Half-year Report
13/11/2023 07:00
To: PR Newswire
From: Capital Gearing Trust P.l.c.
LEI: 213800T2PJTPVF1UGW53
Date: 13 November 2023
Capital Gearing Trust P.l.c. (the “Company”)
Announcement of the Half-Year Financial Report for the six months ended 30
September 2023
Chairman’s Statement
Investment Performance
At the half year to 30 September 2023, the net asset value per share
(‘NAV’) was 4,674.9p, compared to 4,797.3p at 31 March 2023. This
represents a NAV total return of -1.3% over the past six months. This return
was better than the global aggregate bond index and the investment trust index
which returned -3.8% and -1.7% respectively in Sterling terms. Whilst it is
always disappointing to report negative returns the defensive orientation of
the portfolio did provide some protection from simultaneously weak bond and
equity markets. The returns lagged Consumer Price Index (‘CPI’) inflation
of 2.4% in the period.
The share price ended the half year at 4,585p, a fall of 1.8%. During the
period 2,218,929 shares, with an aggregate value of £102.1m, were bought back
under the Company’s discount control policy (‘DCP’).
Discount Control Policy Update
Since 2015 the Company has operated the DCP which aims to ensure that, in
normal market conditions, the shares trade consistently close to their
underlying NAV.
As announced on 31 October 2023, the Company was in the process of seeking
approval from the Northern Irish Courts to reclassify its share premium
account as a distributable reserve to continue to support the DCP. In our
announcement, we referred to this process having been subject to significant
delays as a result of various “technical and administrative issues”. It is
now clear that these issues comprise a series of errors and omissions on the
part of third parties. As a result, the Board has decided to take direct
control over this process and has agreed a revised timetable to take this
through to a successful conclusion. This will start with refreshing the
requisite shareholder authority at a soon to be convened General Meeting and
should result in the reserves being created in the early part of next year.
The Board is extremely frustrated by the delay caused in the process and the
fact that it was not made aware of this until very recently. The Board intends
to investigate matters further and seek compensation for any costs incurred
whilst reserving all the Company’s other rights.
Following the cancellation of the share premium account the Company will have
very significant headroom in its reserves to support the DCP for the
foreseeable future. Shareholders should be assured that the Board remains
fully committed to the DCP and any temporary modifications will be reversed as
soon as the Northern Irish Court process is concluded.
Performance Comparators
The Company does not have a formal benchmark but over the years has compared
its performance against Retail Price Index (‘RPI’) inflation and the MSCI
UK index. RPI inflation is no longer classified as a national statistic by the
Office for National Statistics due to methodological flaws. It has been
replaced by CPI inflation, which we will now refer to as a comparator. As a
number of shareholders have pointed out, neither our investment objective nor
our portfolio construction reflect the UK equity market, so the Company will
no longer use the MSCI UK index as a comparator but may refer to equity
indices more generally when looking at specific components of performance.
Board Update
We are pleased to welcome Ravi Anand as a non-executive Director with effect
from 1 August 2023. Ravi has already made a positive impact on our discussions
pulling on his experience of investment trusts and financial services more
generally.
Wendy Colquhoun has been appointed as Chair of the Nominations Committee to
lead our Board succession planning. Robin Archibald will retire at the 2024
AGM after nine years on the Board. As noted in the Annual Report, to avoid two
long standing Directors departing at the same time, it has been agreed that I
will remain on the Board for a further period of one or two years beyond 2024
to enable a further Board member to be recruited and to oversee an orderly
handover to a new Chairman.
Outlook
It seems likely that the second half of the year will continue to be
challenging, as all asset markets are buffeted by a deteriorating geopolitical
backdrop, high interest rates and lingering inflation. Against this backdrop
the Company remains defensively positioned, with a relatively constrained
allocation to equities and significant exposure to short duration high quality
bonds. However, with volatile markets come opportunities and the investment
manager will seek to exploit falling prices in the bond and equity markets
when values become compelling.
Jean Matterson
Chairman
10 November 2023
Investment Manager’s Report
Investment Review
The first half of the financial year has proven challenging with a negative
return of 1.3%. The six month period was characterised by rising interest
rates in developed markets which proved a headwind to our bond portfolios and
rising investment trust discounts, particularly in the alternatives sector,
which were a challenge to our risk assets.
Despite the headwinds, corporate bonds and risk assets made positive
contributions to the portfolio. Detracting from performance were nominal
government bonds, index-linked bonds, and gold. The Company’s nominal
government bonds comprise treasury bills and short duration bonds. A
significant majority of these are denominated in Sterling and generated
positive returns. However, the holdings of Japanese treasury bills (2%) and
Swedish government bonds (2%) both made negative contributions as sterling
appreciated by 10.1% and 3.6% against the Japanese Yen and Swedish Krona,
respectively.
Since the start of 2021, the Yen has risen from 141 to the pound to 182.
Adjusting for relative inflation, it has depreciated by over 30%. We remain
convinced of the Yen’s attraction and have a 9% weighting to the currency.
This is both on valuation grounds and portfolio composition. On all purchasing
power parity (‘PPP’) measures, the Yen appears to be extraordinarily
cheap. The portfolio role for the Yen is also important. Japan is the single
largest overseas holder of US government bonds. There is a concern, justified
in our view, that a change in Japanese monetary policy could result in huge
sales of treasuries and repatriation of the proceeds. Were this to happen,
rising yields on US government bonds should be accompanied by gains on the
Yen.
Index-linked bonds were the other source of negative returns. The Company’s
holdings of UK index-linked bonds (23% of the portfolio) made positive
contributions, helped by the very short duration. We took advantage of
weakness over the summer to lengthen duration adding to 5 year bonds on very
attractive yields. US TIPS were the chief detractor during the period as 10
year yields rose by around 100 basis points.
Corporate bonds delivered positive returns of 1.9% over the six months. Gains
were broad based. The portfolio currently has a duration of around 2.5 years
and yields around 7% with the vast majority carrying an investment grade
credit rating. While pleased with the performance of our credit portfolio,
with credit spreads tight and a deteriorating macroeconomic environment, we
are reluctant to increase the Company’s allocation to the asset class or
take on additional duration risk.
Risk assets contributed positively over the six-month period with conventional
equities returning over 5%. Our two largest holdings the SPDR Europe Energy
ETF and the iShares MSCI Japan ESG ETF returned 13.6% and 5.9% respectively.
Our property holdings contributed 6.5%, buoyed by Civitas Social Housing being
subject to a takeover bid. The only significant drag on return was our
infrastructure holdings which delivered a negative return of 11%. We have
taken the opportunity to add to our infrastructure holdings on the back of
share price weakness. They offer, based on conservative assumptions,
prospective real returns of mid-single digits: equal or higher than the
long-term return on equities with considerably lower risk. Such returns are
very appetising.
With discounts so wide in the alternatives sector it is reasonable to ask
whether the stated NAVs can be relied upon. Our answer is a cautious
“yes”. The evidence of solidity is mounting with asset disposals at or
above book value being announced across many trusts in multiple sectors. If
the valuations can be relied upon why are so many trusts trading at large
discounts? It is simply a question of supply, demand and the quantity theory
of asset prices. Huge amounts of capital have been raised in the alternative
space in recent years. Over the last 18 months multi-asset funds have seen
large redemptions and wealth managers have switched their focus to highly tax
efficient low coupon gilts. With demand falling and the supply remaining
constant, the balancing variable – price – must take the strain, with all
too painful consequences. The diagnosis reveals the cure. With no prospect for
a change in demand, supply needs to be withdrawn from the sector. For now the
only contraction comes from takeovers. It would be preferable for the sector
to help itself by selling assets and buying-back shares or returning capital
to shareholders. We see precious little evidence of this to date and have
generally been frustrated by the attitudes of boards and management teams. We
will continue to engage with boards and hope to report greater progress to you
in the full year results.
Outlook
The key feature of the last six months has been the surprising resilience of
the US economy (and, to a lesser extent, Europe and the UK). This has resulted
in the market coming to believe the Federal Reserve when they said that rates
needed to be “higher for longer”. Accompanying this realisation is a
growing chorus of voices calling for a “soft landing”. We remain sceptical
of this outcome: the effects of the rate hiking cycle have not fully flowed
into the economy, credit availability is falling rapidly, and the money supply
is shrinking. As Niall Ferguson recently put it “The US economy’s not a
plane and it won’t land gently”. Nor is history on the side of the
optimists, indeed the swelling chorus may itself be a siren song. There was a
huge spike in the number of articles containing the phrase “soft landing”
in both 1999/2000 and 2007/08. We worry that history will repeat itself.
Markets do not share our concerns: credit spreads and equity risk premia are
low. In the full year results we wrote that the most rapid rate hiking cycle,
following on from an extended period of ultra-cheap money, might result in the
financial system breaking. So far this has not come to pass. That crises at
Credit Suisse and Silicon Valley Bank were contained does not mean that future
crises will be avoided. To give an example, at the end of Q3 Bank of
America’s losses on its hold to maturity portfolio – mostly comprising
agency mortgage bonds – were $130 bn, around 58% of its tier 1 capital.
Given the subsequent moves in rates we can only assume those losses have
grown. This is just one bank and one part of its balance sheet. The scale of
losses throughout the financial system must be very large indeed.
Ordinarily a financial crisis or a recession would be bullish for long bonds.
While this may yet occur, it is by no means certain. Short dated bonds will
rally as markets anticipate rate cuts from the Federal Reserve. What happens
to longer dated bonds is less clear. If the Fed is forced to cut rates before
inflation has been brought under control, then long term interest rates may
rise as investors price higher inflation and demand additional term premium to
compensate for volatility.
Such a move might be exacerbated by concerns over debt sustainability. This
year the US budget deficit is forecast to be 7.7% of GDP – a truly
staggering $2tn. A recession would only make this figure worse. As the Federal
Government rolls over its debts (around one third over the next 12 months) it
is paying real interest rates of around 2.5%. This is higher than the trend
growth rate of the economy. The formula r – g(1) neatly encapsulates the
problem. It shows that the debt to GDP ratio would rise even if it were to run
a balanced primary budget. For the past two decades the increasing debt stock
of the US has been financed by relatively price insensitive buyers(2). The
appetite of these buyers is waning and new buyers will need to be found. The
price of money may rise to enable the market to clear. The knock-on impact to
other asset classes is unknown but fiscal dominance and crowding out must be a
risk.
Eventually, these high yields are the source of their own destruction. There
are only two ways in which government borrowings can be made sustainable.
Either countries must run balanced budgets or, through financial repression,
reduce the interest rate they pay on their debts. With no political
constituency for fiscal prudence the latter becomes the only viable route.
The destination is clear, but the timing and the path taken are not. There are
only three things of which we can be reasonably certain. First, the attempt by
markets to price a bi-stable regime (comprising the present regime of rising
real yields and a future regime of financial repression) will bring volatility
to bond markets. Second, long duration nominal bonds are likely to be a poor
investment across both regimes. Third, index-linked bonds will fair much
better than their nominal cousins and thrive when the financial repression
eventually comes. For the time being, we accept our inability to forecast the
future and therefore adopt a cautious stance, positioning the portfolio to
withstand and ultimately, we hope, profit from what lies ahead.
Peter Spiller Alastair Laing Christopher Clothier
10 November 2023
(1) Where r is the real cost of debt and g the trend growth of the economy
(2) These have ranged from global FX reserve managers, yield starved Japanese
pension funds, the Federal Reserve conducting QE and – in recent years –
domestic banks trying to invest a glut of post-Covid deposits
Interim Management Report
A review of the half year and the outlook for the Company can be found in the
Chairman’s Statement and the Investment Manager’s Report above.
Principal Risks and Uncertainties
The principal risks and uncertainties facing the Company were explained in
detail within the Annual Report issued in May 2023.
There remain heightened uncertainties for global economies and financial
markets, with rapid changes in interest rates, higher levels of inflation,
volatility in bond and equity markets and continued heightened geopolitical
risks impacting on energy supply and costs, global trade and economic
activity. Recent conflict in the Middle East has heightened geopolitical risk
and is likely to continue to have an adverse impact on world markets.
As announced on 31 October 2023, the Company has placed temporary limits on
buy backs under its discount control policy while it awaits approval from the
Northern Irish Court to cancel the Company’s share premium account and
create additional distributable reserves. While this progresses, there is
heightened risk around the premium and discount at which the shares will
trade, the continued operation of the DCP and the Company’s third party
service providers responsible for monitoring the DCP and providing
administration services. The DCP is expected to be restored in full following
receipt of Court approval.
The Directors continue to work with the agents and advisers to the Company to
manage the risks, including any emerging risks the best they can.
Related Party Transactions
Details of related party transactions are contained in the Annual Report
issued in May 2023. There have been no material changes to be reported.
Going Concern
The Company’s investment objective and business activities, together with
the main trends and factors likely to affect its development and performance
are monitored continuously by the Board. The Directors believe that the
Company is reasonably well placed to manage its business risks and, having
reassessed the principal risks, consider it appropriate to continue to adopt
the going concern basis of accounting in preparing the interim financial
information.
Statement of Directors’ Responsibilities
Each Director confirms that, to the best of their knowledge:
(i) the condensed set of financial
statements has been prepared in accordance with Financial Reporting Standard
104 (Interim Financial Reporting);
(ii) the Half-Year 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 of the
financial year and description of principal risks and uncertainties for the
remaining six months of the financial year) and 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); and
(iii) the Half-Year Report, taken as a whole, is
fair, balanced and understandable and provides information necessary for
shareholders to access the Company’s performance, position and strategy.
For and on behalf of the Board
Jean Matterson
Chairman
10 November 2023
Investments of the Company
at 30 September 2023
The top ten investments in each asset category are listed below.
30 September 2023 £'000 31 March 2023 £'000
Index-Linked Government Bonds
Index-Linked Bonds - United Kingdom 257,996 267,376
Index-Linked Bonds - United States 177,113 248,154
Index-Linked Bonds - Japan 27,553 29,840
Index-Linked Bonds - Canada 15,036 16,693
Index-Linked Bonds - Sweden 11,003 10,997
Index-Linked Bonds - Australia 4,414 4,834
Index-Linked Bonds - Germany - 5,236
493,115 583,130
Conventional Government Bonds
Conventional Government Bonds - United Kingdom 104,392 95,319
Conventional Government Bonds - Sweden 23,399 19,304
Conventional Government Bonds - Japan 22,783 34,978
Conventional Government Bonds - United States - 5,638
150,574 155,239
Preference Shares / Corporate Debt
Grainger 3.375% 2028 7,824 7,484
Akelius Residential Property 2.375% 2025 6,252 5,123
BP Capital Perpetual Bond 5,277 -
Burford Capital 6.125% 2025 5,170 4,878
Network Rail 1.75% 2027 4,715 -
Liberty Living Finance 2.625% 2024 4,648 3,179
Land Securities 1.974% 2026 4,631 -
RMS IL 2.8332% 2035 4,364 3,074
NB Private Equity Partners ZDP 2024 4,213 -
Deutsche Pfandbriefbank 7.625% 2025 4,155 4,207
Other Preference Shares/Corporate Debt Investments 114,517 145,842
165,766 171,787
Funds / Equities
iShares MSCI Japan ESG Screened UCITS ETF 42,855 46,301
SPDR MSCI Europe Energy UCITS ETF 32,622 34,236
Lyxor STOXX Europe 600 Basic Resources UCITS ETF 17,707 18,670
North Atlantic Smaller Companies Investment Trust 16,078 15,335
Greencoat UK Wind 14,801 14,815
Grainger 10,887 11,327
iShares S&P 500 Energy Sector UCITS ETF 8,392 7,795
International Public Partnerships 7,023 7,558
GCP Infrastructure Investments 6,053 7,618
Aker Asa 6,048 8,838
Other Fund/Equity Investments 144,877 156,104
307,343 328,597
Gold
Wisdomtree Physical Swiss Gold 11,250 13,048
Total investments 1,128,048 1,251,801
Cash 5,006 13,766
Total 1,133,054 1,265,567
Income Statement
Six months ended 30 September 2023 (unaudited)
Revenue Capital Total
£’000 £’000 £’000
Net losses on investments - (27,390) (27,390)
Net currency losses - (82) (82)
Investment income (note 2) 13,627 - 13,627
Other income 160 - 160
Gross return 13,787 (27,472) (13,685)
Investment management fee (2,188) - (2,188)
Other expenses (538) - (538)
Net return before tax 11,061 (27,472) (16,411)
Tax charge on net return (1,818) - (1,818)
Net return attributable to equity shareholders 9,243 (27,472) (18,229)
Net return per Ordinary Share (note 3) 36.47p (108.40)p (71.93)p
Income Statement
Six months ended 30 September 2022 (unaudited)
Revenue Capital Total
£’000 £’000 £’000
Net losses on investments - (59,969) (59,969)
Net currency gains - 131 131
Investment income (note 2) 12,711 - 12,711
Other income - - -
Gross return 12,711 (59,838) (47,127)
Investment management fee (2,247) - (2,247)
Other expenses (482) - (482)
Net return before tax 9,982 (59,838) (49,856)
Tax charge on net return (656) - (656)
Net return attributable to equity shareholders 9,326 (59,838) (50,512)
Net return per Ordinary Share (note 3) 39.75p (255.07)p (215.32)p
Income Statement
Year ended 31 March 2023 (audited)
Revenue Capital Total
£’000 £’000 £’000
Net losses on investments - (68,449) (68,449)
Net currency losses - (547) (547)
Investment income (note 2) 24,846 - 24,846
Other income 93 - 93
Gross return 24,939 (68,996) (44,057)
Investment management fee (4,620) - (4,620)
Other expenses (974) - (974)
Net return before tax 19,345 (68,996) (49,651)
Tax charge on net return (1,739) - (1,739)
Net return attributable to equity shareholders 17,606 (68,996) (51,390)
Net return per Ordinary Share (note 3) 70.67p (276.96)p (206.29)p
The total column of this statement represents the Income Statement of the Company. The Revenue return and Capital return columns are supplementary to this and are prepared under guidance issued by the Association of Investment Companies. All revenue and capital items in the above statement derive from continuing operations. There are no gains or losses other than those recognised in the Income Statement.
Statement of Changes in Equity (unaudited) for the six months ended 30 September 2023
Called-up share capital Share premium account Capital re-demption reserve Unrealised capital reserve Realised capital reserve* Revenue reserve* Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000
Opening balance at 1 April 2023 6,645 1,101,753 16 (7,973) 140,426 18,852 1,259,719
Net return attributable to equity shareholders and total comprehensive income for the period - - - (24,365) (3,107) 9,243 (18,229)
Shares bought back (note 6) - - - - (102,065) - (102,065)
Dividends paid (note 4) - - - - - (15,577) (15,577)
Total transactions with owners recognised directly in equity - - - - (102,065) (15,577) (117,642)
Closing balance at 30 September 2023 6,645 1,101,753 16 (32,338) 35,254 12,518 1,123,848
for the six months ended 30 September 2022
Called-up share capital Share premium account Capital re-demption reserve Unrealised capital reserve Realised capital reserve* Revenue reserve* Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000
Opening balance at 1 April 2022 5,223 816,009 16 57,222 159,561 11,804 1,049,835
Net return attributable to equity shareholders and total comprehensive income for the period - - - (72,894) 13,056 9,326 (50,512)
New shares issued (note 6) 1,198 242,390 - - - - 243,588
Dividends paid (note 4) - - - - - (10,558) (10,558)
Total transactions with owners recognised directly in equity 1,198 242,390 - - - (10,558) 233,030
Closing balance at 30 September 2022 6,421 1,058,399 16 (15,672) 172,617 10,572 1,232,353
*These reserves are regarded as being available for distribution.
Statement of Financial Position (unaudited)
at 30 September 2023
(unaudited) (unaudited) (audited)
30 September 2023 30 September 2022 31 March 2023
£’000 £’000 £’000
Fixed assets
Investments held at fair value through profit or loss 1,128,048 1,211,490 1,251,801
Current assets
Debtors 4,276 8,045 7,892
Cash at bank and in hand 5,006 42,578 13,766
9,282 50,623 21,658
Creditors: amounts falling due within one year (13,482) (29,760) (13,740)
Net current (liabilities)/assets (4,200) 20,863 7,918
Total assets less current liabilities 1,123,848 1,232,353 1,259,719
Capital and reserves
Called-up share capital 6,645 6,421 6,645
Share premium account 1,101,753 1,058,399 1,101,753
Capital redemption reserve 16 16 16
Capital reserve 2,916 156,945 132,453
Revenue reserve 12,518 10,572 18,852
Total equity shareholders’ funds 1,123,848 1,232,353 1,259,719
Net asset value per Ordinary Share 4,674.9p 4,798.4p 4,797.3p
The Half-Year Financial Report for the six months ended 30 September 2023 was
approved by the Board of Directors on 10 November 2023 and signed on its
behalf by:
Jean Matterson
Chairman
10 November 2023
Cash Flow Statement (unaudited)
for the six months ended 30 September 2023
(unaudited) (unaudited) (audited)
6 months ended 30 September 2023 6 months ended 30 September 2022 Year ended 31 March 2023
£’000 £’000 £’000
Net cash inflow from operating activities (note 5) 5,821 7,767 16,499
Payments to acquire investments (339,122) (522,583) (1,037,482)
Receipts from sale of investments 440,413 264,802 713,875
Net cash inflow/(outflow) from investing activities 101,291 (257,781) (323,607)
Equity dividends paid (15,577) (10,558) (10,558)
Repurchase of Ordinary shares (100,185) - (15,315)
Proceeds from the issue of Ordinary shares - 253,075 297,172
Cost of shares issues - (536) (1,036)
Cost of share buybacks (110) - -
Net cash (outflow)/inflow from financing activities (115,872) 241,981 270,263
Decrease in cash and cash equivalents (8,760) (8,033) (36,845)
Cash and cash equivalents at start of period 13,766 50,611 50,611
Cash and cash equivalents at end of period 5,006 42,578 13,766
Notes to the Financial Statements
1 Basis of preparation
The condensed Financial Statements for the six months to 30 September 2023
comprise the Income Statement, the Statement of Changes in Equity, the
Statement of Financial Position and the Cash Flow Statement, together with the
notes set out below. They have been prepared in accordance with FRS 104
‘Interim Financial Reporting’, the AIC’s Statement of Recommended
Practice issued in 2022 (“SORP”), UK Generally Accepted Accounting
Principles (“UK GAAP”) and using the same accounting policies as set out
in the Company’s Annual Report and Accounts at 31 March 2023.
2 Investment income
(unaudited) (unaudited) (audited)
6 months ended 30 September 2023 6 months ended 30 September 2022 Year ended 31 March 2023
£’000 £’000 £’000
Income from investments
Interest from UK bonds 5,116 2,570 6,049
Income from UK equity and non-equity investments 4,740 6,375 11,057
Interest from overseas bonds 3,474 1,505 4,973
Income from overseas equity and non-equity investments 297 2,261 2,767
Total income 13,627 12,711 24,846
3 Net return per Ordinary share
The calculation of return per Ordinary share is based on results after tax
divided by the weighted average number of shares in issue during the period,
excluding shares held in treasury, of 25,344,195 (30 September 2022:
23,459,021, 31 March 2023: 24,912,016).
The revenue, capital and total return per Ordinary share is shown in the
Income Statement.
4 Dividends paid
(unaudited) (unaudited) (audited)
6 months ended 30 September 2023 6 months ended 30 September 2022 Year ended 31 March 2023
£’000 £’000 £’000
2022 dividend paid 15 July 2022 (46.0p per share) - 10,558 10,558
2023 dividend paid 10 July 2023 (60.0p per share) 15,577 - -
5 Reconciliation of net return on ordinary activities before tax to net cash
inflow from operating activities
(unaudited) (unaudited) (audited)
6 months ended 30 September 2023 6 months ended 30 September 2022 Year ended 31 March 2023
£’000 £’000 £’000
Net return before tax (16,411) (49,856) (49,651)
Adjustments for:
Capital return before tax 27,472 59,838 68,996
Decrease/(increase) in prepayments 16 28 (5)
Increase in accruals and deferred income 16 102 39
Overseas withholding tax paid (29) (59) (115)
Decrease/(increase) in recoverable tax 3 (10) (10)
UK Corporation tax paid (1,006) (243) (874)
(Increase)/decrease in dividends receivable (326) (307) 186
Increase in accrued interest (3,832) (1,857) (1,520)
Realised (losses)/gains on foreign currency transactions (82) 131 (547)
Net cash inflow from operating activities 5,821 7,767 16,499
6 Ordinary Shares
During the period, the Company bought back 2,218,929 Ordinary shares (six
months to 30 September 2022: nil and year to 31 March 2023: 321,500) for a
cash consideration totalling £102,065,000 (six months to 30 September 2022:
nil and year to 31 March 2023: £15,334,000).
During the period, the Company issued no new Ordinary shares and no Ordinary
shares were issued from treasury (six months to 30 September 2022: 4,790,460
new Ordinary shares issued for proceeds totalling £243,588,000 and no
Ordinary shares were issued from treasury, year to 31 March 2023: 5,688,288
new Ordinary shares issued for proceeds totalling £287,166,000 and no
Ordinary shares were issued from treasury).
At 30 September 2023, there were 26,580,263 Ordinary shares in issue (30
September 2022: 25,682,435 and 31 March 2023: 26,580,263). At 30 September
2023 2,540,429 Ordinary shares were held in treasury (30 September 2022: nil
and 31 March 2023: 321,500).
7 Fair value of financial assets and liabilities
Financial Reporting Standard 102 requires an entity to classify fair value
measurements using a fair value hierarchy that reflects the significance of
the inputs used in making the measurements. The fair value hierarchy has the
following levels:
Level 1: valued using unadjusted quoted prices in active markets for identical
assets;
Level 2: valued using observable inputs other than quoted prices included
within Level 1; and
Level 3: valued using inputs that are unobservable and are valued by the
Directors using International Private Equity and Venture Capital Valuation
(‘IPEV’) guidelines, such as earnings multiples, recent transactions and
net assets, which equate to their fair values.
The financial assets and liabilities measured at fair value in the Statement
of Financial Position are grouped into the fair value hierarchy at 30
September 2023 as follows:
Financial assets at fair value through profit or loss Level 1 £000 Level 2 £000 Level 3 £000 2023 Total £000
Quoted securities 1,127,386 – – 1,127,386
Delisted equities – – 662 662
Net fair value 1,127,386 – 662 1,128,048
8 General information
The financial information contained in this Half-Year Report does not
constitute statutory accounts as defined in section 434 of the Companies Act
2006. The financial information for the half-years ended 30 September 2023 and
30 September 2022 have not been audited. The abridged financial information
for the year ended 31 March 2023 has been extracted from the Company’s
statutory accounts for that period, which have been filed with the Registrar
of Companies. The report of the Auditors on those accounts was unqualified and
did not contain a statement under either section 498(2) or section 498(3) of
the Companies Act 2006.
Enquiries:
Juniper Partners Limited
Company Secretary
Email: company.secretary@capitalgearingtrust.com
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