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Framlington Inn.Gwth (FIT)

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Wednesday 18 November, 2009

Framlington Inn.Gwth

Interim Management Statement

Framlington Innovative Growth Trust PLC

First interim management statement for the year ending 30 June 2010

To the members of Framlington Innovative Growth Trust PLC

This is the Company's first interim management statement for the year ending 30
June 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.


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. As at 30 June 2009, the Index included companies with a market
capitalisation of between approximately £20 million and £310 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.


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
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 30 September 2009

                                30 September 2009   30 June 2009              %
Net asset value per share                 344.42p        294.29p           17.0
(investments at bid value,                                                     
including current year                                                         
Net asset value per share                  341.80        279.32p           22.4
(investments at bid value,                                                     
excluding current year                                                         
Share price                               269.00p        235.00p           14.5
FTSE SmallCap (ex investment              2535.00        1891.40           34.0
companies) index                                                               
Net assets                          £89.1 million  £73.2 million           21.6

Fund manager commentary

The first quarter of this current year saw our benchmark index rise 34%. Over
the same period the Trust's net asset value (including current year revenue)
increased by 17% after providing for the final and special dividends for the
year ended 30 June 2009, totalling 13.75 pence per share.

I commented in my report in the annual accounts that the shortfall in
performance against the Index during the year to 30 June 2009 arose from sharp
increases in the values of investments that the Trust did not wish to hold,
being typically highly leveraged and high risk companies which fell out of the
FTSE 250 Index in March into our Index. Whilst many of these stocks returned to
the FTSE 250 again in September 2009 our relative performance continued to be
affected adversely in the first three months of the current financial year by
further sharp increases in their values.

On the broader front it would appear that economic recovery is underway and
investors have become less risk averse. Much of the Government's fiscal
stimulus is still taking effect and company earnings forecasts are being
upgraded as modest increases in demand are adding to the benefits from earlier
cost cutting.

The question that has to be raised is whether markets have run too fast. Across
the UK markets the proportion of stocks trading above their 50 day and 200 day
moving average price (often used as a measure of whether markets are
overbought) is at the highest level since early 2005. However, with valuations
of more stable stocks lagging behind those of riskier ones we should expect a
rotation into the kind of better quality stocks held in our portfolio if the
rally continues. Our portfolio should also prove resilient if the rally has a
pause or encounters a setback.

Looking forward any easing in credit conditions is supportive for smaller
companies and improving UK economic news will help their longer-term future.

Ten largest holdings at 30 September 2009

                                            Value at       % of    
                                            30.09.09   portfolio at
Synergy Healthcare                           5,076         5.52    
Cranswick                                    4,387         4.77    
Air Partner                                  4,165         4.53    
Hill & Smith Holdings                        3,900         4.24    
UMECO                                        3,450         3.75    
Braemar Shipping Services                    3,272         3.56    
Craneware                                    3,068         3.34    
Clarke (T)                                   2,990         3.25    
NCC Group                                    2,975         3.24    
Advanced Medical Solutions Group             2,850         3.10    

Sector allocation at 30 September 2009

Oil & Gas                                           3.1
Basic materials                                     0.1
Industrials                                        36.9
Consumer goods                                      7.3
Health care                                        10.6
Consumer services                                  18.7
Financials                                          8.7
Technology                                         14.6

Material events and transactions

The annual general meeting was held on 29 October 2009. All the resolutions set
out in the notice of Annual General Meeting dated 23 September 2009 were passed
at the meeting, including special resolutions authorising the Company to allot
securities and make market purchases of its Ordinary Shares.

The Chairman announced at the Annual General Meeting that Brian Watson, the
Manager of Framlington Innovative Growth Trust PLC, had informed the Board that
he intended to retire by 30 June 2010. The Chairman announced that that the
Board was undertaking a review of the Company's management arrangements with
AXA Framlington and expected to complete this process by early 2010.

The Trust has bought back 255,000 shares since 30 June 2009. The Company's
issued share capital is 24,633,001 ordinary shares of 25 pence each.

A final dividend of 6.25 pence per share and a special dividend of 7.50 pence
per share for the year ended 30 June 2009 were paid on 4 November 2009 to
shareholders on the register on 2 October 2009, following approval by
shareholders at the annual general meeting.

There have not been any other material events or transactions during the period
1 July 2009 to the date of publication of this statement.

Company information

Year end: 30 June

Results: interim results to 31 December 2009 announced February 2010; final
results to 30 June 2010 announced September 2010

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

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

18 November 2009


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