Annual Report and
Financial Statements
For the period ended 31 March 2022
CAPITAL GEARING TRUST P.L.C.
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
n The Company
an investment trust with shares listed on the
n Investment Objective
The Company’s objective is to preserve and
over time to grow shareholders’ real wealth.
n Capital Structure and Voting Rights
The share capital comprises Ordinary shares
of 25 pence each. As at 31 March 2022,
20,891,975 shares were in issue and no shares
were held in treasury (5 April 2021: 13,813,113
shares in issue and no shares held in treasury).
n Discount/Premium Control Policy (“DCP”)
The Company aims to purchase or issue
shares to ensure, in normal market conditions,
that the shares trade consistently close to
n Dividends
The Company pays an annual dividend but
focuses on total return rather than any net
income level.
n Management and Administration
Investment management is carried out
(“CGAM”) for
an annual fee of 0.60% of net assets up to
up
secretarial and various administrative services
are provided by Juniper Partners. Custodial
and depositary services are carried out by The
n Company’s Website
italgearingtrust.com
n ISA
a fully qualifying investment trust under the
individual savings account (“ISA”) rules.
n Annual General Meeting
The G
2022 at 11.00 a.m. Further details on the
68.
Company Summary
The Company is a member of the Association of Investment Companies.
Information disclaimer
This report is produced for members of the Company with the purpose of providing them with information relating to the Company and its
the future. Past performance is no guarantee of future performance. Investment returns are not guaranteed and you may not get back the
its advisers, including CG Asset Management and Juniper Partners, have endeavoured to produce these audited accounts in good faith and in
accordance with legislation, regulations, reporting standards and to be useful to stakeholders in the Company, including its shareholders.
01
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Financial Statements Shareholder InformationCompany Summary
Company Summary Inside front cover
Contents 1
Financial Summary 2
Performance 3
The Strategic Report
Chairman’s Statement 4
7
Portfolio Analysis 9
Portfolio Investments 9
The 13
Management and Administration 14
15
Governance Report
25
Corporate Governance Statement 30
35
39
43
Independent Auditors’ Report 44
Financial Statements
Income Statement 50
51
Statement of Financial Position 52
Cash Flow Statement 53
54
Notice of Annual General Meeting 68
Shareholder Information 71
76
Contents
02
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Financial Summary
Total return performance (to 31 March 2022)
6 April 2021 to
31 March 2022 1 Year 3 Years 5 Years 10 Years
Share Price
1
10.0% 10.6% 27.3% 38.1% 79.2%
1
10.5% 10.7% 27.0% 37.1% 85.1%
1
18.7% 19.1% 15.8% 24.4% 89.0%
9.0% 9.0% 13.5% 20.1% 34.3%
Share Price relative to MSCI UK -7.3% -7.1% 9.9% 11.0% -5.2%
0.9% 1.5% 12.2% 15.0% 33.4%
Key data (2022 data to 31 March, earlier periods to 5 April)
2022 2021 2020 2019 2018 2017 2012
Market Capitalisation (£m) 1,073.8 651.3 482.2 328.9 225.3 172.4 88.0
Shareholders’ Funds (£m) 1,049.8 634.0 470.1 321.9 219.5 169.5 84.6
Shares in issue 20,891,975 13,813,113 11,509,263 7,886,589 5,762,919 4,453,174 2,919,906
Share Price (pence) 5,140.0 4,715.0 4,190.0 4,170.0 3,910.0 3,870.5 3,015.0
5,025.1 4,590.2 4,084.2 4,082.0 3,809.0 3,805.0 2,898.6
1
2.3% 2.7% 2.6% 2.2% 2.6% 1.7% 4.0%
56.81 51.04 59.12 51.12 37.04 18.26 18.82
Total dividend per Share (pence) 46.00 45.00 42.00 35.00 27.00 20.00 18.50
1
0.52% 0.58% 0.65% 0.70% 0.77% 0.89% 1.31%
18,168.57 15,303.2 12,085.7 16,062.4 14,884.2 14,615.9 9,540.5
323.5 296.9 292.6 285.1 278.3 269.3 240.8
Allocation of portfolio
35.0% 29.9% 25.1% 33.0% 37.9% 34.7% 46.9%
3.9% 6.2% 18.8% 10.3% 1.1% 4.1% 5.9%
Preference Shares/Corporate Debt 10.9% 10.3% 14.0% 17.6% 17.3% 21.5% 19.3%
44.1% 46.0% 34.1% 35.2% 36.9% 33.4% 23.2%
Cash 4.8% 5.8% 6.9% 2.9% 5.8% 5.4% 2.5%
Gold 1.3% 1.8% 1.1% 1.0% 1.0% 0.9% 2.2%
100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
1
Alternative Performance Measure.
03
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Financial Statements Shareholder InformationCompany Summary
Share price total return performance over 5 years to 31 March 2022
7.
Share price Total Return MSCI UK Total Return
2017 2018 2019 2020 2021
As at 31 March
90
80
70
100
110
120
130
140
150
RPI
2022
Net asset value total return performance over 20 years to 31 March 2022
2.
As at 31 March
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
NAV Total Return MSCI UK Total Return RPI
2022
500
400
300
200
100
0
Performance
measures over the medium to longer term.
04
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Forty years
Capital Gearing Trust has passed several milestones this
year, including its fortieth anniversary under the same
investment management team, headed by Peter Spiller.
Over the 40 years from 1982, the Company’s primary
investment objective has been the same: to preserve
shareholders’ wealth. It has achieved this objective
comfortably, even during challenging market conditions.
Only once in the last 40 years has the Company registered
a negative annual return, which is a commendable record
by any measure.
The Company’s secondary objective has been to grow
shareholders’ real wealth. The Company has provided
a compound share price annual return (with dividends
with a market capitalisation of over £1 billion. This follows
strong demand for the Company’s shares since the
introduction of the discount and premium control policy
complacent. Shareholders are likely to be more interested
in the future than the past. We remain intensely focused
the ever-changing challenges that investors face.
However, it is worth pausing on this fortieth anniversary to
congratulate CG Asset Management and Peter Spiller on
their achievements and for their consistently good service
to the Company.
The past year
The Company’s year-end has been changed to 31 March,
from 5 April. This month end reporting period sits better
with market comparisons and quarterly performance
measurement statistics.
foreshortened year. The share price total return over the
same period was 10.0%, ending the year with a share
price of 5,140p. This is a very satisfactory performance
Whilst the Company does not have a formal benchmark,
this performance compares with the equity return
the sameperiod.
The main driver of performance over the last year has
been the outperformance of both the equity and the bond
portions of the portfolio. The percentage of the portfolio
in i-related assets has increased over the last
-linked returns. Towards the end
of last year, the Investment Manager initiated positions in
power and energy plays which performed very well in the
asset classes, the Investment Manager has invested in
investments come under the heading of risk assets, and,
along with other equity investments, account for around
44% of the portfolio.
Our Investment Manager continues to believe that
conventional equity assets remain overvalued in the main,
and hence around 50% of the portfolio is held mainly in
in short-dated conventional bonds, preference shares
and treasury bills – ready to deploy these funds should
of the portfolio invested in gold and cash, amounting to
6%. When the time is appropriate, these cash equivalent
resources will be used to buy into equities at attractive
theCompany.
Further details on the portfolio, individual share price
movements and geographic markets are provided in
the report from the Investment Manager and in the
Strategport.
Earnings and dividends
period was 56.81p. This is the fourth year
account. This year it has been driven by higher levels
of equity income, in particular from infrastructure and
property shares. The Company’s portfolio is not managed
with any income criteria in mind, but with the payment of
dividends being a consequence of meeting the income
distribution tests for maintaining investment trust status.
believes that this dividend, which is not a material part
of the Company’s total return and so recommends
this for shareholder approval at the Company’s
forthcom.
Chairman’s Statement
05
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Company Summary Financial Statements Shareholder Information
Costs
running the Company. The assets of the Company now
billion. As a lower investment management fee
rate of 0.3% is charged on assets over £500 million, this
The key measure of overall costs is the ongoing charges
measured solely on the costs of running the Company,
has declined from 0.58% last year to 0.52% this year. As
disclosed in the Key Information Document (KID), when
the management costs of the underlying funds in which
the Company invests are also taken into account, the
The Company does not have any substantial marketing or
promotional costs. Promotional service costs are largely
included in the management fee. We have maintained
competitive costs for all our third-party suppliers, not least
to try and keep the cost of operating the Company, which
low as we can.
Our secretarial and administration agreement with Juniper
Partners has been reviewed in light of the Company’s
changed circumstances since Juniper Partners assumed
the contract in 2015. As a result, the company secretarial
fee will be subject to an increase, the costs of operating
the DCP will remain the same, and an ad valorem
secretarial/administration fee has been introduced to
the Company. Full details of this are given in the Directors’
the .
Board matters
a non-independent member on
Peter Spiller and Chris Clothier, we see at least one, and
usually more, of the portfolio managers at our oard
the markets and stocks, as well as being able to discuss
and question them on their investment approach and
requisite skills to oversee the running of the Company on
behalf of shareholders. As set out in the remuneration
individual remuneration more in line with the market.
consultant to provide a
oard evaluation to make sure that we measure up to our
obligations under corporate governance and regulatory
of recruiting a further Director in order to refresh the oard
Annual General Meeting
The AGM will be held on Tuesday, 12 July 2022 at
the Company is set out on pages 68 and 69
Covid-19 restrictions have been lifted, we look forward to
welcoming shareholders back in person to the meeting.
Further details on the resolutions can be found on pages
27 and 28
proposed are in the best interests of the Company and
its shareholders and encourages shareholders to vote by
to do in respect of their own shareholdings. We would
encourage shareholders to return their votes by electronic
to vote on their behalf if their shares as held through
Share issuance and buybacks
and serves shareholders well in providing good liquidity
more volatile market conditions.
Demand for the Company’s shares continues to be
strong. We have issued some 7,078,862 shares during the
year, raising net proceeds of some £354.3 million – our
busiest year of issuance since the DCP commenced. We
have not needed to buy back any shares in the last year.
At 31 March 2022, there were 20,891,975 shares in issue
and net assets were £1,049.8 million. The Company
incurs modest costs for operating the DCP and for
renewing shareholder authority from time to time (which
has involved publishing a prospectus and convening two
general meetings in the last year). Issuance at a premium
and buying back at a discount under the DCP more than
compensates for costs and is consistently accretive to
DCP added 0.9% to shareholder total returns over the last
Chairman’s Statement
(continued)
06
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Chairman’s Statement
(continued)
in size has had no adverse impact on the investment
Investment Manager that the growth in assets under
their management can be accommodated for some time
Whilst all recent DCP activity has been on issuance, in the
event that shareholders were looking to sell stock, we
would have no hesitation in operating an equally robust
buy-back policy. The successful operation of the DCP has
stemming from issuance which has more than covered
Outlook
The Company was formed in 1982 when interest rates
were high, and potential returns looked very attractive as
stockmarket valuations were low and interest rates were
falling. It should come as no surprise to investors to realise
that the reverse is now true, with historically low interest
rates on the rise, and current stock market valuations
making future returns distinctly less attractive.
As our Investment Manager put it in a recent article
“prospective returns look lousy for practically everything”.
Investors are facing rising interest rates, substantially
“” which have helped keep asset
prices up and economies from going into recession.
That said, stockmarket concerns are overshadowed by
the atrocities being perpetrated in Ukraine. Apart from
the consequences of attacks on freedom, the economic
impacts of the war are being felt throughout the world,
with disruption to energy and agricultural supplies and the
That may sound a very gloomy outlook, but there are
always interesting investment ideas and opportunities out
The Company holds a lot of near-cash investments, like
linked assets which will continue to be held to help protect
Company goes into the current year with its risk assets
focused on a range of potentiallty rewarding areas, such
as rented accommodation; renewable infrastructure, and
energy and materials and commodities plays.
It may not be possible to counteract the current levels
know that CGAM and its team will do its best and will look
It is certain to be a very challenging year but so too have
other years in the past 40 where the Company has
weathered well.
Jean Matterson
Chairman
27
07
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Company Summary Financial Statements Shareholder Information
Review
performing assets were purchased in the aftermath of
the Covid-19 bear market of 2020. In those dark days
and nervous that the pandemic had undermined the
prospects for all assets, particularly property. This opened
up a buying opportunity in alternative property companies,
those in the logistics and residential subsectors (“beds
plc delivered
” returns were
holdings represented more than 22% of the total portfolio,
although by year end, this level was reduced to 16%. Many
net asset values onto premia, so most positions were
acquired by other companies. The proceeds of these
sales were invested into infrastructure assets, with a
particular focus on renewable energy. Unlike property
companies, infrastructure had not recovered strongly
after the pandemic, many renewable energy companies
had derated by as much as 30% from their late 2019
highs. This derating fortuitously coincided with a surge in
power prices so provided an attractive entry point. Our
infrastructure portfolio, which now represents 7% of our
portfolio, delivered 20% returns over the year and still
enjoys a strong tailwind. We also increased our broader
traded funds which have delivered strong returns
Only one meaningful risk asset allocation delivered double
digit negative returns: German residential property.
There are some crumbs of comfort: this sector has
been a fantastic long-term performer for the Company
Deutschland, returned 16%. Today, German residential
market otherwise characterised by elevated valuations.
The most notable area of relative outperformance came
was key. The wider bond market endured a poor year,
reported in sterling). Our bond portfolio delivered 8%
with the stand out performers being our 21% holding in
more sticky than the market is currently forecasting in
conventional bonds for another year.
It is pleasing that both the bond and equity portfolios
delivered strong absolute and relative outperformance.
bond markets remain poor but recent weakness is
opening up a range of discount opportunities and the
potential for further rotation into areas of value over the
Outlook
As the Company celebrates its fortieth year, it appears
that the world economy may be undergoing a major
transition. It seems that we are moving from an era of
put in place central banking policies that suppressed the
Certainly there was a recession, but companies and
households were robust enough for it to be comparatively
of workers in the capitalist world doubled, due to China’s
Demographics helped too, with the growing working
age population in the West boosted by the increasing
participation and improving opportunity for women.
Technology, always at the heart of productivity gains,
made a particular contribution in easing price discovery
through the internet.
The result was that trend bond yields fell throughout the
40-year period, a fabulous background for above normal
could operate with a policy stance so stimulative that
many nominal bond yields even went negative without
rising on the same waves of stimulus, have reached
Investment Manager’s Report
08
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Investment Manager’s Report (continued)
Outlook (continued)
Our situation today is the mirror image of the last 40
years. Globalisation is being rolled back both for reasons
of security of supply and the geopolitical risks associated
with
of manufacturing is fading. Furthermore, there are no
realistic candidates for any equivalent increases in the
workforce of the capitalist economy from elsewhere.
Manufacturing closer to home will be more secure, but
just goods; the bargaining power of labour is being at least
partially restored.
The scale of investment required to achieve net zero
least through higher commodity prices as demand for
natural resources for infrastructure renewal meets the
constrained supply of metals and minerals due to low
The greatest imbalance that has developed over the last
has been encouraged by abnormally low interest rates.
History suggests that the only way to reduce the burden
repression is likely to cause some shocks but in time will
bring debt into better balance.
Our main objective is to keep shareholders’ capital whole
during this period of repression, which with luck will
end with an environment similar to 1982. That is to say,
and rising and debt no longer alarming. That would be
a great environment from which to deliver the types of
returns that shareholders of Capital Gearing Trust have
enjoyed over the last 40 years.
Peter Spiller Alastair Laing Christopher Clothier
2022
09
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Company Summary Financial Statements Shareholder Information
Asset Allocation 2022 (2021)
Index Linked
Gov’t Bonds
35% (30%)
Gold 1% (2%)
Cash 5% (6%)
Conventional Gov’
t
Bonds 4% (6%)
Pref Shares /
Corp Debt 11% (10%)
F
unds /
E
quities
44%
(46%)
Currency Exposure 2022 (2021)
GBP
49%
(53%)
USD 28% (26%)
SEK 5%
(4%)
EUR 9% (7%)
JPY 7% (8%)
Other 2% (2%)
Portfolio Investments
2022
£’000
2021
£’000
Index-Linked Government Bonds
- 226,600 131,754
- 75,146 21,660
- 27,321 20,189
- 26,880 12,737
- 4,900 –
- 3,871 2,500
364,718 188,840
Conventional Government Bonds
40,589 38,997
40,589 38,997
Portfolio Analysis
10
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
2022
£’000
2021
£’000
Zero Dividend Preference Shares
5,060 3,553
JZ Capital Partners 2022 3,450 1,647
Polar Capital 2024 2,204 1,348
2,144 831
1,869 1,110
Chelverton Smaller Companies ZDP 2025 1,851 464
2049 1,751 –
Investments with a market value below £1,500,000 4,086 2,030
Acorn Income Fund 2022 – 2,455
Infrastructure Income – 1,858
22,415 15,296
Corporate Debt
Tesco 3.322% 2025 4,484 854
Severn Trent 1.3% 2022 4,361 3,407
Unite (USAF) 3.374% 2028 3,887 1,386
2023 3,871 –
A2D Fund 4.75% 2022 3,725 1,627
Sydney Airport Finance Company 3.12% 2030 3,560 –
Highbury Finance 7.017% 2023 3,441 –
3,403 1,947
Aberdeen Asian Smaller Companies 2.25% 2025 3,268 2,844
2025 3,232 –
Heathrow Funding 5.225% 2023 3,175 –
3,132 1,142
3,123 3,060
MPT Operating Partnership 2.55% 2023 2,969 2,030
2,779 2,751
2022 2,586 –
Housing Finance Corp 8.625% 2023 2,575 –
2022 2,497 –
2,405 2,371
2,300 468
2023 2,107 –
2022 2,024 –
Western Power 5.25% 2023 1,639 –
2022 1,632 –
1,559 1,407
2023 1,559 –
Investments with a market value below £1,500,000 15,593 9,936
Pershing Square 5.5% 2022 – 4,963
– 3,149
– 2,518
Places for People Capital Markets 1% 2022 – 2,393
– 1,525
90,886 49,778
Portfolio Investments (continued)
11
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Company Summary Financial Statements Shareholder Information
Portfolio Investments (continued)
2022
£’000
2021
£’000
Funds/Equities
37,753 –
25,652 19,461
Grainger 20,677 12,485
18,427 –
Investment Trust 16,302 13,260
15,551 13,395
Greencoat UK Wind 13,047 4,104
12,721 10,320
11,515 4,807
10,840 –
Digital 9 Infrastructure 10,092 –
9,234 6,168
GCP Infrastructure Investments 8,825 3,278
8,578 5,538
7,425 4,922
7,138 1,947
Aker Asa 7,104 –
6,860 5,463
6,473 2,242
6,328 –
Foresight Solar Fund 6,200 –
Taylor Maritime Investments 6,130 –
5,923 2,170
5,906 6,445
5,767 12,326
Troy Income and Growth Trust 5,599 –
5,596 5,029
Finsbury Growth & Income Trust 5,492 –
5,259 1,636
5,124 2,565
4,933 1,976
Pershing Square 4,903 2,384
4,852 5,549
4,816 –
Castellum 4,783 3,681
4,396 –
4,378 –
4,244 –
Civitas Social Housing 4,233 5,366
4,217 1,907
4,174 –
Securities Trust of Scotland 3,995 514
Cordiant Digital Infrastructure 3,935 1,452
3,713 57
3,381 –
3,339 1,928
3,131 1,602
2,990 931
2,935 1,686
2,869 –
Miton UK Microcap Trust 2,799 1,793
2,748 2,438
2,605 –
Tufton Oceanic Assets 2,525 –
2,436 –
2,404 –
12
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Portfolio Investments (continued)
2022
£’000
2021
£’000
Funds/Equities
Grand City Properties 2,380 1,879
2,242 3,835
2,216 –
2,005 2,335
1,983 –
1,954 1,622
1,866 1,407
1,753 –
Investment Company 1,663 –
1,646 –
Weiss Korea Opportunity Fund 1,632 3,720
Polar Capital Global Healthcare 1,602 1,319
1,578 1,754
1,576 –
Crystal Amber Fund 1,567 1,193
Investments with a market value below £1,500,000 19,202 18,779
– 29,863
– 9,845
– 6,910
– 5,580
– 5,252
JP Morgan Multi Asset – 3,305
– 3,268
Kungsleden – 2,688
ADO Properties – 2,591
– 2,480
Deutsche Wohnen – 2,288
– 2,281
– 1,868
International Public Partnerships – 1,666
– 1,635
460,137 290,188
Gold
Wisdomtree Physical Swiss Gold 13,148 11,131
13,148 11,131
Total Investments 991,893 594,230
Cash 50,611 37,242
Total 1,042,504 631,472
The full portfolio listing of the Company as at 31 March 2022 is published on its website at www.capitalgearingtrust.com.
13
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Company Summary Financial Statements Shareholder Information
members who
work closely with Juniper Partners and CGAM in the
day to day operations of the Company. Apart from the
scheduled
carry out
Non-executive Directors
Jean Matterson (Chairman)
Appointed a Director in May 2015 and assumed the
position of Chair following the Annual General Meeting on
,
private client portfolio management with particular
emphasis on investment trusts. She was previously with
Manager and director. She is a director of Herald
Robin Archibald (Chairman of the Audit Committee
and Senior Independent Director)
Appointed a Director in May 2015 and as Audit Chair in
subsequently worked with Samuel Montagu, SG Warburg
has concentrated on advising and managing transactions
in the UK closed-ended funds sector. He is a non-
Property Investment Company plc and chairman of
Wendy Colquhoun (Chairman of the Remuneration
Committee)
Appointed a Director in January 2021. Until May 2020,
Wendy was a senior corporate partner at international law
After qualifying as a solicitor in 1987, Wendy held roles with
UK corporate group at Dundas & Wilson (a leading
chair of Henderson Opportunities Trust plc and a non-
and chair of the risk and governance committee of
Paul Yates
Appointed a Director in December 2019. Paul is chairman
,
where he is also the senior independent director, and
, where he is also chairman
of thttee
investment management began at Samuel Montagu & Co
in 1980. He joined Phillips and Drew in 1985, being the year
a number of positions covering management, portfolio
management, pensions, strategy and client service. He
between 2001 and 2005 and, after undertaking a number
The Board
14
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Management and Administration
Investment Manager
CG Asset Management Limited
Telephone: 020 3906 1633
CGAM currently has total funds
under management of £3.9 billion.
Depositary, Custodian and Banker
The Northern Trust Company
Company Secretary and Administrator
Juniper Partners Limited
Telephone: 0131 378 0500
Carson McDowell LLP
Registered number
AIC
Association of Investment Companies
www.theaic.co.uk
Registrar
Computershare Investor Services PLC
Telephone: 0370 873 5864
Independent auditors
BDO LLP
Corporate stockbroker
JP Morgan Cazenove
15
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Company Summary Financial Statements Shareholder Information
Business model and investment strategy
The Company, as an investment trust, is a UK closed-
ended public limited company which invests in a
the investment
Company, are long-term investment vehicles and
outsources its entire operational infrastructure to third
and oversees CG Asset Management, an independent
Investment Manager, to manage the investment
portfolio. CG Asset Management also acts as the
Company’s Alternative Investment Fund Manager.
Company’s strategy, decides the
of the C
and regulatory requirements and reports regularly to
shareholders on the Company’s performance. The
Directors do not envisage any change to this model in
the foreseeable future. The Company also appoints an
to provide administration services for the Company,
which includes company secretarial, accounting and
management of discount and premium control services.
The Company seeks to preserve shareholders’ real
wealth and deliver absolute total returns through the
construction of a multi asset portfolio with a specialist
focus on investment company equities and related
securities. Portfolio construction is the key tool to
mitigate capital loss in any given year. The Investment
Manager allocates across asset classes based on an
assessment of capital markets and macro-economic
risks, with the aim of avoiding capital loss. In addition, a
portion of the portfolio is invested into closed-ended
superior to those available in more liquid equity markets.
Objective
The Company’s objective is to preserve and, over time,
to grow shareholders’ real wealth.
Investment policy
As preserving shareholders’ real wealth is core to the
investment objective, greater emphasis is placed on
investment objective implies returns at least in line with
The Company does not have a formal benchmark but
does not have a target dividend payment. It is anticipated
that capital return is likely to be the larger component of
the returns.
The Investment Manager has the authority to invest
investments are typically in listed collective investment
holding companies and property companies.
asset values and to the macro-economic environment. A
Investment Manager has the authority to invest in any
geographical region and has no set limits on industry
The Company will not invest more than 15% of
its investment portfolio in any single security. The
Investment Manager is not permitted to invest in
derivatives (such as options, swaps or forward contracts)
managed by the Investment Manager also requires
The Company has the authority to borrow up to 20% of
Promoting the success of the Company under
Section 172
shareholders how the Directors have discharged their
duties and responsibilities over the course of the
Act 2006 (the “Section 172 Statement”). This requires
members as a whole, taking into account the likely
long-term consequences of decisions, the need to
foster relationships with all stakeholders in the Company
and the impact of the Company’s operations on
theenvironment.
Strategic Review
16
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Strategic Review (continued)
Role of the Board
who have a broad range of skills and
the Company’s investment objective and policy, gearing, corporate governance and strategy, and for monitoring the
performance of the Company’s various service providers. Gender and diversity disclosure can be found on page 32
The Company’s main stakeholders are shareholders, the Investment Manager and its service providers. The Company also
engages with its investee companies where appropriate, particularly on performance and corporate governance issues.
How the Board engages with stakeholders
interactions with them.
Stakeholder How we engage
Shareholders
with them, both through written communication from the Company and interaction with
the Investment ’ views and aims to act fairly
between shareholders. The Company’s shareholder register is retail investor dominated
and has wealth managers and private client brokers on it representing private investors. As
Investment Manager and Company’s broker regularly meet with current and prospective
shareholders to discuss the Company, its performance and outlook. The Chairman is available
Manager is in contact with investor platforms to identify how best to communicate with the
direct retail investor community. The operation of the DCP is crucial to providing secondary
market liquidity for investors and in providing stability of pricing at close to the prevailing net
asset value.
announcements, including daily net asset value announcements, and the Company’s website.
The Investment Manager prepares monthly factsheets and quarterly reports and maintains a
website which includes current information for investors.
The Company’s Annual General Meeting typically provides a forum, both formal and informal,
for shareholders to meet and discuss issues with the Directors and Investment Manager. The
and to provide feedback on the Company. The Company Secretary also deals with regular
shareholders to vote on all
Investment Manager 7 and 8 details the key investment decisions
taken during the period. The Investment Manager has continued to manage the Company’s
strategy review meeting to ensure that the Company is positioned well for the future delivery
of its objective for its stakeholders.
in operation.
17
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Company Summary Financial Statements Shareholder Information
Strategic Review (continued)
Stakeholder How we engage
Communities and the
environment
Investment
importance of providing an investment product which meets the needs of its investors in both
takes
concerns and for the Company to act as a good ‘corporate citizen’. An investment approach
that meets the needs of investors provides a service valuable to the communities in which
engagement section on pages 20 to 23.
Other Service Providers
either directly or through the Investment Manager with regular communications and
meetings. A key relationship is with Juniper Partners who provide company secretarial,
administration and accounting services, as well as
continued direct contact with Juniper Partners. During the year eted a
comprehensive review of the service provision from Juniper Partners and the fee basis for
their services.
terms and conditions of the Company’s main service providers to ensure they are performing
during the period
to the stakeholders of the Company, and this has been
between these meetings as required.
Since the Covid-19 pandemic emerged in early 2020,
there has been increased interaction with the Investment
Manager, the Company Secretary and other agents of the
Company to ensure that the Company continues to have
structure to meet the challenging circumstances. This
included a complete review of the service provision from
Juniper Partners.
Jean Matterson, together with representatives of the
Investment Manager, met a number of share dealing
platform providers to gather views on the performance
and general operation of the Company, including
the DCP. This information was reported to the rest
strategic review on how the Company is operating.
The Investment Manager also held an Investor Day
in September 2021, which was well attended by
shareholders and potential investors.
The operation of the DCP is a fundamental part of the
secondary market close to the prevailing net asset value
and the removal of pricing volatility around net asset value
either when selling or buying shares in the Company.
requires constant monitoring, maintaining the requisite
responsible for maintaining the operational resilience for
both buyback and issuance. The Company held general
meetings and 25 April 2022 to
request renewed shareholder authority to issue additional
shares on a non pre-emptive basis. Shareholders were
very supportive of the resolutions proposed both in the
percentage voting in favour of the resolutions and the
proportion of shares voted overall.
AIC, on matters which impact on the operations of the
Company, with one of the key areas being the ability to
access private investors with their shares held through
investor platforms and the ability to encourage those
shareholders to vote on Company business.
18
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Strategic Review (continued)
Management of the portfolio and agents to the
Company
7and 8 details
the key investment decisions taken during the period
structure of the investment portfolio is an important factor
in delivering the Company’s stated investment objective.
26, during the period,
the continuing appointment of the Investment Manager
was in the best interests of shareholders. A similar
conclusion was reached on the continued appointment
of the Company’s other service providers and there
were no changes during the period. The administration
arrangements with Juniper Partners, including the
administration fees, were re-negotiated during the year
levels required for the Company and its various activities.
Key performance indicators (“KPIs”)
purpose of assessing and reporting investment
performance and these are discussed further in
the Chairman’s Statement
over the short-term (3 years) and the MSCI UK
Further information on
these measures can be found on pages 74 and 75.
Tables and graphs showing the performance of the
2 and 3.
n
measure of demand for the Company’s shares and
a key indicator of the need for shares to be bought
back or issued. At the start of the period under
2.7%, compared
with 2.3% at 31 March 2022, with an average of
3.0% for the period ended 31 March 2022; and
n Ongoing charges ratio, calculated using the
methodology recommended by the Association of
to measure and monitor the control of costs. This
was 0.52% for the period to 31 March 2022 (2021:
0.58%). Since the introduction of the DCP in 2015
46% from 0.96%
to 0.52%. Further information can be found on
Principal and emerging risks
challenges, largely as a result of the Covid-19 virus which
the longer term and the emerging risks that will be faced
for the Company, not least the economic impact. The
central aims remain to preserve value in the Company’s
portfolio and liquidity in the Company’s shares. These
aims were achieved in the last 12 months. The Directors
are also trying to ensure that the Company maintains its
investment strategy, has operational resilience, meets
its regulatory requirements as an investment trust and
these continuing uncertaintimes.
The Directors have carried out a robust assessment of
the principal and emerging risks facing the Company,
including those that would threaten its business model,
future performance, solvency or liquidity. The principal
risks and uncertainties facing the Company, together
takes, are set out in
19
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Company Summary Financial Statements Shareholder Information
Strategic Review (continued)
and more recently the geopolitical risks of events such as the invasion of
The Investment Manager continues to apply protective measures in constructing the portfolio but is also aware that an
‘oversold market’ can present opportunities as well and it retains liquidity in the portfolio
Risk Mitigation
Investment strategy and performance
strategy of the Company and monitoring
investment performance. Inappropriate strategy
and/or poor investment performance may have an
There is increasing awareness of the challenges
and emerging risks posed by climate change. The
Investment Manager will continue to monitor
developments in this area.
Geopolitical risks have always been part of the
investment process. The risk has heightened as a
stockmarkets.
Increased overall risk due to rising
global political tensions
annually, considering investment performance, shareholder views,
developments in the marketplace and the structure of the Company.
and allows the monitoring of
the spread of investments and associated investment risks. The
Investment Manager’s approach is set out on pages 20 to 23.
detail by the Investment Manager at each meeting.
The Investment Manager is formally appraised at least annually by
Premium/discount level
The Company’s share price could be impacted by
a range of factors causing it to be higher than (at
a premium to) or lower than (at a discount to) the
can create liquidity issues, restricting the
ability of investors to buy and sell shares in the
Fluctuations in the share price can cause volatility
investment portfolio.
Risk remains relatively unchanged
The Company operates a discount/premium control policy, under
which it will aim to purchase or issue shares to ensure, in normal
market conditions, that the shares trade close to their underlying
and/or supply for the
of shareholders. The DCP continues to be reviewed to ensure
liquidity for issuance and buyback.
the Investment Manager’s ability to invest new proceeds (in the case
to meet the demands of the DCP.
The Company Secretary monitors the relevant authority levels, which
uninterrupted operation of the DCP.
20
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Strategic Review (continued)
Risk Mitigation
Operational
The Company is reliant on third-party service
providers including CGAM as Investment Manager,
Juniper Partners as Company Secretary and
key teams at such service providers. Failure of the
internal control systems of these third parties could
result in inaccurate information being reported or
risk to the Company’s assets.
Risk remains relatively unchanged
The Audit Committee formally reviews each service provider at
least annually, considering their reports on internal controls and
Committee reviews the service levels and how the service providers
have performed.
The operational requirements of the Company, including from its
service providers, have been subject to rigorous testing as to their
application during the Covid-19 pandemic, where increased use of
date the operational arrangements have proven robust.
Further details of the Company’s internal control and risk
management system is provided on pages 33 and 34.
Regulatory and governance
The Company operates in a regulatory
environment. Failure to comply with section 1158
Company losing investment trust status and being
or the suspension of the Company’s listing on the
Risk remains relatively unchanged
Compliance with relevant regulations is monitored on an ongoing
basis by the Company Secretary and Investment Manager who
increasing governance requirements and complies with them
receives regulatory updates from the Investment Manager, Company
Secretary, lawyers and auditors as relevant.
ised of corporate governance issues and changes
and as far as practical the Company complies with governance
guidance oroes not and meets the guidance of
the AIC Code (refer to page 30).
Financial and economic
The Company’s investments are impacted by
and credit which could cause losses to the
increases and geopolitical events,
including the invasion of Ukraine
market risk, interest rate risk, foreign currency risk and credit risk.
on pages 61 to 67. , and geopolitical risks, are considered a
component of market risk, with the impact of ation and events
in Ukraine taken into account. The ongoing economic impact of the
Covid-19 pandemic is also considered.
portfolio to meet its operating requirements, including the operation
of DCP. In common with most commercial operations, there are
predict and plan for in advance. The Company does what it can to
address these risks when they emerge, not least operationally and in
trying to meet its investment objective.
Share issuance
During the period the Company issued 7,078,862 new
shares for an aggregate consideration of £354.3m. The
shares were issued to satisfy investor demand and were
costs of the DCP, costs of investing the proceeds and to
were issued in accordance with the DCP, which is detailed
further on page 19. Since the year end, the Company has
issued a further 1,623,195 new shares.
ESG and the investment process
institutional investors. The Company aims to conduct
itself responsibly, ethically and fairly and has sought to
ensure that the Investment Manager’s management
of the portfolio of investments takes account of
where appropriate.
21
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Company Summary Financial Statements Shareholder Information
Strategic Review (continued)
The Company has limited direct impact on the
environment as it invests primarily in government bonds
and closed-ended and other collective investment
vehicles. The investment sectors chosen do not
generally raise ethical issues. The majority of the
Company’s assets are bonds issued by governments of
countries which have, in the opinion of the Investment
Manager, robust social institutions and good credit
quality. These judgements are based on both qualitative
and quantitative factors. Qualitative factors include
respect for the rights of individuals and of property, free
speech, lack of corruption, transparency and freedom
The balance of the investment portfolio comprises
corporate bonds, preference shares and equity funds.
Within these asset classes the Investment Manager
does not directly invest into companies in the tobacco,
defence or gambling sectors. However, through broad
holdings of collective equity funds, there will be small
indirect holdings of companies that operate in these
sectors. These holdings are not considered to be
, the underlying investee companies’
policies to act with due regard to community, welfare
and environmental factors. The Investment Manager
Investing. Further information on the Investment
Manager’s governance and policies can be found at
www.cgasset.com/governance-and-policies.
In meeting its responsibilities to its own shareholders,
the Company aims to preserve value in its portfolio and
stakeholders, including the employees of the agents
who provide services to the Company and is operating to
protect those interests in these challenging times.
The Investment Manager’s investment approach
1. Be honest
led initiatives, no jargon.
CGAM does not have an ethical fund range (and by
implication an unethical fund range). The standards apply
to all the funds it manages.
3. Ethics, not mathematics
Securing appropriate data is essential to all aspects
of investment decision making, including judgements
around sustainability. However, data has to be interpreted
be applied in a uniform way to every situation; CGAM
emphasises judgement over simplistic third-party
quantitative scoring.
4. Engagement over disinvestment
is most valuable to encourage positive transition rather
than pursuing disinvestment.
5. Targeted, not scatter-shot
Whilst supporting positive transition might be the
where it will have the most impact rather than taking a
generalist approach.
6. Driven by governance
Improved governance leads to improved social,
so CGAM’s engagement activities invariably focus on
governance, even when the ultimate objective is positive
social or environmental change.
7. Integration, not separation
CGAM’s entire team is collectively responsible for
stewardship activities with the ultimate responsibility
does not have a
analysts as this does not appear to represent true
integration of approach.
22
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Strategic Review (continued)
CGAM’s ESG approach to the Company’s investments by asset class
1. Direct government securities
minority of the assets held by the Company are invested in direct holdings of securities issued by
criteria, CGAM considers indices compiled by a range of n-Governmental Organisations (refer to the table below)
and requires
to using third party indices, CGAM also overlays its own subjective assessments, which typically leads to material
Index Criteria
Top quartile
Good or satisfactory
Global freedom score Free rating
Statement of intent by 2050 or earlier
2. Direct corporate credit and preference shares
The Company holds small quantities of direct credit and preference share holdings issued by corporate issuers. Given
corporate issuers who are primarily engaged in the following activities:
Exclusion area Exclusion sub-area Threshold
Controversial weapons Anti-personnel mines, cluster munitions, chemical weapons 0%
Tobacco Manufacture or marketing <5%
Thermal Coal Coal mining or coal-based energy production <5%
Oil sands or arctic drilling Production <5%
Gambling Services <5%
Adult entertainment Production or broadcasting <5%
Firearms Manufacture <5%
Predatory lending Services <5%
CGAM does not invest directly in companies with primary activities in the above areas, although it cannot always
identify immaterial non-core activities. As a result, CGAM employs a revenue threshold in certain areas.
3. Listed closed-ended funds, investment trust REITs and property companies
companies and typically have the following features:
n they hold a broad portfolio of securities on behalf of their shareholders;
n
n no employees or customers; and
n have a board of directors to represent shareholder interests and concerns.
23
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Company Summary Financial Statements Shareholder Information
Strategic Review (continued)
Given the prominent role that directors play in investment companies, CGAM frequently undertakes activities that
scenario but include those listed in the table below. As well as engagement in the sector, CGAM places particular
weight on providing primary capital to high impact investment companies with an environmental or social focus. In
its assessment, by providing primary capital, via IPO sponsorship or follow-on fund raisings, investors have a greater
impact than by simply trading securities in the secondary market.
Activist engagement technique Frequency of employment
Continuous
Continuous
Shareholder co-ordination Frequent
Frequent
Frequent
Periodic
Periodic
Publishing open letters Periodic
Periodic
Threatening to requisition meetings Periodic
4. Exchange traded funds (‘ETFs’)
of securities. CGAM does engage directly with its
programme of identifying and conducting due diligence
on these products is ongoing.
Going concern
The Audit Committee has undertaken an assessment
of whether the Company is a going concern. The
Company’s investment objective and business activities,
development and performance, are described above.
describes the Company’s processes for managing
to market price, interest rates, foreign currency, credit
Investment Manager and the Company Secretary to
ensure that the Company’s operations are resilient,
and its portfolio robust enough to meet challenges and
opportunities. The Directors believe that the Company
is well placed to manage its business risks successfully
and consider that the Company currently has adequate
management arrangements in place to continue in
of the DCP. For this reason, they continue to adopt the
going concern basis in preparing the annual report and
there are any material uncertainties to the Company’s
ability to continue to adopt this approach over a period
of 12 months from the date of approval of these
Viability statement
principal risks facing the Company including those that
would threaten its business model, future performance,
of the risks facing the Company and has put in place
appropriate processes and controls in order to mitigate
these risks as far as practicable. The principal risks which
manage these, are detailed on pages 19 and 20.
believes it is appropriate to assess the Company’s
viability over a three-year period in recognition of the
Investment Manager’s long-term horizon and also what
the Directors believe to be investors’ horizons, taking
account of the Company’s current position and the
potential impact of the principal risks and uncertainties,
the operation of the DCP and the circumstances of
investment companies more generally.
24
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
The Directors also take into account the liquidity of the
portfolio and scenario stress testing when considering
and its ability to meet liabilities as they fall due and to
the ongoing operation of the DCP. The stress
a substantial fall in stockmarkets, and therefore asset
values, with a considerable loss of income. The impact of
reduction in management fees and most .
The results of the stress testing indicated that there
for the
Company to continue in operation. The stress tests
the DCP in the event of
the Company having to buy back a substantial number
.
and the adequacy of the controls in place. Also, the
Directors do not envisage any change in strategy or
its objective or any events that would prevent the
Company from continuing to operate over that period
as the Company’s assets are liquid, its commitments
are limited, and the Company intends to continue to
operate as an investment trust. The Directors believe
that only a dramatic downtkets,
deteriorating economic circumstances, or other crises
besetting global markets, could have an impact on
thisassessment.
continue in operation and meet its liabilities as they fall
ained on pages 4 to
24 have been approveigned on its
behalf by:
Jean Matterson
Chairman
27
Strategic Review (continued)
25
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Company Summary Financial Statements Shareholder Information
statements of Capital Gearing Trust P.l.c. for the
period ended 31 March 2022.
Company status
section 833 of the Companies Act 2006 and operates
as an investment trust in accordance with Chapter 4 of
This legislation provides conditions that the Company
must meet in respect of each accounting period. The
investment trust. The Company does not fall within the
Revenue and dividend
The net return attributable to shareholders for the
9,813
The Company does not aim to invest for income to
support any target dividend payment, and dividend
46p per share for the period ended 31 March 2022, (2021:
45p) for approval by shareholders at the forthcoming
Annual General Meeting. The dividend will be payable on
15 July 2022 to shareholders on the register of members
approved by shareholders before the balance sheet date.
Net asset value per share
The net asset value per share of the Company as at
5,025.1p, compared with 4,590.2p as
on of the Company is set out in detail
i
statements describes the Company’s processes for
managing its capitsk management
objectives, details of itsts and its
to market price, interest rates, foreign currency,
credit and liquidity risk.
Share capital
The Company’s share capital comprises Ordinary shares
of 25p each nominal value. The voting rights of the
shares on a poll are one vote for each share held. As at
,891,975 shares were in issue (5 April
2021: 13,813,113) and no shares were held in treasury
As at the date of this report, the issued share capital
consisted of 22,515,170 shares and no shares were held
in treasury. Whilst shares are held in treasury, no dividends
are paid on them and they have no voting rights.
Substantial shareholders
At 31 March 2022, f the
following interest in the voting rights of the Company:
N
% of Issued share
capital held
7.1%
Since 31 March 2022 to the date of this report, the
Company has been informed that JM Finn & Co is
interested in 5.0% of the issued share capital. In addition to
the above, directors and employees
of CGAM were interested in shares representing 2.2% of
the issued share capital.
Management and contracts
Investment Manager
The Company’s investments are managed by CG Asset
2017. Under this agreement, CGAM receives an annual
investment management fee of 0.60% of the net assets
of the Company up to £120m, 0.45% of net assets
above £120m up to £500m, and 0.30% thereafter, based
on quarterly valuations and payable quarterly in arrears.
in the event of termination otherwise than at the end
of a quarter, the Company is obliged to pay to CGAM a
due proportion of the fee for the period ended on the
termination of the agreement, calculated by reference
to the net assets of the Company as at the date of
event of termination.
CGAM was appointed as the Company’s AIFM in
The Investment Manager operates under the investment
page 15. Any proposed deviation from these guidelines is
meetings. In addition, the Investment Manager presents
the policy during the preceding quarter and outlining any
instances where approval for investment decisions was
The Investment Manager also provides marketing
and investor relation services under the investment
management agreement.
Directors’ Report
26
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Performance, evaluation and the continuing
appointment of the Investment Manager
The Directors held detailed reviews into the investment
strategy adopted by the Investment Manager at the
Committee meeting on 23 May 2022. The performance
of the Investment Manager during the period to
the Investment Manager were discussed at this meeting.
The Investment Manager was not present during the
In reviewing the Investment Manager’s performance, the
Directors consider the following:
n adherence to the pre-agreed investment policy and
n whether the strategy adopted by the Investment
Manager has been and continues to be consistent
with the Company’s aims;
n the asset value performance achieved in the period
under review as well as over the longer term and
whether this satisfies the investment objective as
communicated to shareholders;
n performance comparison to a selected peer group;
and
n compliance and administration competence.
continuing appointment of the Investment Manager
shareholders as a whole.
Company secretarial, administrative and
accounting services
Juniper Partners, previously known as PATAC, was
appointed by the Company in 2015 to provide company
secretarial, administrative and accounting services
under an Administration Agreement. Juniper Partners
also provides discount and premium control services to
the Company. This agreement may be terminated on
three months’ notice. For the period to 31 March 2022,
annum payable quarterly in arrears (2021: £152,291).
In addition, in respect of its services in connection with
the operation of the DCP, Juniper Partners is entitled
to a fee of £30,000 per annum plus a commission of
0.1% of the aggregate consideration received or paid in
respect of any Ordinary shares issued or bought back
over the period. These fees amounted to £355,061
Following a review of the fees payable to Juniper
to Juniper Partners were behind market rates for the
services received.
2022, Juniper Partners, in respect of administration
and company secretarial services, will
fee of £145,000 per annum plus 0.02% of the value of
shareholders’ funds up to and including £1 billion: 0.01%
of the value of shareholders’ funds over £1 billion up to
and including £2 billion: and 0.00625% of the value of
shareholders’ funds on any amounts over £2 billion.
In respect of services provided in connection with the
DCPwill
of 0.1% of the aggregate consideration paid in respect
of any Ordinary shares bought back by the Company or
received in respect of any Ordinary shares issued by the
Company up to and including £250 million: commission
of 0.075% of the aggregate consideration paid in respect
of any Ordinary shares bought back by the Company
or received in respect of any Ordinary shares issued
by the Company over £250 million up to and including
£500 million: and commission of 0.05% of the aggregate
consideration paid in respect of any Ordinary shares
bought back by the Company or received in respect of any
Ordinary shares issued by the Company over £500 million.
Depositary and Custodian
was appointed in 2011 to provide custodial services
for the portfolio and subsequently appointed to act
requirements of the AIFMD. Pursuant to the terms of
which is based on the net asset value of the Company,
subject to a minimum of £50,000 per annum, and safe-
keeping and transaction fees which vary by market.
Termination of the depositary and custody agreement
Details of the fees paid during the period are recorded in
57.
that may arise and impose such limits or conditions as it
to ensure all details are kept up to date. Appropriate
authorisation is sought prior to the appointment of
arise.
Directors’ Report (continued)
27
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Company Summary Financial Statements Shareholder Information
Directors’ Report (continued)
Directors
are set out on page 13, together with their biographies.
Directors’ interests in the shares of the Company are set
37.
There are no agreements between the Company and its
Retirement and re-election of Directors
themselves for re-election at the forthcoming AGM and
on an annual basis going forward.
After due consideration of the results of the
and that each Director demonstrates commitment to
their role, including the necessary commitment of time
Directors is in the best interests of the Company and its
shareholders.
Directors’ indemnity
insurance in place for all Directors, which is reviewed
periodically. Subject to the provisions of UK legislation,
the Company’s Articles of Association (the “Articles”)
provide the Directors with a qualifying third-party
indemnity provision against costs which they may incur
relating to the defence of any proceedings brought
against them arising out of their positions as Directors,
in which they are acquitted or judgment is given in their
favour by the courts. The qualifying third-party indemnity
claims have been brought against the Company or
Whistleblowing policy
employees, a formal whistleblowing policy has not been
by means of which any Directors or employees of
the Chairman or Senior Independent Director matters
raised during the period to 31 March 2022.
Information about securities carrying voting
Rights
The following information is disclosed in accordance with
Section 992 of the Companies Act 2006:
n the Company’s capital structure is summarised above;
n the details of the substantial shareholders in the
Company are listed above;
n the rules on the appointment and replacement
of the Directors are set out in the Articles and are
summarised on page 32. Any change to the Articles
would be governed by the Companies Act 2006;
n the Directors’ powers to issue and buy back shares,
in force at the financial year-end, are recorded on
page 28;
n there are: no restrictions concerning the transfer
of securities in the Company; no special rights
with regard to control attached to securities;
no agreements between holders of securities
regarding their transfer known to the Company; and
no agreements which the Company is party to that
might affect its control following a takeover bid; and
Annual General Meeting (the “AGM”)
The AGM of the Company will be held on 12 July 2022 at
J.P. Morgan, The Great Hall,
. The formal
notice of such is set out on pages 68 to 69. Shareholders
are strongly advised to appoint the Chairman of the
meeting to vote on their behalf by completing and
votes through an investment platform.
Shareholders are encouraged to submit questions
Thursday, 7
to any questions raised ahead of the AGM and the
presentation from the Investment Manager will be made
There are 16 resolutions being proposed at the AGM,
12 of which are ordinary resolutions, two of which are
being considered as special business, and four of which
(resolutions 13
1 to 4 concern the receiving of the accounts, approving
the Directors’ remuneration report and remuneration
Directors to determine their remuneration.
28
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Directors’ Report (continued)
Additional information on the resolutions relating to
special business is detailed below:
Resolution 11 – Articles of Association
The current Articles of Association provide that
in aggregate. Although there are currently no plans to
to increase the fee limit contained in the Articles of
including for any new appointments. It is proposed
that the limit be increased to £180,000 per annum in
aggregate, an increase of 9%. Directors’ remuneration
will continue to be paid in accordance with the Directors’
Resolutions 12 and 13 – Directors’ authority to allot
shares and disapply pre-emption rights
At the AGM held on 6 July 2021 (the “2021 AGM”),
the Directors were given the authority until the date
of the following AGM to allot up to 4,905,987 shares
and to disapply pre-emption rights in respect of up to
2,943,592 of these shares. At general meetings held on
and 25 April 2022, the Directors were
given further authority to allot up to a total of 7,934,375
shares on a non pre-emptive basis. Details of the shares
issued under these authorities can be found in note 11
on page 60.
At this year’s AGM, the Directors are seeking authority
to allot up to 7,505,056 shares, in aggregate a nominal
value of £1,876,264.00, representing one third of the
issued share capital as at 26 May 2022. The Directors are
also seeking to disapply pre-emption rights in respect of
the allotment of up to 20% of the issued share capital of
the Company, (equivalent to 4,503,034 shares at 26 May
2022 with an aggregate nominal value of £1,125,758.50),
including any shares which have been bought back as
treasury shares.
which state that non pre-emptive issues should be
T
of ew shareholders.
Resolution 14 – Authority to make market
purchases of the Company’s shares
At the 2021 AGM, the Directors were given the authority
until the date of the following AGM to buy back up to
2,206,222 shares (14.99% of the issued share capital at
the date of the 2021 AGM). There have been no shares
bought back under these authorities.
At this year’s AGM, the Directors are seeking authority to
buy back up to 3,375,023 shares (14.99% of the issued
share capital as at 26 May 2022) for cancellation or
holding up to 10% in treasury for re-sale into the market
during more favourable market conditions at values equal
If approved, the powers, as detailed above under
2 to 14 and in the formal notice of the AGM,
renewed, varied or revoked by the Company in general
is of the opinion that it would result in an enhancement
back shares is an important part of the operation of the
DCP, if and when required.
Resolution 15 – Cancellation of the Company’s
share premium account
The Company has built up a substantial share premium
account owing to the high level of issuance since the
introduction of the discount and premium control policy.
This account is non-distributable. The Company may
cancel the share premium account and convert the
amount into a distributable reserve following approval by
account to a distributable reserve would provide a
future, if required, to fund share buybacks or other
returns of capital in accordance with the applicable law.
operation of the DCP and provide the Company with
authority at its Annual General Meeting held in 2020
which was approved by shareholders. However, due to
administrative delays during the Covid-19 pandemic this
in the share premium account since the previous
renewed approval from shareholders at the forthcoming
AGM to cancel the amount standing to the credit of the
current share premium account, following which it will
make an application to the Court to obtain its approval
to the cancellation and the creation of an equivalent
distributable reserve.
Resolution 16 – Notice of general meetings
At the 2021 AGM, a resolution was passed to allow the
Company to call a general meeting other than an AGM
on at least 14 clear days’ notice. Such shareholder
AGMs, which can only be held on 21 clear days’ notice.
Without such shareholder authority, all general meetings
need 21 clear days’ notice.
29
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Company Summary Financial Statements Shareholder Information
Directors’ Report (continued)
general meetings other than AGMs on the shorter notice
period of 14 clear days, and this resolution seeks such
approval from shareholders.
Recommendation
The Directors consider that all the resolutions detailed in
the formal notice of the AGM are in the best interests of
the Company and the shareholders taken as a whole and
therefore unanimously recommend to shareholders that
they vote in favour of each resolution, as the Directors
intend to in respect of their own holdings.
Statutory auditor
independent of the Company and, as mentioned
Company’s auditors will be put to shareholders at the
Directors’ statement as to disclosure of
information to auditors
page 13
n to the best of each Director’s knowledge and belief,
there is no information relevant to the preparation
of their report of which the Company’s auditors are
unaware; and
n each Director has taken all the steps a Director
aware of relevant audit information and to establish
that the Company’s auditors are aware of that
information.
This information is given and should be interpreted in
accordance with the provisions of section 418 of the
Companies Act 2006.
Business ethics
The Company is an investment company with no
employees or customers and does not provide goods
or services in the normal course of business. It has
appointed third parties to manage the investments and
to carry out administrative and secretarial services. The
Company’s own supply chain consists predominately
of professional advisers and service providers in the
that they comply with the provisions of the UK Modern
Slavery Act 2015 and maintain adequate safeguards in
Criminal Finances Act 2017.
Bribery Act 2010
The Company has zero tolerance towards bribery and
is committed to carrying out business fairly, honestly
and openly. The Investment Manager also adopts a zero
tolerance approach and has policies and procedures in
place to prevent bribery.
Criminal Finances Act 2017
The Company has a commitment to zero tolerance
Greenhouse gas emissions
20
to 23 and are aligned towards the delivery of sustainable
investment performance over the longer term. The direct
impact of the Company’s activities is minimal as it has no
employees, premises, physical assets or operations either
as a producer or a provider of goods or services, while
does not directly generate any greenhouse gas or other
producing sources to report under the Companies Act
2006 and associated regulations. As the Company did
not consume more than 40,000 kWh of energy during the
Taskforce for Climate Related Financial
Disclosures (‘TCFD’)
The Company notes the TCFD recommendations on
Political and charitable contributions
political or charitable purposes (2021: nil).
Post balance sheet events
Since 31 March 2022, there are no post balance sheet
events which would require adjustment of or disclosure
Juniper Partners Limited
Company Secretary
27
30
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
This Corporate Governance Statement forms part of the
Compliance with the recommendations of AIC
Code and UK Corporate Governance Code
of the AIC Code of Corporate Governance (the “AIC
Code”). The AIC Code is endorsed by the Financial
provisions set out in the UK Corporate Governance Code
to make them relevant to investment companies.
incorporates the UK Corporate Governance Code,
provides the most appropriate governance framework
for the Company. Accordingly, the Company reports
against the principles and provisions of the AIC Code
information to shareholders. The 2019 edition of the AIC
Code is applicable to the period under review and can be
found at www.theaic.co.uk.
The UK Corporate Governance Code includes
internal audit function and workforce engagement. For
considers that these provisions are not relevant to the
investment company. In particular, the Company’s day-
to-day management and administrative functions are
outsourced to third parties. As a result, the Company has
and has therefore not reported further in respect of
these provisions.
with the provisions of the AIC Code and the relevant
provisions of the UK Corporate Governance Code.
Application of the AIC Code
Operation of the Board
categorised under various headings, including strategy,
internal controls, gearing, asset allocation, share price
risk, investment restrictions, performance, corporate
It has delegated investment management, within
Asset Management and the company secretarial and
administration functions have been delegated to Juniper
the Investment Manager.
and for compliance with applicable rules and regulations
including the AIC Code.
of the Company. Key representatives of the Investment
the
Directors to probe on matters of concern or seek
13.
Audit Committee
The Audit Committee is a formally constituted
of the Audit Committee on page 39
was appointed a member of the audit committee with
members of the Audit Committee have relevant and
closed ended investment company sector and UK listed
as being independent, is invited to attend the Audit
Committee meeting at which the annual accounts are
considered and any other meetings that the Committee
deems necessary. The Committee is chaired by
Nomination Committee
independent Directors, oversees the annual appraisal
for re-election each year, evaluates the overall
This Committee is chaired by Jean Matterson.
Corporate Governance Statement
31
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Company Summary Financial Statements Shareholder Information
The Committee, when assessing the performance
of Directors and for making recommendations as to
questionnaires and reviews by the Chair. The Senior
Independent Director is responsible for the appraisal of
the Chair. The 2022 review did not identify any causes
foncern.
Management Engagement Committee
all the independent Directors of the Company and
least once a year to consider the performance and
remuneration of the Investment Manager and to review
the terms of the investment management contract.
the terms and performance of the other key service
suppliers to the Company on an annual basis, including
been during the year.
Remuneration Committee
independent Directors of the Company and is chaired by
Wendy Colquhoun. The Committee meets at least once
and the remuneration of the Directors.
During the period, the Committee considered the
Directors’ fees over the last eight years, fees paid by
its investment trust peer group and the results of
Trust Associate’s 2021 fee review. After considering
this information and the work and responsibilities of
the Directors, the Committee concluded that for the
10% increase to the fees of each of the Chairman and
the Chairman of the Audit Committee. It was agreed to
by 9.09% to £30,000. The additional fee payable to the
Senior Independent Director would remain at £2,000.
be found on
pages 35 to 38.
Directors’ meeting attendance
The number of formal meetings held during the period from 6 April 2021 to 31 March 2022 and the Directors’
attendance is detailed below.
Board
Audit
Committee
Management
Engagement
Committee
Nomination
Committee
Remuneration
Committee
Miss J G K Matterson 5/5 3/3 1/1 1/1 1/1
5/5 3/3 1/1 1/1 1/1
Ms W M Colquhoun 5/5 3/3 1/1 1/1 1/1
5/5 3/3 1/1 1/1 1/1
2/2
the period, for strategic discussions and continued implementation of the discount/ premium control policy. Members
informal and regular basis.
Corporate Governance Statement (continued)
32
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Corporate Governance Statement (continued)
Independence of the Directors
with the Investment Manager and has no other
relationships or circumstances which might be perceived
the view that all of the Directors can be considered to
makes a clear distinction between the activities of an
investment trust and a conventional trading company.
the Investment Manager. In overseeing this relationship
understanding and judgement of the Directors. The
Director, having been appointed to this role in January
director and audit chair for other investment companies.
Director tenure
In accordance with the AIC Code all Directors are subject
is based on the outcome of an annual performance
evaluation. The Chair also speaks with each Director
individually. The performance of each Director and
nominations for re-election are then discussed by the
an issue, with the Director’s contribution, and ability being
important factors in determining the value the individual
Company. The Chairman and Directors would generally
up to nine years. However,
change and the need to maintain cohesion, and continuity
may require this term to be adjusted.
Director remuneration
The Company’s policy on Director remuneration is set
35 to 38.
Gender and diversity
can function well together and have a good operational
knowledge of the Company and the closed ended
investment company sector more generally. Accordingly,
boardroom diversity in its broadest sense, in terms of
and its corporate structure, including its third-party
advisers. Any new appointee would make an appropriate
review its composition regularly and, when appropriate,
of having the blend of skills and attributes that will best
serve shareholders in the future.
including the Chairman of the Company, thereby
constituting 50% female representation.
appropriate to establish diversity targets or quotas at
this time, however the Committee is mindful of the
and the
Company’s aim is to have an appropriate level of diversity
.
Directorate
served by ensuring a smooth and orderly refreshment of
as the only non-independent Director, stepped down
meetings as a representative of the Investnager.
Induction and training
an induction programme which is tailored to the particular
provided covering industry and regulatory matters and the
Directors receive other relevant training as required.
33
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Company Summary Financial Statements Shareholder Information
Corporate Governance Statement (continued)
Ongoing evaluation
and contribution of the individual Directors, including the
was conducted by way of evaluation questionnaires,
the results of which were discussed by the Directors in
February 2022. The Senior Independent Director led the
annual evaluation of the Chairman. The outcome was
250,
an
the Chair and the individual Directors, every three years.
take place in 2022/23.
Shareholder communications
Shareholder relations are given high priority by both
medium by which the Company communicates with
shareholders is through half yearly and annual reports.
The information contained therein is supplemented by
and quarterly report available on the Company’s website.
communication with shareholders to CGAM and, through
able to develop an understanding of shareholders’ views.
There is also a communication line with shareholders
through Juniper Partners in its role as company secretary
report from the Investment Manager summarising any
always happy to meet with shareholders for the purpose
of discussing matters in relation to the operation and
prospects of the Company.
T
welcomes questions and discussion on issues of concern
or areas of uncertainty. Shareholders who have any
questions are encouraged to address these through the
The Investment Manager typically makes a presentation
at the AGM outlining the key investment issues that
face the Company. The presentation will also be made
available on the Company’s website.
Accountability, internal controls and audit
documents released by the Company, including the
of the Company’s position and prospects.
systems of internal controls and for reviewing their
Company is achieved by the Directors determining the
investment strategy, and the Investment Manager being
responsible for the day to day investment management
decisions on behalf of the Company. Accounting,
company secretarial and custodial services have also
been delegated to organisations that are specialists in
these areas, and which can provide, because of their size
and specialisation, economies of scale, segregation of
duties and all that is required to provide proper systems
of internal control within a regulated environment.
As the Company has no employees and its operational
functions are undertaken by third parties, the Audit
Committee does not consider it necessary for the
Company to establish its own internal audit function.
reports received from its principal service providers
to satisfy itself as to the controls in place. The internal
controls aim to ensure that assets of the Company are
safeguarded, proper accounting records are maintained,
and for publication is reliable.
compliance and risk management, is embedded in
the controls of the Company by a series of regular
risk analyses, Investment Manager reports and control
put in place to mitigate them, including those not
directly the responsibility of the Investment Manager.
on a continuing basis by the Investment Manager, the
custodian and the Company S
Audit Committee receive regular reports from them. The
control systems are designed to provide reasonable, but
not absolute, assurance against material misstatement
or loss and to manage, rather than eliminate, risk of
failure to achieve objectives.
34
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Company’s risk management and internal controls
systems and, at least annually, carries out a review
process for identifying, evaluating and managing the
principal risks faced by the Company in accordance with
controls during the period under review. These controls
have been in place throughout the period under review
Since the Covid-19 pandemic emerged in 2020, the
closely with all of its agents, directly
or indirectly, to ensure that internal controls and the
resilience of operating systems continue to be in place,
which has proven to be the case. The systems and
controls have proven to be robust to date, despite the
provisions and increased reliance on internet and phone
communication.
Juniper Partners Limited
Company Secretary
27
Corporate Governance Statement (continued)
35
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Company Summary Financial Statements Shareholder Information
This section provides details of the remuneration policy
for the Directors of the Company. All Directors are non-
appointment, and none have a service contract.
Director’s appointment is subject to their re-election
every year at the AGM. The Company has no employees.
the requirements of the Companies Act 2006. The
shareholders approved the remuneration policy at
the Annual General Meeting in 2019 and it will be put
to shareholders again at this year’s AGM. This policy,
together with the Directors’ letters of appointment, may
n Committee
consisting of all the independent Directors, chaired
by Wendy Colquhoun. The Committee considers
and determines all matters relating to the Directors’
in cash. There are no performance related elements to
the Directors’ fees and the Company does not operate
any type of incentive, share scheme or pension scheme.
Therefore, no Directors receive bonus payments or
pension contributions from the Company or hold options
to acquire shares in the Company. Directors are entitled to
receive reasonable
connection with their responsibilities, which largely relate
Policy on Directors’ remuneration
The Company’s policy is that the remuneration of each
Director should be commensurate with the duties,
responsibilities and time commitment of each
respective role and consistent with the requirement to
attract and retain Directors of appropriate quality and
comparable to that of similar investment trusts within
investment trusts which are similar in size and structure.
Given the nature of the Company, there may be
circumstances where additional remuneration is paid
to Directors for requirements outside the normal
The remuneration policy is not
subject to employee consultation as the Company
has no employees. As such, there are no employee
comparative data to provide in relation to the setting of
the remuneration policy of the Directors.
remuneration subject to the aggregate annual fees not
from time to time. The current limit of the total
aggregate annual fees payable is £165,000. This limit can
be increased by ordinary resolution of the shareholders.
emuneration is solely composed of Directors’ fees and
Directors are not eligible for any other remuneration for
approved by the .
shareholders on the remuneration policy on an ongoing
basis and will take account of these views where
appropriate. It is intended that this policy will remain in place
for the
Shareholder views
in respect of the remuneration policy and the Directors’
remuneration.
Expenses
All Directors are entitled to the reimbursement of
order to perform their duties as Directors of the Company.
Review of remuneration policy
ensure that it remains appropriate.
Amendment to Articles of Association
As noted above, the current aggregate annual fee limited
within the Articles is £165,000 per annum. A resolution
to increase this limit to £180,000, will be proposed at
the 2022 AGM. Increasing this cap is to allow for future
increases to Directors’ fees and provide capacity to
appoint a further Director should it ever be considered
desirable to do so.
Audit requirements
The Company’s auditors are required to report on
certain information contained within this report. These
elements are described below as ‘audited’. The auditors’
opinion is included within the auditors’ report set out on
pages 44 to 49.
Directors’ Remuneration Report
36
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Directors’ fees (audited)
The Directors who served during the year received remuneration as detailed below. The fee rates, having been
determined are applied from the date, which is not necessarily the commencement of a reporting period, where a
director is appointed or assumes additional responsibilities.
year and a detailed review was undertaken in February 2022 and the basis for the increase in fees is provided in the
12.
Annual fee rates
2023
£
2022
£
2021
£
Chairman 42,350 38,500 35,000
36,300 33,000 30,000
All other Directors 30,000 27,500 25,000
Aggregate director’s remuneration
, including Directors who have retired, over the previous
Fees
£
To 31 March 2022 128,500
To 5 April 2021 113,577
To 5 April 2020 121,000
To 5 April 2019 99,000
To 5 April 2018 121,000
period ended 31 March 2022 was £128,500
(il 2021: £113,577
the prior year’s comparative, is set out in the table below:
Directors Total
2022
£
2021
£
Miss J G K Matterson 38,500 32,481
Mr R Archibald (Chairman of the Audit Committee and Senior Independent Director) 35,000 32,000
Mr A R Laing (retired on 6 July 2021) – –
Ms W M Colquhoun 27,500 5,673
Mr P T Yates 27,500 25,000
Mr E G Meek – 18,423
128,500 113,577
For the period end
received remuneration totalling £170,000 (2021: £126,000) from CG Asset Management in respect of its services to
the Company. CG Asset Management does not recharge this remuneration to the Company.
to the
nancial statements. There were no other transactions with Directors during the year.
period ended 31March 2022 (
).
Directors’ Remuneration Report (continued)
37
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Company Summary Financial Statements Shareholder Information
Directors’ Remuneration Report (continued)
Annual percentage change in remuneration of directors
period ended 31 March 20222021.
oard compared to previous remuneration and less than full
year appointment.
Directors
2022
Total Fees
% change
2021
Total Fees
% change
Miss J G K Matterson 18.5% 29.9%
Mr R Archibald (Chairman of the Audit Committee and Senior Independent Director) 9.4% 10.3%
Mr A R Laing (retired 6 July 2021) – –
Ms W M Colquhoun 384.8% n/a
Mr P T Yates 10.0% 212.5%
Directors and their interests (audited)
31 March 2022 and the number of shares in the Company over which they held an interest are
listed below. The interests of each Director include the interests of their connected persons:
Ordinary shares of 25p each
31 March 2022 1
Miss J G K Matterson
16,700 15,700
Mr R Archibald
2,432 2,079
Ms W M Colquhoun
400 400
Mr P T Yates
1,000 1,000
31 March 2022 up to the date of this report. The Company has
own shares in the Company.
Performance graphs
2002
to 2022
3.
Relative importance of spend on pay
are detailed in the table below:
2022
£’000
2021
£’000
Absolute
change
£’000
129 114 15
9,610 6,771 2,839
202220,891,975
shares, being the number of shares in issue at 2022).
38
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Directors’ Remuneration Report (continued)
Statement of voting at the last Annual General Meeting
An ordinary resolution for the approval of this report will be put to the members at the forthcoming AGM and every year
thereafter. To date, no shareholders have commented in respect of the remuneration report or policy. Should there be
in the future, the Directors will seek to discuss with relevant shareholders the reasons for any such vote and any actions
in response will be disclosed in future reports. At the last AGM held on 6 July 2021, shareholders, on a show of hands,
(99.9%) were cast in favour and 3,971 (0.1%) were cast against. 4,364 votes were withheld.
At the AGM held on 9 July 2019, shareholders, on a show of hands, passed the resolution to approve the Directors’
were cast against. 687 votes were withheld.
Annual statement
period ended 31 March 2022:
a) the major decisions on Directors’ remuneration;
b) any substantial changes relating to Directors’ remuneration made during the year; and
Wendy Colquhoun
2022
39
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Company Summary Financial Statements Shareholder Information
Audit Committee Report
As Chairman of the Company’s Audit Committee (the
“Committee”) I am pleased to present the Committee’s
report to shareholders for the period to 31 March
2022. This report describes the range of work that the
Committee has considered, been engaged in and the
Composition
The Committee comprises Jean Matterson, Wendy
investment companies over the last ten years. My
biography and those of the other Committee members
can be found on page 13
Matterson, the C
a member of the Audit C
meetings by invitation only. Collectively, the Committee
brings considerable corporate and investment company
Role and responsibilities
The principal objective of the Committee is to provide
Company’s internal controls and the integrity of its
doing so, the Committee operates within its terms of
reference, which are reviewed at each meeting and are
available on the Company’s website.
The Committee discharges the following key functions:
n to review the internal financial and non-financial
controls, identify the principal risks, including
emerging risks, and monitor the mitigating
controls. This includes meeting representatives
of the Investment Manager, Administrator and
Custodian and receiving reports on the quality
and effectiveness of the accounting records and
management information maintained on behalf of
the Company;
n to consider the integrity of and recommend to
half-yearly and annual reports to shareholders and
related announcements;
n to review the accounting policies and significant
financial reporting judgements;
n to assess going concern and viability of the
Company, including the assumptions used;
n t
balanced and understandable;
n t
objectivity, effectiveness, appointment,
remuneration and the quality of the services
provided and to approve, if appropriate, any non-
audit services to be carried out by the auditor;
n together with the Company Secretary, to review
the Company’s compliance with financial reporting,
regulatory and governance requirements; and
n to assess the need for an internal audit function,
taking account of the assurances received from the
internal controls and systems.
The Committee met in full three times during the
year, and its members met more regularly on an
informal basis, as well as reviewing and commenting on
documentation between formal committee meetings.
The Company’s auditor is invited to attend meetings as
appropriate. The Committee has continued to support
of internal control and management of risk, the audit
process and the Company’s process for monitoring
compliance with laws and regulations and its own code of
In particular, the Committee focussed on the
Financial reporting
During the year, the Committee considered the
in the production of the interim accounts, including
emerging risks and changes to the Company’s risk
areas of audit risk relevant to the Company had been
put in place to obtain reasonable assurance that the
misstatements and that the accounting policies applied
continue to be appropriate.
40
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Audit Committee Report (continued)
Financial reporting (continued)
How the issue was addressed
Ownership and valuation of
investments
The appointed Depositary is responsible for the custody and controlling
of all assets of the Company entrusted for safekeeping. Controls are in
by Juniper Partners via reconciliations to custodial records. The valuation
of investments is undertaken in accordance with the accounting policies
54
held at the balance sheet date.
Ongoing impact of the Covid-19
pandemic and review of recent
and geopolitical
The Committee considered the ongoing impact of Covid-19 on the
Company, its service providers, compliance with regulatory requirements,
The Committee also
and geopolicial risks as part of the review of the
investment portfolio and the asset allocation.
Revenue recognition, particularly
from delisted trusts, where returns
may be of capital rather than
income, and any other returns from
investments which constitute capital
rather than revenue returns.
enquiry was made on revenue of an atypical nature, such as special
dividends or capital receipts.
The Investment Manager reported to the Committee that less than
0.1% of the Company’s portfolio is invested in delisted investment trusts.
and Investment Manager to ensure they are appropriately allocated to
revenue or capital.
Potential for management override of
controls and maintaining appropriate
internal controls
responsibility between the Investment Manager, Custodian, Company
Secretary and receive appropriate reports from each of them regarding
the operation and review of those organisations’ internal controls.
Going concern The content of the investment portfolio, trading activity, portfolio
After due consideration, the Committee concluded it was appropriate to
of liquidity of the portfolio was a key factor that led to this conclusion, as
well as the Company being ungeared and its continued ability to meet the
control policy.
Company’s accounting reference
date
The Committee reviewed the annual reporting timetable and concluded
that using a month-end performance reporting adopted by the
investment company is more appropriate than the historic basis of
recommendation of the Committee, agreed to amend the accounting
reference date to 31 March. A change in accounting reference period does
not require shareholder approval.
Compliance with s1158 Corporation
tax Act 2000 (Investment trust
status) and other taxation issues
impacting on the Company
The Committee reviews the Company Secretary’s procedures for
ensuring compliance with relevant regulations, so the Company maintains
41
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Company Summary Financial Statements Shareholder Information
Audit Committee Report (continued)
Financial statements
The production and the audit of the Company’s Annual
contributors. One of the key governance requirements of
is that they are fair, balanced and understandable. The
Committee has given consideration to the following:
a) the comprehensive reviews that are undertaken
Investment Manager, Company Secretary and
Auditor and the Audit Committee that aim to ensure
consistency and overall balance; and
b) the controls that are in place at the Investment
Manager and third-party service providers to
ensure the completeness and accuracy of the
As a result of the work performed, the Committee
Statements for the period ended 31 March 2022, taken as
a whole, are fair, balanced and understandable and provide
the information necessary for shareholders to assess the
Company’s performance, position, business model and
43.
Audit appointment and tenure
have acted in
this role since their appointment in July 2020, following
a formal tender process. As described below, the
Committee reviews the performance of the auditors
annually, taking into consideration the services and advice
provided to the Company and the fees charged for these
services. The audit partner is required to be rotated at
put out to tender at least every ten years. The Company
complied with the provisions of The
Statutory Audit Services Market
Investigation (Mandatory Use of Competitive Tender
Processes and Audit lities) Order
2014 dperiod ended 31 March 2022.
Policy on non-audit services
The Company operates on the basis whereby the
provision of non-audit services by the auditor is
independence of the auditor is not likely to be impinged
on by undertaking the work and the quality and objectivity
of both the non-audit work and audit work will not be
compromised. There was no non-audit work carried
Grant Thornton.
Audit plan and fees
The Committee considered the plan and scope of the audit,
and proposed fees. The audit fee of £38,000 for the current
year’s audit, an increase from £28,000 from the previous
Committee. There has been a trend for increased audit fees
throughout the accounting industry, particularly for listed
that the Company will be impacted by this in future years
but that the fees will remain competitive for what is being
provided and for the circumstances of the Company.
and Financial Statements are reviewed and are given the
opportunity to speak to the Committee members without
the presence of the representatives of the Investment
Manager or Company Secretary.
The Audit Committee has adopted a framework in
process and audit quality. This includes a review of the
a) the quality of the audit engagement partner and the
audit team;
available to it;
d) consideration of the appropriateness of the level of
audit materiality adopted;
42
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Audit Committee Report (continued)
f) communications by the auditor with the Audit
Committee;
g) how the auditor supports the work of the Audit
Committee and contributes added value; and
h) a review of independence and objectivity of the audit
.
Company to meet its obligations, and to gain value from
remuneration for that year.
Internal audit function
Systems are in operation to safeguard the Company’s
assets and shareholders’ investments, to maintain
information used within the business, or published, is
principally among them, the Investment Manager
the Company’s framework of internal control and the
Committee’s view on reporting received from the
Investment Manager and the Administrator
has therefore concluded that it is not necessary for the
Company to have its own internal audit function.
Committee evaluation
questionnaire. The outcome was positive with no
2022-2023 action plan
During the year to 31 March 2023, the Committee
governance and economic environment, and the risks
and opportunities so presented. The annual report and
the resilience of the Company’s operations, the internal
ntinue to be
monitored, particularly the impact of increasin
and geopolitical risks, whether current or emerging.
Robin Archibald
Chairman of the Audit Committee
43
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Company Summary Financial Statements Shareholder Information
The Directors are responsible for preparing the Annual
applicable law and regulation.
accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting
and applicable law). Under company law, the Directors
statements, the Directors are required to:
n select suitable accounting policies and then apply
them consistently;
n state whether applicable UK Accounting Standards,
the financial statements;
n make judgements and accounting estimates that
are reasonable and prudent; and
n prepare the financial statements on the going
concern basis unless it is inappropriate to presume
that the Company will continue in business.
The Directors are also responsible for safeguarding the
assets of the Company and hence for taking reasonable
steps for the prevention and detection of fraud and other
irregularities.
The Directors are responsible for keeping adequate
the Company and enable them to ensure that the
published on the Company’s website which is
maintained by the Investment Manager. The
Investment Manager is responsible for the maintenance
in the United Kingdom governing the preparation and
legislation in other jurisdictions.
Declaration
best of his or her knowledge:
n the Company’s Financial Statements, which have
been prepared in accordance with United Kingdom
Generally Accepted Accounting Practice (United
102, and applicable law), give a true and fair view of
the assets, liabilities, financial position and net
return of the Company;
n
of the development and performance of the
business and the position of the Company,
together with a description of the principal risks and
uncertainties that it faces; and
n
and understandable and provides information
necessary for shareholders to assess the
Company’s position and performance, business
model and strategy.
Jean Matterson
Chairman
2022
Directors’ Responsibilities Statement in Respect of the
Annual Report and the Financial Statements
44
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
n give a true and fair view of the state of the
Company’s affairs as at 31 March 2022 and of
the Company’s net return attributable to equity
shareholders for the period then ended;
n have been properly prepared in accordance with
United Kingdom Generally Accepted Practice; and
n have been prepared in accordance with the
requirements of the Companies Act 2006.
Gearing Trust P.l.c. (the ‘Company’) for the period ended
31 March 2022 which comprise the Income Statement,
Financial Position, the Cash Flow Statement and notes
framework that has been applied in their preparation
is applicable law and United Kingdom Accounting
The Financial Reporting Standard applicable in the UK and
Republic of Ireland (United Kingdom Generally Accepted
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are
further described in the Auditor’s responsibilities for
report. We believe that the audit evidence we have
for our opinion. Our audit opinion is consistent with the
additional report to the audit committee.
Independence
Following the recommendation of the Audit Committee,
The period of total uninterrupted engagement including
retenders and reappointments is 2 years, covering
the year ending 5 April 2021 and the period ending
in accordance with the ethical requirements that are
other ethical responsibilities in accordance with these
requirements. The non-audit services prohibited by that
standard were not provided to the Company.
Conclusions relating to going concern
that the Directors’ use of the going concern basis of
is appropriate. Our evaluation of the Directors’
assessment of the Company’s ability to continue to
adopt the going concern basis of accounting included:
n evaluating the appropriateness of the Directors’
method of assessing going concern by reviewing
the revenue and cash forecast used by the Directors
in completing the assessment;
n assessing the Directors’ assumptions and
judgements made with regards to the base
case forecast including discretionary and non-
discretionary cash outflows, assessing the
reasonableness of these against historic outflows
and considering the available cash resources;
n assessing the Directors’ assumptions and
judgements made with regards to stress-testing
forecasts including considering the sufficiency of
the liquidity of the portfolio.
or conditions that, individually or collectively, may cast
as a going concern for a period of at least twelve months
In relation to the Company’s reporting on how it has
applied the UK Corporate Governance Code, we have
nothing material to add or draw attention to in relation
about whether the Directors considered it appropriate to
adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the
Directors with respect to going concern are described in
the relevant sections of this report.
Independent auditors’ report to the members of
Capital Gearing Trust P.l.c.
45
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Company Summary Financial Statements Shareholder Information
Overview
Key audit matters
2022
3
2021
3
Materiality Com statements as a whole
An overview of the scope of our audit
Our audit was scoped by obtaining an understanding of the Company and its environment, including the Company’s
addressed the risk of management override of internal controls, including assessing whether there was evidence of
bias by the Directors that may have represented a risk of material misstatement.
Key audit matters
do not provide a separate opinion on this matter.
Key audit matter How the scope of our audit addressed the key audit matter
Valuation and
ownership
of quoted
investments
(note 1b and 8)
We considered the valuation and
ownership of investments to be
investments represent the most
statements and the key driver
erformance.
There is a risk that the investment
balance includes investments
which are no longer owned by the
Company or that the bid price used
to value the investment is incorrect
leading to a material misstatement.
We responded to this matter by testing the valuation and
ownership of the portfolio of quoted investments. We
performed the following procedures:
n Confirmed the period-end bid price was used by
prices (over 99% of
;
n Assessing if there were contra indicators, such as
liquidity considerations, to suggest bid price is not the
most appropriate indication of fair value by considering
the realisation period for individual holdings;
n Obtained direct confirmation from the custodian
regarding the ownership of all investments held at the
balance sheet date.
n
of shares held per the statement obtained from the
custodian by the valuation per share.
Key observations
any matters to suggest that the valuation and ownership of
investments was not appropriate.
Independent auditors’ report to the members of
Capital Gearing Trust P.l.c. (continued)
46
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Independent auditors’ report to the members of
Capital Gearing Trust P.l.c. (continued)
Our application of materiality
misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could
statements as a whole.
performance materiality as follows:
2022
£m
2021
£m
Materiality £10.4m £6.3m
Basis for determining
materiality
Rationale for the benchmark
applied
As an investment trust, the net asset
value is the key measure of performance
As an investment trust, the net asset
value is the key measure of performance
Performance materiality £7.87m £4.41m
Basis for determining
performance materiality
75% of materiality based on our
A more conservative performance
materiality was used as this was
year on the audit. Performance materiality
was set at 70% of total materiality.
Lower testing threshold
items impacting revenue return of £510,000 (2021: £670,000) based on 5
Reporting threshold
qualitative grounds.
Other information
The directors are responsible for the other information. The other information comprises the information included in
the annual report
statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material misstatements, we are required to determine whether this
conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
47
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Company Summary Financial Statements Shareholder Information
Independent auditors’ report to the members of
Capital Gearing Trust P.l.c. (continued)
Corporate governance statement
that part of the Corporate Governance Statement relating to the Company’s compliance with the provisions of the UK
during the audit.
Going concern
and longer-term
viability
n The Directors’ statement with regards to the appropriateness of adopting the going concern
basis of accounting and any material uncertainties identified; and
n
this assessment covers and why the period is appropriate.
Other Code
provisions
n Directors’ statement on fair, balanced and understandable;
n
principal risks;
n The section of the annual report that describes the review of effectiveness of risk
management and internal control systems; and
n The section describing the work of the audit committee.
Other Companies Act 2006 reporting
by the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below.
Strategic report
and Directors’
report
In our opinion, based on the work undertaken in the course of the audit:
n the information given in the Strategic report and the Directors’ report for the financial period for
which the financial statements are prepared is consistent with the financial statements; and
n the Strategic report and the Directors’ report have been prepared in accordance with
applicable legal requirements.
In the light of the knowledge and understanding of the Company and its environment obtained in
Directors’ report.
Directors’
remuneration
In our opinion, the part of the Directors’ remuneration report to be audited has been properly
prepared in accordance with the Companies Act 2006.
Matters on which
we are required
to report by
exception
We have nothing to report in respect of the following matters in relation to which the Companies
Act 2006 requires us to report to you if, in our opinion:
n adequate accounting records have not been kept, or returns adequate for our audit have not
been received from branches not visited by us; or
n the financial statements and the part of the Directors’ remuneration report to be audited are
not in agreement with the accounting records and returns; or
n certain disclosures of Directors’ remuneration specified by law are not made; or
n
48
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Independent auditors’ report to the members of
Capital Gearing Trust P.l.c. (continued)
Responsibilities of Directors
statement in respect of the annual repor
statements, the Directors are responsible for the
internal control as the Directors determine is necessary
are free from material misstatement, whether due to
fraud or error.
are responsible for assessing the Company’s ability to
continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going
concern basis of accounting unless the Directors either
intend to liquidate the Company or to cease operations,
or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the
Our objectives are to obtain reasonable assurance about
material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinion.
not a guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement
error and are considered material if, individually or in
Extent to which the audit was capable of detecting
irregularities, including fraud
Irregularities, including fraud, are instances of non-
compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect
our procedures are capable of detecting irregularities,
including fraud is detailed below:
We gained an understanding of the legal and regulatory
framework applicable to the Company and the industry
in which it operates, and considered the risk of acts by
the Company which were contrary to applicable laws
and regulations, including fraud through enquiries from
the Company Secretary, revieng
minutes and review of the risk register. We considered the
AIC Code of Corporate Governance, industry practice
would lead to the Company losing various deductions and
We focused on laws and regulations that could give rise
statements. Our tests included, but were not limited to:
n agreement of the financial statement disclosures to
underlying supporting documentation;
n enquiries of the Company Secretary and those
of any fraud and non-compliance with laws
andregulations;
n review of minutes of board meetings and other
committee meetings throughout the period; and
for instances of non-compliance with laws and
regulations and fraud
n obtaining an understanding of the control
environment in monitoring compliance with laws
and regulations; and
n reviewing the calculation in relation to Investment
Trust compliance to check that the Company was
meeting its requirements to retain their Investment
Trust Status.
to material misstatement including fraud and considered
the areas most susceptible to fraud to be management
override of controls and the valuation of quoted
investments.
Our tests included, but were not limited to:
n the procedures set out in the Key Audit Matters
section above in relation to the valuation of quoted
investments; and
n testing a sample of journals which met a defined risk
criteria by agreeing to supporting documentation and
evaluating whether there was evidence of bias by the
Investment Manager and Directors that represented
a risk of material misstatement due to fraud.
49
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Company Summary Financial Statements Shareholder Information
regulations and potential fraud risks to all engagement
team members and remained alert to any indications
of fraud or non-compliance with laws and regulations
throughout the audit. The engagement team collectively
had the appropriate competence and capabilities
to identify or recognise non-compliance with laws
Our audit procedures were designed to respond to risks
recognising that the risk of not detecting a material
misstatement due to fraud is higher than the risk of
not detecting one resulting from error, as fraud may
misrepresentations or through collusion. There are
inherent limitations in the audit procedures performed
and the further removed non-compliance with laws and
become aware of it.
A further description of our responsibilities is available on
uk/auditorsresponsibilities. This description forms part of
our auditor’s report.
Use of our report
This report is made solely to the Company’s members,
as a body, in accordance with Chapter 3 of Part 16 of
the Companies Act 2006. Our audit work has been
undertaken so that we might state to the Company’s
members those matters we are required to state to
them in an auditor’s report and for no other purpose. To
assume responsibility to anyone other than the Company
and the Company’s members as a body, for our audit
work, for this report, or for the opinions we have formed.
Vanessa Bradley (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
27 May 2022
Independent auditors’ report to the members of
Capital Gearing Trust P.l.c. (continued)
50
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Period ended 31 March 2022 Ye a r ended 5 April 2021
Note
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
8 – 57,875 57,875 – 57,452 57,452
gains/(losses) – 530 530 – (116) (116)
Investment income 2 14,677 – 14,677 9,942 – 9,942
Gross return 14,677 58,405 73,082 9,942 57,336 67,278
Investment management fee 3 (3,627) – (3,627) (2,604) – (2,604)
4 (727) – (727) (612) – (612)
Net return before tax 10,323 58,405 68,728 6,726 57,336 64,062
5 (510) – (510) (396) – (396)
Net return attributable to
equity shareholders 9,813 58,405 68,218 6,330 57,336 63,666
Net return per Ordinary share 7 56.81p 338.14p 394.95p 51.04p 462.35p 513.39p
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 and therefore no statement of
comprehensive income has been presented.
The notes on pages 54 to 67
Income Statement
for the period ended 31 March 2022
51
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Company Summary Shareholder InformationFinancial Statements
Note
Called-up
share
capital
£’000
Share
premium
account
£’000
Capital
redemption
reserve
£’000
Capital
reserve*
£’000
Revenue
reserve
£’000
Total equity
share-
holders’
funds
£’000
Opening b 2,903 362,726 16 97,081 7,333 470,059
and total comprehensive income for the year – – – 57,336 6,330 63,666
Shares issued from treasury – 389 – 3,961 – 4,350
550 100,322 – – – 100,872
Dividends paid 6 – – – – (4,901) (4,901)
Total transactions with owners recognised
directly in equity 550 100,711 – 3,961 (4,901) 100,321
Closing b 3,453 463,437 16 158,378 8,762 634,046
Opening b1 3,453 463,437 16 158,378 8,762 634,046
and total comprehensive income for the period – – – 58,405 9,813 68,218
1,770 352,572 – – – 354,342
Dividends paid 6 – – – – (6,771) (6,771)
Total transactions with owners recognised
directly in equity 1,770 352,572 – – (6,771) 347,571
Closing balance at 31 March 2022 5,223 816,009 16 216,783 11,804 1,049,835
31 March 2022 £159,561,000 (2021: £120,241,000) of the capital reserve together with the revenue reserve are
regarded as being available for distribution. Unrealised capital gains are not available for distribution.
The notes on pages 54 to 67
Statement of Changes in Equity
for the period ended 31 March 2022
52
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Note
31 March
2022
£’000
5 April
2021
£’000
Fixed assets
8 991,893 594,230
Current assets
Debtors 9 15,386 3,895
Cash at bank and in hand 50,611 37,242
65,997 41,137
Creditors: amounts falling due within one year 10 (8,055) (1,321)
Net current assets 57,942 39,816
Total assets less current liabilities 1,049,835 634,046
Capital and reserves
Called-up share capital 11 5,223 3,453
Share premium account 816,009 463,437
Capital redemption reserve 16 16
Capital reserve 216,783 158,378
11,804 8,762
Total equity shareholders’ funds 1,049,835 634,046
Net asset value per Ordinary share 12 5,025.1p 4,590.2p
50 to 672022 and signed on its behalf by:
Jean Matterson
Chairman
The notes on pages 54 to 67
Statement of Financial Position
as at 31 March 2022
53
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Company Summary Shareholder InformationFinancial Statements
Note
Period ended
31 March
2022
£’000
Year ended
5 April
2021
£’000
N 13 9,759 7,256
Payments to acquire investments (833,682) (372,428)
496,426 269,854
(337,256) (102,574)
6 (6,771) (4,901)
Proceeds from the issue of Ordinary shares 348,313 103,954
Cost of share issues (676) (134)
340,866 98,919
Increase in cash and cash equivalents 13,369 3,601
Cash and cash equivalents at start of period 37,242 33,641
Cash and cash equivalents at end of period 50,611 37,242
The notes on pages 54 to 67
Cash Flow Statement
for the period ended 31 March 2022
54
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
The current reporting period is 6 April
2022. The comparative information is for t
2020 to 5 April 2021.
a) Basis of accounting
Capital Gearing Trust P.l.c. is a public company limited by
and carries on business as an investment trust.
The accounts are prepared in accordance with the
Companies Act 2006, United Kingdom Generally
Accepted Accounting Practice (Accounting Standards
of Investment Companies in April 2021. All of the
Company’s operations are of a continuing nature.
The accounts have been prepared on a going concern
by the revaluation of investments held at fair value
In concluding on going concern
basis, the Directors have taken into account the liquidity
of the portfolio, forecasts and obligations under the DCP.
The principal accounting policies are set out below.
These policies have been applied consistently
throughout the current period and prior year.
to be reasonable under the circumstances.
There are no critical accounting estimates or judgements.
b) Valuation of investments
The Company has elected to adopt Sections 11 and 12
instruments. The Company’s business is investing in
return in the form of income and capital growth. This
performance evaluated on a fair value basis in
accordance with a documented investment strategy
and information is provided internally on that basis to the
investments are designated by the Company as “held at
included initially at fair value which is taken to be their
Subsequently the investments are valued at fair value,
which are quoted bid prices for investments traded in
active markets. Where trading in the securities of an
investee company is suspended, the investment is
All purchases and sales are accounted for on a trade
date basis.
c) Accounting for reserves
Gains and losses on sales of investments and any other
capital charges are included in the Income Statement
and dealt with in the capital reserve. Increases and
decreases in the valuation of investments held at the
balances held at the year end are also included in the
Income Statement and dealt with in the capital reserve.
The cost of repurchasing the Company’s own shares for
cancellation including the related stamp duty and
transaction costs is charged to the distributable
share premium account.
d) Dividends
by shareholders.
e) Income
Dividends receivable on listed equity shares are
and the return on zero dividend preference shares is
recognised as a capital return.
dividend date is quoted are recognised when the
Company’s right to receive payment is established.
Special dividends receivable are taken to capital where
relevant circumstances indicate that the dividends are
capital in nature.
Income from securities where the return is linked to an
value is considered to represent a capital return, and is
included in the Income Statement as such in accordance
Notes to the Financial Statements
55
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Company Summary Shareholder InformationFinancial Statements
(continued)
f) Expenses
are charged to revenue and include, where
g) Taxation Policy
period
reverse. Owing to the Company’s status as an
investment trust, and the intention to continue to meet
the conditions required to obtain approval in the
foreseeable future, the Company has not provided
the revaluation of investments.
Other debtors and creditors do not carry any interest,
are short-term in nature and initially recognised at fair
value and then held at amortised cost, with debtors
reduced by appropriate allowances for estimated
irrecoverable amounts.
Cash at bank and in hand may comprise cash and
demand deposits which are readily convertible to a
risk of changes in value.
i) Foreign currency
presentational currency of the Company. The directors,
having regard to the currency of the Company’s share
capital and the predominant currency in which the
Company operates, have determined the functional
currency to be sterling.
Transactions denominated in foreign currencies are
rates as at the date of the transaction. Monetary assets
and liabilities denominated in foreign currencies at the
at the year end.
j) Capital reserve
The following are accounted for in this reserve:
n gains and losses on the realisation of investments;
n increases and decreases in the valuation of
investments held at the year end;
n realised foreign currency differences of a capital
nature; and
n unrealised foreign currency differences of a capital
nature.
k) Repurchases of shares into treasury and
subsequent re-issue
The cost of repurchasing shares into treasury, including the
related stamp duty and transaction costs is dealt with in the
transactions are accounted for on a trade date basis. Where
shares held in treasury are subsequently cancelled, the
nominal value of those shares is transferred out of “called-
up share capital” and into “capital redemption reserve”.
The sales proceeds of treasury shares re-issued are
purchase price of those shares and is transferred to
the purchase price is transferred to “share premium”.
Notes to the Financial Statements (continued)
56
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Notes to the Financial Statements (continued)
2 Investment income
2022
£’000
2021
£’000
Income from investments:
Interest from UK bonds 1,584 1,329
Income from UK equity and non-equity investments 8,163 4,194
Interest from overseas bonds 2,083 1,994
Income from overseas equity and non-equity investments 2,847 2,425
Total income 14,677 9,942
2022
£’000
2021
£’000
Total income comprises:
Dividends 7,868 4,919
Property Income and Interest Distributions 3,142 1,700
Interest 3,667 3,323
14,677 9,942
2022
£’000
2021
£’000
Income from investments comprises:
9,747 5,523
4,930 4,419
14,677 9,942
3 Investment management fee
2022
£’000
2021
£’000
Investment management fee 3,627 2,604
0.60% of the net assets of the Company up to £120m, 0.45% on net assets above £120m to £500m and 0.30%
thereafter (2021: the same basis). At 31 March 2022 £1,020,000 (5 April 2021: £710,000) was payable. The terms of the
investment management agreement are detailed on page 25.
57
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Company Summary Shareholder InformationFinancial Statements
Notes to the Financial Statements (continued)
4 Other expenses
2022
£’000
2021
£’000
Fees payable to Company’s 46 34
129 114
Company secretarial, administration and accountancy services 154 152
Depositary fees 152 92
ge and FCA fees 50 39
49 36
Custody services 37 25
110 120
727 612
5 Taxation
Revenue
£’000
Capital
£’000
2022
Total
£’000
Revenue
£’000
Capital
£’000
2021
Total
£’000
44 – 44 28 – 28
466 – 466 368 – 368
510 – 510 396 – 396
period is lower (2021: lower1:
Revenue
£’000
Capital
£’000
2022
Total
£’000
Revenue
£’000
Capital
£’000
2021
Total
£’000
10,323 58,405 68,728 6,726 57,336 64,062
1,961 11,097 13,058 1,278 10,894 12,172
(1,495) – (1,495) (936) – (936)
– (11,097) (11,097) – (10,894) (10,894)
44 – 44 28 – 28
– – – 26 – 26
510 – 510 396 – 396
charge of £466,000 is payable in respect of the period ended 31 March 2022 (to 5 April 2021: £342,000).
58
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Notes to the Financial Statements (continued)
6 Dividends
2022
£’000
2021
£’000
Ordinary shares
2021 dividend paid 161 (45p per share) 6,771 –
2020 dividend paid 1720 (42p per share) – 4,901
The 2021 dividend was paid on 161 to shareholders on the register on 111 when there were
15,047,463 Ordinary shares in issue. The 2020 dividend was paid on 1720 to shareholders on the register on
520 when there were 11,669,563 Ordinary shares.
46p per share for the period ended 31 March
2022. If approved, this dividend will be paid to shareholders on 15 July 2022. This dividend is subject to approval by
, based on the number of shares in issue at 31 March
2022, is £9,610,000. However the actual amount of the dividend to be paid will be based on the number of shares in
22, the dividend record date.
2022
£’000
2021
£’000
9,813 6,330
46p for the period ended 31 March 2022 (9,610) (6,771)
203 (441)
7 Net return per Ordinary share
The net return per Ordinary share of 394.95p (2021: net return of 513.39p) is based on the total net return after
period of £68,218,000 (2021: net return of £63,666,000) and on 17,272,426 (2021:
12,401,011) Ordinary shares, being the weighted average number of Ordinary shares in issue in each period.
56.81p (2021: 51.04
£9,813,000 (2021: £6,330,000) and on 17,272,426 (2021: 12,401,011) Ordinary shares, being the weighted average
number of Ordinary shares in issue in each period.
Capital return per Ordinary share of 338.14p (2021: net return of 462.35p) is based on the net capital return for the
period of £58,405,000 (2021: net gain of £57,336,000) and on 17,272,426 (2021: 12,401,011) Ordinary shares,
being the weighted average number of Ordinary shares in issue in each period.
The Company does not have dilutive securities. Therefore the basic and diluted returns per share are the same.
59
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Company Summary Shareholder InformationFinancial Statements
Notes to the Financial Statements (continued)
2022
£’000
2021
£’000
Investments comprise –
Ordinary shares UK 228,809 144,074
Ordinary shares overseas 164,043 86,094
Zero dividend preference shares UK 22,415 15,296
115,735 60,657
74,268 38,123
289,572 167,180
16,618 11,655
80,433 71,151
991,893 594,230
Opening cost of investments 556,030 450,139
Unrealised appreciation/(depreciation) 38,200 (5,288)
Opening fair value of investments 594,230 444,851
Additions at cost 840,165 363,098
(135) (581)
Sales proceeds (500,242) (270,590)
Gains on investments 57,875 57,452
Closing fair value of investments 991,893 594,230
Closing book cost of investments 934,906 556,030
Unrealised appreciation 56,987 38,200
991,893 594,230
39,088 13,964
Increase in unrealised appreciation 18,787 43,488
57,875 57,452
The Company received proceeds of £500,242,000 (2021: £270,590,000) from investments sold in the period. The
average book cost of these investments when they were purchased was £461,154,000 (2021: £256,626,000). These
investments have been revalued over time and until they were sold any unrealised gains/losses were included in the fair
value of investments. Included within these proceeds are capital repayments of £565,000 (2021: nil), which are considered
to be capital dividends.
The geographical spread of investments is shown on page 9.
The total transaction costs on additions were £546,000 (2021: £417,000) and on sales were £124,000 (2021: £43,000).
These costs are included in the book cost of acquisitions and the net proceeds of sales.
54 for a fuller description.
60
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Notes to the Financial Statements (continued)
9 Debtors
2022
£’000
2021
£’000
Other debtors 13,333 2,770
Prepayments and accrued income 2,041 1,116
12 9
15,386 3,895
10 Creditors: amounts falling due within one year
2022
£’000
2021
£’000
Other creditors 6,644 160
Accruals and deferred income 1,168 819
243 342
8,055 1,321
11 Called-up share capital
2022
£’000
2021
£’000
Allotted and fully paid Ordinary shares of 25p each
At the beginning of the period: 13,813,113 Ordinary shares (2021: 11,611,563) 3,453 2,903
Allotted during the period: 7,078,862 Ordinary shares (2021: 2,201,550) 1,770 550
At the end of the period: 20,891,975 Ordinary shares (2021: 13,813,113) 5,223 3,453
During the period to 31 March 2022, no Ordinary shares were repurchased by the Company (2021: ). ary
shares (2021: 102,300) were re-issued from treasury by the Company (2021: £4,350,000
for cancellation during the year (2021: nil) and at the year end no shares were held in treasury (2021: one).
During the period to 31 March 2022, 7,078,862 (2021: 2,201,550) new Ordinary shares were issued by the Company for
cash proceeds totalling £354,342,000 (2021: £100,872,000).
12 Net asset value per Ordinary share
The net asset value per Ordinary share and the net asset value attributable to the Ordinary shares at the year end,
calculated in accordance with the Articles, were as follows:
Net asset value per Ordinary share attributable to
2022 2021
Ordinary shares 5,025.1p 4,590.2p
Net assets attributable to
2022
£’000
2021
£’000
Ordinary shares 1,049,835 634,046
20,891,975 (2021: 13,813,113)
Ordinary shares, being the number of Ordinary shares in issue at the year end.
61
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Company Summary Shareholder InformationFinancial Statements
Notes to the Financial Statements (continued)
13
activities
2022
£’000
2021
£’000
68,728 64,062
Adjustments for:
(58,405) (57,336)
(Increase)/ decrease in prepayments (32) 40
Increase in accruals and accrued income 349 114
(44) (28)
(3) (5)
(596) (90)
(Increase)/decrease in dividends receivable (228) 22
(Increase)/decrease in accrued interest (540) 593
/(losses) on foreign currency transactions 530 (116)
9,759 7,256
14 Financial instruments
2022
£’000
2021
£’000
991,893 594,230
Financial assets that are debt instruments measured at amortised cost
– Cash at bank and at hand 50,611 37,242
– Other debtors 13,333 2,770
– Accrued income 1,978 1,085
1,057,815 635,327
2022
£’000
2021
£’000
Financial liabilities measured at amortised cost
– Other creditors 6,626 143
– Accruals 1,168 819
7,794 962
n
n cash and liquid resources that arise directly from the Company’s operations; and
n debtors and creditors.
summarised below.
Other debtors and creditors do not carry any interest and are short-term in nature and accordingly are stated at their
nominal value.
62
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Notes to the Financial Statements (continued)
14 Financial instruments (continued)
Market risk
The Company invests in the shares of other investment companies. These companies may use borrowings or other
means to gear their balance sheets which may result in returns that are more volatile than the markets in which they
investments. An appropriate spread of investments is held in the portfolio in order to reduce both the systemic risk
the investments held by the Company is shown on pages 9 to 12. All investments are stated at bid value, which in the
Directors’ opinion is equal to fair value.
Price risk sensitivity
period and the net assets and net
asset value per Ordinary share to an increase or decrease of 10% (2021: 5%) in market prices. This level of change is
considered to be reasonably possible based on an observation of current market conditions. The sensitivity analysis is
based on the Company’s investments at the Statement of Financial Position date with all other variables held constant.
2022
10%
increase
in market
prices
£’000
2022
10%
decrease
in market
prices
£’000
2021
5%
increase
in market
prices
£’000
2021
5%
decrease
in market
prices
£’000
(294) 294 (105) 105
Capital return 99,190 (99,190) 29,712 (29,712)
98,896 (98,896) 29,607 (29,607)
98,896 (98,896) 29,607 (29,607)
473.36p (473.36)p 214.34p (214.34)p
Interest rate risk
appropriate level of yields given the economic background. Key determinants include economic growth prospects,
Investment Manager takes all these factors into account when making any investment decisions as well as considering
return achieved is unaltered from its purchase date. However, over the life of a bond the market price at any given time
will depend on the market environment at that time. Therefore, a bond sold before its redemption date is likely to have
63
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Company Summary Shareholder InformationFinancial Statements
Notes to the Financial Statements (continued)
14 Financial instruments (continued)
Interest rate sensitivity
instruments at the Statement of Financial Position date with all other variables held constant.
2022
1%
increase
in interest
rates
£’000
2022
1%
decrease
in interest
rates
£’000
2021
1%
increase
in interest
rates
£’000
2021
1%
decrease
in interest
rates
£’000
410 (410) 301 (301)
410 (410) 301 (301)
410 (410) 301 (301)
1.96p (1.96)p 2.18p (2.18)p
31 March 2022 was as follows:
Total
(as per
Statement
of Financial
Position)
£’000
Floating
rate
£’000
Index-
linked
£’000
Other
rate
£’000
Assets/
(liabilities)
on which
no interest
is paid
£’000
Weighted
average
interest
rate
%
Weighted
average
period
for which
rate is
(years)
Assets
Investment trusts & other funds 495,700 – – – 495,700 – –
75,146 – 75,146 – – 0.38 1.87
18,175 – 18,175 – – 3.64 1.99
UK government bonds 40,589 – – – 40,589 – –
UK non-government bonds 52,825 – – 52,825 – 3.93 2.21
289,572 – 289,572 – – 0.68 8.33
bonds 4,276 – 4,276 – – 1.44 7.71
Overseas non-government bonds 15,610 – – 15,610 – 2.99 1.88
Invested funds 991,893 – 387,169 68,435 536,289
Cash at bank 50,611 50,611 – – – – –
Other debtors 15,386 – – – 15,386 – –
Liabilities
Creditors (8,055) – – – (8,055) – –
Total net assets 1,049,835 50,611 387,169 68,435 543,620
64
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Notes to the Financial Statements (continued)
14 Financial instruments (continued)
1 was as follows:
Total
(as per
Statement
of Financial
Position)
£’000
Floating
rate
£’000
Index-
linked
£’000
Other
rate
£’000
Assets/
(liabilities)
on which
no interest
is paid
£’000
Weighted
average
interest
rate
%
Weighted
average
period
for which
rate is
(years)
Assets
Investment trusts & other funds 316,615 – – – 316,615 – –
21,660 – 21,660 – – 0.17 2.91
13,660 – 13,660 – – 2.85 1.03
UK government bonds 38,997 – – – 38,997 – –
UK non-government bonds 21,619 – – 21,619 – 4.84 2.12
167,180 – 167,180 – – 0.97 10.98
Overseas non-government bonds 14,499 – – 14,499 – 4.76 1.19
Invested funds 594,230 – 202,500 36,118 355,612
Cash at bank 37,242 37,242 – – – – –
Other debtors 3,895 – – – 3,895 – –
Liabilities
Creditors (1,321) – – – (1,321) – –
Total net assets 634,046 37,242 202,500 36,118 358,186
assets, which equate to their fair values.
instruments traded in active markets is based on quoted market prices at the Statement of Financial Position date.
industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market
transactions on an arm’s length basis.
65
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Company Summary Shareholder InformationFinancial Statements
Notes to the Financial Statements (continued)
14 Financial instruments (continued)
31 March 2022 as follows:
Financial assets at fair value
Level 1
£000
Level 2
£000
Level 3
£000
2022
Total
£000
Level 1
£000
Level 2
£000
Level 3
£000
2021
Total
£000
Quoted securities 988,276 2,842 – 991,118 593,804 – – 593,804
Delisted equities – – 775 775 – – 426 426
988,276 2,842 775 991,893 593,804 – 426 594,230
these investments has been determined by reference to their quoted bid prices at the reporting date.
Delisted investments
The fair value of the Company’s investments in unquoted stocks have been determined by reference to primary
valuation techniques described in note 1(b).
During the period to 31 March 2022, two assets (Gabellint Trust and Weiss Korea Opportunities
FundShares)) werethey
2022
Total
£’000
2021
Total
£’000
Opening balance 426 540
Purchases – –
Sales (9,949) –
Transfers 9,335 218
Total gains/(losses) on investments in the Income Statement:
on assets sold 614 –
on assets held at the end of the year 349 (332)
Closing balance 775 426
Foreign currency risk
Company’s investments denominated in foreign currencies are:
2022
Investments
£’000
2022
Accrued interest
£’000
2021
Investments
£’000
2021
Accrued interest
£’000
78,916 5 32,884 –
US Dollar 282,579 473 145,690 401
Swedish Krona 39,449 50 26,342 27
an Krone 7,104 – – –
Australian Dollar 7,926 13 2,499 4
36,283 2 20,188 2
452,257 543 227,603 434
66
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Notes to the Financial Statements (continued)
14 Financial instruments (continued)
Foreign currency sensitivity
to sterling. This level of change is considered to be reasonably possible based on an observation of current market
conditions. The sensitivity analysis is based on the Company’s foreign currency investments at the Statement of
Financial Position date with all other variables held constant.
2022
10%
appreciation
of sterling
£’000
2022
10%
depreciation
of sterling
£’000
2021
10%
appreciation
of sterling
£’000
2021
10%
depreciation
of sterling
£’000
(399) 399 (358) 358
Capital return (45,226) 45,226 (22,760) 22,760
(45,625) 45,625 (23,118) 23,118
(45,625) 45,625 (23,118) 23,118
(218.39)p 218.39p (167.36)p 167.36p
Liquidity risk
majority of the Company’s assets are investments in quoted securities which are readily realisable. All liabilities are
payable within three months.
Credit risk
In addition to interest rate risk, the Company’s investment in bonds, the majority of which are government bonds, is
quality of the issue, the lower the interest rate at which the issuer can borrow money. Issuers of a lower quality will tend
carried out with a number of brokers whose standing is reviewed periodically by the Investment Manager. The
A further credit risk is the failure of a counterparty to a transaction to discharge its obligations under that transaction,
Credit risk exposure
2022
Statement
of Financial
Position
£’000
2022
Maximum
exposure
£’000
2021
Statement
of Financial
Position
£’000
2021
Maximum
exposure
£’000
991,893 496,193 594,230 277,095
Debtors – amounts due from the custodian,
dividends and interest receivable 15,311 15,311 3,856 3,856
Cash at bank 50,611 50,611 37,242 37,242
1,057,815 562,115 635,328 318,193
67
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Company Summary Shareholder InformationFinancial Statements
14 Financial instruments (continued)
Capital management policies and procedures
shareholders. The Company’s capital comprises its equity share
capital and reserves.
15 Related party transactions
25), and the Directors’ fees and shareholdings (as
35 and 38), there have been no related party transactions in
the period ended 31 March 2022.
16 Company information
its Ordinary s
Notes to the Financial Statements (continued)
68
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
ninth Annual
of J.P. Morgan, The
on Tuesday, 122
for the following purposes:
Ordinary business
resolutions which will be proposed as ordinary resolutions:
period ended
22.
the period ended , together with the
report of the auditor thereon.
3. To approve the remuneration policy of the Company.
4 46 pence per Ordinary
share.
5. To re-elect Jean Matterson as a Director.
6
7
8. To re-elect Wendy Colquhoun as a Director.
9
10. To authorise the Directors to determine the
remuneration of the auditors.
Special business
resolutions, of which resolutions 11 and 12 will be
proposed as ordinary resolutions and resolutions 13 to
16 will be proposed as special resolutions:
Ordinary resolution
Aggregate Directors’ Remunerations
11. To increase the aggregate limit on Directors’
remuneration from £165,000 to £180,000
Directors’ authority to allot shares
12. THAT the Directors be generally and unconditionally
authorised, pursuant to section 551 of the
powers of the Company to allot relevant securities
(within the meaning of section 551 of the Act)
£1,876,264.00 (being one third of the issued share
capital of the Company as at 262022, being the
latest practicable date prior to the publication of this
7,505,056 Ordinary shares
of 25 pence each), provided that such authority shall
to be held in 2023, unless previously revoked, varied
or renewed by the Company in general meeting
and provided that the Company shall be entitled to
or agreement which would or might require relevant
Special resolutions
Directors’ authority to disapply pre-emption rights
13. THAT the Directors be and are hereby empowered
pursuant to section 570 of the Companies Act
2006 (the “Act”) to allot equity securities (within the
meaning of section 560 of the Act) for cash
pursuant to the authority conferred on them by
resolution 12 above or otherwise as if section 561
of the Act did not apply to any such allotment, and
be empowered pursuant to section 573 of the Act
to sell relevant equity securities (within the meaning
of section 560 of the Act) if, immediately before the
sale, such equity securities were held by the
724 of the Act (“treasury shares”)), for cash as if
section 561 of the Act did not apply to any such
sale, provided that this power shall be limited to the
allotment of equity securities and the sale of
treasury shares, in connection with and pursuant to:
where the equity securities respectively
attributable to the interests of holders of
Ordinary shares of 25 pence each in the
Company (the “Ordinary shares”) are
proportionate (as nearly as may be) to the
respective numbers of Ordinary shares held by
arrangements in connection with the issue as
representing fractional entitlements or to deal
with legal or practical problems arising in any
overseas territory, the requirements of any
other matter whatsoever; and
b) otherwise than pursuant to sub-paragraph
a) above, up to an aggregate nominal value
of £1,125,758.50 or, if less, the number
representing 20% of the issued share capital
of the Company at the date of the meeting at
which this resolution is proposed; and
Notice of Annual General Meeting
69
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Company Summary Shareholder InformationFinancial Statements
of the Company to be held in 2023, unless previously
renewed, varied or revoked by the Company in
general meeting and provided that the Company
might require equity securities to be allotted or
Authority to make market purchases of the Company’s
own shares
14. THAT the Company be and is hereby generally and
unconditionally authorised in accordance with
section 701 of the Companies Act 2006 (the “Act”)
to make market purchases (within the meaning of
section 693 of the Act) of Ordinary shares of 25
pence each in the Company (the “Ordinary
shares”), provided that:
shares to be purchased shall be 3,375,023 or,
if less, the number representing 14.99% of the
issued share capital of the Company at the
date of the meeting at which this resolution
b) the minimum price which may be paid for an
Ordinary share shall be 25 pence;
may be paid for an Ordinary share shall be an
amount equal to the higher of:
(i) 105% of the average of the middle market
quotations for an Ordinary share as
business days immediately preceding the
day on which such purchase is made; and
(ii) the higher of the last independent trade
and the highest current independent bid
relating to an Ordinary share on the trading
venue where the purchase is carried out;
the conclusion of the AGM of the Company to
be held in 2023 unless such authority is
renewed prior to such time; and
e) the Company may enter into a contract to
purchase Ordinary shares under this authority
Cancellation of the Company’s share premium account
15
cancelling the Company’s entire share premium
is sought; and (ii) the credit thereby arising in
the Company’s books of account be available as
permitted by the Companies Act 2006 and The
Notice of general meetings
16. THAT a general meeting other than an Annual
General Meeting may be called on not less than
14 clear days’ notice.
Juniper Partners
Company Secretary
Murray House
Murray Street
2022
Location of Annual General Meeting
J.P. Morgan
The Great Hall
Tuesday, 12 July 2022
Shareholders are encouraged to vote in favour of the
resolutions to be proposed at the AGM by form of
(including through
any platform) shareholders are encouraged to arrange
for their nominee to vote on their behalf.
Notice of Annual General Meeting (continued)
70
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Notes
1. Members are entitled to attend, speak and vote at the
AGM. A member entitled to attend, speak and vote at the
need not be a member of the Company. A member may
To have the right to vote at the AGM (and also for the
purposes of calculating how many votes a member may
cast on a poll) shareholders must be registered in the
working days) before the day of the AGM or any
after the relevant deadline shall be disregarded in
determining the rights of any person to vote at
a pre-paid reply envelope. Completion and return of such
or submission of any
will not prevent a member from subsequently attending
the AGM and voting in person if they so wish.
copy thereof, must be received by post or (during normal
business hours only) by hand to Computershare Investor
before the time of the meeting or any adjourned meeting.
4. A person who is not a member of the Company, but has
been nominated by a member of the Company (the
“relevant member”) under section 146 of the Companies
Act 2006 to enjoy information rights (the “nominated
under note 1 above. A nominated person may have a right
under an agreement with the relevant member to be
for the AGM. If a nominated person does not have such a
he/she may have a right under an agreement with the
voting rights. It is important to remember that a
nominated person’s main contact in terms of their
investment remains as the relevant member (or perhaps
the custodian or broker who administers the investment)
and a nominated person should continue to contact them
(and not the Company) regarding any changes or queries
relating to their personal details and holding (including any
where the Company writes to a nominated person
directly for a response.
5. In the case of joint holders the vote of the senior who
votes of the other joint holders. For this purpose,
seniority shall be determined by the order in which the
names stand in the register of members.
6. Any corporation which is a member can appoint one or
behalf all of its powers as a member provided that they do
not do so in relation to the same shares.
may do so for the AGM and any adjournment(s) thereof
(available via www.euroclear.com).
The message, regardless of whether it constitutes the
order to be valid, be transmitted so as to be received by the
AGM. For this purpose, the time of the receipt will be taken
to be the time (as determined by the timestamp applied to
the Company’s agent is able to retrieve the message by
8. Any member attending the AGM has the right to ask
questions. Shareholders are also invited to submit their
these questions will be posted on our website after the
AGM. Please
which, to be passed, require more than half of the votes
16
are proposed as special resolutions which, to be passed,
require at least three-quarters of the votes cast to be in
favour of the resolution.
2 (being the last practicable date prior to
the publication of this document) the total number of
Ordinary shares of 25p each in issue and the total number
of voting rights was 22,515,170.
re-election can be found at page 13 of the report and
12. A copy of this notice, and other information required by
section 311A of the Companies Act 2006, can be found at
www.capitalgearingtrust.com.
13. The members of the Company may require the Company
(without payment) to publish, on the website, a statement
(which is also to be passed to the Auditor) setting out any
matter relating to the audit of the Company’s accounts,
including the Auditor’s report and the conduct of the
audit. The Company will be required to do so once it has
received such requests from either members
representing at least 5% of the total voting rights of the
Company or at least 100 members who have a relevant
right to vote and hold shares in the Company on which
there has been paid up an average sum per member of at
least £100. Such requests must be made in writing and
must state the member’s full name and address and be
sent to the registered address of the Company.
Notice of Annual General Meeting (continued)
71
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Company Summary Shareholder InformationFinancial Statements
Financial Calendar
March May July November
Financial year end (31st) Annual results for the
2022 published
Annual Report published
Annual General
Meeting
Dividend payment date
Interim results for
the six months ended
Half Year Report published
Financial Reporting
from the Company Secretary and electronic copies can be accessed on the
Company’s website www.capitalgearingtrust.com.
Contacting the Board
so via the Company Secretary.
Capital Gains Tax
25p Ordinary shares was 21.25p.
Frequency of NAV Publication Daily
Share Price
website by using the Company’s TIDM code ‘CGT’ within the price search
facility. The share price is also available on the Company’s website.
How to Invest
Sources of Further Information Company’s website www.capitalgearingtrust.com
AIC www.theaic.co.uk
For registrar queries contact Computershare on 0370 873 5864.
TIDM: CGT
Nominee Share Code The Company will arrange for copies of shareholder documents to be made
available on request to interested parties and operators of nominee accounts.
Disability Act Access for the hard of hearing to the services of the registrar to the
dial 18001 followed by the number you wish to dial.
Data Protection The Company is committed to ensuring the privacy of any personal data
provided to us. Further details of the Company’s privacy policy can be found
on the Company’s website www.capitalgearingtrust.com.
Key Information Document
came into force in January 2018, a key information document (KID) has been
produced for the Company by its AIFM and is available on the Company’s
website. The KID, which is not the responsibility of the Company, is produced in a
prescribed form, with little scope for deviation. Investor’s should note that the
procedures for calculating risks, costs and potential returns contained in the KID
Company and anticipated returns cannot be guaranteed. The costs disclosed in
the KID include transaction charges and look through costs, being the operating
costs of investee funds, in addition to the ongoing charges of the Company.
Shareholder Information
72
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Non-Mainstream Pooled Investment Rules
clients, subject to normal suitability requirements.
Net asset value performance 1982 to 2022
100
80
200
300
500
1,000
2,000
4,000
6,000
8,000
10,000
16,000
As at 31 March
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2015
2013
2017
2018
2019
2020
2021
20,000
Capital Gearing Trust NAV Total Return
MSCI UK Total Return
16,000
2022
Alternative Investment Fund Managers Directive (‘AIFMD’)
Company’s Alternative Investment Fund Manager (“AIFM”). CG Asset Management is authorised as a Full Scope
current intention to employ gearing.
In accordance with the AIFMD, information in relation to the Company’s leverage and the remuneration of the
Company’s AIFM, CG Asset Management, is required to be made available to investors. In accordance with the
Directive, the AIFM’s remuneration policy and the numerical remuneration disclosures in respect of the AIFM’s
2021) are available from CG Asset Management on request.
Shareholder Information (continued)
73
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Company Summary Shareholder InformationFinancial Statements
Company’s
C
31March 2022 and 5 April 2021, the C
actual leverage levels at 31 March 2022 are shown below:
Gross
Method
Commitment
Method
200% 200%
Actual 100% 100%
The investor disclosure document and all additional periodic disclosures required in accordance with the requirements of the
www.capitalgearingtrust.com).
Shareholder Analysis
31 March
2022
% of
Issued
share
capital
5 April
2021
% of
Issued
share
capital
40.3 35.1
Private client stockbrokers 18.2 22.1
Wealth management 14.7 14.8
Private client fund management 6.4 6.1
Private investors 3.5 5.2
Asset managers 3.5 3.8
13.4 12.9
100.0 100.0
Beware of Share Fraud
This is often by a phone call or email which can originate from outside UK. Shareholders may receive unsolicited phone
calls or correspondence concerning investment matters that imply a connection to the Company. These are typically
risk shares.
If you are contacted, we recommend that you do not respond with any personal information, including access to
www.fca.org.uk/consumer/protect-yourself-scams
Shareholder Information (continued)
74
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Shareholder Information (continued)
Alternative Performance Measures
performance against a range of criteria and are viewed as particularly relevant to an investment trust. Other terms
detailed below are for reference.
NAV Total Return
2022 2021
A 4,590.2 4,084.2p
5,025.1 4,590.2p
9.5% 12.4%
Impact of dividend reinvested D 1.0% 1.2%
NAV total return 10.5% 13.6%
Share Price Total Return Share price total return measures the increase or decrease in share price plus the dividends
paid in the period, which are assumed to be reinvested at the share price at the time that
2022 2021
Opening share price A 4,715.0p 4180.0p
Closing share price 5,140.0p 4715.0p
% change in share price 9.0% 12.8%
Impact of dividend reinvested D 1.0% 1.1%
Share price total return 10.0% 13.9%
Premium/Discount to
NAV
The amount by which the share price is higher/lower than the net asset value per share,
2022 2021
A 5,025.1p 4,590.2p
Share price 5,140.0p 4,715.0p
Premium 2.3% 2.7%
75
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Company Summary Financial Statements Shareholder Information
Shareholder Information (continued)
MSCI UK Index Total
Return
received were reinvested into the shares of the underlying companies at the time their
Ongoing Charges The Company publishes its ongoing charges (‘ongoing charges
percentage of the average daily net assets during the year.
within underlying investee funds:
2022
£0,000
2021
£0,000
Investment Management fee 3,627 2,535
727 612
30 30
Ongoing charges A 4,384 3,177
Average net assets 848,922 551,147
Ongoing charges ratio excluding costs of
underlying funds 0.52% 0.58%
funds and the ongoing charges ratio including these costs:
2022 2021
Ongoing cost ratio from above A 0.52% 0.58%
Impact of underlying investee fund costs 0.26% 0.32%
Ongoing charges ratio including costs of
underlying funds 0.78% 0.90%
76
Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022
Alternative Performance
Measures
Alternative performance measures are numerical measures of the Company’s current,
to assess the Company’s performance against a range of criteria and are viewed as
particularly relevant for an investment company.
DCP A discount and premium control policy (‘DCP’) that seeks to ensure that the Company’s
shares trade at close to net asset value, in normal market conditions, through a
combination of share buy-backs and share issues. The DCP creates liquidity in the
shares and should reduce premium/discount volatility.
Drawdown
downside risk that can be used to assess the relative riskiness of one portfolio relative
Earnings per share revenue return
attributable to equity shareholders by the weighted average number of shares in issue.
Equity ETF
Market Capitalisation The value of the Company’s total market value of its shares and is calculated by
multiplying the total number of shares in issue with the current share price.
Net Asset Value (‘NAV’) The value of total assets less liabilities. To calculate the net asset value per share the net
asset value is divided by the number of shares in issue.
Ongoing Charges
Premium/Discount to NAV The amount by which the share price is higher/lower than the net asset value per share,
Total Return
value per share/share price plus the dividends paid in the period, which are assumed to
asset value or share price of the Company.
Treasury shares Shares that have been repurchased by the Company but not cancelled. These shares
are held in a treasury account and remain part of the Company’s share capital but do not
carry any rights to receive dividends or vote at general meetings.
Capital Gearing Trust P.l.c.
Murray House
Murray Street
www.capitalgearingtrust.com