Interim Management Statement
19 Mai 2010 - 7:18PM
UK Regulatory
TIDMFIT
Framlington Innovative Growth Trust PLC
Second interim management statement for the year ending 30 June 2010
To the members of Framlington Innovative Growth Trust PLC
This is the Company's second interim management statement for the year ending
30 June 2010 and covers the period to 31 March 2010. This statement has been
produced to comply with the requirements of the Disclosure and Transparency
Rules issued by the UKLA and should not be relied upon by any other party or
for any other purpose.
Investment objective
The objective of the Company is to produce long term capital growth through
investment in a portfolio of growth companies based in or predominantly trading
in the UK. These companies generally demonstrate a willingness and ability to
embrace new and evolving technologies and take advantage of social, political
and cultural trends in the economy. The shares of these companies will usually
be either listed on the London Stock Exchange or dealt in on AIM with a market
capitalisation at the time of purchase, in most cases, less than that of the
median company in the FTSE SmallCap (excluding Investment Companies) index.
Benchmark
The performance of the Company is measured by reference to the FTSE SmallCap
(excluding Investment Companies) Index (the "Index").
Investment Policy
The Company will normally invest in companies with a market capitalisation at
the time of purchase, in most cases, less than that of the median company in
the Index. The Index includes companies with a market capitalisation of between
approximately GBP50 million and GBP450 million.
There are risks of investing in smaller companies which are mitigated by
investment in a diversified portfolio of companies covering a range of sectors
and by the Manager's careful stock selection. There are no restrictions on the
sectors in which the Company may invest. In normal circumstances, the portfolio
will usually comprise at least 50 stocks in a range of sectors.
The statutory maximum amount which may be invested in any one company is 15% of
the Company's investments but in normal circumstances, a holding in one company
would not represent more than 5% of the Company's investments, measured as at
the date of purchase of an investment.
The Company may not invest more than 10%, in aggregate, of the value of its
total assets in other listed closed-ended investment funds except in the case
of investment in closed-ended investment funds which themselves have published
investment policies to invest no more than 15% of their total assets in other
listed closed-ended investment funds, in which case the limit is 15%.
Investment Philosophy and Process
The underlying investment philosophy of the Manager is Growth at a Reasonable
Price (GARP). As a result, the portfolio will typically have a growth bias,
although the emphasis will vary over time. In seeking growth, the Manager
invests in companies expected to produce above average growth in earnings and
cash returns on invested capital. In order to assess a company's growth
prospects, the Manager looks at the quality of its management and financial
position, the industry in which it operates and its competitive position.
However, buying companies with good growth prospects can only be profitable if
the current price does not already reflect those prospects. The Manager's
research efforts are directed towards fully understanding a company and its
markets, and use is made of a full matrix of valuations methods to ensure that
we do not overpay for growth.
As an active investor, the Manager believes effective stock selection is key to
successful investment management. The investment process, in support of this,
focuses primarily on bottom-up fundamental analysis, combining in-house
analysis, company meetings and external research.
Gearing
The Company's articles allow borrowings up to an amount equal to one half of
the aggregate of the amount paid up on the issued share capital for the time
being and the amounts standing to the credit of the reserves of the Company. In
normal circumstances, the directors would expect the Company to be fairly fully
invested but it may, when the directors consider it appropriate, hold cash of
up to 25% or be geared up to 25% of total assets.
Capital structure
The Company has one class of share capital: ordinary shares of 25 pence each.
Financial position
NAV and total assets at 31 March 2010
31 March 2010 31 December % increase/
2009
(decrease)
Net asset value per share 340.17p 334.59p 1.7
(investments at bid value,
including current year
revenue)
Share price 279.50p 262.00p 6.7
FTSE SmallCap (ex investment 2354.10 2327.90 1.1
companies) index
Net assets GBP83.4 million GBP82.0 million 1.7
The share price was 297p at 18 May 2010.
Fund manager commentary
The third quarter of the year saw a market rise in our benchmark index of 1.1%.
This rise lagged the broader market which was supported by increasing evidence
that the pace of economic recovery was accelerating. Within the small cap
market there were rises for internationally orientated companies while those
with domestic bias were generally under some pressure. The harsh winter
impacted some of the businesses in the short term.
The Trust's performance was broadly in line with the index during the quarter.
In the main the positive influences on performance were internationally
orientated with Umeco leading the way as prospects for the aerospace industry
improved. Advanced Medical Solutions were subject to a bid approach which was
turned down. Air Partner was weak for the second quarter in a row with a
reduction in profitability and the retirement of the well respected chief
executive weighing heavily on the shares. If the world economy continues to
recover, their fortunes should improve. Intec Telecom Systems saw delays in
contract awards and increased pressure on prices.
The crisis in Greece has led to a shake out in markets as the strains of
monetary union without political union become clear. The data on industrial
production around the world continues to improve rapidly and this will lead to
further upgrades to some forecasts. There is likely to be a pick up in takeover
activity as companies seek to strengthen their market positions now there is
more stability in economies. Gearing has been largely eliminated due to the
overbought position of the market.
Ten largest holdings at 31 March 2010
Value at % of
31.03.10 portfolio
at
GBP000s 31.03.10
Cranswick 4,266 4.84
UMECO 4,148 4.71
Craneware 3,676 4.17
Synergy Health 3,606 4.09
Advanced Medical Solutions Group 3,562 4.04
Clarke (T.) 3,467 3.94
Hill & Smith Holdings 3,417 3.88
Braemar Shipping Services 3,129 3.55
SDL 2,912 3.31
Aveva Group 2,837 3.22
Sector allocation at 31 March 2010
%
Oil & Gas 4.3
Basic materials 6.0
Industrials 29.2
Consumer goods 7.4
Health care 9.7
Consumer services 15.7
Telecommunications 0.0
Financials 8.2
Technology 19.5
Material events and transactions
On 20 January 2010, the Board announced the completion of its review of the
Trust's management arrangements. The full text of the announcement can be read
on the Trust's website www.figt.co.uk
Following his retirement from AXA Framlington in February 2010, Brian Watson
resigned as director of the Company on 24 February 2010.
In the period since 31 December 2009, the Trust has not bought back any of its
ordinary shares. The Trust's issued share capital at the date of this
announcement is 24,507,001 ordinary shares of 25 pence each.
There have not been any other material events or transactions during the period
1 January 2010 to the date of publication of this statement.
Triennial Performance Review
The Articles of Association require that the performance of the Company shall
be compared with its benchmark index on a triennial basis and if the Company
has not outperformed over the three year period the Board has to put a
continuation vote and additionally give any shareholders who wish to exit an
opportunity to receive cash for some or all of their holdings. The next
triennial review is at 30 June 2010 being the date of the current financial
year end.
If the performance target is met, and therefore no continuation vote is
triggered, it is the Board's intention to propose a partial tender offer in
July 2010 to shareholders who were on the register on 25 January this year.
At 18 May 2010, the Trust's net asset value per share (capital only) stood at
342.14 pence, a decrease of 40.2% since 30 June 2007. This compares with 39.7%
decrease within the benchmark index. However, the Articles of Association
require that the net asset value per share for the purposes of this comparison
with benchmark shall exclude any uplifts from share buybacks that have taken
place during the three year period. Consequently, the underperformance against
benchmark for the purposes of triggering the continuation vote or not is
therefore approximately 3.5% at this date.
Company information
Year end: 30 June
Results: final results to 30 June 2010 announced September 2010
interim results to 31 December 2010 announced February 2011
Dividend: Final dividend for year ending 30 June 2010 paid November 2010
Further information on the Company, including the annual report and accounts
for the year ended 30 June 2009, is available from the Company's website
www.figt.co.uk
All performance data source: AXA Framlington and Lipper. Past performance is
not a guide to future returns.
By order of the board
AXA Investment Managers UK Limited
Company Secretary to Framlington Innovative Growth Trust PLC
19 May 2010
END
Framlington (LSE:FIT)
Graphique Historique de l'Action
De Avr 2024 à Mai 2024
Framlington (LSE:FIT)
Graphique Historique de l'Action
De Mai 2023 à Mai 2024
