Statement re Gearing Policy

Keystone Investment Trust plc

LEI: 5493002H3JXLXLIGC563

HEADLINE:  Gearing policy

The Board has been monitoring closely the effect on the Company’s balance sheet of the extremely volatile recent market conditions.  Disposals have been made in accordance with the Board’s gearing policy while also having regard to individual stock valuations, liquidity and the balance of the portfolio. 

At close of business on 25 March 2020, the Company’s balance sheet showed gearing of 13.5%.

Following careful consideration, the Board has decided to amend its gearing policy with the intention of safeguarding shareholder value as far as possible.  The revised policy is that the portfolio manager may not make net purchases at times when net borrowings exceed 15% of net assets and, if movements in the NAV cause that ratio to increase above 20%, must take action to reduce the gearing ratio.  Notwithstanding this change to policy, in the current uncertain and volatile markets the Board will continue to monitor gearing and liaise closely with Invesco to actively manage borrowing and cash levels.

This change to policy has been facilitated by a renegotiation of covenants under the Company’s borrowing facility, which has been reduced to £40 million (previously £45 million).  The covenant for maximum indebtedness has been increased to 25% of net assets from 20%, and total assets must not fall below £120 million (previously £150 million).

Chairman Karen Brade commented: “The Board is pleased to be able to announce these changes to help our portfolio manager navigate these uncharted waters.  We are grateful to our lending bank for their assistance in these challenging times.”

Portfolio manager James Goldstone commented “The last three weeks have seen volatility in markets and indiscriminate selling of equities of historic proportions. Whilst there remains considerable uncertainty, concerted action is being taken to mitigate the impact of the Covid-19 pandemic on corporate earnings and balance sheets. Significant value has now emerged in many shares and attractive investment opportunities exist for those with a long-term horizon. I would like to thank the Board for the steps they have taken and the flexibility that this will confer in turbulent times.”

Invesco Asset Management Limited
Company Secretary

27 March 2020