Interim Management Statement

 
TIDMFAME 
 
Framlington AIM VCT PLC 
 
First interim management statement for the year ending 30 September 2012 
 
To the members of Framlington AIM VCT PLC 
 
This is the Company's first interim management statement for the year ending 30 
September 2012 and covers the period to 31 December 2011. 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. 
 
Change of Manager, change of investment policy and continuation vote 
 
As announced on 31 January 2012 and explained in more detail in the Report and 
Accounts for the year ended 30 September 2011, the Board has, given the 
disappointing performance of the AIM market, been considering for some time a 
new strategic direction for the Company. Experience over the last few years has 
shown that AIM is not necessarily the best place for VCT funds with VCTs 
specialising in unquoted investments in general having offered better returns. 
 
The Board has, therefore, decided to change the manager of the Company to a 
manager that specialises in managing both AIM and unquoted investments and has 
decided to appoint Downing LLP as the new Manager of the Company. The 
appointment of Downing LLP is currently expected to be effective from 1 March 
2012. Downing has agreed to manage the Company for a lower annual fee of 1.8%, 
and to institute a lower overall cost cap of 3%, which is one of the lowest in 
the VCT industry. Following this appointment, the name of the Company will be 
changed to Downing Income VCT 4 PLC. 
 
Downing will, over time, transfer around half of the qualifying investments 
into unquoted companies which have the ability to generate attractive returns. 
It will in the process manage a careful selling programme of a number of the 
Company's AIM stocks and will focus upon the AIM stocks where it believes there 
is the most opportunity for upside. This change of strategy will reduce the 
Company's exposure to the AIM market, which has been volatile, and broaden the 
investments in the portfolio to include private equity backed businesses. A 
resolution to amend the Company's investment policy to reflect this change of 
strategy will be put to shareholders at the forthcoming Annual General Meeting 
which will be held on 13 March 2012. 
 
The Company's Articles of Association require the Board to propose an ordinary 
resolution at the AGM to be held in 2012 to the effect that the Company shall 
continue in being as a venture capital trust. Accordingly, a resolution to this 
effect is included in the notice of AGM which is included in the Report and 
Accounts for the year ended 30 September 2011. 
 
Investment objective 
 
The Company's current investment objective is to achieve long term capital 
growth primarily through investment in a diversified portfolio of qualifying 
companies quoted on AIM. It is expected that realised capital gains, along with 
income, will be returned to shareholders, at the discretion of the Directors, 
through the payment of dividends. The Investment Manager may also invest the 
assets of the Company in companies traded on the PLUS Market trading facility 
and in unquoted stocks, although this is not currently expected to be 
significant. 
 
The majority of the Company's investments will be in newly issued shares, as it 
is a VCT requirement that 70% of the funds raised pursuant to the offer be 
invested in new issues of shares that qualify as qualifying holdings within 
three years of the share issue. The Company had to achieve this requirement by 
30 September 2007 and now has to comply on an on-going basis. 
 
Qualifying holdings are defined as holdings of shares or securities in unquoted 
(including AIM and PLUS Market companies) whose purpose is to carry on a 
qualifying trade wholly or mainly in the UK. Sectors that are excluded include 
property, financial services and commodities. Companies must not be controlled 
by the VCT or any other company. At the end of three years, up to 30% of a 
VCT's assets can be invested in non-qualifying investments such as bank 
deposits, gilts and fixed interest stock. At least 30% of the VCT's qualifying 
holdings must be ordinary shares with no preferential rights. The remainder can 
be in loans of at least five years' duration, or preference shares. 
 
The size of companies in which the Company may invest is limited by the VCT 
rules. Qualifying holdings, as defined above, must have gross assets of GBP15 
million or less immediately prior to investment and GBP16 million or less 
immediately after investment. Although the companies in which the Company 
invests are small, the risk that this entails is mitigated by the 
diversification of holdings which results from the requirement to invest 70% of 
funds raised in qualifying holdings. 
 
The maximum exposure to any one stock or group, other than another VCT, is 15% 
of the Company's investments. 
 
The Company's borrowings must be restricted to an amount which is less than 10% 
of the Company's issued share capital and reserves. 
 
As noted above, a resolution to amend the Company's investment policy will be 
put to shareholders at the forthcoming AGM. The first paragraph of the current 
investment policy, as set out above, will be amended to read as follows, the 
remaining paragraphs being unchanged: 
 
"The Company's investment objective is to achieve long term capital growth 
primarily through investment in a diversified portfolio of qualifying 
companies. It is expected that realised capital gains, along with income, will 
be returned to shareholders, at the discretion of the Directors, through the 
payment of dividends. The Investment Manager may invest the assets of the 
Company in companies that are either quoted on AIM or traded on the PLUS Market 
trading facility or in unquoted stocks." 
 
Capital structure 
 
The Company has one class of share capital: ordinary shares of 10 pence each. 
The Company's issued share capital at the date of this announcement is 
21,405,778 ordinary shares of 10 pence each. 
 
Material events and transactions 
 
During the period to 31 December 2011, a further GBP253,000 was invested in 
qualifying holdings, adding to existing holdings in a number of AIM quoted 
qualifying companies which were raising additional capital to fund acquisitions 
or for working capital purposes. These included Byotrol, Cyan, Hightex, 
Photonstar LED, Porta Communications and Wheelsure. GBP242,000 was raised through 
the disposal of investments, mainly as a result of profit taking in Angle, 
Craneware and Brooks McDonald, which are the Company's largest holdings. 
 
A final capital dividend for the year ended 30 September 2011, totalling 2.50 
pence per share, will be paid on 20 March 2012 to shareholders on the register 
on 24 February 2012, following approval by shareholders at the annual general 
meeting on 13 March 2012. 
 
NAV and total assets at 31 December 2011 
 
                               31 December 2011 30 September 2011 (Decrease) 
                                                                  / increase 
 
                                                                  % 
 
Net asset value per share           38.81 pence       41.82 pence      (7.2) 
 
(investments at bid value, 
including current year 
revenue) 
 
Net asset value per share           67.31 pence       70.32 pence      (4.3) 
including cumulative dividends 
paid to date 
 
Net assets                         GBP8.3 million      GBP9.0 million      (7.8) 
 
Share price (mid market)            29.50 pence       29.00 pence        1.7 
 
At 31 December 2011, 93 % of the portfolio was invested in qualifying holdings. 
 
The net asset value at 10 February 2012 was 38.25p pence per share. 
 
Ten largest holdings at 31 December 2011 
 
                                  Value at  % of net 
                                  31.12.11  assets 
                                            31.12.11 
                                  GBP000s 
 
Craneware                               711          8.6 
 
Brooks MacDonald                        666          8.0 
 
Angle                                   498          6.0 
 
Noble Investments                       330          4.0 
 
Digital Barriers                        326          3.9 
 
Instem Life Science                     294          3.5 
 
Anpario                                 286          3.4 
 
AFC Energy                              257          3.1 
 
Vertu Motors                            233          2.8 
 
EKF Diagnostics                         220          2.7 
 
Company information 
 
Year end: 30 September 
 
Results: interim results to 31 March 2012 announced May 2012 
 
final results to 30 September 2012 announced December 2012 
 
Dividend: Final dividend for the year ended 30 September 2011 payable 20 March 
2012 
 
By order of the Board 
 
AXA Investment Managers UK Limited 
 
Company Secretary to Framlington AIM VCT PLC 
 
17 February 2012 
 
Further information on the Company, including the annual report and accounts 
for the year ended 30 September 2011 and the interim report and accounts for 
the six months ended 31 March 2011, is available from the Manager's website 
www.axa-im.com 
 
Neither the contents of the Manager's website nor the contents of any website 
accessible from hyperlinks on the Manager's website (or any other website) is 
incorporated into, or forms part of, this announcement. 
 
 
 
END