TIDMKPC
RNS Number : 9819H
Keystone Positive Change I.T. PLC
30 November 2022
RNS Announcement
Keystone Positive Change Investment Trust plc (KPC)
Regulated Information Classification: Annual Financial and Audit
Reports
Legal Entity Identifier: 5493002H3JXLXLIGC563
Results for the year to 30 September 2022
Over the year to 30 September 2022, the Company's net asset
value per share (NAV) total return was (35.2%) compared to a total
return of (3.7%) for the Comparative Index (in sterling terms). The
share price total return for the same period was (43.3%) as the
discount widened from 0.9% to 13.2%.
Past performance is not a guide to future performance. Total
return information is sourced from Baillie Gifford/ Refinitiv. See
disclaimer at the end of this announcement. For a definition of
terms see Glossary of Terms and Alternative Performance Measures at
the end of this announcement.
Keystone Positive Change Investment Trust plc ('Keystone' or
'the Company') aims 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 annum over rolling five
year periods; and to 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 performance target stated is in no way guaranteed.
Capital growth takes priority over income and dividends. Keystone
is managed by Baillie Gifford & Co, an independent fund
management group, which has around GBP230 billion under management
and advice.
Keystone 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 at keystonepositivechange.com ++ . Past performance
is not a guide to future performance. See disclaimer at the 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 November 2022
For further information please contact:
Alex Blake, Baillie Gifford & Co
Tel: 0131 275 2000
Jonathan Atkins, Four Communications
Tel: 0203 920 0555 or 07872 495396
The following is the Preliminary Results Announcement for the
year to 30 September 2022 which was approved by the Board on 29
November 2022.
Chair's Statement
The past year has been characterised by turmoil in the financial
markets, high inflation and rising interest rates. Much of it has
been due to the challenging measures introduced globally in
response to the pandemic and the effects of the war in Ukraine.
Keystone Positive Change ('KPC') has two objectives of equal
importance: to generate attractive long-term returns and to invest
in companies instrumental in contributing to solutions in areas
such as healthcare, education, social inclusion and the
environment. The Positive Change team have an investment horizon of
five years and beyond for these structural themes to play out.
Notwithstanding the extremely disappointing financial performance
of the Company during the year under review, your Board remains
confident in the long-term investment and strategic rationale
behind the positive change strategy and the team implementing it.
As you would expect, your Board has closely monitored the Manager's
rationale and belief in the operational strength of the portfolio
companies, ensuring that the process includes regular challenge of
the initial theses for investment. We are confident that the high
conviction portfolio will come good.
Performance
Over the year to 30 September 2022, the Company's net asset
value ('NAV') total return (in sterling terms) was -35.2% compared
to -3.7% for the comparative index, the MSCI All Country World
Index. The Managers' Report on pages 4 to 6 provides further detail
on the main contributors to performance over the period.
The share price total return was -43.3%, as the discount widened
from 0.9% to 13.2% reflecting a widening of discounts across
investment companies generally, and exacerbated by a broader
deterioration in sentiment towards growth style mandates. The
Company has the power to buy back its own shares and will do so
when the Board considers that such activity will benefit ongoing
shareholders. The Board does not consider that buying back shares
during periods when market sentiment is universally negative will
improve the Company's rating. Shrinking the asset base, thereby
increasing the ongoing charges ratio and reducing the shares'
liquidity, may however be detrimental. The Board will, of course,
be mindful of the range of options at its disposal to address,
where possible, the discount at which the Company's shares trade
relative to its NAV.
Impact
The Company is focused on listed and private companies for whom
solving a social or environmental challenge is core to their
business. Amid a backdrop of uncertainty we believe that now, more
than ever, investing for positive change is important and full of
opportunity. We aim to invest in exceptional companies whose
products, services and behaviour generate meaningful improvements.
Companies held in the portfolio must be positioned to make a
significant contribution to solutions in one of four impact
areas:
- Social Inclusion and Education;
- Environment and Resources;
- Healthcare and Quality of Life; and
- Base of the Pyramid (addressing the needs of the poorest four billion people in the world).
The Manager's impact analysis is based on robust, bottom-up
research that is independent from, but complementary to, the
investment analysis. Two senior impact analysts form part of the
decision-making team, with additional impact analysts providing
support. Further details of the Manager's approach are provided on
the following pages.
In August 2022, the Company published its inaugural KPC Impact
Report on the contribution that all companies within the portfolio
have made towards a more sustainable and inclusive world, through
monitoring and measuring the impact that their products and
services are having on society and the environment. The Impact
Report is available on the Company's website.
Gearing
The Company started the financial year with net gearing of 4.6%,
having drawn down GBP10 million of a GBP25 million multi-currency
revolving credit facility provided by The Royal Bank of Scotland
International Limited. At 30 September 2022, net gearing stood at
10.6%, the Company having drawn down an additional GBP5 million
during December 2021 and dollar strength increasing the value of
the US$ element of the loan in sterling terms. The Company is
expected to continue to maintain a modest level of structural
gearing, which should enhance shareholder returns over the long
term.
Costs
Under the new management arrangements, 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. Baillie Gifford waived
their management fee for the first six months following their
appointment in February 2021.
The ongoing charges for the year to 30 September 2022 were
0.90%. Last year, the ongoing charges were 0.51% (and would have
been 0.82% without Baillie Gifford's fee waiver). The Board expects
the Company to grow, and benefit increasingly from the lower rate
of management fee at the upper tier as it does so. The higher base
fee recognises the Manager's investment of time and resource in
pursuit of the Company's twin objectives, and the Board is
confident that long-term performance, in financial and impact
terms, will justify the level of ongoing charges in the meantime.
No performance fee is payable under the new management
arrangements.
Dividend
KPC's investment objective is to generate returns from the
Company's portfolio, predominantly from capital growth. A change to
the Company's dividend policy was approved at the Annual General
Meeting ('AGM') in February 2022, such that no interim dividends
will be paid, and any annual dividends will be paid only to the
extent needed for the Company to maintain its investment trust
status. In accordance with the dividend policy, the Board is
recommending a final dividend of 0.4p per share. This will be
proposed for shareholders' approval at the AGM to be held on 8
February 2023 and, if approved, will be paid on 15 February 2023 to
shareholders on the register at close of business on 20 January
2023.
The Board
Andrew Fleming was appointed as a Director on 1 March 2022 to
replace John Wood, who retired at the last AGM John's wise counsel
will be missed, but Andrew brings considerable fund management,
investment trust and impact investment experience to the Board. The
Company is compliant with the gender representation requirements of
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. The most recent recruitment process had a
shortlist that comprised 50% women and 33% candidates of a
non-white ethnic background.
Annual General Meeting
We anticipate welcoming shareholders to the AGM in London on 8
February 2023. Notwithstanding the relaxation of government
controls, Covid-19 related rules might tighten at short notice in
the event of a winter resurgence, restricting the meeting to the
minimum number. To ensure your votes are counted in that
eventuality, I would ask shareholders to submit their votes by
proxy before the applicable deadline on 6 February 2023 and to
submit any questions for the Board or Manager in advance by email
to trustenquiries@bailliegifford.com or by calling 0800 917 2112
(Baillie Gifford may record your call). This will not impede your
subsequent attendance in person should you wish to be present,
assuming regulations permit. Any changes to the AGM arrangements
will be announced to the London Stock Exchange regulatory news
service and made available at keystonepositivechange.com .
Outlook
The Positive Change team's investment horizon of five years and
beyond allows the team to focus on long-term structural trends
which present compelling investment opportunities in support of a
sustainable and inclusive world. The Board supports the team in
making full use of the unique features of the investment trust
structure, including investing in both public and private
companies. We are grateful for the continued support of our
long-term shareholders and we are delighted to welcome our many new
shareholders.
Karen Brade
Chair
29 November 2022
Past performance is not a guide to future performance. Total
return information is sourced from Baillie Gifford/ Refinitiv. See
disclaimer at the end of this announcement. For a definition of
terms used see Glossary of Terms and Alternative Performance
Measures at the end of this announcement.
Managers' Report
The past year has been an unsettling one in several ways. Our
hearts go out to those whose lives have been upended by conflicts.
While geopolitical events have dominated the headlines, the pace of
climate change has also accelerated, as evidenced by heatwaves in
India and Europe and the devastating flooding in Pakistan. This
challenging backdrop, combined with supply chain disruptions and
higher inflation and interest rates, created a much tougher
environment for equity investors, especially those focusing on
growth equities. Over the past twelve months, the Company's NAV
total return was minus 35.2%, compared to minus 3.7% for the
benchmark MSCI All Country World Index (in sterling terms).
The short-term underperformance is understandably painful for
the Company's shareholders. Stock selection and gearing were the
dominant drivers of negative returns over the year. The most
notable detractor to performance was Moderna, a company that played
a critical role during the Covid-19 pandemic. However, somewhat
contrary to broader sentiment and while not wanting to downplay the
phenomenal progress and societal impact the company has achieved
during the pandemic, it is the broader potential of Moderna's
technology which underpins the long-term investment case. Messenger
RNA ('mRNA') technology has potential far beyond the Covid-19
vaccine, spanning respiratory diseases more broadly (such as flu
and RSV), latent diseases (such as HIV), rare diseases and in the
treatment of cancer, to name a few. ASML, the leading manufacturer
of lithography equipment which performs a critical role in the
manufacturing of semiconductors, was also a negative contributor.
Despite macro-economic concerns that drive uncertainty for its
customers, including inflation, consumer confidence and the risk of
a recession, the overall demand for its systems remains robust
given the expanding use cases for semiconductors from automotive to
healthcare applications, and from cloud computing to AI. The
management team remain confident in the long-term opportunity for
ASML to play an important role in the continuation of Moore's Law
and are investing in capacity to meet the growing demand for its
products.
In contrast to ASML and Moderna, where the operational progress
has been positive, there are some companies where the operational
performance has been more challenging and consequently contributed
to those companies underperforming. One example would be the single
cell tooling business, 10x Genomics, which has experienced weaker
than expected revenue growth due to some short-term challenges
related to Covid restrictions and supply chains. However, longer
term, we are enthused by the opportunity for 10x Genomics to help
inform our understanding of biology on a more granular level.
Stocks that contributed positively to performance include
Alnylam, a biotechnology company developing a new class of highly
innovative drugs. The company now has five drugs approved and a
healthy pipeline. Tesla was another positive contributor to
performance over the twelve month period, having delivered strong
operational results, exceeding our expectations on the level of
profitability it has been able to reach, which is particularly
notable given the inflationary environment and challenging supply
chains.
Actions over the past year:
Philosophy - unchanged
When we were appointed the Managers of Keystone Positive Change
in February 2021, we outlined our ambition; one based on investing
in innovative, growth companies whose products and services are
helping to address global sustainability challenges. Despite the
short-term volatility since then, we remain absolutely committed to
this vision. Events of the past year have shown the necessity of
transitioning towards a prosperous, sustainable, and inclusive
world. At the same time, technological progress is enabling
innovative solutions towards global challenges. As the late Hans
Rosling reminded us in his excellent book, Factfulness,
"Step-by-step, year-by-year, the world is improving." With this
sound advice in mind, we continued to make progress towards our
vision.
Portfolio
While near-term market volatility does not alter our long-term
investment philosophy, it would be unwise to remain ignorant of its
effects. We conducted portfolio analysis on exposures to inflation,
interest rates, and geopolitical risks, and reperformed in-depth,
fundamental research on individual companies. Throughout the year,
we reviewed a number of holdings whose share price had fallen
significantly. We distinguished between companies facing
operational challenges and those performing well operationally but
whose share price declines, in our view, were mostly attributable
to changes in market sentiment. We used this as a prompt to move on
from companies where we had lost conviction and redeployed capital
towards companies where the divergence between share price and
operating performance created an attractive opportunity for
additions.
As an example of the former, we sold our holding in Beyond Meat.
While we still believe in the plant-based meat market's long-term
prospects, and admire the ambition of Ethan Brown, Beyond Meat's
founder and CEO, a number of operational missteps reduced our
assessment of its probability of success. We also sold out of
Alibaba, where the combination of regulatory intervention and
internal issues dampened our belief that the company can continue
to grow at a rapid pace and drive positive change in Chinese
society.
In contrast, we added to our holding in MercadoLibre, which has
strengthened its competitive position in the Latin American
ecommerce market and made impressive progress in building out its
financial services offerings. We also took the opportunity to add
to the position in Sartorius, the leading provider of consumable
products that support the biotech industry, owing to what we
believe was a dislocation between the share price relative to the
company's operational progress and long-term opportunity. Several
levers for growth underpin that opportunity, including growing use
of biologics and increasing penetration of single-use products. As
mentioned above, 10x Genomics experienced some operational
challenges that we believe are short term in nature. This provided
an opportunity to add to the position, reflecting our optimism over
the long term for 10x to play an important role in improving our
understanding of health and disease as more labs buy and use its
equipment that enables more granular analysis of cells.
These are three examples among a handful of portfolio additions.
We have also continued our hunt for new portfolio holdings and made
two new investments in public companies over the period: Nu, the
disruptive digital bank in Latin America; and Duolingo, the
educational technology company focused on language learning, as
discussed in the Interim Report.
These additions and purchases were funded by selling companies
where we have lost conviction as noted above; by reducing positions
in companies where we felt the valuation was more stretching such
as Tesla and heat-pump manufacturer, Nibe; and by some small
reductions to larger positions such as Moderna and ASML.
As identified in last year's Managers' Report, a key attraction
of the Company's closed-ended structure is its ability to invest in
private companies. This enables the provision of primary capital to
companies, helping them to invest in technology, hire talent, and
scale their businesses. While private market activity slowed this
year, we continue to find interesting companies. A good example is
Climeworks, which we invested in earlier this year. Climeworks'
direct air capture (DAC) technology helps to remove CO2 from
ambient air. In addition to drastic emissions reductions, carbon
removal solutions such as direct air capture and storage are
essential for removing historic and unavoidable CO2 emissions from
the air. The company's first facility in Iceland can capture 3,600
tons of CO2 annually after accounting for its own emissions, and
its next plant will have ten times the capacity. Even that will be
a drop in the ocean compared to the gigatons of removal that is
estimated to be required annually. This shows the size of the
challenge that remains, but also the opportunity for Climeworks if
it can succeed. After investing in Climeworks, the
Company now invests in four private companies, accounting for
6.7% of net assets.
Pipeline
We continue to build our knowledge of thematically-relevant
topics that excite us over the long term, including climate
technology, food and agriculture, and financial inclusion. To
complement desk research, members of the team travelled to Brazil
to meet companies including Nu and MercadoLibre, attended a
conference in San Diego focusing on carbon negative technologies,
studied renewable energy infrastructure in Orkney, and visited
companies in the U.S., Europe, and Japan. After a hiatus on travel
owing to Covid-19, we were pleased to be engaging in person with
companies again and learning first-hand about new technologies and
innovation. It reinforces enthusiasm for the future, both in terms
of investment opportunities and global development prospects.
Positive Change
Over the past year, investee companies continued to make
positive contributions towards a sustainable future. In August
2022, Ørsted's Hornsea 2 Offshore Windfarm became fully
operational. The 1.3 GW project is the world's largest offshore
windfarm, generating enough renewable electricity to power 1.4
million homes. In 2021, Ørsted's renewable energy generation helped
to avoid 15.1 million metric tons of CO2 emissions. Thanks to the
work of companies such as Tesla, Umicore, and Northvolt,
electrification continues to gather pace. In 2021, Tesla delivered
almost 1 million electric vehicles and its products and services
have enabled customers to avoid 8.4 million metric tons of CO2
emissions. On social impact, mobile and digital technologies are
improving access to essential services such as education and
finance. As of December 2021, Nu had 41 million monthly active
users of its financial services, including 5.6 million people
accessing a bank account or credit card for the first time. Both
Coursera and Duolingo provided educational content to millions of
users across the world. In expanding offshore wind capacity,
increasing the number of electric vehicles sold or the number of
monthly active users, these businesses are also growing their
financial metrics and deepening their competitive advantages.
The Company's Impact Report for 2021 contains more detailed
information on the social and environmental impact of all investee
companies' products and services. In addition, the Positive
Conversations Report for 2021 covers our engagement with portfolio
companies and our assessments of Environmental, Social, and
Governance factors. Both reports can be found on the Company's
website, and we would welcome your feedback, as this is a new and
rapidly-evolving area of reporting and we are eager to understand,
and meet, shareholders' expectations.
Outlook:
Against the concerning geopolitical backdrop and complex global
challenges, we remain committed to our long-term philosophy of
investing in innovative companies that are supporting the
transition towards a more prosperous, sustainable, and inclusive
future. Our confidence is built on the existence of structural
trends such as the advancement of science and technology, continued
deflation of renewable energy, and the growing awareness of
sustainability issues. These trends provide exciting opportunities
for innovative and mission-driven companies. By investing in a
subset of them, which are led by outstanding management teams and
have the potential to build durable competitive advantages, we
believe that the Company can generate attractive long-term
investment returns for its shareholders and contribute towards a
better future.
Kate Fox
Lee Qian
29 November 2022
Past performance is not a guide to future performance.
Total return information is sourced from Baillie
Gifford/Refinitiv. See disclaimer at the end of this
announcement.
For a definition of terms used see Glossary of Terms and
Alternative Performance Measures at the end of this
announcement.
Investing for Positive Change
Delivering Attractive Long-Term Investment Returns
We aim to deliver attractive investment returns, which we define
as meaningful outperformance (by 2% annually net of fees) of the
MSCI ACWI over rolling five-year periods.
Our emphasis on growth and competitive advantage means that we
expect the delivered returns of the portfolio to come primarily
from revenue and profit growth at the companies we hold, rather
than from changes in valuation. In broad terms, we look for
companies with the potential to double in value over a five year
period, while still having significant growth prospects
thereafter.
Patience is required to tolerate short-term volatility that we
embrace in order to generate superior long-term financial returns.
We expect our portfolio of 30-60 listed and private companies to
differ significantly from the benchmark index, many of whose major
constituents are likely to suffer from precisely the challenges
that we outline in our four Impact Themes below, and whose very
scale makes it difficult for them to innovate. While measuring
portfolio returns relative to a benchmark index can be a helpful
way to monitor the output of our investment process, we do not
consider the benchmark when constructing the portfolio.
Delivering a Positive Impact
We look for listed and private companies for whom delivering a
positive impact is core to their business; whose products and
services represent a significant improvement to the status quo; and
who conduct business with honesty and integrity. We look for areas
where there is a meaningful, and widely-accepted, opportunity gap
between the current situation and the desirable social outcome, and
for companies that are proactively narrowing that gap through their
business activities. To this end, we have identified four Impact
Themes.
Similar to financial returns, making a meaningful positive
impact requires patience and perseverance. We are not looking for
quick fixes, but genuine improvements which often take years, if
not decades, of hard work. We believe a period of five to ten years
is a useful timeframe for assessing companies' social and
environmental contributions. We expect the four Impact Themes to
evolve over time, hopefully as challenges are resolved. We review
the themes on a regular basis.
Four Impact Themes
Social Inclusion and Education
Income and wealth inequalities have risen significantly over the
past 30 years and now threaten our acceptance of capitalism as a
force for good. We look for companies that are building a more
inclusive society through their products and services. We also look
for companies that are improving the quality or accessibility of
education as we believe that the diffusion of skills and knowledge
is one of the best tools to reduce inequality.
Environment and Resource Needs
The environmental impact of human activities is increasing, and
basic resources such as food and water are becoming scarcer.
Throughout history, climate change and famine have repeatedly
limited the development of nations. Left unresolved, those problems
could jeopardise international relations, destabilise our society
and damage our planet. We are looking for companies that are
improving our resource efficiency and reducing the environmental
impact of our economic activities.
Healthcare and Quality of Life
We are living longer but we are not necessarily healthier. We
are richer but we are not necessarily happier. The stress of modern
life is damaging our physical and mental health. We are searching
for companies that are actively improving the quality of life in
developed and developing countries.
Base of the Pyramid
Economic growth has led to improvements in living conditions in
many parts of the world. However, the fruits of human ingenuity
have not filtered down to everyone. We are looking for companies
that are addressing the basic and aspirational needs of the
billions of people at the bottom of the global income ladder.
Investment Process
Analysing Investment and Impact Using a Robust and Consistent
Process
Both our objectives are of equal importance. To reflect this, we
have established a six-stage process which allows both the impact
and investment objectives to be considered equally in the key parts
of our process: research, portfolio construction and reporting.
1. What we look for - A vast opportunity set for long-term stock pickers
The universe of companies in which we can invest is vast. We
make no attempt to cover the whole universe. Neither do we use
quantitative screens to cut it down to a manageable size. Instead,
we rely on a clear and consistent set of filters to focus our
attention on the relatively small number of businesses that might
be of interest to us. These filters flow naturally from our dual
objectives, and focus on: (1) the company's potential to address
one of our four thematic global challenges; (2) its potential to
build a profitably growing business.
2. Idea generation - Ideas naturally flow from our dual objectives. Curiosity is key
We are bottom-up stock pickers who let our curiosity and
enthusiasm drive our research agenda. Idea generation takes place
throughout the investment process: when we meet companies; through
attendance at conferences; during team meetings; and through
general reading. Our long-term time horizon, focus on fundamental
in-house research and desire to take a different perspective means
we use diverse sources of information, from independent research to
engaging with academics and industry experts. Sharing a common
objective with the rest of our investment colleagues (seeking high
quality growth companies), we are fortunate in being able to
leverage the intellectual resources of our wider investment
department of around a hundred investors, including regional and
global teams and sector specialists, and our ESG team.
3. Fundamental company research: eight questions - Consistent
framework focuses on dual objectives
Our company analysis consists of two stages: fundamental company
research and impact analysis.
Our fundamental company research involves an Investment Manager
examining eight questions relating to the quality of the business
and its growth prospects as well as the impact the company is
expected to deliver:
1. What change is the company driving?
2. What is the scale of the growth opportunity and how might it evolve over time?
3. What is required to unlock the opportunity and how quickly can the company capitalise on it?
4. What is the competitive edge and how might it develop?
5. What attributes of the culture, governance, and management
attitude will support or detract from the company's ability to
capitalise on the opportunity?
6. What are the financial characteristics today and how might they evolve?
7. What might the company look like and what might its valuation be in 5 to 10 years?
8. What will it take to be an outlier?
To assess the growth potential and quality of a business, we
consider the company's broad opportunity set, the strength and
durability of the competitive advantage, the financial
characteristics and management attitudes. To assess the expected
impact of a holding, we consider the challenge the company is
tackling, its product characteristics and business practices.
Valuation analysis focuses on whether we think the long-term
growth prospects of a company are under-appreciated. Here, we use a
range of measures for valuing companies and remain very much
focused on the potential for a business in five years' time. If a
company has backing from an Investment Manager, it will be taken
forward to the second stage of research: the Impact Analysis.
4. Impact analysis - Independent and disciplined
The second stage of research focuses specifically on the impact
potential of a business. This is carried out by one of the Positive
Change Team's Impact Analysts. Analysing impact is complex and can
be highly subjective. Our impact analysis is carried out
independent of the investment case using a rigorous, qualitative
framework that is based upon three factors: (1) Intent - Forward
looking strategy that supports the positive outcome? Backed up by
actions, commitments and structures? Uses influence to drive
solutions in the wider industry? (2) Product impact - Relationship
between the product and the impact? Breadth and depth of impact?
Materiality in the context of the business and the problem? Linkage
with the United Nations Sustainable Development Goals (UN SDGs)?
(3) Business practices - Addresses impacts across the full value
chain? Transparent in its actions? Leads the industry in business
practices?
This analysis is holistic: we recognise that there is no perfect
company and under each of these three factors we also consider
areas of controversy, the negative consequences of operations and a
company's awareness of those issues.
Monitoring and reporting impact is important: as one of our dual
objectives it is as important as monitoring and reporting financial
performance. The monitoring of impact is ongoing and is interwoven
with our monitoring of the investment case for a company. We look
at company reports and disclosures and are engaged with management,
we monitor significant news, always with a focus on the long term
and the key milestones we expect a company to reach in order to
deliver impact.
5. Portfolio construction -Two Elements - Investment and impact considered in tandem
The Positive Change team meet regularly to discuss new ideas and
the level of conviction in existing holdings. The team's conviction
in both the impact and investment potential of a company is taken
into consideration when making portfolio decisions and sizing
positions. Investment decisions are made by the five decision
makers: three Investment Managers: Kate Fox, Lee Qian and Thaiha
Nguyen, and two Senior Impact Analysts: Michelle O'Keeffe and
Edward Whitten. Every stock must have the backing of an Investment
Manager and at least one Senior Impact Analyst. The group heavily
relies on and respects the opinions of team members to help inform
individual views. We think this process allows us to harness
diverse perspectives while also retaining conviction and
accountability of individual decision-making and reducing personal
bias.
We are active investors and our portfolio will differ
significantly from the benchmark, many of whose major constituents
are likely to face headwinds from the challenges we identify. In
order for a company to enter our portfolio, it must meet both of
our objectives - there are no compromises.
With a long-term investment horizon, portfolio turnover will be
low, we expect it to be below 20% per annum over the long term. We
will carefully monitor the companies in which we invest through
ongoing research and engagement with management teams. It is
inevitable that businesses will have setbacks and we are happy to
own companies through periods of short-term operational weakness.
However, if longer-term concerns develop that are not addressed by
management, if we detect a deterioration in the fundamental
investment case, for either element of our dual objectives, we will
sell a holding.
6. Monitoring, engagement and reporting - Rigorous, ongoing and with a long-term focus
Once we have taken a holding, we continue to monitor operational
performance and progress towards delivering positive change. In
doing so we engage with management teams on an ongoing basis. We
report on how the strategy has delivered on both its financial
objective and its impact objective.
The impact different companies make is not always quantifiable,
nor should it be. Furthermore, comparing impact across companies
with very different activities is problematic. And, where impact is
more easily quantifiable, it is not always measured and disclosed
in a uniform way. Despite its challenges, we have developed a
robust approach using our in depth knowledge of companies, and we
report annually, though we always remain focused on our
five-year-plus time horizon.
6.1 Company Impact
Consistent with our bottom-up, fundamental investment approach,
we identify bespoke metrics or milestones for each company that
will help us monitor its progress in delivering positive change. We
represent this impact through 'The Positive Chain', a model which
demonstrates how each company is contributing to positive outcomes
and impacts through its inputs, activities and outputs. We depend
primarily on company reported data but do not limit ourselves to
current levels of disclosure: where there are gaps we will engage
with companies and request more information.
Company engagement more broadly is ongoing, and we will discuss
with management teams both areas where we would like to see
improvements as well as areas where companies excel.
6.2 Portfolio Contribution to United Nations Sustainable
Development goals
At an overall portfolio level, we also link the product impact
for each company to the 'United Nations' Sustainable Development
Goals' ('UN SDG'). The UN developed the SDGs in 2015 as part of an
ambitious programme which aims to end poverty in all forms, to
build peaceful and inclusive societies, to protect human rights and
promote gender equality, and to ensure the protection of the planet
and its natural resources by the end of 2030. With 17 goals split
into 169 specific targets covering a broad range of topics, we do
not intend the portfolio to address every single goal. However,
mapping the contribution of individual holdings to these goals via
the underlying 169 targets allows us to assess the contribution of
the portfolio as a whole using an independent framework.
The companies in the portfolio take different approaches and we
hope to gain insight into what works best and to share our
learnings across holdings. For those companies that report how
their business is aligned with the 'SDGs', we take this into
consideration when making the linkage to the goals, but we are
selective in order to be as consistent as possible across all
holdings.
Investment Portfolio by Impact Theme as at 30 September 2022
Social Value % Environment Value % Healthcare Value % Base of Value %
Inclusion GBP'000 and GBP'000 and Quality GBP'000 the GBP'000
and Education Resource of Life Pyramid
Needs
Bank
Rakyat
ASML 10,057 6.6 Deere 8,941 5.8 Moderna 9,480 6.2 Indonesia 6,262 4.1
MercadoLibre 8,652 5.7 Tesla 6,503 4.3 Dexcom 7,743 5.1
Alnylam
TSMC 8,126 5.3 Novozymes 5,355 3.5 Pharmaceuticals 7,522 4.9 Safaricom 4,249 2.8
Duolingo 2,783 1.8 Xylem 5,312 3.5
PsiQuantum 1,687 1.1 Ørsted 5,237 3.4 Illumina 5,251 3.4
Northvolt
Nu Holdings 1,652 1.1 AB 4,710 3.1 Abiomed 4,676 3.1
Coursera 1,550 1.0 Umicore 4,593 3.0 Sartorius 4,129 2.7
NIBE
Shopify 1,443 0.9 Industrier 3,434 2.2 M3 3,635 2.4
FDM 1,128 0.7 Ecolab 2,927 1.9 Chr. Hansen 3,140 2.1
Discovery
Climeworks 2,056 1.3 Holdings 2,999 2.0
AbCellera
Spiber 736 0.5 Biologics 2,083 1.4
Joby
Aviation 388 0.3 10x Genomics 1,744 1.1
Teladoc 1,446 0.9
Peloton
Interactive 289 0.2
Berkeley
Lights 149 0.1
37,078 24.2 50,192 32.8 54,286 35.6 10,511 6.9
Net Liquid
Assets* 786 0.5
-------- ----- ------------ -------- ----- ---------------- -------- ----------------- -------- -------
Total assets
* 152,853 100.0
-------- ----- ------------ -------- ----- ---------------- -------- ----------------- -------- -------
* For a definition of terms used, see Glossary of Terms and
Alternative Performance Measures at the end of this
announcement.
List of Investments at 30 September 2022
% of Cumulative
Fair value total % of total
Name Business Impact theme* GBP'000 assets assets
------------------------ ------------------------------------ -------------- ---------- ------- -----------
Supplier to semiconductor
ASML industry Social 10,057 6.6
Moderna Messenger RNA therapeutics Healthcare 9,480 6.2
Deere Agricultural equipment Environment 8,941 5.8
Latin American ecommerce platform
MercadoLibre and fintech Social 8,652 5.7
TSMC Semiconductor manufacturer Social 8,126 5.3
Dexcom Continuous glucose monitoring Healthcare 7,743 5.1
Alnylam Pharmaceuticals Biotechnology Healthcare 7,522 4.9
Electric cars and renewable
Tesla energy solutions Environment 6,503 4.3
Bank Rakyat Indonesia Bank Base 6,262 4.1
Novozymes Biological solutions Environment 5,355 3.5 51.5
Xylem Innovative water solutions Environment 5,312 3.5
Illumina Gene sequencing equipment Healthcare 5,251 3.4
Ørsted Renewable energy Environment 5,237 3.4
Battery developer and manufacturer,
specialising
in lithium-ion technology
Northvolt AB U for electric vehicles Environment 4,710 3.1
Abiomed Medical implant manufacturer Healthcare 4,676 3.1
Global materials technology
Umicore and recycling Environment 4,593 3.0
Telecommunications and mobile
Safaricom payments Base 4,249 2.8
Biopharmaceutical and laboratory
Sartorius tooling Healthcare 4,129 2.7
M3 Online medical services Healthcare 3,635 2.4
NIBE Industrier Sustainable energy solutions Environment 3,434 2.2 81.1
Chr. Hansen Biological solutions Healthcare 3,140 2.1
Life and health insurance
Discovery Holdings provider Healthcare 2,999 2.0
Water, hygiene and infection
Ecolab prevention services Environment 2,927 1.9
Language learning website
Duolingo and mobile app Social 2,783 1.8
AbCellera Biologics Antibody drug discovery tools Healthcare 2,083 1.4
Climeworks U Direct air carbon capture Environment 2,056 1.3
10x Genomics Life science technology Healthcare 1,744 1.1
PsiQuantum U Silicon photonic quantum computing Social 1,687 1.1
Digital banking company based
Nu Holdings in Brazil Social 1,652 1.1
Coursera Online learning Social 1,550 1.0 95.9
Teladoc Healthcare services provider Healthcare 1,446 0.9
Shopify Online commerce platform Social 1,443 0.9
IT-focused professional services
FDM provider Social 1,128 0.7
Spiber U Novel protein biomaterials Environment 736 0.5
Joby Aviation Electric aircraft Environment 388 0.3
Peloton Interactive Connected home fitness technology Healthcare 289 0.2
Berkeley Lights Life science technology Healthcare 149 0.1
------------------------ ------------------------------------ -------------- ---------- ------- -----------
Total investments 152,067 99.5 99.5
Net liquid assets 786 0.5
------------------------------------------------------------------------------ ---------- ------- -----------
Total assets 152,853 100.0 100.0
-------------------------------------------------------------- -------------- ---------- ------- -----------
* Abbreviated as follows: Healthcare - Healthcare and Quality of
Life; Social - Social Inclusion and Education; Environment -
Environment and Resource Needs; Base - Base of the Pyramid.
(U) Denotes unlisted/private company holding.
For a definition of terms used see Glossary of Terms and
Alternative Performance Measures at the end of this
announcement.
Income Statement
For the year ended For the year ended
30 September 2022 30 September 2021
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
================================================== ========= ========== ========== ========= ========= =========
(Losses)/gains on investments (note 2) - (72,765) (72,765) - 30,478 30,478
Currency (losses)/gains - (1,333) (1,333) - 859 859
Income 1,459 - 1,459 2,353 - 2,353
Investment management fee (note 3) (247) (741) (988) (150) (451) (601)
Other administrative expenses (506) - (506) (427) (166) (593)
================================================== ========= ========== ========== ========= ========= =========
Net return before finance costs and taxation 706 (74,839) (74,133) 1,776 30,720 32,496
Finance costs of borrowings (101) (266) (367) (50) (111) (161)
================================================== ========= ========== ========== ========= ========= =========
Net return on ordinary activities before taxation 605 (75,105) (74,500) 1,726 30,609 32,335
Tax on ordinary activities (216) - (216) (121) - (121)
================================================== ========= ========== ========== ========= ========= =========
Net return on ordinary activities after taxation 389 (75,105) (74,716) 1,605 30,609 32,214
================================================== ========= ========== ========== ========= ========= =========
Net return per ordinary share (note 4) 0.63p (121.50p) (120.87p) 2.60p 49.49p 52.09p
================================================== ========= ========== ========== ========= ========= =========
Note:
Dividends per share paid and payable in respect
of the year (note 5) 0.40p 11.20p
================================================== ========= ========== ========== ========= ========= =========
The total column of this statement represents the profit and
loss account of the Company. The supplementary revenue and capital
columns are prepared under guidance issued by the Association of
Investment Companies.
All revenue and capital items in this statement 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 on ordinary activities after taxation is both the
(loss)/profit and total comprehensive (expense)/income for the
year.
Balance Sheet
For the year ended For the year ended
30 September 30 September
Notes 2022 2022 2021 2021
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------- ----- --------- --------- --------- ---------
Fixed assets
Investments 6 152,067 224,464
-------------------------------------- ----- --------- --------- --------- ---------
Current assets
Debtors 199 132
Cash and cash equivalents 962 593
-------------------------------------- ----- --------- --------- --------- ---------
1,161 725
-------------------------------------- ----- --------- --------- --------- ---------
Creditors
Amounts falling due within one
year 7 (15,650) (10,422)
-------------------------------------- ----- --------- --------- --------- ---------
Net current liabilities (14,489) (9,697)
-------------------------------------- ----- --------- --------- --------- ---------
Total assets less current liabilities 137,578 214,767
-------------------------------------- ----- --------- --------- --------- ---------
Creditors
Amounts falling due after more
than one year 7 (250) (250)
-------------------------------------- ----- --------- --------- --------- ---------
Net assets 137,328 214,517
-------------------------------------- ----- --------- --------- --------- ---------
Capital and reserves
Share capital 6,760 6,760
Share premium account 3,449 3,449
Capital redemption reserve 466 466
Capital reserve 126,264 203,842
Revenue reserve 389 -
-------------------------------------- ----- --------- --------- --------- ---------
Total shareholders' funds 8 137,328 214,517
-------------------------------------- ----- --------- --------- --------- ---------
Statement of Changes in Equity
For the year ended 30 September 2022
Share Capital
Share premium redemption Capital Revenue Shareholders'
capital account reserve reserve reserve funds
Notes 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 - - - (75,105) 389 (74,716)
Dividends paid during
the year 5 - - - (2,473) - (2,473)
--------------------------- ----- -------- -------- ----------- -------- -------- -------------
Shareholders' funds at
30 September 2022 6,760 3,449 466 126,264 389 137,328
--------------------------- ----- -------- -------- ----------- -------- -------- -------------
For the year ended 30 September 2021
Share Capital
Share premium redemption Capital Revenue Shareholders'
capital account reserve reserve reserve funds
Notes 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 - - - 30,609 1,605 32,214
Ordinary shares bought
back and held in treasury 9 - - - (1,100) - (1,100)
Dividends paid during
the year 5 - - - (475) (6,447) (6,922)
--------------------------- ----- -------- -------- ----------- -------- -------- -------------
Shareholders' funds at
30 September 2021 6,760 3,449 466 203,842 - 214,517
--------------------------- ----- -------- -------- ----------- -------- -------- -------------
Cash Flow Statement
For the year For the year
ended ended
30 September 30 September
2022 2022 2021 2021
Notes GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------------- ----- -------- -------- --------- --------
Cash flow from operating activities
Net return before finance costs and
taxation (74,133) 32,496
Tax on overseas income (207) (111)
Adjustments for:
Purchase of investments (20,553) (360,107)
Sale of investments 20,185 376,529
-------- -------- --------- --------
(368) 16,422
Losses/(gains) on investments held
at fair value 72,765 (30,478)
Movement in unrealised currency gains
and losses 1,374 (183)
Increase in debtors (76) (88)
Increase/(decrease) in creditors 41 (89)
-------------------------------------------- ----- -------- -------- --------- --------
Net cash (outflow)/inflow from operating
activities (604) 17,969
-------------------------------------------- ----- -------- -------- --------- --------
Cash flow from financing activities
Interest and facility fee paid on bank
facility (329) (150)
Preference dividends paid (12) (12)
Bank facility drawn down/(repaid) and
overdraft (repaid) 3,727 (9,833)
Shares bought back and held in treasury - (1,100)
Net equity dividends paid 5 (2,473) (6,922)
-------------------------------------------- ----- -------- -------- --------- --------
Net cash inflow/(outflow) from financing
activities 913 (18,017)
-------------------------------------------- ----- -------- -------- --------- --------
Net increase/(decrease) in cash and
cash equivalents 309 (48)
Exchange movements 60 21
Repayment of overdraft - 650
Cash and cash equivalents at start
of the year 593 (30)
-------------------------------------------- ----- -------- -------- --------- --------
Cash and cash equivalents at the end
of the year 962 593
-------------------------------------------- ----- -------- -------- --------- --------
Reconciliation of cash and cash equivalents
to
the Balance Sheet is as follows:
Cash held at custodian 962 593
Cash and cash equivalents 962 593
-------------------------------------------- ----- -------- -------- --------- --------
Cash flow from operating activities
includes:
Dividends received 1,434 2,298
Interest received 2 -
-------------------------------------------- ----- -------- -------- --------- --------
Notes to the Financial Statements
1. The Financial Statements for the year to 30 September 2022
have been prepared in accordance with FRS 102, 'The Financial
Reporting Standard applicable in the UK and Republic of Ireland'
and on the basis of the accounting policies set out in the Annual
Report and Financial Statements which are unchanged from the prior
year and have been applied consistently.
2. (Losses)/gains on Investments
2022 2021
GBP'000 GBP'000
----------------------------------------------- -------- --------
(Losses)/gains on investments:
Realised (losses)/gains on sales (6,963) 4,060
Changes in investment holding gains and losses (65,802) 26,418
----------------------------------------------- -------- --------
(72,765) 30,478
----------------------------------------------- -------- --------
3. Management Fee
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 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. In respect of 2021, Baillie Gifford & Co Limited
waived the first six months' fee following the transfer of the
mandate from Invesco. 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 Returns per Ordinary Share
2022 2022 2022 2021 2021 2021
Revenue Capital Total Revenue Capital Total
------------------------ -------- --------- --------- -------- -------- ------
Net return per ordinary
share 0.63p (121.50p) (120.87p) 2.60p 49.49p 52.09p
------------------------ -------- --------- --------- -------- -------- ------
Revenue return per ordinary share is based on the net revenue
return on ordinary activities after taxation of GBP389,000 (2021 -
GBP1,605,000) and on 61,815,632 (2021 - 61,846,509) ordinary shares
of 10p, being the weighted average number of ordinary shares in
issue during the year. Capital return per ordinary share is based
on the net capital loss for the financial year of GBP75,105,000
(2021 - gain of GBP30,609,000) and on 61,815,632 (2021 -
61,846,509) ordinary shares, being the weighted average number of
ordinary shares in issue during the year.
There are no dilutive or potentially dilutive shares in
issue.
5. Ordinary Dividends
2022 2022 2021 2021
p GBP'000 p GBP'000
-------------------------------------- ---- -------- ----- --------
Amounts recognised as distributions
in the year:
Fourth interim dividend in lieu of
a final dividend (prior year) 4.00 2,473 4.00 2,473
First interim dividend - - 2.40 1,483
Second interim dividend - - 2.40 1,483
Third interim dividend - - 2.40 1,483
-------------------------------------- ---- -------- ----- --------
4.00 2,473 11.20 6,922
-------------------------------------- ---- -------- ----- --------
We also set out below the total dividends paid and proposed in
respect of the financial year, which is the basis on which the
requirements of section 1158 of the Corporation Tax Act 2010 are
considered. The revenue available for distribution by way of
dividend for the year is GBP389,000 (2021 - GBP1,605,000).
2022 2022 2021 2021
p GBP'000 p GBP'000
-------------------------------------- ---- -------- ----- --------
Amounts paid and payable in respect
of the financial year:
First interim dividend - - 2.40 1,483
Second interim dividend - - 2.40 1,483
Third interim dividend - - 2.40 1,483
Proposed final (payable 15 February
2023)/fourth interim dividend 0.40 247 4.00 2,473
-------------------------------------- ---- -------- ----- --------
0.40 247 11.20 6,922
-------------------------------------- ---- -------- ----- --------
The Board recommends a final dividend of 0.4p per ordinary share
for the year. If approved, the recommended final dividend will be
paid on 15 February 2023 to shareholders on the register at the
close of business on 20 January 2023. The ex-dividend date is 19
January 2023.
6. Investments
Level Level Level
1 2 3 Total
As at 30 September 2022 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- -------- -------- -------- --------
Listed equities 142,878 - - 142,878
Unlisted securities - - 9,189 9,189
---------------------------------- -------- -------- -------- --------
Total financial asset investments 142,878 - 9,189 152,067
---------------------------------- -------- -------- -------- --------
Level Level Level
1 2 3 Total
As at 30 September 2021 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- -------- -------- -------- --------
Listed equities 219,818 - - 219,818
Unlisted securities - - 4,646 4,646
---------------------------------- -------- -------- -------- --------
Total financial asset investments 219,818 - 4,646 224,464
---------------------------------- -------- -------- -------- --------
Investments in securities are financial assets held at fair
value through profit or loss. In accordance with Financial
Reporting Standard 102, the tables above provide an analysis of
these investments based on the fair value hierarchy described
beneath, which reflects the reliability and significance of the
information used to measure their fair value.
Fair Value Hierarchy
The fair value hierarchy used to analyse the basis on which the
fair values of financial instruments held at fair value through the
profit and loss account are measured is described below. Fair value
measurements are categorised on the basis of the lowest level input
that is significant to the fair value measurement.
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).
The Company's unlisted investments at 30 September 2022 were
valued using a variety of techniques. These include using
comparable company multiples, net asset values, assessment of
comparable company performance and assessment of milestone
achievement at the investee companies. The determinations of fair
value included assumptions that the trading multiples and
comparable companies chosen for the multiples approach provide a
reasonable basis for the determination of fair value. Valuations
are cross-checked for reasonableness to alternative multiples-based
approaches or benchmark index movements as appropriate. In some
cases the latest dealing price is considered to be the most
appropriate valuation basis, but only following assessment using
the techniques described above.
The valuation techniques used by the Company are further
explained in the accounting policies on pages 50 and 51 of the
Annual Report and Financial Statements. A sensitivity analysis by
valuation technique of the unlisted securities is on page 62 of the
Annual Report and Financial Statements.
The purchases and sales proceeds figures disclosed in note 9 of
the Annual Report and Financial Statements include transaction
costs of GBP5,000 (2021 - GBP137,000) and GBP8,000 (2021 -
GBP226,000) respectively. The Company received GBP20,185,000 (2021
- GBP376,529,000) from investments sold during the year. The book
cost of these investments when they were purchased was
GBP27,148,000 (2021 - GBP372,693,000). These investments have been
revalued over time and, until they were sold, any unrealised
gains/losses were included in the fair value of the investments. Of
the realised losses on sales of investments during the year of
GBP6,963,000 (2021 - gain of GBP4,060,000), a net loss of
GBP2,218,000 was included in investment holding gains at the
previous year end (2021 - loss of GBP152,000)
7. Creditors
Creditors falling due within one year include drawings under the
following borrowing facilities:
At 30 September 2022 the Company had a 3 year GBP25 million
multi-currency unsecured floating rate revolving facility with The
Royal Bank of Scotland International Limited, which expires on 31
August 2024.
At 30 September 2022 drawings were as follows:
3/4 The Royal Bank of Scotland International Limited: US$8.7
million at an interest rate of 1.25% over US LIBOR and GBP7.5
million at an interest rate of 1.25% over SONIA, both maturing in
December 2022 (2021 - US$6.9 million at an interest rate of 1.25%
over US LIBOR and GBP5 million at an interest rate of 1.25% over
SONIA, both maturing in December 2021).
The main covenants relating to the above loans are that total
borrowings shall not exceed 25% of the Company's adjusted portfolio
value and the Company's minimum adjusted portfolio value shall be
GBP100 million.
There were no breaches of loan covenants during the year.
Creditors falling due after more than one year comprise 5%
cumulative preference shares of GBP1 each.
2022 2022 2022 2021 2021 2021
Par Book Market Par Book Market
value value value value value value
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- -------- -------- -------- -------- -------- --------
Bank loans due within
one year 15,275 15,275 15,275 10,114 10,114 10,114
5% cumulative preference
shares 250 250 239 250 250 248
------------------------- -------- -------- -------- -------- -------- --------
15,525 15,525 15,514 10,364 10,364 10,362
------------------------- -------- -------- -------- -------- -------- --------
8. Shareholders' Funds Per Ordinary Share
2022 2021
----------------------------------------------- -------------- --------------
Shareholders' funds GBP137,328,000 GBP214,517,000
Number of ordinary shares in issue at the year
end 61,815,632 61,815,632
----------------------------------------------- -------------- --------------
Shareholders' funds per ordinary share 222.2p 347.0p
----------------------------------------------- -------------- --------------
The shareholders' funds figures above have been calculated after
deducting borrowings at book value, in accordance with the
provisions of FRS 102. For the current and prior year, the
difference between borrowings at book value, borrowings at par and
borrowings at market value is negligible (see note 7 above) and no
reconciliation between NAV at book/par value and NAV at market/fair
value is provided, as the NAV per share is the same on both
bases.
9. Shares in Issue
In the year to 30 September 2022, the Company issued and bought
back no ordinary shares. (2021 - 423,735 shares were bought back
during the year over 14 separate occasions at an average price of
257.8p to be held in treasury for subsequent re-issue or
cancellation). At 30 September 2022 the Company had authority to
buy back 9,266,163 ordinary shares and to allot or sell from
treasury 6,181,563 ordinary shares without application of
pre-emption rights. Under the provisions of the Company's Articles
of Association share buy-backs are funded from the capital
reserve.
10. Related Parties and Transactions with the Managers
The Directors' fees and shareholdings are detailed in the
Directors' Remuneration Report on pages 37 and 38 of the Annual
Report and Financial Statements. No Director has a contract of
service with the Company. During the year no Director was
interested in any contract or other matter requiring disclosure
under section 412 of the Companies Act 2006.
Baillie Gifford & Co Limited has been appointed as the
Company's Alternative Investment Fund Manager ('AIFM') and Company
Secretaries. Details of the terms of the Investment Management
Agreement are set out on page 28 of the Annual Report and Financial
Statements and details of the fees during the year and the balances
outstanding at the year end are shown in notes 3 and 11
respectively of the Annual Report and Financial Statements.
11. The financial information set out above does not constitute
the Company's statutory accounts for the years ended 30 September
2022 or 2021 but is derived from those accounts. Statutory accounts
for 2021 have been delivered to the Registrar of Companies and
those for 2022 will be delivered in due course. The auditor has
reported on these accounts; the reports were (i) unqualified, (ii)
did not include a reference to any matters to which the auditor
drew attention by way of emphasis without qualifying their report,
and (iii) did not contain a statement under section 498 (2) or (3)
of the Companies Act 2006.
12. The Report and Accounts will be available on the Managers'
website keystonepositivechange.com++ on or around 9 December
2022.
++ 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.
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).
Shareholders' Funds
Shareholders' Funds is the value of all assets held less all
liabilities, with borrowings deducted at book cost.
Net Asset Value (APM)
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) as per note 8 above. For the
current and prior year, the difference between borrowings at book
value, borrowings at par and borrowings at market value is
negligible (see note 7 above) 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.
2022 2021
--------------------------------------------- ---------- -------------- --------------
Shareholders' funds (Net Asset Value) a GBP137,328,000 GBP214,517,000
Ordinary shares in issue (excluding treasury
shares) b 61,815,632 61,815,632
--------------------------------------------- ---------- -------------- --------------
(a ÷
Net asset value per share b x 100) 222.2p 347.0p
--------------------------------------------- ---------- -------------- --------------
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.
Net Liquid Assets
Net liquid assets comprise current assets less current
liabilities (excluding borrowings).
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.
Total Return (APM)
The total return is the return to shareholders after reinvesting
the dividend on the date that the share price goes ex-dividend, as
detailed below.
2022 2022 2021 2021
NAV Share price NAV Share price
---------------------------- ---------- ------- ------------ ------ ------------
Closing NAV per share/share
price a 222.2p 192.8p 347.0p 344.0p
Dividend adjustment factor
* b 1.01228 1.01242 1.0338 1.0360
Adjusted closing NAV per c = a
share/share price x b 224.9p 195.2p 358.7p 356.4p
Opening NAV per share/share
price d 347.0p 344.0p 305.8p 253.0p
---------------------------- ---------- ------- ------------ ------ ------------
(c ÷
Total return d) -1 (35.2%) (43.3%) 17.3% 40.9%
---------------------------- ---------- ------- ------------ ------ ------------
* The dividend adjustment factor is calculated on the assumption
that dividends of 4.0p (2021 - 11.2p) paid by the Company during
the year were reinvested into shares of the Company at the cum
income NAV/share price, as appropriate, at the ex-dividend
dates.
Ongoing Charges (APM)
The total expenses ( excluding dealing and borrowing costs)
incurred by the Company as a percentage of the daily average net
asset value (with borrowings at fair value), as detailed below.
2022 2021
----------------------------------------- --------- -------------- --------------
Investment management fee GBP988,000 GBP601,000
Other administrative expenses GBP506,000 GBP593,000
Less: non-recurring expenses - (GBP166,000)
----------------------------------------- --------- -------------- --------------
Total recurring expenses a GBP1,494,000 GBP1,028,000
Average daily cum-income net asset value b GBP166,326,000 GBP202,840,000
----------------------------------------- --------- -------------- --------------
a ÷
Ongoing charges b 0.90% 0.51%
----------------------------------------- --------- -------------- --------------
Baillie Gifford & Co Limited was appointed on 11 February
2021 and agreed to waive its management fee for six months from the
date of its appointment. The calculation for 2021 above was
therefore not representative of future management fees. The
reconciliation below shows the ongoing charges figure if the
management fee waiver had not been in place.
2022 2021
----------------------------------------- --------- -------------- --------------
Investment management fee GBP988,000 GBP601,000
Investment management fee waiver - GBP643,000
Other administrative expenses GBP506,000 GBP593,000
Non-recurring expenses - (GBP166,000)
Total expenses a GBP1,494,000 GBP1,671,000
Average daily cum-income net asset value b GBP166,326,000 GBP202,840,000
----------------------------------------- --------- -------------- --------------
a ÷
Ongoing charges b 0.90% 0.82%
----------------------------------------- --------- -------------- --------------
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).
2022 2021
----------------------------------------- --------- -------------- --------------
Borrowings (at book cost) a GBP15,525,000 GBP10,364,000
Less: cash and cash equivalents (GBP962,000) (GBP593,000)
Less: sales for subsequent settlement - -
Add: purchases for subsequent settlement - -
----------------------------------------- --------- -------------- --------------
Adjusted borrowings b GBP14,563,000 GBP9,771,000
----------------------------------------- --------- -------------- --------------
Shareholders' funds c GBP137,328,000 GBP214,517,000
----------------------------------------- --------- -------------- --------------
a ÷
Gross gearing c 11.3% 4.8%
----------------------------------------- --------- -------------- --------------
b ÷
Net gearing c 10.6% 4.6%
----------------------------------------- --------- -------------- --------------
Leverage (APM)
For the purposes of the Alternative Investment Fund Managers
(AIFM) Regulations, leverage is any method which increases the
Company's exposure, including the borrowing of cash and the use of
derivatives. It is expressed as a ratio between the Company's
exposure and its net asset value and can be calculated on a gross
and a commitment method. Under the gross method, exposure
represents the sum of the Company's positions after the deduction
of sterling cash balances, without taking into account any hedging
and netting arrangements. Under the commitment method, exposure is
calculated without the deduction of sterling cash balances and
after certain hedging and netting positions are offset against each
other.
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.
Compound Annual Return (APM)
The compound annual return converts the return over a period of
longer than one year to a constant annual rate of return applied to
the compounded value at the start of each year.
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.
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
Source: London Stock Exchange Group plc and its group
undertakings (collectively, the 'LSE Group'). (c) LSE Group 2022.
FTSE Russell is a trading name of certain of the LSE Group
companies. 'FTSE(R)' 'Russell(R)', 'FTSE Russell(R)', is/are a
trade mark(s) of the relevant LSE Group companies and is/are used
by any other LSE Group company under license. All rights in the
FTSE Russell indexes or data vest in the relevant LSE Group company
which owns the index or the data. Neither LSE Group nor its
licensors accept any liability for any errors or omissions in the
indexes or data and no party may rely on any indexes or data
contained in this communication. No further distribution of data
from the LSE Group is permitted without the relevant LSE Group
company's express written consent. The LSE Group does not promote,
sponsor or endorse the content of this communication.
Regulated Information Classification : Annual Financial and
Audit Reports.
- ends -
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
FR FLFSRLDLAFIF
(END) Dow Jones Newswires
November 30, 2022 02:00 ET (07:00 GMT)
Keystone Positive Change... (LSE:KPC)
Gráfico Histórico do Ativo
De Abr 2024 até Mai 2024
Keystone Positive Change... (LSE:KPC)
Gráfico Histórico do Ativo
De Mai 2023 até Mai 2024
