REG - CT UK Cap & Inc inv - Interim Results and Dividend Announcement
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RNS Number : 4717K CT UK Capital and Income Investment 29 May 2025
CT UK Capital and Income Investment Trust PLC
Unaudited Statement of Results
for the half-year ended 31 March 2025
Date: 29 May 2025
LEI: 21380052ETTRKV2A6Y19
Highlights for the half-year ended 31 March 2025:
· The dividend((1)) for this half-year of 5.90p represents an increase
of 3.5% in comparison to the six-months ended 31 March 2024 and provides
Shareholders with an annual yield((2)) of 4.0%.
· The Company is recognised as a "Dividend Hero" by the Association of
Investment Companies having increased its dividend over 31 consecutive
years.
· The Company's Net Asset Value ("NAV") total return((3)) was -1.6%,
underperforming the FTSE All-Share Index (the "Benchmark") which returned 4.1%
over the same period.
· Share price total return((3)) was -2.7%. The share price ended the
period at 318p.
"In recent decades it is difficult to think of a parallel for the current
economic and geo-political situation and there is very considerable
uncertainty as to how this will evolve. However, it is important for
investors to focus on the long-term, to try to ignore the noise of current
events and not to act hastily. Your investment manager believes valuations are
one of the strongest indicators of future investment performance, and on that
front the opportunities for the UK stock market and a considerable number of
UK companies, look particularly attractive."
Nicky McCabe
Chair
SUMMARY OF RESULTS
Half-year ended Half-year ended
31 March 2025 31 March 2024
Share price total return((3)) -2.7% +9.5%
Net Asset Value total return((3)) -1.6% +12.9%
FTSE All-Share Index total return +4.1% +6.9%
Dividends per ordinary share
First interim dividend in respect of year to -
30 September 2025 ((1)) 2.95p
30 September 2024 - 2.85p
Second interim dividend in respect of year to -
30 September 2025 ((1)) 2.95p
30 September 2024 - 2.85p
Total interim dividends relating to the period 5.90p 5.70p
(1) The first interim dividend of 2.95 pence per share was paid on 31
March 2025 and the second interim dividend of 2.95 pence per share is payable
on 30 June 2025 to Shareholders registered on 13 June 2025 with an ex-dividend
date of 12 June 2025.
(2) Calculated as the total of the four most recent quarterly dividends
declared divided by the period end share price.
(3) Total Return - the return to Shareholders calculated on a per share
basis by adding dividends paid in the period to the increase or decrease in
the Share Price or Net Asset Value in the period. The dividends are assumed to
have been re-invested in the form of shares or net assets, respectively, on
the date on which the shares were quoted ex-dividend.
The Chair, commenting on the results, said:
Dear Shareholder,
This is my first report to you since taking over as Chair at the Annual
General Meeting. I look forward to representing you while continuing to work
with our investment manager and the Columbia Threadneedle team.
The first six months of our financial year saw the UK equity market make
reasonable progress with a gain for the FTSE All-Share Index of 4.1%. This
was against a backdrop that might have been thought of as unsupportive: in the
UK, the economy has proven to be slower growing and inflation generally higher
and more persistent than expected. So, whilst there were two cuts in the
Base Rate from the Bank of England, taking the rate to 4.5%, the UK 10-year
Government Bond saw its yield increase from 4.0% to 4.7%, signalling
scepticism about the fiscal plans and making it more expensive for the
Government to borrow. While the clean sweep of the Republican Party in the
November elections in the USA was initially taken well by stock markets,
subsequent talk on tariffs was seen much less positively.
Total Return - The Company offers reliable income while at the same time
seeking to grow the size of your investment
The headline strength of the UK market was heavily concentrated in a
relatively small number of very large companies and this provided a
challenging background for our performance. Your investment manager firmly
believes that there are more attractive investment opportunities outside of
the very largest companies as many of these smaller companies are both better
positioned for long-term growth while also being more attractively valued.
Thus, compared to the Index, the portfolio is positioned so that it has a
greater weighting in medium- and smaller-sized companies. However, over the
last six months this was disadvantageous for performance. Whilst the FTSE
All-Share Index (which is weighted by size) gained 4.1%, the median company in
the Index fell 4.1%. Against this background, the Net Asset Value total
return per share for your Company was -1.6%.
For a number of years there has been a considerable difference in performance
between different parts of the UK stock market, based more on size than
underlying company performance. This has provided a headwind that is visible
in our medium- and longer-term performance. It is worth bearing in mind that
we have been through periods similar to this in the past, which have typically
come before a strong reversal in performance.
Income Growth - The Company has increased its dividend every year since it was
launched, through the market's ups and downs
With these results, your Company announces a strong level of income growth,
+26% relative to the comparable six-month period the previous year. This is,
however, really reflective of unusual circumstances a year ago, which were
detailed in last year's interim report. Positively, we are seeing reasonable
levels of underlying dividend growth from most of our investee companies and
in turn we aim to continue to grow the dividend we pay to our shareholders, as
we have every year since 1993.
At the end of March 2025, we paid a dividend of 2.95 pence per share to
shareholders and with these results we announce a further dividend of 2.95
pence per share to be paid on 30 June 2025. The combined dividend for the
first half of 5.9 pence per share represents an increase of 3.5% over the
year, which in turn is ahead of the rate of Consumer Price Inflation of 2.6%
to March 2025.
Dividend Cover and Revenue Reserve
Our revenue return per share in the first half was 5.0 pence so the dividend
was 85% covered by earnings. Our forecast anticipates a higher level of
income receipts in the second half of our financial year and this, together
with our Revenue Reserve of £9.2 million, provides a solid base from which to
aim for further dividend growth.
We are very aware that our record of more than 31 years of dividend growth is
an important attraction to many shareholders. We are proud of this
achievement and aim to continue to grow our dividend to extend the record
further.
Share Buy-backs
The Board firmly believes the share price should not become too detached from
the underlying NAV per share and in order to try to achieve this we are
willing and able to buy and sell the Company's own shares when they are too
far adrift from that reference point.
In the first six months of this financial year, we bought back a total of just
under 1.6 million of our own shares across 16 separate occasions at an average
discount to NAV of 4.1%. These purchases added marginally to NAV for
remaining shareholders and also helped to provide some liquidity to the stock
market.
Share Price Rating
During the six months under review our share price traded at an average
discount to NAV of around 3.5% and the shares traded within a fairly narrow
band around this average for most of the period. However, having started the
period at a discount of 2.9% and ended at a discount of 4.1%, the share price
total return of -2.7% lagged the NAV performance.
Balance Sheet and Gearing
We have a loan facility with The Royal Bank of Scotland International that was
renewed in March. At the start of the financial year, we had borrowed £28
million using the facility; following the realisations of some investments
during the six months under review, the amount borrowed had reduced to £20
million and the size of the renewed facility is lower at £20 million to
reflect that.
Directorate Change
I would like to thank Jane Lewis for her time as my predecessor as Chair of
the Board of this Company and for her tenure on the Board before that.
Jane's hard work, enthusiasm and focus on the key issues have been of great
benefit to the Company and we wish her well for the future.
As was announced at the Annual General Meeting in March, in order to refresh
the Board, we have appointed John Blowers as a new director. As a former
marketing and managing director at Interactive Investor, John has direct
experience of direct to consumer marketing which will be very relevant as we
look to appeal to new and existing shareholders.
Outlook
Without risking hyperbole, in recent decades it is difficult to think of a
parallel for the current economic and geo-political situation and there is
very considerable uncertainty as to how this will evolve. It is a truism to
state that markets dislike uncertainty and this is causing a higher level of
volatility in markets than during our first six months. However, it is a
fair observation to note that the epicentre of the uncertainty is in the
United States, and that is where the most negative impact on markets is
currently being felt. In the UK, the Government's large working majority
signals to international investors that we are a relative haven of stability,
so whilst the UK as a considerable trading and strategic partner of the US is
not immune to events there and internationally, neither are we completely
swept up in them.
It is certainly important for investors to focus on the long-term, to try to
ignore the noise of current events and not to act hastily; historically, it
has been the case that trying to get the timing of investments in and out of
markets has been a less profitable activity than remaining invested in
profitable businesses. Your investment manager believes valuations are one
of the strongest indicators of future investment performance, and on that
front the opportunities for the UK stock market and a considerable number of
UK companies, look particularly attractive.
Finally, your Board believes that it is important at times like this to have a
steady pair of hands in charge and this is what we have in Julian Cane who has
now been your investment manager for 28 years.
On behalf of the Board
Nicky McCabe
28 May 2025
Forward -looking statements
This half-year report may contain forward-looking statements with respect to
the financial condition, results of operations and business of the Company.
Such statements involve risk and uncertainty because they relate to future
events and circumstances that could cause actual results to differ materially
from those expressed or implied by forward-looking statements. The
forward-looking statements are based on the Directors' current view and on
information known to them at the date of this report. Nothing should be
construed as a profit forecast.
Directors' Statement of Principal Risks and Uncertainties
Most of the Company's principal risks and uncertainties are market related and
no different from those of other investment trusts investing primarily in
listed equities. They are described in more detail under the heading
"Principal Risks and Future Prospects" within the Strategic Report in the
Company's Annual Report for the year ended 30 September 2024.
The principal risks identified in the Annual Report were:
· Market and Political Risks
· Investment Performance Risks
· Legal and Regulatory Risks
· Product Strategy Risks
· Cyber Risks
· Third Party Service Provider Risks
At present the global economy continues to suffer disruption due to the
effects of the war in Ukraine, events in the Middle East and the uncertainty
surrounding the imposition of US trade tariffs. The Directors continue to
review the key risk register for the Company which identifies the risks that
the Company is exposed to, including those that are considered to be emerging,
the controls in place and the actions being taken to mitigate them.
The Board considers that the principal risks have not changed materially since
28 November 2024, the date of the Company's Annual Report. The Board has also
considered these principal risks in relation to going concern.
Directors' Statement of Responsibilities in Respect of the Half-Yearly
Financial Report
We confirm that to the best of our knowledge:
· the condensed set of financial statements have been prepared in
accordance with applicable UK Accounting Standards on a going concern basis
and give a true and fair view of the assets, liabilities, financial position
and return of the Company;
· the Chair's Statement and the Directors' Statement of Principal
Risks and Uncertainties (together constituting the Interim Management Report)
include a fair review of the information required by the Disclosure Guidance
and Transparency Rule ('DTR') 4.2.7R, being an indication of important events
that have occurred during the first six months of the financial year and their
impact on the financial statements;
· the Directors' Statement of Principal Risks and Uncertainties is
a fair review of the principal risks and uncertainties for the remainder of
the financial year; and
· the half-yearly report includes a fair review of the information
required by DTR 4.2.8R, being related party transactions that have taken place
in the first six months of the current financial year and that have materially
affected the financial position or performance of the Company during the
period, and any changes in the related party transactions described in the
last Annual Report that could do so.
On behalf of the Board
Nicky McCabe
Chair
28 May 2025
Condensed Income Statement
Half-year ended 31 March 2025 Half-year ended 31 March 2024 (Unaudited)
(Unaudited)
Note Revenue Capital Total Revenue Capital Total
£'000s £'000s £'000s £'000s £'000s £'000s
(Losses)/gains on investments - (9,950) (9,950) - 36,440 36,440
Foreign exchange gains/(losses) 2 (12) (10) (1) (39) (40)
Income 6,164 - 6,164 4,897 - 4,897
Management fee (346) (346) (692) (361) (361) (722)
Other expenses (448) - (448) (407) - (407)
Net return before finance costs and
Taxation 5,372 (10,308) (4,936) 4,128 36,040 40,168
Finance costs (355) (355) (710) (398) (398) (796)
Net return before taxation 5,017 (10,663) (5,646) 3,730 35,642 39,372
Taxation (30) - (30) (18) - (18)
Net return attributable to
Shareholders 4,987 (10,663) (5,676) 3,712 35,642 39,354
2 Return per share - basic and diluted 5.01p (10.72p) (5.71p) 3.59p 34.45p 38.04p
The total column of this statement is the profit and loss account of the
Company. The revenue return and capital return columns are supplementary to
this and are prepared under guidance published by the Association of
Investment Companies.
All revenue and capital items in the above
statement derive from continuing operations.
A Statement of Comprehensive Income is not
required as all gains and losses of the Company have been reflected in the
above statement.
Condensed Statement of Changes in Equity
Share Capital Total
Share premium redemption Special Capital Revenue Shareholders'
Half-year ended 31 March 2025 Capital account reserve Reserve Reserves reserve Funds
(Unaudited)
£'000s £'000s £'000s £'000s £'000s £'000s £'000s
Balance at 30 September 2024 26,822 141,367 4,146 - 160,600 11,059 343,994
Movements during the half-year
ended 31 March 2024
Dividends paid - - - - - (6,844) (6,844)
Ordinary shares bought back and held in treasury -
- - - (5,050) - (5,050)
Costs relating to broker - - - - (5) - (5)
Net return attributable to Shareholders
- - - - (10,663) 4,987 (5,676)
Balance at 31 March 2025 26,822 141,367 4,146 - 144,882 9,202 326,419
Half-year ended 31 March 2024
(Unaudited)
Balance at 30 September 2023 26,822 141,367 4,146 - 130,082 12,330 314,747
Movements during the half-year
ended 31 March 2024
Dividends paid - - - - - (6,964) (6,964)
Ordinary shares bought back and held in treasury -
- - - (6,954) - (6,954)
Costs relating to broker - (6) - - (5) - (11)
Net return attributable to Shareholders
- - - - 35,642 3,712 39,354
Balance at 31 March 2024 26,822 141,361 4,146 - 158,765 9,078 340,172
Year ended 30 September 2024
(Audited)
Balance at 30 September 2023 26,822 141,367 4,146 - 130,082 12,330 314,747
Movements during the year
ended 30 September 2024
Dividends paid - - - - - (12,710) (12,710)
Ordinary shares bought back and held in treasury
- - - - (13,586) - (13,586)
Costs relating to broker - - - - (10) - (10)
Net return attributable to
Shareholders - - - - 44,114 11,439 55,553
Balance at 30 September 2024 26,822 141,367 4,146 - 160,600 11,059 343,994
Condensed Balance Sheet
31 March 2025 31 March 2024 30 September 2024
(Unaudited) (Unaudited) (Audited)
£'000s £'000s £'000s
Fixed assets
Investments 343,470 360,881 370,968
Current assets
Debtors 4,266 1,836 1,312
Cash and cash equivalents 711 4,268 319
Total current assets 4,977 6,104 1,631
Current liabilities
Creditors: amounts falling within one year (2,028) (813) (605)
Loan (20,000) (26,000) (28,000)
Total current liabilities (22,028) (26,813) (28,605)
Net current liabilities (17,051) (20,709) (26,974)
Net assets 326,419 340,172 343,994
Capital and reserves
Share capital 26,822 26,822 26,822
Share premium account 141,367 141,361 141,367
Capital redemption reserve 4,146 4,146 4,146
Special reserve - - -
Capital reserves 144,882 158,765 160,600
Revenue reserve 9,202 9,078 11,059
Total Shareholders' funds 326,419 340,172 343,994
Net Asset Value per ordinary share 331.45p 333.38p 343.84p
Condensed Statement of Cash Flows
Half-year ended Half-year ended
31 March 2025 31 March 2024
(Unaudited) (Unaudited)
£'000s £'000s
Cash flows from operating activities before interest and dividends received
and interest paid
(1,256) (902)
Dividends received 4,398 4,706
Interest and underwriting commission received 85 91
Interest paid (716) (800)
Cash flows from operating activities 2,511 3,095
Investing activities
Purchase of investments (16,580) (16,457)
Sale of investments 34,370 28,221
Cash flows from investing activities 17,790 11,764
Cash flows before financing activities 20,301 14,859
Financing activities
Equity dividends paid (6,844) (6,964)
Costs associated with share issues and buybacks (5) (11)
Costs of shares bought back and held in treasury (5,050) (6,954)
(Repayment)/drawdown of bank loan (8,000) 1,000
Cash flows from financing activities (19,899) (12,929)
Net movement in cash and cash equivalents 402 1,930
Cash and cash equivalents at the beginning of the period 319 2,378
Effect of movement in foreign exchange (10) (40)
Cash and cash equivalents at the end of the period 711 4,268
Represented by:
Cash at bank 361 98
Short term deposits 350 4,170
711 4,268
Notes
1 Basis of preparation
These condensed financial statements, which are unaudited, have been prepared
on a going concern basis in accordance with the Companies Act 2006, FRS 102,
Interim Financial Reporting (FRS104) and the Statement of Recommended Practice
"Financial Statements of Investment Trust Companies and Venture Capital
Trusts" ("SORP") issued by the AIC.
The accounting policies applied in the condensed set of financial statements
are set out in the Company's Annual Report for the year ended 30 September
2024.
2 Earnings per ordinary share
Earnings per ordinary share attributable to Shareholders reflects the overall
performance of the Company in the period. Net revenue recognised in the
first six months is not necessarily indicative of the total likely to be
received in the full accounting year.
Half-year ended Half-year ended
31 March 2025 31 March 2024
£'000s £'000s
Revenue return 4,987 3,712
Capital return (10,663) 35,642
Total return (5,676) 39,354
Number Number
Weighted average ordinary shares in issue 99,451,204 103,462,593
Total return per share (5.71p) 38.04p
3 Dividend
The second interim dividend of 2.95 pence per share in respect of the year
ending 30 September 2025 will be paid on 30 June 2025 to all Shareholders on
the register at close of business on 13 June 2025, with an ex-dividend date of
12 June 2025. The total cost of this dividend, based on 98,158,345 shares in
issue, and entitled to the dividend on 27 May 2025, being the last practicable
date before publication, is £2.9 million.
4 Going concern
In assessing the going concern basis of accounting the Directors have had
regard to the guidance issued by the Financial Reporting Council. They have
also considered the Company's objective, strategy and policy, the current cash
position of the Company, the availability of the loan facility and compliance
with its covenants and the operational resilience of the Company and its
service providers.
At present, the global economy continues to suffer disruption due to the
effects of the war in Ukraine, events in the Middle East and the uncertainty
surrounding the imposition of US trade tariffs and the Directors have given
careful consideration to the consequences for the Company. The Company has a
number of banking covenants and at present the Company's financial position
does not suggest that any if these are close to being breached.
The primary risk is that there is a very substantial decrease in the Net Asset
Value of the Company in the short to medium term. The Directors have
considered the remedial measures that are open to the Company if such a
covenant breach appears possible. As at 27 May 2025, the last practicable date
before publication of this report, borrowings amounted to £10 million. This
is in comparison to a Net Asset Value of £340 million. In accordance with its
investment policy the Company is mainly invested in readily realisable, FTSE
All-Share listed securities. These can be realised, if necessary, to repay the
loan facility and fund the cash requirements for future dividend payments.
The Company operates within a robust regulatory environment. The Company
retains title to all assets held by the Custodian. Cash is held with banks
approved and regularly reviewed by the Manager and the Board.
Based on this information the Directors believe that the Company has the
ability to meet its financial obligations as they fall due for a period of at
least twelve months from the date of approval of these financial statements.
Accordingly, these financial statements have been prepared on a going concern
basis.
5 Results
The results for the half-year ended 31 March 2025 and 31 March 2024, which are
unaudited, constitute non-statutory accounts within the meaning of Section 434
of the Companies Act 2006. The latest published accounts which have been
delivered to the Registrar of Companies are for the year ended 30 September
2024; the report of the Independent Auditors thereon was unqualified and did
not contain a statement under Section 498 of the Companies Act 2006. The
abridged financial statements shown on prior pages for the year ended 30
September 2024 are an extract from those accounts.
6 Half-Year Report
The Company's Half-Year Report is available on the internet at
www.ctcapitalandincome.co.uk.
Printed copies may be obtained by contacting the Company Secretary at the
Company's Registered Office, Cannon Place, 78 Cannon Street, London EC4N 6AG.
By order of the Board
Columbia Threadneedle Investment Business Limited, Secretary
28 May 2025
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