TIDMKPC
RNS Number : 3716K
Keystone Positive Change I.T. PLC
05 May 2022
RNS Announcement
Keystone Positive Change Investment Trust plc
Legal Entity Identifier: 5493002H3JXLXLIGC563
Regulated Information Classification: Half Yearly Financial
Report
Results for the six months to 31 March 2022
Over the six months to 31 March 2022, the Company's net asset
value total return was minus 19.1% compared to a total return of
positive 3.6% for the comparative index * . The share price total
return was minus 27.0% as the discount widened from 0.9% to
10.6%.
3/4 A significant driver of the underperformance has been the
sell-off in growth stocks as the market prices in the prospects of
higher inflation, irrespective of operational progress;
3/4 During the period we made two new investments in Nu Holdings and Duolingo;
3/4 We also added to the positions in AbCellera, Northvolt, Peloton, and Teladoc;
3/4 New investments and additions have been funded by reductions
to positions in Tesla and NIBE;
3/4 Structural trends such as deflation of renewable
technologies, advancement of computer science, and the need for
sustainability provide exciting opportunities for patient
investors.
Keystone Positive Change's objective is to generate long term
capital growth with the aim of the NAV total return exceeding that
of the MSCI AC World Index in sterling terms by at least 2 per
cent. per annum over rolling five-year periods; and contribute
towards a more sustainable and inclusive world by investing in the
equities of companies whose products or services make a positive
social or environmental impact. At 31 March 2022 the Company had
total assets of GBP186.8 million.
Keystone Positive Change is managed by Baillie Gifford, an
Edinburgh-based fund management group with approximately GBP250
billion under management and advice as at 4 May 2022.
Keystone Positive Change is a listed UK company. The value of
its shares and any income from them can fall as well as rise and
investors may not get back the amount invested. The Company is
listed on the London Stock Exchange and is not authorised or
regulated by the Financial Conduct Authority. You can find up to
date performance information about Keystone Positive Change at
keystonepositivechange.com ++ .
Past performance is not a guide to future performance. Total
return information is sourced from Baillie Gifford/Refinitiv and
relevant underlying index providers. See disclaimer at end of this
announcement.
* A composite index comprising the movement on the FTSE
All-Share Index to 10 February 2021 and the movement on the MSCI
All Country World Index in sterling terms thereafter.
++ Neither the contents of the Managers' website nor the
contents of any website accessible from hyperlinks on the Managers'
website (or any other website) is incorporated into, or forms part
of, this announcement.
4 May 2022
For further information please contact:
Alex Blake, Baillie Gifford & Co
Tel: 0131 275 2859
Mark Knight, Four Communications
Tel: 0203 697 4200 or 07803 758810
The following is the unaudited Interim Financial Report for the
six months to 31 March 2022.
Responsibility Statement
We confirm that to the best of our knowledge:
a) the condensed set of Financial Statements has been prepared
in accordance with FRS 104 'Interim Financial Reporting';
b) the Interim Management Report includes a fair review of the
information required by Disclosure Guidance and Transparency Rule
4.2.7R (indication of important events during the first six months,
their impact on the Financial Statements and a description of the
principal risks and uncertainties for the remaining six months of
the year); and
c) the Interim Financial Report includes a fair review of the
information required by Disclosure Guidance and Transparency Rule
4.2.8R (disclosure of related party transactions and changes
therein).
On behalf of the Board
Karen Brade
Chairman
4 May 2022
Chairman's Statement
Last year your Board oversaw a significant transition for the
Company, of both investment objective and new management, with the
ambition of making Keystone Positive Change ('KPC') a vehicle
capable of generating attractive long-term returns for shareholders
while also being instrumental in the search for solutions to global
challenges in areas such as healthcare, education, social inclusion
and the environment that have been brought sharply into focus over
the last two years. These changes were overwhelmingly approved by
shareholders at a general meeting of the Company in February
2021.
With the advantage of hindsight, the timing of the transition
was inopportune, as it coincided with a dramatic deterioration in
investor sentiment away from growth equities. However, your Board
remains confident in the long-term investment and strategic
rationale behind the decision to adopt this new strategy and the
team implementing it.
Performance
Over the six months to 31 March 2022, the Company's net asset
value per share ('NAV') total return was -19.1% compared to a total
return of +3.6% for the MSCI All Country World Index in sterling
terms. The share price total return was -27.0% over the six months
to 31 March 2022, as the discount widened from 0.9% to 10.6%.
Gearing
Total debt increased by GBP5.0 million to GBP15.4 million. Net
gearing at 31 March 2022 was 8.1% (September 2021 - 4.6%).
Annual General Meeting
KPC's first AGM was held in person. All the resolutions were
passed, including a revised dividend policy which has moved from
making four quarterly payments to a single payment which will be
paid after the next AGM and will be the amount sufficient to
maintain the Company's investment trust status. The 4.0p paid in
December 2021 was the last quarterly payment under the previous
policy.
Board Composition
We have appointed Andrew Fleming as a Director with effect from
1 March 2022 to replace John Wood, who stepped down at the last
AGM. Andrew brings considerable fund management, investment trust
and impact investment experience to the Board.
The Company is already compliant with the FCA's recently
published new rules on diversity and inclusion on company boards,
which target that at least 40% of directors will be women and at
least one of the senior positions on each board will be held by a
woman.
Positive Conversations Report
The first KPC Positive Conversations report, which focuses on
business practices of the companies in the portfolio and how they
operate, has been published on the Company's website. We look
forward to sharing the first annual KPC Impact Report, which will
be published in the summer.
Outlook
The Positive Change team has an investment horizon of five years
and beyond, with turnover in the portfolio expected to be typically
no more than 20% per annum. This allows the team to focus on
identifying long-term structural trends which present compelling
investment opportunities to address the Company's commitment to
supporting a sustainable world.
Karen Brade
Chairman
4 May 2022
Interim Management Report
On many levels, the past six months have been deeply
challenging. Russia's invasion of Ukraine has led to unbearable
suffering and destruction. Our hearts go out to those affected by
this terrible war. In addition, conflicts continue in countries
including Syria, Yemen, and Afghanistan, and closer to home,
poverty and inequality are becoming increasingly difficult to
ignore. These events add to our determination to act for Positive
Change. Commerce and prosperity are the best deterrents to
conflicts. We need to build a sustainable world where everyone can
flourish.
Over the past six months, the Company's NAV total return was
minus 19.1% compared to a 3.6% positive total return from the
benchmark MSCI All Country World Index (in sterling terms). A
significant driver of the underperformance has been the sell-off in
growth stocks as the market prices in the prospects of higher
inflation and discount rates, irrespective of operational progress.
Moderna, for example, was the largest detractor from performance
over the period despite announcing its first year of profitability
after shipping over 800 million Covid vaccines in 2021 (over 200
million of these to low and middle income countries) and it has a
further 44 programmes in development, 25 of which are in clinical
trials. Gearing also detracted from performance over the
period.
This short-term underperformance is understandably painful for
the Company's shareholders, but we continue to be excited by the
long-term prospects of the companies held in the portfolio.
Importantly, we remain resolutely committed to our long-term
investment philosophy - one that has served us well over the past
five years that we have managed the Positive Change strategy. Our
aim is not to minimise short-term volatility, but to invest in
exceptional businesses that can generate huge societal and economic
value over the long-term.
A Critical Juncture
The Intergovernmental Panel on Climate Change ('IPCC')'s latest
assessment, released on 4 April 2022, provided a stark warning. The
window for addressing climate change is quickly closing. Even if we
halve greenhouse gas emissions by 2030, it is almost inevitable
that we will, at least temporarily, exceed the 1.5˚C warming limit.
Avoiding the worst impacts of climate change requires drastic
decarbonisation across all sectors and the removal of large amounts
of carbon dioxide from the atmosphere. The investment needed is
immense - roughly three to six times greater than the current
levels. However, we should not lose hope. The IPCC report noted
that the costs of solar, wind, and batteries have fallen by up to
85% since 2010. Here lie exciting opportunities. By scaling up
renewable technologies, innovative companies and impact-focused
investors can play an invaluable role in tackling climate
change.
Numerous portfolio holdings are making important contributions
towards tackling climate change. Ørsted continues to be at the
vanguard of the offshore wind industry, developing projects across
North America, Europe, and Asia. The company is also investing in
new technologies, such as floating offshore wind and green
hydrogen. As electrification gathers pace, the demand for batteries
will rise. Meeting this rising demand will be crucial to tackling
climate change. Northvolt, one of our private company investments,
has been making good progress on this in Europe. The company
produced its first lithium-ion battery cell at the end of last year
and has recently announced the plan for a third Gigafactory. In the
area of food and agriculture, Deere continues to innovate with
precision agriculture. Its newly launched products such as
autonomous tractors and See & Spray are helping farmers to grow
more crops with fewer inputs.
More innovations are needed for tackling climate change and we
are enthusiastic about the opportunity this presents. In recent
months, we have been researching companies working on areas
including next generation battery technology, green hydrogen,
carbon capture, and cultivated meat. We believe these will be
fruitful areas for idea generation over the coming years and
decades.
Portfolio Update
During periods of significant market volatility, it can be
tempting to make frequent portfolio changes. Often, that would be
the wrong thing to do. Our focus continues to be on the long term,
with the majority of our time spent on evaluating the long-term
fundamentals of existing holdings and searching for new investment
ideas. In the six months up to 31 March 2022, we made two new
investments for the Company: Nu Holdings and Duolingo.
Nu Holdings, which went public in December 2021, is Latin
America's leading digital bank. The company was born out of its
founder's frustrations with banking services in Brazil, where
incumbent banks have focused mostly on serving wealthy customers,
leaving a large unbanked and underbanked population. By leveraging
on digital and mobile technologies, Nu is able to achieve a lower
cost-to-serve and provide a superior customer experience. With over
40 million active customers, and 5 million of them accessing
banking and credit card services for the first time, Nu's offerings
clearly have significant appeal. The next milestone is to
demonstrate the ability to lend profitably at scale. While early
signs are promising, we are cognisant that many more years of data
are required before we can draw a firm conclusion. Nevertheless,
given the size of opportunity and the management's track record so
far, we have taken a holding on your behalf.
Duolingo is an education company that is well-known for its
popular language learning app. The company uses gamification and
storytelling to create a fun and engaging way to learn languages.
For many people, learning a language can open up new education and
career opportunities, or help them to explore new cultures. At the
end of 2021, Duolingo had over 40 million monthly active users and
just under 10 million daily active users. The company is still in
the early stages of monetisation, which, together with new products
such as language proficiency testing, should support attractive
growth for many years to come.
In addition to the two new investments, we have been adding to
the Company's positions in AbCellera, Northvolt, Peloton, and
Teladoc. AbCellera continues to demonstrate the power of its
antibody discovery platform. In 2021, the company added nine
discovery partners and moved four programmes into the clinic. We
added to the position to reflect our growing conviction and a more
attractive valuation. As mentioned, Northvolt is making good
progress scaling up battery production in Europe. We have been
supporting the company in its capital raising. Peloton has had a
more difficult time of late, with poor execution by the management
team. However, we believe that the trend towards at-home exercising
will continue and Peloton's offerings remain competitive. The new
CEO, Barry McCarthy, brings in relevant experience from his time at
Spotify and Netflix. As a result, we supported the company's
capital raise last year. Teladoc continues to benefit from the
rising demand for telemedicine. In 2021, the company enabled nearly
20 million virtual visits, compared to 4 million in 2019. Despite
this, its share price has fallen back to its 2019 level, which
provided an attractive opportunity to add to our holdings.
The new investments and additions have been funded by reductions
to the Company's holdings in Tesla and NIBE. Despite ongoing supply
chain disruptions, Tesla had a phenomenal year in 2021. The company
delivered nearly 1 million electric vehicles and its operating
profits more than tripled to US$6.5 billion. However, with a higher
share price, the likely investment upside is now much lower. NIBE
is a manufacturer of heat-pumps, which should benefit from efforts
to decarbonise heating. However, the market is pricing in
significant growth over the coming years, which leaves less room
for a differentiated view.
Positive Conversations
We have met with the management of around half of the companies
in the portfolio since the start of 2022, including in person
meetings with several holdings in North America. These discussions
play a core role in our work, and we are delighted to share the
Company's first Positive Conversations report, which can be found
on the Company's website. While the first annual Impact Report,
which will be published in the summer, will focus on the impact of
the products and services of the companies in the portfolio,
Positive Conversations focuses on their business and details our
engagement and proxy voting activities over the course of 2021.
Outlook
The near-term outlook remains highly uncertain, but our focus is
on the long term. Over time periods of five years or more, there
are many more certainties, such as the continued deflation of
renewable technologies, the advancement of computer science, and
the growing awareness of a need for sustainability. Those
long-term, structural trends provide exciting opportunities for
patient investors. The road there might be bumpy and the short-term
volatility can be unpleasant, but the rewards over the long term -
for investors and society - will be enormous.
Lee Qian and Kate Fox
Portfolio Managers
4 May 2022
For a definition of terms see Glossary of Terms and Alternative
Performance Measures at the end of this announcement.
Past performance is not a guide to future performance
Portfolio
Social Inclusion Environment and Healthcare and Quality Base of the Pyramid
and Education Resource Needs of Life
-------------------------------- ----------------------------- --------------------------------- ----------------------------
Holding Value % Holding Value % Holding Value % Holding Value %
GBP'000 GBP'000 GBP'000 GBP'000
--------------- -------- ----- ------------ -------- ----- ---------------- -------- ----- ---------- -------- ------
Bank
Rakyat
ASML 15,781 8.4 Tesla 11,484 6.1 Moderna 13,784 7.4 Indonesia 5,747 3.1
TSMC 11,319 6.1 Deere 9,282 5.0 Dexcom 10,244 5.5
MercadoLibre 8,162 4.4 Ørsted 6,987 3.7 Illumina 8,024 4.3 Safaricom 5,171 2.8
Discovery
Shopify 2,988 1.6 Umicore 5,685 3.0 Holdings 5,345 2.9
Coursera 2,806 1.5 Novozymes 4,339 2.3 Abiomed 5,254 2.8
Alnylam
Alibaba 2,478 1.3 Xylem 4,309 2.3 Pharmaceuticals 5,130 2.7
NIBE
Nu Holdings 2,458 1.3 Industrier 3,567 1.9 M3 3,991 2.1
Northvolt
FDM 1,913 1.0 AB(U) 3,384 1.8 Chr. Hansen 3,938 2.1
Duolingo 1,603 0.9 Ecolab 2,982 1.6 Sartorius 3,670 2.0
Beyond
PsiQuantum(U) 1,519 0.8 Meat 1,409 0.8 Teladoc 3,482 1.9
Spiber(U) 1,032 0.6 10x Genomics 2,705 1.4
Joby AbCellera
Aviation 502 0.3 Biologics 1,525 0.8
Peloton
Interactive 935 0.5
Berkeley
Lights 314 0.2
51,027 27.3 54,962 29.4 68,341 36.6 10,918 5.9
--------------- -------- ----- ------------ -------- ----- ---------------- -------- ----- ---------- -------- ------
Net liquid
assets 1,540 0.8
-------- ------
(u) Private Company (unlisted)
investment Total assets 186,788 100.0
-------- ------
Condensed Income Statement (unaudited)
For the six months For the six months For the year ended
ended 31 March 2022 ended 31 March 2021 30 September 2021
(audited)
===============
Revenue Capital Total Revenue Capita Total Revenue Capita Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
l l
=============== ======= ======== ============ =============== ======= ======== ============ ============ ===============
Losses on
investments - (40,036) (40,036) - (3,325) (3,325) - 30,478 30,478
Currency
(losses)/gains - (147) (147) - 1,057 1,057 - 859 859
Income from
investments
and interest
receivable 684 - 684 1,721 - 1,721 2,353 - 2,353
Investment
management
fee (note 3) (145) (435) (580) (100) (299) (399) (150) (451) (601)
Other
administrative
expenses (273) - (273) (199) (166) (365) (427) (166) (593)
=============== ======= ======== ============ =============== ======= ======== ============ ============ ===============
Net return
before finance
costs and
taxation 266 (40,618) (40,352) 1,422 (2,733) (1,311) 1,776 30,720 32,496
=============== ======= ======== ============ =============== ======= ======== ============ ============ ===============
Finance costs
of borrowings (38) (97) (135) (24) (51) (75) (50) (111) (161)
=============== ======= ======== ============ =============== ======= ======== ============ ============ ===============
Net return on
ordinary
activities
before
taxation 228 (40,715) (40,487) 1,398 (2,784) (1,386) 1,726 30,609 32,335
=============== ======= ======== ============ =============== ======= ======== ============ ============ ===============
Tax on ordinary
activities (119) - (119) (49) - (49) (121) - (121)
=============== ======= ======== ============ =============== ======= ======== ============ ============ ===============
Net return on
ordinary
activities
after taxation 109 (40,715) (40,606) 1,349 (2,784) (1,435) 1,605 30,609 32,214
=============== ======= ======== ============ =============== ======= ======== ============ ============ ===============
Net return per
ordinary
share (note 4) 0.17p (65.86p) (65.69p) 2.18p (4.50p) (2.32p) 2.60p 49.49p 52.09p
The total column of this statement is the profit and loss account of the
Company. The supplementary revenue and capital columns are prepared under
guidance published by the Association of Investment Companies.
All revenue and capital items in the above statements derive from continuing
operations.
A Statement of Comprehensive Income is not required as the Company does
not have any other comprehensive income and the net return of ordinary activities
after taxation is both the profit and total comprehensive income for the
period.
Condensed Balance Sheet (unaudited)
At 31 March At 30 September
2022 2021
(audited)
GBP'000 GBP'000
======================================= =================== ==================
Fixed assets
=================== ==================
Investments held at fair value through
profit or loss (note 6) 185,248 224,464
======================================= =================== ==================
Current assets
Debtors 420 132
Cash and cash equivalents 1,573 593
======================================= =================== ==================
1,993 725
======================================= =================== ==================
Creditors
Amounts falling due within one year:
Bank loan (note 7) (15,100) (10,114)
Other creditors (453) (308)
======================================= =================== ==================
(15,553) (10,422)
======================================= =================== ==================
Net current liabilities (13,560) (9,697)
======================================= =================== ==================
Total assets less current liabilities 171,688 214,767
======================================= =================== ==================
Creditors
=================== ==================
Amounts falling due after more than
one year:
Cumulative preference shares (note
8) (250) (250)
======================================= =================== ==================
Net assets 171,438 214,517
======================================= =================== ==================
Capital and reserves
Share capital (note 9) 6,760 6,760
Share premium account 3,449 3,449
Capital redemption reserve 466 466
Capital reserve 160,654 203,842
Revenue reserve 109 -
======================================= =================== ==================
Shareholders' funds 171,438 214,517
======================================= =================== ==================
Net asset value per ordinary share
* 277.3p 347.0p
======================================= =================== ==================
* For a definition of terms see Glossary of Terms and
Alternative Performance Measures at the end of this
announcement.
Condensed Statement of Changes in Equity (unaudited)
For the six months ended 31 March 2022
Share Capital
Share premium redemption Capital Revenue Shareholders'
capital account reserve reserve reserve funds
GBP'000 GBP'000 GBP'000 * GBP'000 GBP'000
GBP'000
=========================== ============= ============ ============== ============== ========== ===============
Shareholders' funds at
1 October 2021 6,760 3,449 466 203,842 - 214,517
Net return on ordinary
activities after taxation - - - (40,715) 109 (40,606)
Dividends paid during the
period (note 5) - - - (2,473) - (2,473)
=========================== ============= ============ ============== ============== ========== ===============
Shareholders' funds at
31 March 2022 6,760 3,449 466 160,654 109 171,438
=========================== ============= ============ ============== ============== ========== ===============
For the six months ended 31 March 2021
Share Capital
Share premium redemption Capital Revenue Shareholders'
capital account reserve reserve reserve funds
GBP'000 GBP'000 GBP'000 * GBP'000 GBP'000
GBP'000
=========================== ============ ============ ============== ============== ========== ===============
Shareholders' funds at
1 October 2020 6,760 3,449 466 174,808 4,842 190,325
Net return on ordinary
activities after taxation - - - (2,784) 1,349 (1,435)
Shares bought back into
treasury (note 9) - - - (1,100) - (1,100)
Dividends paid during the
period (note 5) - - - - (3,956) (3,956)
=========================== ============ ============ ============== ============== ========== ===============
Shareholders' funds at
31 March 2021 6,760 3,449 466 170,924 2,235 183,834
=========================== ============ ============ ============== ============== ========== ===============
* The Capital Reserve balance at 31 March 2022 includes
investment holding losses of GBP36,636,000 (31 March 2021
- losses of GBP30,471,000).
Condensed Cash Flow Statement (unaudited)
=================================================
Six months Six months
to to
31 March 31 March
2022 2021
GBP'000 GBP'000
==================================================== ========== ==========
Cash flows from operating activities
Net return before finance costs and taxation (40,352) (1,311)
Net losses on investments 40,036 3,325
Currency losses/(gains) 141 (1,057)
Overseas tax incurred (53) (38)
Changes in debtors and creditors (306) (380)
Net cash (outflow)/inflow from investing
activities (731) 24,720
==================================================== ========== ==========
Net cash (outflow)/inflow from operating
activities * (1,265) 25,259
==================================================== ========== ==========
Shares bought back into treasury - (1,100)
Net cash inflow/(outflow) from drawdown/(repayment)
of bank loans 4,849 (19,183)
Interest and cumulative preference share
dividends paid (127) (93)
Dividends paid (2,473) (3,956)
==================================================== ========== ==========
Net cash inflow/(outflow) from financing
activities 2,249 (24,332)
==================================================== ========== ==========
Increase in cash and cash equivalents 984 927
Exchange movements (4) 3
Cash and cash equivalents at start of
period 593 (30)
==================================================== ========== ==========
Cash and cash equivalents at end of period 1,573 900
==================================================== ========== ==========
* Cash from operating activities includes dividends received of
GBP349,000 (31 March 2021 - GBP1,670,000) and interest received of
nil (31 March 2021 - nil).
Cash and cash equivalents at 30 September 2020 reconciled to the
balance sheet as follows: cash held at
custodian of GBP620,000 less overdraft included in short term creditors of GBP650,000.
Notes to the condensed financial statements (unaudited)
1 The condensed Financial Statements for the six months to 31
March 2022 comprise the statements set out above together with the
related notes 1 to 11 below. They have been prepared in accordance
with FRS 104 'Interim Financial Reporting' and the AIC's Statement
of Recommended Practice issued in October 2019 and updated in April
2021 with consequential amendments. They have not been audited or
reviewed by the Auditors pursuant to the Auditing Practices Board
Guidance on 'Review of Interim Financial Information'. The
condensed Financial Statements for the six months to 31 March 2022
have been prepared on the basis of the same accounting policies as
set out in the Company's Annual Report and Financial Statements at
30 September 2021.
The financial information contained within this Interim
Financial Report does not constitute statutory accounts as defined
in sections 434 to 436 of the Companies Act 2006. The financial
information for the year ended 30 September 2021 has been extracted
from the statutory accounts which have been filed with the
Registrar of Companies. The Auditors' Report on those accounts was
not qualified, did not include a reference to any matters to which
the Auditors drew attention by way of emphasis without qualifying
their report, and did not contain statements under sections 498(2)
or (3) of the Companies Act 2006.
2 Going Concern
The Directors have considered the Company's principal risks and
uncertainties, as set out below, together with the Company's
current position, investment objective and policy, the level of
demand for the Company's shares, the nature of its assets, its
liabilities and projected income and expenditure.
The Board has, in particular, considered the ongoing impact of
market volatility during the Covid-19 pandemic and hostilities in
Ukraine. The Company's assets, the majority of which are
investments in quoted securities which are readily realisable,
exceed its liabilities significantly. The Board approves borrowing
and gearing limits and reviews regularly the amounts of any
borrowing and the level of gearing as well as compliance with
borrowing covenants. The Company has continued to comply with the
investment trust status requirements of section 1158 of the
Corporation Tax Act 2010 and the Investment Trust (Approved
Company) regulations 2011. Accordingly, the Directors consider it
appropriate to adopt the going concern basis of accounting in
preparing these condensed Financial Statements and confirm that
they are not aware of any material uncertainties which may affect
the Company's ability to continue to do so over a period of at
least twelve months from the date of approval of these condensed
Financial Statements.
3 Baillie Gifford & Co Limited, a wholly owned subsidiary of
Baillie Gifford & Co, was appointed by the Company as its
Alternative Investment Fund Manager and Company Secretary with
effect from 11 February 2021. Baillie Gifford & Co Limited has
delegated the investment management services to Baillie Gifford
& Co. The Management Agreement can be terminated on three
months' notice. The annual management fee is 0.70% on the first
GBP100 million of market capitalisation, 0.65% on the next GBP150
million of market capitalisation and 0.55% on the remaining market
capitalisation. Management fees are calculated and payable on a
quarterly basis. Market capitalisation is calculated using middle
market quotations derived from the Stock Exchange Daily Official
List and the weighted average number of shares in issue during the
quarter. The Managers waived the first six months' fee following
the transfer of the mandate from Invesco to Baillie Gifford &
Co Limited.
Invesco Fund Managers Limited received a management fee in
respect of each of the quarterly periods ending on 31 March, 30
June, 30 September and 31 December each year of 0.1125% calculated
on the average value of the market capitalisation of the Company's
shares for the ten business days ending on the relevant quarter end
date. The final fee payable by the Company to Invesco Fund Managers
Limited was for the period from 1 January to 7 March 2021.
4
Net return Six months Six months Year to 30
per ordinary to 31 March to 31 March September
share
2022 2021 2021
GBP'000 GBP'000 (audited)
GBP'000
===================== ============= ============= ===========
Revenue return
on ordinary
activities
after taxation 109 1,349 1,605
Capital return
on ordinary
activities
after taxation (40,715) (2,784) 30,609
===================== ============= ============= ===========
Total net return (40,606) (1,435) 32,214
===================== ============= ============= ===========
Weighted average
number of ordinary
shares in issue 61,815,632 61,877,555 61,846,509
===================== ============= ============= ===========
The net return per ordinary share figures are based on the above
totals of revenue and capital and the weighted average number of
ordinary shares in issue (excluding treasury shares) during each
period.
There are no dilutive or potentially dilutive shares in
issue.
5
Dividends Six months Six months Year to 30
to 31 March to 31 March September
2022 2021 2021
GBP'000 GBP'000 (audited)
GBP'000
============= === ============= ============= ===========
Amounts recognised as distributions in the period:
Fourth interim
of 4.0p paid
December 2,473 2,473 2,473
First interim
of 2.4p paid
March - 1,483 1,483
Second interim
of 2.4p paid
June - - 1,483
Third interim
of 2.4p paid
September - - 1,483
================== ============= ============= ===========
2,473 3,956 6,922
================================= ============= ===========
Amounts paid and payable in respect of the period:
First interim
of 2.4p paid
March - 1,483 1,483
Second interim
of 2.4p paid
June - 1,483 1,483
Third interim
of 2.4p paid
September - - 1,483
Fourth interim
of 4.0p paid
December - - 2,473
================== ============= ============= ===========
- 2,966 6,922
================================= ============= ===========
At the Company's Annual General Meeting held on 9 February 2022,
shareholders approved a change of Dividend Policy, such that the
Company will no longer pay four quarterly interim dividends. A
single final dividend will be paid following the Company's
financial year end, being the amount sufficient to maintain the
Company's investment trust status.
6 Fair Value Hierarchy
The Company's investments are financial assets held at fair
value through profit or loss. The fair value hierarchy used to
analyse the basis on which the fair values of financial instruments
held at fair value through profit or loss are measured is described
below. The levels are determined by the lowest
(that is the least reliable or least independently observable)
level of input that is significant to the fair value measurement
for the individual investment in its entirety.
Level 1 - using unadjusted quoted prices for identical
instruments in an active market;
Level 2 - using inputs, other than quoted prices included within
Level 1, that are directly or indirectly observable (based on
market data); and
Level 3 - using inputs that are unobservable (for which market
data is unavailable).
An analysis of the Company's financial asset investments based
on the fair value hierarchy described above is shown below.
Investments held at fair value through profit or loss
Level 1 Level 2 Level 3 Total
As at 31 March 2022 GBP'000 GBP'000 GBP'000 GBP'000
======================== ========== ========== ========== ==========
Listed equities 179,313 - - 179,313
Unlisted equities - - 5,935 5,935
======================== ========== ========== ========== ==========
Total financial asset
investments 179,313 - 5,935 185,248
======================== ========== ========== ========== ==========
Level 1 Level 2 Level 3 Total
As at 30 September GBP'000 GBP'000 GBP'000 GBP'000
2021 (audited)
======================== ========== ========== ========== ==========
Listed equities 219,818 - - 219,818
Unlisted equities - - 4,646 4,646
======================== ========== ========== ========== ==========
Total financial asset
investments 219,818 - 4,646 224,464
======================== ========== ========== ========== ==========
The fair value of listed security investments is bid price or,
in the case of FTSE 100 constituents and holdings on certain
recognised overseas exchanges, last traded price. Listed
Investments are categorised as Level 1 if they are valued using
unadjusted quoted prices for identical instruments in an active
market and as Level 2 if they do not meet all these criteria but
are, nonetheless, valued using market data. Unlisted investments
are valued at fair value by the Directors following a detailed
review and appropriate challenge of the valuations proposed by the
Managers. The Managers' unlisted investment policy applies
methodologies consistent with the International Private Equity and
Venture Capital Valuation guidelines ('IPEV'). These methodologies
can be categorised as follows: (a) market approach (multiples,
industry valuation benchmarks and available market prices); (b)
income approach (discounted cash flows); and (c) replacement cost
approach (net assets). The Company's holdings in unlisted
investments are categorised as Level 3 as unobservable data is a
significant input to their fair value measurements.
7 During the year to 30 September 2021 the Company's GBP40
million committed revolving credit facility with The Bank of New
York Mellon (International) Limited, London Branch, was repaid and
expired and a 3 year GBP25 million multicurrency unsecured floating
rate facility with Royal Bank of Scotland International Limited was
arranged. At 31 March 2022 drawings were as follows: US$10.0
million at an interest rate of 1.76086% and GBP7.5 million at an
interest rate of 1.25%+ SONIA, both maturing in June 2022 (30
September 2021 - US$6.9 million and GBP5 million maturing in
December 2021).
8 Creditors: amounts falling due after more than one year
Long term creditors consist of 250,000 5% cumulative preference
shares of GBP1 each. The preference shares dividend is paid
bi-annually, in March and September.
At 30 September
At 31 March 2021 (audited)
2022
=========================
Share Capital: allotted, Number GBP'000 Number GBP'000
called up and fully paid
========================= =========== ======= ========== =========
Ordinary shares of 10p
each in issue 61,815,632 6,182 61,815,632 6,182
Ordinary shares of 10p
each held in treasury 5,778,363 578 5,778,363 578
========================= =========== ======= ========== =========
9 67,593,995 6,760 67,593,995 6,760
========================= =========== ======= ========== =========
In the six months to 31 March 2022, the Company transacted no
buybacks (six months to 31 March 2021 - 423,735 shares bought back
at a total cost of GBP1,100,000).
At 31 March 2022 the Company had authority to buy back 9,266,163
ordinary shares on an ad hoc basis as well as a general authority
to issue shares and an authority to issue shares or sell shares
from treasury on a non pre-emptive basis up to an aggregate nominal
amount of GBP618,156. In accordance with authorities granted at the
last Annual General Meeting in February 2022, buy-backs will only
be made at a discount to net asset value and the Board has
authorised use of the issuance authorities to issue new shares or
sell shares from treasury at a premium to net asset value, in both
cases in order to enhance the net asset value per share for
existing shareholders and improve the liquidity of the Company's
shares.
10 During the period, transaction costs on purchases amounted to
GBP2,000 (year to 30 September 2021 - GBP137,000) and transaction
costs on sales amounted to GBP2,000 (year to 30 September 2021 -
GBP226,000). Total transaction costs amounted to GBP4,000 (year to
30 September 2021 - GBP363,000).
11 Related Party Transactions
There have been no transactions with related parties during the
first six months of the current financial year that have materially
affected the financial position or the performance of the Company
during that period and there have been no changes in the related
party transactions described in the last Annual Report and
Financial Statements that could have had such an effect on the
Company during that period.
None of the views expressed in this document should be construed
as advice to buy or sell a particular investment.
Principal Risks and Uncertainties
The principal risks facing the Company are:
the risk that the Company's strategy and business model are
unsuccessful in achieving its investment objective;
discount/premium risk; financial risk; gearing risk; operational
risk and custody and depositary risk; political and associated
economic risk; and regulatory risk. An explanation of these risks
and how they are managed is set out on pages 21 and 22 of the
Company's Annual Report and Financial Statements for the year to 30
September 2021 which is available on the Company's website:
keystonepositivechange.com ++ . The principal risks and
uncertainties have not changed materially since the date of that
report.
++ Neither the contents of the Managers' website nor the
contents of any website accessible from hyperlinks on the Managers'
website (or any other website) is incorporated into, or forms part
of, this announcement.
None of the views expressed in this document should be construed
as advice to buy or sell a particular investment.
The Interim Financial Report will be available on the Company's
page of the Managers' website keystonepositivechange.com ++ on or
around 12 May 2022.
Third Party Data Provider Disclaimer
No third party data provider ('Provider') makes any warranty,
express or implied, as to the accuracy, completeness or timeliness
of the data contained herewith nor as to the results to be obtained
by recipients of the data. No Provider shall in any way be liable
to any recipient of the data for any inaccuracies, errors or
omissions in the index data included in this document, regardless
of cause, or for any damages (whether direct or indirect) resulting
therefrom.
No Provider has any obligation to update, modify or amend the
data or to otherwise notify a recipient thereof in the event that
any matter stated herein changes or subsequently becomes
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recommendations, forecasts, judgements, or any other conclusions,
or any course of action determined, by you or any third party,
whether or not based on the content, information or materials
contained herein.
MSCI Index Data
Source: MSCI. The MSCI information may only be used for your
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and may not be used as a basis for or a component of any financial
instruments or products or indices. None of the MSCI information is
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make (or refrain from making) any kind of investment decision and
may not be relied on as such. Historical data and analysis should
not be taken as an indication or guarantee of any future
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FTSE Index Date
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a trade mark of the London Stock Exchange Group companies and is
used by FTSE International Limited under licence. All rights in the
FTSE indices and/or FTSE ratings vest in FTSE and/ or its
licensors. Neither FTSE nor its licensors accept any liability for
any errors or omissions in the FTSE indices and/or FTSE ratings or
underlying data and no party may rely on any FTSE indices, ratings
and/or underlying data contained in this communication. No further
distribution of FTSE Data is permitted without FTSE's express
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content of this communication.
Glossary of Terms and Alternative Performance Measures (APM)
Total Assets
The total value of all assets held less all liabilities (other
than liabilities in the form of borrowings).
Net Asset Value
When a Company's borrowings are all short-term, flexible
facilities, Net Asset Value (NAV) equates to shareholders' funds,
being the value of all assets held less all liabilities (including
borrowings). Per share amounts are calculated by dividing the
relevant figure by the number of ordinary shares in issue
(excluding shares held in treasury). For the current and prior
period, the difference between borrowings at book value, borrowings
at par and borrowings at market value is negligible and no
reconciliation between NAV at book/ par value and NAV at fair value
is provided, as the NAV per share is the same on both bases.
Net Asset Value Per Share (APM)
At 31 March At 30 September
2022 2021
(audited)
================================================== ================ ================
Shareholders' funds (Net Asset a GBP171,438,000 GBP214,517,000
Value)
Ordinary shares in issue (excluding
treasury shares) b 61,815,632 61,815,632
==================================== ============ ================ ================
(a ÷
Net asset value per share b x 100) 277.3p 347.0p
==================================== ============ ================ ================
Discount/Premium (APM)
An investment trust's share price is rarely the same as its NAV.
When the share price is lower than the NAV per share it is said to
be trading at a discount. The size of the discount is calculated by
subtracting the share price from the NAV per share and is usually
expressed as a percentage of the NAV per share. If the share price
is higher than the NAV per share, this situation is called a
premium.
Net Liquid Assets
Net liquid assets comprises current assets less current
liabilities excluding borrowings.
Total Return (APM)
The total return is the return to shareholders after reinvesting
the net dividend on the date that the share price goes ex-dividend.
In periods where no dividend is paid, the total return equates to
the capital return.
31 March 31 March 30 September 30 September
2022 2022 2021 2021
NAV Share NAV Share price
price
================================== =================== ======== ======================== ============
Closing NAV/price
per share a 277.3p 248.0p 347.0p 344.0p
Dividend adjustment
factor * b 1.0123 1.0124 1.0338 1.0360
Adjusted closing c = a
NAV/price per share x b 280.7p 251.1p 358.7p 356.4p
Opening NAV/price
per share d 347.0p 344.0p 305.8p 253.0p
===================== =========== =================== ======== ======================== ============
(c ÷
Total return d) -1 (19.1%) (27.0%) 17.3% 40.9%
===================== =========== =================== ======== ======================== ============
* The dividend adjustment factor is calculated on the assumption
that the dividends paid by the Company during the period were
reinvested into shares of the Company at the cum income NAV/share
price at the relevant ex-dividend date.
Gearing (APM)
At its simplest, gearing is borrowing. Just like any other
public company, an investment trust can borrow money to invest in
additional investments for its portfolio. The effect of the
borrowing on the shareholders' assets is called 'gearing'. If the
Company's assets grow, the shareholders' assets grow
proportionately more because the debt remains the same. But if the
value of the Company's assets falls, the situation is reversed.
Gearing can therefore enhance performance in rising markets but can
adversely impact performance in falling markets.
Gross gearing, also referred to as potential gearing is the
Company's borrowings expressed as a percentage of shareholders'
funds (a ÷ c in the table below).
Net gearing, also referred to as invested gearing is borrowings
at book value less cash and cash equivalents (any certificates of
deposit are not deducted) and brokers' balances expressed as a
percentage of shareholders' funds (b ÷ c in the table below).
31 March 30 September
2022 2021
================================================== ============== ==============
Borrowings (at book cost) a GBP15,350,000 GBP10,364,000
Less: cash and cash equivalents (GBP1,573,000) (GBP593,000)
Less: sales for subsequent - -
settlement
Add: purchases for subsequent GBP89,000 -
settlement
================================ ================ ============== ==============
Adjusted borrowings b GBP13,866,000 GBP9,771,000
================================ ================ ============== ==============
Shareholders' funds c GBP171,438,000 GBP214,517,000
================================ ================ ============== ==============
a ÷
Gross gearing c 9.0% 4.8%
================================ ================ ============== ==============
b ÷
Net gearing c 8.1% 4.6%
================================ ================ ============== ==============
Active Share (APM)
Active share, a measure of how actively a portfolio is managed,
is the percentage of the portfolio that differs from its
comparative index. It is calculated by deducting from 100 the
percentage of the portfolio that overlaps with the comparative
index. An active share of 100 indicates no overlap with the index
and an active share of zero indicates a portfolio that tracks the
index.
Treasury Shares
The Company has the authority to make market purchases of its
ordinary shares for retention as treasury shares for future
reissue, resale, transfer, or for cancellation. Treasury shares do
not receive distributions and the Company is not entitled to
exercise the voting rights attaching to them.
Unlisted (Private) Company
An unlisted or private company means a company whose shares are
not available to the general public for trading and are not listed
on a stock exchange.
Sustainable Finance Disclosure Regulation ('SFDR')
The EU Sustainable Finance Disclosure Regulation ('SFDR') does
not have direct impact in the UK following Brexit. However, it
applies to third-country products marketed in the EU. As Keystone
Positive Change Investment Trust plc is marketed in the EU by the
AIFM, BG & Co Limited, via the National Private Placement
Regime (NPPR), the following disclosures have been provided to
comply with the high-level requirements of SFDR.
The AIFM has adopted Baillie Gifford & Co's Governance and
Sustainable Principles and Guidelines as its policy on integration
of sustainability risks in investment decisions.
Detail on the Investment Manager's approach to sustainability
can be found in the Governance and Sustainability Principles and
Guidelines document, available publicly on the Baillie Gifford
website
(bailliegifford.com/en/uk/about-us/literature-library/corporate-governance/governance-sustainability-principles-and-guidelines/).
Keystone Positive Change Investment Trust plc has sustainable
investment as its objective while seeking capital growth over the
long term. Pursuant to Article 9 of the Sustainable Finance
Disclosure Regulation, it aims to invest in companies whose
products, behaviour and/or services make a positive impact.
No index has been designated as a reference sustainable
benchmark against which the product can be measured to determine if
it is meeting its sustainable investment objective. However,
Baillie Gifford & Co has developed a robust approach using its
in-depth knowledge of companies to measure the impact of
sustainable investments. A positive change impact report is
published annually and is publicly available on the Baillie Gifford
website. This report shows how each company in the portfolio is
delivering positive change through its products and services. Key
metrics for each individual company in relation to the contribution
made by their products and services to the four impact themes and
their contribution to the Sustainable Development Goals are
included in the report.
The Regulatory Technical Standards ('RTS') under SFDR which
specify the details of the content and presentation of information
regarding the transparency of the promotion of environmental and/or
social characteristics or sustainable investments in the Company's
financial reports are not yet in force. However, the Company
believes the disclosures above comply with the principles-based
Level 1 requirements under SFDR.
Taxonomy Regulation
The Taxonomy Regulation establishes an EU-wide framework or
criteria for environmentally sustainable economic activities in
respect of six environmental objectives. It builds on the
disclosure requirements under SFDR by introducing additional
disclosure obligations in respect of AIFs that invest in an
economic activity that contributes to an environmental
objective.
The Company invests predominantly in shares of companies whose
products or services make a positive social or environmental
impact. A portion of these investments are in economic activities
that contribute to the environmental objectives of climate change
mitigation and climate change adaptation and as such may be
eligible to be assessed for Taxonomy alignment. The 'do no
significant harm' principle applies only to those investments
underlying the Company that take into account the criteria for
environmentally sustainable economic activities. The investments
underlying the remaining portion of the Company do not take into
account the EU criteria for environmentally sustainable economic
activities.
Disclosure of taxonomy alignment is dependent on disclosure by
undertakings of the proportion of their products or services (as
measured by turnover, capital expenditure and operating
expenditure) that are associated with Taxonomy-aligned economic
activities. These disclosures of such undertakings are likely only
to be available from 1 January 2023 onwards. As a result, the AIFM
at this time is not able to provide standardised and comparable
disclosures on the proportion of environmentally sustainable
investments (including the proportion of enabling and transitional
activities) according to the Taxonomy Regulation.
-Ends-
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END
IR BKQBKFBKDOPK
(END) Dow Jones Newswires
May 05, 2022 02:01 ET (06:01 GMT)
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