Half-year Report

RNS Number : 1182X

Keystone Positive Change I.T. PLC

30 April 2021

 

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 2021

¾ Baillie Gifford took over the management of the portfolio on 10 February 2021.

¾ The portfolio was transitioned to Baillie Gifford's Positive Change portfolio of global companies. The transition coincided with a period of considerable volatility in global stock markets,   which made the managers' steadfast focus on the long-term prospects for businesses in the portfolio even more important.

¾ The Board believes that the Company is well positioned for long-term success, with a differentiated investment objective that will attract new 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 2021 the Company had total assets of £ 184.1 million.

Keystone Positive Change is managed by Baillie Gifford, an Edinburgh-based fund management group with approximately £ 340 billion under management and advice as at 28 April 2021.

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 Refinitiv/Baillie Gifford and relevant underlying index providers. See disclaimer at end of this announcement.

‡ 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.

30 April 2021

For further information please contact:

Alex Blake, Baillie Gifford & Co 

Tel: [phone]

Mark Knight, Four Communications

Tel: [phone] or 07803 758810

 

The following is the unaudited Interim Financial Report for the six months to 31 March 2021.

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

30 April 2021

Chairman's Statement

In December 2020 the Board announced that it had undertaken an extensive review of the Company's strategy and had conducted a competitive tender in relation to the Company's investment management arrangements.  For the Company to occupy a core position in shareholders' portfolios and to facilitate identification of the best investment opportunities, the Board had concluded that it should change the Company's investment mandate to a global all-cap strategy that would respond to a growing desire among investors for a more responsible and sustainable approach to investment, and that this strategy should be delivered by Baillie Gifford & Co Limited ('Baillie Gifford'). 

At a General Meeting  on 10 February 2021 shareholder approval was given to appoint Baillie Gifford and implement its Positive Change strategy, committed to achieving positive impact as well as long-term capital growth.  The strategy invests in companies that offer solutions to global challenges in areas such as healthcare, education, social inclusion and the environment. It has been tailored to take advantage of the Company's investment trust structure.

The Company's name, London Stock Exchange ticker and web address were respectively changed to Keystone Positive Change Investment Trust plc, KPC and keystonepositivechange.com. Baillie Gifford agreed to waive its management fee for the first six months.

The portfolio was reorganised completely in the second half of February 2021, with the purchase of 33 new global growth equities that will contribute to positive social or environmental change. As at 31 March 2021, four legacy illiquid holdings remained and a small balance which was held in a FTSE 250 ETF, awaiting market opening for allocation to a target investment.

Stock market volatility worked against the Company initially, with valuations declining in the period following the portfolio transition. As long-term investors, however, the period from 10 February to 31 March 2021 is considered too brief to form a useful perspective on the new mandate.

Performance

Over the six months to 31 March 2020, the Company's net asset value per share ('NAV') total return was -0.9% compared to a total return of +14.2% for the comparative index, being a chain-linked 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. The share price total return was +14.6% over the six months to 31 March 2021, as the discount to NAV narrowed from 17.3% to 4.5%.

The following table shows performance over the six-month period, segmented into the periods to and from 10 February 2021 under the management of Invesco Fund Managers Limited and Baillie Gifford respectively.

Total Return	30 September to 31 March (%)	30 September to 10 February (%)	10 February to 31 March (%)
NAV	-0.9	+14.2	-13.2
Share Price	+14.6	+35.8	-15.6
Comparative Index	+14.2	+14.2	0.0

Objective and Investment Policy

At the General Meeting, shareholders approved changes to the Company's objective and investment policy to incorporate two equally weighted objectives to:

¾ generate long term capital growth with the aim of the NAV total return exceeding that of the MSCI All Country World Index in sterling terms by at least 2 per cent. per annum over rolling five-year periods; and

¾ 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.

The changes to the objective and investment policy were approved by 95.8% of the votes lodged.

Dividends

The new investment objective and policy will result in returns from the Company's portfolio being generated predominantly from capital growth. As such, the Company expects to pay a significantly lower level of dividend in future.  In respect of the Company's year ended 30 September 2020, the Board declared total dividends of 11.2 pence per Ordinary Share. To mitigate the impact on shareholder income in the short term, as previously announced, the Board intends to utilise the Company's reserves to maintain the dividend in respect of the financial year to 30 September 2021.

The fourth interim dividend for 2020, of 4.0p, was paid on 24 December 2020 to shareholders on the register at the close of business on 4 December 2020. The first interim dividend for 2021, of 2.4p, was paid on 12 March 2021 to shareholders on the register at the close of business on 19 February 2021. A second interim dividend of 2.4p will be paid on 11 June 2021 to shareholders on the register at close of business on 21 May 2021, with the ex-dividend date being 20 May 2021. It is expected that the Company's dividend policy for 2022 will be amended, such that no interim dividends will be paid, and any annual dividend will be paid only to the extent needed for the Company to maintain its investment trust status.

Share Buy Backs and Issuance

In the two months to the end of November 2020, the Company bought back 423,735 shares into treasury, at a cost of £1.1 million and a weighted average discount to NAV of 17.1%. At 31 March 2021, 5,778,363 shares were held in treasury. Such shares have no voting rights and are not entitled to dividends. They are available for reissue when market conditions permit, being a price representing a premium to the prevailing NAV and, as such, accretive to existing shareholders.

The discount to NAV at which the shares have traded narrowed considerably following the announcement of the proposed appointment of Baillie Gifford in December 2020. As at close of business on 27 April 2021, the discount was 1.8% compared with 17.3% at the start of the financial year.  Whilst this is encouraging, and the Board also notes the significant increase in secondary market trading volumes, the Board will continue to review the discount or premium at which the shares trade over the coming months and consider, in discussion with major shareholders, the need to address any imbalance of demand and supply

Outlook

Positive Change is an investment strategy that seeks to align shareholders' interests as investors with their interests as members of wider society and inhabitants of an environment threatened by climate change, amongst other factors. The portfolio managers are focused on finding the companies that will progress through current events and emerge with an even more dominant position and strong prospects, while contributing to building a better outcome for society. In some ways and for some businesses, the Covid-19 crisis is accelerating our path towards a future already anticipated by existing commercial and lifestyle trends. The Positive Change team has an investment horizon of five years and beyond, with turnover in the portfolio of 30-60 stocks expected to be typically no more than 20% per annum.  Commentary on the Managers' investment philosophy and activity over the short period since their appointment can be found in the Managers' Report below.

The Board believes that the Company is well positioned for long term success with a differentiated investment objective that will attract new investors and help increase the size of the Company.  It has been designed to make the best use of the unique features of the investment trust structure, by the use of gearing and, by investing in public and private companies. We look forward to embarking on this new journey, thank our long-term shareholders for their valued ongoing support, and welcome new shareholders who have purchased since the change of strategy.

Karen Brade

Chairman

30 April 2021

 

Interim Management Report

Keystone Positive Change Investment Trust has two equally important objectives: to deliver attractive investment returns and to contribute towards a more sustainable and inclusive world. In this, our very first Managers' Report for the trust, we felt it would be helpful to outline our philosophy before sharing our short-term activity and long-term ambition.

Philosophy

After centuries of progress and advancement, humanity is now facing a number of challenges that must be addressed in order to place our society onto a path of sustainable development. We need to combat climate change and other environmental degradations. We need to continue improving living standards for the majority. And as Covid-19 has sadly shown us, we need to invest heavily in healthcare so fewer people have their lives cut short by diseases. We believe that the best way for the investment community to contribute to this effort is through a positive and proactive approach, where investing is focused on companies that are addressing those challenges, rather than simply excluding companies that are causing harm.

We live in an extraordinarily exciting period where the advancements of technologies are enabling new solutions and innovations. Precision agriculture is helping farmers to become more sustainable and productive. New classes of therapeutics are helping to treat previously incurable diseases. And mobile and digital technologies are democratising the access to information, education, and financial services. Our focus is on companies that are challenging the status quo and driving a positive change in society. We look for companies that are led by ambitious and committed management teams; where their products and services are helping to address a sustainability challenge; and where there is the opportunity to build a scalable business that will generate long-term value for society and shareholders. Clearly, not every company we invest in will be successful, but we are confident that the successful ones will make an outsized impact on investment returns and sustainable development.

This style of investment requires an active and long-term approach. The challenges to sustainable development are numerous and interlinked and the impact of companies on society is often complex and nuanced. We do not believe that broad-brush approaches such as negative screening or incorporating third-party ESG scores provide much insight. Instead, we leverage in-depth, fundamental research into companies and industries. We use diverse sources of information to help us make informed judgements. A long-term horizon is absolutely crucial, too. Challenges such as climate change will require years and decades of investments. In addition, most companies will face temporary setbacks at some stage. We aim to support companies through those periods of difficulties and encourage management teams to invest for the long-term.

Our aim is to contribute towards a more sustainable and inclusive world whilst generating attractive long-term investment returns. This leads to our dual objectives. On investment, we aim to outperform the global equities benchmark over rolling 5-year periods by at least 2% per annum. On impact, our aim is to invest in and support companies that are making meaningful contributions to solving sustainability and social challenges.

The portfolio will invest in 30-60 exceptional companies whose products and services are proactively solving challenges across our four impact themes: social inclusion and education; environment and resource needs; healthcare and quality of life; and base of the pyramid (addressing the needs of those at the bottom of the global income ladder).

Short Term: The First Six Weeks

Following our appointment at the General Meeting on 10 February 2021, our initial priority was to ensure a smooth transition from the previous portfolio of UK companies to the Positive Change portfolio of global companies. As at the end of March 2021, we are pleased that this process is nearing completion.

Our investment horizon is five years or more but it is worth noting that global stock markets were unusually volatile during the first few months of 2021, which coincided with the period during which we undertook the transition of the portfolio. Amid the recent short-term volatility in stocks, our steadfast focus on the long-term progress for businesses in the portfolio remains even more important.  We are investing in a technological golden age, which is facilitating structural changes in a multitude of industries from healthcare to energy.  Companies in the portfolio are very much at the forefront of some of these changes and will be instrumental in helping us to achieve our two equally important objectives. 

We invested in two new holdings at the end of March which we believe will meet these long-term objectives. Both companies are in the Healthcare & Quality of Life theme although they are contributing towards very different challenges.

Firstly, Peloton, which is a pioneer of connected fitness equipment for use at home and has an ambitious goal of achieving 100 million subscribers over the coming decades. The beneficial effects of fitness are well known and include lower risk of heart disease, stroke, diabetes, depression, dementia, and certain types of cancer. By lowering friction and, over the medium term, cost, we believe Peloton will help drive better health outcomes alongside being a profitable and growing business.

Secondly, AbCellera, which performs antibody discovery services for pharmaceutical and biotech partners. The company increases the speed of antibody discovery and potentially discovers better quality antibodies by leveraging on its in-house technology. By achieving this, we expect AbCellera to help improve and expand antibody treatments for large patient populations suffering from some of the world's most common diseases, including cancer. A meaningful share of the antibodies therapeutic market could lead to a very attractive investment outcome.

These two investments were funded by reductions to Alphabet and Japanese medical platform, M3.

Long Term: Looking Ahead to a Positive Future

Technological advancements and increasing awareness of sustainability issues are providing powerful tailwinds for innovative companies that are addressing societal challenges. This creates exciting opportunities for long-term and purpose-driven investors. We are continuing our research on food and agriculture. This is a sector that is ripe for disruption, from plant-based food to vertical farming. We are also researching the fashion industry, which has enormous environmental and social impact. Here, changing attitudes towards second-hand goods and new sustainable materials are presenting interesting investment opportunities. Other areas that we are looking at include digital connectivity in Africa, innovations related to renewable power generation, energy storage and electrification, and healthcare. 

With Keystone Positive Change Investment Trust, we have expanded our investable universe to include less liquid listed and private companies. There are plenty of exciting opportunities in this space. In addition, the impact of our activity - providing primary capital to help businesses scale - is potentially greater.

We're working closely with the Private Companies team at Baillie Gifford and are inspired by the number of private companies which have the potential to be holdings within the investment trust. We have the ambition for 5-10% of the portfolio to be invested in private companies within a few years and for that proportion to increase gradually over time (up to a maximum of 30%).

We look forward to sharing the outcome of our research over the coming months. We are just at the very beginning of our Keystone Positive Change journey and we thank shareholders for joining us.

Lee Qian and Kate Fox

Portfolio Managers

30 April 2021

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 and Education			Environment and Resource Needs			Healthcare and Quality of Life				Base of the Pyramid
Holding	Value £'000	%	Holding	Value £'000	%	Holding	Value £'000	%	Holding		Value £'000	%
ASML	13,233	7.2	Tesla	15,507	8.4	Moderna	10,393	5.6	Bank Rakyat   Indonesia		3,974	2.2
TSMC	11,921	6.5	Umicore	6,477	3.5	Illumina	8,189	4.5
MercadoLibre	8,837	4.8	NIBE Industrier	5,743	3.1	M3	8,080	4.4
Alphabet	5,506	3.0	Deere	5,575	3.0	Dexcom	6,680	3.6
Alibaba	4,547	2.5	Xylem	4,936	2.7	10x Genomics	5,975	3.2
Shopify	4,547	2.5	Ørsted	4,085	2.2	Teladoc	5,235	2.8
FDM	1,766	1.0	Novozymes	3,723	2.0	Abiomed	4,644	2.5
Coursera	648	0.4	Beyond Meat	2,891	1.6	Chr. Hansen	4,535	2.5
			Ecolab	2,785	1.5	Alnylam    Pharmaceuticals	4,071	2.2
						Sartorius	3,795	2.1
						Discovery Holdings	3,565	1.9
						Glaukos	3,547	1.9
						Peloton  Interactive	3,000	1.6
						AbCellera  Biologics	1,102	0.6
						Berkeley Lights	802	0.4
	51,005	27.9		51,722	28.0		73,613	39.8			3,974	2.2
								Positive Change holdings			180,314	97.9
								Legacy holdings			3,222	1.8
								Net liquid assets			548	0.3
								Total assets			184,084	100.0

Condensed Income Statement (unaudited)

	For the six months ended 31 March 2021			For the six months ended 31 March 2020			For the year ended 30 September 2020
								(audited)
	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
Losses on investments	-	(3,325)	(3,325)	-	(71,142)	(71,142)	-	(40,377)	(40,377)
Currency gains/(losses)	-	1,057	1,057	-	(780)	(780)	-	(473)	(473)
Income from investments and interest receivable	1,721	-	1,721	3,287	-	3,287	5,848	-	5,848
Investment management fee (note 3)	(100)	(299)	(399)	(102)	(306)	(408)	(192)	(576)	(768)
Other administrative expenses	(199)	(166)	(365)	(234)	(127)	(361)	(453)	(133)	(586)
Net return before finance costs and taxation	1,422	(2,733)	(1,311)	2,951	(72,355)	(69,404)	5,203	(41,559)	(36,356)
Finance costs of borrowings	(24)	(51)	(75)	(289)	(5,714)	(6,003)	(321)	(5,795)	(6,116)
Net return on ordinary activities before taxation	1,398	(2,784)	(1,386)	2,662	(78,069)	(75,407)	4,882	(47,354)	(42,472)
Tax on ordinary activities	(49)	-	(49)	(38)	-	(38)	(67)	-	(67)
Net return on ordinary activities after taxation	1,349	(2,784)	(1,435)	2,624	(78,069)	(75,445)	4,815	(47,354)	(42,539)
Net return per ordinary share (note 4)	2.18p	(4.50p)	(2.32p)	3.94p	(117.17p)	(113.23p)	7.41p	(72.87p)	(65.46p)
Note: Dividends paid and payable per share (note 5)

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 2021 £'000	At 30 September 2020 (audited) £'000
Fixed assets
Investments held at fair value through profit or loss (note 6)	183,536	210,738
Current assets
Debtors	234	54
Cash and cash equivalents	900	620
	1,134	674
Creditors
Amounts falling due within one year:
Bank loan (note 7)	-	(19,180)
Other creditors	(586)	(1,657)
	(586)	(20,837)
Net current assets/(liabilities)	548	(20,163)
Total assets less current liabilities	184,084	190,575
Creditors
Amounts falling due after more than one year:
Cumulative preference shares (note 8)	(250)	(250)
Net assets	183,834	190,325
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	170,924	174,808
Revenue reserve	2,235	4,842
Shareholders' funds	183,834	190,325
Net asset value per ordinary share*	297.39p	305.80p

*  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 2021

	Share capital £'000	Share premium account £'000	Capital redemption reserve £'000	Capital reserve* £'000	Revenue   reserve  £'000	Shareholders' funds £'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

For the six months ended 31 March 2020

	Share capital £'000	Share premium account £'000	Capital redemption reserve £'000	Capital reserve* £'000	Revenue  reserve  £'000	Shareholders' funds £'000
Shareholders' funds at 1 October 2019	6,760	3,449	466	239,073	7,858	257,606
Net return on ordinary activities after taxation	-	-	-	(78,069)	2,624	(75,445)
Shares bought back into treasury (note 9)	-	-	-	(12,336)	-	(12,336)
Dividends paid during the period (note 5)	-	-	-	-	(4,792)	(4,792)
Shareholders' funds at 31 March 2020	6,760	3,449	466	148,668	5,690	165,033

*The Capital Reserve balance at 31 March 2021 includes investment holding losses of £30,471,000 (31 March 2020 - losses of £69,348,000)

 

Condensed Cash Flow Statement (unaudited)

	Six months to 31 March 2021	Six months to 31 March 2020
	£'000	£'000
Cash flows from operating activities
Net return before finance costs and taxation	(1,311)	(69,404)
Net losses on investments	3,325	71,142
Currency (gains)/losses	(1,057)	551
Overseas tax incurred	(38)	(38)
Changes in debtors and creditors	(380)	(252)
Scrip dividends	-	(217)
Net cash inflow from investing activities	24,720	9,804
Net cash inflow from operating activities*	25,259	11,586
Shares bought back into treasury	(1,100)	(12,290)
Net cash outflow from repayment of bank loans and debentures	(19,183)	(14,806)
Interest and cumulative preference share dividends paid	(93)	(1,688)
Dividends paid	(3,956)	(4,792)
Net cash outflow from financing activities	(24,332)	(33,576)
Increase/(decrease) in cash and cash equivalents	927	(21,990)
Exchange movements	3	-
Cash and cash equivalents at start of period†	(30)	22,557
Cash and cash equivalents at end of period	900	567

*  Cash from operating activities includes dividends received of £1,670,000 (31 March 2020 - £3,040,000) and interest received of £nil (31 March 2020 - £1,000).

† Cash and cash equivalents at 30 September 2020 reconciled to the balance sheet as follows: cash held at custodian £620,000 less overdraft included in short term creditors of £650,000.

 

Notes to the condensed financial statements (unaudited)

1.	The condensed Financial Statements for the six months to 31 March 2021 comprise the statements set out above, together with the related notes 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. They have not been audited or reviewed by the Auditors pursuant to the Auditing Practices Board Guidance 'Review of Interim Financial Information'. The condensed Financial Statements for the six months to 31 March 2021 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 2020. 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 2020 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 a statement 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 coronavirus (Covid-19) pandemic. It is the Directors' opinion that the Company has adequate resources to continue in operational existence for the foreseeable future. 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 £100 million of market capitalisation, 0.65% on the next £150 million of market capitalisation and 0.55% on the remaining market capitalisation. Management fees are calculated and payable on a quarterly basis, based on market capitalisation, which 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 have 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 per ordinary share	Six months to  31 March 2021 £'000	Six months to  31 March 2020 £'000	Year to  30 September 2020 (audited) £'000
	Revenue return on ordinary activities after taxation	1,349	2,624	4,815
	Capital return on ordinary activities after taxation	(2,784)	(78,069)	(47,354)
	Total net return	(1,435)	(75,445)	(42,539)
	Weighted average number of ordinary shares in issue	61,877,555	66,629,936	64,983,327
	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 to  31 March 2021 £'000		Six months to  31 March 2020 £'000		Year to  30 September 2020 (audited) £'000
	Amounts recognised as distributions in the period:
	Special of 0.734p paid December			-		496		496
	Fourth interim of 4.0p paid December			2,473		2,704		2,704
	First interim of 2.4p paid March			1,483		1,592		1,592
	Second interim of 2.4p paid June			-		-		1,537
	Third interim of 2.4p paid September			-		-		1,502
				3,956		4,792		7,831
	Amounts paid and payable in respect of the period:
	First interim of 2.4p paid March			1,483		1,592		1,592
	Second interim of 2.4p payable/paid June			1,483		1,537		1,537
	Third interim of 2.4p paid September			-		-		1,502
	Fourth interim of 4.0p paid December			-		-		2,473
				2,966		3,129		7,104
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 though profit or loss
	As at 31 March 2021	Level 1 £'000		Level 2 £'000		Level 3 £'000		Total £'000
	Listed equities	183,521		-		-		183,521
	Unlisted equities	-		-		15		15
	Total financial asset investments	183,521		-		15		183,536
	As at 30 September 2020 (audited)	Level 1 £'000		Level 2 £'000		Level 3 £'000		Total £'000
	Listed equities	210,713		-		-		210,713
	Unlisted equities	-		-		25		25
	Total financial asset investments	210,713		-		25		210,738
	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.	The Company's £40 million committed revolving credit facility with The Bank of New York Mellon, London Branch, was repaid and expired on 5 February 2021. At 31 March 2021 the Company had not replaced the facility and there were no outstanding drawings (30 September 2020 - £19.2 million).
8.	Creditors: amounts falling due after more than one year Long term creditors consist of 250,000 5% cumulative preference shares of £1 each. The preference shares dividend is paid bi-annually, in March and September.
9.	Share Capital: allotted, called up and fully paid		At 31 March 2021				At 30 September 2020 (audited)
			Number		£'000		Number		£'000
	Ordinary shares of 10p each in issue		61,815,632		6,182		62,239,367		6,224
	Ordinary shares of 10p each held in treasury		5,778,363		578		5,354,628		536
			67,593,995		6,760		67,593,995		6,760
	In the six months to 31 March 2021, the Company bought back into treasury 423,735 ordinary shares (nominal value £42,000, representing 0.7% of the issued share capital as at 30 September 2020) at a discount to net asset value, at a total cost of £1,100,000 (six months to 31 March 2020 - 3,564,158 at a total cost of £12,336,000, with the number of shares bought back prior to 13 February 2020 restated for the 5 for 1 split on that date). At 31 March 2021 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 £618,156. In accordance with authorities granted at the last Annual General Meeting in February 2021, 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 £198,000 (year to 30 September 2020 - £323,000) and transaction costs on sales amounted to £219,000 (year to 30 September 2020 - £56,000). Total transaction costs amounted to £417,000 (year to 30 September 2020 - £379,000).
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.

 

	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 Also described as shareholders' funds, Net Asset Value (NAV) is the value of all assets held less all liabilities (including borrowings). The NAV per share is calculated by dividing this amount by the number of ordinary shares in issue (excluding shares held in treasury). Net Asset Value Per Share (APM) At 31 March 2021  At 30 September 2020 (audited)  Shareholders' funds (Net Asset Value) a £183,834,000 £190,325,000 Ordinary shares in issue (excluding treasury shares) b 61,815,632 62,239,367 Net asset value per share (a ÷ b x 100) 297.39p 305.80p Net Liquid Assets Net liquid assets comprises current assets less current liabilities (excluding borrowings). Discount/Premium (APM) As stockmarkets and share prices vary, 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. 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. Net Asset Value Total Return 31 March 2021 NAV 30 March 2021 Share price Closing NAV/price per share a 297.39p 284.00p Dividend adjustment factor* b 1.018973 1.020623 Adjusted closing NAV/price per share c = a x b 303.03p 289.86p Opening NAV/price per share d 305.80p 253.00p Total Return (c ÷ d) - 1 (0.9%) 14.6% † 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. Potential gearing is the Company's borrowings expressed as a percentage of shareholders' funds. Invested gearing/net cash represents borrowings at par less cash and cash equivalents (as adjusted for investment and share buy-back/issuance transactions awaiting settlement) expressed as a percentage of shareholders' funds. 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.
	Glossary of Terms and Alternative Performance Measures (APM) (Ctd) 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.

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; market risk; investment risk; share price and dividend risk; gearing risk; reliance on the manager and other service providers; pandemic risk; and regulatory risk. An explanation of these risks and how they are managed is set out on pages 8 to 11 of the Company's Annual Financial Report for the year to 30 September 2020 which is available on the Company's website: keystonepositivechange.com. The principal risks and uncertainties have not changed in nature since the date of that report, notwithstanding the change in investment portfolio from primarily UK equities to a global portfolio, and the change of AIFM from Invesco to Baillie Gifford & Co Limited.

‡ 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 on the Managers' website keystonepositivechange.com‡ on or around 11 May 2021.

Automatic Exchange of Information

In order to fulfil its obligations under UK tax legislation relating to the automatic exchange of information, Keystone Positive Change Investment Trust plc is required to collect and report certain information about certain shareholders.

The legislation requires investment trust companies to provide personal information to HMRC on certain investors who purchase shares in investment trusts. Accordingly, Keystone Positive Change Investment Trust plc will have to provide information annually to the local tax authority on the tax residencies of a number of non-UK based certificated shareholders and corporate entities.

All new shareholders, excluding those whose shares are held in CREST, who come on to the share register will be sent a certification form for the purposes of collecting this information.

For further information, please see HMRC's Quick Guide: Automatic Exchange of Information - information for account holders gov.uk/government/publications/exchange-of-information- account-holders.

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 inaccurate.

Without limiting the foregoing, no Provider shall have any liability whatsoever to you, whether in contract (including under an indemnity), in tort (including negligence), under a warranty, under statute or otherwise, in respect of any loss or damage suffered by you as a result of or in connection with any opinions, 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 internal use, may not be reproduced or redisseminated in any form 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 intended to constitute investment advice or a recommendation to 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 performance analysis, forecast or prediction. The MSCI information is provided on an 'as is' basis and the user of this information assumes the entire risk of any use made of this information. MSCI, each of its affiliates and each other person involved in or related to compiling, computing or creating any MSCI information (collectively, the 'MSCI Parties') expressly disclaims all warranties (including, without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCI Party have any liability for any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits) or any other damages. (msci.com).

FTSE Index Data

FTSE International Limited ('FTSE') © FTSE 2021. 'FTSE®' is 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 written consent. FTSE does not promote, sponsor or endorse the content of this communication.

ends -

 

END

 

 

IR BXGDSLUDDGBC