Triennial performance review and proposals


 
TIDMFIT 
 
FRAMLINGTON INNOVATIVE GROWTH TRUST PLC: TRIENNIAL PERFORMANCE REVIEW AND 
                                   PROPOSALS 
 
Performance 
 
In the six months since 31 December 2009, when George Luckraft assumed the 
responsibility for the investment management of the Company, it has achieved an 
increase in net asset value per share of approximately 3.8 per cent. This 
compares favourably with a decrease in the Company's benchmark index, the FTSE 
SmallCap (ex Investment Companies) Index (the "Benchmark"), of 5.3 per cent 
over the same period. 
 
For the purposes of the triennial performance review to 30 June 2010, this 
recent improvement in investment performance has been good enough to overcome 
the Company's earlier shortfall in performance, measured against the Benchmark. 
The investment underperformance largely occurred during the year to 30 June 
2009. At the time of the interim results announcement in February 2010, the 
Company was approximately 8 per cent behind the Benchmark on the basis set out 
in the Company's articles of association and at 30 June 2010 the Company was 
approximately 2 per cent ahead of the Benchmark. 
 
Over its life since 1992, the Company has outperformed the Benchmark in 16 out 
of 18 years. 
 
Background 
 
Following a review of the Company's situation, in January 2010 the Board gave a 
commitment that, if the Company achieved its triennial performance target (thus 
not requiring a continuation vote to be put to the Company's annual general 
meeting), the Board would, nevertheless, propose a tender offer in July 2010 
which would provide shareholders, on the register at close of business on 25 
January 2010, with an opportunity to realise their investment in the Company. 
 
Accordingly, in line with this commitment announced in January 2010, the Board 
is proposing to put forward a tender offer in the near future. The Board 
considers that a tender offer of up to 50 per cent of the Company's issued 
share capital will be sufficient to enable those who want to realise their 
shares for cash to be able to do so and will apply a 5 per cent discount to the 
Realisation Value of the shares tendered. 
 
If the Company had failed to meet its performance target, the Company would 
have put forward reconstruction proposals, including a full cash exit and 
rollover options. If the tender offer is oversubscribed the Board will 
reconstruct the Company offering a full cash exit for those who want to exit 
and an open ended rollover option for those wishing to stay invested. 
 
Proposed changes to the Company 
 
Apart from approval for the tender offer, the Board is also seeking shareholder 
approval for a change in investment policy. This will permit the Company to 
invest more generally across the full range of Benchmark constituents and with 
the aim of achieving a portfolio yield of greater than 110 per cent of the 
Benchmark yield. As at 30 June the Benchmark included companies with market 
capitalisations up to GBP322.4 million and had a yield of 3.64 per cent. 
 
Since 1 January 2010, the basic management fee, which includes company 
secretarial and administration services, has been calculated quarterly based on 
market capitalisation at a rate of 0.2 per cent per quarter (compared to a 
previous fee base of 0.2 per cent per quarter on total assets less current 
liabilities). 
 
After 30 June 2010, the triennial performance fee will be capped at three per 
cent of the Company's average net assets for each preceding three year period. 
Previously the performance fees were uncapped until January 2010 when a cap was 
volunteered by AXA Framlington for the three years ended 30 June 2010. It is 
not expected that any performance fee will be payable for that period. 
 
Circular to Shareholders 
 
The Board expects to post a circular to shareholders in early August containing 
details of the proposed tender offer and including the notice convening the 
general meeting at which the resolutions required to approve the tender offer, 
and the reconstruction proposals if the tender offer is oversubscribed, will be 
proposed. The circular will also include the detail of the other proposals set 
out in the Company's announcement of 20 January 2010 relating to the 
introduction of a simple triennial continuation vote, the adoption of a higher 
income and more flexible investment policy and the introduction of new 
performance fee arrangements. 
 
Dividend 
 
The final dividend for the year ended 30 June 2010 would normally be paid in 
November 2010. However, in light of the tender offer proposal, the Board would 
intend to pay an interim dividend in conjunction with the tender offer 
arrangements, details of which will be included in the circular to 
shareholders. 
 
12 July 2010 
 
Enquiries 
 
George Luckraft 020 7374 4100 
AXA Framlington 
 
Robin Archibald 020 3100 0290 
Winterflood Investment Trusts 
 
 
 
END
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