The Biotech Growth Trust PLC - Publication of a circular and notice of general meeting
Publication of a circular and notice of general meeting
Background
It was announced on
Under the Listing Rules this change to the benchmark index in the Portfolio Management Agreement is a related party transaction and must therefore be approved by Shareholders. The purpose of the Circular is therefore to explain and provide the background to the proposed change to the benchmark index (the " Benchmark Index Change ") and to give notice of the General Meeting at which an ordinary resolution will be proposed to approve the change.
The Proposed Benchmark Index Change
The Board is asking Shareholders to approve a change to the Index which is used as the Benchmark for measuring the Company's performance and a corresponding change to the definition of the "Index" in the Portfolio Management Agreement.
The Index is used as the benchmark against which the Board measures the growth in the Company's net asset value (or "
NAV
") since the appointment of the Portfolio Manager on
The Company's investment objective is to seek capital appreciation through investment in the worldwide biotechnology sector.
The Index used to measure performance against that objective is the NASDAQ Biotechnology Index, which began on
On
In recent years the Biotechnology industry as a whole and the constituents of the NASDAQ Biotechnology Index have changed as the industry has become more mature. This has seen an increase in the number of Index constituents who pay a dividend, meaning that shareholders in some of these Index companies now receive a total return comprising both dividends and capital return.
While the element of the Index's total return comprised of dividends is currently modest and the Company itself is not receiving sufficient dividend income to be required to pay a dividend under current investment trust taxation rules, the Board believes this trend, in which dividend income contributes to the total return earned from the Index, is likely to increase.
The Board therefore considers that it is appropriate to compare the Company's NAV total return with the NASDAQ Biotechnology Index Total Return (net of withholding tax and sterling adjusted) and that this is the correct index to incentivise the Portfolio Manager to outperform.
If the Benchmark Index Change is approved at the General Meeting, it would take effect from
The Company's NAV per Ordinary Share total return during the period
The Company's non-annualised performance as compared with both indices is shown below:
_____________________________________________________________________ | |1 year|3 years|5 years| |______________________________________________|______|_______|_______| |NASDAQ Biotechnology Index (Capital Only) |5.0% |2.5% |29.8% | |______________________________________________|______|_______|_______| |NASDAQ Biotechnology Index (Net, Total Return)|5.6% |4.2% |33.1% | |______________________________________________|______|_______|_______| |BIOG NAV Total Return |26.5% |-25.4% |37.1% | |______________________________________________|______|_______|_______|
General Meeting
Shareholder approval for the Benchmark Index Change is being sought by the Resolution to be proposed as an ordinary resolution at a General Meeting to be held immediately after the conclusion of the Company's Annual General Meeting on
Document availability
The Circular will shortly be available for inspection at the National Storage Mechanism which is located at https://data.fca.org.uk/#/nsm/nationalstoragemechanism and on the Company's website at www.biotechgt.com . Terms used and not defined in this announcement shall have the meanings given to them in the Circular.
LEI: 549300Z41EP32MI2DN29
For further information please contact:
Frostrow Capital LLP 020 3709 8734 Company SecretaryWinterflood Securities Limited , Corporate Broker 020 3100 0000Neil Morgan
Disclaimers
The information set out in this announcement is a summary of the Circular. Shareholders should read the whole of the Circular when considering what action they should take in connection with the General Meeting.
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