contents
Section 1: Overview and performance
Financial highlights
1
Why BlackRock Throgmorton Trust plc?
2
Performance record
4
Ten year record
5
Chairman’s statement
6
Investment Manager’s report
13
Section 2: Portfolio
Portfolio of investments
21
Fair value and gross market exposure of investments
27
Distribution of investments
28
Section 3: Governance
Governance structure
34
Directors’ biographies
35
Strategic report
38
BlackRock Investment Stewardship
55
Directors’ report
56
Corporate governance statement
66
Report of the remuneration committee
73
Directors’ remuneration policy
77
Report of the Audit Committee
79
Statement of Directors’ responsibilities in respect of the Annual Report and
Financial Statements
84
Section 4: Financial Statements
Independent Auditor’s Report
88
Statement of Comprehensive Income
94
Statement of Changes in Equity
95
Statement of Financial Position
96
Cash Flow Statement
97
Notes to the Financial Statements
98
Section 5: Additional information
Shareholder information
126
Analysis of ordinary shareholders
130
Management and other service providers
131
AIFM Report on Remuneration (unaudited)
132
Other AIFMD disclosures (unaudited)
133
Information to be disclosed in accordance with Listing Rule 9.8.4
134
Glossary
135
Section 6: Annual general meeting
Notice of annual general meeting
142
Share fraud warning
146
4
BlackRock Throgmorton Trust plc
l
Annual Report and Financial Statements 30 November 2023
Performance record
As at
30 November
2023
As at
30 November
2022
Net assets (£’000)
1
575,925
633,357
Net asset value per ordinary share (pence)
600.72
626.10
Ordinary share price (mid-market) (pence)
579.00
595.00
Benchmark Index
2
14,713.60
15,652.96
Discount to cum income net asset value
3
(3.6)%
(5.0)%
For the year
ended
30 November
2023
For the year
ended
30 November
2022
Performance (with dividends reinvested)
Net asset value per share
3
(2.3)%
(31.1)%
Ordinary share price
3
(0.8)%
(35.5)%
Benchmark Index
2
(6.0)%
(17.5)%
Average discount to cum income net asset value for the year
3
(5.2)%
(3.5)%
For the year
ended
30 November
2023
For the year
ended
30 November
2022
Change
%
Revenue
Net profit on ordinary activities after taxation (£’000)
16,510
13,257
+24.5%
Revenue earnings per ordinary share (pence)
4
16.56
12.95
+27.9%
Dividends per ordinary share (pence)
Interim
3.30
2.60
+26.9%
Final
11.45
8.50
+34.7%
Total dividends payable/paid
14.75
11.10
+32.9%
-45
-30
-15
0
15
30
45
Benchmark Index
1
Ordinary share price (mid-market)
NAV per share
Annual performance figures to 30 November change %, calculated in Sterling terms with dividends reinvested.
Sources: BlackRock and Datastream.
(1.1)
(0.6)
(5.7)
11.9
23.2
27.7
6.3
7.3
21.3
33.9
43.8
(2.1)
(9.0)
(17.5)
(31.1)
(35.5)
(6.0)
(2.3)
(0.8)
(2.7)
1.8
8.0
3.8
9.1
8.2
24.5
37.0
38.8
24.4
42.8
2014
%
2015
2016
2017
2018
2019
2020
2021
2022
2023
Annual performance for the ten years to 30 November 2023
1
The change in net assets reflects portfolio movements, dividends paid, share issues and share buybacks during the year.
2
The Company’s Benchmark Index is the Numis Smaller Companies plus AIM (excluding Investment Companies) Index. With effect
from 22 March 2018, the Numis Smaller Companies plus AIM (excluding Investment Companies) Index replaced the Numis Smaller
Companies excluding AIM (excluding Investment Companies) Index as the Company’s Benchmark Index. From 1 December 2013
to 21 March 2018, the Company’s Benchmark Index was the Numis Smaller Companies excluding AIM (excluding Investment
Companies) Index. Prior to 1 December 2013, the Company’s Benchmark Index was the Numis Smaller Companies plus AIM
(excluding Investment Companies) Index. The performance of the Benchmark Indices during these periods has been blended to
reflect these changes.
3
Alternative Performance Measures, see Glossary on pages 135 to 138.
4
Further details are given in the Glossary on page
138.
1
Mid-market price.
2
Alternative Performance Measures, see Glossary on pages 135 to 138.
Equity shareholders’ funds (£m)
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
235.5
286.3
301.5
396.8
379.6
470.1
596.2
935.1
633.4
575.9
626.1
600.7
322.0
391.6
412.3
542.7
519.1
634.1
681.2
921.9
NAV per share (p)
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
Ordinary share price per share¹ (p)
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
579.0
270.0
339.5
325.0
457.5
457.0
640.0
682.0
935.0
595.0
(3.6)
(5.0)
(16.1)
(13.3)
(21.2)
(15.7)
(12.0)
0.9
1.4
0.1
Share price (discount)/premium to NAV² (%)
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
6.2%
Compound annual
growth rate over the
ten year period
Net revenue profit after taxation (£m)
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
13.3
16.5
3.8
5.9
5.7
7.4
8.1
6.3
5.4
11.4
12.95
16.56
5.19
8.08
7.83
10.11
11.02
8.56
6.57
12.15
Revenue return per ordinary share (p)
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
12.7%
Compound annual
growth rate over the
ten year period
Dividends per share (p)
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
11.10
14.75
4.40
6.70
7.50
9.00
10.00
10.20
-2.3
-1.1
+23.2
+7.3
+33.9
+37.0
-2.7
-31.1
+24.4
+9.1
Change in NAV per share (with dividends reinvested)² (%)
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
13.9%
Compound annual
growth rate over the
ten year period
7.2%
Compound annual
growth rate over the
ten year period
10.20
10.50
Section 1: Overview and performance
5
Ten year record
6
BlackRock Throgmorton Trust plc
l
Annual Report and Financial Statements 30 November 2023
Chairman’s
statement
Overview
I am pleased to report that the Company outperformed our benchmark index by
3.7% during the twelve months to 30 November 2023. Although it is disappointing
that in absolute terms our Net Asset Value fell by 2.3% for the year under review,
over the longer term, performance remains strong, with the Company’s NAV return
outperforming the benchmark index by 17.0% over five years and by 72.4% over
ten years. At the share price level, the outperformance was 29.0% and 95.9% over
the same periods.
As you will read in the Investment Manager’s report which follows on pages 13 to
17, our portfolio manager, Dan Whitestone, highlights that UK Smaller Company
valuations are very low, both versus their own history and other asset classes.
2023 has once again been difficult to navigate, with significant market volatility
and a widening gap between the fortunes of smaller and larger companies.
However, given a macroeconomic backdrop of falling inflation, rising consumer
confidence, and strong wage growth, these factors may well serve as a potential
catalyst for a re-rating of the sector. Therefore, the outlook for our asset class may
be brighter than many recognise.
Trading and earnings across our portfolio remain robust and the level of revenue
produced by our portfolio has increased by 27.9%. This has enabled the Board to
increase our total dividends for the year by an impressive 32.9% year-on-year.
Market overview
In my Half-Yearly statement in
July, I described how the first six months of our
financial year were dominated by powerful geopolitical and macroeconomic
drivers. Markets were focused on the path of inflation and interest rates, seemly
above all else and this theme continued through the second half of the financial
year to 30 November 2023.
The rate of UK inflation, as measured by the Consumer Price Index, steadily
reduced during the year, down from 10.7% at the start of our financial year to 3.9%
as at 30 November 2023. This brought some welcome relief to UK consumers and
Financial year’s highlights
•
NAV outperformed the Benchmark Index over one year by 3.7 percentage points
•
Performance remains strong over the longer term; our NAV has outperformed the Benchmark Index
by 17% over five years (share price by 29.0%) and by 72.5% over 10 years (share price by 95.8%)
•
NAV underperformed the Benchmark Index over three years by 4.3%, and outperformed over five
years by 17% and over 10 years by 72.5%
•
Share price narrowed to a 3.6% discount to NAV at the year end and traded at an average discount of
5.2% to NAV during the financial year
•
Final dividend declared of 11.45p per share (2022: 8.50p)
(All returns are in Sterling terms with dividends reinvested).
Christopher Samuel
Chairman
Section 1: Overview and performance
7
corporates alike. The path of inflation had been driven by high energy and food prices and although these fell during the year,
they remain far higher than in recent years. Ongoing structural issues in the UK labour market also kept wage demands high,
somewhat offsetting the easing rate of food inflation and lower energy prices.
The Bank of England (BOE) continued its policy of monetary tightening throughout most of the year with the Monetary Policy
Committee (MPC) voting to hold the base rate at 5.25% in
September 2023. This is the highest level since February 2008
and ended a run of fourteen consecutive rate increases since December 2021. It was well-received by the equity markets. In
the US, The Central Bank held the base rate of interest steady at 5.25% signalling interest rate cuts were likely in 2024. This
saw almost all asset classes rise significantly in a year-end rally in response. In contrast the BOE was more hawkish, flagging
that UK wage growth remained elevated and that the MPC will continue to consider the economic data before a rate cut was
contemplated. This supports a ‘higher for longer’ narrative and more recently, UK data has been mixed with wage growth
softening but with inflation
above expectations in December at 3.9%, potentially pushing back expectations of an interest rate
cut in early 2024.
Another feature of the year under review was the elevated geo-political risk, with the focus switching from the conflict in
Ukraine to rising tensions in the Middle East. There is increasing concern around the inflationary impact of disruption to major
shipping routes in the Red Sea and an escalation into a wider conflict in the region. Looking forward, there are also several
significant elections in 2024, notably in the UK, US and Europe, with a range of outcomes, all of which could impact market
volatility and sentiment.
For a second year running the UK equity market continues to look cheap on a range of valuation metrics and this gives our
portfolio manager cause for genuine optimism for UK smaller companies. He notes that the trading environment is more
benign, with falling inflation, strong employment data and wage growth out-pacing inflation for the first time in many years.
Importantly, sales growth and earnings remain robust for many of the companies within our portfolio, and the revenue
generated by our portfolio this year rose by an impressive 27.9%. This has enabled the Board to increase the total dividend
paid by the Company by 32.9% versus the prior financial year. In addition, the UK economy has displayed notable resilience,
with household balance sheets and corporate earnings in better shape than many anticipated. In 2023 the UK avoided a
much-feared economic recession and is forecasting modest growth in 2024. A ‘soft landing’ – a slowdown in economic growth
that avoids a recession – may still be possible, although UK GDP growth was 0.3% in November 2023. In any case, the current
cycle of monetary policy tightening appears to have peaked, and markets are focusing on if and when interest rates will be cut;
an event that may be the catalyst for a broader change in market sentiment towards UK Smaller Companies and, in particular,
the high-quality growth companies in which we invest.
Performance
Over the twelve months to 30 November 2023, the Company’s NAV returned -2.3%, compared with a total return of -6.0%
from the Company’s Benchmark Index, the Numis Smaller Companies plus AIM (excluding Investment Companies) Index,
an outperformance of 3.7percentage points. At the share price level, the return was -0.8% as the Company’s share rating
narrowed from a discount of 5.0% at the start of the financial year to a discount of 3.6% at the year end.
-20
0
20
40
60
80
100
120
140
160
1 Year change %
Performance record to 30 November 2023 (with dividends reinvested)
NAV per share
Share price
Benchmark Index
3 Year change %
5 Year change %
%
37.3
-11.1
-0.8
25.3
-7.7
-2.3
8.3
-3.4
-6.0
113.5
41.1
136.9
10 Year change %
8
BlackRock Throgmorton Trust plc
l
Annual Report and Financial Statements 30 November 2023
The longer-term performance remains strong. The Company’s NAV return
underperformed the Benchmark Index by 4.3% over three years, outperformed
by 17.0% over five years and by 72.4% over ten years. The share price
underperformed the Benchmark Index by 7.7% over three years, outperformed by
29.0% over five years and by 95.8% over ten years. (All percentages calculated in
Sterling terms with dividends reinvested.)
As at close of business on 31 January 2024, the Company’s NAV had increased
by 8.8%, compared to the Benchmark Index which increased by 5.4%. The share
price over the same period increased by 6.0
%. Further information on portfolio
performance, positioning and the outlook for the forthcoming year can be found in
the Investment Manager’s report on pages 13 to 17.
The Board and our Manager remain focused on achieving the Company’s
objectives of providing shareholders with long-term capital growth and an
attractive total return and remain confident in the investment approach and
process. We thank shareholders for your loyalty and support.
Performance fee
Following an outperformance
versus the benchmark during the financial year, a
performance fee accrual of £2,014,000 has been accrued. Our performance fee
is calculated over a two-year rolling period and therefore no fee is payable to the
Manager for the current financial year. Further information on management fees
can be found on page 57 and in Note 4 to the financial statements on pages 102
and 103.
Policy on share price discount/premium
We recognise that a widening of, and volatility in, the Company’s discount is viewed
by some investors as a key disadvantage of investment trusts. The Board believes
that the best way of addressing any discount volatility over the longer term is to
generate good performance and to create demand for the Company’s shares in
the secondary market through broadening awareness of the Company’s unique
structure, strong investment team and robust investment process, and our long-
term investment track record in an attractive sector that is difficult to navigate.
The Board considers several factors in determining whether the premium/discount
to NAV (the share rating) at which the Company’s shares trade is excessive or
otherwise. These may include but are not limited to: whether the share rating is
commensurate with the current demand for UK Smaller Companies and whether
the Company’s shares are trading in normal market conditions; the ongoing
attractiveness of the investment proposition, in particular the strength of the
portfolio management team and process; and the strong long-term performance
delivered for shareholders, both in absolute and relative terms.
Share buy back activity
During the year to 30 November 2023 the Company’s share rating ranged between
a discount of 1.0% to 9.2% and ended the year at 3.6% (30 November 2022:
discount of 5.0%). The 12-month average discount at 30 November 2023 was
5.2% (2022: average discount: 3.5%). During the financial year the Company
bought back a total of 5,286,703 ordinary shares into treasury (2022: 2,015,000)
for a total consideration of £29,807,000 (2022: £11,544,000). All shares were
bought back at a discount to the prevailing NAV, were therefore accretive to
Chairman’s statement
continued
Section 1: Overview and performance
9
existing shareholders, and were placed into treasury for future re-issue. The advantage of holding shares in treasury over
cancelling them is that they remain listed. This means that where there is an opportunity to re-issue these shares, the
Company does not have to pay additional fees for admission to trading as would be required with an issue of new shares. It is
the Board’s policy that it will generally only take shares into treasury where it believes there is a reasonable likelihood of re-
issue in the future.
Since 30 November 2023 and up to the latest practicable date of 31 January 2024, a further 580,669 shares have been
bought back for a total consideration of £3,519,000. As at this date, the Company’s shares were trading at a discount of 6.1%.
No ordinary shares were issued during the period.
The Board believes that the share buy back activity undertaken has been effective and has been in shareholders’ interests.
Despite what has been a challenging and volatile year, it is pleasing that the Company’s share rating has been relatively stable
and has traded within a fairly tight range for most of the year, and at a consistently tighter discount relative to the peer group
average. As we navigate these more volatile and uncertain markets, your Board will continue to monitor the Company’s share
rating and may deploy its powers to issue or buy back the Company’s shares where it believes that it is in shareholders’ long-
term best interests to do so.
As it does each year, the Board will once again seek at the Company’s Annual General Meeting (AGM) to renew the authorities
granted by shareholders to issue or buy back shares. We encourage shareholders to vote in favour of these resolutions which
are described in more detail in the Director’s Report on pages 63 to 65.
Revenue return and dividends
The revenue return per share for the year amounted to 16.56 pence per share, compared with 12.95 pence per share for
the previous year, an increase of 27.9%. The Board recognises that, although the Company’s objective is capital growth,
shareholders value the dividends paid by the Company. The Directors are therefore pleased to declare a proposed final
dividend of 11.45 pence per share for the year ended 30 November 2023 (2022: 8.50p). This, together with the interim
dividend of 3.30 pence per share paid on 1 September 2023, gives a total dividend for the year of 14.75 pence per share,
increasing the total dividend distributed to shareholders in the prior financial year by 32.9%. This dividend will be paid on
28 March 2024, subject to shareholder approval at the forthcoming AGM, to shareholders on the Company’s register on
23
February 2024.
Board composition and diversity
The Board regularly considers its composition and that of its committees and has an ongoing succession plan in place
designed to ensure that it retains an appropriate balance of skills, knowledge, experience, independence, and diversity that
meets or exceeds relevant best practice and the requirements of the UK Corporate Governance Code, including guidance on
tenure and the composition of the Board’s committees.
We are cognisant of the benefits of a diverse range of skills on the Board and the Company is compliant with the Parker Review
recommendation that FTSE 350 companies have at least one director from an ethnically diverse background by 2024. The
Board is also compliant with the recommendations of the FTSE Women Leaders Review. The review set targets for FTSE 350
companies which are designed to achieve boards with 40% female representation (previously 33%) and at least one woman
in the role of Chair or Senior Independent Director on the board by the end of 2025. We have also disclosed data on the
breakdown of the Board by gender and ethnicity. The disclosure can be found on page 67.
The Board is cognisant of the concept of “overboarding” and considers the time commitment required by the Directors’ other
roles, taking into account their nature and complexity. The Board reviews this information annually, for each Director, including
my own as Chairman of the Board, to ensure that all Directors have sufficient capacity to carry out their role effectively. Before
recommending a Director for re-election, their independence, attendance record and ongoing commitment to the affairs of
the Company is also considered. Further information on the Board’s assessment of Directors independence and other time
commitments can be found in the Corporate Governance Statement on page 67.
“Despite a challenging backdrop, our portfolio manager
is optimistic about the future. He highlights what he
believes is a significant mis-pricing of UK Small cap
companies, evidenced by the disconnect between
corporate sales and earnings and valuations ascribed by
the market.”
10
BlackRock Throgmorton Trust plc
l
Annual Report and Financial Statements 30 November 2023
Board performance evaluation
As a constituent of the FTSE 350, and as recommended by the UK Corporate Governance Code, the Company undertook a
comprehensive, externally facilitated, Board performance evaluation this financial year. The evaluation was carried out by a
wholly independent third party, Stogdale St James Limited and included one-to-one interviews with the Board, representatives
of the Manager and service providers, the completion of evaluation questionnaires and the observation of the Board
and its interactions by the evaluator. A separate evaluation of my performance as Chairman was also undertaken by the
independent evaluator, the results of which were considered by our Senior Independent Director and circulated to the Board.
This process resulted in a small number of findings and recommendations that the Board will adopt, notwithstanding that
the overall conclusion was very positive in terms of the effectiveness of the Board, its composition, and the skills, expertise
and commitment of the Directors. We believe that the combination of our ongoing succession plan and structured search
and selection process through which the Board identifies new appointments, coupled with the annual Board evaluation of
their ongoing performance, allows the Board to confidently assert that its composition is appropriate for a Company of this
size and complexity and that each Director is effectively discharging their role. Further information on the evaluation of the
performance of the Board can be found on page 68.
Further details of the background and experience the Board of Directors can be found in their biographies on pages
35 to 37.
The Board’s policy on Board diversity and associated disclosures can be found in the Corporate Governance Statement on
page 67.
Our approach to Environmental, Social and Governance (ESG) integration
Consideration of material ESG issues is built into our Manager’s investment process and climate risk is considered to be a key
part of investment risk, an approach your Board supports. The style of our Investment Manager naturally steers away from
companies with weak balance sheets and poor cash flow which is a common characteristic of the few resource stocks in the
Benchmark Index. It should be noted that the Company does not have an explicit mandate for sustainable, ESG or impact-
focused investment, nor has it adopted exclusionary screens. The Investment Manager’s integration of ESG factors into his
analysis is, though, an important lens through which to identify long term winners, just as poor ESG outcomes provide a useful
tool in establishing candidates for the short book.
Further information on the Manager's approach to responsible investing can be found on page
55.
Annual General Meeting
The Board is pleased to announce that the Company’s Annual General Meeting (AGM) will be held in person on Tuesday,
19 March 2024 at 12.00 p.m. at the offices of BlackRock at 12 Throgmorton Avenue, London, EC2N 2DL. Details of the
business of the meeting are set out in the Notice of Annual General Meeting on pages 142 to 145 of this Annual Report.
Prior to the formal business of the meeting, our Investment Manager will make a presentation to shareholders. This will be
followed by a question and answer session. Shareholders who are unable to attend the meeting in person but who wish to
follow the AGM proceedings can do so via a live webinar this year. Details on how to register, together with access details,
will be available shortly on the Company’s website at:
www.blackrock.com/uk/thrg
or by contacting the Company Secretary
at
cosec@blackrock.com
. It is not possible to attend, speak or vote via this medium and it is solely intended to provide
shareholders with the ability to watch the proceedings.
Additionally, if you are unable to attend you can exercise your right to vote by proxy or appoint a proxy to attend in your place.
Details of how to do this are included on the AGM Proxy Card provided to shareholders with the annual report. If you hold your
shares through a platform or nominees, you will need to contact them and ask them to appoint you as a proxy in respect of
your shares in order to attend, speak and vote at the AGM. Further information on the business of this year's AGM can be found
in the Notice of the AGM on pages 142 to 145.
Shareholder communication and engagement
We appreciate how important access to regular information is to our shareholders. To supplement our Company website, we
offer shareholders the ability to sign up to the Trust Matters newsletter which includes information on the Company as well as
news, views and insights on the investment trust market. Information on how to sign up is included on the inside front cover of
this report.
Following positive feedback and greater attendance and participation at the Company’s AGM
last year, I have once again
sought to engage with shareholders who hold their shares through an intermediary or platform via the provisions of section
793 of the Companies Act 2006. The Board encourages all shareholders to either attend the AGM or exercise your right to vote
by proxy.
Chairman’s statement
continued
Section 1: Overview and performance
11
The Board is aware that certain execution only investment platforms are now providing shareholders with the ability to vote
electronically. The Board encourages shareholders to take advantage of this functionality where it is available to you.
The Board takes its responsibilities very seriously and is committed to exercising the highest standard of corporate
governance. It also regularly considers the views of its major shareholders, offering to meet with them annually, and seeks to
engage with all shareholders where possible. Should you wish to contact me, you can do so via our Company Secretary whose
details are set out on page 131.
Outlook
As you will read in his report which follows, our portfolio manager is optimistic about the future. He highlights what he believes
is a significant mis-pricing of UK Small Cap companies, evidenced by the disconnect between the growth in corporate sales
and earnings and the valuations ascribed by the market. UK smaller companies are currently trading at
valuations which look
very cheap versus other asset classes, and compared with their historical averages. In addition, our portfolio highlights in his
report the differential between the performance of UK small-cap and large cap equities, the widest since the Global Financial
Crisis. With a gradually improving macroeconomic backdrop and several potential catalysts for a re-rating of the sector, not
least a cut in interest rates, he believes the opportunity set presented by our asset class is highly compelling for the medium-
term investor.
Our Investment Manager’s fundamental philosophy remains unchanged, with a continued focus on financially strong
companies with innovative business models and differentiated offerings which are capable of delivering sustained growth over
time. This approach has served the Company well over many years and the Board remains fully supportive of our Investment
Manager and his approach.
CHRISTOPHER SAMUEL
Chairman
2
February 2024
Section 1: Overview and performance
13
Investment
Manager’s
report
For the year ended 30 November 2023
Market review and overall investment performance
Interest rate policy and inflation remained top of minds during the second half of
the financial year, with markets heavily influenced on a month-by-month basis
by the latest inflation figures and rhetoric from central banks around the world.
Thankfully, inflation has been coming down throughout the year, and most recently
we have seen a stark change in narrative from
higher for longer to peak rates and
imminent central bank pivot
. This has not been a consistent narrative throughout
the past six months, with spikes in volatility caused by concerns for the growth
outlook for China, mixed economic data fuelling the “higher for longer” narrative,
fears of the ‘inevitable’ hard recession, geopolitical conflict, and mixed earnings,
to name a few. And whilst the most recent change in sentiment has provided a
supportive backdrop for the Company, it does continue the trend of heightened
volatility within markets.
Performance review
For the second half of 2023, the Company’s NAV outperformed the benchmark
by +1.3%, falling by 2.4% in absolute terms versus our benchmark which fell by
3.7%. In terms of the underlying portfolio performance, the long book, before fees,
lost 2.9% whilst the short book had a strong period generating 0.9% for the six
months ended 30 November 2023 (for the full year, before fees), the long portfolio
contributed -2.0% and the short portfolio contributed +0.4% respectively to NAV
returns.
This takes the Company’s total return for the financial year of 2023 to -2.3%,
and although disappointing to report a loss it should be noted that the
Company outperformed its benchmark by +3.7% over this same period, indeed
outperforming in both the first half and the second half of our financial year.
For the purposes of this performance review we think it more instructive to
comment specifically on the second half to avoid repeating the detailed write up of
the first half presented in our interim financial statements. More detail in respect of
performance attribution is set out in the table in the glossary on page 138.
The second consecutive year of losses for our benchmark reflects the significant
negative sentiment that clouds UK and small and medium sized companies in
particular. This is reflected in the fund flow data which shows November 2023
Dan Whitestone
Investment Manager
“Whilst there is
much that can be
debated about
the economic
outlook, we think
the valuation of UK
small and
mid-cap companies
is compelling.”
The largest contributor to portfolio performance was pharmaceutical services specialist
Ergomed, which announced a recommended cash offer from the Private Equity firm
Permira at a 28% premium to the previous day’s closing price.
marked the 28th consecutive month of outflows in UK small and mid-caps. It is my view that this pervasive selling pressure
has resulted in a significant mispricing within UK small and mid-caps, evidenced by the low price-to-earnings ratio for the
small and mid-cap universe (FTSE 250 10.5x and FTSE Small Cap 8.3x) but also the extent of relative underperformance
versus the FTSE 100. To put this into context, the FTSE 250 has underperformed the FTSE 100 in 17 of the last 24 months,
and now is the largest and longest period of relative underperformance on record, far exceeding the Great Financial Crisis.
However, despite the bearish views, persistently high inflation, a recession, and a collapse in corporate profitability, the second
half of 2023 has given cause for more optimism reflecting falling inflation, strong employment and increasing consumer
confidence. The underlying fundamentals (i.e. sales growth, margins, balance sheet strength, free cash generation) of many of
the Company’s holdings remain robust and company updates on the whole have been supportive. Of course, in any given year
there will be disappointments, and this year is no exception, but in aggregate, I think the earnings of the Company’s holdings
and the broader small and mid-cap investment universe have proved far more resilient than many predicted.
Focusing on the biggest contributors and detractors for the second half, the largest contributor was
Ergomed
which
announced a recommended cash offer from the Private Equity firm Permira at a 28% premium to the previous day’s closing
price. Whilst helpful to this period's performance we are incredibly disappointed to lose another of our genuinely differentiated
and exciting UK mid-cap growth companies which we have had the privilege of owning for many years. We congratulate Miro
Reljanovic (Founder and CEO) for all he has delivered and wish him the best. However, in our view Ergomed is a great example
of the inherent value within the broader UK mid-cap complex (and our long book!), where many predominantly international
earners, with strong balance sheets continue to grow, yet trade on significant valuation discounts to their US listed peers.
The second biggest contributor was our short position in a UK listed software company. After a meteoric rise, fuelled by
news flow about very large contract wins, the shares were suspended earlier this year upon the detection of a fraud. After an
independent investigation, it transpired most of those contract wins did not exist and 90% of bookings were fake. Revenues,
rather than growing, were actually falling. After coming within days of running out of cash, the company completed a
restructuring and rescue fund raising in July. We closed out our short in the placing 96% below the suspension price.
Investment Manager’s report
continued
Long-term holding Dechra Pharmaceuticals, a specialist in veterinary pharmaceuticals and related products, received a cash offer
from private equity group EQT.
Section 1: Overview and performance
15
The third biggest contributor was from our long position in
Computacenter
which has continued to trade well, reporting a
24% year-over-year increase in organic gross invoice income at their interims, reflecting strong end market dynamics (digital
transformation, cyber security, etc) and continued market share gains. Other notable contributors include
Tatton Asset
Management
,
Games Workshop
,
Baltic Classified Group
, and
Hill & Smith
, all of which delivered successive positive updates
throughout the period and ended with earnings higher than predicted at the start of the year.
Turning to the detractors, the biggest was from our long position in
CVS Group
, which fell sharply on the news that the
Competition and Markets Authority (CMA) are launching an inquiry into how “veterinary services are bought and sold amid
concerns that pet owners may not be getting a good deal or receiving the information needed to make good choices”. Whilst we
have spoken to management at length and also have experience of CMA Inquiries into other industries, due to the sensitivity of
this we feel it imprudent to comment now. We still own this stock, which, at the time of writing, accounts for around 2.5% of NAV.
The second largest detractor was
WH Smith
which despite reporting continued solid trading throughout the period, fell back
either due to the lack of an upgrade to full-year guidance or just general aversion to UK mid-cap growth companies. WH Smith
remains a top 10 holding at the time of writing. The third largest detractor was
SigmaRoc
which also continued to deliver solid
trading results throughout the period, reporting like for like revenue growth of 13% and a double-digit profit increase, yet the
shares languished on 7x current year's earnings.
Portfolio positioning and outlook
2023 saw a continuation of many themes of uncertainty carried forward from 2022, and the market continued to grapple with
the interplay between inflation, monetary and fiscal policy and corporate earnings. The overall positioning of the Company
reflects our outlook which has not changed significantly over the last six months. As discussed in our interim report, my view
remains that interest rates had peaked and inflation would fall markedly. As the year-on-year impact on inflation rolled over,
the impending fall in utility bills would offer some meaningful shelter to those still to re-mortgage to a new higher priced fixed
deal. Over a third of homeowners mortgage free, and a large percentage of the mortgage book having re-mortgaged earlier
in 2023, there are many who will benefit from strong employment, falling utility costs and higher interest on cash. Indeed,
many banks have upgraded their household cash flow forecasts through 2023 as a consequence and consumer confidence
continues to remain robust. Generally speaking, financial conditions are not too stretched; corporates and consumers are
reasonably well capitalised, and banks have plenty of capital. As such, the path of employment will dictate the consumer
outlook, but we continue to expect the trough to be shallower than in previous downturns.
Infrastructure products and galvanizing services supplier Hill & Smith was a notable contributor to performance.
PHOTO COURTESY OF HILL & SMITH / COLLEEN MURRAY
16
BlackRock Throgmorton Trust plc
l
Annual Report and Financial Statements 30 November 2023
For UK domestic focused PLCs, 2024 will likely see growing dispersion in financial
returns as those with strong market share stories (digital, trading down, new
product verticals, etc) will outperform and grow despite a more challenging
backdrop. Input costs have now reversed for many and so the attention will focus
on top line and in particular underlying volume growth as price will become a far
less significant lever to flex. The converging valuations of many UK consumer
shares has been a source of immense frustration for us, with well-capitalised
market share winners, with high gross margins trading on similar price to earnings
ratios and free cash flow yields to their far inferior peer group. We hope 2024 will
mark the year of more dispersion in valuations between winners and losers which
should benefit this Company well.
Housebuilding and RMI (Repair, Maintenance and Improvement) has had a tough
2023, but I continue to believe the outlook is far better than it was in September
2022, despite valuations in a similar place. In recent weeks I have added to
housebuilders as well as RMI related plays, as in my view valuations are close to
trough on earnings that are also close to trough so the recovery potential in both
earnings and multiple is substantial. With positioning so extreme, we have seen
only in recent days and weeks what implications that can have on these types
of shares as falling borrowing costs, a steadying housing market and strong
employment have forced a reappraisal.
We retain a significant exposure to industrials and our approach remains selective.
Though industrial activity moderated in 2023, there have been many cross
currents and dispersion between companies and sub sectors and geographies.
Destocking has been a big theme in the sector, with supply chain issues initially
leading to overordering, and then in turn overstocking (as supply chain issues
resolved); this then led many businesses to destock, cutting orders and resulting
in a slowdown in revenues. The stop-start nature of these supply chain issues
throughout the year has impacted a range of geographies and sub sectors
differently, as they are all at different points in the cycle. We got some of these
dynamics right and some wrong in 2023.
Within General Industrial we noticed that quite a few of our companies flagged
a recent pick up in their book-to-bill ratios in November and December 2023.
Perhaps there is some genuine emerging evidence that several have turned a
corner and growth can accelerate through 2024. Reshoring in the US, as well as
several Government programmes (Chips, IRA) continues to provide additional
tailwinds of growth for quite a few US focused, but UK listed, small and mid-caps
we have exposure to e.g. Hill & Smith.
There is much that can be debated about the economic outlook, but we think
the valuation of UK small and mid-cap companies is compelling. It is therefore
with some sadness, that the great de-equitization of UK public sector continues.
Non-market participants are seemingly taking a very different view on the value
of company equity and thereby their associated cash flows, and this is evidenced
by i) corporate share buy-backs (the majority of our investments are buying back
their equity), ii) Corporate M&A (e.g.
Deutsche's cash-bid for Numis), and iii)
Private Equity (e.g.
Permira’s acquisition of Ergomed, and EQT's acquisition of
Dechra Pharmaceuticals). These were 3 holdings of the Company we were very
sorry to see depart, and in the case of Ergomed and Dechra are the loss of holdings
this Company has owned for many years. Alas, we expect this is a trend that will
continue; private equity continues to sit on near record levels of cash (we estimate
circa US$438 billion in Europe) which they are keen to deploy. A challenge for us
will be to ensure we don’t let the significant disconnect in valuations away from
strong fundamentals and future cash flow growth enable others to realise the
inherent value available in our home market, denying us of compelling future
returns just for a cash bid today. My hope is that this focuses the market on the
opportunities in front of us and catalyses a re-rating.
“The Company
now possesses
many companies
on single digit
price to earnings
ratios, with double
digit FCF yields,
but unlike so many
archetypal “value”
sectors, have far
superior growth
prospects.”
Investment Manager’s report
continued
Section 1: Overview and performance
17
Looking ahead to 2024, market volatility is unlikely to abate, and 2024 will mark a significant year for Elections worldwide
which may well inject further turbulence into the macro backdrop. However, there are reasons for optimism. We enter 2024
with inflation and mortgage rates falling, whilst productivity and factory construction and corporate profits are rising. Labour
markets are showing signs of softness but remain robust, and with low levels of unemployment many are experiencing the
benefits of real wage growth for the first time in years, which should in time lead to higher services PMIs. Inventory balances
are low after a prolonged period of destocking and so our hope is that manufacturing PMIs turn upwards which will boost the
outlook for growth. As for inflation, we believe pressure will ease this year with deflationary pressures gaining traction during
the course of 2024. Oil and gas prices are low (at the time of writing) amidst concerns of oversupply which will continue to
alleviate pressure on corporate input costs and consumer wallets. In the US, the indications over recent weeks are that the
Fed
is likely to hold rates (with a bias to cut). As we’ve seen in the last couple of months, we think this has the potential to catalyse a
broadening out of market leadership away from some very narrow areas of outperformance, both in the US and the UK, which
overall should be a net positive for our positioning. In summary, the picture we see is one of a gradual recovery, and in our
view this is not reflected in valuations of UK small and medium sized companies which we think offer compelling value in both
absolute and relative terms. Indeed, the Company now possesses many companies on single digit price to earnings ratios, with
double digit F
ree Cash
F
low yields, but unlike so many archetypical “value” sectors, have far superior growth prospects. As a
result, the net market exposure of the Company is slowly increasing and is now around 106%, while the gross is c.114%.
DAN WHITESTONE
BlackRock Investment Management (UK) Limited
2
February 2024
Section 2: Portfolio
21
Portfolio of
investments
1
Breedon
(2022: 12th)
Construction & Materials
Market value: £18,919,000
Share of net assets: 3.3%
(2022: 2.4%)
Supplier of construction materials
2
Gamma Communications*
(2022: 7th)
Mobile Telecommunications
Market value: £17,506,000
Share of net assets: 3.0%
(2022: 2.8%)
Provider of communication services to UK businesses
3
Oxford Instruments
(2022: 2nd)
Electronic & Electrical Equipment
Market value: £15,989,000
Share of net assets: 2.8%
(2022: 3.1%)
Designer and manufacturer of tools and systems for industry and research
4
Grafton Group
(2022: 13th)
Support Services
Market value: £15,915,000
Share of net assets: 2.8%
(2022: 2.1%)
Builders’ merchants in the UK, Ireland and Netherlands
5
YouGov*
(2022: 11th)
Media
Market value: £15,642,000
Share of net assets: 2.7%
(2022: 2.4%)
Provider of survey data and specialist data analytics
6
4imprint Group
(
2022: 3rd
)
Media
Market value: £15,344,000
Share of net assets: 2.7%
(2022: 3.1%)
Supplier of promotional merchandise in the US
22
BlackRock Throgmorton Trust plc
l
Annual Report and Financial Statements 30 November 2023
7
Rotork
(
2022: 23rd
)
Electronic & Electrical Equipment
Market value: £14,498,000
Share of net assets: 2.5%
(2022: 1.6%)
Manufacturer of industrial flow equipment
8
WH Smith
(2022: 9th)
General Retailers
Market value: £14,285,000
Share of net assets: 2.5%
(2022: 2.6%)
Retailer of books, stationery, magazines, newspapers and confectionary
9
Computacenter
(2022: 16th)
Software & Computer Services
Market value: £13,978,000
1
Share of net assets: 2.4%
(2022: 2.0%)
Computer services
10
CVS Group*
(2022: 5th)
General Retailers
Market value: £13,924,000
Share of net assets: 2.4%
(2022: 2.9%)
Operator of veterinary surgeries
*
Traded on the Alternative Investment Market (AIM) of the London Stock Exchange.
1
Includes long derivative positions.
Percentages shown are the share of net assets.
The market value shown is the gross exposure to the shares through equity investments and long derivative positions. For
equity investments, the market value is the fair value of the shares. For long derivative positions, it is the market value of the
underlying shares to which the portfolio is exposed via the contract.
Percentages in brackets represent the portfolio holding as at 30 November 2022. Arrows indicate the change in relative
ranking of the position in the portfolio compared to its ranking as at 30 November 2022.
Portfolio of investments
continued
Section 2: Portfolio
23
#
Company
£’000^
%
Description
11
Tatton Asset Management*
Financial Services
12,693
2.2
Provision of discretionary fund management services to
the IFA market
12
Hill & Smith Holdings
Industrial Metals & Mining
12,513
2.2
Supplier of infrastructure products and galvanizing
services
13
Sigmaroc*
Construction & Materials
12,318
2.1
Buy-and-build group targeting construction materials
assets in the UK and Northern Europe
14
Moneysupermarket.com
Software & Computer Services
10,737
1
1.9
Provider of price comparison website specialising in
financial services
15
IntegraFin
Financial Services
10,617
1
1.8
UK savings platform for financial advisors
16
Workspace Group
Real Estate Investment Trusts
10,540
1.8
Supply of flexible workspace to businesses in London
17
Dunelm Group
General Retailers
10,383
1.8
Retailer of homeware products
18
Watches of Switzerland
Personal Goods
10,314
1.8
Retailer of luxury watches
19
Bytes Technology
Software & Computer Services
9,791
1.7
Specialist in software, security and cloud services
20
Qinetiq Group
Aerospace & Defence
9,737
1.7
Provider of scientific and technological services to the
defence, security and aerospace markets
21
Boku*
Support Services
9,685
1.7
Digital payments platform
22
Mattioli Woods*
Financial Services
9,410
1.6
Provider of wealth management services
23
Chemring Group
Aerospace & Defence
9,245
1.6
Provider of technology products and services to
aerospace, defence and security markets
24
Morgan Sindall
Construction & Materials
8,930
1
1.6
Supplier of office fit out, construction and urban
regeneration services
25
TT Electronics
Electronic & Electrical Equipment
8,913
1
1.5
Global manufacturer of electronic components
26
Baltic Classifieds Group
Software & Computer Services
8,905
1
1.5
Operator of online classified businesses in the Baltics
27
SIG
Industrial Support Services
8,526
1.5
Supplier of building, roofing and insulation products
28
Future
Media
8,068
1.4
Multi-platform media business covering technology,
entertainment, creative arts, home interest and education
29
JET2*
Travel & Leisure
7,791
1.4
Low cost tour operator and airline
30
GlobalData*
Media
7,177
1
1.2
Data analytics and consulting
31
Howden Joinery Group
General Retailers
7,010
1
1.2
Kitchen and joinery product supplier
32
Next Fifteen Communications*
Media
6,947
1.2
Provider of digital communication products and services
33
Indivior PLC
Pharmaceuticals & Biotechnology
6,807
1.2
Pharmaceuticals business specialising in addiction and
mental health treatments
34
Deliveroo
Software & Computer Services
6,783
1.2
Online food delivery business
35
Vesuvius
Industrial Engineering
6,564
1
1.1
British engineered ceramics company
36
Intermediate Capital Group
Investment Banking & Brokerage
6,147
1.1
Private equity business
37
Luceco
Electronic & Electrical Equipment
6,131
1.1
Supplier & manufacturer of high quality LED lighting
products
38
Alfa Financial Software
Software & Computer Services
6,126
1.1
Provider of software to the finance industry
24
BlackRock Throgmorton Trust plc
l
Annual Report and Financial Statements 30 November 2023
#
Company
£’000^
%
Description
39
FTSE 250 Index Future
Financial Services
5,844
1
1.0
Index future
40
Robert Walters
Support Services
5,813
1.0
Provider of specialist recruitment services
41
Cranswick
Food Producers
5,802
1.0
Producer of premium, fresh and added-value food
products
42
Londonmetric Property
Real Estate Investment Trusts
5,787
1
1.0
Investor in, and developer of property
43
Serica Energy*
Oil, Gas & Coal
5,685
1.0
Oil and gas producer
44
Ascential
Software & Computer Services
5,498
1.0
Specialist information and data analytics company
45
Bellway
Household Goods and Home Construction
5,429
0.9
UK housebuilder
46
Kier Group
Support Services
5,318
0.9
UK construction, services and property group
47
Euronext
&
Financial Services
5,283
1
0.9
European stock exchange
48
Young & Co’s Brewery
Travel & Leisure
5,234
0.9
Owner and operator of pubs mainly in the London area
49
Lok’nStore*
Real Estate Investment & Services
5,200
0.9
Provider of self-storage space in the UK
50
Hunting
Oil Equipment and Services
5,066
1
0.9
Oil services business
51
Hiscox
Non-life Insurance
5,024
1
0.9
Provision of insurance services
52
Sirius Real Estate
Real Estate Investment & Services
4,961
0.9
Owner and operator of business parks, offices and
industrial complexes in Germany
53
Auction Technology Group
General Retailers
4,861
0.8
Operator of marketplaces for curated online auctions
54
OSB Group
Financial Services
4,831
0.8
Specialist lending business
55
Judges Scientific*
Electronic & Electrical Equipment
4,719
0.8
Designer and producer of scientific instruments
56
Xero*
&
Software & Computer Services
4,685
1
0.8
Software company specialising in accounting for small
businesses
57
Games Workshop
Leisure Goods
4,630
0.8
Developer, publisher and manufacturer of miniature war
games
58
Herc Holdings
&
Industrial Transportation
4,609
1
0.8
Equipment rental business
59
Porvair
Industrial Engineering
4,601
0.8
Specialist filtration and environmental technology
60
AB Dynamics*
Industrial Engineering
4,400
0.8
Developer and supplier of specialist automotive testing
systems
61
Zotefoams
Chemicals
4,370
1
0.8
Manufacturer of polyolefin foams used in sport,
construction, marine, automation, medical equipment
and aerospace
62
Clarkson
Industrial Transportation
4,297
0.7
Provider of shipping services
63
Victorian Plumbing*
Home Improvement Retailers
4,024
1
0.7
Online retailer of bathroom products
64
Polar Capital Holdings
Financial Services
3,984
0.7
Provider of investment management services
65
Senior Plc
Aerospace & Defence
3,961
0.7
Specialist engineering business
66
Crest Nicholson
Household Goods and Home Construction
3,959
0.7
UK housebuilder
67
Babcock International Group
Aerospace & Defence
3,956
0.7
British aerospace, defence and nuclear engineering
services company
Portfolio of investments
continued
Section 2: Portfolio
25
#
Company
£’000^
%
Description
68
Ashtead*
Oil, Gas & Coal
3,914
0.7
International equipment rental business
69
TP ICAP
Investment Banking & Brokerage
3,736
0.6
Inter-dealer broker
70
Permanent TSB
Banks
3,729
0.6
Irish bank
71
Redrow
Household Goods and Home Construction
3,491
0.6
UK housebuilder
72
Marshalls
Construction & Materials
3,443
1
0.6
British construction materials group
73
MJ Gleeson
Household Goods and Home Construction
3,301
0.6
UK housebuilder
74
SThree
Support Services
3,258
0.6
Provider of specialist professional recruitment services
75
Restore*
Support Services
3,251
0.6
Records management business
76
Eckoh*
Software & Computer Services
3,166
0.5
Global provider of secure payments products
77
GPE
Real Estate Investment Trusts
3,142
1
0.5
Owner of commercial real estate in central London
78
Spectris
Electronic & Electrical Equipment
3,133
0.5
Supplier of productivity enhancing instrumentation and
controls
79
Aston Martin
Automobiles & Parts
3,129
0.5
Luxury sports car manufacturer
80
Accesso Technology*
Software & Computer Services
3,128
1
0.5
Provider of ticketing and virtual queuing solutions
81
DiscoverIE
Electronic & Electrical Equipment
3,025
0.5
International designer, manufacturer and supplier of
customised electronics
82
Renishaw
Electronic & Electrical Equipment
3,016
0.5
Engineering and scientific technology company
83
Safestore
Real Estate Investment Trusts
2,957
0.5
Provider of self-storage units
84
Rambus
&
Technology Hardware & Equipment
2,929
1
0.5
US listed chip and silicon IP producer
85
Medpace Holdings
&
Pharmaceuticals & Biotechnology
2,878
1
0.5
Clinical research organization (CRO) conducting global
clinical research for the development of drugs and
medical devices
86
Cerillion*
Software & Computer Services
2,838
0.5
Provider of billing, charging and customer management
systems
87
Ashmore Group
Financial Services
2,726
1
0.5
Emerging market focused investment manager
88
Kainos Group
Software & Computer Services
2,676
1
0.5
Provider of digital technology solutions
89
PayPoint
Industrial Support Services
2,619
1
0.5
Digital payments business
90
Impax Asset Management*
Financial Services
2,595
0.5
Provider of asset management services
91
Dechra Pharmaceuticals
Pharmaceuticals & Biotechnology
2,442
0.4
Developer and supplier of pharmaceutical and other
products focused on the veterinary market
92
Advanced Medical Solutions*
Healthcare Equipment & Services
2,401
1
0.4
Developer and manufacturer of advanced wound care
solutions
93
The Pebble Group*
Media
2,357
0.4
Designer and manufacturer of promotional goods
94
Oxford Biomedica
Pharmaceuticals & Biotechnology
2,252
1
0.4
Gene cell therapy
95
Spirent
Technology Hardware & Equipment
2,224
0.4
Multinational telecommunications testing
26
BlackRock Throgmorton Trust plc
l
Annual Report and Financial Statements 30 November 2023
#
Company
£’000^
%
Description
96
Animalcare Group*
Pharmaceuticals & Biotechnology
2,024
0.4
Veterinary pharmaceuticals business
97
XP Power
Electronic & Electrical Equipment
1,874
0.3
Leading provider of power solutions
98
MaxCyte*
Pharmaceuticals & Biotechnology
1,816
0.3
Clinical-stage global cell-based therapies and life
sciences company
99
Big Technologies*
Software & Computer Services
1,684
0.3
Provider of remote personal monitoring products
100
Gooch & Housego*
Electronic & Electrical Equipment
1,506
0.3
Designer and manufacturer of advanced photonic
systems
101
Team17*
Leisure Goods
1,504
0.3
Video game developer and publisher
102
Vivendum
Industrial Engineering
912
1
0.2
Manufacturer of hardware and software for the film
industry
Long investment positions (excluding
BlackRock’s Institutional Cash Series plc -
Sterling Liquidity Fund)
641,715
111.4
Short investment positions
(22,086)
(3.8)
1
Includes long derivative positions
*
Traded on the Alternative Investment Market (AIM) of the London Stock Exchange
&
Holdings listed on exchanges outside of the UK
^
The market value shown is the gross exposure to the shares through equity investments and long derivative positions. For
equity investments, the market value is the fair value of the shares. For long derivative positions, it is the market value of the
underlying shares to which the portfolio is exposed via the contract
Percentages shown are the share of net assets.
At 30 November 2023, the Company held equity interests in six companies comprising more than 3% of
a company’s share capital as follows: Tatton Asset Management (4.1%); Sigmaroc (3.7%); TT Electronics
(3.4%); Luceco (3.1%); Eckoh (3.1%);
and
Mattioli Woods (3.0%).
Portfolio of investments
continued
Section 2: Portfolio
27
Fair value
1
Gross market
exposure
2, 3
Gross market exposure as a %
of net assets
2
£’000
£’000
2023
2022
Long equity investment positions (excluding
BlackRock’s Institutional Cash Series plc - Sterling
Liquidity Environmentally Aware Fund)
557,594
557,594
96.8
91.1
Long derivative positions
(1,120)
84,121
14.6
15.7
Subtotal of Long investment positions
556,474
641,715
111.4
106.8
Short investment positions
368
(22,086)
(3.8)
(2.5)
Subtotal of Long and Short investment positions
556,842
619,629
107.6
104.3
Cash and cash equivalents
24,022
(38,764)
(6.7)
(3.5)
Other net current liabilities
(4,940)
(4,940)
(0.9)
(0.8)
Net assets
575,924
575,925
100.0
100.0
The Company uses gearing through the use of long and short derivative positions. Gross and Net Gearing as at 30 November
2023 were 115.2% and 107.6% respectively (2022: 109.3% and 104.3% respectively). Gross and Net Gearing are Alternative
Performance Measures, see Glossary on pages 13
5
to 13
8.
1
Fair value is determined as follows:
–
Long equity investment positions are valued at bid prices where available, otherwise at latest market traded quoted prices.
–
The exposure to securities held through long derivative positions directly in the market would have amounted to £85,241,000 at the time of
purchase, and subsequent movement in market prices have resulted in unrealised losses on the long derivative positions of £(1,120,000)
resulting in the value of the total long derivative market exposure to the underlying securities decreasing to £84,121,000 as at 30
November 2023. If the long positions had been closed on 30 November 2023, this would have resulted in a loss of £(1,120,000) for the
Company.
–
The notional exposure of selling the securities gained via the short derivative positions would have been £(22,454,000) at the time of
entering into the contract, and subsequent movement in market prices have resulted in unrealised gains on the short derivative positions
of £368,000 resulting in the value of the total short derivative market exposure of these investments increasing to £(22,086,000) at 30
November 2023. If the short positions had been closed on 30 November 2023, this would have resulted in a gain of £368,000 for the
Company.
2
Gross market exposure for equity investments is the same as fair value; bid prices are used where available and, if unavailable, latest market
traded quoted prices are used. For both long and short derivative positions, the gross market exposure is the market value of the underlying
shares to which the portfolio is exposed via the contract.
3
The gross market exposure column for cash and cash equivalents has been adjusted to assume the Company traded direct holdings, rather
than exposure being gained through long and short derivative positions.
Fair value and gross market exposure of
investments
as at 30 November 2023
28
BlackRock Throgmorton Trust plc
l
Annual Report and Financial Statements 30 November 2023
Distribution of investments
as at 30 November 2023
Sector
% of
long portfolio
% of
short portfolio
% of
net portfolio
Oil, Gas & Coal
1.6
0.0
1.6
Oil Equipment and Services
0.8
0.0
0.8
Oil & Gas
2.4
0.0
2.4
Chemicals
0.7
0.0
0.7
Industrial Metals & Mining
2.0
0.0
2.0
Basic Materials
2.7
0.0
2.7
Aerospace & Defence
4.4
0.0
4.4
Construction & Materials
7.0
(0.4)
6.6
Electronic & Electrical Equipment
10.1
0.0
10.1
Industrial Engineering
2.7
0.0
2.7
Industrial Support Services
1.8
(0.2)
1.6
Industrial Transportation
1.4
(0.3)
1.1
Support Services
7.0
(0.2)
6.8
Industrials
34.4
(1.1)
33.3
Food Producers
1.0
0.0
1.0
Personal Goods
1.7
0.0
1.7
Consumer Staples
2.7
0.0
2.7
Healthcare Equipment & Services
0.4
0.0
0.4
Pharmaceuticals & Biotechnology
2.9
(0.2)
2.7
Health Care
3.3
(0.2)
3.1
Automobiles & Parts
0.5
0.0
0.5
Consumer Services
0.0
0.0
0.0
General Retailers
8.2
(0.7)
7.5
Home Improvement Retailers
0.6
0.0
0.6
Household Goods and Home Construction
2.6
0.0
2.6
Leisure Goods
1.0
0.0
1.0
Media
9.0
0.0
9.0
Travel & Leisure
2.1
0.0
2.1
Consumer Discretionary
24.0
(0.7)
23.3
Banks
0.6
0.0
0.6
Closed End Investments
0.0
(0.2)
(0.2)
Financial Services
9.4
(0.6)
8.8
Investment Banking & Brokerage
1.6
(0.4)
1.2
Non-life Insurance
0.8
0.0
0.8
Financials
12.4
(1.2)
11.2
Real Estate Investment & Services
1.6
0.0
1.6
Real Estate Investment Trusts
3.6
0.0
3.6
Real Estate
5.2
0.0
5.2
Software & Computer Services
12.9
(0.4)
12.5
Technology Hardware & Equipment
0.8
0.0
0.8
Technology
13.7
(0.4)
13.3
Mobile Telecommunications
2.8
0.0
2.8
Telecommunications
2.8
0.0
2.8
Total Investments
103.6
(3.6)
100.0
The above percentages are calculated on the net portfolio as at 30 November 2023. The net portfolio is calculated as long
equity and derivative positions, less short derivative positions as at 30 November 2023.
Section 2: Portfolio
29
0.0%
2.5%
11.7%
30.3%
15.4%
4.8%
12.2%
-1.0%
-0.7%
£2bn – £2.5bn
£2.5bn – £5bn
£5bn – £10bn
£1.5bn – £2bn
£0m – £500m
1
The above investments may comprise exposures to long equity and long derivative positions.
Source: BlackRock.
Long positions
1
% of net portfolio
Short positions
-10
0
10
20
30
40
Market capitalisation
as at 30 November 2023
-0.7%
£500m – £1bn
0.0%
-0.7%
0.0%
-0.5%
26.7%
£1bn – £1.5bn
-13
12
0
0
0
33
Long positions
1
Number of positions
1
The above investments may comprise exposures to long equity and long derivative positions.
Source: BlackRock.
Short positions
£2.5m – £5m
£0m – £2.5m
£5m – £10m
£15m – £20m
-20
-10
0
10
20
30
40
50
Position size
as at 30 November 2023
Market value
39
12
6
0
£10m – £15m
Analysis of the portfolio
30
BlackRock Throgmorton Trust plc
l
Annual Report and Financial Statements 30 November 2023
FTSE 250
55.5%
FTSE AIM
29.5%
FTSE Small Cap
8.7%
Other
4.5%
FTSE 100
1.8%
Portfolio holdings within Key Benchmark Indices
Gross Basis
1
Net Basis
2
FTSE 250
53.7%
FTSE AIM
30.8%
FTSE Small Cap
9.4%
Other
4.2%
FTSE 100
1.9%
Analysis of the portfolio
continued
Within Benchmark
70.4%
Off-Benchmark
29.6%
Source: BlackRock.
1
Long exposure plus short exposure as a percentage of the portfolio in aggregate excluding investment in BlackRock’s Institutional Cash
Series plc – Sterling Liquid Environmentally Aware Fund.
Long exposure less short exposure as a percentage of the portfolio excluding investment in BlackRock’s Institutional Cash
Series plc – Sterling Liquid Environmentally Aware Fund.
2
Within Benchmark
68.2%
Off-Benchmark
31.8%
Holdings included within the Benchmark Index as at 30 November 2022 were 58.6% on a Gross Basis and 56.8% on a Net Basis.
3
Portfolio holdings within Benchmark Index (the Numis Smaller Companies plus AIM
(excluding Investment companies) Index)
Net Basis
2,3
Gross Basis
1,3
34
BlackRock Throgmorton Trust plc
l
Annual Report and Financial Statements 30 November 2023
Governance structure
Responsibility for good governance lies with the Board. The governance framework of
the Company reflects the fact that, as an investment company, the Company has no
employees, the Directors are all non-executive and the investment management and
administration functions are outsourced to the Manager and other service providers.
The Board
6 scheduled meetings per annum
Membership:
Six Non-executive Directors (NED), all independent of the
Investment Manager
Chairman
: Christopher Samuel
Key objectives:
•
To determine and review the investment policy, strategy and parameters;
•
To provide leadership within a framework of prudent and effective controls
which enable risk to be assessed and managed, and the Company’s assets to be
safeguarded;
•
To challenge constructively and scrutinise performance of all outsourced
activities; and
•
To establish the Company’s remuneration policy and keep it under review.
Audit Committee
1
3 scheduled meetings per annum*
Membership:
All NEDs
Chairman:
Angela Lane
Key objectives:
•
To oversee financial reporting;
•
To review the reporting of the auditor and the effectiveness of the audit;
•
To consider the adequacy of the control environment and to review the
Company’s risk register; and
•
To review the performance of the third party service providers.
*
The Committee has considered developing best practice around the number of
times the audit committee of a FTSE 250 company should meet each year and has
concluded that three meetings is appropriate. The Committee believes that it is not the
number of meetings held that determines its effectiveness, it is the robustness of the
debate and challenge, and the scope, timeliness and quality of the information which
the committee considers.
Management Engagement
Committee
1
1 scheduled meeting per annum
Membership:
All NEDs
Chairman:
Christopher Samuel
Key objectives:
•
To be responsible for the annual review of the performance of the Manager and
Investment Manager; and
•
To ensure that the provisions of the management agreement follow industry
practice, remain competitive and are in the best interest of shareholders.
Nomination Committee
1
1 scheduled meeting per annum
Membership:
All NEDs
Chairman:
Christopher Samuel
Key objectives:
•
To make recommendations for any new Board appointments;
•
To review regularly the structure, size and composition of the Board; and
•
To consider and make recommendations to the Board on matters of succession
planning.
Remuneration Committee
1
1 scheduled meeting per annum
Membership:
All NEDs
Chairman:
Nigel Burton
Key objectives:
•
To make recommendations on remuneration of Directors; and
•
To determine and recommend to the Board a policy on Directors’ remuneration.
1
Terms of reference for the committee are available at
www.blackrock.com/uk/thrg
Section 3: Governance
35
Directors’ biographies
Christopher Samuel
Appointed 1 June 2016
Chairman
Christopher was Chief Executive
of Ignis Asset Management from
2009 until its sale to Standard Life
Investments in 2014. He was previously
Chief Operating Officer at Gartmore
and Hill Samuel Asset Management
and a Partner at Cambridge Place
Investment Management. He is
currently a Non-executive Director
of Quilter plc
1
. He was formerly the
Chairman of JPMorgan Japanese
Investment Trust plc and a Non-
executive Director of Alliance Trust
plc, UIL Limited and its subsidiary
UIL Finance Limited. He qualified as a
Chartered Accountant with KPMG.
Attendance record:
Board: 6/6
Audit Committee: 3/3
Management Engagement
Committee: 1/1
Nomination Committee: 1/1
Remuneration Committee: 1/1
None of the Directors has a service contract with the Company. The terms of their appointment are
detailed in a letter sent to them when they join the Board. These letters are available for inspection at the
registered office of the Company and will be available at the Annual General Meeting.
Louise Nash
Appointed 21 March 2019
Senior Independent Director
Louise was a UK Small and Mid-Cap
fund manager, firstly at Cazenove
Capital and latterly at M&G
Investments which she left in 2015.
She now works for family wine business
Höpler and also acts as a consultant
to JLC Investor Relations. Louise was
previously a Non-executive Director of
Stockdale Securities.
Attendance record:
Board: 6/6
Audit Committee: 3/3
Management and Engagement
Committee: 1/1
Nomination Committee: 1/1
Remuneration Committee: 1/1
1
He is also a Non-executive Director of Quilter plc’s subsidaries: Quilter Financial Planning, Quilter Investment Platform Limited and Quilter
Life & Pensions Limited. The Board meetings for the Quilter plc subsidiaries are held at the same time and the role is considerably less
onerous than that of a listed company. The Board has specifically considered the time commitment of the Chairman and is satisfied that he
has sufficient time to effectively discharge his role and obligations to the Company.
36
BlackRock Throgmorton Trust plc
l
Annual Report and Financial Statements 30 November 2023
Directors’ biographies
continued
Angela Lane
Appointed 10 June 2020
Chairman of the Remuneration
Committee until 30 November 2022.
Chairman designate of the Audit
Committee
Angela previously spent 18 years
working in private equity at 3i,
becoming a partner in 3i's Growth
Capital business managing the UK
portfolio. Since 2007, Angela has held
several non-executive and advisory
roles for small and medium capitalised
companies across a range of
industries including business services,
healthcare, travel, media, consumer
goods and infrastructure. She is
currently a Non-executive Director and
Chairman of the Audit Committee of
Pacific Horizon Investment Trust plc,
Seraphim Space Investment Trust plc
and Dunedin Enterprise Investment
Trust plc. She is a Fellow of the Institute
of Chartered Accountants in England
and Wales.
Attendance record:
Board: 6/6
Audit Committee: 3/3
Management Engagement
Committee: 1/1
Nomination Committee: 1/1
Remuneration Committee: 1/1
Nigel Burton
Appointed 21 December 2020
Non-executive Director
Chairman of the Remuneration
Committee with effect from
1 December 2022.
Nigel spent over 14 years as an
investment banker at leading City
institutions including UBS Warburg
and Deutsche Bank, including as the
Managing Director responsible for the
energy and utilities sector. He then
spent 15 years as Chief Financial Officer
or Chief Executive Officer of a number
of private and public companies. Nigel
is currently a Non-executive Director
of AIM listed companies Microsaic
Systems plc, eEnergy Group plc and
Location Sciences Group plc. He was
formerly a Non-executive Director of
Mobile Streams plc, Digitalbox plc,
Corcel plc, Modern Water plc, Alexander
Mining plc and Chairman of Remote
Monitored Systems plc.
Attendance record:
Board: 6/6
Audit Committee: 3/3
Management Engagement
Committee: 1/1
Nomination Committee: 1/1
Remuneration Committee: 1/1
None of the Directors has a service contract with the Company. The terms of their appointment are
detailed in a letter sent to them when they join the Board. These letters are available for inspection at the
registered office of the Company and will be available at the Annual General Meeting.
Section 3: Governance
37
None of the Directors has a service contract with the Company. The terms of their appointment are
detailed in a letter sent to them when they join the Board. These letters are available for inspection at the
registered office of the Company and will be available at the Annual General Meeting.
Merryn Somerset Webb
Appointed 24 March 2021
Non-executive Director
Merryn has significant experience
of financial matters through her role
as a senior columnist for Bloomberg
Opinion. She writes extensively on
personal finance and features regularly
on both radio and television. Merryn
brings valuable investment trust
specific experience. She was formerly
a Non-executive Director of Baillie
Gifford Shin Nippon PLC, Murray
Income Investment Trust plc and
Netwealth Investments Limited.
Attendance record:
Board: 6/6
Audit Committee: 3/3
Management Engagement
Committee: 1/1
Nomination Committee: 1/1
Remuneration Committee: 1/1
Glen Suarez
Appointed 9 January 2023
Glen Suarez was appointed to the
Board on 9 January 2023. He is an
experienced director, having held
both executive and non-executive
roles. He is currently a Chairman of
Impax Environmental Markets plc and
chairman of the board of Knight Vinke
Asset Management. He is a senior
adviser to FMAP Limited, a consultancy
founded by Lord Maude which advises
governments on the implementation
of public sector reform. Glen was
chairman of The Edinburgh Investment
Trust plc until July 2022 and was a
committee member and co-chair of the
Capital Markets Advisory Committee,
an independent body advising the IASB
on accounting issues and standards
between 2014 and 2020. He is a
Fellow of the Institute of Chartered
Accountants in England and Wales and
a member of the Royal Society of Arts.
Attendance record:
Board: 6/6
Audit Committee: 3/3
Management Engagement
Committee: 1/1
Nomination Committee: 1/1
Remuneration Committee: 1/1
38
BlackRock Throgmorton Trust plc
l
Annual Report and Financial Statements 30 November 2023
Strategic report
The Directors present the Strategic Report of the Company for the year ended 30 November 2023.
Principal activities
The Company is a public company limited by shares which carries on business as an investment trust and its principal activity
is portfolio investment.
Objective
The Company’s objective is to provide shareholders with long-term capital growth and an attractive total return through
investment primarily in UK smaller and mid-capitalisation companies traded on the London Stock Exchange.
Strategy, business model, investment policy and investment process
The Company invests in accordance with the objective given above. The Board is collectively responsible to shareholders for
the long-term success of the Company and is its governing body. There is a clear division of responsibility between the Board
and the Manager, BlackRock Fund Managers Limited (BFM). Matters for the Board include setting the Company’s strategy,
including its investment objective and policy, setting limits on gearing (both bank borrowings and the effect of derivatives),
capital structure, governance, and appointing and monitoring of performance of service providers, including the Manager.
The Company’s business model follows that of an externally managed investment trust; therefore the Company does not have
any employees and outsources its activities to third party service providers, including the Manager who is the principal service
provider.
The management of the investment portfolio and the administration of the Company have been contractually delegated to
BFM. The Manager, operating under guidelines determined by the Board, has direct responsibility for the decisions relating
to the day-to-day running of the Company and is accountable to the Board for the investment, financial and operating
performance of the Company.
Other service providers include the Depositary and the Fund Accountant, The Bank of New York Mellon (International) Limited,
and the Registrar, Computershare Investor Services PLC. Details of the contractual terms with third party service providers are
set out in the Directors’ Report.
What makes BlackRock Throgmorton Trust plc different?
•
A greater toolkit for
outperformance
•
Potential for enhanced
outperformance generation
through taking both long and
short positions
•
Potential to smooth out volatility
of returns whilst maintaining
exposure to the attractive,
but sometimes volatile, asset
class of UK smaller and
mid-capitalisation companies
•
Ability to flex overall market
exposure to potentially reduce
correlation to the market
A superior toolkit for outperformance
Risk management cannot fully eliminate the risk of investment loss. There is no guarantee that a positive investment outcome will be
achieved. Source: BlackRock. For illustrative purposes only.
Conventional
Long only fund
BlackRock Throgmorton
Trust plc
= long only + leverage
short alpha
alpha
potential
alpha
potential
Same net
market
exposure
Section 3: Governance
39
Investment Policy
The Company’s performance is measured against the Numis Smaller Companies plus AIM (excluding Investment Companies)
Index (the Benchmark Index). The Investment Manager, BlackRock Investment Management (UK) Limited (BIM (UK)), may
invest in companies outside the Benchmark Index without restriction, subject to the following limits.
The Company may hold up to 15% of its gross assets, at the time of acquisition, in securities of companies which are listed or
traded on a stock exchange outside the UK.
In addition to the normal long only portfolio, the Company will likely hold a mixture of long and short contracts for difference
(CFDs) and/or comparable equity derivatives that would result in a typical net market exposure of between 100% and 115%.
In extremis, the Company could deploy the full 30% of permissible leverage into short CFDs and/or comparable equity
derivatives, thereby reducing its overall net market exposure to 70%.
The Company may also invest up to 2.5% of its net assets (measured at the time of investment) in unquoted securities,
including securities issued by companies incorporated outside the United Kingdom. However, the Company may invest more
than 2.5%, but no more than 3.75%, of its net assets (both measured at the time of investment), in unquoted securities in
circumstances where such investment is in an existing investee company and, in the Investment Manager’s opinion, a failure
of the Company to make such investment would have a material adverse effect on the value of the Company’s investment in
such investee company.
In addition, the Company is permitted to employ leverage up to 30% of net assets, which it does primarily through the use of
CFDs and/or comparable equity derivatives, rather than bank borrowings, therefore enabling the Company to have a maximum
net market exposure of 130%.
In normal circumstances the Company will likely hold a mixture of long and short CFDs and/or comparable equity derivatives
that would result in a typical net market exposure of between 100% and 115%*.
A clear investment process underpins portfolio construction
Source: BlackRock. Investment process subject to change. For illustrative purposes only.
Idea generation
In-depth fundamental company analysis
Typical portfolio construction
Earnings
growth
Industry
Market
position
Cash
generation
Looking
through the
Long / Short
lens
BlackRock resources
Company meetings
External research
Macro / thematic
Diversification
c.130 positions
Longs c.1% to 5%
Shorts c.0.5% to 1%
Net: 90% to 115%
Gross: 100% to 130%
Lower, managed volatility
Balance
sheet
BlackRock
Emerging Companies Team
Portfolio Manager
Management
Regular engagement with BlackRock Investment Stewardship and Risk Function throughout the investment process
*
The AIC measures gearing at gross level, rather than net market exposure level (i.e. gearing is calculated as borrowings + long CFDs
and/or comparable equity derivatives + short CFDs and/or comparable equity derivatives) and therefore the published gearing
figures will be higher than the typical net market exposure of between 100% and 115%.
40
BlackRock Throgmorton Trust plc
l
Annual Report and Financial Statements 30 November 2023
Portfolio risk will be mitigated by investment in a diversified portfolio of holdings. No more than 5% of the Company’s gross
assets, at the time of acquisition, may be invested in any one single holding, excluding holdings in cash or money market
funds, where up to 10% of the Company’s gross assets may be held. The Company may also invest in collective investment
vehicles. However, the Company will not invest more than 10% of its gross assets, at the time of the acquisition, in other listed
closed-ended investment funds, unless such companies have a stated investment policy not to invest more than 15% of their
gross assets in other listed closed-ended investment funds, in which case the limit is 15% of gross assets.
The Board’s policy is that net gearing, borrowings less cash, should not exceed 20% of gross assets. The Company expects to
employ any leverage primarily through its use of CFDs and/or comparable equity derivatives.
No material change will be made to the investment objective and policy without shareholder approval.
Investment process
A unique feature of the Company is that it has the ability to go both long and short up to approximately 30% of the Company’s
net assets.
Notwithstanding recent positive returns from UK small and mid-capitalisation companies, while the sector has generated
positive returns over the long term, there can be significant volatility. Such an environment provides an attractive opportunity
to add value via both long and short positions which can exploit share price moves whether up or down. As the maximum short
portfolio exposure through derivatives is 30% of net assets, the Company will at all times retain an exposure to the market, as
shown in the chart below. In the course of their research the investment management team comes across companies which
they judge are likely to underperform; the ability to take short positions therefore enhances the opportunity to make money for
shareholders. This is not possible in a conventional or long only portfolio.
When markets are expected to rise in the medium term, the long/short strategy is used to generate additional market exposure
through ensuring that the long exposure exceeds the short exposure in a range between 0% to 15% of the net assets of the
Company. Rising or ‘bull’ markets have historically (in the UK) persisted for longer than falling or ‘bear’ markets. A typical net
market exposure might therefore be between 100% and 115%. This is lower than the ‘gross exposure’, which is the
combination of the long equity positions, plus the net of long and short derivative positions expressed as a percentage of net
assets.
Net market exposure is the long equity positions, plus the net of long and short derivative positions. For illustrative purposes only.
Typical market positioning – % of NAV (115% net exposure)
Long positions
Short positions
Net market exposure
100
0
115%
120%
5%
%
Strategic report
continued
Section 3: Governance
41
ESG integration
The Manager defines Environmental, Social and Governance (ESG) integration as the practice of incorporating material ESG
information and consideration of sustainability risks into investment decisions in order to enhance risk-adjusted returns. This
statement does not imply that the Company has an ESG-aligned investment objective, but rather describes how ESG information is
considered as part of the overall investment process.
Of course, ESG information is not the sole consideration for investment decisions; instead, the Manager assesses a variety of
economic and financial indicators which include ESG considerations in combination with other information in the research
phase of the investment process to make investment decisions appropriate to their client’s objectives. This may also include
relevant third party insight, as well as internal engagement commentary and input from BlackRock Investment Stewardship
(BIS) on governance issues. The Investment Manager conducts regular portfolio reviews with the BlackRock Risk and
Quantitative Analysis (RQA) team. These reviews include discussion of the portfolio's exposure to material ESG risks, as well as
exposure to sustainability-related business involvements, climate-related metrics, traditional financial risks and other factors.
The Manager’s approach to ESG integration is to broaden the total amount of information its investment professionals consider
in order to improve investment analysis, seeking to meet or exceed economic return and financial risk targets. ESG factors can
be useful and relevant indicators for investment purposes and can help portfolio managers with their decision-making through
identifying potentially negative events or corporate behaviour. The Investment Manager works closely with BIS to assess the
governance quality of companies and understand any potential issues, risks or opportunities.
The Manager’s research team monitors differing levels of risk throughout the process and believes that avoiding major
downside events can generate significant outperformance over the long-term. Inputs from the RQA team are an integral
part of the investment process. The RQA team analyse market and portfolio risk factors including stress tests, correlations,
factor returns, cross-sectional volatility and attributions. The Manager’s evaluation procedures and financial analysis of the
companies within the portfolio also take into account environmental, social and governance matters and other business
issues.
The Company does not meet the criteria for Article 8 or 9 products under the EU Sustainable Finance Disclosure Regulation
(SFDR) and the investments underlying this financial product do not take into account the EU criteria for environmentally
sustainable economic activities. The Investment Manager has access to a range of data sources, including principal adverse
indicator (PAI) data, when making decisions on the selection of investments. However, whilst BlackRock considers ESG risks
for all portfolios and these risks may coincide with environmental or social themes associated with the PAIs, the Company does
not commit to considering PAIs in driving the selection of its investments.
Further information on the Manager’s approach to ESG and sustainability can be found in the report on Responsible Investing
on page 55.
Performance
The Investment Manager’s report on pages 13 to 17 includes a review of the main developments during the year, together with
information on investment activity within the Company’s portfolio.
Results and dividends
The results for the Company are set out in the Statement of Comprehensive Income on page 94. The total loss for the year,
after taxation, was £15,749,000 (2022: a loss of £295,888,000) of which the revenue return amounted to £16,510,000 (2022:
£13,257,000) and a capital loss of £32,259,000 (2022: loss of £309,145,000).
Details of the dividends declared in respect of the year are set out in the Chairman’s Statement on page 9.
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Annual Report and Financial Statements 30 November 2023
Key performance indicators
At each Board meeting, the Directors consider a number of performance measures to assess the Company’s success in
achieving its objectives. The key performance indicators (KPIs) used to measure the progress and performance of the
Company over time, and which are comparable to those reported by other investment trusts, are set out in the table below.
These KPIs fall within the definition of ‘Alternative Performance Measures’ (APMs) under guidance issued by the European
Securities and Markets Authority (ESMA), and additional information explaining how these are calculated is set out in the
Glossary on pages 135 to 138.
The Board monitors the KPIs at each meeting. Additionally, it regularly reviews a number of indices and ratios to understand the
impact on the Company’s relative performance of the various components such as asset allocation and stock selection. This
includes an assessment of the Company’s performance and ongoing charges against its peer group of investment trusts with
similar investment objectives.
Year ended
30 November
2023
Year ended
30 November
2022
Net asset value total return
1,2
(2.3)%
(31.1)%
Share price total return
1,2
(0.8)%
(35.5)%
Benchmark Index total return
3
(6.0)%
(17.5)%
Discount to cum income net asset value
2
3.6%
5.0%
Revenue return per share
16.56p
12.95p
Total dividend per share
14.75p
11.10p
Ongoing charges
2,4
0.54%
0.54%
Ongoing charges including performance fees
2,5
0.87%
0.54%
1
This measures the Company’s share price and NAV total return, which assumes dividends paid by the Company have been
reinvested.
2
Alternative Performance Measures, see Glossary on pages 135 to 138.
3
The Company’s Benchmark Index is the Numis Smaller Companies plus AIM (excluding Investment Companies) Index.
4
Ongoing charges represent the management fee and all other operating expenses, excluding the performance fee, finance costs,
direct transaction costs, custody transaction charges, VAT recovered, taxation, prior year expenses written back and certain non-
recurring items as a % of average daily net assets.
5
Ongoing charges represent the management fee, performance fee and all other operating expenses, excluding finance costs, direct
transaction costs, custody transaction charges, VAT recovered, taxation, prior year expenses written back and certain non-recurring
items as a % of average daily net assets. Further information on the management fees paid by the Company can be found in Note 4
to the financial statements on pages 102 and 103.
Share price discount/premium
The Directors recognise that it is in the long-term interests of shareholders that the Company’s shares do not trade at an
excessive discount or premium to their prevailing NAV for any material length of time. In the year under review the discount/
premium to NAV of the ordinary shares on a cum income basis has ranged between a discount of 9.2% and 1.0%, with the
average being a discount of 5.2%. The shares ended the year at a discount of 3.6% on a cum income basis. As at 31 January
2024 the discount was 6.1%.
As it does each year, the Board will also be seeking to renew the authority from shareholders at the AGM to issue new shares (or
to reissue shares held in treasury) and to buy back shares. Further information on these powers and the Board's policy in this
respect can also be found in the Chairman’s Statement on pages 8 and 9.
Strategic report
continued
Section 3: Governance
43
Principal risks
As required by the UK Code of Corporate Governance, the Board has in place a robust, ongoing process to identify, assess
and monitor the principal and emerging risks of the Company, including those that they consider would threaten its business
model, future performance, solvency or liquidity. Emerging risks are considered by the Board as they come into view and
are incorporated into the Company’s risk register where applicable. Additionally, the Manager considers emerging risks in
numerous forums and the Risk and Quantitative Analysis team produces an annual risk survey. Any material risks of relevance
to the Company identified through the annual risk survey will be communicated to the Board.
A core element of this process is the Company’s risk register, which identifies the risks facing the Company and the likelihood
and potential impact of each risk, together with the controls established for mitigation. A residual risk rating is calculated for
each risk, which allows the effect of any mitigating procedures to be reflected in the register. The current risk register includes
a range of risks spread between investment performance risk, income/dividend risk, legal & regulatory risk, counterparty risk,
operational risk, market risk, political risk and financial risk.
The risk register, its method of preparation and the operation of key controls in the Manager’s and third party service providers’
systems of internal control are reviewed on a regular basis by the Audit Committee. In order to gain a more comprehensive
understanding of the Manager’s and other third party service providers’ risk management processes and how these apply to
the Company’s business, the Audit Committee periodically receives presentations from BlackRock’s Internal Audit and Risk
& Quantitative Analysis teams. Where produced, the Audit Committee also reviews summaries of the Service Organisation
Control (SOC1) reports from the Company’s service providers.
The principal risks and uncertainties faced by the Company during the financial year, together with the potential effects,
controls and mitigating factors, are set out in the table on pages 43 to 46.
Investment performance
Principal risk
The Board is responsible for:
•
setting the investment policy to fulfil the Company’s objectives; and
•
monitoring the performance of the Company’s Investment Manager and the strategy adopted.
An inappropriate policy or strategy may lead to:
•
poor performance compared to the Company’s Benchmark Index, peer group or shareholder expectations;
•
a widening discount to NAV;
•
a reduction or permanent loss of capital; and
•
dissatisfied shareholders and reputational damage.
Mitigation/Control
To manage these risks the Board:
•
regularly reviews the Company’s investment mandate and long-term strategy;
•
has set, and regularly reviews, the investment guidelines and has put in place appropriate limits on levels of gearing and
the use of derivatives;
•
receives from the Investment Manager a regular explanation of stock selection decisions, portfolio gearing and any
changes in gearing and the rationale for the composition of the investment portfolio;
•
receives from the Investment Manager regular reporting on the portfolio’s exposure through derivatives, including the
extent to which the portfolio is geared in this manner and the value of any short positions;
•
monitors the maintenance of an adequate spread of investments in order to minimise the risks associated with particular
sectors, based on the diversification requirements inherent in the Company’s investment policy; and
•
monitors the share price discount or premium to NAV.
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Annual Report and Financial Statements 30 November 2023
Market risk
Principal risk
Market risk arises from changes to the prices of the Company’s investments. It represents the potential loss the Company
might suffer through holding investments and derivatives. Market risk includes the potential impact of events which are
outside the scope of the Company’s control, such as Russia's invasion of Ukraine, the hostilities in the Middle East, and the
impacts of climate change.
Mitigation/Control
The Board carefully considers the diversification of the portfolio, asset allocation, stock selection, unquoted investments and
levels of gearing on a regular basis and has set investment restrictions and guidelines which are monitored and reported on by
the Investment Manager. The Board monitors the implementation and results of the investment process with the Investment
Manager, and key market risk factors are discussed.
The Board also recognises the benefits of a closed-end fund structure in extremely volatile markets such as those experienced
with the COVID-19 pandemic and more recently the impact of Russia’s invasion of Ukraine and the potential impact of the
hostilities in the Middle East on the global economy. Unlike open-ended counterparts, closed-end funds are not obliged to sell
down portfolio holdings at low valuations to meet liquidity requirements for redemptions. During times of elevated volatility
and market stress, the ability of a closed-end fund structure to remain invested for the long-term enables the Investment
Manager to adhere to disciplined fundamental analysis from a bottom-up perspective and be ready to respond to dislocations
in the market as opportunities present themselves.
Income/dividend risk
Principal risk
The amount of dividends and future dividend growth will depend on the performance of the Company’s underlying portfolio
holdings. Changes in the composition of the portfolio and any change in the tax treatment of the dividends or interest received
by the Company may reduce the level of dividends received by shareholders.
Mitigation/Control
The Board monitors this risk through the receipt of detailed income forecasts and considers the level of income at each
meeting. The Company also has a revenue reserve and powers to pay dividends from capital which could potentially be used to
support the Company’s dividend if required.
Financial risk
Principal risk
The Company’s investment activities expose it to a variety of financial risks that include market risk, foreign currency risk and
interest rate risk. At 30 November 2023, the Company had approximately 29.5% of its gross asset value invested in AIM traded
equity securities and 4.5% of its gross assets in international markets, and, by the very nature of its investment objective,
largely invests in smaller companies. Liquidity in these securities can from time to time become constrained, making these
investments difficult to realise at or near published prices.
Mitigation/Control
The Company is not materially exposed to foreign currency and interest rate risk. For mitigation of market risk, see above.
There are also risks linked to the Company’s use of derivative transactions including long and short investment positions.
Details are disclosed in note 11 on page 108, together with a summary of the policies for managing and controlling these risks
in note 16.
Operational risk
Principal risk
In common with most other investment trust companies, the Company has no employees. The Company therefore relies upon
the services provided by BlackRock (the Manager and AIFM) and The Bank of New York Mellon (International) Limited (the
Depositary and Fund Accountant) who maintain the Company’s accounting records.
Strategic report
continued
Section 3: Governance
45
Failure by any service provider to carry out its obligations to the Company could have a material adverse effect on the
Company’s performance. Disruption to the accounting, payment systems or custody records, as a result of a cyber-attack or
otherwise, could impact the monitoring and reporting of the Company’s financial position.
The security of the Company’s assets, dealing procedures, accounting records and maintenance of regulatory and legal
requirements, depend on the effective operation of these systems.
Mitigation/Control
The Board reviews the overall performance of the Manager, Investment Manager and all other third party service providers and
compliance with the investment management agreement on a regular basis.
The Fund Accountant’s and the Manager’s internal control processes are regularly tested and monitored throughout the year
and are evidenced through their Service Organisation Control (SOC 1) reports, which are subject to review by an Independent
Service Assurance Auditor. The SOC 1 reports provide assurance in respect of the effective operation of internal controls.
The Company’s financial instruments held in custody are subject to a strict liability regime and in the event of a loss of such
financial instruments held in custody, the Depositary must return assets of an identical type or the corresponding amount,
unless able to demonstrate that the loss was a result of an event beyond its reasonable control.
The Board considers succession arrangements for key employees of the Manager and the Board also considers the business
continuity arrangements of the Company’s key service providers on an ongoing basis and reviews these as part of its review
of the Company’s risk register. In respect of the unprecedented risks posed by the COVID-19 pandemic in terms of the ability
of service providers to function effectively, the Board has received reports from key service providers setting out the measures
that they have put in place to address the crisis, in addition to their existing business continuity framework. Having considered
these arrangements and reviewed service levels since the crisis has evolved, the Board is confident that a good level of service
has and will be maintained.
The Board also receives regular updates from BlackRock’s internal audit function and the Company’s Audit Committee
Chairman attends an annual briefing from the head of BlackRock’s internal audit function once a year. This is supplemented
by a written report which describes the progress made against the current internal audit plan, any issues identified and the
plan for the forthcoming year.
Legal and regulatory risk
Principal risk
The Company has been approved by HM Revenue & Customs as an investment trust, subject to continuing to meet the
relevant eligibility conditions, and operates as an investment trust in accordance with Chapter 4 of Part 24 of the Corporation
Tax Act 2010. As such, the Company is exempt from capital gains tax on the profits realised from the sale of its investments.
Any breach of the relevant eligibility conditions could lead to the Company losing its investment trust status and being
subject to corporation tax on capital gains realised within the Company’s portfolio. In such event the investment returns of
the Company may be adversely affected. Any serious breach could result in the Company and/or the Directors being fined or
the subject of criminal proceedings or the suspension of the Company’s shares which would in turn lead to a breach of the
Corporation Tax Act 2010.
Mitigation/Control
The Investment Manager monitors investment movements, the level of forecast income and expenditure and the amount
of proposed dividends, if any, to ensure that the provisions of Chapter 4 of Part 24 of the Corporation Tax Act 2010 are not
breached, and the results are reported to the Board at each meeting.
Following authorisation under the Alternative Investment Fund Managers’ Directive as retained and onshored in the UK
(AIFMD), the Company and its appointed Alternative Investment Fund Manager (AIFM) are subject to the risks that the
requirements of the AIFMD are not correctly complied with. The Board and the AIFM also monitor changes in government
policy and legislation which may have an impact on the Company.
Compliance with the accounting standards applicable to quoted companies and those applicable to investment trusts are also
regularly monitored to ensure compliance.
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Annual Report and Financial Statements 30 November 2023
Risk of regulatory change
Principal risk
Amongst other relevant laws and regulations, the Company is required to comply with the provisions of the Companies Act
2006, the Alternative Investment Fund Managers’ Directive (as retained and onshored in the UK), the Market Abuse Regulation
(also as retained and onshored in the UK), the UK Listing Rules and the Disclosure Guidance and Transparency Rules.
Mitigation/Control
The Company Secretary and the Company’s professional advisers monitor developments in relevant laws and regulations and
provide regular reports to the Board in respect of the Company’s compliance.
The Market Abuse Regulation came into force across the EU on 3 July 2016 and has been retained and onshored in the UK
following Brexit. The Board has taken steps to ensure that individual Directors (and their Persons Closely Associated) are aware
of their obligations under the regulation and has updated internal processes, where necessary, to ensure the risk of non-
compliance is effectively mitigated.
Counterparty
Principal risk
The potential loss that the Company could incur if a counterparty is unable (or unwilling) to perform on its commitments.
The Company’s investment policy also permits the use of both exchange-traded and over-the-counter derivatives (including
contracts for difference).
Mitigation/Control
Due diligence is undertaken before contracts are entered into and exposures are diversified across a number of counterparties.
The Board reviews the controls put in place by the Investment Manager to monitor and to minimise counterparty exposure,
which include intra-day monitoring of exposures to ensure that these are within set limits.
The Depositary is liable for restitution for the loss of financial instruments held in custody, unless it is able to demonstrate that
the loss was due to an event beyond its reasonable control.
Strategic report
continued
Section 3: Governance
47
Viability statement
The Directors have assessed the prospects of the Company over a longer period than the 12 months referred to by the “Going
Concern” guidelines.
The Board conducted this review for the period up to the AGM in 2029, being a five-year period from the date that this Annual
Report will be approved by shareholders. This is generally the investment holding period investors consider while investing
in the smaller companies’ sector. The Board is cognisant of the uncertainty surrounding the potential duration of the
Russia/Ukraine conflict and the hostilities in the Middle East, their impact on the global economy, and the prospects for the
Company’s portfolio holdings. In making its assessment the Board has also considered the following factors:
•
the Company’s principal risks as set out on pages 43 to 46;
•
the impact of a significant fall in UK equity markets on the value of the Company’s investment portfolio in the light of the
heightened volatility resulting from the ongoing Russia/Ukraine conflict, the hostilities in the Middle East, and any potential
impact on the global economy, and the path of inflation and interest rates in the UK;
•
the ongoing relevance of the Company’s investment objective; and
•
the level of demand for the Company’s shares.
The Directors have also considered the Company’s revenue and expense forecasts and the fact that expenses and liabilities
are relatively stable. The Company also has a portfolio of investments which provides a level of cash receipts in the form of
dividends and which are considered to be relatively realisable if required.
The Directors reviewed the assumptions and considerations underpinning the Company’s existing going concern assertion
(please see the disclosure in the Directors’ Report on page 60), which are based on:
•
processes for monitoring costs;
•
key financial ratios;
•
evaluation of risk management and controls;
•
compliance with the investment objective;
•
the Company’s ability to meet its liabilities as they fall due;
•
portfolio risk profile;
•
share price discount to NAV;
•
gearing;
•
counterparty exposure and liquidity risk;
•
the operational resilience of the Company and its key service providers and their ability to continue to provide a good level of
service for the foreseeable future; and
•
the effectiveness of business continuity plans in place for the Company and key service providers.
The Company has a relatively liquid portfolio and largely fixed overheads (excluding any applicable performance fees) which
comprise a very small percentage of net assets 0.54% excluding performance fees, 0.87% including performance fees
in 2023. The effective performance fee cap in the event that the NAV return exceeds the Benchmark Index return over the
performance period is circa 0.90% of the average gross assets over the two years and the applicable percentage to be applied
to the outperformance of the NAV total return over the Benchmark Index return is 15%. In addition, the maximum cap on total
management and performance fees is 1.25% of average gross assets (measured over a rolling two-year period). Therefore, the
Board has concluded that the Company would be able to meet its ongoing operating costs as they fall due.
48
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Annual Report and Financial Statements 30 November 2023
The Directors have also considered the impact of potential changes in law, regulation and taxation and the matter of foreign
exchange risk. They have determined that although there are a number of potential risks associated with the legal, fiscal and
regulatory landscape they do not believe that this represents a material threat to the Company’s strategy and business model,
nor do they believe that the Investment Manager will be materially impeded in achieving the Company’s investment objective.
Based on the results of their analysis, the Directors have a reasonable expectation that the Company will be able to continue in
operation and meet its liabilities as they fall due over the period of their assessment.
Strategic report
continued
Section 3: Governance
49
Section 172 statement: Promoting the success of BlackRock
Throgmorton Trust plc
The Companies (Miscellaneous Reporting) Regulations 2018 require directors to explain more fully how they have discharged
their duties under Section 172(1) of the Companies Act 2006 in promoting the success of their companies for the benefit
of members as a whole. This enhanced disclosure covers how the Board has engaged with and understands the views of
stakeholders and how stakeholders’ needs have been taken into account, the outcome of this engagement and the impact that
it has had on the Board’s decisions.
As the Company is an externally managed investment company and does not have any employees or customers, the Board
considers the main stakeholders in the Company to be the shareholders and the key service providers (being the Manager and
Investment Manager, the Custodian, Depositary, Registrar and Broker). The reasons for this determination, and the Board’s
overarching approach to engagement, are set out in the table below:
Stakeholders
Shareholders
Continued shareholder support and engagement are critical to the continued existence of the Company and the successful
delivery of its long-term strategy. The Board is focused on fostering good working relationships with shareholders and on
understanding the views of shareholders in order to incorporate them into the Board’s strategy and objectives in delivering
long-term growth and income.
In turn, portfolio holdings are ultimately shareholders’ assets, and the Board recognises the importance of good stewardship
and communication with investee companies in meeting the Company’s investment objective and strategy.
Manager and Investment Manager
The Board’s main working relationship is with the Manager, who is responsible for the Company’s portfolio management
(including asset allocation, stock and sector selection) and risk management, as well as ancillary functions such as
administration, secretarial, accounting and marketing services. The Manager has sub-delegated portfolio management to the
Investment Manager. Successful management of shareholders’ assets by the Investment Manager is critical for the Company
to successfully deliver its investment strategy and meet its objective. The Company is also reliant on the Manager as AIFM to
provide support in meeting relevant regulatory obligations under the AIFMD and other relevant legislation.
Other key service providers
In order for the Company to function as an investment trust with a listing on the premium segment of the official list of the
FCA and trade on the London Stock Exchange’s (LSE) main market for listed securities, the Board relies on a diverse range
of advisors for support in meeting relevant obligations and safeguarding the Company’s assets. For this reason, the Board
considers the Company’s Custodian, Depositary, Registrar and Broker to be stakeholders. The Board, either directly or through
the Manager, maintains regular contact with its key external providers and receives regular reporting from them through the
Board and Committee meetings, as well as outside of the regular meeting cycle.
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Annual Report and Financial Statements 30 November 2023
A summary of the key areas of engagement undertaken by the Board with its key stakeholders in the year under review and
how Directors have acted upon this to promote the long-term success of the Company are set out in the table below.
Investment mandate and objective
Issue
The Board is committed to promoting the role and success of the Company in delivering on its investment mandate to
shareholders over the long-term. The Board also has responsibility to shareholders to ensure that the Company’s portfolio
of assets is invested in line with the stated investment objective and in a way that ensures an appropriate balance between
spread of risk and portfolio returns.
Engagement
The Board works closely with the Investment Manager throughout the year in further developing our investment strategy
and underlying policies, not simply for the purpose of achieving the Company’s investment objective but in the interests of
shareholders and future investors.
The Board is kept advised in respect of the Manager’s consideration of ESG factors as part of the investment process; a
summary of BlackRock’s approach to ESG matters is set out on page 53.
Impact
Details regarding the Company’s NAV and share price performance can be found in the Chairman’s Statement on page 7 and
in the Strategic Report on page 42.
The portfolio activities undertaken by the Manager can be found in the Investment Manager’s Report on pages 13 to 17.
Management of the share rating
Issue
The Board believes that the best way of addressing the discount over the longer term is to continue to generate good
performance and to create demand for the Company’s shares in the secondary market through broadening awareness of the
Company’s unique structure. The Board believes that it is in shareholders’ interests that the share price does not trade at an
excessive premium or discount to NAV. Therefore, where deemed to be in shareholders’ long-term interests, it may exercise its
powers to issue shares or buy back shares with the objective of ensuring that an excessive premium or discount does not arise.
Engagement
The Manager reports total return performance statistics to the Board on a regular basis, along with the portfolio yield and the
impact of dividends paid on brought forward distributable reserves.
The Board reviews the Company’s discount/premium to NAV on a regular basis and holds regular discussions with the
Manager and the Company’s broker regarding the discount/premium level.
The Board believes that the best way of maintaining the share rating at an optimal level over the long-term is to create demand
for the shares in the secondary market. To this end the Investment Manager is devoting considerable effort to broadening the
awareness of the Company, particularly to wealth managers and to the wider retail shareholder market.
The Manager provides the Board with feedback and key performance statistics regarding the success of the Company’s
marketing initiatives.
Impact
The average discount for the year to 30 November 2023 was 5.2%. During the year the Company’s share price has traded
between a discount of 9.2% and 1.0%.
Strategic report
continued
Section 3: Governance
51
Service levels of third party providers
Issue
The Board acknowledges the importance of ensuring that the Company’s principal suppliers are providing a suitable level of
service including: the Manager in respect of investment performance and delivering on the Company’s investment mandate;
the Depositary in respect of its duties towards safeguarding the Company’s assets; the Registrar in its maintenance of the
Company’s share register and dealing with investor queries and the Company’s Brokers in respect of the provision of advice
and acting as a market maker for the Company’s shares.
Engagement
The Manager reports to the Board on the Company’s performance on a regular basis. The Board carries out a robust annual
evaluation of the Manager’s performance, their commitment and available resources.
The Board performs an annual review of the service levels of all third party service providers and concludes on their suitability
to continue in their role.
The Board has received updates in respect of business continuity planning from the Company’s Manager, Depositary, Fund
Administrator, Brokers, Registrar and Printers, and is confident that arrangements are in place to ensure that a good level of
service will continue to be provided.
Impact
Performance evaluations were performed on a timely basis and the Board concluded that all third party service providers,
including the Manager, Depositary and Fund Administrator were operating effectively and providing a good level of service.
Board composition
Issue
The Board is committed to ensuring that its own composition brings an appropriate balance of knowledge, experience and
skills, and that it is compliant with best corporate governance practice under the UK Corporate Governance Code, including
guidance on tenure and the composition of the Board’s committees.
Engagement
During the year the Board undertook a review of succession planning arrangements and identified the need for action to
ensure that the composition of the Board remained appropriate and that there was an ongoing process of refreshment,
bringing in new ideas and different perspectives. The Board, through its Nomination Committee, agreed the selection criteria
and the method of selection, recruitment and appointment. Board diversity, including factors such as age, ethnicity, and
gender, was taken into account when establishing the criteria.
All Directors are subject to a formal evaluation process on an annual basis (more details and the conclusions in respect of the
2023 evaluation process are given on page 68). All Directors stand for re-election by shareholders annually. Shareholders may
attend the AGM and raise any queries in respect of Board composition or individual Directors in person or may contact the
Company Secretary or the Chairman using the details provided on page 131 if they wish to raise any issues.
Impact
The Directors are not aware of any issues that have been raised directly by shareholders in respect of Board composition in
2023. Details for the proxy voting results in favour and against individual Directors’ re-election at the 2023 AGM are given on
the Company’s website at
www.blackrock.com/uk/thrg
.
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Annual Report and Financial Statements 30 November 2023
Shareholders
Issue
Continued shareholder support and engagement are critical to the continued existence of the Company and the successful
delivery of its long-term strategy.
The dividend is funded out of current year revenue and, where deemed appropriate, may be supported from revenue reserves if
current year revenue is insufficient. The Company does not have a policy of seeking income, however, the portfolio has, to date,
continued to deliver a level of income such that the Board is able to pay an attractive dividend.
Engagement
The Board is committed to maintaining open channels of communication and to engaging with shareholders and welcomes
and encourages attendance and participation from shareholders at its Annual General Meetings. Shareholders therefore have
the opportunity to meet the Directors and Investment Manager and to address questions to them directly. The Chairman and
Senior Independent Director also meet directly with shareholders providing a forum for canvassing their views and enabling
the Board to be aware of any issues of concern.
The Annual Report and Half Yearly financial report are available on the BlackRock website and are also circulated to
shareholders either in printed copy or via electronic communications. In addition, regular updates on performance, monthly
factsheets, the daily NAV and other information are also published on the website at
www.blackrock.com/uk/thrg
.
The Board also works closely with the Manager to develop the Company’s marketing strategy, with the aim of ensuring
effective communication with shareholders in respect of the investment mandate and objective. Unlike trading companies,
shareholder meetings usually take the form of a meeting with the Investment Manager as opposed to members of the Board.
As well as attending regular investor meetings the Investment Manager holds regular discussions with wealth management
desks and offices to build on the case for, and understanding of, long-term investment opportunities in the UK smaller
companies’ sector.
However, the Board is ultimately responsible for communication with shareholders and all substantive matters arising from
such communication are referred to the Board.
The Manager also coordinates public relations activity, including meetings between the Investment Manager and relevant
industry publications to set out their vision for the portfolio strategy and outlook for the UK equity market. The Manager
releases the daily NAV and monthly portfolio updates to the market to ensure that investors are kept up to date in respect of
performance and other portfolio developments and maintains a website on behalf of the Company that contains relevant
information in respect of the Company’s investment mandate and objective. If shareholders wish to raise issues or concerns
with the Board, they are welcome to do so at any time.
The Chairman is available to meet directly with shareholders periodically to understand their views on governance and the
Company’s performance where they wish to do so. He may be contacted via the Company Secretary whose details are given on
page 131.
Impact
The Board values any feedback and questions from shareholders ahead of and during Annual General Meetings in order to
gain an understanding of their views and will take action when and as appropriate. Feedback and questions will also help the
Company evolve its reporting, aiming to make reports more transparent and understandable.
Feedback from all substantive meetings between the Investment Manager and shareholders will be shared with the Board.
The Directors will also receive updates from the Company’s broker on any feedback from shareholders, as well as share trading
activity, share price performance and an update from the Investment Manager.
The Investment Manager attended professional investor meetings and held discussions with a range of different wealth
management desks and offices in respect of the Company during the year under review. Investors were also impressed with
the wide pool of resource available through BlackRock’s Emerging Companies team, and the rigorous ‘bottom-up’ investment
approach.
Strategic report
continued
Section 3: Governance
53
Responsible Investing
Issue
Consideration of material Environmental, Social and Governance (ESG) information and sustainability risks are considered
when making investment decisions. Sustainbility-related risks, including climate-related risks, are becoming a defining factor
in companies’ long-term prospects across the investment spectrum, with significant and lasting implications for economic
growth and prosperity.
Engagement
The Board believes that responsible investment and sustainability are integral to the longer-term delivery of the Company’s
success. The Board works closely with the Investment Manager to regularly review the Company’s performance, investment
strategy and underlying policies to ensure that the Company’s investment objective continues to be met in an effective,
responsible and sustainable way in the interests of shareholders and future investors.
The Investment Manager’s approach to the consideration of ESG factors in respect of the Company’s information and
consideration of sustainability risks are kept under review by the Board.
The Investment Manager reports to the Board in respect of its consideration of sustainability risks and these are integrated
into the investment process; a summary of BlackRock’s approach to ESG integration is set out on page 41. The Investment
Manager’s engagement and voting policy is detailed on pages 58 and 59.
Impact
The Investment Manager believes there is often a positive correlation between good ESG practices on the part of portfolio
companies and investment performance. Details of the Company’s performance in the year are given in the Chairman’s
Statement on page 7 and the Performance Record on page 4.
The Board’s approach to ESG
Environmental, Social and Governance (ESG) issues can present both opportunities and risks to long-term investment
performance. The Company does not have an ESG mandate (and accordingly does not have an ESG or impact focused
investment strategy and has not adopted any exclusionary screens) but our Investment Manager does take ESG factors into
account as part of the investment process as these elements can significantly influence a company’s valuation. These ESG
issues are a key focus of the Board, and the Board is committed to a diligent oversight of the activities of the Manager in these
areas. The Board is aware of the Company’s long-term underweight position in extractive industries, where innovative and
disruptive business models are rare and the non-participation in some capital raises where ESG factors have been a concern.
The Board believes multi-year engagement and dialogue with management is, in most cases, the most constructive way of
building understanding of an investee company’s approach to addressing material business risks and opportunities. This is
particularly true for our Manager given the extent of BlackRock’s shareholder engagement. Further detail of how our Manager
has voted and engaged with the companies in our portfolio can be found on pages 58 and 59.
As well as the understanding afforded by its sheer scale, the Board believes that BlackRock is well placed as Manager to fulfil
these requirements due to its approach to ESG integration and its application of this to the Company’s investment processes,
the emphasis it places on sustainability, its investment stewardship approach and its position in the industry as one of the
largest suppliers of sustainable investment products in the global market. More information on BlackRock’s approach to
sustainability and investment stewardship is set out on page 55.
Future prospects
The Board’s main focus is on the achievement of capital growth and the future of the Company is dependent upon the success
of the investment strategy. The outlook for the Company is discussed in the Chairman’s Statement on page 11 and in the
Investment Manager’s Report on pages 13 to 17.
Social, community and human rights issues
As an investment trust, the Company has no direct social or community responsibilities. However, the Company believes
that it is in shareholders’ interests to consider human rights issues, and environmental, social and governance factors when
selecting and retaining investments. Details of the Company’s approach to socially responsible investment is set out above
and on page 55.
54
BlackRock Throgmorton Trust plc
l
Annual Report and Financial Statements 30 November 2023
Modern Slavery Act
As an investment vehicle the Company does not provide goods or services in the normal course of business and does not have
customers. Accordingly, the Directors consider that the Company is not required to make any slavery or human trafficking
statement under the Modern Slavery Act 2015. The Board considers the Company’s supply chain, dealing predominantly with
professional advisers and service providers in the financial services industry, to be low risk in relation to this matter.
Directors, gender representation and employees
The Directors of the Company on 30 November 2023, all of whom held office throughout the year, are set out on pages 35
to 37. The Board recognises the importance of having a range of experienced Directors who, both individually and
collectively, possess a suitable balance of skills, knowledge, independence and diversity to enable it to fulfil its obligations.
As at 30 November 2023, the Board consisted of three men and three women, resulting in 50% female representation. The
Company has no employees, and all of its Directors are non-executive. Therefore, there are no disclosures to be made in
respect of employees.
The Chairman’s Statement on pages 6 to 11 and the Investment Manager’s Report on pages 13 to 17 form part of this
Strategic Report.
The Strategic Report was approved by the Board at its meeting on 2 February 2024.
By order of the Board
KEVIN MAYGER
for and on behalf of
BlackRock Investment Management (UK) Limited
Company Secretary
2 February 2024
Strategic report
continued
Section 3: Governance
55
Investment stewardship approach
Consistent with BlackRock’s fiduciary duty as an asset manager, BlackRock Investment Stewardship (BIS) seeks to support
investee companies in their efforts to deliver long-term financial value on behalf of their clients. These clients include public
and private pension plans, governments, insurance companies, endowments, universities, charities and, ultimately, individual
investors, among others. BIS serves as a link between BlackRock’s clients and the companies they invest in. Clients depend on
BlackRock to help them meet their investment goals; the business and governance decisions that companies make may have a
direct impact on BlackRock’s clients’ long-term investment outcomes and financial wellbeing.
The Company’s Investment Manager works closely with BlackRock’s Investment Stewardship team to assess the governance
quality of companies and business practices, and better understand any potential issues, risks or opportunities. The Investment
Manager uses this information when conducting research and due diligence on new investments and again when monitoring
investments in the portfolio.
Global Principles
The
BIS Global Principles
,
regional voting guidelines
, and
engagement priorities
(collectively, the “BIS policies”) set out the
core elements of corporate governance that guide BIS’ investment stewardship efforts globally and within each regional
market, including when engaging with companies and voting at shareholder meetings when authorized to do so on behalf
of clients. Each year, BIS reviews its policies and updates them as necessary to reflect changes in market standards and
regulations, insights gained over the year through third-party and its own research, and feedback from clients and companies.
Regional proxy voting guidelines
BIS’ regional voting guidelines are intended to help clients and companies understand its thinking on key governance matters.
They are the benchmark against which it assesses a company’s approach to corporate governance and the items on the
agenda to be voted on at the shareholder meeting. BIS applies its guidelines pragmatically, taking into account a company’s
unique circumstances where relevant. BlackRock informs voting decisions through research and engages as necessary.
BIS reviews its voting guidelines annually and updates them as necessary to reflect changes in market standards, evolving
governance practice and insights gained from engagement over the prior year. BIS’ regional voting guidelines are available on
its website at
www.blackrock.com/corporate/about-us/investment-stewardship#stewardship-policies
.
BlackRock is committed to transparency in terms of disclosure of its stewardship activities on behalf of clients. BIS publishes
its stewardship policies – such as the
BIS Global Principles
,
regional voting guidelines
, and
engagement priorities
– to help
BlackRock’s clients understand its work to advance their interests as long-term investors in public companies. Additionally,
BIS publishes both annual and quarterly reports detailing its stewardship activities, as well as
vote bulletins
that describe its
rationale for certain votes at high profile shareholder meetings.
BlackRock’s reporting and disclosures
In terms of its own reporting, BlackRock believes that the Sustainability Accounting Standards Board provides a clear set
of standards for reporting sustainability information across a wide range of issues, from labour practices to data privacy to
business ethics. For evaluating and reporting climate-related risks, as well as the related governance issues that are essential
to managing them, the Task Force on Climate-Related Financial Disclosures (TCFD) provides a valuable framework. BlackRock
recognises that reporting to these standards requires significant time, analysis and effort. BlackRock’s 2022 TCFD report can
be found at
www.blackrock.com/corporate/literature/continuous-disclosure-and-important-information/tcfd-report
-2022-
blkinc.pdf
.
The above forms part of the Strategic Report.
BlackRock Investment Stewardship
56
BlackRock Throgmorton Trust plc
l
Annual Report and Financial Statements 30 November 2023
The Directors present the Annual Report and Financial Statements of the Company for the year ended 30 November 2023.
Status of the Company
The Company carries on business as an investment trust. It has been approved by HM Revenue & Customs as an investment
trust in accordance with Sections 1158 and 1159 of the Corporation Tax Act 2010, subject to the Company continuing to meet
eligibility conditions. The Directors are of the opinion that the Company has conducted its affairs in a manner which will satisfy
the conditions for continued approval.
The Company is domiciled in the UK as an investment company within the meaning of Section 833 of the Companies Act 2006. It
is not a close company and has no employees.
As an investment company that is managed and marketed in the United Kingdom, the Company is an Alternative Investment
Fund (AIF) falling within the scope of, and subject to the requirements of the Alternative Investment Fund Managers’ Directive
(AIFMD) (as implemented and transposed into UK law). The Company is governed by the provisions of the UK Alternative
Investment Fund Managers Regulations 2013 (the Regulations) and is required to be authorised by the Financial Conduct
Authority (FCA). It must comply with a number of obligations, including the appointment of an Alternative Investment Fund
Manager (AIFM) and a depositary to carry out certain functions. The Company must also comply with the Regulations in
respect of leverage, outsourcing, conflicts of interest, risk management, valuation, remuneration and capital requirements and
must also make additional disclosures to both shareholders and the FCA. Further details are set out on the BlackRock website
at
www.blackrock.com/uk/thrg
, the Regulatory Disclosures section on pages 132 to 135 and in note 16 of the Notes to the
Financial Statements on pages 111 to 122.
The Company’s ordinary shares are eligible for inclusion in the Stocks & Shares component of an Individual Savings Account
(ISA).
Facilitating retail investments
The Company currently conducts its affairs so that its shares can be recommended by an Independent Financial Advisor to
ordinary retail investors in accordance with the FCA’s rules in relation to non-mainstream pooled investments and intends
to continue to do so for the foreseeable future. The shares are excluded from the FCA’s restrictions which apply to non-
mainstream pooled investments because they are shares in an investment trust.
The Common Reporting Standard
Tax legislation under The OECD (Organisation for Economic Co-operation and Development) Common Reporting Standard for
Automatic Exchange of Financial Account Information (The Common Reporting Standard) was introduced on 1 January 2016.
The legislation requires investment trust companies to provide personal information to HMRC about investors who purchase
shares in investment trusts. The Company will have to provide information annually to the local tax authority on the tax
residencies of a number of non-UK based certificated shareholders, and corporate entities. The local tax authority to which the
information is initially passed may in turn exchange the information with the tax authorities of another country or countries
in which the shareholder may be tax resident, where those countries (or tax authorities in those countries) have entered into
agreements to exchange financial account information.
All new shareholders entered onto the share register, excluding those whose shares are held in CREST, will be sent a
certification form for the purposes of collecting this information.
Dividends
Details of dividends paid and payable are set out in the Chairman’s Statement on page
9.
Investment management and administration
BlackRock Fund Managers Limited (BFM) was appointed as the Company’s AIFM with effect from 2 July 2014. The
management contract is terminable by either party on six months’ notice.
BlackRock Investment Management (UK) Limited (BIM (UK)) continues to act as the Company’s Investment Manager under a
delegation agreement with BFM. BIM (UK) also acted as the Company Secretary of the Company throughout the year.
BFM receives a base management fee of 0.35% of gross assets per annum (calculated on the month end gross assets of the
Company, including the economic exposure of the total long and short positions and index futures less current liabilities).
Directors’ report
Section 3: Governance
57
BFM is also entitled to a performance fee of 15% of Net Asset Value (NAV) total return outperformance of the Benchmark
Index measured and annualised on a two-year rolling basis and applied on the average gross assets over two years. The
performance fee has an effective cap of circa 0.9% of average gross assets over that period. Outperformance is the amount by
which the Fund Return arithmetically exceeds the Benchmark Return. The cap applies as a result of the maximum cap on total
management and performance fees of 1.25% of average gross assets over a rolling two-year period.
The fee structure also includes a mechanism by which any cumulative previous underperformance versus the Benchmark
Index return must be made good before any future performance fee can be generated. Conversely, any outperformance which
has not been remunerated as a result of the application of the maximum cap on total fees of 1.25% (as above) may be carried
forward solely for the purposes of being applied to net off against any underperformance not yet made good. The performance
fee model for the Company operates on a rolling two-year period, with an effective annual cap of circa 0.9% on average gross
assets over two years. On the first day of the financial year outperformance from the previous financial year (if any) is carried
forward and accrued in the daily NAV released to the London Stock Exchange.
For the year ended 30 November 2023, the total accrual of performance fee for all rolling two year performance periods
amounted to £2,014,000 (2022: £nil;), calculated as follows:
•
For the annualised rolling two-year performance period to 30 November 2023, the Company has underperformed the
benchmark by 5.9% as at 30 November 2023. No performance fee relating to this performance period has been accrued at
the date of this report.
•
For the annualised rolling two-year performance period to 30 November 2024, the Company has outperformed the
benchmark by 1.9% as at 30 November 2023. A performance fee of £2,014,000 relating to this performance period has
been accrued at the date of this report, which does not become payable until 30 November 2024, subject to the ongoing
performance of the Company.
The Board believes that the 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.
Further details of the management fees are disclosed in note 4 on
pages 102 and 103
.
No penalty on termination of the investment management agreement is payable by the Company in the event that six months’
written notice is given to BFM. There are no provisions relating to payment of fees in lieu of notice.
The Company contributes to a focused investment trust sales and marketing initiative operated by BIM (UK) on behalf of
the investment trusts under its management. The Company’s contribution to the consortium element of the initiative, which
enables the trusts to achieve efficiencies by combining certain sales and marketing activities, represented 0.025% per annum
of its net assets (£624.7 million as at 31 December 2022) and this contribution is matched by BIM (UK).
For the year ended 30 November 2023, £149,000 including VAT (2022: £153,000 including VAT) has been accrued in respect
of these initiatives. The purpose of the programme overall is to ensure effective communication with existing shareholders
and to attract new shareholders to the Company. This has the benefit of improving liquidity in the Company’s shares and helps
sustain the stock market rating of the Company.
BFM and BIM (UK) are subsidiaries of BlackRock, Inc. which is a publicly traded corporation on the New York Stock Exchange
and operating as an independent firm.
Appointment of the Manager
The Board considers the arrangements for the provision of investment management and other services to the Company on
an ongoing basis and a formal review is conducted annually. As part of the annual review, the Board considers the quality and
continuity of the personnel assigned to handle the Company’s affairs, the investment process and the results achieved to date.
The Board believes that the continuing appointment of BFM (the Manager) as AIFM, and the delegation of investment
management services to BIM (UK) (the Investment Manager), on the terms disclosed above, is in the interests of shareholders
as a whole. The specialist nature of the Company’s investment remit is, in the Board’s view, best served by the Emerging
Companies team at BlackRock, which has a proven track record in successfully investing in this sector.
58
BlackRock Throgmorton Trust plc
l
Annual Report and Financial Statements 30 November 2023
Depositary and Custodian
The Company has appointed The Bank of New York Mellon (International) Limited as its Depositary (the Depositary or BNYM).
Its duties and responsibilities are outlined in the investment fund legislation (as contained in the FCA AIF Rulebook). The
main role of the Depositary under the AIFMD is to act as a central custodian with additional duties to monitor the operations
of the Company, including monitoring cash flows and ensuring the value of the Company’s shares is calculated appropriately
in accordance with the relevant regulations and guidance. The Depositary is also responsible for enquiring into the conduct
of the AIFM in each annual accounting period. The Depositary receives a fee payable at 0.0095% of the net assets of the
Company. The Company has appointed the Depositary in a tripartite agreement to which BFM as AIFM is also a signatory. The
Depositary is also liable for loss of financial instruments held in custody.
Under the depositary agreement, custody services in respect of the Company’s assets have been delegated to BNYM which
also receives a custody fee payable by the Company at rates depending on the number of trades effected and the location of
securities held. Custody fees of £7,000 (2022: £8,000) were paid to BNYM. The depositary agreement is subject to 90 days’
notice of termination by any party.
Registrar
The Company has appointed Computershare Investor Services PLC as its Registrar (the Registrar). The principal duty of
the Registrar is the maintenance of the register of shareholders (including registering transfers). It also provides services in
relation to any corporate actions, dividend administration, shareholder documentation and compliance with the Common
Reporting Standard.
The Registrar receives a fixed fee, plus disbursements and VAT. Fees in respect of corporate actions are negotiated as and
when they arise. Registrar fees of £44,000 (2022: £45,000) were paid to the Registrar.
Derivative counterparties
The Company transacts with multiple counterparties for transacting in derivatives. At 30 November 2023, the Company had
master agreements with BNP Paribas, Société Générale, Merrill Lynch and JPMorgan, to enable the Company to gain long and
short exposure on individual securities through derivatives. Further details are given in note 16 on pages 111 to 122.
Change of control
There are no agreements which the Company is party to that might be affected by a change in control of the Company.
Exercise of voting rights in investee companies
The exercise of voting rights attached to the Company’s portfolio has been delegated to the Investment Manager, whose
policy is set out below. BlackRock’s approach to voting at shareholder meetings, engagement with companies and corporate
governance is framed within an investment context. BlackRock believes that sound corporate governance and sustainable
business models contribute to companies’ long-term financial performance and thus to better risk-adjusted returns.
BlackRock’s proxy voting process is led by the BlackRock Investment Stewardship (BIS) team, located in nine offices around
the world. Collectively within BIS, 18 languages are spoken and 31 academic disciplines are represented. The team’s globally-
coordinated, local presence and breadth of experience enables more frequent and better-informed dialogue with companies.
The BIS team draws upon its own expertise, as well as other internal and external resources globally, to represent the long-
term economic interests of clients. Active portfolio managers with positions in a company can vote their shares independently
of BIS based on their views of what is best for their specific fund and client base.
BIS’ Global Principles and regional proxy voting guidelines, updated every year, form the foundation of the team’s engagement
with companies and voting decisions at shareholder meetings on behalf of clients. The voting guidelines are principles-
based and not prescriptive because in BlackRock’s view that each voting situation needs to be assessed on its merits.
Voting decisions are taken to support the outcome that BlackRock believes is in the
long-term economic interests of clients.
The Global Principles are published on BlackRock’s website at:
www.blackrock.com/corporate/literature/fact-sheet/blk-
responsible-investment-engprinciples-global.pdf
During the year under review, the Investment Manager voted on 1,518 proposals at 103 general meetings on behalf of the
Company. At these meetings the Investment Manager voted in favour of most resolutions, as should be expected when
investing in well-run companies, but voted against 42 management resolutions and abstained or withheld from voting on
7 resolutions.
BIS’ reasons for not supporting director elections – and management proposals generally – are consistently
governance-related: board composition and effectiveness, including director independence and overcommitment, and
executive compensation.
Directors’ report
continued
Section 3: Governance
59
BlackRock Throgmorton Trust plc – engagement with portfolio companies in 2023
Given the Board’s belief in the importance of engagement and communication with portfolio companies, it receives regular
updates from the Manager in respect of activity undertaken for the year under review. BlackRock’s Emerging Companies
team, which is headed by our portfolio manager, Dan Whitestone, undertakes extensive, proprietary, on-the-ground research
and seeks to engage with the management of the companies in which it invests. During the year the team met with the
management of over 750 companies. In addition, BlackRock also has a separate Investment Stewardship team (BIS) that
is committed to promoting sound corporate governance through engagement with investee companies, development of
proxy voting policies that support best governance practices and wider engagement on public policy issues. For the year to
30 November 2023, BlackRock’s Investment Stewardship team conducted a total of
68 company engagements on a range
of governance issues with the management teams of 54 portfolio companies representing 52.9
% of the portfolio
number of
holdings
at 30 November 2023. To put this into context, there were 102 companies in the BlackRock Throgmorton Trust plc
portfolio at 30 November 2023. Additional information is set out in the table and charts below as well as the key engagement
themes for the meetings held in respect of the Company’s portfolio holdings.
As at
30 November
2023
As at
30 November
2022
Number of engagements held
68
58
Number of companies met
54
46
% of equity investments covered
52.9
49.0
Shareholder meetings voted at
103
92
Number of proposals voted on
1518
1411
Number of votes against management resolutions
42
59
% of total votes represented by votes against management
2.8
4.1
0
25
50
75
100
97%
16%
15%
0
10
20
30
40
50
60
56%
28%
10%
47%
15%
13%
Engagement themes*
1
Environmental
Social
Governance
Top 6 Engagement Topics*
1
Remuneration
Board composition and effectiveness
Board gender diversity
Corporate strategy
Human capital management
Climate risk management
*
Engagements include multiple company meetings during the year with the same company. Most engagement conversations cover
multiple topics and are based on BlackRock vote guidelines and BlackRock’s engagement priorities can be found at:
www.blackrock.
com/corporate/about-us/investment-stewardship#engagement-priorities
. Percentages reflect the number of meetings at which
a particular topic is discussed as a percentage of the total meetings held; as more than one topic is discussed at each meeting the
total will not add up to 100%.
1
Sources: ISS Proxy Exchange and BlackRock Investment Stewardship.
60
BlackRock Throgmorton Trust plc
l
Annual Report and Financial Statements 30 November 2023
Principal risks
The key risks faced by the Company are set out in the Strategic Report on pages
43 to 46
.
Going concern
The Financial Statements of the Company have been prepared on a going concern basis. The forecast projections and actual
performance are reviewed on a regular basis throughout the year and the Directors believe that this is the appropriate basis,
and 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 these Financial Statements were approved, and is financially sound. The Company is able to
meet all of its liabilities from its assets and the 2023 ongoing charges (excluding performance fees) are approximately 0.54%
(2022: 0.54%) of the net assets.
Directors
Having carefully considered the Board’s composition and the need to ensure that a suitable balance of skills, knowledge,
experience, independence and diversity is maintained. All of the Directors held office throughout the year under review.
Details of Directors’ interests in the ordinary shares of the Company are set out in the Report of the Remuneration Committee
on pages
73 to 76. Further information on the Directors of the Company as at 30 November 2023 and as at the date of this
report can be found on pages
35 to 37
.
All appointments to the Board and re-elections of Directors are carried out in accordance with the Companies Act and the
Company’s Articles of Association. The Company’s Articles of Association provide that one third of Directors retire by rotation
each year. In addition, each Director shall retire and offer themselves for re-election at intervals of no more than three years.
The Board may also appoint Directors but any Director so appointed must stand for election by the shareholders at the next
Annual General Meeting. Directors are also required to retire if they have served more than nine years on the Board and then
may offer themselves for annual re-election.
However, in accordance with best practice and the recommendations of the UK Code of Corporate Governance, the Board has
agreed that all Directors will retire each year and if eligible, will offer themselves for re-election at the forthcoming Annual
General Meeting (AGM) to be held on 19
March 2024. The Board has considered the position of all Directors standing for
re-election at the AGM and believes that it is in the Company’s best interests to support the respective resolutions. The Board
therefore recommends that shareholders vote in favour of these resolutions.
The Board ensures that each Director has sufficient time to discharge their role and considers both the number and nature of
their other commitments, the time commitment required and overall capacity. This may include a detailed review of their time
spent on other activities. Any new external appointments must first be approved by the Board and the Director concerns must
demonstrate that they have sufficient time to carry out the new role. Before recommending a Director for re-election their time
capacity, independence, attendance record and ongoing commitment to the affairs of the Company are considered. A formal
evaluation of their performance is also carried out each year.
Directors’ report
continued
Director
Asset and
Investment
Management
Finance and/or
Accounting
Investment Trust
experience
Marketing and
Distribution
Corporate Strategy
and Finance
Christopher Samuel
✔
✔
✔
✔
✔
Glen Suarez
✔
✔
✔
✔
Merrryn Somerset Webb
✔
✔
✔
Nigel Burton
✔
✔
✔
✔
✔
Louise Nash
✔
✔
✔
✔
Angela Lane
✔
✔
✔
✔
Section 3: Governance
61
Having considered the Directors’ performance within the annual Board performance evaluation process, further details of
which are provided on page 68
, the Board believes that it continues to be effective and that the Directors bring extensive
knowledge and experience, suitably aligned to the activities of the Company, and demonstrate a range of valuable business,
financial and asset management skills, as set out in the table above. Further details of their experience and expertise can be
found in their biographies on pages
35 to 37
.
Further details of the independence of the Board and Board tenure is provided in the Corporate Governance Report on
page
66
.
There were no contracts subsisting during the year under review or up to the date of this report in which a Director of the
Company is or was materially interested and which is or was significant in relation to the Company’s business. None of the
Directors is entitled to compensation for loss of office on the takeover of the Company. None of the Directors has a service
contract with the Company.
Conflicts of interest
The Board has put in place a framework for Directors to report conflicts of interest or potential conflicts of interest.
All Directors are required to notify the Company Secretary of any situations, or potential situations where they consider that
they have or may have, a direct or indirect interest or duty that conflicts or possibly conflicts with the interests of the Company.
All new situations, or changes to previously reported situations are reviewed on an individual basis and reviewed at each
meeting. Directors are also reminded at each meeting that there remains a continuing obligation to notify the Company
Secretary of any new situations that may arise or any changes that may occur to a previously notified situation. The Board
considers that the framework has worked effectively throughout the year.
Directors’ remuneration report and policy
The Directors’ Remuneration Report can be found within the Report of the Remuneration Committee on pages 73 to 76
.
An advisory ordinary resolution to approve this report will be put to shareholders at the Company’s AGM. The Company is
also required to put the Directors’ Remuneration Policy to a binding shareholder vote every three years. The Company’s
Remuneration Policy was last put to shareholders at the AGM in 2023, therefore, an ordinary resolution to approve the policy
will be put to shareholders at the AGM to be held in 2026.
Directors’ responsibilities
The Directors’ responsibilities in preparing these Financial Statements are noted on
pages 84 and 85.
Substantial share interests
As at 30 November 2023 and as at the date of this report, the following investors had declared a notifiable interest of 3% or
more in the Company’s voting rights.
Shareholder
Number of
Ordinary
shares
% of issued
share
capital
1
Brewin Dolphin Ltd
12,954,781
12.99
Rathbones Investment Management Ltd
8,376,867
8.53
IntegraFin Holdings plc
3,872,733
4.01
1
Based upon 95,872,161 shares in issue at the year end.
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Annual Report and Financial Statements 30 November 2023
As at
31 January
2024, the following investors had declared a notifiable interest in the Company’s voting rights:
Shareholder
Number of
Ordinary
shares
% of issued
share
capital
1
Brewin Dolphin
Ltd
11,754,200
12.32
Rathbones Investment Management Ltd
7,957,309
8.34
IntegraFin Holdings plc
6,492,572
6.80
1
Based upon 95,428,492 shares in issue
as at 30 January 2024
.
Articles of Association
Any amendments to the Company’s Articles of Association must be made by a special resolution of the members of the Company.
Share capital
Details of the Company’s share capital and voting rights are given in note 14 on page
109
. Details of the voting rights in the
Company’s shares as at the date of this report are also given in note 16 to the Notice of Annual General Meeting on page
145.
The ordinary shares carry the right to receive dividends and have one voting right per ordinary share. There are no restrictions
on the voting rights of the ordinary shares or on the transfer of the ordinary shares. There are no shares which carry specific
rights with regard to the control of the Company.
Share issues and repurchases
The Board believes that the best way to address any discount over the longer term is to generate good performance and to
create demand for the Company’s shares in the secondary market through effective marketing to drive awareness of the
Company’s unique structure, robust investment process and long-term investment track record in an attractive sector that is
difficult to navigate.
In support of this activity, and where deemed to be in shareholders’ long-term interests, the Board may exercise its powers to
issue or buy back shares with the objective of ensuring that neither an excessive discount or premium to NAV arises.
The Board considers several factors in determining whether the discount or premium to NAV at which the Company’s shares
trade is excessive or otherwise. These may include but are not limited to: whether the share rating is commensurate with the
peer group of UK Smaller Companies and whether the Company’s shares are trading in normal market conditions; the ongoing
attractiveness of the investment proposition, in particular the strength of the portfolio management team and process; and the
strong long-term performance delivered for shareholders, both in absolute and relative terms.
Although the Manager initiates any buybacks, the policy and parameters are set by the Board and reviewed at regular intervals.
If needed, the Company would raise any cash required to finance the purchase of such shares either by selling securities in the
Company’s portfolio or by short-term borrowing.
The Directors believe that it is in shareholders’ interests to ensure that the Company has, at all times, the ability to buy back
shares and to issue new shares or sell shares from treasury in order to manage any excessive share price premium to NAV that
may arise.
Although the Manager initiates any buybacks, the policy and parameters would be set by the Board and reviewed at regular
intervals. If needed, the Company would raise any cash required to finance the purchase of such shares either by selling
securities in the Company’s portfolio or by short-term borrowing.
The Directors believe that it is in shareholders’ interests to ensure that the Company has, at all times, the ability to buy back
shares and to issue new shares or sell shares from treasury in order to manage any excessive share price premium to NAV that
may arise.
The current authority to repurchase ordinary shares was granted to Directors at the AGM held in March 2023 and expires at
the conclusion of the AGM in 2024.
The Directors are therefore proposing that their authority to buy-back shares to be held in treasury, or for cancellation, and to
issue new shares or sell shares from treasury be renewed at the forthcoming AGM.
Directors’ report
continued
Section 3: Governance
63
Treasury shares
The Company is authorised to purchase its own ordinary shares to be held in treasury for reissue or cancellation at a future
date. As at 30 November 2023, 7,337,703 shares were held in treasury (2022: 2,051,000 shares).
Treasury shares will only be reissued at prices at or above the prevailing NAV per share thereby giving the Company the ability
to reissue shares quickly and cost effectively, improving liquidity and providing the Company with additional flexibility in the
management of its capital base. It also ensures a positive overall effect for shareholders when shares are bought back at a
discount and then sold at a price at or above the NAV per share.
Streamlined Energy & Carbon Reporting scheme (SECR) statement: greenhouse gas (GHG)
emissions and energy consumption disclosure
As an externally managed investment company, the Company has no greenhouse gas emissions to report from its operations,
nor does it have any responsibility for any other emissions producing sources under the Companies Act (Strategic Report and
Directors’ Reports) Regulations 2013. For the same reason, the Company considers itself to be a low energy user under the
SECR regulations and therefore is not required to disclose energy and carbon information.
Business of the AGM
The following information to be discussed at the forthcoming Annual General Meeting is important and requires
your immediate attention. If you are in any doubt about the action you should take, you should seek advice from your
stockbroker, bank manager, solicitor, accountant or other financial adviser authorised under the Financial Services and
Markets Act 2000 (as amended).
If you have sold or transferred all of your ordinary shares in the Company, you should pass this document, together
with any other accompanying documents including the form of proxy, at once to the purchaser or transferee, or to
the stockbroker, bank or other agent through whom the sale or transfer was effected, for onward transmission to the
purchaser or transferee.
The business of this year’s AGM consists of 15 resolutions. Resolutions 1 to 12 are proposed as ordinary resolutions and
resolutions 13 to 15 are being proposed as special resolutions.
Ordinary Resolution 1 – Annual Report and Financial Statements
This resolution seeks shareholder approval to receive the report of the Directors and Financial Statements for the year ended
30 November 2023 and the Auditor’s report thereon.
Ordinary Resolution 2 – Approval of the Directors’ Remuneration Report
This resolution is an advisory vote on the Directors’ Remuneration Report for the year ending 30 November 2023, excluding
any content relating to the proposed future remuneration policy as set out on pages 77 and 78.
Ordinary Resolution 3 – Approval of a final dividend
This resolution seeks shareholder approval of a final dividend of 11.45
pence for the year ended 30 November 2023.
Ordinary Resolutions 4 to 9 – Election or re-election of the Directors
Resolutions 4 to 9 relate to the re-election of the Directors. The Board has undertaken a formal performance evaluation during
the year and confirms that the performance of the Directors standing for re-election continues to be effective and that each
Director continues to demonstrate commitment to their role and has confirmed with each Director, and specifically with the
Chairman of the Board, that they have sufficient time to effectively discharge their duties to the Company. Their biographies
on pages
35 to 37
provide details of their collective expertise and experience. The Board believes their re-appointment is in the
best interests of shareholders and will promote the long-term success of the Company.
Ordinary Resolutions 10 and 11 – Appointment of the external Auditor and the Auditor’s Remuneration
These resolutions relate to the re-appointment and remuneration of the Company’s auditor. The Company, through its Audit
Committee, has considered the independence and objectivity of the external auditor and is satisfied that the Auditor is
independent. Further information in relation to the assessment of the existing Auditor’s independence can be found in the
Report of the Audit Committee on pages
81 to 83
.
Resolutions relating to the following items of special business will be proposed at the forthcoming AGM.
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Annual Report and Financial Statements 30 November 2023
Ordinary Resolution 12 – Authority to allot ordinary shares
The Directors may only allot shares for cash if authorised to do so by shareholders in a general meeting. This resolution seeks
authority for the Directors to allot shares for cash up to an aggregate nominal amount of £
476,207.46 per annum, which
is equivalent to 9,524,149
ordinary shares of 5p each and represents 10% of the Company’s issued ordinary share capital
(excluding treasury shares) as at the date of the Notice of the AGM. This resolution will expire at the conclusion of the AGM of
the Company to be held in 2025 unless renewed prior to that date at an earlier general meeting. All shares issued under this
authority would be at a premium to the prevailing NAV.
Special Resolution 13 – Authority to disapply pre-emption rights
By law, Directors require specific authority from shareholders before allotting new shares or selling shares out of treasury for
cash without first offering them to existing shareholders in proportion to their holdings.
Resolution 1
3 empowers the Directors to allot new shares for cash or to sell shares held by the Company in treasury, otherwise
than to existing shareholders on a pro rata basis, up to an aggregate nominal amount of £476,207.46 which is equivalent to
9,524,149
ordinary shares of 5p each and represents 10% of the Company’s issued ordinary share capital (excluding treasury
shares) as at the date of the Notice of the AGM. This resolution, which is subject to the passing of ordinary resolution 12, will
expire at the conclusion of the AGM of the Company to be held in 2025 unless renewed prior to that date at an earlier general
meeting. All shares issued under this authority would be at a premium to the prevailing NAV.
Special Resolution 14 – Authority to buy back ordinary shares
The resolution to be proposed will seek to renew the authority granted to Directors enabling the Company to purchase its own
ordinary shares. The Directors will only consider repurchasing shares in the market if they believe it to be in shareholders’ interests
and as a means of correcting any imbalance between supply and demand for the Company’s shares.
The Directors are seeking authority to purchase up to
14,276,699
ordinary shares (being 14.99% of the issued ordinary share
capital excluding treasury shares as at the date of this report). This authority, unless renewed at an earlier general meeting, will
expire at the conclusion of the AGM of the Company to be held in 2025.
Any ordinary shares purchased pursuant to this resolution shall be cancelled immediately upon completion of the purchase or
held, sold, transferred or otherwise dealt with as treasury shares in accordance with the provisions of the Companies Act.
Special Resolution 15 – Notice period for General Meetings
Special Resolution 15 empowers the Directors to hold general meetings (other than annual general meetings) on 14 days’
notice, which is the minimum notice period permitted by the Companies Act 2006. The EU Shareholder Rights Directive
increases the minimum notice period to 21 days unless two conditions are met.
The first condition is that the Company offers facilities for shareholders to vote by electronic means. The second condition is that
there is an annual resolution of shareholders approving the reduction in the minimum notice period from 21 days to 14 days, hence
this resolution being proposed. It is not intended that this power will be used as a matter of course, rather that this flexibility will be
utilised where the Board believes that the nature of the business to be conducted requires that a general meeting be convened at 14
days’ notice.
Recommendation
The Board considers that each of the resolutions to be proposed at the Annual General Meeting is likely to promote the
success of the Company for the benefit of its members as a whole and is in the best interests of the Company and its
shareholders as a whole. The Directors unanimously recommend that shareholders vote in favour of these resolutions as they
intend to do in respect of their own beneficial holdings.
As mentioned in the Chairman’s statement, if you are unable to attend the meeting in person you can cast your vote by proxy,
either by appointing the chairman as your proxy or alternatively a third party. Details on how to do so are included on the Proxy
Card provided. If you hold your shares through a Nominee or Platform you will need to contact them directly to instruct them
on how you wish to vote or to request that they appoint you as a proxy in respect of your shareholding should you wish to
attend the meeting. It may also be possible to vote electronically via the platform. If you are able to do so we would encourage
shareholders to exercise your vote.
Directors’ report
continued
Section 3: Governance
65
Corporate Governance
Full details are given in the Corporate governance statement on pages 66 to 72. The Corporate Governance Statement forms
part of this Directors’ Report.
Audit information
As required by Section 418 of the Companies Act 2006 the Directors who held office at the date of approval of this Directors’
Report confirm that, so far as they are aware, there is no relevant audit information of which the Company’s auditor is unaware;
and each Director has taken all the steps that they ought to have taken as a Director to make themselves aware of any relevant
audit information and to establish that the Company’s auditor is aware of that information.
Independent Auditor
In line with EU regulations on mandatory audit rotation, an audit tender process was carried out by the Company during
2018. Following this process, and on the recommendation of the Company’s Audit Committee, the Board resolved that
PricewaterhouseCoopers LLP be appointed as the Company’s independent auditor for the financial year commencing on
1 December 2018. PricewaterhouseCoopers LLP have audited the Company’s Financial Statements for the year ending 30
November 2023.
A resolution to re-appoint PricewaterhouseCoopers LLP as auditor of the Company will be proposed at the forthcoming
Annual General Meeting, together with a resolution to authorise the Audit Committee to determine its remuneration.
The Directors’ Report was approved by the Board at its meeting on
2 February 2024.
By order of the Board
KEVIN MAYGER
for and on behalf of
BlackRock Investment Management (UK) Limited
Company Secretary
2 February 2024
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Annual Report and Financial Statements 30 November 2023
Introduction
Corporate governance is one of the processes by which the Board seeks to safeguard shareholders’ interests and protect and
enhance shareholder value. Shareholders hold the Directors responsible for the stewardship of the Company, delegating
authority and responsibility to the Directors to manage the Company on their behalf and holding them accountable for its
performance.
The Board is ultimately responsible for framing and executing the Company’s strategy and for closely monitoring risks.
We aim to run the Company in a manner which is responsible and consistent with our belief in honesty, transparency and
accountability. In our view, good governance means managing the business well and engaging effectively with investors. We
consider the practice of good governance to be an integral part of the way we manage the Company, and we are committed to
maintaining high standards of financial reporting, transparency and business integrity.
As a UK-listed investment trust company our principal reporting obligation is driven by the UK Corporate Governance Code
(the UK Code). However, as listed investment trust companies differ in many ways from other listed companies, the Association
of Investment Companies has drawn up its own set of guidelines, the AIC Code of Corporate Governance (the AIC Code),
which addresses the governance issues relevant to investment companies and meets the approval of the Financial Reporting
Council.
The UK Code is available from the Financial Reporting Council’s website at frc.org.uk. The AIC Code is available from the
Association of Investment Companies at
www.theaic.co.uk
.
This report, which forms part of the Directors’ Report, explains how the Board deals with its responsibility, authority and
accountability.
Compliance
The Board has made the appropriate disclosures in this report to ensure that the Company meets its continuing obligations.
It should be noted that, as an investment trust, most of the Company’s day-to-day responsibilities are delegated to third party
service providers, the Company has no employees and the Directors are all non-executives, therefore not all the provisions of
the UK Code are directly applicable to the Company.
The Board considers that the Company has complied with the recommendations of the AIC Code and the provisions contained
within the UK Code that are relevant to the Company throughout the accounting period, except for those relating to:
• the role of the chief executive;
• executive directors’ remuneration; and
• the need for an internal audit function.
For the reasons set out in the AIC Guide, and explained in the UK Code, the Board considers these provisions are not relevant
to the position of the Company, being an externally managed investment company with no executive employees and, in
relation to internal audit function, in view of BlackRock having an internal audit function.
Information on how the Company has applied the principles of the AIC Code and the UK Code is set out below.
The Board
Board composition
As at 30 November 2023, and at the date of this report, the Board consists of six Non-executive Directors, all of whom are
independent of the Company’s Manager.
The provision of the UK Corporate Governance Code which relates to the combination of the roles of the chairman and chief
executive does not apply as the Company has no executive directors.
The Directors’ biographies, on pages 35 to 37
, demonstrate a breadth of investment knowledge, business and financial
experience relevant to the Company’s business which enables the Board to provide effective strategic leadership and proper
governance of the Company. Details of the Chairman’s other significant time commitments can also be found on page 35
.
Corporate governance statement
Section 3: Governance
67
Board independence and tenure
The Board’s independence, including that of the Chairman, has been considered and all of the Directors are deemed to be
independent in character and have no relationships or circumstances which are likely to affect their judgement.
The Board subscribes to the view expressed in the AIC Code that long-serving Directors should not be prevented from forming
part of an independent majority. It does not consider that the length of tenure, in isolation, reduces a Director’s ability to act
independently. The Board’s policy on tenure is that continuity and experience add significantly to the strength of the Board
and, as such, no formal limit on the overall length of service of any of the Company’s Directors has been imposed, although the
Board believes in the merits of an ongoing and progressive refreshment of its composition.
Succession planning
The Directors support a planned and progressive renewing of the Board. The Board’s tenure and succession policy seeks
to ensure that the Board remains well balanced at all times through the application of a formal succession plan, seeking to
identify and appoint new Directors, as required, who possess a range of skills, knowledge and experience which is aligned to
the activities of the Company. Directors must also be able to demonstrate sufficient commitment to the Company, including
the ability to commit sufficient time to effectively discharge their duties.
Overboarding
The Board is cognisant of the concept of “overboarding” and has considered the time commitment required by the Directors’
other roles, taking into account their nature and complexity. The Board does not believe that any of the Directors are currently
overboarded. The Board reviews this information annually to ensure all Directors have sufficient capacity to carry out their role
effectively. Further information on how the Board satisfies itself that Directors have sufficient time to effectively discharge
their role is set out on pages 60 and 61.
Board Diversity
While the Board does not have a formal policy on diversity, it recognises the benefits at Board level and believes that Directors
should have a mix of different skills, experience, backgrounds, ethnicity, gender and other characteristics. It has therefore
agreed to comply with best practice and applicable regulation in respect of diversity, including gender and ethnicity.
A broad range of factors are taken into account when setting an appointment brief and during the search and selection
process and have been applied during the recruitment and that all Board appointments must be made on merit, in the context
of the skills, experience, independence and knowledge which the Board as a whole requires to be effective.
As at 30 November 2023 the Board had a 50:50 gender ratio, in accordance with relevant regulation and best practice, and
will continue to consider other diversity characteristics, such as age, ethnicity, gender, disability, educational or professional
background when appraising Board composition.
The Board has complied with the recommendations of the Parker Review in respect of board diversity and the recent changes
to the FCA’s Listing Rules which set new diversity targets and associated disclosure requirements for UK companies listed
on the premium and standard segment of the London Stock Exchange. Listing Rule 9.8.6R (9) requires listed companies to
include a statement in their annual reports and accounts in respect of certain targets on board diversity, or if those new targets
have not been met to disclose the reasons for this. This new requirement applies to accounting periods commencing on or
after 1 April 2022. Further information on the composition and diversity of the Board can be found in the disclosure table
which follows below:
Gender
Number
of Board
members
Percentage
of Board
Number of
senior roles
held
1
Men
3
50%
1
Women
3
50%
2
Ethnicity
2
White British (or any other white background)
5
8
3%
3
Asian or Asian British
1
17
%
0
1
A senior position is defined as the role of Chairman, Audit Committee Chairman or Senior Independent Director.
2
Categorisation of ethnicity is stated in accordance with the Office of National Statistics classification.
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Annual Report and Financial Statements 30 November 2023
Directors’ induction and training
When a new Director is appointed to the Board, he or she is provided with all the relevant information regarding the Company
and their duties and responsibilities as a Director. In addition, a new Director will participate in a comprehensive induction day
which includes presentations from representatives of the Manager, including the Investment Manager, Legal & Compliance,
Risk & Quantitative Analysis, Internal Audit and the Company Secretary, whereby he or she will become familiar with the
various processes which are considered necessary for the performance of their duties and responsibilities. The induction
session is structured to ensure new Directors can ask questions and request clarification where required.
The Company’s policy is to encourage Directors to keep up to date and attend training courses on matters which are directly
relevant to their involvement with the Company. The Directors also receive regular briefings from, amongst others, the
Auditor and the Company Secretary regarding any proposed developments or changes in law or regulations that could affect
themselves or the Company.
Directors’ liability insurance
The Company has maintained appropriate Directors’ Liability Insurance cover throughout the year, which continues to be in
force as at the date of this report.
The Board’s responsibilities
The Board is responsible to shareholders for the effective stewardship of the Company. A formal schedule of matters reserved
for the decision of the Board has been adopted. Investment policy and strategy are determined by the Board. It is also
responsible for the gearing policy, dividend policy, public documents, such as the Annual Report and Financial Statements, the
buy-back policy and corporate governance matters. In order to enable them to discharge their responsibilities effectively the
Board has full and timely access to relevant information.
The Board currently meets at least six times a year to review investments, performance, financial reports and other reports of
a strategic nature. Board or Board Committee meetings are also held on an ad hoc basis to consider issues as they arise. Key
representatives of the Manager and/or Investment Manager attend each meeting and between these meetings there is regular
contact with the Manager and Investment Manager.
The Directors have direct access to company secretarial advice and the services of the Manager, through a nominated
representative, who is responsible to the Board for ensuring that Board and Committee procedures are followed and that the
Company complies with applicable rules and regulations. Where necessary, in the furtherance of their duties, the Directors
may seek independent professional advice at the expense of the Company.
Performance evaluation
In order to review the effectiveness of the Board, its Committees and the individual Directors, the Board carries out an annual
appraisal process. As recommended by the UK Code, and as a constituent of the FTSE 350, the annual evaluation for the year
ended 30 November 2023 has been carried out with the assistance of an independent third party, Stogdale St James. The
performance evaluation took the form of interviews with all board members, representatives or the Manager and the Broker,
supplemented by electronic performance evaluation questionnaires. The evaluation looked at several key areas, including
the performance of the Board and its Committees, the effectiveness of the Board’s oversight of the Investment Manager,
investment strategy and performance, risk management, external relations and succession planning. The responses were then
collated, analysed and discussions held between the external evaluator and the Chairman and Senior Independent Director.
The performance of the Chairman was also evaluated by our external appraiser and reported to our Senior Independent
Director, who in turn shared the findings with the Board.
The appraisal process is considered to be constructive in terms of identifying areas in which the functioning and performance
of the Board and its Committees and the contribution of individual Directors could be improved, as well as building on and
developing individual and collective strengths. The overall conclusion from the evaluation process was that the Board and its
Committees were functioning effectively.
Delegation of responsibilities
The Board has delegated the following areas of responsibility:
Corporate governance statement
continued
Section 3: Governance
69
Management and administration
The management of the investment portfolio and the administration of the Company have been contractually delegated
to BlackRock Fund Managers Limited (BFM or the Manager) as the Company’s AIFM, and BFM (with the permission of the
Company) has delegated certain investment management and other ancillary services to BlackRock Investment Management
(UK) Limited (BIM (UK) or the Investment Manager). The contractual arrangements with the Manager are summarised on
pages 56 and 57. The Manager, operating under guidelines determined by the Board, has responsibility for the decisions
relating to the day-to-day running of the Company and is accountable to the Board for the investment, financial and operating
performance of the Company.
The Manager has delegated the fund accounting and administration services to The Bank of New York Mellon (International)
Limited.
The review of the Manager’s performance is an ongoing duty and responsibility of the Board which is carried out at every
Board Meeting. In addition, a formal review is undertaken annually, details of which are set out on page 68
of the Directors’
Report.
The assets of the Company have been entrusted to the Depositary for safekeeping. The Company’s appointed Depositary is
The Bank of New York Mellon (International) Limited. The address at which the business is conducted is given on page 131
.
The Board has delegated the exercise of voting rights attaching to the securities held in the portfolio to the Investment
Manager. Details of the Investment Manager’s approach to voting is set out on page
58.
Committees of the Board
The Board has appointed a number of committees as set out below and on page
34
. Copies of the terms of reference of each
committee are available on request from the Company’s registered office, on the BlackRock website at
www.blackrock.com/uk/
thrg
and at each Annual General Meeting.
Audit Committee
The Audit Committee, is chaired by Angela Lane and consists of all the Directors of the Company. Further details are provided
in the Report of the Audit Committee on pages
79 to 83
.
Nomination Committee
The Nomination Committee, which comprises all the Directors, is chaired by Christopher Samuel.
The role of the Committee is to review Board structure, size and composition, the balance of knowledge, experience and skills
range and to consider succession planning and tenure policy. Appointments of new Directors will be made on a formalised
basis, with the Committee agreeing the selection criteria and the method of selection, recruitment and appointment. Board
diversity, including gender, ethnicity and other diversity characteristics, will be taken into account in establishing the criteria.
The services of an external search consultant may be used to identify potential candidates. The Committee meets at least once
a year and more often if required.
Management Engagement Committee
The Management Engagement Committee is chaired by Christopher Samuel and comprises all the Directors of the Company.
The Committee annually reviews the appropriateness of the Manager’s continued appointment, together with the terms and
conditions thereof.
In addition to reviewing performance, the Manager is also assessed in relation to the quality of the fund management and
administration teams, commitment to their investment trust business, strength of relationships with shareholders and the
appropriateness of the management contract, including fees.
Remuneration Committee
The Remuneration Committee was established on 1 February 2021 and is currently chaired by Nigel Burton. The
Remuneration Committee has delegated responsibility for determining and recommending to the Board a policy for Directors’
remuneration. The Committee reports and makes recommendations to the Board on all matters of remuneration. Further
details are provided in the Report of the Remuneration Committee on pages
73 to 76
.
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Annual Report and Financial Statements 30 November 2023
Internal controls
The Board is responsible for ensuring the establishment and maintenance of the Company’s system of internal controls and
for monitoring their adequacy and effectiveness, for ensuring that financial information published or used within the business
is reliable, and for regularly monitoring compliance with regulations governing the operation of investment companies.
The Board reviews the effectiveness of the internal control systems on an ongoing basis to identify, evaluate and manage the
Company’s significant risks. As part of that process, there are procedures designed to capture and evaluate any failings or
weaknesses and should a matter be categorised by the Board as significant, procedures exist to ensure that necessary action
is taken to remedy the failing. The Board is not aware of any significant failings or weaknesses arising during the year under
review.
Control of the risks identified, covering financial, operational, compliance and risk management, is embedded in the
operations of the service providers as delegated by the Company. There is a monitoring and reporting process to review
these controls, which has been in place throughout the year under review and up to the date of this report, carried out by the
Manager’s internal audit department. This accords with the Financial Reporting Council’s: Guidance on Risk Management and
Internal Control.
The Company’s risk register sets out the risks relevant to the Company and describes, where relevant, the internal controls that
are in place at the AIFM, the Investment Manager and other third party service providers to mitigate these risks.
The Audit Committee formally reviews this register on a semi-annual basis and BFM, as the Company’s AIFM, reports on any
significant issues that have been identified in the period. The Depositary also reviews the control processes in place at the
Custodian, the Fund Accountant and the AIFM and reports formally to the Committee twice yearly. Both the AIFM and the
Depositary will escalate issues and report to the Committee outside of these meetings on an ad hoc basis to the extent this
is required. The Committee also receives summaries of the annual Service Organisation Control (SOC 1) reports respectively
from BlackRock and The Bank of New York Mellon on the internal controls of their respective operations, together with the
opinion of their reporting accountants.
The Board recognises that these control systems can only be designed to manage rather than to eliminate the risk of failure
to achieve business objectives, and to provide reasonable, but not absolute, assurance against material misstatement or loss,
and relies on the operating controls established by the Manager and the Depositary.
The Manager prepares revenue forecasts and management accounts which allow the Board to assess the Company’s activities
and review its performance at each Board meeting. The Board and the Manager have agreed clearly defined investment
criteria and have specified levels of authority and exposure limits. Reports on these issues, including performance statistics
and investment valuations, are submitted to the Board at each meeting.
Internal audit
The Company does not have its own internal audit function, as all the administration is delegated to the Manager whose
internal audit department reports to the Company’s Audit Committee on a semi-annual basis on the results of testing
performed in relation to the Manager’s internal control processes. The Board monitors the controls in place through the
Manager’s internal audit department and considers that there is currently no need for the Company to have its own internal
audit function although this matter is kept under review.
Financial reporting
The production of the Annual Report and Financial Statements is outsourced to the Fund Administrator and is reviewed
and approved by the Directors. The Statement of Directors’ Responsibilities in respect of the Annual Report and Financial
Statements is set out on pages 84 and 85, the Independent Auditor’s Report on pages
88 to 93
and the Statement of Going
Concern on page 60.
Bribery prevention policy
The provision of bribes of any nature to third parties in order to gain a commercial advantage is prohibited and is a criminal
offence. The Company has a zero-tolerance policy towards bribery and a commitment to carry out business fairly, honestly
and openly. The Board takes its responsibility to prevent bribery very seriously, and BlackRock has anti-bribery policies and
procedures in place which are high level, proportionate and risk based, and which are periodically reviewed by the Board.
The Company’s other service providers have been contacted in respect of their anti-bribery policies and where necessary,
contractual changes are made to existing agreements in respect of anti-bribery provisions.
Corporate governance statement
continued
Section 3: Governance
71
Criminal Finances Act 2017
The Company has a commitment to zero-tolerance towards the criminal facilitation of tax evasion.
GDPR
Data protection rights were harmonised across the European Union following the implementation of the General Data
Protection Regulation (GDPR) on 25 May 2018. The Board has sought and received assurances from its third party service
providers that they have taken appropriate steps to ensure compliance with GDPR.
Communication with shareholders
All shareholders have the opportunity to attend and vote at the AGM. The Notice of the AGM sets out the business of the
Meeting and any special business is explained in the Directors’ Report. The Notice of the AGM and related papers are sent to
shareholders at least 20 working days before the meeting. Separate resolutions are proposed for substantive issues.
The Chairman also writes to shareholders each year to invite them to the AGM. In addition, in recognition of the importance of
seeking to reach all shareholders, particularly those who purchase their shares via an intermediary, the Company has, as it did
at this time last year, utilised the S.793 process with the objective of communicating with the Company’s broad shareholder
base. The Board believes that it is important that as many shareholders as possible have the opportunity to attend the AGM
and, importantly, that they are encouraged to exercise their votes.
Regular updates on performance are available to shareholders on the website. The Investment Manager will review the
Company’s activities at the AGM, where the Directors, including the Chairman of the Board and the Chairman of the Audit
Committee and representatives of the Manager will be available to answer shareholders’ questions. Proxy voting figures are
announced to the shareholders at the AGM and will be made available on the Manager’s website shortly after the meeting.
In accordance with provision 4 of the 2018 UK Corporate Governance Code, when, in the opinion of the Board, a significant
proportion of votes have been cast against a resolution at any general meeting, the Board will explain, when announcing the
results of voting, what actions it intends to take to understand the reasons behind the vote result.
The Company’s willingness to enter into discussions with shareholders is demonstrated by a programme of presentations
made by the Investment Manager. The Board discusses with the Investment Manager at each Board meeting any feedback
from meetings with shareholders, and it also receives reports from its corporate broker. The Chairman and Senior Independent
Director also meet directly with shareholders providing a forum for canvassing their views and enabling the Board to be aware
of any issues of concern.
There is also a clear channel of communication between the Board and the Company’s shareholders via the Company
Secretary and the Board encourages shareholders to utilise this. The Company Secretary has no express authority to respond
to enquiries addressed to the Board and all communication, other than junk mail, is redirected to the Chairman.
There is a section within this report entitled “Additional Information – Shareholder Information”, on pages 126 to 129, which
provides an overview of useful information available to shareholders.
The Company’s financial statements, regular fact sheets and other information, are also published on the BlackRock website
at
www.blackrock.com/uk/thrg
. The work undertaken by the Auditor does not involve consideration of the maintenance and
integrity of the website and, accordingly, the Auditor accepts no responsibility for any changes that have occurred to the
financial statements since they were initially presented on the website. Visitors to the website need to be aware that legislation
in the United Kingdom governing the preparation and dissemination of the financial statements may differ from legislation in
their jurisdiction.
Packaged Retail and Insurance-Based Investment Products (PRIIPs) Regulation (the Regulation)
The Regulation requires that anyone manufacturing, advising on, or selling a PRIIP to retail investors in the UK must comply
with the Regulation. Shares issued by Investment Trusts fall into scope of the Regulation.
72
BlackRock Throgmorton Trust plc
l
Annual Report and Financial Statements 30 November 2023
Investors should be aware that the Regulation requires the AIFM, as the PRIIP manufacturer, to prepare a key information
document (KID) in respect of the Company. This KID must be made available, free of charge, to UK retail investors prior to them
making any investment decision and as published on BlackRock’s website. Neither the Board nor the Company is responsible
for the information contained in the KID and investors should note that the procedures for calculating the risks, costs and
potential returns are prescribed by law. The figures in the KID may not reflect the expected returns for the Company and
anticipated performance returns cannot be guaranteed.
The PRIIPs KID in respect of the Company can be found at:
www.blackrock.com/uk/thrg
.
Disclosure Guidance and Transparency Rules
Other information required to be disclosed pursuant to the Disclosure Guidance and Transparency Rules has been placed
in the Directors’ Report on pages
56 to 65 because it is information which refers to events that have taken place during the
course of the year.
By order of the Board
CHRISTOPHER SAMUEL
Chairman
2
February 2024
Corporate governance statement
continued
Section 3: Governance
73
On behalf of the Board, the Remuneration Committee presents the Directors’ Remuneration Report for the year ended 30
November 2023 which has been prepared in accordance with Sections 420-422 of the Companies Act 2006 and the Large and
Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008.
The law requires the Company’s Auditor to audit certain of the disclosures provided. Where disclosures have been audited,
they are indicated as such. The Auditor’s opinion is included in their report on pages
88 to 93
.
Remuneration Committee
The Committee has delegated responsibility for determining the policy for directors’ remuneration and setting remuneration
for the Company’s chair, Audit Committee chair and independent Non-executive Director in accordance with the principles and
provisions of the UK Code. The Committee reports and makes recommendations to the Board on all matters of remuneration.
Statement by the Chairman of the Remuneration Committee
A key driver of the Company’s Remuneration Policy is that fees payable to Directors should be sufficient to attract and retain
individuals with suitable knowledge and experience. The Company’s Directors are all non-executive and are independent of the
Manager. The Company’s Directors’ Remuneration Policy was last reviewed in December 2023. Following this review, it was agreed
that with effect from 1 December 2023 all Directors’ fees would be increased to the levels set out in the policy table on page
78.
Further detail on the Company’s remuneration policy and the basis for determining the level of any change in Directors’
remuneration are set out in the Remuneration policy on pages 77 and 78
. Directors’ fees were last increased on 1 December 2023.
No discretionary fees have been paid to Directors during the year or previous year or since inception and the payment of such fees
is expected to be a rare occurrence, only necessary in exceptional circumstances. Any discretionary fees paid to the Directors will
be clearly disclosed in the Directors’ Remuneration Report accompanied by an explanation of the work undertaken and why it was
deemed necessary to pay such additional remuneration. The Company’s Directors are all non-executive and are independent of the
Manager. No advice or services were provided by any external agencies or third parties.
Implementation of the Remuneration Policy in the year 2023
The Directors intend that the Remuneration Policy, which forms part of this report, will be implemented as set out on pages
77
and 78
. The Directors do not receive any performance related remuneration or incentives.
Discretionary payments are permitted under the policy; however, such discretionary payments would only be considered in
exceptional circumstances.
Remuneration/service contracts
The maximum remuneration of the Directors is determined within the limits of the Company’s Articles and the limit currently
amounts in aggregate to £250,000.
No element of the Directors’ remuneration is performance related. The Company has not awarded any share options or
long-term performance incentives to any of the Directors. None of the Directors has a service contract with the Company or
receives any non-cash benefits or pension entitlements. The terms of their appointment are detailed in an appointment letter
issued to them when they join the Board. These letters are available for inspection at the registered office of the Company.
Report of the Remuneration Committee
Nigel Burton
Chairman of the
Remuneration Committee
74
BlackRock Throgmorton Trust plc
l
Annual Report and Financial Statements 30 November 2023
Remuneration implementation report
A single figure for the total remuneration of each Director is set out in the table below for the years ended 30 November 2023
and 2022. The information in the table below has been audited.
Year ended 30 November 2023
Year ended 30 November 2022
Directors
Base
Salary
Taxable
Benefits
1
Total
Base
Salary
Taxable
Benefits
1
Total
£
£
£
£
£
£
Christopher Samuel (Chairman)
46,700
540
47,240
44,000
775
44,775
Nigel Burton
31,700
–
31,700
30,000
300
30,300
Loudon Greenlees
2
11,455
196
11,651
35,000
275
35,275
Angela Lane
35,359
402
35,761
30,000
654
30,654
Louise Nash
31,700
2,140
33,840
30,000
1,904
31,904
Glen Suarez
3
28,226
2,154
30,380
–
–
–
Merryn Somerset Webb
31,700
1,893
33,593
30,000
1,703
31,703
Total
216,840
7,325
224,165
199,000
5,611
204,611
1
Taxable benefits relate to travel and subsistence costs.
2
Loudon Greenlees retired on 23 March 2023.
3
Glen Suarez was appointed on 9 January 2023.
No discretionary payments were made in the year to 30 November 2023 (2022: £nil).
The amounts paid by the Company to the Directors were for services as Non-executive Directors. As at 30 November 2023,
fees of £18,000 (2022: £17,000) were outstanding to Directors in respect of their annual fees.
Relative importance of spend on pay
As the Company has no employees, the table below also comprises the total remuneration costs and benefits paid by the
Company. To enable shareholders to assess the relative importance of spend on pay, this has been shown in the table
below compared to the Company’s net profit on ordinary activities after taxation, total operating expenditure and dividend
distributions.
2023
£’000
2022
£’000
Change
£’000
Directors’ total remuneration
224
205
+19
Dividends paid and payable
14,192
11,249
+2,943
Net (loss)/profit on ordinary activities after taxation
(15,749)
(295,888)
+280,139
Buyback of ordinary shares after costs
29,807
11,544
+18,263
No payments were made in the period to any past Directors (2022: £nil).
Report of the Remuneration Committee
continued
Section 3: Governance
75
Annual percentage change in Directors’ remuneration
The following table sets out the annual percentage changes in Directors’ fees over the past five years.
Directors
30 November
2019
30 November
2020
30 November
2021
30 November
2022
30 November
2023
Christopher Samuel
6.9%
2.6%
3.8%
7.3%
6.1%
Loudon Greenlees
1
7.1%
3.3%
4.8%
7.7%
5.7%
Jean Matterson
2
8.3%
3.8%
3.7%
n/a
n/a
Louise Nash
3
n/a
3.8%
3.7%
7.1%
5.7%
Angela Lane
4
n/a
n/a
3.7%
7.1%
5.7%
Nigel Burton
5
n/a
n/a
n/a
7.1%
5.7%
Merryn Somerset Webb
6
n/a
n/a
n/a
7.1%
5.7%
Glen Suarez
7
n/a
n/a
n/a
n/a
n/a
1
As Loudon Greenlees retired as a Director on 23 March 2023, the percentage change in his annual fixed fee has been annualised.
2
As Jean Matterson retired as a Director on 24 March 2021, the percentage change in her annual fixed fee has been annualised.
3
As Louise Nash was appointed as a Director on 21 March 2019, the percentage change in her annual fixed fee has been annualised.
4
As Angela Lane was appointed as a Director on 10 June 2020, the percentage change in her annual fixed fee has been annualised.
5
As Nigel Burton was appointed as Director on 21 December 2020, the percentage change in his annual fixed fee has been
annualised.
6
As Merryn Somerset Webb was appointed as a Director on 24 March 2021, the percentage change in her annual fixed fee has been
annualised.
7
As Glen Suarez was appointed as a Director on 9 January 2023, there is no percentage change comparison.
As previously noted, the Company does not have any employees and hence no comparisons are given in respect of the
comparison between Directors’ and employees’ pay increases.
Directors’ Shareholdings
The interests of the Directors in the ordinary shares of the Company are set out in the table below. The Company does not
have a share option scheme, therefore none of the Directors has an interest in any share options in the Company. There is no
requirement for Directors to hold shares in the Company.
2 February
2024
30 November
2023
30 November
2022
Ordinary
shares
Ordinary
shares
Ordinary
shares
Christopher Samuel
65,606
65,606
64,294
Loudon Greenlees
n/a
n/a
15,000
Louise Nash
3,900
3,900
3,900
Angela Lane
11,673
11,673
11,614
Nigel Burton
16,570
16,570
16,238
Merryn Somerset Webb
3,727
3,727
3,727
Glen Suarez
4,800
4,800
n/a
The information in the table above has been audited.
76
BlackRock Throgmorton Trust plc
l
Annual Report and Financial Statements 30 November 2023
All of the holdings of the Directors are beneficial. No changes to these holdings have been notified up to the date of this report.
Retirement of directors
Further details are given in the Directors’ Report on pages
60 and 61.
Performance
The graph below compares the Company’s NAV and share price total returns with the total return on an equivalent investment
in the Benchmark Index
1
. This index is deemed to be the most appropriate as the Company has a UK smaller and mid-
capitalisation companies’ objective.
Performance from 30 November 2013 to 30 November 2023
Share price performance
NAV performance
Benchmark Index
1
Nov 22
Nov 23
Nov 13
Nov 14
Nov 15
Nov 16
Nov 17
Nov 18
Nov 19
Nov 20
Nov 21
0
50
100
150
200
250
300
350
400
1
With effect from 22 March 2018, the Numis Smaller Companies plus AIM (excluding Investment Companies) Index replaced the
Numis Smaller Companies excluding AIM (excluding Investment Companies) Index as the Company’s Benchmark Index. From
1 December 2013 to 21 March 2018, the Company’s Benchmark Index was the Numis Smaller Companies excluding AIM (excluding
Investment Companies) Index. Prior to 1 December 2013 the Company’s Benchmark Index was the Numis Smaller Companies plus
AIM (excluding Investment Companies) Index. The performance of the Benchmark Indices during these periods has been blended to
reflect these changes.
Sources: BlackRock and Datastream.
Performance figures in Sterling terms with dividends reinvested, rebased to 100 at 30 November 2013.
For and on behalf of the Board
NIGEL BURTON
Chairman of the Remuneration Committee
2
February 2024
Report of the Remuneration Committee
continued
Section 3: Governance
77
In setting the appropriate level of Directors’ fees, a number of factors are considered by the Company’s Remuneration
Committee, including:
•
the workload of the Directors, their responsibilities, any change in these responsibilities and additional legal duties (for
example as a result of new legislation being implemented);
•
the relationship with their suppliers (primarily the Company’s third party service providers);
• the size and complexity of the Company;
• the time commitment required;
•
the level of skills and appropriate experience required;
•
the need for Directors to maintain on an ongoing basis an appropriate level of knowledge of regulatory and compliance
requirements in an industry environment of increasing complexity;
•
the average rate of inflation during the period since the last fee increase;
•
the level of remuneration in comparison with other investment trusts of a similar size and/or mandate; and
•
any data published by the Association of Investment Companies to ensure that fees are in line with industry practice.
This comparison, together with consideration of any alteration in Non-executive Director responsibilities, is used to review
whether any change in remuneration is necessary. The review is performed on an annual basis. The Remuneration Committee
is cognisant of the need to avoid any potential conflicts of interest and has therefore agreed a mechanism by which no Director
is present when his or her own pay is being considered.
The Company has no employees and consequently no consideration is required to be given to employment conditions
elsewhere in setting this policy and there has been no employee consultation.
No element of the Directors’ remuneration is performance related or subject to recovery or withholding (except for tax).
Directors cannot be awarded any share options or long-term performance incentives. None of the Directors has a service
contract with the Company or receives any non-cash benefits (except as described in the policy table), pension entitlements or
compensation for loss of office.
The Remuneration Policy would be applied when agreeing the remuneration package of any new Director. The terms of
Directors’ appointments are detailed in a letter sent to them when they join the Board. These letters are available for inspection
at the registered office of the Company. Directors’ appointments do not have a fixed duration, but they can be terminated by
the Company in writing at any time without obligation to pay compensation. On termination of the appointment, Directors
shall only be entitled to accrued fees as at the date of termination together with reimbursement of any expenses properly
incurred prior to that date. No payments for loss of office are made.
Directors are also subject to re-election at least every three years and, if not elected, their appointment ceases immediately.
However, in accordance with the UK Corporate Governance Code the Board have agreed that all Directors will, being eligible,
stand for re-election annually. The continuation of an appointment is contingent on a satisfactory performance evaluation and
re-election by shareholders at the AGM.
Consideration of shareholders’ views
In accordance with applicable law and regulation, an ordinary resolution to approve the remuneration report is put to
shareholders at each AGM, and shareholders have the opportunity to express their views and raise any queries in respect
of remuneration policy at this meeting. The Company last obtained shareholder approval for its remuneration policy at the
AGM in 2023. In accordance with the Companies Act 2006, the remuneration policy will next be subject to a triennial binding
shareholder vote at the AGM in 2026.
At the Company’s AGM held on 23 March 2023, 99.80% (including votes cast at the Chairman’s discretion) were in favour of
the resolution to approve the remuneration policy and 0.20% of votes cast were against. The Company’s remuneration policy
is laid before shareholders every three years.
At the Company’s AGM held on 23 March 2023, 99.84% of votes cast were in favour of the resolution to approve the Directors’
remuneration report in respect of the year ended 30 November 2022 and 0.16% against. The remuneration report is laid
before shareholders annually.
Any discretionary fees paid to the Directors will be clearly disclosed in the Directors’ Remuneration Report accompanied by an
explanation of the work undertaken.
Directors’ remuneration policy
78
BlackRock Throgmorton Trust plc
l
Annual Report and Financial Statements 30 November 2023
Policy table
Purpose and link to
strategy
Fees payable to Directors should be sufficient to attract and retain individuals of high calibre
with knowledge and experience which is suitably aligned to the activities of the Company. Those
chairing the Board and key committees should be paid higher fees than other Directors in
recognition of their more demanding roles. Fees should reflect the time spent by Directors on the
Company’s affairs and the level of complexity of responsibilities borne by the Directors.
Description
Levels of fixed annual fee with effect from 1 December 2023:
Chairman – £48,800
Audit Committee Chairman – £38,700
Senior Independent Director – £34,100
Directors – £33,100
All reasonable expenses to be reimbursed.
Maximum levels
Remuneration consists of a fixed fee each year, set in accordance with the stated policies and any
increase granted must be in line with the stated policies.
The Company’s Articles of Association provide that until otherwise determined by the Company by
ordinary resolution, there shall be paid to the Directors (other than alternate Directors) such fees for
their services in the office of Director as the Directors may determine (not exceeding in the aggregate
an annual sum of £250,000 (subject to increase as provided above) or such larger amount as the
Company may by ordinary resolution decide) divided between the Directors as they agree.
In accordance with the provisions of the Company’s Articles of Association the Directors are also
entitled to be repaid all reasonable travelling, hotel and other expenses incurred by them respectively
in or about the performance of their duties as Directors including any expenses incurred in attending
meetings of the Board or of Committees of the Board or Annual General Meetings or General
Meetings. In addition, the Directors propose a limit of £10,000 in relation to the maximum that may
be paid in respect of taxable benefits. These ceilings have been set at a level to provide flexibility in
respect of the recruitment of additional Board members (where required) and inflation.
Policy on share
ownership
Directors are encouraged to own shares in the Company. All Directors are currently shareholders.
Operation
Fixed fee element
The Board reviews the quantum of Directors’ fees each year to ensure that this is in line with the
level of Directors’ fees for other investment trusts of similar size and complexity.
When considering any changes in fees, the Board will take into account factors such as the
average rate of inflation over the period since the previous review, and the level and any change
in the Directors’ responsibilities (including additional time commitments as a result of increased
regulatory or corporate governance requirements). Directors are not eligible to be compensated for
loss of office, nor are they eligible for bonuses, pension benefits, share options or other incentives or
benefits. Directors do not have service contracts but are appointed under letters of appointment.
Discretionary
Payments
The Company’s Articles of Association authorise the payment of discretionary fees to Directors for
any additional work undertaken on behalf of the Company which is outside of their normal duties.
Any such extra work undertaken is subject to the prior approval of the Chairman or, in the case of
the Chairman undertaking the extra work, subject to the prior approval of the Chairman of the Audit
Committee. The level of discretionary fees shall be determined by the Directors and will be subject
to a maximum of £10,000 per annum per Director. Any discretionary fees paid will be disclosed in
the Directors’ Remuneration Report within the Annual Report.
Taxable benefits
Certain expenses incurred by Directors are required to be treated as taxable benefits. Taxable benefits
comprise, but are not limited to, travel expenses and subsistence incurred by the Directors in the
course of travel to attend Board and Committee meetings which are held at the Company’s registered
office in London, and which are reimbursed by the Company and therefore treated as a benefit in
kind and are subject to tax and national insurance. The Company’s policy in respect of this element
of remuneration is that all reasonable costs of this nature will be reimbursed as they are incurred,
including tax and national insurance costs incurred by the Directors on such expenses.
Directors’ remuneration policy
continued
Section 3: Governance
79
As Chairman of the Audit Committee (the Committee) I am pleased to present the Committee’s report to shareholders for the
year ended 30 November 2023.
Composition
The Committee consists of all the Directors of the Company, including the Board Chairman since 2019. Following the
publication of the latest AIC Code of Corporate Governance, which permits the Board Chairman to be a member of the
Committee, the Board determined that it was appropriate for him to become a member of the Committee, particularly given
that he is a Chartered Accountant and has recent and relevant financial experience.
The Board considers that at least four members of the Committee have recent and relevant financial experience and specific
competence in accounting and/or auditing and the Committee, as a whole, has competence relevant to the sector in which
the Company operates to discharge its function effectively. Further information on the experience of the members of the
Committee can also be found in their biographies on pages
35 to 37
.
Role and responsibilities
The Company has established a separately chaired Committee whose duties include considering and recommending to the
Board for approval the contents of the half yearly and annual financial statements and providing an opinion as to whether the
Annual Report and Financial Statements, taken as a whole, are fair, balanced and understandable and provide the information
necessary for shareholders to assess the Company’s performance, position, business model and strategy.
The Committee reviews the external Auditor’s report thereon and has primary responsibility for the relationship with the
external Auditor, including the development of a policy on the provision of non-audit services, reviewing and forming an
opinion on the effectiveness of the external audit process and audit quality. Other duties include reviewing the appropriateness
of the Company’s accounting policies and monitoring the effectiveness of the internal control systems and standards.
The Company operates within written terms of reference detailing its scope and duties and these are available on the
Company’s website at
www.blackrock.com/uk/thrg
.
The Committee meets at least three times a year. Two of these meetings are held prior to the Board meetings to approve the
half yearly and annual reports. The Committee will hold additional meetings where deemed to be necessary. The Committee
also receives regular reports from the Manager’s internal audit and compliance departments.
Responsibilities and review of the external audit
During the year the principal activities of the Audit Committee included:
•
considering and recommending to the Board for approval the contents of the half yearly and annual financial statements and
reviewing the external auditors’ report thereon;
•
reviewing the scope, execution, results, cost effectiveness, independence and objectivity of the external Auditor;
•
reviewing the audit and any non-audit fees payable to the external Auditor and the terms of its engagement;
•
reviewing and approving the external Auditor’s plan for the financial year, with a focus on the identification of areas of audit risk,
and consideration of the appropriateness of the level of audit materiality adopted;
•
reviewing the effectiveness of the external audit process and the quality of the audit engagement leader and the audit team, and
making a recommendation to the Board with respect to the reappointment of the Auditor;
•
reviewing the role of the Manager and third party service providers in an effective audit process;
Angela Lane
Chairman of the
Audit Committee
Report of the Audit Committee
80
BlackRock Throgmorton Trust plc
l
Annual Report and Financial Statements 30 November 2023
•
considering the quality of the formal audit report to shareholders;
•
reviewing the appropriateness of the Company’s accounting policies;
•
monitoring the effectiveness of the Company’s risk management and internal control systems and standards and carrying out a
review, at least annually, of their effectiveness; and
•
evaluating the need for an internal audit function, as set out in the Corporate Governance Statement on page 70.
The fees paid to the external Auditor are set out in note 5 on page 104. An explanation on how auditor objectivity and
independence is safeguarded is reported under assessment of the effectiveness of the external audit process on pages 82
and 83
.
Whistleblowing policy
The Committee has also reviewed and accepted the ‘whistleblowing’ policy that has been put in place by the Manager under
which its staff, in confidence, can raise concerns about possible improprieties in matters of financial reporting or other
matters, in so far as they affect the Company.
Significant issues considered regarding the Annual Report and Financial Statements
During the year, the Committee considered a number of significant issues and areas of key audit risk in respect of the Annual
Report and Financial Statements. The Committee reviewed the external audit plan at an early stage and concluded that the
appropriate areas of audit risk relevant to the Company had been identified and that suitable audit procedures had been put in
place to obtain reasonable assurance that the Financial Statements as a whole would be free of material misstatements. The
table below sets out the key areas of risk identified by the Committee and also explains how these were addressed.
Significant issue
The accuracy of the valuation of the investment portfolio.
How the issue was addressed
Listed investments, long and short derivative positions and index futures are valued using stock exchange prices from third
party vendors.
The Board reviews detailed portfolio valuations on a regular basis throughout the year and receives confirmation from the
Manager that the pricing basis is appropriate, in line with relevant accounting standards as adopted by the Company and that
the carrying values are materially correct.
Significant issue
The risk of misappropriation of assets and ownership of investments.
How the issue was addressed
The Depositary is responsible for financial restitution for loss of financial investments held in custody.
The Depositary reports to the Committee on a twice-yearly basis and is also available to attend the Company’s Annual General
Meeting.
The Committee reviews reports from its service providers on key controls over assets of the Company. Any significant issues
are reported by the Manager to the Committee. The Manager has put in place procedures to ensure that investments can only
be made to the extent that the appropriate contractual and legal arrangements are in place to protect the Company’s assets.
Report of the Audit Committee
continued
Section 3: Governance
81
Significant issue
The accuracy of the calculation of management and performance fees.
How the issue was addressed
The Manager reports to the Committee on the calculation of any performance fee accruals that have been included in the
Company’s NAV on a regular basis. The management fee and any performance fee are calculated in accordance with the
contractual terms in the investment management agreement by the administrator, BNYM, and are reviewed in detail by the
Manager and are also subject to an analytical review by the Committee.
Significant issue
The risk that income is overstated, incomplete or inaccurate through failure to recognise proper income entitlements or to
apply the appropriate accounting treatment for recognition of income.
How the issue was addressed
The Committee reviews income forecasts, including special dividends, and receives explanations from the Manager for
any variations or significant movements from previous forecasts and prior year figures. The audit includes checks on the
completeness and accuracy of income, and also checks that this has been recognised in accordance with stated accounting
policies.
The provision of portfolio valuation, fund accounting and administration services is delegated to the Manager, which sub-
delegates the provision of fund accounting to The Bank of New York Mellon (International) Limited. The provision of custody
and depositary services is directly contracted by the Company to The Bank of New York Mellon (International) Limited. The
Committee has therefore reviewed summaries of the Service Organisation Control (SOC 1) reports prepared by the Manager,
Depositary and the Fund Accountants to ensure that the relevant control procedures are in place to cover these areas of risk
as identified in the table above and are adequate and appropriate and have been designated as operating effectively by the
reporting auditors.
The Committee receives and reviews regular reports on the material risks faced by the Company and the key controls employed
to manage these risks. Consideration is given regularly to the nature and extent of risks faced by the Company and these
risks are monitored and regularly re-assessed. Where changes in risk have been identified during the year, the Committee will
assess whether any further action is required to mitigate these risks.
The Committee has reviewed the effectiveness of the Company’s risk management and internal controls systems, which
accord with the FRC ‘Guidance on Risk Management, Internal Control and Related Financial and Business Reporting’, and has
procedures in place to review their effectiveness on a regular basis. No material weaknesses have been identified in the year
under review and up to the date of this report.
The Committee confirms that these procedures have been in place throughout the Company’s financial year and continue to
be in place up to the date of approval of this report.
Auditor and audit tenure
The Company’s current auditor PricewaterhouseCoopers LLP was appointed on 21 March 2019 following the result of a
tender process held in late 2018. The current audit engagement leader is Mr Allan McGrath who has been the Company’s audit
engagement leader since September 2021. Prior to this date, the audit engagement leader was Christopher Meyrick.
The Committee, in conjunction with the Board, is committed to reviewing this appointment on a regular basis to ensure
the Company is receiving an optimal level of service. The appointment of the Auditor is reviewed each year and the audit
engagement leader rotates at least every five years. There are no contractual obligations that restrict the Company’s choice of
auditor.
The Committee is mindful of the EU Audit Reform (as retained in UK law), including regulations on mandatory auditor
regulation which require a review of the appointment of the auditor every ten years. The legislation also prohibits certain non-
audit consulting services and caps the amount of additional fees auditors can charge their clients. The Company carried out a
formal tender process in 2018 and following due consideration, PricewaterhouseCoopers LLP was selected as the Company’s
new Independent Auditor.
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Annual Report and Financial Statements 30 November 2023
It is the Company’s policy to put the statutory audit out to tender at least every ten years.
The Committee is satisfied that the Company has complied with the provisions of the Statutory Audit Services for Large
Companies Market Investigation (Mandatory Use of Competitive Processes and Audit Committee Responsibilities) Order
2014, published by the Competition and Markets Authority on 26 September 2014. In recognition of underlying audit
rotation requirements, the Committee currently intends that a further tender process will be undertaken during the year to
30 November 2029 to cover the financial year ending 30 November 2029 onwards. The Committee will continue to review the
Auditor’s appointment each year to ensure that the Company is receiving an optimal level of service.
There were no fees paid to the Auditor in respect of non-audit services during the year. The Company’s policy on non-audit
services is set out in full in the Audit Committee’s terms of reference which are available on the Company’s website at
www.blackrock.com/uk/thrg
.
Assessment of the effectiveness of the external audit process
To assess the effectiveness of the external audit, members of the Committee communicate regularly with BIM (UK) and BFM to
obtain a good understanding of the quality and efficiency of the audit. The Committee has adopted a formal framework in its
review of the effectiveness of the external audit process and audit quality. This includes a review of the following areas:
•
the quality of the audit engagement leader and the audit team;
•
the expertise of the audit firm and the resources available to it;
• identification of areas of audit risk;
• planning, scope and execution of the audit;
•
consideration of the appropriateness of the level of audit materiality adopted;
•
the role of the Committee, the Manager and third party service providers in an effective audit process;
•
communication by the Auditor with the Committee;
•
monitoring and reviewing the supply of any non-audit services, taking into account relevant ethical guidelines regarding the
provision of such services;
•
how the Auditor supports the work of the Committee and how the audit contributes added value;
•
a review of the independence and objectivity of the audit firm; and
•
the quality of the formal audit report to shareholders.
Feedback in relation to the audit process and the effectiveness of the Manager in performing its role is also sought from
relevant involved parties, notably the audit engagement leader and his team.
The external Auditor is invited to attend the Committee meetings at which the half yearly and annual report and financial
statements are considered and to meet with the Audit Committee without representatives of the Manager being present on
at least one occasion. The effectiveness of the Board and the Manager in the external audit process is assessed principally in
relation to the timely identification and resolution of any process errors or control breaches that might impact the Company’s
net asset values and accounting records. It is also assessed by reference to how successfully any issues in respect of areas
of accounting judgement are identified and resolved, the quality and timeliness of papers analysing these judgements, the
Board’s and the Manager’s approach to the value of independent audit and the booking of any audit adjustments arising, and
the timely provision of draft public documents for review by the auditor and the Committee.
To form a conclusion with regard to the independence of the external Auditor, the Committee considers whether the skills
and experience of the Auditor makes it a suitable supplier of non-audit services and whether there are safeguards in place to
ensure that there is no threat to its objectivity and independence in the conduct of the audit resulting from the provision of
any such services. On a continuous basis, PricewaterhouseCoopers LLP reviews the independence of its relationship with the
Company and, on a semi-annual basis, reports to the Committee, providing details of any other relationship with the Manager.
As part of this review, the Committee also receives information about policies and processes for maintaining independence
and monitoring compliance with relevant requirements from the Company’s Auditor, including information on the rotation of
the Audit engagement leader and staff, the level of fees that the Company pays in proportion to the overall fee income of the
Report of the Audit Committee
continued
Section 3: Governance
83
firm, and the level of related fees, details of any relationships between the Audit firm and its staff and the Company as well
as an overall confirmation from the Auditor of its independence and objectivity. As a result of its review, the Committee has
concluded that PricewaterhouseCoopers LLP is independent of the Company and the Manager.
Conclusions in respect of the Annual Report and Financial Statements
The production and the audit of the Company’s Annual Report and Financial Statements is a comprehensive process requiring
input from a number of different contributors. In order to reach a conclusion that the Annual Report and Financial Statements
are fair, balanced and understandable, the Board has requested that the Committee advise on whether these criteria are
satisfied. In so doing, the Committee has given consideration to the following:
•
the comprehensive control framework over the production of the Annual Report and Financial Statements, including the
verification processes in place to deal with the factual content;
•
the extensive levels of review that are undertaken in the production process by the Manager, the Depositary and the
Committee;
•
the controls that are in place at the Manager and other third party service providers to ensure the completeness and
accuracy of the Company’s financial records and the security of the Company’s assets; and
•
the existence of satisfactory Service Organisation Control reports that have been reviewed and reported on by external
auditors to verify the effectiveness of the internal controls of the Manager, Custodian and Fund Accountant.
In addition to the work outlined above, the Committee has reviewed the Annual Report and Financial Statements and is
satisfied that, taken as a whole, they are fair, balanced and understandable and provide shareholders with the information
necessary to assess the Company’s position, performance, business model and strategy. In reaching this conclusion, the
Committee has assumed that the reader of the Annual Report and Financial Statements would have a reasonable level of
knowledge of the investment trust industry in general. The Committee has reported on these findings to the Board who affirms
the Committee’s conclusions in the Statement of Directors’ Responsibilities in respect of the Annual Report and Financial
Statements on pages 84 and 85.
ANGELA LANE
Chairman of the Audit Committee
2 February 2024
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Annual Report and Financial Statements 30 November 2023
The Directors are responsible for preparing the Annual Report and Financial Statements, (including the Directors’
Remuneration Report) in accordance with applicable United Kingdom law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law, the Directors
are required to prepare the financial statements in accordance with international accounting standards in conformity with
the requirements of the Companies Act 2006. Under company law the Directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the
Company for that period.
In preparing these Financial Statements, the Directors are required to:
•
present fairly the financial position, financial performance and cash flows of the Company;
•
select suitable accounting policies in accordance with IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and
Errors’ and then apply them consistently;
•
present information, including accounting policies, in a manner that provides relevant, reliable, comparable and
understandable information;
• make judgements and estimates that are reasonable and prudent;
•
state whether the Financial Statements have been prepared in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006, subject to any material departures disclosed and explained in
the Financial Statements;
•
provide additional disclosures when compliance with the specific requirements in international accounting standards in
conformity with the requirements of the Companies Act 2006, is insufficient to enable users to understand the impact of
particular transactions, other events and conditions on the Company’s financial position and financial performance; and
•
prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the Company will
continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them
to ensure that the Financial Statements comply with the Companies Act 2006. They are also responsible for safeguarding
the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other
irregularities. The Directors are also responsible for preparing the Strategic Report, the Directors’ Report, the Directors’
Remuneration Report and the Corporate Governance Statement in accordance with the Companies Act 2006 and applicable
regulations, including the requirements of the Listing Rules and the Disclosure Guidance and Transparency Rules. The
Directors have delegated responsibility to the Investment Manager and the AIFM for the maintenance and integrity of the
Company’s corporate and financial information included on BlackRock’s website. Legislation in the United Kingdom governing
the preparation and dissemination of Financial Statements may differ from legislation in other jurisdictions.
Each of the Directors, whose names are listed on pages 35 to 37
, confirms to the best of his or her knowledge that:
•
the Financial Statements, which have been prepared in accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006, give a true and fair view of the assets, liabilities, financial position and net
loss of the Company; and
•
the Annual Report and Financial Statements include a fair review of the development and performance of the business and
the position of the Company, together with a description of the principal risks and uncertainties that it faces.
Statement of Directors’ responsibilities
in respect of the Annual Report and
Financial Statements
Section 3: Governance
85
The 2018 UK Corporate Governance Code also requires Directors to ensure that the Annual Report and Financial Statements
are fair, balanced and understandable. In order to reach a conclusion on this matter, the Board has requested that the Audit
Committee advise on whether it considers that the Annual Report and Financial Statements fulfil these requirements. The
process by which the Committee has reached these conclusions is set out in the Audit Committee’s report on pages
79 to 83
.
As a result, the Board has concluded that the Annual Report and Financial Statements for the year ended 30 November 2023,
taken as a whole, are fair, balanced and understandable and provided the information necessary for shareholders to assess the
Company’s position, performance, business model and strategy.
For and on behalf of the Board
CHRISTOPHER SAMUEL
Chairman
2 February 2024
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Annual Report and Financial Statements 30 November 2023
Report on the audit of the financial
statements
Opinion
In our opinion, BlackRock Throgmorton Trust plc’s financial
statements:
•
give a true and fair view of the state of the Company’s
affairs as at 30 November 2023 and of its loss and cash
flows for the year then ended;
•
have been properly prepared in accordance with UK-
adopted international accounting standards; and
•
have been prepared in accordance with the requirements
of the Companies Act 2006.
We have audited the financial statements, included within
the Annual Report and Financial Statements (the “Annual
Report”), which comprise: the Statement of Financial Position
as at 30 November 2023; the Statement of Comprehensive
Income, the Statement of Changes in Equity, and the Cash
Flow Statement for the year then ended; and the Notes to
the Financial Statements, which include a description of the
significant accounting policies.
Our opinion is consistent with our reporting to the Audit
Committee.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (“ISAs (UK)”) and applicable law.
Our responsibilities under ISAs (UK) are further described
in the Auditors’ responsibilities for the audit of the financial
statements section of our report. We believe that the audit
evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Independence
We remained independent of the Company in accordance
with the ethical requirements that are relevant to our
audit of the financial statements in the UK, which includes
the FRC’s Ethical Standard, as applicable to listed public
interest entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-
audit services prohibited by the FRC’s Ethical Standard were
not provided.
We have provided no non-audit services to the Company in
the period under audit.
Our audit approach
Overview
Audit scope
•
The Company is a standalone Investment
Trust Company and engages BlackRock
Fund Managers Limited (the ‘Manager’) to
manage its assets. The Manager engages
Bank of New York Mellon (International)
Limited (the “Fund Accountant”) to provide
administrative functions to the Company.
•
We tailored the scope of our audit taking
into account the type of investments within
the Company, the involvement of the third
parties, the accounting processes, controls,
and the industry in which the Company
operates.
Key audit
matters
•
Valuation and existence of investments
•
Accuracy, occurrence and completeness of
investment income
Materiality
•
Overall materiality: £5.8m (2022: £6.3m)
based on 1% of net assets.
•
Performance materiality: £4.3m (2022:
£4.7m).
The scope of our audit
As part of designing our audit, we determined materiality and
assessed the risks of material misstatement in the financial
statements.
Key audit matters
Key audit matters are those matters that, in the auditors’
professional judgement, were of most significance in the
audit of the financial statements of the current period and
include the most significant assessed risks of material
misstatement (whether or not due to fraud) identified by the
auditors, including those which had the greatest effect on:
the overall audit strategy; the allocation of resources in the
audit; and directing the efforts of the engagement team.
These matters, and any comments we make on the results of
our procedures thereon, were addressed in the context of our
audit of the financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate
opinion on these matters.
This is not a complete list of all risks identified by our audit.
The key audit matters below are consistent with last year.
Independent Auditor’s Report
to the members of BlackRock Throgmorton Trust plc
Section 4: Financial Statements
89
Key audit matter
How our audit addressed the key audit matter
Valuation and existence of investments
Refer to the Report of the Audit Committee (page 80),
Accounting policies (page 100) and Notes to the financial
statements (page 107).
The investment portfolio at the year end comprised of
listed equity investments valued at £558 million and a net
holding of derivative Contracts for Difference (CFDs) with a
net fair value of (£0.6m).
We focused on the valuation and existence of investments
because investments represent the principal element of
the net asset value (NAV) as disclosed on the Statement of
Financial Position in the Financial Statements.
Our audit work on the valuation and existence of the
investments included the following:
•
We tested the valuation of all investments and CFDs by
agreeing the valuation to independent third party sources
using our proprietary data analytics tool “Halo”. Where
further investigation was required into Halo pricing, for
example where no price was returned by Halo, we manually
agreed pricing to independent third party sources.
•
We tested the existence of all of the investments
and CFDs by agreeing the Company’s holdings to an
independent custodian confirmation in the case of the
listed equity investments, as well as independent broker
confirmations for the portfolio of derivatives, as at
30 November 2023.
We have no matters to report as a result of this testing.
Accuracy, occurrence and completeness of investment
income
Refer to the Report of the Audit Committee (page 81),
Accounting policies (page 99) and Notes to the Financial
Statements (page 102).
Income from investments consists primarily of dividend
income. Within dividend income there is a risk of
incomplete or inaccurate recognition of revenue through
the failure to recognise proper income entitlements
or to apply an inappropriate accounting treatment. In
addition, the Directors are required to exercise judgement
in determining whether income receivable in the form
of special dividends should be classified as ‘revenue’ or
‘capital’ in the Statement of Comprehensive Income.
We responded to this risk by performing the following audit
procedures:
•
We obtained an understanding of the processes and
controls around income recognition and classification
of special dividends by reviewing the internal control
reports of the Fund Accountant.
•
We assessed the appropriateness of the classification of
special dividends as revenue or capital by the Directors
with reference to publicly available information.
•
For all dividends recorded by the Company, we performed
our audit procedures through the use of our proprietary
testing tool Halo:
–
We tested the accuracy of their receipts by agreeing
the dividend rates from investments to independent
market data.
–
We tested occurrence by examining for each
investment holding, that all dividends recorded in the
year had been declared in the market.
–
To test for completeness, we investigated that the
appropriate dividends had been received in the year by
reference to independent data of dividends declared
for all investment holdings held within the year.
•
We tested the accuracy, occurrence, and completeness
of net profit from derivatives by agreeing a sample of
derivative returns against broker statements.
•
For the revenue generated by realised gains, we test
the accuracy and occurrence by agreeing a sample of
gains recorded to supporting evidence such as bank
statements and broker statements.
•
As stipulated by the requirements set out in the AIC
SORP, we tested on a sample basis the allocation
and presentation of dividend income between the
revenue and capital return columns of the Statement of
Comprehensive Income by determining reasons behind
dividend distributions. We have no matters to report as a
result of this testing.
No material differences were identified.
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How we tailored the audit scope
We tailored the scope of our audit to ensure that we
performed enough work to be able to give an opinion on
the financial statements as a whole, taking into account the
structure of the Company, the accounting processes and
controls, and the industry in which it operates.
All audit procedures were conducted remotely by a UK audit
team. We tested and examined information using sampling
and other auditing techniques, to the extent we considered
necessary to provide a reasonable basis for us to form our
own judgements.
The impact of climate risk on our audit
In planning our audit, we made enquiries of the Directors
and the Investment Manager to understand the extent of the
potential impact of climate change risk on the Company’s
financial statements. The Directors and Investment
Manager concluded that the impact on the measurement
and disclosures within the financial statements is not
material because the majority of the Company’s investment
portfolio is made up of level 1 quoted securities which are
valued at fair value based on market prices. We found this
to be consistent with our understanding of the Company’s
investment activities. We also considered the consistency
of the climate change disclosures included in the Strategic
Report and Investment Manager Report with the financial
statements and our knowledge from our audit.
Materiality
The scope of our audit was influenced by our application
of materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations,
helped us to determine the scope of our audit and the nature,
timing and extent of our audit procedures on the individual
financial statement line items and disclosures and in
evaluating the effect of misstatements, both individually and
in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined
materiality for the financial statements as a whole as follows:
Overall company materiality
£5.8m (2022: £6.3m).
How we determined it
1% of net assets
Rationale for benchmark applied
We applied this benchmark, which is a generally accepted
auditing practice for investment trust audits.
We use performance materiality to reduce to an appropriately
low level the probability that the aggregate of uncorrected
and undetected misstatements exceeds overall materiality.
Specifically, we use performance materiality in determining
the scope of our audit and the nature and extent of our
testing of account balances, classes of transactions and
disclosures, for example in determining sample sizes. Our
performance materiality was 75% (2021: 75%) of overall
materiality, amounting to £4.3m (2022: £4.7m) for the
Company financial statements.
In determining the performance materiality, we considered
a number of factors - the history of misstatements, risk
assessment and aggregation risk and the effectiveness of
controls - and concluded that an amount at the upper end of
our normal range was appropriate.
We agreed with the Audit Committee that we would report
to them misstatements identified during our audit above
£288,000 (2022: £317,000) as well as misstatements
below that amount that, in our view, warranted reporting for
qualitative reasons.
Conclusions relating to going concern
Our evaluation of the Directors’ assessment of the
Company’s ability to continue to adopt the going concern
basis of accounting included:
•
evaluating the Directors’ updated risk assessment and
considering whether it addressed relevant threats;
•
evaluating the Directors’ assessment of potential
operational impacts, considering their consistency with
other available information and our understanding of
the business and assessed the potential impact on the
financial statements;
•
reviewing the Directors’ assessment of the Company’s
financial position in the context of its ability to meet
future expected operating expenses, their assessment of
liquidity as well as their review of the operational resilience
of the Company and oversight of key third-party service
providers; and
•
assessing the implication of significant reductions in net
asset value as a result of a severe but plausible downside
in the market’s performance on the ongoing ability of the
Company to operate.
Based on the work we have performed, we have not identified
any material uncertainties relating to events or conditions
that, individually or collectively, may cast significant doubt
on the Company’s ability to continue as a going concern for
a period of at least twelve months from when the financial
statements are authorised for issue.
In auditing the financial statements, we have concluded that
the Directors’ use of the going concern basis of accounting in
the preparation of the financial statements is appropriate.
Independent Auditor’s Report
continued
Section 4: Financial Statements
91
However, because not all future events or conditions can
be predicted, this conclusion is not a guarantee as to the
Company’s ability to continue as a going concern.
In relation to the Directors’ reporting on how they have
applied the UK Corporate Governance Code, we have
nothing material to add or draw attention to in relation to
the Directors’ statement in the financial statements about
whether the Directors considered it appropriate to adopt the
going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors
with respect to going concern are described in the relevant
sections of this report.
Reporting on other information
The other information comprises all of the information in
the Annual Report other than the financial statements and
our auditors’ report thereon. The Directors are responsible
for the other information. Our opinion on the financial
statements does not cover the other information and,
accordingly, we do not express an audit opinion or, except to
the extent otherwise explicitly stated in this report, any form
of assurance thereon.
In connection with our audit of the financial statements,
our responsibility is to read the other information and,
in doing so, consider whether the other information is
materially inconsistent with the financial statements or our
knowledge obtained in the audit, or otherwise appears to
be materially misstated. If we identify an apparent material
inconsistency or material misstatement, we are required to
perform procedures to conclude whether there is a material
misstatement of the financial statements or a material
misstatement of the other information. If, based on the work
we have performed, we conclude that there is a material
misstatement of this other information, we are required to
report that fact. We have nothing to report based on these
responsibilities.
With respect to the Strategic Report and Directors’ Report, we
also considered whether the disclosures required by the UK
Companies Act 2006 have been included.
Based on our work undertaken in the course of the audit,
the Companies Act 2006 requires us also to report certain
opinions and matters as described below.
Strategic Report and Directors’ Report
In our opinion, based on the work undertaken in the course
of the audit, the information given in the Strategic Report
and Directors’ Report for the year ended 30 November 2023
is consistent with the financial statements and has been
prepared in accordance with applicable legal requirements.
In light of the knowledge and understanding of the Company
and its environment obtained in the course of the audit, we
did not identify any material misstatements in the Strategic
Report and Directors’ Report.
Directors’ Remuneration
In our opinion, the part of the Report of the remuneration
committee to be audited has been properly prepared in
accordance with the Companies Act 2006.
Corporate governance statement
The Listing Rules require us to review the Directors’
statements in relation to going concern, longer-term viability
and that part of the corporate governance statement relating
to the Company’s compliance with the provisions of the UK
Corporate Governance Code specified for our review. Our
additional responsibilities with respect to the corporate
governance statement as other information are described in
the Reporting on other information section of this report.
Based on the work undertaken as part of our audit, we
have concluded that each of the following elements of the
corporate governance statement is materially consistent with
the financial statements and our knowledge obtained during
the audit, and we have nothing material to add or draw
attention to in relation to:
•
The Directors’ confirmation that they have carried out a
robust assessment of the emerging and principal risks;
•
The disclosures in the Annual Report that describe those
principal risks, what procedures are in place to identify
emerging risks and an explanation of how these are being
managed or mitigated;
•
The Directors’ statement in the financial statements
about whether they considered it appropriate to adopt
the going concern basis of accounting in preparing them,
and their identification of any material uncertainties to
the Company’s ability to continue to do so over a period
of at least twelve months from the date of approval of the
financial statements;
•
The Directors’ explanation as to their assessment of the
Company’s prospects, the period this assessment covers
and why the period is appropriate; and
•
The Directors’ statement as to whether they have a
reasonable expectation that the Company will be able
to continue in operation and meet its liabilities as they
fall due over the period of its assessment, including any
related disclosures drawing attention to any necessary
qualifications or assumptions.
Our review of the Directors’ statement regarding the longer-
term viability of the Company was substantially less in
scope than an audit and only consisted of making inquiries
and considering the Directors’ process supporting their
statement; checking that the statement is in alignment with
the relevant provisions of the UK Corporate Governance
Code; and considering whether the statement is consistent
with the financial statements and our knowledge and
understanding of the Company and its environment obtained
in the course of the audit.
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In addition, based on the work undertaken as part of our
audit, we have concluded that each of the following elements
of the corporate governance statement is materially
consistent with the financial statements and our knowledge
obtained during the audit:
•
The Directors’ statement that they consider the
Annual Report, taken as a whole, is fair, balanced and
understandable, and provides the information necessary
for the members to assess the Company’s position,
performance, business model and strategy;
•
The section of the Annual Report that describes the review
of effectiveness of risk management and internal control
systems; and
•
The section of the Annual Report describing the work of the
Audit Committee.
We have nothing to report in respect of our responsibility
to report when the Directors’ statement relating to the
Company’s compliance with the Code does not properly
disclose a departure from a relevant provision of the Code
specified under the Listing Rules for review by the auditors.
Responsibilities for the financial statements
and the audit
Responsibilities of the Directors for the financial
statements
As explained more fully in the Statement of Directors’
responsibilities in respect of the Annual Report and Financial
Statements, the Directors are responsible for the preparation
of the financial statements in accordance with the applicable
framework and for being satisfied that they give a true
and fair view. The Directors are also responsible for such
internal control as they determine is necessary to enable
the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are
responsible for assessing the Company’s ability to continue
as a going concern, disclosing, as applicable, matters related
to going concern and using the going concern basis of
accounting unless the Directors either intend to liquidate
the Company or to cease operations, or have no realistic
alternative but to do so.
Auditors’ responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and
to issue an auditors’ report that includes our opinion.
Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial
statements.
Irregularities, including fraud, are instances of non-
compliance with laws and regulations. We design procedures
in line with our responsibilities, outlined above, to detect
material misstatements in respect of irregularities, including
fraud. The extent to which our procedures are capable of
detecting irregularities, including fraud, is detailed below.
Based on our understanding of the Company and industry,
we identified that the principal risks of non-compliance
with laws and regulations related to breaches of Section
1158 of the Corporation Tax Act 2010 (see page 56 of the
Annual Report), and we considered the extent to which non-
compliance might have a material effect on the financial
statements. We also considered those laws and regulations
that have a direct impact on the financial statements such
as the Companies Act 2006. We evaluated management’s
incentives and opportunities for fraudulent manipulation
of the financial statements (including the risk of override
of controls), and determined that the principal risks were
related to posting inappropriate journal entries to increase
net asset value. Audit procedures performed by the
engagement team included:
•
discussions with the Manager and the Audit Committee,
including consideration of known or suspected instances
of non-compliance with laws and regulation and fraud;
•
understand the controls implemented by the Company
and the Fund Accountant designed to prevent and detect
irregularities;
•
assessment of the Company’s compliance with the
requirements of Section 1158 of the Corporation Tax Act
2010, including recalculation of numerical aspects of the
eligibility conditions;
•
identifying and testing journal entries, in particular year
end journal entries posted by the Fund Accountant during
the preparation of the financial statements;
•
designing audit procedures to incorporate unpredictability
around the nature, timing or extent of our testing for
example, targeting transactions that otherwise would be
immaterial; and
•
reviewing relevant meeting minutes, including those of the
Audit Committee.
There are inherent limitations in the audit procedures
described above. We are less likely to become aware of
instances of non-compliance with laws and regulations that
are not closely related to events and transactions reflected
in the financial statements. Also, the risk of not detecting a
material misstatement due to fraud is higher than the risk of
not detecting one resulting from error, as fraud may involve
deliberate concealment by, for example, forgery or intentional
misrepresentations, or through collusion.
Independent Auditor’s Report
continued
Section 4: Financial Statements
93
Our audit testing might include testing complete populations of certain transactions and balances, possibly using data
auditing techniques. However, it typically involves selecting a limited number of items for testing, rather than testing complete
populations. We will often seek to target particular items for testing based on their size or risk characteristics. In other cases,
we will use audit sampling to enable us to draw a conclusion about the population from which the sample is selected.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities
. This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance
with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or
assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may
come save where expressly agreed by our prior consent in writing.
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
•
we have not obtained all the information and explanations we require for our audit; or
•
adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received
from branches not visited by us; or
•
certain disclosures of Directors’ remuneration specified by law are not made; or
•
the financial statements and the part of the Report of the remuneration committee to be audited are not in agreement with
the accounting records and returns.
We have no exceptions to report arising from this responsibility.
Appointment
Following the recommendation of the Audit Committee, we were appointed by the Directors on 21 March 2019 to audit
the financial statements for the year ended 30 November 2019 and subsequent financial periods. The period of total
uninterrupted engagement is 5 years, covering the years ended 30 November 2019 to 30 November 2023.
Allan McGrath
(Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Edinburgh
2
February 2024
94
BlackRock Throgmorton Trust plc
l
Annual Report and Financial Statements 30 November 2023
Statement of Comprehensive Income
for the year ended 30 November 2023
2023
2022
Notes
Revenue
Capital
Total
Revenue
Capital
Total
£’000
£’000
£’000
£’000
£’000
£’000
Income from investments held at fair value through profit
or loss
3
15,981
–
15,981
12,585
91
12,676
Net income from derivatives
3,11
830
–
830
1,526
–
1,526
Other income
3
1,139
–
1,139
749
–
749
Total income
17,950
–
17,950
14,860
91
14,951
Net loss on investments held at fair value through profit
or loss
10
–
(28,389)
(28,389)
–
(250,583)
(250,583)
Net loss on foreign exchange
–
(114)
(114)
–
(676)
(676)
Net profit/(loss) from derivatives
11
–
242
242
–
(55,673)
(55,673)
Total
17,950
(28,261)
(10,311)
14,860
(306,841) (291,981)
Expenses
Investment management and performance fees
4
(629)
(3,903)
(4,532)
(756)
(2,269)
(3,025)
Other operating expenses
5
(792)
(20)
(812)
(843)
(20)
(863)
Total operating expenses
(1,421)
(3,923)
(5,344)
(1,599)
(2,289)
(3,888)
Net profit/(loss) on ordinary activities before finance
costs and taxation
16,529
(32,184)
(15,655)
13,261
(309,130) (295,869)
Finance costs
6
(25)
(75)
(100)
(5)
(15)
(20)
Net profit/(loss) on ordinary activities before taxation
16,504
(32,259)
(15,755)
13,256
(309,145) (295,889)
Taxation
7
6
–
6
1
–
1
Net profit/(loss) on ordinary activities after taxation
16,510
(32,259)
(15,749)
13,257
(309,145) (295,888)
Earnings/(loss) per ordinary share (pence)
9
16.56
(32.36)
(15.80)
12.95
(302.05)
(289.10)
The total columns of this statement represent the Company’s Statement of Comprehensive Income, prepared in accordance
with UK-adopted International Accounting Standards (IAS). The supplementary revenue and capital accounts 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 discontinued during the year. All income is attributable to the
equity holders of the Company.
The Company does not have any other comprehensive income/(loss) (2022: £nil). The net profit/(loss) for the year disclosed
above represents the Company’s total comprehensive income/(loss).
The notes on pages 98 to 123 form part of these Financial Statements.
Section 4: Financial Statements
95
Statement of Changes in Equity
for the year ended 30 November 2023
The notes on pages 98 to 123 form part of these Financial Statements.
Notes
Called
up share
capital
Share
premium
account
Capital
redemption
reserve
Special
reserve
Capital
reserves
Revenue
reserve
Total
£’000
£’000
£’000
£’000
£’000
£’000
£’000
For the year ended 30 November 2023
At 30 November 2022
5,160
242,122
11,905
33,038
327,883
13,249
633,357
Total comprehensive (loss)/income:
Net (loss)/profit for the year
–
–
–
–
(32,259)
16,510
(15,749)
Transactions with owners, recorded directly
to equity:
Ordinary shares bought back into treasury 14, 15
–
–
–
(29,646)
–
–
(29,646)
Share buyback costs
14, 15
–
–
–
(161)
–
–
(161)
Dividends paid
1
8
–
–
–
–
–
(11,876)
(11,876)
At 30 November 2023
5,160
242,122
11,905
3,231
295,624
17,883
575,925
For the year ended 30 November 2022
At 30 November 2021
5,072
225,660
11,905
44,582
637,028
10,901
935,148
Total comprehensive (loss)/income:
Net (loss)/profit for the year
–
–
–
–
(309,145)
13,257
(295,888)
Transactions with owners, recorded directly
to equity:
Ordinary shares issued
88
16,479
–
–
–
–
16,567
Share issue costs
–
(17)
–
–
–
–
(17)
Ordinary shares bought back into treasury
–
–
–
(11,487)
–
–
(11,487)
Share purchase costs
–
–
–
(57)
–
–
(57)
Dividends paid
1
8
–
–
–
–
–
(10,909)
(10,909)
At 30 November 2022
5,160
242,122
11,905
33,038
327,883
13,249
633,357
1
Final dividend of 8.50p per share for the year ended 30 November 2022, declared on 10 February 2023 and paid on 31 March 2023
and interim dividend of 3.30p per share for the year ended 30 November 2023, declared on 27 July 2023 and paid on 1 September
2023.
2
Final dividend of 8.00p per share for the year ended 30 November 2021, declared on 7 February 2022 and paid on 31 March 2022
and interim dividend of 2.60p per share for the year ended 30 November 2022, declared on 20 July 2022 and paid on 26 August
2022.
For information on the Company’s distributable reserves please refer to note 15 on page 110.
96
BlackRock Throgmorton Trust plc
l
Annual Report and Financial Statements 30 November 2023
Notes
2023
2022
£’000
£’000
Non current assets
Investments held at fair value through profit or loss
10
557,594
576,771
Current assets
Other receivables
12
2,280
3,131
Derivative financial assets held at fair value through profit or loss
11, 16
703
4,800
Current tax asset
365
174
Cash collateral pledged with brokers
11, 16
775
–
Cash and cash equivalents
11, 16
24,328
58,793
Total current assets
28,451
66,898
Total assets
586,045
643,669
Current liabilities
Other payables
13
(7,740)
(2,240)
Derivative financial liabilities held at fair value through profit or loss
11, 16
(1,454)
(2,202)
Bank overdraft
(306)
–
Liability for cash collateral received
11, 16
(620)
(5,870)
Total current liabilities
(10,120)
(10,312)
Net assets
575,925
633,357
Equity attributable to equity holders
Called up share capital
14
5,160
5,160
Share premium account
15
242,122
242,122
Capital redemption reserve
15
11,905
11,905
Special reserve
15
3,231
33,038
Capital reserves
15
295,624
327,883
Revenue reserve
15
17,883
13,249
Total equity
575,925
633,357
Net asset value per ordinary share (pence)
9
600.72
626.10
The Financial Statements on pages 94 to 123 were approved and authorised for issue by the Board of Directors on 2 February
2024 and signed on its behalf by Mr Christopher Samuel, Chairman.
BlackRock Throgmorton Trust plc
Registered in England, No. 00594634
Statement of Financial Position
as at 30 November 2023
The notes on pages 98 to 123 form part of these Financial Statements.
Section 4: Financial Statements
97
Cash Flow Statement
for the year ended 30 November 2023
2023
2022
£’000
£’000
Operating activities
Net loss on ordinary activities after taxation
(15,755)
(295,889)
Add back finance costs
100
20
Net loss on investments held at fair value through profit or loss (including transaction
costs)
28,389
250,583
Net (profit)/loss from derivatives (including transaction costs)
(242)
55,673
Financing costs on derivatives
(2,324)
(1,101)
Net loss on foreign exchange
114
676
Sales of investments held at fair value through profit or loss
207,680
325,600
Purchases of investments held at fair value through profit or loss
(216,892)
(231,750)
Net receipts/(payments) on closure of derivatives
5,915
(65,886)
Increase in other receivables
(470)
(279)
Increase/(decrease) in other payables
2,892
(8,169)
Decrease/(increase) in amounts due from brokers
1,321
(998)
Increase/(decrease) in amounts due to brokers
2,365
(2,599)
Net cash collateral (pledged)/received
(6,025)
13,250
Net cash inflow from operating activities before taxation
7,068
39,131
Taxation paid
(185)
(92)
Net cash inflow from operating activities
6,883
39,039
Financing activities
Interest paid
(100)
(20)
Cash proceeds from ordinary shares issued
–
17,680
Cash paid for ordinary shares bought back into treasury
(29,564)
(11,544)
Dividends paid
(11,876)
(10,909)
Net cash outflow from financing activities
(41,540)
(4,793)
(Decrease)/increase in cash and cash equivalents
(34,657)
34,246
Effect of foreign exchange rate changes
(114)
(676)
Change in cash and cash equivalents
(34,771)
33,570
Cash and cash equivalents at start of year
58,793
25,223
Cash and cash equivalents at end of year
24,022
58,793
Comprised of:
Cash at bank
–
103
Bank overdraft
(306)
–
Cash Fund
1
24,328
58,690
24,022
58,793
1
Cash Fund represents funds held on deposit with the BlackRock Institutional Cash Series plc – Sterling Liquid Environmentally
Aware Fund.
The notes on pages 98 to 123 form part of these Financial Statements.
98
BlackRock Throgmorton Trust plc
l
Annual Report and Financial Statements 30 November 2023
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. Accounting policies
The principal accounting policies adopted by the Company have been applied consistently, other than where new policies have
been adopted and are set out below.
(a)
Basis of preparation
On 31 December 2020, International Financial Reporting Standards (IFRS) as adopted by the European Union at that date was
brought into UK law and became UK-adopted International Accounting Standards (IAS), with future changes being subject to
endorsement by the UK Endorsement Board and with the requirements of the Companies Act 2006 as applicable to companies
reporting under those standards.
The Financial Statements have been prepared under the historic cost convention modified by the revaluation of certain
financial assets and financial liabilities held at fair value through profit or loss and in accordance with UK-adopted IAS. All of
the Company’s operations are of a continuing nature.
Insofar as the Statement of Recommended Practice (SORP) for investment trust companies and venture capital trusts issued
by the Association of Investment Companies (AIC) in October 2019 and updated in July 2022 is compatible with UK-adopted
IAS, the Financial Statements have been prepared in accordance with the guidance set out in the SORP.
Substantially all of the assets of the Company consist of securities that are readily realisable and, accordingly, the Directors
are satisfied that the Company has adequate resources to continue in operational existence for the foreseeable future for the
period to 2 February 2025, being a period of at least twelve months from the date of approval of the Financial Statements and
therefore consider the going concern assumption to be appropriate. The Directors have reviewed the income and expense
projections and the liquidity of the investment portfolio in making their assessment.
The Directors have considered the impact of climate change on the value of the investments included in the Financial
Statements and have concluded that:
•
there was no further impact of climate change to be considered as the investments are valued based on market pricing as
required by IFRS 13; and
•
the risk is adequately captured in the assumptions and inputs used in measurement of Level 3 assets, if any, as noted in
note 16 of the Financial Statements.
The Directors have considered the impact of climate change on the value of the investments included in the Financial
Statements and have concluded that there was no further impact of climate change to be considered as the investments are
valued based on market pricing as required by IFRS 13.
None of the Company’s other assets and liabilities were considered to be potentially impacted by climate change.
The Company’s Financial Statements are presented in Sterling, which is the functional currency of the Company and the
currency of the primary economic environment in which the Company operates. All values are rounded to the nearest
thousand pounds (£’000) except where otherwise indicated.
Adoption of new and amended International Accounting Standards and interpretations:
IFRS 9 – Fees in the ’10 per cent’ Test for Derecognition of Financial Liabilities
(effective 1 January 2022). The International
Accounting Standards Board (IASB) has amended IFRS 9 Financial Instruments to clarify the fees that a company includes
when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the
original financial liability.
Relevant International Accounting Standards that have yet to be adopted:
IFRS 17 – Insurance contracts
(effective 1 January 2023). This standard replaces IFRS 4, which currently permits a wide
range of accounting practices in accounting for insurance contracts. IFRS 17 will fundamentally change the accounting by all
entities that issue insurance contracts and investment contracts with discretionary participation features.
This standard is unlikely to have any impact on the Company as it has no insurance contracts.
Notes to the Financial Statements
for the year ended 30 November 2023
Section 4: Financial Statements
99
IAS 12 - Deferred tax related to assets and liabilities arising from a single transaction
(effective 1 January 2023). The IASB
has amended IAS 12 Income Taxes to require companies to recognise deferred tax on particular transactions that, on initial
recognition, give rise to equal amounts of taxable and deductible temporary differences. According to the amended guidance,
a temporary difference that arises on initial recognition of an asset or liability is not subject to the initial recognition exemption
if that transaction gave rise to equal amounts of taxable and deductible temporary differences. These amendments might
have a significant impact on the preparation of financial statements by companies that have substantial balances of right-
of-use assets, lease liabilities, decommissioning, restoration and similar liabilities. The impact for those affected would be the
recognition of additional deferred tax assets and liabilities.
The amendment of this standard is unlikely to have any significant impact on the Company.
IAS 8 – Definition of accounting estimates
(effective 1 January 2023). The IASB has amended IAS 8 Accounting Policies,
Changes in Accounting Estimates and Errors to help distinguish between accounting policies and accounting estimates,
replacing the definition of accounting estimates.
IAS 1 and IFRS Practice Statement 2 – Disclosure of accounting policies
(effective 1 January 2023). The IASB has amended
IAS 1 Presentation of Financial Statements to help preparers in deciding which accounting policies to disclose in their
financial statements by stating that an entity is now required to disclose material accounting policies instead of significant
accounting policies.
IAS 1 Classification of liabilities as current or non-current
(effective 1 January 2024). The IASB has amended IAS 1
Presentation of Financial Statements to clarify its requirement for the presentation of liabilities depending on the rights that
exist at the end of the reporting period. The amendment requires liabilities to be classified as non-current if the entity has a
substantive right to defer settlement for at least 12 months at the end of the reporting period. The amendment no longer refers
to unconditional rights.
IAS 12 – International Tax Reform Pillar Two Model Rules
(effective 1 January 2023). The IASB has published amendments
to IAS 12 Income Taxes to respond to stakeholders’ concerns about the potential implications of the imminent implementation
of the OECD pillar two rules on the accounting for income taxes. The amendment is an exception to the requirements in IAS 12
that an entity does not recognise and does not disclose information about deferred tax assets as liabilities related to the OECD
pillar two income taxes and a requirement that current tax expenses must be disclosed separately to pillar two income taxes.
None of the standards that have been issued but are not yet effective are expected to have a material impact on the Company.
(b) Presentation of the Statement of Comprehensive Income
In order to better reflect the activities of an investment trust company and in accordance with guidance issued by the AIC,
supplementary information which analyses the Statement of Comprehensive Income between items of a revenue and a capital
nature has been presented alongside the Statement of Comprehensive Income.
(c) Segmental reporting
The Directors are of the opinion that the Company is engaged in a single segment of business being investment business.
(d) Income
Dividends receivable on equity shares are recognised as revenue for the year on an ex-dividend basis. Where no ex-dividend
date is available, dividends receivable on or before the year end are treated as revenue for the year. Provision is made for any
dividends not expected to be received. Special dividends, if any, are treated as a capital or a revenue receipt depending on the
facts or circumstances of each particular case. The return on a debt security is recognised on a time apportionment basis so as
to reflect the effective yield on the debt security.
Deposit interest receivable is accounted for on an accruals basis. Interest income from the Cash Fund is accounted for on an
accruals basis.
Where the Company has elected to receive its dividends in the form of additional shares rather than in cash, the cash
equivalent of the dividend is recognised as income. Any excess in the value of the shares received over the amount of the cash
dividend is recognised in capital.
100
BlackRock Throgmorton Trust plc
l
Annual Report and Financial Statements 30 November 2023
2. Accounting policies
continued
(e) Expenses
All expenses, including finance costs, are accounted for on an accruals basis. Expenses have been charged wholly to the
revenue column of the Statement of Comprehensive Income, except as follows:
•
expenses which are incidental to the acquisition or sale of an investment are charged to the capital column of the Statement
of Comprehensive Income. Details of transaction costs on the purchases and sales of investments are disclosed within note
10 to the Financial Statements on page 107;
•
expenses are treated as capital where a connection with the maintenance or enhancement of the value of the investments
can be demonstrated;
•
the investment management fee and finance costs have been allocated 25% to the revenue account and 75% to the capital
account 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; and
•
performance fees are allocated 100% to the capital column of the Statement of Comprehensive Income as fees are
generated in connection with enhancing the value of the investment portfolio.
(f) Taxation
The tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on the
taxable profit for the year. Taxable profit differs from net profit as reported in the Statement of Comprehensive Income because
it excludes items of income or expenses that are taxable or deductible in other years and it further excludes items that are
never taxable or deductible. The Company’s liability for current tax is calculated using tax rates that were applicable at the
balance sheet date.
Where expenses are allocated between capital and revenue accounts, any tax relief in respect of expenses is allocated between
capital and revenue returns on the marginal basis using the Company’s effective rate of corporation tax for the accounting
period.
Deferred taxation is recognised in respect of all temporary differences that have originated but not reversed at the financial
reporting date, where transactions or events that result in an obligation to pay more taxation in the future or right to pay
less taxation in the future have occurred at the financial reporting date. This is subject to deferred taxation assets only being
recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the
temporary differences can be deducted. Deferred taxation assets and liabilities are measured at the rates applicable to the
legal jurisdictions in which they arise.
(g) Investments held at fair value through profit or loss
In accordance with IFRS 9, the Company classifies its investments at initial recognition as held at fair value through profit or
loss and are managed and evaluated on a fair value basis in accordance with its investment strategy and business model.
All investments are measured initially and subsequently at fair value through profit or loss. Purchases of investments are
recognised on a trade date basis. Sales of investments are recognised at the trade date of the disposal.
The fair value of the financial investments is based on their quoted bid price at the financial reporting date, without deduction
for the estimated selling costs. This policy applies to all current and non-current asset investments held by the Company.
Changes in the value of investments held at fair value through profit or loss and gains and losses on disposal are recognised
in the Statement of Comprehensive Income as “Net profit/(loss) on investments held at fair value through profit or loss”. Also
included within the heading are transaction costs in relation to the purchase or sale of investments.
For all financial instruments not traded in an active market, the fair value is determined by using various valuation techniques.
Valuation techniques include market approach (i.e., using recent arm’s length market transactions adjusted as necessary and
reference to the current market value of another instrument that is substantially the same) and the income approach (e.g.,
discounted cash flow analysis and option pricing models making use of available and supportable market data where possible).
See note 2(o) below.
(h) Derivatives
The Company can hold long and short positions in contracts for difference (CFDs) and index futures which are held at fair
value based on the bid prices of the underlying securities in respect of long positions and the offer prices of the underlying
securities in respect of short positions.
Notes to the Financial Statements
continued
Section 4: Financial Statements
101
Profits and losses on derivative transactions are recognised in the Statement of Comprehensive Income. They are shown in the
capital column of the Statement of Comprehensive Income if they are of a capital nature and are shown in the revenue column
of the Statement of Comprehensive Income if they are of a revenue nature. To the extent that any profits or losses are of a mixed
revenue and capital nature, they are apportioned between revenue and capital accordingly. Derivative assets and derivative liabilities
that are subject to netting arrangements are offset in the Statement of Financial Position.
(i) Other receivables and other payables
Other receivables and other payables do not carry any interest and are short term in nature and are accordingly stated on an
amortised cost basis.
(j) Dividends payable
Under IAS, final dividends should not be accrued in the Financial Statements unless they have been approved by shareholders
before the financial reporting date. Interim dividends should not be recognised in the Financial Statements unless they have
been paid.
Dividends payable to equity shareholders are recognised in the Statement of Changes in Equity.
(k) Foreign currency translation
Transactions involving foreign currencies are converted at the rate ruling at the date of the transaction. Foreign currency
monetary assets and liabilities and non-monetary assets held at fair value are translated into Sterling at the rate ruling
on the financial reporting date. Foreign exchange differences arising on translation are recognised in the Statement of
Comprehensive Income as a revenue or capital item depending on the income or expense to which they relate. For investment
transactions and investments held at the year end, denominated in a foreign currency, the resulting gains or losses are
included in the gain on investments held at fair value through profit or loss in the Statement of Comprehensive Income.
(l) Cash and cash equivalents
Cash comprises cash in hand and on demand deposits. Cash equivalents are short term, highly liquid investments that are
readily convertible to known amounts of cash and that are subject to an insignificant risk of changes in value.
The Cash Fund is managed by BlackRock Asset Management Ireland Limited and is subject to fees and expenses which are
capped at 0.03% of the NAV. The investment is managed as part of the Company’s cash and cash equivalents as defined under
IAS 7 and is presented as a cash equivalent in the Financial Statements.
(m) Bank borrowings
Bank overdrafts are recorded as the proceeds received. Finance charges, including any premium payable on settlement or
redemption and direct issue costs, are accounted for on an accruals basis in the Statement of Comprehensive Income using
the effective interest rate method and are added to the carrying amount of the instruments to the extent that they are not
settled in the period in which they arise.
(n) Share repurchases, share reissues and new share issues
Shares repurchased and subsequently cancelled – share capital is reduced by the nominal value of the shares repurchased,
and the capital redemption reserve is correspondingly increased in accordance with Section 733 of the Companies Act 2006.
The full cost of the repurchase is charged to the special reserve.
Shares repurchased and held in treasury – the full cost of the repurchase is charged to the special reserve.
Where treasury shares are subsequently re-issued:
•
amounts received to the extent of the repurchase price are credited to the special reserve; and
•
any surplus received in excess of the repurchase price is taken to the share premium account.
Where new shares are issued, the par value is taken to called up share capital and amounts received to the extent of any
surplus received in excess of the par value are taken to the share premium account.
Share issue costs are charged to the share premium account. Costs on share reissues are charged to the special reserve and
capital reserves.
(o) Critical accounting estimates and judgements
The Directors of the Company make estimates and assumptions concerning the future. The resulting accounting estimates and
assumptions will, by definition, seldom equal the related actual results. Estimates and judgements are regularly evaluated and are
based on historical experience and other factors, including expectations of future events that are believed to be reasonable under
the circumstances. The Directors do not believe that any accounting judgements or estimates have a significant risk of causing a
material adjustment to the carrying amount of assets and liabilities within the next financial year. There are no critical accounting
estimates or judgements.
102
BlackRock Throgmorton Trust plc
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Annual Report and Financial Statements 30 November 2023
3. Income
2023
2022
£’000
£’000
Investment income:
UK dividends
12,201
9,654
UK special dividends
1,464
839
UK REIT dividends
610
509
Overseas dividends
1,706
1,515
UK stock dividends
–
68
Total investment income
1
15,981
12,585
Net income from derivatives
830
1,526
Other income:
Deposit interest
3
111
Interest from Cash Fund
1,083
594
Collateral interest
53
44
1,139
749
Total income
17,950
14,860
1
UK and overseas dividends are presented based on the country of domicile of the respective underlying portfolio company.
Dividends and interest received in cash during the year amounted to £15,499,000 and £1,191,000 (2022: £12,223,000 and
£615,000).
No special dividends have been recognised in capital during the year (2022: £91,000).
4. Investment management and performance fees
2023
2022
Revenue
Capital
Total
Revenue
Capital
Total
£’000
£’000
£’000
£’000
£’000
£’000
Investment management fee
629
1,889
2,518
756
2,269
3,025
Performance fee
–
2,014
2,014
–
–
–
Total
629
3,903
4,532
756
2,269
3,025
Investment Management fees
The investment management fee is calculated at the rate of 0.35% per annum on month end Gross Assets. For the purposes of
this note, Gross Assets are defined as the value of the portfolio of the Company, including uninvested cash, with the portfolio
valuation based on value at risk (with value at risk being the gross asset value of the long-only portfolio plus the gross value
of the underlying equities, long and short, to which the Company is exposed through derivatives including CFDs and index
futures). The management fee is charged 25% to the revenue account and 75% to the capital account of the Statement of
Comprehensive Income. There is no additional fee for company secretarial and administration services.
Performance fees
The performance fee is calculated at the rate of 15% of the outperformance of the Company. For the purpose of this
note, outperformance is defined as the amount by which the annualised percentage Net Asset Value total return of the
Company arithmetically exceeds the annualised percentage return of the Benchmark Index, measured over a rolling two-
year performance period. This rate is applied to the average Gross Assets, in that rolling two-year performance period.
Outperformance is the amount by which the Net Asset Value total return arithmetically exceeds the Benchmark Index total
return.
There is a cap on the annual total management and performance fees of 1.25% per financial year of the average Gross Assets
over the rolling two-year performance period (the “Cap” or “Capped Amount”) which has the effect of capping the annual
performance fees at circa 0.9% of average Gross Assets and which means that the performance fee from any performance
period will not exceed 0.9% of average Gross Assets for the relevant performance period.
Notes to the Financial Statements
continued
Section 4: Financial Statements
103
The performance fee is calculated daily for the rolling two-year performance period ending 30 November 2023 and the
rolling two-year performance period ending 30 November 2024 and, accruals are made in the NAV subject to the Cap. The
performance fee is payable on 30 November each year in relation to the rolling two-year performance period ending on that
date. The accrual is calculated applying the following assumptions:
•
The Benchmark Index remains unchanged;
•
The Net Asset Value total return performs in line with the Benchmark Index total return for the remainder of the respective
rolling two-year performance periods ending 30 November 2023 and 30 November 2024; and
•
The future value of Gross Assets for performance fee purposes is the same at the balance sheet date.
The amount of outperformance on which a performance fee has not been paid in a financial year due to the application of the
Cap will be carried forward to offset against future shortfall returns. As at 1 December 2023, the carried forward unpaid net
outperformance, net of prior period shortfall returns, available to offset against future shortfall returns was 4.8% (1 December
2022: 10.7%). On the first day of the financial year, due to the application of the Cap in the prior financial year, any
performance fee for the ongoing rolling two-year performance period not yet recognised is accrued in the daily NAV released
to the London Stock Exchange on that day.
Performance fees have been wholly allocated to the capital account of the Statement of Comprehensive Income as the
performance has been predominantly generated through capital returns from the investment portfolio. For the year ended 30
November 2023, the total accrual of performance fee for all rolling two-year performance periods amounted to £2,014,000
(2022: £nil), calculated as follows:
•
For the annualised rolling two-year performance period to 30 November 2023, the Company has underperformed the
benchmark by 5.9% as at 30 November 2023. No performance fee relating to this performance period has been accrued at
the date of this report.
•
For the annualised rolling two-year performance period to 30 November 2024, the Company has outperformed the
benchmark by 1.9% as at 30 November 2023. A performance fee of £2,014,000 relating to this performance period has
been accrued at the date of this report, which does not become payable until 30 November 2024, subject to the ongoing
performance of the Company.
104
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Annual Report and Financial Statements 30 November 2023
5. Other operating expenses
2023
2022
£’000
£’000
Allocated to revenue:
Custody fee
7
8
Auditor’s remuneration
1
58
52
Registrar’s fee
44
45
Directors’ emoluments
2
224
205
Broker fees
36
35
Depositary fees
70
83
Marketing fees
149
153
FCA fees
27
28
Printing and postage fees
43
42
AIC fees
21
21
Stock exchange listing fees
31
102
Write back of prior year expenses
3
(12)
(26)
Other administrative costs
94
95
792
843
Allocated to capital:
Custody transaction charges
4
20
20
812
863
The Company’s ongoing charges
5
, calculated as a percentage of average daily net assets and
using the management fee and all other operating expenses, excluding performance fees,
finance costs, direct transaction costs, custody transaction charges, VAT recovered, taxation,
prior year expenses written back and certain non-recurring items, were:
0.54%
0.54%
The Company’s ongoing charges
5
, calculated as a percentage of average daily net assets
and using the management fee and all other operating expenses and including performance
fees but excluding finance costs, direct transaction costs, custody transaction charges, VAT
recovered, taxation, prior year expenses written back and certain non-recurring items, were:
0.87%
0.54%
1
No non-audit services were provided by the Company’s auditors.
2
Further information on Directors’ emoluments can be found in the Directors’ Remuneration Report on page 74. The Company has
no employees.
3
Relates to Directors’ recruitment fees, miscellaneous fees and postage fees written back during the year (2022: Directors’ expenses,
legal fees, registration fees and miscellaneous fees).
4
For the year ended 30 November 2023, expenses of £20,000 (2022: £20,000) were charged to the capital account of the Statement
of Comprehensive Income. These relate to transaction costs charged by the Custodian on sale and purchase trades.
5
Alternative Performance Measures, see Glossary on pages 135 to 13
8
.
Notes to the Financial Statements
continued
Section 4: Financial Statements
105
6. Finance costs
2023
2022
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Interest paid on bank overdraft
4
12
16
–
1
1
Collateral interest paid
21
63
84
5
14
19
25
75
100
5
15
20
7. Taxation
(a) Analysis of credit in year
2023
2022
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Current taxation:
Overseas taxation
(6)
–
(6)
–
–
–
Prior year adjustment
–
–
–
(1)
–
(1)
Total taxation credit (note 7(b))
(6)
–
(6)
(1)
–
(1)
(b) Factors affecting total taxation credit for the year
The taxation assessed for the year is higher (2022: higher) than the blended rate of corporation tax used of 23.01% (based
on a rate of 19.00% up to 31 March 2023 and a rate of 25.00% from 1 April 2023) (2022: standard rate of corporation tax of
19.00%). The differences are explained below:
2023
2022
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Profit/(loss) on ordinary activities before taxation
16,504
(32,259)
(15,755)
13,256
(309,145)
(295,889)
Profit/(loss) on ordinary activities multiplied by
blended rate of 23.01% (2022: standard rate of
19.00%)
3,798
(7,423)
(3,625)
2,519
(58,738)
(56,219)
Effects of:
Non-taxable UK dividend income
(3,144)
–
(3,144)
(2,001)
(17)
(2,018)
Non-taxable overseas dividend income
(393)
–
(393)
(288)
–
(288)
Overseas tax suffered
(6)
–
(6)
–
–
–
Net loss on investments held at fair value through
profit or loss
–
6,533
6,533
–
47,611
47,611
Net (profit)/loss from derivatives
–
(56)
(56)
–
10,578
10,578
Non-taxable stock dividend income
–
–
–
(13)
–
(13)
Net foreign exchange loss
–
26
26
–
128
128
Disallowed expenses
–
5
5
–
4
4
Management expenses not (utilised)/relieved
(261)
915
654
(217)
434
217
Prior year adjustment
–
–
–
(1)
–
(1)
(3,804)
7,423
3,619
(2,520)
58,738
56,218
Total taxation credit for the year (note 7(a))
(6)
–
(6)
(1)
–
(1)
For the year ended/as at 30 November 2023 the Company had net surplus management expenses of £105.6 million (2022:
£102.7 million) and a non-trade loan relationship deficit of £49.2 million (2022: £49.2 million). A deferred tax asset has not
been recognised in respect of these losses because the Company is not expected to generate taxable income in a future period
in excess of the deductible expenses of that future period. Accordingly, it is unlikely that the Company will be able to reduce
future tax liabilities through the use of existing tax losses. Accordingly, the deferred tax asset of £38.7 million (2022: £38.0
million) has not been recognised as at 30 November 2023 which has been calculated based on the corporation tax rate in
effect from 1 April 2023 of 25%, as enacted by the Finance Act 2021.
106
BlackRock Throgmorton Trust plc
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Annual Report and Financial Statements 30 November 2023
8. Dividends
2023
2022
Dividends paid on equity shares:
Record date
Payment date
£’000
£’000
Final dividend of 8.50p per share for the year
ended 30 November 2022 (2021: 8.00p)
24 February 2023
31 March 2023
8,595
8,255
Interim dividend of 3.30p per share for the year
ended 30 November 2023 (2022: 2.60p)
4 August 2023
1 September 2023
3,281
2,654
11,876
10,909
The total dividends payable in respect of the year ended 30 November 2023 which form the basis of Section 1158 of the
Corporation Tax Act 2010 and Section 833 of the Companies Act 2006, and the amounts proposed, meet the relevant
requirements as set out in this legislation.
2023
2022
Dividends paid or declared on equity shares:
£’000
£’000
Interim dividend of 3.30p per share for the year ended 30 November 2023 (2022: 2.60p)
3,281
2,654
Final dividend of 11.45p per share for the year ended 30 November 2023
1
(2022: 8.50p)
10,911
8,595
14,192
11,249
1
Based on 95,291,492 ordinary shares in issue on 31 January 2024.
9. Earnings and net asset value per ordinary share
Total revenue, capital loss and net asset value per ordinary share are shown below and have been calculated using the
following:
Year ended
30 November
2023
Year ended
30 November
2022
Net revenue profit attributable to ordinary shareholders (£’000)
16,510
13,257
Net capital loss attributable to ordinary shareholders (£’000)
(32,259)
(309,145)
Total loss attributable to ordinary shareholders (£’000)
(15,749)
(295,888)
Equity shareholders’ funds (£’000)
575,925
633,357
The weighted average number of ordinary shares in issue during the year on which the earnings
per ordinary share was calculated was:
99,704,909
102,346,782
The actual number of ordinary shares in issue at the year end on which the net asset value per
ordinary share was calculated was:
95,872,161
101,158,864
Loss per ordinary share
Revenue earnings per share (pence) – basic and diluted
16.56
12.95
Capital loss per share (pence) – basic and diluted
(32.36)
(302.05)
Total loss per share (pence) - basic and diluted
(15.80)
(289.10)
As at
30 November
2023
As at
30 November
2022
Net asset value per ordinary share (pence)
600.72
626.10
Ordinary share price (pence)
579.00
595.00
There were no dilutive securities at the year end.
Notes to the Financial Statements
continued
Section 4: Financial Statements
107
10. Investments held at fair value through profit or loss
2023
2022
£’000
£’000
UK listed equity investments held at fair value through profit or loss
390,979
386,123
AIM traded stocks
166,615
190,648
Total value of financial asset investments at 30 November
557,594
576,771
Opening book cost of investments
572,761
674,311
Investment holding gains
4,010
246,893
Opening fair value
576,771
921,204
Analysis of transactions made during the year:
Purchases at cost
216,892
231,750
Sales proceeds received
(207,680)
(325,600)
Loss on investments
1
(28,389)
(250,583)
Closing fair value
557,594
576,771
Closing book cost of investments
583,950
572,761
Closing investment holdings (losses)/gains
(26,356)
4,010
Closing fair value
557,594
576,771
1
The losses on investments for the year ended 30 November 2022 do not include special dividends totalling £91,000 that were
recognised in capital (please see note 3).
The Company received £207,680,000 (2022: £325,600,000) from investments sold in the year. The book cost of these investments
when they were purchased was £205,703,000 (2022: £333,300,000). These investments have been revalued over time and until
they were sold any unrealised gains/losses were included in the fair value of investments.
During the year, transaction costs of £975,000 (2022: £858,000) were incurred on the acquisition of investments. Costs relating
to the disposal of investments during the year amounted to £141,000 (2022: £230,000). All transactions costs have been included
within the capital reserves.
108
BlackRock Throgmorton Trust plc
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Annual Report and Financial Statements 30 November 2023
11. Derivatives
The Company may use a variety of derivative contracts, and during the year entered into a number of index futures contracts
and contracts for difference (CFDs). CFDs are synthetic equities and are valued by reference to the market values of the
investments’ underlying securities.
The sources of the return under the derivative contract (e.g., notional dividends, financing costs, interest returns and realised
and unrealised gains and losses) are allocated to the revenue and capital accounts in alignment with the nature of the
underlying source of income and in accordance with the guidance given in the AIC SORP. Notional dividend income or expense
arising on long or short positions is apportioned wholly to the revenue account. Notional interest income on short positions
is allocated wholly to the revenue account. Notional interest expense on long and short positions is apportioned between
revenue and capital in accordance with the Board’s long term expected returns of the Company (currently determined to be
25% to revenue and 75% to capital). Changes in value relating to underlying price movements of securities in relation to long
and short derivative exposures are allocated to capital. A summary of the various sources of return on the derivative contracts
is given in the table below.
2023
2022
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Net realised gains/(losses) relating to underlying
price movements
–
5,915
5,915
–
(65,886)
(65,886)
Net change in unrealised (losses)/gains relating to
underlying price movements
–
(3,349)
(3,349)
–
11,314
11,314
Notional dividend income on long positions
2,268
–
2,268
2,378
–
2,378
Notional dividend expense on short positions
(666)
–
(666)
(490)
–
(490)
Notional interest expense on long positions
(961)
(2,888)
(3,849)
(369)
(1,111)
(1,480)
Notional interest income on short positions
189
564
753
7
10
17
Total return on derivative contracts for the year
830
242
1,072
1,526
(55,673)
(54,147)
The net fair values of derivative financial assets and liabilities are set out in the table below:
2023
2022
£’000
£’000
Derivative financial assets held at fair value through profit or loss
703
4,800
Derivative financial liabilities held at fair value through profit or loss
(1,352)
(2,202)
Derivative financial liabilities: Amounts due to brokers in respect of revaluation losses on
index futures
(102)
–
Total net derivative financial (liabilities)/assets
(751)
2,598
The fair value of derivative positions at 30 November 2023 was negative £751,000 (2022: positive £2,598,000), comprising
gross revaluation gains of £3,349,000 (2022: £5,912,000) and gross revaluation losses of £4,100,000 (2022: £3,314,000). Net
realised gains of £5,915,000 (2022: losses of £65,886,000) comprised realised gains of £54,428,000 (2022: £79,832,000) and
realised losses of £48,513,000 (2022: £145,718,000).
As at 30 November 2023, the Company held cash and cash equivalent balances of £24,328,000 (2022: £58,793,000). The
Company also pledged cash of £775,000 (2022: £nil) on margin accounts with counterparty brokers. This cash represents
collateral posted to broker margin accounts in relation to amounts due to brokers in respect of unrealised losses on open
derivative positions.
As at 30 November 2023 the Company also owed £620,000 (2022: £5,870,000) to brokers in respect of cash collateral received
relating to amounts owed by these brokers to cover unrealised gains on open derivative positions. These cash balances are
disclosed as an asset of £775,000 on the Statement of Financial Position (2022: £nil), and an equivalent creditor of £620,000
(2022: £5,870,000) is also shown to reflect the economic entitlement of the broker to these margins until such a time as the
open derivative positions are closed out and the profits are realised. To the extent there are any unrealised losses on CFD
contracts, the Company will transfer margin monies across to these broker margin deposit accounts. The Investment Manager
monitors margin positions on a daily basis to ensure any margin deposit balances are minimised and any amounts owed to the
Company are transferred on a timely basis. In the event of default, legal ownership of any monies held in the margin deposit
accounts resides with the counterparty broker.
Notes to the Financial Statements
continued
Section 4: Financial Statements
109
12. Other receivables
2023
2022
£’000
£’000
Amounts due from brokers
712
2,033
Prepayments and accrued income
1,568
1,098
2,280
3,131
13. Other payables
2023
2022
£’000
£’000
Amounts due to brokers
2,808
443
Performance fee accrual
2,014
–
Accruals for expenses and interest payable
2,918
1,797
7,740
2,240
14. Called up share capital
Ordinary shares
in issue
Treasury
shares
Total
shares
Nominal
value
number
number
number
£’000
Allotted, called up and fully paid share capital
comprised:
Ordinary shares of 5 pence each
At 30 November 2022
101,158,864
2,051,000
103,209,864
5,160
Ordinary shares bought back into treasury
(5,286,703)
5,286,703
–
–
At 30 November 2023
95,872,161
7,337,703
103,209,864
5,160
During the year ended 30 November 2023, the Company bought back 5,286,703 shares into treasury (2022: 2,051,000) for a total
consideration of £29,807,000 (2022: £11,544,000) including costs.
During the year ended 30 November 2023, no new shares were issued (2022: 1,773,900 new shares for a total consideration of
£16,550,000 including costs).
Since 30 November 2023 and up to 31 January 2024, no shares have been reissued. 580,669 shares have been bought back into
treasury for a total consideration of £3,519,000.
The ordinary shares give shareholders voting rights, the entitlement to all of the capital growth in the Company’s assets and to all
income from the Company that is resolved to be distributed.
110
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Annual Report and Financial Statements 30 November 2023
15. Reserves
Distributable reserves
Share
premium
account
Capital
redemption
reserve
Special
reserve
Capital
reserve
arising on
investments
sold
Capital
reserve
arising on
revaluation
of
investments
held
Revenue
reserve
£’000
£’000
£’000
£’000
£’000
£’000
At 30 November 2022
242,122
11,905
33,038
321,274
6,609
13,249
Movement during the year:
Total comprehensive income/(loss):
Profit/(loss) for the year
–
–
–
1,455
(33,714)
16,510
Transactions with owners, recorded
directly to equity:
Ordinary shares bought back into
treasury
–
–
(29,646)
–
–
–
Share buyback costs
–
–
(161)
–
–
–
Dividends paid
–
–
–
–
–
(11,876)
At 30 November 2023
242,122
11,905
3,231
322,729
(27,105)
17,883
Distributable reserves
Share
premium
account
Capital
redemption
reserve
Special
reserve
Capital
reserve
arising on
investments
sold
Capital
reserve
arising on
revaluation
of
investments
held
Revenue
reserve
£’000
£’000
£’000
£’000
£’000
£’000
At 30 November 2021
225,660
11,905
44,582
398,865
238,163
10,901
Movement during the year:
Total comprehensive (loss)/income:
(Loss)/profit for the year
–
–
–
(77,591)
(231,554)
13,257
Transactions with owners, recorded
directly to equity:
Ordinary shares issued
16,479
–
–
–
–
–
Share issue costs
(17)
–
–
–
–
–
Ordinary shares bought back into
treasury
–
–
(11,487)
–
–
–
Share purchase costs
–
–
(57)
–
–
–
Dividends paid
–
–
–
–
–
(10,909)
At 30 November 2022
242,122
11,905
33,038
321,274
6,609
13,249
The share premium account and capital redemption reserves are not distributable reserves under the Companies Act 2006. In
accordance with ICAEW Technical Release 02/17BL on Guidance on Realised and Distributable Profits under the Companies
Act 2006, the special reserve and capital reserves may be used as distributable reserves for all purposes and, in particular, the
repurchase by the Company of its ordinary shares and for payments such as dividends. In accordance with the Company’s
Articles of Association, the special reserve, capital reserves and the revenue reserve may be distributed by way of dividend. As
30 November 2023, there was no gain on capital reserve arising on the revaluation of investments (2022: gain of £6,609,000).
The gain on revaluation of investments is subject to fair value movements and may not be readily realisable at short notice,
as such any gains may not be entirely distributable. The investments are subject to financial risks; as such capital reserves
(arising on investments sold) and the revenue reserve may not be entirely distributable if a loss occurred during the realisation
of these investments.
Notes to the Financial Statements
continued
Section 4: Financial Statements
111
16. Risk management policies and procedures
The Company’s investment activities expose it to various types of risks which are associated with the financial instruments
and markets in which it invests. The following information is not intended to be a comprehensive summary of all risks and
shareholders should refer to the Alternative Investment Fund Managers’ Directive FUND 3.2.2R Disclosures which can be
found at
www.blackrock.com/uk/thrg
for a more detailed discussion of the risks inherent in investing in the Company.
Risk management framework
The following information refers to the risk management framework of the Alternative Investment Fund Manager (AIFM).
However, as disclosed in the Corporate Governance Statement on pages 66 to 72 and in the Statement of Directors’
Responsibilities on pages 84 and 85, it is the ultimate responsibility of the Board to ensure that the Company’s risks are
appropriately monitored, and to the extent that elements of this are delegated to third party service providers, the Board is
responsible for ensuring that the relevant parties are discharging their duties in accordance with the terms of the relevant
agreements and taking appropriate action to the extent issues are identified.
The Directors of the AIFM review quarterly investment performance reports and receive semi-annual presentations in
person from the Investment Manager covering the Company’s performance and risk profile during the year. The AIFM
has delegated the day-to-day administration of the investment programme to the Investment Manager. The Investment
Manager is also responsible for ensuring that the Company is managed within the terms of its investment guidelines and
limits set out in the Alternative Investment Fund Managers’ Directive FUND 3.2.2R Disclosures which can be found at
www.blackrock.com/uk/thrg
.
The AIFM is responsible for monitoring investment performance, product risk monitoring and oversight and has the
responsibility for the monitoring and oversight of regulatory and operational risk for the Company. The Directors of the AIFM
have appointed a Risk Manager who has responsibility for the daily risk management process with assistance from key risk
management personnel of the Investment Manager, including members of the Risk and Quantitative Analysis Group (RQA)
which is a centralised group which performs an independent risk management function. RQA independently identifies,
measures and monitors investment risk, including climate-related risk, and tracks the actual risk management practices
being deployed across the Company. By breaking down the components of the process, RQA has the ability to determine if the
appropriate risk management processes are in place. This captures the risk management tools employed, how the levels of risk
are controlled, ensuring risk/return is considered in portfolio construction and reviewing outcomes.
The AIFM reports to the Audit Committee twice yearly on key risk metrics and risk management processes; in addition, the
Depositary monitors the performance of the AIFM and reports to the Audit Committee semi-annually. Any significant issues
are reported to the Board as they arise.
Risk exposures
The risk exposures of the Company are set out as follows:
(a) Market risk
Market risk arises mainly from uncertainty about future values of financial instruments influenced by other price, currency
and interest rate movements. It represents the potential loss the Company may suffer through holding market positions in
financial instruments in the face of market movements.
A key metric RQA uses to measure market risk is Value-at
-Risk (VaR) which encompasses price, currency and interest rate risk.
VaR is a statistical risk measure that estimates the potential portfolio loss from adverse market moves in an ordinary market
environment. VaR analysis reflects the interdependencies between risk variables (including foreign currency risk, interest rate
risk and other price risk), unlike a traditional sensitivity analysis.
The VaR calculations are based on a confidence level of 99% with a holding period of not greater than one day and a historical
observation period of not less than one year (250 days). A VaR number is defined at a specified probability and a specified
time horizon. A 99% one day VaR means that the expectation is that 99% of the time over a one day period the Company will
lose less than this number in percentage terms. Therefore, higher VaR numbers indicate higher risk. It is noted that the use
of VaR methodology has limitations, namely assumptions that risk factor returns are normally distributed and that the use of
historical market data as a basis for estimating future events does not encompass all possible scenarios, particularly those
that are of an extreme nature and that the use of a specified confidence level (e.g., 99%) does not take into account losses
that occur beyond this level. There is some probability that the loss could be greater than the VaR percentage amounts. These
limitations, and the nature of the VaR measure, mean that the Company can neither guarantee that losses will not exceed the
VaR amounts indicated, nor that losses in excess of the VaR amounts will not occur more frequently.
112
BlackRock Throgmorton Trust plc
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Annual Report and Financial Statements 30 November 2023
16. Risk management policies and procedures
continued
The one-day VaR as at 30 November 2023 and 30 November 2022 (based on a 99% confidence level) was 2.20% and 4.58%,
respectively.
(i) Market risk arising from other price risk
Exposure to other price risk
Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in
market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors
specific to the individual financial instrument or its issuer, or factors affecting similar financial instruments traded in the
market. Local, regional or global events such as war, acts of terrorism, the spread of infectious illness or other public health
issues, recessions, climate change, or other events could have a significant impact on the Company and the market price of its
investments.
The Company is exposed to market price risk arising from its equity investments and its exposure to derivative positions.
The movements in the prices of these investments result in movements in the performance of the Company. Other price risk
sensitivity has been covered by the VaR analysis under the market risk section above.
The Company’s exposure to other changes in market prices at 30 November 2023 on its equity investments was £557,594,000
(2022: £576,771,000). In addition, the Company’s gross market exposure to these price changes through its derivatives
exposure is set out below.
Use of derivatives
The Company may utilise both contracts for difference (CFDs) and index futures, as part of its investment policy. These
instruments can be highly volatile and potentially expose investors to a higher risk of loss. The low initial margin deposits
normally required to establish a position in such instruments permit a high degree of leverage in respect of each transaction.
As a result, depending on the type of instrument, a relatively small movement in the price of a contract may result in a profit or
loss which is high in proportion to the value of the net exposures in the underlying derivative positions.
The Company’s current investment strategy specifically utilises CFDs and index futures. The Company limits the gross market
exposure, and therefore the leverage, of this strategy to approximately 30% of the Company’s net assets. The long and short
CFD positions have a linear performance to referenced stocks quoted on exchanges and therefore have a volatility profile
similar to the underlying stocks. See ‘Management of OTC financial derivative instruments’ paragraph below for gearing
through the use of derivatives.
Management of other price risk
By diversifying the portfolio, where this is appropriate and consistent with the Company’s objective, the risk that a price
change of a particular investment will have a material impact on the NAV of the Company is reduced which is in line with the
investment objective of the Company.
Management of over-the-counter (OTC) financial derivative instruments
Economic exposure through derivatives is restricted to 30% of the net asset value of the Company. The gross value represents
the aggregate of the long and short exposure without netting and so within this limit market exposure may be significantly
less. The net exposure refers to the market exposure the Company has to the underlying securities on long derivative positions,
less the market exposure of the underlying securities on which the Company has taken in short derivative positions. Further
definitions are provided in the Glossary on pages 135 to 13
8
. To the extent derivatives are used to gear the Company’s
portfolio, aggregate leverage through the use of derivatives will not exceed 30% of net assets. The Board’s policy is that net
gearing, borrowing less cash, should not exceed 20% of gross assets.
Exposures are monitored daily by the Investment Manager and its independent risk management team and can be closed out
at any time by the Company, subject to market liquidity. The Company’s Board also reviews exposures regularly.
The CFD positions are diversified across sectors and geographies comprising 42 positions as at 30 November 2023 (2022:
37).
Notes to the Financial Statements
continued
Section 4: Financial Statements
113
The gross underlying notional exposures through derivatives at 30 November 2023 and 30 November 2022 were:
2023
£’000
% of net
assets
2022
£’000
% of net
assets
Gross exposure relating to long derivative positions
78,277
13.6
99,602
15.7
Gross exposure relating to short derivative positions
22,086
3.8
15,637
2.5
Index Futures – gross exposure relating to long position
5,844
1.0
–
–
Gross economic exposure subject to a 30% restriction
(see above)
106,207
18.4
115,239
18.2
Net market exposure
62,035
10.8
83,965
13.2
Concentration of exposure to market risks
An analysis of the Company’s investment portfolio, and sector analysis, is shown on pages 21 to 30. At 30 November 2023,
this shows the majority of the portfolio’s value is in UK companies. Accordingly, there is concentration of exposure to the UK,
although it is recognised that an investment’s country of domicile or of listing does not necessarily equate to its exposure to
the economic conditions in that country.
(ii) Market risk arising from foreign currency risk
Exposure to foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in foreign exchange rates. Foreign currency sensitivity risk has been covered by the VaR analysis under the market
risk section.
As the Company’s objective is to achieve capital growth for shareholders through investment mainly in smaller UK quoted
companies, substantially all of the Company’s assets are Sterling denominated. Up to 15% of the Company’s portfolio can
be invested in overseas companies. Consequently, at any time a proportion of the Company’s assets, liabilities and income
may be denominated in currencies other than Sterling (the Company’s functional currency and that in which it reports its
results). There were six non-Sterling denominated long investment positions and there was one non-Sterling denominated
short investment position held within the Company’s portfolio at 30 November 2023 (2022: five long positions and no short
positions).
The fair values of the Company’s monetary items which have foreign currency exposure at 30 November 2023 and
30 November 2022 are shown below. Where the Company’s equity investments which are not monetary items are
denominated in a foreign currency, they have been included separately in the analysis so as to show the overall level of
exposure.
Australian
Dollar
Euro
Swedish
Krona
US
Dollar
2023
£’000
£’000
£’000
£’000
Receivables (due from brokers, withholding tax receivable, prepayments
and accrued income)
–
19
1
–
Derivatives – long positions (gross exposure)
4,685
5,283
–
10,416
Derivatives – short positions (gross exposure)
–
–
(2,315)
–
Cash and cash equivalents
–
–
–
–
Payables (due to brokers and other payables)
(3)
(12)
–
(15)
Total foreign currency exposure on net monetary items
4,682
5,290
(2,314)
10,401
Investments at fair value through profit and loss that are equities
–
3,729
–
–
Total net foreign currency exposure
4,682
9,019
(2,314)
10,401
Total net foreign currency exposure as a % of net assets
0.81%
1.57%
-0.40%
1.81%
114
BlackRock Throgmorton Trust plc
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Annual Report and Financial Statements 30 November 2023
16. Risk management policies and procedures
continued
Australian
Dollar
Euro
Swedish
Krona
US
Dollar
2022
£’000
£’000
£’000
£’000
Receivables (due from brokers, withholding tax receivable, prepayments
and accrued income)
–
–
–
1,272
Derivatives – long positions (gross exposure)
3,913
12,872
–
11,370
Derivatives – short positions (gross exposure)
–
–
–
–
Cash and cash equivalents
–
–
–
Payables (due to brokers and other payables)
(7)
(87)
–
(22)
Total foreign currency exposure on net monetary items
3,906
12,785
–
12,620
Investments at fair value through profit and loss that are equities
–
5,227
–
619
Total net foreign currency exposure
3,906
18,012
–
13,239
Total net foreign currency exposure as a % of net assets
0.62%
2.84%
–
2.09%
Management of foreign currency risk
The Investment Manager monitors the Company’s exposure to foreign currencies on a daily basis and reports to the Board of the
Company on a regular basis.
The Investment Manager measures the risk to the Company of the foreign currency exposure by considering the effect on the
Company’s net asset value and income of a movement in the exchange rate to which the Company’s assets, liabilities, income
and expenses are exposed.
The Company does not use financial instruments to mitigate the currency exposure in the period between the time that income
is included in the Financial Statements and its receipt. Although permitted, derivative contracts are not used to hedge against
exposure to foreign currency risk.
Consequently, the Company is exposed to risks that the exchange rate of its reporting currencies, relative to other currencies,
may change in a manner which has an adverse effect on the value of the portion of the Company’s assets which are denominated
in currencies other than their own currencies.
(iii) Market risk arising from interest rate risk
Exposure to interest rate risk
Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in
market interest rates.
The Company is exposed to interest rate risk specifically through its cash holdings and on positions within the CFD portfolio.
Interest rate movements may affect the level of income receivable from any cash at bank and on deposits. The effect of interest
rate changes on the earnings of the companies held within the portfolio may have a significant impact on the valuation of the
Company’s investments. Movements in interest rates will also have an impact on the financing costs of the CFD derivative
contracts. Interest rate sensitivity risk has been covered by the VaR analysis under the market risk section.
Interest rate exposure
The exposure at 30 November 2023 and 30 November 2022 of financial assets and liabilities to interest rate risk is shown by
reference to:
•
floating interest rates – when the interest rate is due to be re-set; and
•
fixed interest rates – when the financial instrument is due for repayment.
Notes to the Financial Statements
continued
Section 4: Financial Statements
115
2023
Within one
year
2022
Within one
year
£’000
£’000
Exposure to floating interest rates:
Derivative contracts
– Notional long derivative positions
78,277
99,602
– Notional short derivative positions
(22,086)
(15,637)
– Notional long index future positions
5,844
–
Cash Fund
24,328
58,690
Cash collateral pledged with brokers
775
–
Cash at bank
–
103
Bank overdraft
(306)
–
Cash collateral received
(620)
(5,870)
Management of interest rate risk
The Company is exposed to interest rate risk on cash holdings and CFD positions. The Company incurs charges on long
positions when held.
The Company incurred a charge based on LIBOR plus 25 basis points for long CFD positions and received a benefit based
on LIBOR minus 35 basis points for short positions. For non-Sterling long positions, the Company incurred a charge based
on EURIBOR plus 25 basis points for positions denominated in Euros, Bank Bill Swap Rate plus 25 basis points for positions
denominated in Australian Dollars, CHF LIBOR plus 30 basis points for positions denominated in Swiss Francs and the Federal
Funds Rate plus 18 basis points for positions denominated in US Dollars. For non-Sterling short positions, the Company
received a benefit based on EURIBOR minus 25 basis points for positions denominated in Euros and CHF LIBOR minus
30 basis points for positions denominated in Swiss Francs.
Notional interest is determined on a gross basis; i.e., for this purpose long and short positions or exposures within the master
agreement are not netted for calculation of notional interest. Further details of notional interest arising in the year in relation
to derivative positions are given within note 11 to the Financial Statements on page 108.
The Company has additional exposure to interest rate risk in relation to its holding in the Cash Fund. Interest received on this
holding in the year was on average 4.73% (2022: 1.27%).
The Company does not have any fixed rate exposure at 30 November 2023 or 30 November 2022.
Interest rates received on cash balances or paid on bank borrowings, respectively, is set out in the table below:
Interest
received
Interest
paid
2023
%
%
Sterling
3.84
7.93
Interest
received
Interest
paid
2022
%
%
Sterling
0.96
4.20
(b) Counterparty credit risk
Credit risk is the risk that the issuer of a financial instrument will fail to fulfil an obligation or commitment that it has entered
into with the Company.
The Company is exposed to counterparty credit risk from the parties with which it trades and will bear the risk of settlement
default. Counterparty credit risk to the Company arises from transactions to purchase or sell investments and through its
positions in long and short derivatives.
The major counterparties engaged with the Company are all widely recognised and regulated entities.
There we no past due or impaired assets as of 30 November 2023.
116
BlackRock Throgmorton Trust plc
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Annual Report and Financial Statements 30 November 2023
16. Risk management policies and procedures
continued
Depositary
The Company’s Depositary is The Bank of New York Mellon (International) Limited (BNYM or the Depositary) (S&P long term
credit rating as at 30 November 2023: AA- (2022: AA-)). The Company’s listed investments are held on its behalf by The Bank
of New York Mellon (International) Limited (BNYM) as the Company’s Custodian (as sub-delegated by the Depositary). All
of the equity assets and cash of the Company are held within the custodial network of the global custodian appointed by
the Depositary. Bankruptcy or insolvency of the Depositary/Custodian may cause the Company’s rights with respect to its
investments held by the Depositary/Custodian to be delayed or limited. The maximum exposure to this risk at 30 November
2023 is the total value of equity investments held with the Depositary/Custodian and cash and cash equivalents in the
Statement of Financial Position.
In accordance with the requirements of the depositary agreement, the Depositary will ensure that any agents it appoints to
assist in safekeeping the assets of the Company will segregate the assets of the Company. Thus, in the event of insolvency or
bankruptcy of the Depositary, the Company’s non-cash assets are segregated and this reduces counterparty credit risk. The
Company will, however, be exposed to the counterparty credit risk of the Depositary in relation to the Company’s cash held
by the Depositary. In the event of the insolvency or bankruptcy of the Depositary, the Company will be treated as a general
creditor of the Depositary in relation to cash holdings of the Company. The Board monitors the Company’s risk by reviewing
the custodian’s internal control reports.
Counterparties/brokers
The Company only invests directly in markets that operate on a delivery versus payment basis, and consequently most
investment transactions in listed securities involve simultaneous delivery of securities against cash payment using an
approved broker. The risk of default is considered minimal, and the trade will fail if either party fails to meet its obligation.
Cash held as security by a counterparty to financial derivative contracts is subject to the credit risk of the counterparty. The
following table details the total number of counterparties to which the Company is exposed, the maximum exposure to any one
counterparty, the collateral held by the Company against this exposure, the total exposure to all other counterparties and the
lowest long term credit rating of any one counterparty (or its ultimate parent if unrated).
Total number
of
counterparties
Maximum
exposure
to any one
counterparty
1
Collateral
held
1
Total exposure
to all other
counterparties
1
Lowest
credit rating
of any one
counterparty
2
£’000
£’000
£’000
£’000
2023
5
1,795
400
1,980
A-
2022
8
4,005
–
729
A-
1
Calculated on a net exposure basis.
2
Standard & Poor’s ratings.
The Company may also be exposed to counterparty risk should there be any rehypothecation of pledged collateral. Collateral
is received/paid where the client service agreement states that there should be collateral movements agreed with the
counterparty, where there is a requirement for a mark-to-market process or collateralisation to ensure that the Company is
protected against any counterparty default.
Collateral
The Company engages in activities which may require collateral to be provided to a counterparty (pledged collateral) or may
hold collateral received (inbound collateral) from a counterparty. Pledged and Inbound cash collateral is paid/received in
Sterling. The Company uses inbound collateral received from a counterparty to reduce the counterparty credit risk associated
with any trading activity in which the Company has engaged.
The collateral received/posted by the Company under the ISDA Master Agreement in respect of variation margin is transferred
bilaterally under a title transfer arrangement. Collateral received by the Company in respect of variation margin is held in an
account in the name of the Depositary on behalf of the Company. Collateral received is segregated from the assets belonging
to the Company’s Depositary.
At 30 November 2023, all cash collateral received by the Company in respect of CFD transactions was re-invested in the Cash
Fund managed by the Manager or its affiliates as disclosed in the Schedule of Investments. The Company is the legal owner of
inbound collateral and can sell the assets and withhold the cash in the case of default. All cash received or posted as collateral
has an open maturity tenor as it is not subject to a contractual maturity date.
Notes to the Financial Statements
continued
Section 4: Financial Statements
117
The returns earned by the Company from the reinvestment of cash collateral in the Cash Fund during the year ended 30
November 2023 was 4.73% (2022: 1.27%).
Cash collateral pledged by the Company is separately identified as an asset in the Statement of Financial Position and is not
included as a component of cash and cash equivalents. Inbound cash collateral received by the Company is reflected as a
liability on the Statement of Financial Position as cash collateral payable. The cash is subject to certain counterparty credit
risk as the Company’s access to its cash could be delayed should the counterparties become insolvent or bankrupt.
The fair value of inbound cash collateral and cash collateral pledged is reflected in the Statement of Financial Position and is
set out in the table below:
Pledged collateral
Liability for inbound collateral
As at
30 November
2023
As at
30 November
2022
As at
30 November
2023
As at
30 November
2022
£’000
£’000
£’000
£’000
Cash collateral
775
–
(620)
(5,870)
Receivables
Amounts due from brokers are disclosed on the Statement of Financial Position as receivables. The counterparties included
in receivables are the same counterparties discussed previously under counterparty credit risk and subject to the same
scrutiny by the BlackRock RQA Counterparty and Concentration Risk Team (RQA CCR). The Company monitors the ageing of
receivables to mitigate the risk of debtor balances becoming overdue.
In summary, the exposure to credit risk at 30 November 2023 and 30 November 2022 was as follows:
2023
3 months
or less
2022
3 months
or less
£’000
£’000
Derivative positions – amounts due from brokers
703
4,800
Cash Fund
24,328
58,690
Cash collateral pledged with brokers
775
–
Cash at bank
–
103
Amounts due from brokers
712
2,033
26,518
65,626
The following table details the Company’s exposure to derivatives and net cash collateral (received/pledged in Sterling)
analysed by counterparty as at the balance sheet date:
2023
Name of counterparty
Counterparty
country of
incorporation
Receivable/
(payable) for
derivatives
Cash collateral
pledged/
(received)
£’000
£’000
JPMorgan
United States
67
(330)
Société Générale
France
636
(290)
BNP Paribas
France
(1,352)
400
Merrill Lynch
United States
(102)
375
(751)
155
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Annual Report and Financial Statements 30 November 2023
16. Risk management policies and procedures
continued
2022
Name of counterparty
Counterparty
country of
incorporation
Receivable/
(payable) for
derivatives
Cash collateral
pledged/
(received)
£’000
£’000
JPMorgan
United States
4,577
(4,160)
Société Générale
France
223
(580)
BNP Paribas
France
(2,202)
(1,130)
2,598
(5,870)
Management of counterparty credit risk
Credit risk is monitored and managed by RQA CCR. The team is headed by BlackRock’s Chief Credit Officer who reports to the
Global Head of RQA. Credit authority resides with the Chief Credit Officer and selected team members to whom specific credit
authority has been delegated. As such, counterparty approvals may be granted by the Chief Credit Officer, or by identified RQA
Credit Risk Officers who have been formally delegated authority by the Chief Credit Officer.
The counterparty/credit risk is managed as follows:
•
transactions are only entered into with those counterparties approved by RQA CCR, with a formal review carried out for each
new counterparty and with counterparties selected by RQA CCR on the basis of a number of risk mitigation criteria designed
to reduce the risk to the Company of default;
•
the creditworthiness of financial institutions with whom cash is held is reviewed regularly by the RQA CCR; and
•
RQA CCR reviews the credit standard of the Company’s brokers on a periodic basis and set limits on the amount that may be
due from any one broker.
The Board monitors the Company’s counterparty risk by reviewing:
•
the semi-annual report from the Depositary, which includes the results of periodic site visits to the Company’s Custodian
where controls are reviewed and tested;
•
the Custodian’s Service Organisation Control (SOC 1) reports which include a report by the Custodian’s auditors. This report
sets out any exceptions or issues noted as a result of the auditor’s review of the Custodian’s processes;
•
the Manager’s internal control reports which include a report by the Manager’s auditors. This report sets out any exceptions
or issues noted as a result of the auditor’s review of the Manager’s control processes; and
•
in addition, the Depositary and the Manager report any significant breaches or issues arising to the Board as soon as these
are identified.
There were no past due assets as at 30 November 2023 (2022: £nil).
Offsetting disclosures
In order to better define its contractual rights and to secure rights that will help the Company mitigate its counterparty risk, the
Company may enter into an ISDA Master Agreement or similar agreement with its OTC derivative contract counterparties. An
ISDA Master Agreement is an agreement between the Company and the counterparty that governs OTC derivative contracts
and typically contains, among other things, collateral posting terms and netting provisions in the event of a default and/or
termination event. Under an ISDA Master Agreement, the Company has a contractual right to offset with the counterparty
certain derivative financial instruments payables and/or receivables with collateral held and/or posted and create one single
net payment in the event of default including the bankruptcy or insolvency of the counterparty. However, bankruptcy or
insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against the right of offset in bankruptcy,
insolvency or other events.
For financial reporting purposes, the Company does offset derivative assets and derivative liabilities that are subject to netting
arrangements in the Statement of Financial Position. The disclosures set out in the following table include financial assets and
financial liabilities that are subject to an enforceable master netting agreement or similar agreement.
Notes to the Financial Statements
continued
Section 4: Financial Statements
119
At 30 November 2023 and 2022, the Company’s derivative assets and liabilities (by type) are as follows:
At 30 November 2023
At 30 November 2022
Assets
Liabilities
Assets
Liabilities
£’000
£’000
£’000
£’000
Derivatives
Long derivative positions
2,344
(3,361)
5,422
(2,692)
Short derivative positions
1,005
(637)
490
(622)
Index future position – long position
–
(102)
–
–
Total derivative assets and liabilities in the Statement
of Financial Position
3,349
(4,100)
5,912
(3,314)
Derivatives not subject to a master netting agreement
–
–
–
–
Total assets and liabilities subject to a master netting
agreement
3,349
(4,100)
5,912
(3,314)
The following table presents the Company’s derivative assets and liabilities by counterparty, net of amounts available for
offset, under a master netting agreement and net of any related collateral paid/(received) by the Company at 30 November
2023 and 30 November 2022:
Derivative
assets/
(liabilities)
subject to a
master
netting
agreement
by a
counterparty
Derivatives
available
for offset
Net amount
as per
statement
of financial
position
Non-cash
collateral
given
Cash
collateral
Net amount
of derivative
assets/
(liabilities)
1
Counterparty
£’000
£’000
£’000
£’000
£’000
£’000
At 30 November 2023
JPMorgan
1,758
(1,691)
67
–
(67)
–
Société Générale
827
(191)
636
–
(290)
346
BNP Paribas
764
(2,116)
(1,352)
–
400
(952)
Merrill Lynch
–
(102)
(102)
–
102
–
Total as at 30 November 2023
3,349
(4,100)
(751)
–
145
(606)
At 30 November 2022
JPMorgan
5,537
(960)
4,577
–
(4,160)
417
Société Générale
288
(65)
223
–
(223)
–
BNP Paribas
87
(2,289)
(2,202)
–
(1,130)
(3,332)
Total as at 30 November 2022
5,912
(3,314)
2,598
–
(5,513)
(2,915)
1
Amount represents the net amount receivable/(payable) from/(to) the counterparty in the event of default, and does not include
over-collateralised positions.
(c) Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulties in meeting obligations associated with financial liabilities.
The Company is also exposed to the liquidity risk for margin calls on derivative instruments. At the year end, the Company had
no overdraft facility (2022: nil).
120
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Annual Report and Financial Statements 30 November 2023
16. Risk management policies and procedures
continued
Liquidity risk exposure
The remaining undiscounted gross cash flows of the financial liabilities as at 30 November 2023 and 30 November 2022,
which are payable in the next 90 days, were as follows:
2023
3 months
or less
2022
3 months
or less
£’000
£’000
Amounts due to brokers, accruals and provisions
7,740
2,240
Derivative financial liabilities held at fair value through profit or loss
1,454
2,202
Cash collateral received in respect of derivatives
620
5,870
Bank overdraft
306
–
10,120
10,312
Management of liquidity risk
Liquidity risk is minimised by holding sufficient liquid investments which can be readily realised to meet liquidity demands.
Asset disposals may also be required to meet liquidity needs. However, the timely sale of trading positions can be impaired
by many factors including decreased trading volume and increased price volatility. As a result, the Company may experience
difficulties in disposing of assets to satisfy liquidity demands. Liquidity risk is not significant as the Company’s assets are
investments in listed securities that are readily realisable.
The Company is also exposed to liquidity risks from the leverage employed through exposure to long and short derivative
positions. The underlying securities of the CFD contracts are all quoted investments that can be realised readily. Short
derivative positions are backed by sufficient margin cash to reduce risk. Additional cash is held within the portfolio to further
mitigate risk.
The Company’s liquidity risk is managed on a daily basis by the Investment Manager in accordance with established policies
and procedures in place. The Investment Manager reviews daily forward-looking cash reports which project cash obligations.
These reports allow them to manage their obligations.
For the avoidance of doubt, none of the assets of the Company are subject to special liquidity arrangements.
(d) 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(g) to the Financial Statements on
page 100.
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 or liability.
The fair value hierarchy has the following levels:
Level 1 – Quoted market price for identical instruments in active markets
A financial instrument is regarded as quoted in an active market if quoted prices are readily 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. The Company does not adjust the quoted price for these instruments.
Level 2 – Valuation techniques using observable inputs
This category includes instruments valued using quoted prices for similar instruments in markets that are considered less
than active, or other valuation techniques where all significant inputs are directly or indirectly observable from market data.
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 and relying as little as possible on entity specific inputs.
Notes to the Financial Statements
continued
Section 4: Financial Statements
121
As at the year end the long and short derivative positions were valued using the underlying equity bid price (offer price in
respect of short positions) and the contract price at the inception of the trade or at the trade reset date. There have been no
changes to the valuation technique since the previous year or as at the date of this report.
Contracts for difference have 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.
Level 3 – Valuation techniques using significant unobservable inputs
This category includes all instruments where the valuation technique includes inputs not based on market data and these
inputs could have a significant impact on the instrument’s valuation.
This category also includes instruments that are valued based on quoted prices for similar instruments where significant
entity determined adjustments or assumptions are required to reflect differences between the instruments and instruments
for which there is no active market. 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.
The level in the fair value hierarchy within which 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 including an assessment of the relevant risks including but not limited to credit risk,
market risk, liquidity risk, business risk and sustainability risk. The determination of what constitutes ‘observable’ inputs
requires significant judgement by the Investment Manager and these risks are adequately captured in the assumptions and
inputs used in measurement of Level 3 assets or liabilities.
Fair values of financial assets and financial liabilities
The table below sets out fair value measurements using the IFRS 13 fair value hierarchy.
Financial assets/(liabilities) at fair value through profit
or loss at 30 November 2023
Level 1
Level 2
Level 3
Total
£’000
£’000
£’000
£’000
Assets:
Equity investments
557,594
–
–
557,594
Contracts for difference (fair value)
–
703
–
703
Liabilities:
–
Contracts for difference (fair value)
–
(1,352)
–
(1,352)
Index future
(102)
–
–
(102)
557,492
(649)
–
556,843
Financial assets/(liabilities) at fair value through profit
or loss at 30 November 2022
Level 1
Level 2
Level 3
Total
£’000
£’000
£’000
£’000
Assets:
Equity investments
576,771
–
–
576,771
Contracts for difference (fair value)
–
4,800
–
4,800
Liabilities:
Contracts for difference (fair value)
–
(2,202)
–
(2,202)
576,771
2,598
–
579,369
122
BlackRock Throgmorton Trust plc
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Annual Report and Financial Statements 30 November 2023
16. Risk management policies and procedures
continued
There were no transfers between levels for financial assets and financial liabilities during the year recorded at fair value as at
30 November 2023 and 30 November 2022. The Company did not hold any Level 3 securities throughout the financial year or
as at 30 November 2023 (2022: nil).
For exchange listed equity investments, the quoted price is the bid price. Contracts for difference are valued based on the
bid price of the underlying quoted securities that the contracts relate to. Substantially, all investments are valued based on
unadjusted quoted market prices. Where such quoted prices are readily available in an active market, such prices are not
required to be assessed or adjusted for any price related risks, including climate risk, in accordance with the fair value related
requirements of the Company’s financial reporting framework.
(e) Capital management policies and procedures
The Company’s capital management objectives are:
•
to ensure it will be able to continue as a going concern; and
•
secure long term capital growth and an attractive total return primarily through investing in quoted securities in the UK, as
well as through investment in a portfolio of long and short derivative positions and/or comparable equity derivatives.
This is to be achieved through an appropriate balance of equity capital, investment in derivatives, and gearing. The policy is
that any leverage arising through the Company’s derivative contracts, should not exceed 30% of net assets. Additionally net
gearing (borrowing less cash) should not exceed 20% of net assets.
The Company’s total capital at 30 November 2023 was £575,925,000 (2022: £633,357,000), comprising capital and reserves.
The Board with the assistance of the Investment Manager monitors and reviews the broad structure of the Company’s capital
on an ongoing basis. This review includes:
•
the planned level of gearing, which takes into account the Investment Manager’s view on the market; and
•
the need to buy back equity shares, either for cancellation or to be held in treasury, which takes account of the difference
between the NAV per share and the share price (i.e. the level of share price discount or premium).
The Company is subject to externally imposed capital requirements:
•
as a public company, the Company has a minimum share capital of £50,000; and
•
in order to be able to pay dividends out of profits available for distribution, the Company has to be able to meet one of the
two capital restrictions tests imposed on investment companies by law.
During the year, the Company complied with the externally imposed capital requirements to which it was subject.
17. Related party disclosure
Directors’ emoluments
At the date of this report, the Board consists of six Non-executive Directors, all of whom are considered to be independent of
the Manager by the Board.
Disclosures of the Directors’ interests in the ordinary shares of the Company and fees and expenses payable to the Directors
are set out in the Directors’ Remuneration Report on pages 73 to 76. At 30 November 2023 £18,000 (2022: £17,000) was
outstanding in respect of Directors’ fees.
Notes to the Financial Statements
continued
Section 4: Financial Statements
123
Significant Holdings
The following investors are:
a.
funds managed by the BlackRock Group or are affiliates of BlackRock, Inc. (Related BlackRock Funds) or
b.
investors (other than those listed in (a) above) who held more than 20% of the voting shares in issue in the Company
and are as a result, considered to be related parties to the Company (Significant Investors).
As at 30 November 2023
Total % of shares held by Related
BlackRock Funds
Total % of shares held by Significant
Investors who are not affiliates of
BlackRock Group or BlackRock, Inc.
Number of Significant Investors who
are not affiliates of BlackRock Group or
BlackRock, Inc.
1.34
n/a
n/a
As at 30 November 2022
Total % of shares held by Related
BlackRock Funds
Total % of shares held by Significant
Investors who are not affiliates of
BlackRock Group or BlackRock, Inc.
Number of Significant Investors who
are not affiliates of BlackRock Group or
BlackRock, Inc.
1.84
n/a
n/a
18. Transactions with the Investment Manager and AIFM
BlackRock Fund Managers Limited (BFM) provides management and administration services to the Company under a
contract which is terminable on six months’ notice. 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)). Further
details of the investment management contract are disclosed in the Directors’ Report on pages 56 and 57.
The investment management fee due for the year ended 30 November 2023 amounted to £2,518,000 (2022: £3,025,000). At
the year end, £1,864,000 was outstanding in respect of management fees.
For the year ended 30 November 2023, there was no performance fee payable (2022: £nil). The total accrual of performance
fee for all rolling two year performance periods amounted to £2,014,000 (2022: £nil), calculated as follows:
•
For the annualised rolling two-year performance period to 30 November 2023, the Company has underperformed the
benchmark by 5.9% as at 30 November 2023. No performance fee relating to this performance period has been accrued at
the date of this report.
•
For the annualised rolling two-year performance period to 30 November 2024, the Company has outperformed the
benchmark by 1.9% as at 30 November 2023. A performance fee of £2,014,000 relating to this performance period has
been accrued at the date of this report.
In addition to the above services, BIM (UK) has provided marketing services. The total fees paid or payable for these services
for the year ended 30 November 2023 amounted to £149,000 excluding VAT (2022: £153,000). Marketing fees of £269,000
(2022: £120,000) were outstanding at the year end.
The Company has an investment in the BlackRock Institutional Cash Series plc - Sterling Liquid Environmentally Aware Fund
of £24,328,000 (2022: £58,690,000) which for the year ended 30 November 2023 and 30 November 2022 has been presented
in the financial statements as a cash equivalent.
The ultimate holding company of the Manager and the Investment Manager is BlackRock, Inc., a company incorporated in
Delaware USA.
19. Contingent liabilities
There were no contingent liabilities at 30 November 2023 (2022: none).
126
BlackRock Throgmorton Trust plc
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Annual Report and Financial Statements 30 November 2023
Financial calendar
The timing of the announcement and publication of the Company’s results may normally be expected in the months shown
below:
February
Annual results announced and Annual Report and Financial Statements published
March
Annual General Meeting
April
Final dividend paid
July
Interim figures announced and half yearly financial report published
August
Interim dividend paid
Dividend
The proposed final dividend in respect of the year ended 30 November 2023 is 11.45 pence per share. The Board also declared
an interim dividend of 3.30 pence per share which was paid on 1 September 2023 to shareholders on the register on 4 August
2023.
Dividend timetable
Ordinary shares
Ex-dividend date (shares transferred without the dividend)
22
February 2024
Record date (last date for registering transfers to receive the dividend)
23
February 2024
Dividend payment date
28
March 2024
Payment of dividends
Cash dividends will be sent by cheque to the first-named shareholder at their registered address. Dividends may also be paid
direct into a shareholder’s bank account via BACSTEL-IP (Bankers’ Automated Clearing Service – Telecom Internet Protocol).
This may be arranged by contacting the Company’s registrar, Computershare Investor Services PLC, through their secure
website
www.investorcentre.co.uk
, on 0370 707 4016 or by completing the Mandate Instructions section on the reverse of
your dividend counterfoil and sending this to the Company’s registrar, Computershare. Dividend confirmations will be sent to
shareholders at their registered address, unless other instructions have been given, to arrive on the payment date.
Dividend tax allowance
The annual tax-free allowance on dividend income across an individual’s entire share portfolio reduced to £1,000 from 6 April
2023 and will reduce again to £500 from 6 April 2024. Above this amount, individuals pay tax on their dividend income at a
rate dependent on their income tax bracket and personal circumstances.
The Company continues to provide registered shareholders with confirmation of the dividends paid and this should be
included with any other dividend income received when calculating and reporting total dividend income received. It is a
shareholder’s responsibility to include all dividend income when calculating any tax liability.
If you have any tax queries, please contact a financial advisor.
Dividend reinvestment plan
Shareholders may request that their dividends be used to purchase further shares in the Company. Dividend reinvestment
forms may be obtained from Computershare Investor Services PLC, through their secure website
www.investorcentre.co.uk
, or
on 0370 707 4016. Shareholders who have already opted to have their dividends reinvested do not need to reapply.
Share price
The Company’s mid-market ordinary share price is quoted daily in The Financial Times and The Times under ‘Investment
Companies’ and in The Daily Telegraph under ‘Investment Trusts’. The share price is also available on the BlackRock website at
www.blackrock.com/uk/thrg
.
Shareholder information
Section 5: Additional information
127
ISIN/SEDOL numbers
The ISIN/SEDOL numbers and mnemonic codes for the Company’s shares are:
Ordinary shares
ISIN
GB0008910555
SEDOL
0891055
Reuters
THRG.L
Bloomberg code
THRG:LN
Share dealing
Investors wishing to purchase more shares in the Company or sell all or part of their existing holding may do so through a
stockbroker. Most banks also offer this service. Alternatively, please go to
www.computershare.com/dealing/uk
for a range of
dealing services made available by Computershare.
Internet dealing
– The fee for this service is 1% of the value of the transaction (subject to a minimum of £30).
Telephone dealing
– The fee for this service will be 1% of the value of the transaction (plus £50).
Electronic communications
We encourage you to play your part in reducing our impact on the environment and elect to be notified by email when your
shareholder communications become available online. This means you will receive timely, cost-effective and greener online
annual reports, half yearly financial reports and other relevant documentation.
Shareholders who opt for this service will receive an e-mail from Computershare with a link to the relevant section of the
BlackRock website where the documents can be viewed and downloaded.
Please submit your email address by visiting
www.investorcentre.co.uk/ecomms
(you will need your shareholder reference
number, which is given on your share certificate or dividend confirmation).
You will continue to receive a printed copy of these reports if you have elected to do so. Alternatively, if you have not submitted
your email address nor have elected to receive printed reports, we will write and let you know where you can view these reports
online.
Electronic proxy voting
Shareholders are able to submit their proxy votes electronically via Computershare’s internet site at
www.eproxyappointment.
com
using a unique identification PIN which will be provided with voting instructions and the Notice of Annual General
Meeting.
CREST members who wish to appoint one or more proxies or give an instruction through the CREST electronic proxy
appointment service may do so by using the procedures described in the CREST manual. More details are set out in the notes
on the Form of Proxy and the Notice of Annual General Meeting.
CREST
The Company’s shares may be held in CREST, an electronic system for uncertificated securities trading.
Private investors can continue to retain their share certificates and remain outside the CREST system. Private investors are
able to buy and sell their holdings in the same way as they did prior to the introduction of CREST, although there may be
differences in dealing charges.
128
BlackRock Throgmorton Trust plc
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Annual Report and Financial Statements 30 November 2023
Nominee code
Where shares are held in a nominee company name, the Company undertakes:
•
to provide the nominee company with multiple copies of shareholder communications, so long as an indication of
quantities has been provided in advance; and
•
to allow investors holding shares through a nominee company to attend general meetings, provided the correct authority
from the nominee company is available.
Nominee companies are encouraged to provide the necessary authority to underlying shareholders to attend the Company’s
general meetings.
Publication of net asset value/portfolio analysis
The NAV per share of the Company is calculated daily, with details of the Company’s investments and performance being
published monthly.
The daily NAV and monthly information are released through the London Stock Exchange’s Regulatory News Service and are
available on the BlackRock website at
www.blackrock.com/uk/thrg
and through the Reuters News Service under the code
‘BLRKINDEX’, on page
8800
on Topic 3 (ICV terminals) and under ‘BLRK’ on Bloomberg (monthly information only).
Online access
Other details about the Company are also available on the BlackRock website at
www.blackrock.com/uk/thrg
.
The Financial Statements and other literature are published on the BlackRock website. Visitors to the website need to be aware
that legislation in the United Kingdom governing the preparation and dissemination of the Financial Statements may differ
from legislation in their jurisdiction.
Shareholders can also manage their shareholding online by using Investor Centre, Computershare’s secure website, at
www.investorcentre.co.uk
. To access Computershare’s website, you will need your shareholder reference number (SRN) which
can be found on paper or electronic communications you have previously received from Computershare. Shareholders who
hold a share certificate which has been issued by Capita Registrars should insert a ‘C’ before the shareholder reference
number quoted on the certificate.
Listed below are the most frequently used features of the website.
•
Holding enquiry – view balances, values, history, payments and reinvestments
•
Payments enquiry – view your dividends and other payment types
•
Address change – change your registered address
•
Bank details update – choose to receive your dividend payment directly into your bank account instead of by cheque
•
e-Comms sign
-up – choose to receive e-mail notification when your shareholder communications become available instead
of paper communications
•
Outstanding payments – reissue payments using the online replacement service
•
Downloadable forms – including dividend mandates, stock transfer, dividend reinvestment and change of address forms
Individual savings accounts (ISAs)
ISAs are a tax-efficient method of investment in the UK and the Company’s shares are eligible investments within a stocks and
shares ISA. In the 2023/2024 tax year, investors will be able to invest up to £20,000 in ISAs either as cash or shares.
Shareholder information
continued
Section 5: Additional information
129
Shareholder enquiries
The Company’s registrar is Computershare Investor Services PLC. Certain details relating to your holding can be checked
through the Computershare Investor Centre website. As a security check, specific information needs to be input accurately
to gain access to an individual’s account. This includes the shareholder reference number, available from either the
share certificate, form of proxy or dividend confirmation or other electronic communications previously received from
Computershare. Shareholders who hold a share certificate which has been issued by Capita Registrars should insert a ‘C’
before the shareholder reference number quoted on the certificate.
The address of the Computershare website is
www.investorcentre.co.uk
. Alternatively, please contact the registrar on 0370 707
4016.
Changes of name or address must be notified to the registrar either through Computershare’s website, or in writing to:
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol BS99 6ZZ
General enquiries
Enquiries about the Company should be directed to:
The Company Secretary
BlackRock Throgmorton Trust plc
12 Throgmorton Avenue
London EC2N 2DL
Telephone: 020 7743 3000
Email:
cosec@blackrock.com
130
BlackRock Throgmorton Trust plc
l
Annual Report and Financial Statements 30 November 2023
Analysis of ordinary shareholders
as at 30 November 2023
By type of holder
Number
of shares
2023
Number
of shares
2022
% of total
2023
% of total
2022
Individuals
3,356,536
3,584,913
3.50
5.54
Bank or Nominees
91,954,520
97,015,227
95.87
93.35
Other
603,105
558,724
0.63
1.11
Total
95,914,161
101,158,864
100.00
100.00
Excludes 7,295,703 treasury shares held as at 30 November 2023.
Number
of holders
2023
Number
of holders
2022
% of total
2023
% of total
2022
Individuals
733
766
64.30
59.59
Bank or Nominees
364
366
31.93
37.46
Other
43
44
3.77
2.95
Total
1,140
1,176
100.00
100.00
By size of holding
Number
of shares
2023
Number
of shares
2022
% of total
2023
% of total
2022
1 – 10,000
2,424,264
2,572,450
2.53
2.54
10,001 – 100,000
6,052,389
5,956,406
6.31
5.89
100,001 – 1,000,000
16,597,918
24,673,468
17.30
24.39
1,000,001 – 5,000,000
43,214,548
46,866,431
45.06
46.33
Over 5,000,000
27,625,042
21,090,109
28.80
20.85
Total
95,914,161
101,158,864
100.00
100.00
Excludes 7,295,703 treasury shares held as at 30 November 2023.
Number
of holders
2023
Number
of holders
2022
% of total
2023
% of total
2022
1 – 10,000
858
887
75.20
75.42
10,001 – 100,000
191
193
16.74
16.41
100,001 – 1,000,000
71
75
6.22
6.38
1,000,001 – 5,000,000
17
18
1.49
1.53
Over 5,000,000
4
3
0.35
0.26
Total
1,141
1,176
100.00
100.00
Section 5: Additional information
131
Registered Office
(Registered in England and Wales, No. 00594634)
12 Throgmorton Avenue
London EC2N 2DL
Investment Manager and Company Secretary
BlackRock Investment Management (UK) Limited
1
12 Throgmorton Avenue
London EC2N 2DL
Email:
cosec@blackrock.com
Alternative Investment Fund Manager
2
BlackRock Fund Managers Limited
1
12 Throgmorton Avenue
London EC2N 2DL
Telephone: 020 7743 3000
Banker, Custodian and Depositary
The Bank of New York Mellon (International) Limited
1
160 Queen Victoria Street
London EC4V 4LA
Registrar
Computershare Investor Services PLC
1
The Pavilions
Bridgwater Road
Bristol BS99 6ZZ
Telephone: 0370 707 4016
Independent Auditor
PricewaterhouseCoopers LLP
Atria One
144 Morrison Street
Edinburgh
EH3 8EX
Stockbroker
Stifel Nicolaus Europe Limited
1
150 Cheapside
London EC2V 6ET
Solicitor
Stephenson Harwood LLP
1 Finsbury Circus
London, EC2M 7SH
Management and other service providers
1
Authorised and regulated by the Financial Conduct Authority.
2
BlackRock Fund Managers Limited (BFM) was appointed as the Alternative Investment Fund Manager on 2 July 2014. BlackRock
Investment Management (UK) Limited continues to act as the Investment Manager of the Company under a delegation
agreement with BFM.
132
BlackRock Throgmorton Trust plc
l
Annual Report and Financial Statements 30 November 2023
The below disclosures are made in respect of the remuneration policies of the BlackRock group (“BlackRock”), as they apply
to BlackRock Fund Managers Limited (the “Manager”). The disclosures are made in accordance with the provisions in the
UK implementing the Alternative Investment Fund Managers Directive (the “AIFMD”), the European Commission Delegated
Regulation supplementing the AIFMD (the “Delegated Regulation”) and the “Guidelines on sound remuneration policies under
the AIFMD” issued by the European Securities and Markets Authority.
Quantitative Remuneration Disclosure
The Manager is required to make quantitative disclosures of remuneration in accordance with the AIFMD, the Delegated
Regulation and the FCA FUND Handbook. These disclosures are made in line with BlackRock’s interpretation of currently
available regulatory guidance on quantitative remuneration disclosures. As market or regulatory practice develops BlackRock
may consider it appropriate to make changes to the way in which quantitative remuneration disclosures are calculated. Where
such changes are made, this may result in disclosures in relation to a fund not being comparable to the disclosures made in
the prior year, or in relation to other BlackRock fund disclosures in that same year.
Disclosures are provided in relation to (a) the staff of the Manager; (b) staff who are senior management; and (c) staff who have
the ability to materially affect the risk profile of the Fund, including individuals who, although not directly employed by the
Manager, are assigned by their employer to carry out services directly for the Manager.
All individuals included in the aggregated figures disclosed are rewarded in line with BlackRock’s remuneration policy for their
responsibilities across the relevant BlackRock business area. As all individuals have a number of areas of responsibilities,
only the portion of remuneration for those individuals’ services attributable to the Fund is included in the aggregate figures
disclosed.
Members of staff and senior management of the Manager typically provide both AIFMD and non-AIFMD related services
in respect of multiple funds, clients and functions of the Manager and across the broader BlackRock group. Therefore, the
figures disclosed are a sum of each individual’s portion of remuneration attributable to the Manager according to an objective
apportionment methodology which acknowledges the multiple-service nature of the Manager. Accordingly the figures are not
representative of any individual’s actual remuneration or their remuneration structure.
The amount of the total remuneration awarded by the Manager to its staff which has been attributed to the Manager’s
AIFMD-related business in respect of the Manager’s financial year ending 31 December 2022 is US$194.5 million. This figure
is comprised of fixed remuneration of US$109.3 million and variable remuneration of US$85.2 million. There were a total of
3,790 beneficiaries of the remuneration described above.
The amount of the aggregate remuneration awarded by the Manager, which has been attributed to the Manager’s AIFMD-
related business in respect of the Manager’s financial year ending 31 December 2022, to its senior management was US$21.6
million, and to members of its staff whose actions have a material impact on the risk profile of the Manager’s AIFMD-related
business was US$8.8 million. These figures relate to the entire Manager and not to the Company.
AIFM report on remuneration (unaudited)
Section 5: Additional information
133
Leverage
The Company may employ leverage and borrow cash in accordance with its stated investment policy or investment strategy.
Consistent with its investment objectives and policy, the Company may utilise derivative instruments as part of its investment
policy.
The use of derivatives may expose the Company to a higher degree of risk. In particular, derivative contracts can be highly
volatile, and the amount of initial margin is generally small relative to the size of the contract so that transactions may be
leveraged in terms of market exposure. A relatively small market movement may have a potentially larger impact on derivatives
than on standard underlying bonds or equities. Leveraged derivative positions can therefore increase the Company’s volatility.
The use of borrowings and leverage has attendant risks and can, in certain circumstances, substantially increase the adverse
impact to which the Company’s investment portfolio may be subject. Derivatives were used for leverage purposes during the
year.
For the purposes of this disclosure, leverage is any method by which the Company’s exposure is increased, whether through
borrowing of cash or securities, or leverage embedded in foreign exchange forward contracts or by any other means. The
AIFMD requires that each leverage ratio be expressed as the ratio between a Company’s exposure and its NAV, and prescribes
two required methodologies, the gross methodology and the commitment methodology (as set out in AIFMD Level 2
Implementation Guidance), for calculating such exposure.
Using the methodologies prescribed under the AIFMD, the leverage of the Company is disclosed in the table below:
Derivatives:
Commitment
Leverage
as at
30 November
2023
Gross
Leverage
as at
30 November
2023
Leverage ratio
1.15
1.19
Other risk disclosures
The financial risk disclosures relating to risk framework and liquidity risk are set out in note 16 to the notes to the Financial
Statements on pages
111 to 122
.
Pre-investment disclosures
The AIFMD requires certain information to be made available to investors in AIFs before they invest and requires that material
changes to this information be disclosed in the annual report of each AIF. An Investor Disclosure Document, which sets out
information on the Company’s investment strategy and policies, leverage, risk, liquidity, administration, management, fees,
conflicts of interest and other shareholder information is available on the website at
www.blackrock.com/uk/thrg
.
There have been no material changes (other than those reflected in these Financial Statements) to this information requiring
disclosure. Any information requiring immediate disclosure pursuant to the AIFMD will be disclosed to the London Stock
Exchange through a primary information provider.
In addition, the European Union’s PRIIPs Regulation requires that a key information document (KID) also be made available to
investors before they invest. The PRIIPs compliant KID can also be found on the Company’s website at
www.blackrock.com/uk/
thrg
.
KEVIN MAYGER
For and on behalf of
BlackRock Investment Management (UK) Limited
Company Secretary
2
February 2024
Other AIFMD Disclosures (unaudited)
134
BlackRock Throgmorton Trust plc
l
Annual Report and Financial Statements 30 November 2023
The disclosures below are made in compliance with the requirements of Listing Rule 9.8.4.
9.8.4 (1) The Company has not capitalised any interest in the period under review.
9.8.4 (2) The Company has not published any unaudited financial information in a class 1 circular or prospectus or any profit
forecast or profit estimate.
9.8.4 (3) This provision has been deleted.
9.8.4 (4) The Company does not have any long-term incentive schemes in operation.
9.8.4 (5) and (6) No Director of the Company has waived or agreed to waive any current or future emoluments from the
Company or any subsidiary undertaking.
9.8.4 (7) The Company allotted no ordinary shares during the year.
The Company is a stand-alone entity therefore Listing Rules 9.8.4 (8) and 9.8.4 (9) are not applicable.
9.8.4 (10) There were no contracts of significance subsisting during the period under review to which the Company is a party
and in which a Director of the Company is or was materially interested, or between the Company and a controlling shareholder.
9.8.4 (11) This provision is not applicable to the Company.
9.8.4 (12) and (13) There were no arrangements under which a shareholder has waived or agreed to waive any dividends or
future dividends.
9.8.4 (14) This provision is not applicable to the Company.
KEVIN MAYGER
For and on behalf of
BlackRock Investment Management (UK) Limited
Company Secretary
2
February 2024
Information to be disclosed in accordance
with Listing Rule 9.8.4
Section 5: Additional information
135
Alternative Performance Measure (APM)
An APM is a measure of performance or financial position that is not defined in applicable accounting standards and cannot
be directly derived from the Financial Statements.
The Company’s APMs are set out below and are cross-referenced where relevant to the financial inputs used to derive them as
contained in other sections of the Annual Report.
Benchmark Index
The Company’s Benchmark Index used for performance comparative purposes is the Numis Smaller Companies plus AIM
(excluding Investment Companies) Index.
Benchmark Index outperformance/underperformance is measured by comparing the Company’s net asset value return (NAV)
total return, with the performance of the Benchmark Index on a total return basis.
As at 30 November 2023, the Company’s NAV total return was -2.3% and the total return of the Benchmark Index was -6.0%,
therefore the Company’s NAV outperformance of the Benchmark Index was 3.7 percentage points.
As at 30 November 2023, the Company’s share price return was -0.8% and the total return of the Benchmark Index was -6.0%,
therefore the Company’s share price outperformance of the Benchmark Index was 5.2 percentage points.
Closed-ended company
An investment trust works along the same lines as a unit trust, in that it pools money from investors which is then managed
on a collective basis. The main difference is that an investment trust is a company listed on the Stock Exchange and, in most
cases, trading takes place in shares which have already been issued, rather than through the creation or redemption of units.
As the number of shares which can be issued or cancelled at any one time is limited, and requires the approval of existing
shareholders, investment trusts are known as closed-ended funds or companies. This means that investment trusts are not
subject to the same liquidity constraints as open-ended funds and can therefore invest in less liquid investments.
Contract for difference (CFD)
A contract for difference is an agreement to exchange the difference in value of a particular share or index between the time at
which a contract is opened and the time at which it is closed. A CFD allows an investor to gain access to the movement in the
share price or index by putting down a small amount of cash known as a margin.
CFDs do not have an expiry date like options or futures contracts. As opposed to an expiry date a CFD is effectively renewed at
the close of each trading day and rolled forward if desired.
Discount and premium*
Investment trust shares frequently trade at a discount to NAV. This occurs when the share price (based on the mid-market share
price) is less than the NAV. In this circumstance, the price that an investor pays or receives for a share would be less than the
value attributable to it by reference to the underlying assets. The discount is the difference between the share price and the NAV,
expressed as a percentage of the NAV. As at 30 November 2023, the share price was 579.00p (2022: 595.00p) and the audited
NAV per share was 600.72p (2022: 626.10p), therefore giving a discount of 3.6% (2022: 5.0%) (please see note 9 of the Financial
Statements for the audited inputs to the calculations).
A premium occurs when the share price (based on the mid-market share price) is more than the NAV and investors would
therefore be paying more than the value attributable to the shares by reference to the underlying assets. For example, if the
share price was 370p and the NAV 365p, the premium would be 1.4%.
Discounts and premia are mainly the consequence of supply and demand for the shares on the stock market.
Gearing and borrowings*
The Company may achieve gearing through borrowings or the effect of gearing through an appropriate balance of equity
capital, investment in derivatives and borrowings. The maximum exposure the Company may have to derivatives for
investment purposes and efficient portfolio management purposes, in aggregate, is 120% of the Company’s gross assets. The
Company may use borrowings and enter into derivative transactions that have the effect of gearing the Company’s portfolio to
enhance performance.
Glossary
* Alternative Performance Measure.
136
BlackRock Throgmorton Trust plc
l
Annual Report and Financial Statements 30 November 2023
The Company’s gross and net gearing through the use of long and short CFD positions as at 30 November 2023 and
30 November 2022 is set out in the table below.
Gross and net gearing
Page
30 November
2023
£’000
30 November
2022
£’000
Long investment positions (excluding BlackRock's Institutional Cash Series plc - Sterling
Liquid Environmentally Aware Fund)
27
641,715
676,373
(a)
Short investment positions
27
22,086
15,637
(b)
Gross geared exposure (c = a + b)
663,801
692,010
(c)
Net geared exposure (d = a - b)
27
619,629
660,736
(d)
Net assets
27
575,925
633,357
(e)
Gross gearing % of net assets (f = c/e x 100) %
115.2
109.3
(f)
Net gearing % of net assets (g = d/e x 100) %
107.6
104.3
(g)
Gross and net exposure
Market exposure gained through a CFD contract refers to the gross market value of the underlying securities to which the
investor is exposed through the CFD contract. Gross exposure refers to the total exposure the investor has through both long
and short positions added together. For example, an investor who has 110% long market exposure through CFDs and 20%
short market exposure through CFDs has gross market exposure of 130%.
Net exposure refers to the exposure the investor has through long positions less any short positions. For example, an investor
who has 110% long market exposure through CFDs and 20% short market exposure through CFDs has net market exposure
of 90%; this method of measurement is looking at the net directional market exposure and takes into account the fact that
long and short positions theoretically offset one another when the market moves in a particular direction.
Leverage
Leverage is defined in the AIFMD as “any method by which the AIFM increases the exposure of an AIF it manages whether
through borrowing of cash or securities, or leverage embedded in derivative positions or by any other means”.
Leverage is measured in terms of ‘exposure’ and is expressed as a ratio of net asset value:
Leverage ratio
=
exposure
net asset value
The Directive sets out two methodologies for calculating exposure. These are the Gross Method and the Commitment Method.
The treatment of cash and cash equivalent balances in terms of calculating what constitutes an “exposure” under AIFMD
differs for these two methods. The definitions for calculating the Gross Method exposures require that “the value of any cash
and cash equivalents which are highly liquid investments held in the base currency of the AIF, that are readily convertible to a
known amount of cash, are subject to an insignificant risk of change in value and provide a return no greater than the rate of a
three-month high quality government bond” should be excluded from exposure calculations.
The Commitment Method enables instruments to be netted off to reflect ‘netting’ or ‘hedging’ arrangements and the entity’s
exposure is effectively reduced.
Long and short exposure
CFDs enable an investor to benefit from the price of a stock falling as well as rising. This enables the investor to benefit from
negative as well as positive views on individual stocks.
Entering into a CFD that results in a profit if the share price movement falls, is referred to as taking a short position. The
counterparty pays the investor interest on the cash deposited with it, which collateralises the short positions and deductions
are made from the value of the short CFD contract in respect of dividends payable in relation to these stocks. Entering into a
CFD contract that results in a profit if the share price movement rises, is referred to as taking a long position. The investor pays
a financing charge on long positions and receives payments from the counterparty in respect of dividends payable in relation
to these long positions.
* Alternative Performance Measure.
Glossary
continued
Section 5: Additional information
137
NAV per share (Cum income NAV)
This is the value of the Company’s assets attributable to one ordinary share. It is calculated by dividing ‘total equity’ by the
total number of ordinary shares in issue (excluding treasury shares) as set out in note 9 to the Financial Statements on page
106
for the audited inputs to the calculation. For example, as at 30 November 2023, total equity was £575,925,000 (2022:
£633,357,000) and there were 95,872,161 (2022: 101,158,864) ordinary shares in issue (excluding treasury shares) as set out
in note 9 to the Financial Statements on page
106
for the audited inputs to the calculation; the NAV was therefore 600.72p per
ordinary share (2022: 626.10p).
Total equity is calculated by deducting from the Company’s total assets, its current and long-term liabilities and any provision
for liabilities and charges.
Net asset value (NAV) and share price return (with dividends reinvested)*
Performance statistics enable the investor to make performance comparisons between investment trusts with different
dividend policies. The performance measures the combined effect of any dividends paid, together with the rise or fall in the
share price or NAV. This is calculated by the movement in the share price or NAV plus the dividends paid by the Company
assuming these are reinvested in the Company at the prevailing NAV/Share price (please see note 9 of the financial
statements for the audited inputs to the calculations).
NAV total return
Page
30 November
2023
30 November
2022
Closing NAV per share (pence)
106
600.72
626.10
Add back quarterly dividends (pence)
106
11.80
10.60
Effect of dividend reinvestment (pence)
(0.55)
(1.66)
Adjusted closing NAV (pence)
611.97
635.04
(a)
Opening NAV per share (pence)
106
626.10
921.91
(b)
NAV total return (c = ((a - b)/b)) %
(2.3)
(31.1)
(c)
Share price total return
Page
30 November
2023
30 November
2022
Closing share price (pence)
106
579.00
595.00
Add back quarterly dividends (pence)
106
11.80
10.60
Effect of dividend reinvestment (pence)
(0.54)
(2.11)
Adjusted closing share price (pence)
590.26
603.49
(a)
Opening share price (pence)
106
595.00
935.00
(b)
Share price total return (c = ((a - b)/b)) %
(0.8)
(35.5)
(c)
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. Ongoing charges are based on
costs incurred in the year as being the best estimate of future costs and include the annual management charge.
As recommended by the AIC in its guidance, ongoing charges are calculated using the Company’s annualised revenue and
capital expenses (excluding finance costs, direct transaction costs, custody transaction charges, VAT recovered, taxation, prior
year expenses written back and certain non-recurring items) expressed as a percentage of the average daily net assets of the
Company during the year.
* Alternative Performance Measure.
138
BlackRock Throgmorton Trust plc
l
Annual Report and Financial Statements 30 November 2023
The inputs that have been used to calculate the ongoing charges percentage are set out in the following table:
Ongoing charges calculation
Page
30 November
2023
£’000
30 November
2022
£’000
Management fee
102
2,518
3,025
Other operating expenses
1
104
804
816
Total management fee and other operating expenses
3,322
3,841
(a)
Performance fee
102
2,014
–
(b)
Total management and performance fees and other operating expenses (c = a + b)
5,336
3,841
(c)
Average daily net assets in the year
614,378
710,265
(d)
Ongoing charges in the year excluding performance fees (e = a/d) %
0.54
0.54
(e)
Ongoing charges in the year including performance fees (f = c/d) %
0.87
0.54
(f)
1
Excluding prior year expenses written back during the year and non-recurring expenses of £nil incurred during the year (2022:
£53,000 relating to stock exchange listing fees).
Revenue profit and revenue reserves
Revenue profit is the net revenue income earned after deduction of fees and expenses allocated to the revenue account
and taxation suffered by the Company. Revenue reserves is the undistributed income that the Company keeps as reserves.
Investment trusts do not have to distribute all the income they generate after expenses. They may retain up to 15% of revenue
generated which will be held in a revenue reserve. This reserve can be used at a later date to supplement dividend payments to
shareholders.
Treasury shares
Treasury shares are shares that a company keeps in its own treasury which are not currently issued to the public. These
shares do not pay dividends, have no voting rights and are not included in a company’s total issued share capital amount for
calculating percentage ownership. Treasury stock may have come from a repurchase or buy back from shareholders, or it may
never have been issued to the public in the first place. Treasury shares may be reissued from treasury to the public to meet
demand for a company’s shares in certain circumstances.
Performance attribution
6 months
ended
30 November
2023
Year
ended
30 November
2023
Return on long portfolio
(2.9%)
(2.0%)
Return on short portfolio
0.9%
0.4%
Fees and expenses
(0.6%)
(1.0%)
Accretion from buybacks
0.2%
0.3%
NAV return
(2.4%)
(2.3%)
Benchmark index
(3.6%)
(6.0%)
NAV outperformance of benchmark
1.
3
%
3.70%
Source: BlackRock. Calculations are estimates and data is not audited.
Glossary
continued
* Alternative Performance Measure.
142
BlackRock Throgmorton Trust plc
l
Annual Report and Financial Statements 30 November 2023
Notice is hereby given that the Annual General Meeting of BlackRock Throgmorton Trust plc will be held at the offices
of BlackRock, 12 Throgmorton Avenue, London EC2N 2DL on Tuesday, 19 March 2024 at 12.00 p.m. for the purpose of
considering and, if thought fit, passing the following resolutions (which will be proposed in the case of resolutions 1 to 12, as
ordinary resolutions and, in the case of resolutions 13 to 15, as special resolutions).
Ordinary business
1.
To receive the report of the Directors of the Company and the Financial Statements for the year ended 30 November 2023,
together with the report of the auditor thereon.
2.
To approve the Directors’ Remuneration Report for the year ended 30 November 2023 (excluding any content relating to
the remuneration policy).
3.
To approve a final dividend of 11.45 pence per share.
4.
To re-elect Christopher Samuel as a Director of the Company.
5.
To re-elect Louise Nash as a Director of the Company.
6.
To re-elect Nigel Burton as a Director of the Company.
7.
To re-elect Angela Lane as a Director of the Company.
8.
To re-elect Merryn Somerset Webb as a Director of the Company.
9.
To re-elect Glen Suarez as a Director of the Company.
10.
To re-appoint PricewaterhouseCoopers LLP as Auditor to the Company to hold office until the conclusion of the next
Annual General Meeting of the Company.
11.
To authorise the Audit Committee to determine the Auditor’s remuneration.
Special business
Ordinary resolutions
12.
That, in substitution for all existing authorities, the Directors of the Company be and they are hereby generally and
unconditionally authorised pursuant to Section 551 of the Companies Act 2006 (the Act), to exercise all the powers of the
Company to allot shares in the Company and to grant rights to subscribe for or to convert any security into shares in the
Company up to an aggregate nominal amount of £476,207.46 (being 10% of the aggregate nominal amount of the issued
share capital excluding treasury shares of the Company at the date of this notice) provided that this authority shall expire at
the conclusion of the next Annual General Meeting of the Company to be held in 2025 but so that the Company may, before
such expiry, make any offer or agreement which would or might require relevant securities to be allotted pursuant to any such
offer or agreement as if the authority hereby conferred had not expired.
Special resolutions
13.
That, in substitution for all existing authorities and subject to the passing of resolution 12, the Directors of the Company
be and are hereby empowered pursuant to Sections 570 and 573 of the Companies Act 2006 (the Act) to allot equity
securities (as defined in Section 560 of the Act), and to sell equity securities held by the Company as treasury shares (as
defined in Section 724 of the Act) for cash pursuant to the authority granted by resolution 12, as if Section 561(1) of the
Act did not apply to any such allotments and sales of equity securities, provided that this power:
(a)
shall expire at the conclusion of the next Annual General Meeting of the Company to be held in 2025, except that the
Company may before such expiry make offers or agreements which would or might require equity securities to be
allotted or sold after such expiry and notwithstanding such expiry the Directors may allot and sell equity securities in
pursuance of such offers or agreements;
(b)
shall be limited to the allotment of equity securities and/or sale of equity securities held in treasury for cash up to an
aggregate nominal amount of £476,207.46 (representing 10% of the aggregate nominal amount of the issued share
capital, excluding treasury shares of the Company at the date of this notice); and
Notice of annual general meeting
Section 6: Notice of annual general meeting
143
(c)
shall be limited to the allotment of equity securities and/or the sale of equity securities held in treasury at a price of
not less than the net asset value per share as close as practicable to the allotment or sale.
14.
That, in substitution for the Company’s existing authority to make market purchases of ordinary shares of 5p in the
Company (Shares), the Company be and is hereby authorised in accordance with Section 701 of the Companies Act 2006
(the Act) to make market purchases of Shares (within the meaning of Section 693 of the Act), provided that:
(a)
the maximum number of Shares hereby authorised to be purchased is 14,276,699 (being 14.99% of the Company’s
issued ordinary share capital, excluding treasury shares at the date of this notice);
(b)
the minimum price (exclusive of expenses) which may be paid for a Share shall be 5p being the nominal value per
share;
(c)
the maximum price (exclusive of expenses) which may be paid for a Share shall be the higher of: (i) 5% above the
average of the market value of a Share for the five business days immediately preceding the date of purchase as
derived from the Daily Official List of the London Stock Exchange; and (ii) the higher of the price quoted for (a) the
last independent trade of; and (b) the highest current independent bid for, any number of Shares on the trading venue
where the purchase is carried out; and
(d)
unless renewed, the authority hereby conferred shall expire at the conclusion of the next Annual General Meeting of
the Company to be held in 2025 save that the Company may, prior to such expiry, enter into a contract to purchase
Shares which will or may be completed or executed wholly or partly after such expiry.
All Shares purchased pursuant to the above authority shall be either:
(i)
held, sold, transferred or otherwise dealt with as treasury shares in accordance with the provisions of the Act; or
(ii)
cancelled immediately upon completion of the purchase.
15.
That, the period of notice required for general meetings of the Company (other than Annual General Meetings) shall be not
less than 14 clear days’ notice.
By order of the Board
KEVIN MAYGER
For and on behalf of
BlackRock Investment Management (UK) Limited
Company Secretary
2
February 2024
Registered Office:
12 Throgmorton Avenue
London EC2N 2DL
144
BlackRock Throgmorton Trust plc
l
Annual Report and Financial Statements 30 November 2023
Notes:
1.
A member entitled to attend and vote at the meeting convened by the above Notice is entitled to appoint one or more proxies
to exercise all or any of the rights of the member to attend, speak and vote in his place. A proxy need not be a member of the
Company. If a member appoints more than one proxy to attend the meeting, each proxy must be appointed to exercise the rights
attached to a different share or shares held by the member.
2.
To appoint a proxy, you may use the form of proxy enclosed with this annual report. To be valid, the form of proxy, together with
the power of attorney or other authority (if any) under which it is signed or a notarially certified or office copy of the same, must
be completed and returned to the office of the Company’s registrar in accordance with the instructions printed thereon as soon
as possible and in any event by not later than 12.00 p.m. on 15 March 2024. Amended instructions must also be received by the
Company’s registrar by the deadline for receipt of forms of proxy. Alternatively, you can vote or appoint a proxy electronically by
visiting
www.eproxyappointment.com
. You will be asked to enter the Control Number, the Shareholder Reference Number and PIN
which are printed on the form of proxy. The latest time for the submission of proxy votes electronically is 12.00 p.m. on 15 March
2024.
3.
Proxymity Voting – if you are an institutional investor you may also be able to appoint a proxy electronically via the Proxymity
platform, a process which has been agreed by the Company and approved by the Registrar. For further information regarding
Proxymity, please go to www. proxymity.io. Your proxy must be lodged by 12.00 p.m. on 15 March 2024 in order to be considered
valid. Before you can appoint a proxy via this process you will need to have agreed to Proxymity’s associated terms and conditions.
It is important that you read these carefully as you will be bound by them and they will govern the electronic appointment of your
proxy.
4.
Completion and return of the form of proxy will not prevent you from attending the meeting and voting in person. If you have
appointed a proxy and attend the meeting in person, your proxy appointment will be automatically terminated.
5.
Any person receiving a copy of this Notice as a person nominated by a member to enjoy information rights under Section 146
of the Companies Act 2006 (a Nominated Person) should note that the provisions in Notes 1 and 2 above concerning the
appointment of a proxy or proxies to attend the meeting in place of a member, do not apply to a Nominated Person as only ordinary
shareholders have the right to appoint a proxy. However, a Nominated Person may have a right under an agreement between the
Nominated Person and the member by whom he or she was nominated to be appointed, or to have someone else appointed, as
proxy for the meeting. If a Nominated Person has no such proxy appointment right or does not wish to exercise it, he/she may have
a right under such agreement to give instructions to the member as to the exercise of voting rights at the meeting.
6.
Nominated Persons should also remember that their main point of contact in terms of their investment in the Company remains
the member who nominated the Nominated Person to enjoy the information rights (or perhaps the custodian or broker who
administers the investment on their behalf). Nominated Persons should continue to contact that member, custodian or broker
(and not the Company) regarding any changes or queries relating to the Nominated Person’s personal details and interest in the
Company (including any administrative matter). The only exception to this is where the Company expressly requests a response
from the Nominated Person.
7.
Only shareholders registered in the register of members of the Company by not later than 6.00 p.m. two days prior to the time
fixed for the meeting shall be entitled to attend and vote at the meeting in respect of the number of the ordinary shares registered
in their name at such time. If the meeting is adjourned, the time by which a person must be entered on the register of members
of the Company in order to have the right to attend and vote at the adjourned meeting is 6.00 p.m. two days prior to the time of
adjournment. Changes to the register of members after the relevant times shall be disregarded in determining the rights of any
person to attend and vote at the meeting.
8.
In the case of joint holders, the vote of the senior holder who tenders a vote, whether in person or by proxy, shall be accepted to the
exclusion of the votes of the other joint holders and, for this purpose, seniority will be determined by the order in which the names
stand in the register of members of the Company in respect of the relevant joint holding.
9.
Shareholders who hold their ordinary shares electronically may submit their votes through CREST, by submitting the appropriate
and authenticated CREST message so as to be received by the Company’s registrar not later than 48 hours before the start of
the meeting. Instructions on how to vote through CREST can be found by accessing the following website:
www.euroclear.com/
CREST
. Shareholders are advised that CREST and the internet are the only methods by which completed proxies can be submitted
electronically.
10. If you are a CREST system user (including a CREST personal member) you can appoint one or more proxies or give an instruction
to a proxy by having an appropriate CREST message transmitted. To appoint one or more proxies or to give an instruction to a
proxy (whether previously appointed or otherwise) via the CREST system, CREST messages must be received by Computershare
(ID number 3RA50) not later than 48 hours before the time appointed for holding the meeting. For this purpose, the time of receipt
will be taken to be the time (as determined by the timestamp generated by the CREST system) from which Computershare is able
to retrieve the message. CREST personal members or other CREST sponsored members should contact their CREST sponsor
for assistance with appointing proxies via CREST. For further information on CREST procedures, limitations and system timings
please refer to the CREST manual. The Company may treat as invalid a proxy appointment sent by CREST in the circumstances set
out in Regulation 35(5)(a) of The Uncertificated Securities Regulations 2001.
Notice of annual general meeting
continued
Section 6: Notice of annual general meeting
145
11. If the Chairman, as a result of a proxy appointment, is given discretion as to how the votes subject of those proxies are cast and
voting rights in respect of those discretionary proxies, when added to the interest in the Company’s securities already held by the
Chairman, result in the Chairman holding such number of voting rights that he has a notifiable obligation under the Disclosure
Guidance and Transparency Rules, the Chairman will make the necessary notifications to the Company and the Financial
Conduct Authority. As a result, any member holding 3% or more of the voting rights in the Company, who grants the Chairman
a discretionary proxy in respect of some or all of those voting rights and so would otherwise have a notification obligation under
the Disclosure Guidance and Transparency Rules, need not make a separate notification to the Company and Financial Conduct
Authority.
12. Any questions relevant to the business of the meeting may be asked at the meeting by anyone permitted to speak at the meeting.
A shareholder may alternatively submit a question in advance by a letter addressed to the Company Secretary at the Company’s
registered office. Under Section 319A of the Companies Act 2006, the Company must answer any question a shareholder asks
relating to the business being dealt with at the meeting, unless (i) answering the question would interfere unduly with the
preparation for the meeting or involve the disclosure of confidential information; (ii) the answer had already been given on a
website in the form of an answer to a question; or (iii) it is undesirable in the interests of the Company or the good order of the
meeting that the question be answered.
13. Any corporation which is a member can appoint one or more corporate representatives who may exercise on its behalf all of its
powers as a member provided that, if it is appointing more than one corporate representative, it does not do so in relation to the
same shares. It is therefore no longer necessary to nominate a designated corporate representative.
14. Under Section 527 of the Companies Act 2006, members meeting the threshold requirements set out in that section have the right
to require the Company to publish on a website a statement setting out any matter relating to:
(i)
the audit of the Company’s Financial Statements (including the auditor’s report and the conduct of the audit) that are to be
laid before the meeting; or
(ii)
any circumstance connected with an auditor of the Company ceasing to hold office since the previous meeting at which
annual financial statements and reports were laid in accordance with Section 437 of the Companies Act 2006.
The Company may not require the members requesting any such website publication to pay its expenses in complying with
Sections 527 or 528 of the Companies Act 2006. Where the Company is required to place a statement on a website under Section
527 of the Companies Act 2006, it must forward the statement to the Company’s auditors not later than the time when it makes
the statement available on the website. The business which may be dealt with at the meeting includes any statement that the
Company has been required under Section 527 of the Companies Act 2006 to publish on a website.
15. Under Sections 338 and 338A of the Act, members meeting the threshold requirements in those sections have the right to require
the Company:
(i)
to give, to members of the Company entitled to receive notice of the meeting, notice of a resolution which may properly be
moved and is intended to be moved at the meeting; and/or
(ii)
to include in the business to be dealt with at the meeting any matter (other than a proposed resolution) which may be
properly included in the business.
A resolution may properly be moved, or a matter may properly be included in the business unless:
(a)
(in the case of a resolution only) it would, if passed, be ineffective (whether by reason of inconsistency with any enactment or
the Company’s constitution or otherwise);
(b)
it is defamatory of any person; or
(c)
it is frivolous or vexatious.
Such a request may be in hard copy form or in electronic form, and must identify the resolution of which notice is to be given or the
matter to be included in the business, must be authorised by the person or persons making it, must be received by the Company
not later than 6 February 2024, being the date six weeks clear before the meeting and (in the case of a matter to be included in the
business only) must be accompanied by a statement setting out the grounds for the request.
16. As at 2 February 2024 (being the last practicable date prior to the publication of this Notice of Annual General Meeting), the
Company’s issued share capital consisted of 95,2
4
1,492 ordinary shares of 5p each, excluding shares held in treasury. Each
ordinary share carries the right to one vote and therefore the total voting rights in the Company as at 2 February 2024 are
95,2
4
1,492.
17. Further information regarding the meeting which the Company is required by Section 311A of the Companies Act 2006 to publish
on a website in advance of the meeting, can be accessed at
www.blackrock.com/uk/thrg
.
18. No service contracts exist between the Company and any of the Directors, who hold office in accordance with letters of
appointment and the Articles of Association.
Be ScamSmart
Investment scams are designed
to look like genuine investments
Spot the warning signs
Have you been:
•
contacted out of the blue
•
promised tempting returns and told the investment is safe
•
called repeatedly, or
•
told the offer is only available for a limited time?
If so, you might have been contacted by fraudsters.
Avoid investment fraud
Reject cold calls
Check the FCA Warning List
Get impartial advice
you hand over any money. Seek advice from someone
Report a scam
Find out more at
www.fca.org.uk/scamsmart
1
2
3
Remember: if it sounds too good to
be true, it probably is!
The FCA Warning List is a list of firms and individuals we
know are operating without our authorisation.
If you’ve received unsolicited contact about an investment
opportunity, chances are it’s a high risk investment or a
scam. You should treat the call with extreme caution.
The safest thing to do is to hang up.
If you suspect that you have been approached by
fraudsters please tell the FCA using the reporting form at
www.fca.org.uk/consumers
. You can also call the
FCA Consumer Helpline on
0800 111 6768
If you have lost money to investment fraud, you should
report it to Action Fraud on 0300 123 2040 or online at
www.actionfraud.police.uk
SGN001
Share fraud warning
146
BlackRock Throgmorton Trust plc
l
Annual Report and Financial Statements 30 November 2023
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