REG-Capital Gearing Tst: Half-year Report
15/11/2018 07:05
To: PR Newswire
From: Capital Gearing Trust P.l.c.
LEI: 213800T2PJTPVF1UGW53
Date: 15 November 2018
Capital Gearing Trust P.l.c. (“the Company”)
Announcement of the Half-Year Financial Report for the six months ended 5
October 2018
Interim Management Report
Chairman’s Overview
At the half year to 5 October 2018, the net asset value per share was 3,968.2p
compared to 3,809.8p as at 5 April 2018, and 3,877.7p a year previously. This
represents a total return of 5.3% over the past six months and 2.8% over
twelve. This performance compares with total returns of 4.1% in the MSCI UK
Index and of 14.4% in the sterling MSCI World Index respectively, for the six
month period. Performance in the half-year benefited from a 7% weakening of
sterling relative to the dollar. Some 47% of portfolio assets are currently
held in non-sterling assets.
Operation of the Company’s discount control policy has resulted in a pattern
of steady issuance at a premium to net asset value. The Company’s issued
share capital has increased by 14% over the half-year and is 31% higher than a
year ago. The improved marketability in the Company’s shares has widened the
equity base and extended the shareholder list. In uncertain times, it is clear
that the Company’s emphasis on capital preservation has an appeal for a
significant group of investors.
At the half-year end, total net assets stood at £261m. This growth in the
Company’s asset base continues to reduce the ongoing cost ratio of the
Company. Issuance at a premium has had a beneficial impact on the net asset
value per share.
The Board regularly reviews whether the issuance of new shares might, in any
respect, act against the interests of existing investors by, for example,
diluting returns. A comparison of the performance of Capital Gearing Trust
against a “hard closed” investment fund also managed by CG Asset
Management, Capital Gearing Portfolio Fund, which has the same underlying
investment policy and a closely aligned portfolio structure, is relevant in
answering that question.
Total Returns Over period Capital Gearing Trust Capital Gearing Portfolio Fund
1 month (0.6)% (0.7)%
3 months 1.7% 1.7%
1 year 5.2% 3.0%
Since August 2015 (when discount policy adopted) 25.8% 25.5%
Note: The performance figures are struck on the quarter days (e.g.
30th September) rather than the tax year (5th April) used by Capital Gearing
Trust. The fluctuations of the net asset values on the different reporting
dates causes the variation in performance when compared to the interim results
of the Company.
The figures shown above strongly support the view (held by the investment
manager and the Board) that the steady flow of new money into Capital Gearing
Trust has not impacted adversely on the returns achieved for investors, new or
old, in the Company. The investment manager has deployed the steady inflows of
new money in a productive manner. Moreover, the premium at which the shares
have been issued has helped Capital Gearing Trust to outperform its sister
fund modestly, whilst also offsetting the costs of running the Company.
Investment Review
Two defining characteristics of the last 36 years, the period since the
investment manager took over the running the Company, have been the collapse
in long term interest rates and the negative correlation between stocks and
bonds. In turn, this has had three consequences for money managers. Firstly,
long dated bonds have been excellent investments. Secondly, as long-term
interest rates collapsed, the discount rate applied to other long duration
assets, specifically equities, also collapsed, resulting in considerable
capital gains. Thirdly, the negative correlation between the two investment
types meant that a portfolio combining the two, rebalancing occasionally,
performed very well, with low volatility.
By way of illustration, a portfolio comprising solely the S&P500, bought in
1982 and held to December 2017 would have produced a return of 9.8% per annum
with a volatility of 17.2%. A portfolio comprising 70% S&P 500 and 30%
long-dated US treasuries would have delivered broadly the same return as the
pure equity portfolio, but with 30% less volatility.
These dynamics helped Capital Gearing Trust to deliver positive total returns
in all but one financial year since the investment manager took over nearly
four decades ago.
When equities appeared richly valued, bonds could be relied upon both as a
haven against an equity market retreat and as a source of acceptable returns.
We revisit this piece of financial history because it is particularly relevant
today.
In July 2016, 30-year US treasuries reached a record low yield of 2.1%. Since
then they have been largely “range bound” between 2.65-3.25%. Over the
first two weeks of October they rose rapidly, reaching a yield of 3.36%. Over
the same period, the S&P 500 Index fell by more than 10%. This could be
coincidence, but we suspect that it is not. And if it is not, it neatly
illustrates a major concern that we have: that negative correlation between
stocks and bonds is likely to be much less reliable where long rates are on an
upwards trend.
For a Company with a dual objective of preserving shareholder real wealth and
achieving absolute total return over the medium to longer term, this
environment presents a challenge for portfolio construction. In this
environment risks can be at best reduced; they cannot be wholly mitigated. The
first response is for the portfolio to have short duration (cash, near cash
and short dated government and corporate bonds represented 42% of the
portfolio at the half-year end). The second is to allocate a significant part
of the portfolio to any low risk asset that delivers a positive real return.
There are remarkably few such assets, however US TIPS stand out on this basis,
all the more so after yield rises in early October (24% of the portfolio at
the half-year end).
The equity holdings in the portfolio have been modestly reduced in percentage
terms but retain a similar shape. After a strong run, a few of the specialist
property holdings were sold down, including the Unite Group which was no
longer obviously good value after exceptional gains. The Company made marginal
disposals of German residential property companies, which still have
attractions but have performed so well that they needed to be sold to
rebalance as a proportion of the portfolio. Other investment activity centered
on the renewable energy infrastructure sector, where there has been
considerable issuance in the market. During the half-year, the Company
participated in placings of Foresight Solar Fund, The Renewable Infrastructure
Group, Greencoat UK Wind and Greencoat Renewables. The shares of all of these
companies traded well after the placings, helping the equity portfolio as a
whole to a strong half-year of gains.
Changes at CG Asset Management
On 19 October 2018 the shareholders of the Company’s investment manager (CG
Asset Management Limited) sold a majority of their shares to an Employee
Ownership Trust (“EOT”). The EOT will hold those shares in perpetuity for
the benefit of CG Asset Management employees as a whole, allowing a simple and
flexible means of employee equity participation in the future. The Board of
Capital Gearing Trust, whilst having no influence on this initiative, welcomes
the move which potentially strengthens the depth of management resource and
provides continuity to the Company for the future.
Key Information Documents
The Board, following a request for submissions of views on Key Information
Documents (“KIDs”) from the FCA at the start of the summer, wrote to
express the Board’s reservations, shared by many in the sector, on how the
formulaic financial information is being presented in KIDs and how this
information, rather than being of assistance to investors in closed-ended
funds, could distort and mislead by comparison with financial information
already available.
Capital Gearing Trust has for many years invested a considerable portion of
its portfolio in quoted investment trusts and other collective investment
vehicles. We believe that there is sufficient information available on most
other investment trusts in the market to make an informed investment decision,
which is after all a requirement of the Listing Rules. The information
contained in the KID’s of our Company, and of the other investment trusts we
hold as portfolio investments, adds nothing to the investment decision, but
often only serves to mislead and distort comparisons.
Conclusion
Currently, both equity and bond markets around the world are undergoing what
appears to be a marked correction. After a prolonged bull phase in most risk
assets, there is a possibility that market weakness could persist. Against
this background, the core objectives of the Company remain intact and relevant
– to preserve shareholders’ real wealth and to achieve absolute total
return over the medium to longer term and we work hard to position the Company
and its portfolio in those directions.
For and on behalf of the Board
Graham Meek
Chairman
14 November 2018
Required Disclosures
Principal Risks and Uncertainties
The principal risks and uncertainties facing the Company were explained in
detail within the Annual Report issued in June 2018. There remain
uncertainties for the UK economy and financial markets arising from the
negotiation and implementation of Brexit. The directors are not aware of any
new risks or uncertainties for the Company and its investors both for the
period under review and moving forward.
Related Party Transactions
Details of related party transactions are contained in the Annual Report
issued in June 2018. There have been no material changes in the nature and
type of the related party transactions as stated within the Annual Report.
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 continuously monitored by the Board. The directors believe that the
Company is well placed to manage its business risks and having reassessed the
principal risks consider it appropriate to adopt the going concern basis of
accounting in preparing the interim financial information.
Alternative Investment Fund Managers Directive (“AIFMD”)
The Company is an Alternative Investment Fund (“AIF”) as defined by the
AIFMD and CG Asset Management is the Company’s Alternative Investment Fund
Manager (“AIFM”).
Statement of Directors’ Responsibilities
Each director confirms that, to the best of their knowledge:
a) The condensed set of financial statements has been prepared in accordance
with Financial Reporting Standard 104 (Interim Financial Reporting);
b) The Interim Management Report includes a fair review of the information
required by Disclosure Guidance and Transparency Rule 4.2.7R (indication of
important events during the first six months of the financial year and
description of principal risks and uncertainties for the remaining six months
of the financial year); and
c) The Interim Management Report includes a fair review of the information
required by Disclosure Guidance and Transparency Rule 4.2.8R (disclosure of
related party transactions and changes therein).
The condensed set of financial statements are published on the Company’s
website, www.capitalgearingtrust.com, which is a website maintained by PATAC
Limited. The directors are responsible for the integrity of the Company’s
corporate website and financial information included within the website.
Legislation in the UK governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
For and on behalf of the Board
Graham Meek
Chairman
14 November 2018
Distribution of Investment Funds
at 5 October 2018
Distribution of Investment Funds of £263,282,000 at 5 October 2018
UK North America Europe Elsewhere 5 October 2018 Total
% % % % %
Investment Trust Assets:
Ordinary shares 11.6 2.4 2.2 3.9 20.1
Zero dividend preference shares 7.1 - - - 7.1
Other Assets:
Index-linked 12.4 23.7 0.5 0.1 36.7
Fixed interest 14.4 1.3 0.4 0.6 16.7
Other funds 2.6 0.6 0.3 3.0 6.5
Overseas property shares - - 8.0 - 8.0
Cash 4.5 - 0.4 - 4.9
52.6 28.0 11.8 7.6 100.0
Distribution of Investment Funds of £219,164,000 at 5 April 2018
UK North America Europe Elsewhere 5 April 2018 Total
% % % % %
Investment Trust Assets:
Ordinary shares 14.7 2.9 0.5 4.2 22.3
Zero dividend preference shares 7.3 - - - 7.3
Other Assets:
Index-linked 13.2 24.3 2.3 0.2 40.0
Fixed interest 8.3 0.7 - - 9.0
Other funds 2.9 - 1.2 3.0 7.1
Overseas property shares - - 8.5 - 8.5
Cash 5.2 0.5 0.1 - 5.8
51.6 28.4 12.6 7.4 100.0
Investments of the Company
at 5 October 2018
Investment Trust Ordinary shares: £’000
North Atlantic Smaller Companies 6,240
Investor AB 5,401
Residential Secure Income 3,572
PRS REIT 2,570
Ground Rents Income Fund Ordinary 2,544
The Renewables Infrastructure Group 2,167
Empiric Student Property 1,985
Grainger 1,759
Oryx International Growth Fund 1,577
P2P Global Investments 1,566
Triple Point Social Housing REIT 1,477
Civitas Social Housing C Shares 1,437
Foresight Solar Fund 1,306
RM Secured Direct Lending 1,303
JPEL Private Equity USD 1,189
Artemis Alpha Trust 910
SME Loan Fund 899
Better Capital PCC 891
SQN Asset Finance C Shares 823
Ecofin Global Utilities and Infrastructure Trust 771
Secure Income REIT 753
LXI REIT 736
BBGI SICAV S.A. 701
Gulf Investment Fund 687
EPE Special Opportunities 677
Eurovestech 675
International Public Partnerships 662
HICL Infrastructure 617
CLS Holdings 595
CATCo Reinsurance Opportunities Fund C Shares 595
Greencoat Renewables 570
CATCo Reinsurance Opportunities Fund 565
Schroder UK Growth Fund 542
Witan Pacific Investment Trust 511
Greencoat UK Wind 408
GCP Asset Backed Income Fund 378
GCP Infrastructure Investments 351
Aberdeen Asian Smaller Companies 339
Value & Income Trust 321
JP Morgan Multi Asset 265
Aberdeen Latin American Income 255
Investments with a market value below £250,000 1,408
52,998
Investment Trust Zero Dividend Preference Shares: £’000
NB Private Equity 2022 3,409
JZ Capital Partners 2022 2,431
Utilico Investments 2020 2,118
Utilico Investments 2018 1,697
GLI Finance 2019 1,554
Acorn Income Fund 2022 1,523
Ranger Direct Lending 2021 1,147
Taliesin Property Fund 2018 1,018
Premier Energy & Water Trust 2020 887
Polar Capital 2024 884
NB Private Equity Partners 2024 621
RM Secured Direct Lending 2021 555
Chelverton Smaller Companies 2025 439
Aberforth Split Level Income 2024 403
18,686
Index-linked: £’000
UK Treasury 0.125% 2019 22,665
USA Treasury 2.0% 2026 8,935
USA Treasury 0.125% 2025 8,789
USA Treasury 3.875% 2029 5,824
USA Treasury 2.375% 2025 5,783
USA Treasury 1.75% 2028 4,457
USA Treasury 2.375% 2027 3,934
UK Treasury 2.5% 2020 3,878
USA Treasury 0.625% 2023 3,681
USA Treasury 3.625% 2028 2,766
USA Treasury 0.625% 2024 2,705
USA Treasury 0.125% 2024 2,624
USA Treasury 0.125% 2026 2,616
USA Treasury 3.375% 2032 2,073
Tesco Personal Finance 1.0% 2019 1,563
USA Treasury 0.75% 2042 1,459
National Grid 1.25% 2021 1,249
Places for People Capital Markets 1% 2022 1,115
USA Treasury 0.125% 2023 1,107
Sweden (Kingdom of) 0.25% 2022 953
USA Treasury 2.5% 2029 913
USA Treasury 0.5% 2028 885
UK Treasury 1.875% 2022 883
Severn Trent 1.3% 2022 832
USA Treasury 0.375% 2025 777
USA Treasury 1.375% 2044 638
USA Treasury 1.125% 2021 441
Sydney Airport Finance Company 3.76% 2020 394
USA Treasury 0.875% 2047 364
USA Treasury 0.75% 2045 363
USA Treasury 2.125% 2041 361
USA Treasury 1.0% 2046 345
USA Treasury 2.125% 2040 312
USA Treasury 0.625% 2043 292
Sweden 1.875% 2018 250
Investments with a market value below £250,000 502
96,728
Fixed Interest: £’000
Pershing Square 5.5% 2022 3,592
UK Treasury 12/11/18 3,247
UK Treasury 03/12/18 2,497
UK Treasury 31/12/18 2,496
UK Treasury 18/03/19 1,993
UK Treasury 01/04/19 1,993
JZ Capital Partners 6.0% Convertible Unsecured Loan Stock 2021 1,898
Burford Capital 6.5% 2022 1,839
UK Treasury 11/02/19 1,745
Aberdeen Asian Smaller Companies 2.25% 2025 1,514
UK Treasury 26/11/18 1,498
UK Treasury 25/02/19 1,496
Primary Healthcare Properties 5.375% 2019 1,359
UK Treasury 07/01/19 1,248
Unite Group 6.125% 2020 1,240
UK Treasury 05/11/18 999
UK Treasury 21/01/19 998
UK Treasury 04/02/19 998
UK Treasury 04/03/19 997
Bruntwood Investments 6.0% 2020 902
Helical 4%2019 897
St Modwen 6.25% 2019 833
GE Capital UK Funding Unlimited Company 4.375% 2019 759
FMS Wertmanagement 1.875% 2018 701
Burford Capital 6.125% 2024 638
Home Group Zero Coupon Loan Stock 2027 626
REA Finance B.V. 8.75% 2020 603
UK Treasury 22/10/18 500
UK Treasury 17/12/18 499
A2D Fund 4.75% 2022 478
TP ICAP 5.25% 2024 447
Ecclesiastical Insurance Office 8.625% Non-Cumulative Irredeemable Preference Shares 368
Tesco Personal Finance 5.0% 2020 302
VW Financial Services 1.875% 2021 298
National Grid 0.9% 2020 296
Investments with a market value below £250,000 1,219
44,013
Other Funds: £’000
Vanguard FTSE Japan UCITS ETF 5,897
iShares Core FTSE 100 ETF 3,617
iShares Physical Gold ETC 2,640
Vanguard S&P 500 UCITS 1,590
Vanguard FTSE Developed Asia Pacific ex-Japan UCITS ETF 882
Vanguard FTSE Developed Europe ex-UK UCITS ETF 790
Vanguard FTSE Emerging Markets UCITS ETF 629
Vanguard FTSE 250 UCITS ETF 522
iShares JP Morgan Emerging Market Local Government Bond UCITS ETF 475
17,042
Overseas Property: £’000
Vonovia 6,699
Deutsche Wohnen 4,711
Castellum 3,230
Leg Immobilien 1,869
Kungsleden 1,615
ADO Properties 1,360
Grand City Properties 881
Atrium Ljungberg AB 507
Hufvudstaden 123
20,995
Total investments 250,462
Cash 12,820
Total investment funds 263,282
Income Statement (unaudited)
for the six months ended 5 October 2018
(unaudited) (unaudited) (audited)
6 months ended 5 October 2018 6 months ended 5 October 2017 Year ended 5 April 2018
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Net gains/(losses) on investments - 8,806 8,806 - 3,606 3,606 - (1,243) (1,243)
Exchange gains/(losses) - 12 12 - (73) (73) - (187) (187)
Investment income (note 2) 2,279 - 2,279 1,238 - 1,238 2,876 - 2,876
Gross return 2,279 8,818 11,097 1,238 3,533 4,771 2,876 (1,430) 1,446
Investment management fee (261) (391) (652) (204) (306) (510) (434) (652) (1,086)
Other expenses (197) - (197) (204) - (204) (419) - (419)
Net return on ordinary activities before tax 1,821 8,427 10,248 830 3,227 4,057 2,023 (2,082) (59)
Tax on ordinary activities (note 6) (99) 87 (12) (74) 62 (12) (152) 140 (12)
Net return attributable to equity shareholders 1,722 8,514 10,236 756 3,289 4,045 1,871 (1,942) (71)
Return per Ordinary Share (note 3) 28.16p 139.23p 167.39p 16.07p 69.93p 86.00p 37.04p (38.45)p (1.41)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 5 October 2018
Called-up share capital Share premium account Capital redemption reserve Capital reserve* Revenue reserve Total
£’000 £’000 £’000 £’000 £’000 £’000
Balance at 6 April 2018 1,441 117,389 16 98,034 2,674 219,554
Net return attributable to equity shareholders and total comprehensive income for the period - - - 8,514 1,722 10,236
New shares issued (note 7) 202 32,408 - - - 32,610
Dividends paid (note 4) - - - - (1,619) (1,619)
Total transactions with owners recognised directly in equity 202 32,408 - - (1,619) 30,991
Balance at 5 October 2018 1,643 149,797 16 106,548 2,777 260,781
for the six months ended 5 October 2017
Called-up share capital Share premium account Capital redemption reserve Capital reserve* Revenue reserve Total
£’000 £’000 £’000 £’000 £’000 £’000
Balance at 6 April 2017 1,113 66,610 16 99,976 1,730 169,445
Net return attributable to equity shareholders and total comprehensive income for the period - - - 3,289 756 4,045
New shares issued (note 7) 137 21,290 - - - 21,427
Dividends paid (note 4) - - - - (926) (926)
Total transactions with owners recognised directly in equity 137 21,290 - - (926) 20,501
Balance at 5 October 2017 1,250 87,900 16 103,265 1,560 193,991
*The Capital reserve balance at 5 October 2018 includes unrealised gains on
fixed asset investments of £15,033,000 (5 October 2017 – gains of
£19,134,000 and 6 April 2018 – gains of £10,819,000).
Statement of Financial Position (unaudited)
at 5 October 2018
(unaudited) (unaudited) (audited)
5 October 2018 5 October 2017 5 April 2018
£’000 £’000 £’000
Fixed assets
Investments held at fair value through profit or loss 250,462 189,438 206,397
Current assets
Debtors 3,350 1,027 1,036
Cash at bank and in hand 12,820 3,898 12,767
16,170 4,925 13,803
Creditors: amounts falling due within one year (5,851) (372) (646)
Net current assets 10,319 4,553 13,157
Total assets less current liabilities 260,781 193,991 219,554
Capital and reserves
Called-up share capital 1,643 1,250 1,441
Share premium account 149,797 87,900 117,389
Capital redemption reserve 16 16 16
Capital reserve 106,548 103,265 98,034
Revenue reserve 2,777 1,560 2,674
Total equity shareholders’ funds 260,781 193,991 219,554
Net asset value per Ordinary Share 3,968.2p 3,877.7p 3,809.8p
The Half-Year Financial Report for the six months ended 5 October 2018 was
approved by the Board of Directors on 14 November 2018 and signed on its
behalf by:
Graham Meek
Chairman
14 November 2018
Cash Flow Statement (unaudited)
for the six months ended 5 October 2018
(unaudited) (unaudited) (audited)
6 months ended 5 October 2018 6 months ended 5 October 2017 Year ended 5 April 2018
£’000 £’000 £’000
Net cash outflow from operations before dividends & interest (note 5) (821) (790) (1,649)
Dividends received 1,483 688 1,472
Interest received 1,132 506 1,381
Net cash inflow from operating activities 1,794 404 1,204
Payments to acquire investments (86,646) (81,177) (139,925)
Receipts from sale of investments 53,946 55,364 92,457
Net cash outflow from investing activities (32,700) (25,813) (47,468)
Equity dividends paid (1,619) (926) (927)
Issue of ordinary shares 32,578 21,112 50,837
Net cash inflow from financing activities 30,959 20,186 49,910
Increase/(decrease) in cash and cash equivalents 53 (5,223) 3,646
Cash and cash equivalents at start of period 12,767 9,121 9,121
Cash and cash equivalents at end of period 12,820 3,898 12,767
Increase/(decrease) in cash and cash equivalents 53 (5,223) 3,646
Cash and cash equivalents consist of cash at bank, and in hand 12,820 3,898 12,767
Notes to the Financial Statements
1 Basis of preparation
The condensed Financial Statements for the six months to 5 October 2018
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 November 2014 (“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 5 April 2018.
Fair Value
Under FRS 102 and FRS 104, investments have been classified using the
following fair value hierarchy:
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.
Level 3: valued using inputs that are unobservable.
All of the Company’s investments fall into Level 1 for the periods reported.
2 Investment income
(unaudited) (unaudited) (audited)
6 months ended 5 October 2018 6 months ended 5 October 2017 Year ended 5 April 2018
£’000 £’000 £’000
Income from investments
Income from UK bonds 385 287 662
Income from UK equity and non-equity investments 980 629 1,281
Interest from overseas bonds 435 223 650
Income from overseas equity and non-equity investments 479 99 283
Total income 2,279 1,238 2,876
3 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 of 6,115,181 (5 October 2017: 4,703,266, 5 April 2018:
5,050,988).
The revenue, capital and total return per
Ordinary Share is shown in the Income Statement.
4 Dividends paid
(unaudited) (unaudited) (audited)
6 months ended 5 October 2018 6 months ended 5 October 2017 Year ended 5 April 2018
£’000 £’000 £’000
2017 dividend paid 17 July 2017 (20.0p per share) - 926 927
2018 dividend paid 20 July 2018 (27.0p per share)* 1,619 - -
*The dividend of 27.0p per share paid in respect of the year ended 5 April
2018 comprised an increase in annual dividend to 21.0p per share (2017: 20.0p
per share) plus a special dividend of 6.0p per share (2017: no special
dividend paid).
5 Reconciliation of net return on ordinary activities
before finance costs and taxation to net cash outflow from operations before
dividends and interest
(unaudited) (unaudited) (audited)
6 months ended 5 October 2018 6 months ended 5 October 2017 Year ended 5 April 2018
£’000 £’000 £’000
Net return on ordinary activities before taxation 10,248 4,057 (59)
Less capital return on ordinary activities before taxation (8,427) (3,227) 2,082
Decrease/(increase) in prepayments and accrued income 4 (6) (3)
Increase in accruals and deferred income 12 18 72
Management fees charged to capital (391) (306) (652)
Overseas withholding tax 6 (15) (12)
Increase in recoverable UK taxation (6) - (14)
Dividends received (1,459) (728) (1,564)
Interest received (820) (510) (1,312)
Gains/(losses) on foreign currency transactions 12 (73) (187)
Net cash outflow from operations before dividends and interest (821) (790) (1,649)
6 Taxation
Capital returns and franked dividend income are not subject to UK corporation
tax within an investment trust company. The provision for corporation tax
arises from the excess of unfranked investment income over management expenses
and irrecoverable overseas withholding tax. During the six months to 5
October 2018, £24,000 of withholding tax in relation to prior periods was
received from the Swiss tax authorities (refunds received during periods to 5
April 2018: £nil; and 5 October 2017: £nil).
7 Ordinary Shares
During the period the Company issued 808,845 new Ordinary shares of 25p each
for proceeds totalling £32,610,000 (period to 5 October 2017: 549,545 new
Ordinary shares of 25p each issued for proceeds totalling £21,427,000, year
to 5 April 2018: 1,309,745 new Ordinary shares of 25p each issued for proceeds
totalling £51,107,000).
During the period the Company did not repurchase any Ordinary shares (periods
to 5 October 2017 and 5 April 2018: nil). At 5 October 2018 no shares were
held in treasury (5 October 2017 and 5 April 2018: nil).
At 5 October 2018, there were 6,571,764 Ordinary shares in issue (5 October
2017: 5,002,719, 5 April 2018: 5,762,919).
8 Transaction Costs
Transaction costs on acquisitions within the portfolio amounted to £44,000
and transaction costs on sales amounted to £15,000. These costs are included
in the book cost of acquisitions and in the net proceeds of disposals.
9 General information
The financial information contained in this Half-Year Financial Report does
not constitute statutory accounts as defined in Section 434 of the Companies
Act 2006. The financial information for the half-years ended 5 October 2017
and 5 October 2018 has not been audited. The abridged financial information
for the year ended 5 April 2018 has been extracted from the Company’s
statutory accounts for that year, 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:
Steven Cowie
Company Secretary
Email: company.secretary@capitalgearingtrust.com
Copyright (c) 2018 PR Newswire Association,LLC. All Rights ReservedRecent news on Capital Gearing Trust
See all newsREG-Capital Gearing Trust P.l.c.: Transaction in Own Shares
AnnouncementREG-Capital Gearing Trust P.l.c.: Net Asset Value(s)
AnnouncementREG-Capital Gearing Trust P.l.c.: Transaction in Own Shares
AnnouncementREG-Capital Gearing Trust P.l.c.: Net Asset Value(s)
AnnouncementREG-Capital Gearing Trust P.l.c.: Transaction in Own Shares
Announcement