Capital Gearing
Trust P.l.c.
Annual Report and
Financial Statements
For the year ended
31 March 2025
Key Features 01
Financial Highlights 02
Performance and Asset Allocation 03
Strategic Report
Chairman’s Statement 04
The Investment Management Team 07
Investment Manager’s Report 08
Portfolio Analysis 10
List of the Largest Portfolio Investments 11
ESG and the Investment Process 13
Strategic Review 18
Governance Report
The Board 26
Directors’ Report 28
Corporate Governance Statement 33
Directors’ Remuneration Report 38
Audit and Risk Committee Report 43
Directors’ Responsibilities Statement 47
Independent Auditor’s Report 48
Financial Statements
Income Statement 54
Statement of Changes in Equity 55
Statement of Financial Position 56
Cash Flow Statement 57
Notes to the Financial Statements 58
Alternative Performance Measures 73
Notice of Annual General Meeting 75
Shareholder Information 78
Historic Data 80
Glossary of Terms and Definitions 82
Corporate Information 83
Contents
Information disclaimer
This report has been produced for shareholders of the Company to provide them with information relating to the Company
and its financial results for the year under review. This report contains subjective opinion, analysis and forward-looking
statements which, by their very nature, involve uncertainty. Past performance is no guarantee of future performance.
Investment returns are not guaranteed and you may not get back the amount you originally invested. The Board and its
advisers, have endeavoured to produce these audited accounts in good faith and in accordance with legislation, regulations,
reporting standards and to be useful to all stakeholders in the Company.
Capital Gearing Trust P.l.c. Annual Report and Financial Statements 2025 01
Key Features Strategic Report Governance Report Independent Auditor’s Report Financial Statements Notice of AGM Shareholder Information
Key Features
The Company
Capital Gearing Trust P.l.c. (the ‘Company’ or
‘CGT’) is an investment trust whose Ordinary
shares are admitted to the closed-ended
investment funds category of the Official List
of the FCA and traded on the main market of
the London Stock Exchange.
Investment objective
The Company’s objective is to preserve and,
over time, to grow shareholders’ real wealth.
Capital structure
The share capital comprises Ordinary shares
of 25 pence each. As at 31 March 2025,
17,970,762 shares were in issue, of which
8,609,501 shares were held in treasury.
AGM
The Annual General Meeting (‘AGM’) ofthe
Company will be held at the Numis Auditorium,
45 Gresham Street, London EC2V 7BF on
Thursday, 3 July 2025 at 11.30 a.m. Further
details on the arrangements for the AGM are
provided onpage 6.
Website
www.capitalgearingtrust.com
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 their
underlying Net Asset Value (‘NAV’) per share.
Dividends
The Company typically pays a single annual
dividend but focuses on total return rather
than any net income level.
Management
Investment management is carried out by CG
Asset Management Limited (‘CGAM’ or the
‘Investment Manager’) for an annual fee of
0.60% of net assets up to £120m, 0.45% on net
assets above £120m up to £500m and 0.30%
thereafter. CGAM, including Peter Spiller, has
managed the Company since 1982.
Keeping up to date
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The Company is a member of the Association of Investment Companies.
Financial Calendar
31 March May July November
Financial year-end
Annual results for the
yearended 31 March
2025published
Annual Report published
Annual General
Meeting
Dividend payment date
Half-year results for
the six months ended
30September 2025
Half-Year Report published
02 Capital Gearing Trust P.l.c. Annual Report and Financial Statements 2025
Financial Highlights
Highlights
31 March 2025 31 March 2024
Share price 4,785.0p 4,695.0p
NAV per Ordinary share 4,924.8p 4,810.5p
Dividends per share
(1)
102p 78p
Share price discount to NAV per share
(2)
2.8% 2.4%
Shareholders’ funds £885.0m £1,060.2m
Market capitalisation £859.9m £1,034.7m
Ongoing charges ratio
(2)
0.56% 0.47%
Total return performance to 31 March 2025
One year Three years Five years Ten years
Share price total return
(2)
3.6% (3.1%) 20.9% 55.1%
NAV total return
(2)
4.1% 2.1% 27.1% 65.3%
Consumer Price Index
(3)
2.6% 16.6% 25.7% 36.9%
(1)
The 2025 dividend comprises an interest distribution of 66p and an equity dividend of 36p. Please refer to the Chairman’s Statement
on pages 4 and 5 for further details.
(2)
Please refer to page 82 for a glossary of terms and definitions and to pages 73 and 74 for a reconciliation of the Alternative
Performance Measures to the year-end results.
(3)
The Company does not have a formal benchmark but uses the Consumer Price Index (‘CPI’) as a relative measure over the medium
to longer term.
Capital Gearing Trust P.l.c. Annual Report and Financial Statements 2025 03
Key Features Strategic Report Governance Report Independent Auditor’s Report Financial Statements Notice of AGM Shareholder Information
Performance and Asset Allocation
The Company does not have a formal benchmark but uses the Consumer Price Index (‘CPI’) as a
relative measure over the medium to longer term.
NAV total return performance over five years to 31 March 2025
NAV Total Return CPI
As at 31 March
2020 2021 2022 2023 2024
2025
90%
110%
130%
150%
Source: CG Asset Management Limited, data rebased to 100 in 2020. Share price total return chart is contained on page 41.
Asset allocation
0%
20%
40%
60%
80%
100%
2013
Funds/
Equities
(1)
Corporate
Credit
Conventional
Bonds
Index-Linked
Govt. Bonds
Gold
Cash
2011 2012
2025
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
2024
(1)
Includes Alternatives and Property.
04 Capital Gearing Trust P.l.c. Annual Report and Financial Statements 2025
Chairman’s Statement
Performance
I am pleased to present the Annual Report of Capital
Gearing Trust P.l.c. (the ‘Company’) for the year ended
31March 2025.
In what is my final statement as Chairman of the
Company, I am able to report that over the year ended
31 March 2025, the Company’s NAV total return was
+4.1%. This compares with the Consumer Price Index
(‘CPI’) return of +2.6%. The share price total return over
the year was +3.6%. Whilst the Company has not made
up all of the lost ground experienced at the start of this
decade, the Board feels that the Investment Manager
should be commended for these returns in such volatile
markets and it is pleasing to note that all but one asset
class contributed positively to returns. As part of its
review of the Investment Manager the Board assesses
NAV performance against CPI over the short term (three
years) and over the longer-term (ten years). Over the
past three and ten year periods, the Company’s NAV total
returns have been +2.1% and +65.3%, whilst CPI returned
+16.6% and +36.9% respectively.
Further details regarding the Company’s performance
can be found in the Investment Manager’s Report on
pages 8 and 9.
Discount/premium control policy and
general meeting
Our discount control policy (‘DCP’), which aims to ensure
that, in normal market conditions, the Company’s
Ordinary shares trade at close to underlying asset value,
has worked well over the year under review. The DCP
encompasses both share issuances at a premium and
share buybacks at a discount.
Consistent with the experience of many investment
companies across different asset classes, the Company
has been required to significantly increase the rate
of its share buybacks this year to meet the objective
of the DCP. The Company has repurchased 4,067,965
(2024:repurchased 4,220,036) shares for a total
consideration of £194.5 million (2024: £195.1 million)
over the year ended 31March 2025. No shares were
issued. Shares which are bought back are held in
Treasury rather than cancelled as they can be reissued
from Treasury more efficiently than issuing new shares.
Whilst the repurchase of the Company’s shares does
shrink the assets of the Company, the Board has
completed an impact assessment and noted that due
to the vast majority of the Company’s expenses being
charged on an ad valorem basis, that is they rise and
fall commensurably with the Company’s assets, there
is only a marginal increase in the Company’s ongoing
charges ratio, and hence the DCP continues to benefit
shareholders.
Reflecting both the quantum of buybacks completed
by the Company and the Board’s commitment to the
DCP, the Company held a General Meeting in March
2025 to renew shareholder authority to buy-back
shares when it became clear that the authority to buy-
back 14.99% of the Company’s share capital granted
at the Annual General Meeting in July 2024 would be
exhausted before the date of the 2025 Annual General
Meeting. The renewal was approved by shareholders
and hence the Company has been able to continue the
operation of the DCP and a further 372,609 Ordinary
shares for a total consideration of £18.0 million have
been repurchased in the Company’s new financial year
to date. Since the renewed authority will automatically
expire at the conclusion of the Company’s forthcoming
Annual General Meeting, in line with usual practice, the
Company will ask shareholders to approve a further
renewal of the authority to repurchase up to 14.99%
of its capital at a discount to estimated NAV at the
forthcoming Annual General Meeting .
Income and distributions
The amount the Company receives in dividends
and interest is the outcome of the application of its
investment policy, and the amounts distributed to
shareholders are designed to satisfy the Company’s
minimum annual income distribution test to ensure that
it maintains its investment trust status.
As highlighted in my previous statements, the Company
is receiving more interest income than in previous
years as a result of a change in the portfolio allocation,
coupled with an increase in interest rates. If not
distributed to shareholders, such interest income is
subject to UK corporation taxation and to mitigate the
Company’s tax liability the Board has resolved to pay
at least part of this year’s dividend to shareholders as
an interest distribution, which in turn increases the
level of dividend. This means taking advantage of the
UK interest streaming rules, which allow approved
investment trusts which have income from interest
bearing assets to treat all or part of a distribution as
an interest distribution, rather than a conventional
dividend. By doing this, the Company will receive a
corresponding deduction in its corporation tax liability.
Key Features Strategic Report Governance Report Independent Auditor’s Report Financial Statements Notice of AGM Shareholder Information
Capital Gearing Trust P.l.c. Annual Report and Financial Statements 2025 05
Chairman’s Statement (continued)
Accordingly the Board has recommended a final
dividend of 102p per share which will be paid, subject
to shareholder approval, on 8 July 2025 to shareholders
on the register on 6 June 2025. The ex-dividend date
willbe 5 June 2025. For the purpose of personal taxation
calculations, the Board has designated the payment as
follows:
Interest distribution per Ordinary share: 66p
Dividend distribution per Ordinary share: 36p
Total distribution per Ordinary share: 102p
The total distribution represents an increase of 30.8%
from the 78p paid to shareholders in respect of the
Company’s financial year ended 31 March 2024.
Approximately two thirds of the increase is attributable
to the element of the interest distribution which
has reduced the Company’s corporation tax liability.
Shareholders should note that there is no guarantee
that the Company will continue to be in receipt of
the current level of interest income, and accordingly,
this year’s elevated distribution should not be viewed
as a precedent for future payments. The Company’s
total distribution each year will continue to be largely
determined by net revenue received by the Company
each year.
The distribution will be split into the interest and
dividend components on shareholder tax vouchers. The
tax treatment of an interest distribution in the hands
of a shareholder may be different to the treatment of
a dividend receipt. If you are in any doubt as to your
tax position or you are subject to tax in a jurisdiction
outside the UK, you should consult an appropriate
professional adviser.
Company advisers
During the year, and following a review of its operational
arrangements, the Board appointed Frostrow Capital
LLP and JP Morgan Securities with effect from 1 July
2024 to provide company secretarial and administration,
and DCP services, respectively. There were also new
appointments at CG Asset Management Limited
(‘CGAM’) in relation to its investor relations and
marketing services. The transition to these new service
providers has been seamless, and the appointment
of a dedicated investor relations function at CGAM,
together with the recent appointment of SecNewgate, a
strategic communications firm, is helping to increase the
Company’s profile with investors and potential investors
across the investment community.
Marketing, promotion and shareholder
interaction
Following enhancements to investor relations and
marketing resource, as mentioned above, the Board
is continuing to work with CGAM to increase the
Company’s profile via various media including video
conferences, podcasts and in-person meetings, together
with ongoing interaction with national and investment
industry journalists. It is the Board’s view that enhancing
the Company’s profile will benefit all shareholders,
through a better understanding of the Company, and
its objectives, and by creating sustained demand for
its shares. If you would like to register for email alerts
concerning the Company please use the following link:
https://capitalgearingtrust.com/subscribe.
The Board
The Board plans for succession to ensure it retains an
appropriate balance of skills, knowledge and diverse
perspectives. Following the successful conclusion of two
recruitment campaigns this year, we were delighted
to welcome Karl Sternberg and Theodora Zemek as
non-executive directors with effect from 5September
and 1 November 2024 respectively. Karl has wide
experience in the investment trust sector, as the Chair
of Monks Investment Trust, and a past and present
board member of a number of other trusts. Theo is new
to the investment trust sector but has been recruited for
her valuable experience in fixed interest markets having
worked at M&G, New Star Asset Management and AXA
Investment Management.
I say farewell at the forthcoming Annual General
Meeting. Looking back over my tenure, the Company
is considerably larger in terms of net assets than when
Ifirst joined; the CGAM team has grown, and is stronger
with broader expertise; and there is considerably more
information on the portfolio and market background
available to the Board, along with improved marketing
and enhanced information available to shareholders.
It has had challenges, but has been an enjoyable
experience working with both Board colleagues and the
Investment Managers. I am delighted to confirm that
Karl Sternberg will succeed me as Chairman. I know
that the Board will be ably led by Karl, alongside other
directors with a wide range of the requisite skills needed
to guide the Company through all eventualities.
There are no plans to appoint any more directors at the
current time, so my retirement takes the Board down to
five members. The Board complies with all applicable
diversity targets for UK listed companies and it is
intended that this will continue to be the case.
06 Capital Gearing Trust P.l.c. Annual Report and Financial Statements 2025
Chairman’s Statement (continued)
Annual General Meeting (‘AGM’)
The AGM will be held on Thursday 3 July 2025 at
11.30a.m. at the Numis Auditorium, 45 Gresham Street,
London EC2V 7BF. I hope as many shareholders as
possible will be able to attend to take the opportunity
to meet the Board and to hear a presentation from
the Investment Manager. However, if you are unable
to attend in person, you can watch the Investment
Manager‘s presentation soon after the AGM when a
recording will be posted on the Company’s website.
There will also be an opportunity to hear from the
Investment Managers on Thursday 29 May 2025 at
2.00p.m., when the team will present the Company’s
Annual results via the London Stock Exchange’s
SparkLive webcasting service. Questions can be
submitted at any time before or during the live
presentation. Investors and potential investors are
invited to sign up for the event via the following link:
https://sparklive.lseg.com/CapitalGearingTrust/
events/059f93c6-4d52-474a-8430-bca5629b425a/
capital-gearing-trust-plc-full-year-results-presentation.
Details on the resolutions to be proposed at the AGM
can be found on pages 30 and 31 of the Directors’
Report. The Board firmly believes that all the resolutions
being proposed are in the best interests of the Company
and its shareholders and encourages shareholders to
vote by proxy in favour of the resolutions, as the Board
intends to do in respect of their own shareholdings. We
would encourage shareholders to return their votes by
electronic proxy, including by instructing their platform
providers to vote on their behalf if their shares are held
through platform nominees.
Outlook
As we look ahead, the global investment environment
continues to be marked by elevated levels of
uncertainty. Persistent inflationary pressures, fluctuating
interest rates, and ongoing geopolitical tensions, most
recently exacerbated by President Trump’s trade tariffs,
are reshaping market dynamics.
Against this backdrop, there has perhaps been no
more of an apt time during my tenure to highlight the
benefits of the Company’s objective, that is to preserve
and, over time, to grow shareholders’ real wealth. Whilst
the coming year will be incredibly difficult for active
managers to navigate, your Investment Manager’s
cautious stance on equities and focus on high-quality
bonds should ensure that the Company remains a
relatively safe haven for your money as we aim to limit
drawdowns and yet keep pace with inflation.
Moreover, as discounts within the investment trust
sector have continued to be stubbornly wide, the
Company’s discount control policy shelters investors
from share price volatility providing opportunities to buy
in, and exit, at close to NAV.
I would like to conclude by thanking my fellow
Directors and the team at CGAM for their support and
contribution during my time on the Board and I would
also like to extend my thanks to our shareholders for
their ongoing support. I wish the Company’s fortunes
well for the future.
Jean Matterson
Chairman
28 May 2025
Key Features Strategic Report Governance Report Independent Auditor’s Report Financial Statements Notice of AGM Shareholder Information
Capital Gearing Trust P.l.c. Annual Report and Financial Statements 2025 07
The Company is managed by CG Asset Management, Limited (‘CGAM’) which is authorised and regulated by the
Financial Conduct Authority. The investment team consists of Peter Spiller, Alastair Laing and Chris Clothier,
supported by a team of investment analysts.
Peter Spiller
Founder, CIO, Co-manager
Alastair Laing
CEO, Co-manager
Prior to founding CGAM in 2000, Peter was a partner
and strategy director at Cazenove & Co Capital
Management and a US equity investor at Capel Cure
& Myers. Peter has managed Capital Gearing Trust
plc since 1982. Peter studied Politics, Philosophy and
Economics at Christ Church, Oxford.
Alastair joined CGAM in 2011 and has co-managed the
funds since that date. Alastair joined CGAM from Hg
Capital LLP (a pan-European private equity fund) and
previously worked with the mergers and acquisitions
team at Deloitte LLP. Alastair was educated at
Edinburgh University and was an MBA Scholar at
London Business School. He is a member of the
Institute of Chartered Accountants of Scotland.
Chris Clothier
CO-CIO, Co-manager
Chris joined CGAM in 2015 and has co-managed the
funds since that date. Prior to that he was a director
at IPGL Limited, a private investment vehicle with a
range of public and private interests predominantly in
the financial services industry, where he worked for
six years. Before that he worked at MMC Ventures,
an early-stage venture capital firm. Chris studied
Chemistry at New College, Oxford.
The Investment Management Team
08 Capital Gearing Trust P.l.c. Annual Report and Financial Statements 2025
Review
The Company delivered a NAV total return of +4.1%
and a share price total return of +3.6% over the
year. Thiscompares with CPI inflation of +2.6%, the
investment trust index return of +3.0% and sterling
aggregate bond returns of +0.5%. All parts of the
portfolio delivered a positive contribution with the
exception of the infrastructureholdings.
Attribution analysis
Return on portfolio % %
Cash & treasury-bills 0.6
Credit 0.3
Dry powder 0.9
Index-linked bonds 1.0
Gold 0.4
Infrastructure (0.1)
Alternatives 0.5
Property 0.5
Equities
1.1
Risk assets 2.4
Gross return 4.3
NAV accretion from buyback 0.4
Management fee and other costs (0.6)
Net return 4.1
(1)
Alternative Performance Measure (‘APM‘). Please refer to page 82
for a glossary of terms and definitions and to pages 73 and 74 for a
reconciliation of the Alternative Performance Measures to the year-
end results.
Source: CGAM and Frostrow. All figures are on a total return basis.
Contributions calculated using arithmetic methodology.
Collectively the risk assets (i.e. listed funds with underlying
holdings in equity, infrastructure and alternative assets),
which on average over the year accounted for 32% of the
portfolio, outperformed the investment trust index with
most components outperforming relevant indices. The
only weak spot was the allocation to US equities which
underperformed as a result of limited exposure to this
region and the ‘Magnificent Seven’ in particular. This
outperformance was mainly achieved through some of the
largest holdings: a function of underlying performance,
discount narrowing, and increased M&Aactivity. Our
largest equity investment trust holding, Polar Capital
Global Financials Trust plc, delivered in excess of 20%
returns due to the combination of discount narrowing
and strong underlying performance. Thelargest property
holding, PRS REIT plc, delivered in excess of a 50% return
after a strategic review resulted in the portfolio being
offered for sale. Thelargest hedge fund holding, BH
Macro Ltd, delivered in excess of a 10% return almost
entirely from discount narrowing. One of our larger
infrastructure holdings, BBGI Global Infrastructure,
delivered approximately a 14% return after a takeover
bid from the British Columbia Investment Management
Corporation. Theweakest performing part of the portfolio
was our renewable infrastructure investment trusts,
collectively representing about 3% of the portfolio, with
both UK Wind plc and the Renewable Infrastructure Group
Ltd experiencing double digit falls of around 20%.
The level of M&A activity in our portfolio helps to
illustrate what an eventful year it was for the investment
trusts market. Discounts appear to have hit cyclical
troughs after a couple of years of widening, which
attracted a number of value investors and hedge funds
into the sector. Boards have certainly taken note and
are taking discount controls more seriously. After a
period of relative underperformance we believe there
is scope for investment trusts to outperform the global
equity market over the medium term.
It was another weak year in the bond market with
both the Sterling Aggregate Bond Index and the Global
Aggregate Bond Index delivering small positive gains in
GBP terms. In the UK, long bond prices fell, and in the
US weak currency offset a small rise in bond prices. The
Company’s bond exposure outperformed these indices
as it benefited from having a majority of its index-
linked bond holdings (38% of the portfolio) in relatively
short-dated sterling bonds at the start of the year and
rotated into US Treasury Inflation-Protected Securities
(‘TIPS’) during the year after a period of strong sterling
appreciation post the UK general election. As a result,
the bond portfolio delivered a positive return helping
the overall portfolio to make its modest gains. The rise
in long-dated UK inflation-linked yields to above 2%,
levels not seen since the early 2000s, is a very welcome
development representing the normalisation of a
previously highly distorted market.
The Company ended the year with approximately 32%
of its portfolio in dry powder assets (i.e. cash, treasury
bills and high quality short dated corporate credit).
Thisis close to the highest levels we have held in these
highly defensive assets, and they have proved very
helpful for portfolio resilience given the stern test in
financial markets shortly after the period end. Over
the year, developed market credit spreads narrowed,
delivering gains but reducing prospective returns in this
asset class. As a result the corporate credit holdings
were reduced from approximately 12% to around 9% of
the portfolio at the year-end.
Investment Manager’s Report
Key Features Strategic Report Governance Report Independent Auditor’s Report Financial Statements Notice of AGM Shareholder Information
Capital Gearing Trust P.l.c. Annual Report and Financial Statements 2025 09
Investment Manager’s Report (continued)
Outlook
On the 2 April, shortly after the Company’s financial
year-end, US President Donald Trump announced
sweeping trade tariffs on friend and foe alike. The
breadth and arbitrary nature of these actions added
to a sense of revolutionary change as the institutions
that have underpinned Western development and
security since the second world war are systematically
dismantled. There remains considerable uncertainty
over how long lasting and significant these changes will
prove but even if these policies are reversed during,
or after, a Trump presidency, the role of America as a
benevolent hegemon may never return. The world feels
that bit more dangerous and divided.
There are early signs that trust in the exceptionalism
of American assets is being called into question.
The December 2024 Bank of America Global Fund
Manager Survey recorded the largest ever overweight
allocation to US equities, the culmination of 15 years of
staggering outperformance versus other markets. At
that point the Trump bump turned to slump as a slew
of weaker than expected economic data combined with
policy uncertainty and elevated valuations caused a
correction in US equities, particularly the Magnificent
Seven. To date there is limited evidence of the impact
of recent events on corporate earnings but there is
a considerable risk that margins will suffer given the
extremely elevated levels of profitability achieved by US
corporates. An ominous precedent is the dot com bust
which also occurred after 15 years of outperformance
of US equities and resulted in a decade of relative
underperformance as write-offs and bankruptcies from
excessive capital expenditure weighed on profits.
Bond markets are also beginning to show strain in
the face of excessive government deficits. While it
was central to US Treasury Secretary Scott Bessent’s
economic strategy that the fiscal deficit be reduced
to 3% of GDP, neither the current fiscal plans nor the
growth prospects for the US economy suggest that this
is likely to be achievable. Closer to home, the UK faces
similar issues: a combination of weaker-than-expected
growth, higher-than-expected interest rates, and
the Government’s wafer-thin fiscal headroom have
created a vicious cycle that will likely require some
combination of tax increases and spending cuts later
in the year. Even Germany has dropped its debt brake
amendment to allow significant increases to spending
on infrastructure and defence. Despite governments’
commitments to fiscal consolidation, it appears bond
markets will have to prepare to digest a wave of
issuance over the coming years.
The sheer weight of this issuance will create additional
upward pressure on long bond yields even as many
central banks reduce short-term interest rates to
counter the economic slowdown. Whilst tariffs are
likely to have a deflationary impact on the overall global
economy, they will create pockets of inflation, not least
in the US where retailers are likely to pass through
a majority of price rises to consumers. These new
relatively steep yield curves are a welcome opportunity.
Around the year-end we started to lengthen the
duration of our UK index-linked holdings into better
values. Whilst there is still scope for further curve
steepening, historically purchasing long UK index-linked
bonds above a 2% real yield has been a rewarding
investment and we are watching developments in this
market with interest.
Against this backdrop, the Company remains defensively
positioned, with material allocations to dry powder and
index-linked bonds, while maintaining a cautious stance
towards risk assets. It is true that markets will always
face a degree of uncertainty. However, the present level
of uncertainty faced by the global economy in the face
of constant change to trade policy makes the possible
outcomes for corporate profits, inflation, interest rates
and global growth staggeringly wide. We expect that
these conditions will continue for some time. Our
expectation is that the portfolio’s defensive stance will
prove resilient in the face of the testing outlook that
the global economic order currently faces and generate
positive real returns for shareholders.
Peter Spiller Alastair Laing Chris Clothier
CG Asset Management Limited
28 May 2025
10 Capital Gearing Trust P.l.c. Annual Report and Financial Statements 2025
Asset allocation
As at
31 March
2025
As at
31 March
2024
Index-Linked Government Bonds 38% 44%
Funds/Equities 29% 28%
Conventional Government Bonds 18% 14%
Preference Shares/Corporate Debt 9% 12%
Cash 5% 1%
Gold 1% 1%
100% 100%
In addition to the above table, the asset allocation chart on page 3 shows the change in asset allocation over the last
15years.
Further analysis as at 31 March 2025
0%
Risk Assets,
30%
Index-Linked Bonds,
38%
Dry Powder
(1)
,
32%
20%
40%
60%
80%
100%
By Asset Class
■
By Risk Category
■
■
■
■
■
■
■
Reduce portfolio duration & volatility
Provide optionality
Deliver better returns than cash
Provide hedge against risk assets
Perform well under financial repression
Positive real returns
Seek inflation protection
Lower beta (in aggregate) than equities
■ Positive real yields
Equities,
15%
Property, 3%
Gold, 1%
Alternatives,
11%
Credit,
9%
Cash & T-Bills,
23%
UK Index-Linked Bonds,
9%
US Index-Linked Bonds,
28%
Other Index-Linked Bonds, 1%
(1)
Highly liquid assets such as cash, treasury bills and short term credit holdings that are readily available for investment opportunities.
Currency allocation
As at
31 March
2025
As at
31 March
2024
Sterling 50% 65%
US Dollar
(1)
30% 22%
Japanese Yen
(1)
18% 5%
Euro 1% 2%
Swedish Krona 1% 4%
Other – 2%
100% 100%
Portfolio Analysis
(1) Currency exposure is before the effect of currency hedging. Please refer to Note 15 on page 71 for details of the US Dollar and Japanese Yen hedging
instruments.
Key Features Strategic Report Governance Report Independent Auditor’s Report Financial Statements Notice of AGM Shareholder Information
Capital Gearing Trust P.l.c. Annual Report and Financial Statements 2025 11
List of the Largest Portfolio Investments
The full portfolio listing of the Company as at 31 March 2025 is available at www.capitalgearingtrust.com.
Asset allocation by type/geography and the largest equity holdings are shown below:
As at
31 March
2025
£’000
As at
31 March
2024
£’000
Index-Linked Government Bonds
Index-Linked Bonds – United States 244,846 175,243
Index-Linked Bonds – United Kingdom 75,828 238,005
Index-Linked Bonds – Sweden 11,992 32,182
Index-Linked Bonds – Japan 2,151 16,985
Index-Linked Bonds – Canada – 5,036
334,817 467,451
Conventional Government Bonds
Conventional Government Bonds – Japan 159,043 34,837
Conventional Government Bonds – United Kingdom 15,855 110,063
Conventional Government Bonds – Sweden – 5,553
174,898 150,453
Preference Shares/Corporate Debt
BP Capital Perpetual Bond 9,588 5,629
NGG Finance F2V 5.625% 2073 7,029 –
Unite (USAF) II Plc, 3.921% 2025 5,983 –
Dwr Cymru (Financing) 3.514% 2030 5,662 –
abrdn Asia Focus 2.25% 2025 5,490 4,431
Network Rail 1.75% 2027 4,947 4,829
abrdn 5.25% 2071 4,447 3,835
RMS IL 2.8332% 2035 4,427 4,451
Akelius Residential Property 2.375% 2025 4,404 4,239
Whitbread 3.375% 2025 3,959 –
Other Preference Shares/Corporate Debt Investments 44,282 97,001
100,218 124,415
Funds/Equities
JPMorgan ETFs (Ireland) ICAV 23,308 –
Vanguard FTSE 100 UCITS 16,805 24,311
North Atlantic Smaller Companies Investment Trust 16,469 15,981
PRS REIT 10,306 –
Vanguard FTSE 250 UCITS 10,036 –
12 Capital Gearing Trust P.l.c. Annual Report and Financial Statements 2025
As at
31 March
2025
£’000
As at
31 March
2024
£’000
Funds/Equities (continued)
International Public Partnerships 9,231 8,441
HICL Infrastructure 8,260 7,650
3i Infrastructure 7,488 7,586
Smithson Investment Trust 6,603 6,464
Target Healthcare REIT 6,550 6,385
Other Fund/Equity Investments 124,474 147,642
239,530 300,455
Gold
Wisdomtree Physical Swiss Gold (Exchange Traded Commodity) 10,944 11,018
10,944 11,018
Total Investments 860,407 1,053,792
Cash 42,859 11,643
Total 903,266 1,065,435
List of the Largest Portfolio Investments
(continued)
Key Features Strategic Report Governance Report Independent Auditor’s Report Financial Statements Notice of AGM Shareholder Information
Capital Gearing Trust P.l.c. Annual Report and Financial Statements 2025 13
ESG and the Investment Process
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 environmental, social
and governance (‘ESG’) matters where appropriate.
While the Investment Manager considers ESG issues to
be important when selecting investments, it does not
consider the Company to be a sustainable investment
product and it does not have explicit sustainability
objectives in the investment policy. The Company has
not opted to label the investment product under the
FCA’s Sustainability Disclosure Requirements (‘SDR‘) but
it ensures that it adheres to the Anti-Greenwashing rule.
The Company has limited direct impact on the
environment as it invests primarily in government
bonds and investment companies 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 of
the press.
The balance of the investment portfolio comprises
corporate bonds and preference shares. Within all 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 material in the context of
overall assets managed.
The Board monitors, through the Investment Manager,
and is satisfied with, the underlying investee companies’
policies to act with due regard to community, welfare
and environmental factors. The Investment Manager is
a signatory to UN Principles of Responsible Investing.
Further information on the Investment Manager’s
governance and policies can be found at
www.cgasset.com/governance-and-policies.
14 Capital Gearing Trust P.l.c. Annual Report and Financial Statements 2025
The Investment Manager’s key considerations
1
Be honest
No greenwashing, no PR-lead initiatives, no jargon. CGAM believes stakeholders are best served by an
accurate presentation of its activities rather than a marketing campaign dressed up in the language
ofstewardship.
2
One firm, one rule
CGAM does not have an ethical fund range (and by implication an unethical fund range). CGAM‘s
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 within a specific context.
Thereis no formula that can be applied in a uniform way to every situation; CGAM emphasise
judgement over simplistic third party quantitative scoring.
4
Engagement over disinvestment
When investors have the influence to effect change it is most valuable to encourage positive transition
rather than pursuing disinvestment.
5
Targeted, not scatter-shot
Whilst supporting positive transition might be the optimal strategy, effective engagement is time
consuming. As a small firm CGAM must focus its efforts where it will have the most impact rather than
taking a generalist approach.
6
Driven by governance
Improved governance leads to improved social, environmental and financial outcomes. Investors
have multiple direct mechanisms to influence governance, 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 is a small firm and the entire team is collectively responsible for the stewardship activities with
the ultimate responsibility lying with the chief executive. CGAM does not have a standalone Responsible
Investment Team or ESG analysts as this does not seem to CGAM to represent true integration.
Strategic prioritisation
A majority of the assets held are securities issued by governments such as bonds, bills and currency. As well as
government securities, there are a minority of assets held in securities issued by corporations, typically collective
investment vehicles such as investment trusts, real estate investment trusts or ETFs.
ESG and the Investment Process (continued)
Key Features Strategic Report Governance Report Independent Auditor’s Report Financial Statements Notice of AGM Shareholder Information
Capital Gearing Trust P.l.c. Annual Report and Financial Statements 2025 15
Different asset classes lend themselves to different stewardship approaches based on data quality and the potential
for CGAM to effectively engage and influence the issuer. As a small firm it is essential that CGAM focuses its resources
strategically, targeting engagement activities where it has most influence.
This means focusing the most intense efforts on those corporate issuers in those market segments where CGAM
has a long history of engagement and know many of the participants. This means focusing primarily on listed closed
ended funds and listed property companies.
Where CGAM does not have influence, it is more likely to pursue exclusions. In CGAM’s assessment, exclusions are a
less effective and productive form of stewardship but it makes no sense to expend significant resources on engaging
in areas the firm is less likely to impact. These areas include those where the Company has relatively small holdings
(such as corporate credit) or limited ability influence (such as government bonds).
ESG Data
Quality
Potential for
Engagement Exclusions Engagement
Priority
Focus
Gov’t Bonds
andCash
High Low X
Corporate
Credit
Low Med X
✓
Preference
Shares
Low Med X
✓
Listed
Property
Med High
✓
Listed closed
ended funds
Low High
✓
ETF’s Med Low X
CGAM’s approach to the Company’s investments by asset class
1. Direct government securities
A significant proportion of the assets held by the Company are invested in direct holdings of securities issued by
governments including bonds, bills and cash. As CGAM’s capacity to influence governments is extremely limited, its
primary approach is to exclude sovereigns that do not maintain high ESG standards. In order to help assess these
criteria, CGAM considers indices compiled by a range of Non-Governmental Organisations (refer to the table below)
and requires sovereigns, at a minimum, to achieve strong rankings in at least four out of five of these criteria. In
addition to using third party indices, CGAM also overlays its own subjective assessments, which typically leads to
additional exclusions.
Index Criteria
World Bank governance effectiveness index Top quartile
World press freedom index Good or satisfactory
Global freedom score Free rating
UN Human development index Very high human development rank
Net zero by 2050 statement Statement of intent by 2050 or earlier
ESG and the Investment Process (continued)
16 Capital Gearing Trust P.l.c. Annual Report and Financial Statements 2025
2. Direct corporate credit and preference shares
The Company holds small quantities of direct credit and preference share holdings issued by corporate issuers. Given
CGAM’s small participation in the market and therefore limited influence, CGAM’s primary approach is to exclude
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 including, investment trusts, REITs and property companies
CGAM has a long history of active engagement in the London market for listed closed-ended funds and other
collective investment companies including REITs. In this priority area for engagement, CGAM seeks to achieve positive
transition so does not employ systematic exclusions. Listed investment companies are fundamentally different to
operating companies and typically have the following features:
■ they hold a broad portfolio of securities on behalf of their shareholders;
■ external investment managers, rather than executive management teams;
■ no employees or customers; and
■ have a board of directors to represent shareholder interests and concerns.
Given the prominent role that directors play in investment companies, CGAM frequently undertakes activities that
aim to influence boards and ultimately improve governance. The techniques employed vary based on the specific
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
Management engagement Continuous
Board engagement Continuous
Shareholder co-ordination Frequent
Voting against significant resolutions Frequent
Raising ESG matters in fund reporting Frequent
Amplification through press engagement Periodic
Replacing directors to improve governance Periodic
Publishing open letters Periodic
Publishing research incorporating ESG views Periodic
Threatening to requisition meetings Periodic
ESG and the Investment Process (continued)
Key Features Strategic Report Governance Report Independent Auditor’s Report Financial Statements Notice of AGM Shareholder Information
Capital Gearing Trust P.l.c. Annual Report and Financial Statements 2025 17
4. Exchange traded funds (‘ETFs’)
The Company holds exchange traded funds. ETFs are listed collective funds which typically track an index and provide
low cost, efficient access to a broad portfolio of securities. CGAM does engage directly with its approved panel of ETF
providers to encourage improved stewardship standards. Typically, this is via ESG screened ETFs which is a dynamic
and growing sector. The programme of identifying and conducting due diligence on these products is ongoing.
ESG and the Investment Process (continued)
18 Capital Gearing Trust P.l.c. Annual Report and Financial Statements 2025
Strategic Review
Business model and investment strategy
The Company, as an investment trust, is a UK
closed-ended public limited company which invests in
a diversified portfolio of assets meeting the investment
trust tax conditions. Investment trusts, such as the
Company, are long-term investment vehicles and
are typically externally managed and overseen by
experienced independent non-executive Directors.
The Company has no employees, and the Board
outsources its entire operational infrastructure to third
party organisations. In particular, the Board appoints
and oversees CG Asset Management Limited (‘CGAM’),
as independent Investment Manager, to manage the
investment portfolio. CGAM also acts as the Company’s
Alternative Investment Fund Manager. The Board
sets the Company’s strategy, decides the appropriate
financial policies to manage the assets of the Company,
ensures compliance with tax, legal and regulatory
requirements and reports regularly to shareholders on
the Company’s performance.
The Company seeks to preserve shareholders’ real
wealth and deliver absolute total returns through
the construction of a multi-asset portfolio. Portfolio
construction is the key tool used 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 investment
companies with the aim of generating risk adjusted
returns that are superior to those available in more
liquid equity markets.
One of the unique characteristics of the Company is the
implementation of the Investment Manager’s macro
views on risk assets through the Company’s holdings in
investment companies. Investment companies provide
an opportunity to benefit from an additional return
from discounts narrowing, alongside the underlying
asset performance. There are also risks from discounts
widening. The macro impact of rising interest rates
and inflation particularly affects investment companies
investing in illiquid assets, such as infrastructure,
property, private equity and credit. In addition, the
investment companies sector has a UK equity bias, which
means the impact of a non-UK equity market rally can
be difficult to capture. The Investment Manager believes
the investment companies market continues to be an
appropriate way to allocate a significant portion of the
Company’s risk assets and that the current market offers
a number of compelling investment opportunities.
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
avoiding loss than maximising returns. Achieving the
investment objective implies returns at least in line with
inflation over the short term and significantly ahead of
inflation over the long term.
The Company does not have a formal benchmark
but reports against the UK Consumer Price Index (a
measure of inflation).
The Investment Manager has the authority to invest
in equities, bonds, commodities and cash. Equity
investments are typically in listed collective investment
vehicles, including investment companies, ETFs,
investment holding companies and property companies.
Asset allocation is flexible and responds to changes in
asset values and to the macro-economic environment.
Abroad mix of assets will be maintained, with a
maximum equity exposure of 80% and a minimum of
20%. The Investment Manager has the authority to
invest in any geographical region and has no set limits
on industry sector or country exposure.
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) without prior Board approval. Investments in
other funds managed by the Investment Manager also
requires Board approval.
The Company has the authority to borrow up to 20% of
net assets, subject to prior Board approval.
Promoting the success of the Company
The Board is required to describe to the Company’s
shareholders how the Directors have discharged their
duties and responsibilities over the course of the
financial period under section 172 of the Companies
Act 2006 (the ‘Section 172 Statement’). This requires
an explanation of how the Directors have promoted
the success of the Company for the benefit of its
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 the
environment.
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Capital Gearing Trust P.l.c. Annual Report and Financial Statements 2025 19
Role of the Board
The Board currently comprises six independent non-executive Directors who have a broad range of skills and
experience across all major functions that affect the Company. The Board has responsibility for decisions relating to
the Company’s investment objective and policy, gearing, corporate governance and strategy, and for monitoring the
performance of the Company’s various service providers. The Board’s philosophy is that the Company should foster
a culture where all parties are treated fairly and with respect and the Board recognises the importance of keeping the
interests of the Company’s stakeholders, and of acting fairly between them, front of mind in its key decision making.
The Board has identified the following as its key stakeholders:
Shareholders
Depositary
Custodian
Auditor Registrar
Broker and Discount
Control Services
Company Secretary
and Administrator
Investee
Companies
Key Third Party
Service Providers
Investment Manager/
AIFM
Communities and
Environment
The Company
How the Board engages with stakeholders
The Board considers its stakeholders at Board meetings and receives feedback on the Investment Manager’s
interactions with them.
Stakeholder How we engage
Shareholders
Shareholders are key stakeholders and the Board places great importance on
communication with them, both through written communication from the Company
and the Investment Manager. The Board welcomes all shareholders’ views and aims to
act fairly between shareholders. The Company’s shareholder register is retail investor
orientated both directly and through wealth managers and private client brokers
representing private investors. As a constituent of the FTSE-250 Index, the Company
also has index tracking investors. The 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 to talk directly with shareholders.
Shareholder feedback is discussed by the Directors at Board meetings. The Board is kept
appraised of changes to the share register and the Investment Manager is in contact with
investor platforms to identify how best to communicate with the direct retail investor
community. The operation of the DCP provides secondary market liquidity for investors
and in providing stability of pricing at close to the prevailing net asset value.
Regular updates are provided to shareholders through the Annual Report, Half Yearly
Report, 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.
Strategic Review (continued)
20 Capital Gearing Trust P.l.c. Annual Report and Financial Statements 2025
Stakeholder How we engage
Shareholders
(continued)
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 Board encourages as many shareholders as possible to
attend the Annual General Meeting and to provide feedback on the Company. The
Company Secretary also deals with regular shareholder queries on behalf of the Board.
The Board encourages shareholders to vote on all Company business, which includes
specific exercises to obtain votes for general meetings to maintain issuance and
buyback authorities should they become exhausted between annual general meetings.
Investment
Manager
The Investment Manager’s Report on pages 8 and 9 details the key investment
decisions taken during the year. The Investment Manager has continued to manage
the Company’s assets in accordance with the Company’s investment policy, with the
oversight of the Board. The Investment Manager is represented at all formal Board
meetings.
The Board regularly reviews the Company’s performance against the investment
objective and the application of its investment policy and restrictions. The Board
undertakes an annual strategy review meeting to ensure that the Company is
positioned well for the future delivery of its investment objective.
The Board receives presentations from the Investment Manager at every Board
meeting to help it to exercise effective oversight of the Investment Manager and the
Company’s strategy in operation.
The Board, through the Management Engagement Committee, formally reviews the
performance of the Investment Manager at least annually. Risks and emerging risks are
considered at each Board meeting.
Investee companies
The Board monitors the activities of investee companies through its delegation to the
Investment Manager. The Investment Manager has discretionary powers to exercise
voting rights on all resolutions proposed by the investee companies. The Board
monitors investments made and divested and can query the rationale for exposures
taken and the Investment Manager’s engagement with investee companies.
Communities and
the environment
The Board supports the Investment Manager on Environmental, Social and Governance
(‘ESG’) matters in line with good stewardship practices, and an approach agreed
with the Board. The Board is also acutely aware of the importance of providing
an investment product which meets the needs of its investors in both protecting
and growing value over time. The Board takes appropriate account of broader ESG
concerns and the need 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 the Company operates, not least as a means for financial
planning and saving. See the ESG/engagement section on pages 13 to 17.
Other service
providers
The Board seeks to maintain constructive relationships with all of the Company’s
suppliers either directly or through the Investment Manager and/or Company Secretary
with regular communications and meetings.
The Management Engagement Committee conducts an annual review of the
performance and terms and conditions of engagement of the Company’s main service
providers to ensure they are performing in line with Board expectations and providing
value for money.
Strategic Review (continued)
Key Features Strategic Report Governance Report Independent Auditor’s Report Financial Statements Notice of AGM Shareholder Information
Capital Gearing Trust P.l.c. Annual Report and Financial Statements 2025 21
Specific examples of stakeholder consideration
during the year
The Board has always been mindful of its
responsibilities to the stakeholders of the Company and
the impact of key decisions on the stakeholders, and this
has been part of both scheduled Board meetings and
discussions between these meetings as required.
The Chairman met a number of institutional shareholders
and private wealth managers during the year and she and
her fellow Directors always make themselves available to
engage with shareholders as required. The Investment
Manager also holds an annual Investor Day, which this
year was held in November 2024. The Investor Day, which
is always well attended, is open to all shareholders and
potential investors.
The operation of the Discount Control Policy (‘DCP’) is a
fundamental part of the Company’s operating structure.
It offers liquidity in 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. Ensuring that the
DCP continues to operate effectively requires constant
monitoring, maintaining the requisite authorities, and
having sufficient liquidity in the portfolio. To ensure
the continued operation of the DCP, the Board called a
General Meeting in March 2025 to renew the Company’s
buyback authority, since the existing authority was close
to being fully exhausted. The renewal was supported by
shareholders and hence the Company has been able to
continue the operation of the DCP. Since the renewed
authority will expire at the conclusion of the Company’s
forthcoming Annual General Meeting, and in line with usual
practice, the Company will ask shareholders to approve the
repurchase of up to 14.99% of its capital at a discount to
estimated NAV at the forthcoming Annual General Meeting.
As noted in the Chairman’s Statement, following a review
of all service suppliers, the Board appointed Frostrow
Capital LLP and JP Morgan Securities with effect from 1 July
2024 to provide company secretarial and administration,
and DCP services, respectively. The transition to these new
service providers has been seamless and, together with
new appointments at CG Asset Management in relation
to its investor relations and marketing services, the Board
is confident that the Company has the support in place to
ensure its operations run smoothly and effectively.
In common with many other listed entities the Company is
doing what it can to reduce its carbon footprint. As part of
this strategy, and also to achieve cost savings for the benefit
of shareholders, the Board took the decision to no longer
print and distribute copies of its Half-Year Report. This
document will continue to be available on the Company’s
website at www.capitalgearingtrust.com. The Company’s
annual report will continue to be available in print.
Management of the portfolio
The Investment Manager’s Report on pages 8 and 9 details
the key investment decisions taken during the year ended
31 March 2025. The overall diversified shape and structure
of the investment portfolio is an important factor in
delivering the Company’s stated investment objective.
As explained in more detail on page 29, during the year,
the Management Engagement Committee agreed that
the continuing appointment of the Investment Manager
was in the best interests of shareholders.
Key performance indicators (‘KPIs’)
The Board has chosen KPI indices and ratios for
the purpose of assessing and reporting investment
performance. The KPIs have been chosen to allow the
Board to monitor the performance of the Investment
Manager against CPI over the short-term (three years) and
over the longer-term (ten years). Further information on
these performance measures can be found on page 73.
Tables and graphs showing the performance of the
Company’s NAV per share compared with CPI are shown
on pages 2 and 3.
In addition, the Board monitors the following KPIs:
■ Share price discount/premium to NAV per share, an
important 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 year under
review the discount to NAV was 2.4%, compared with
a discount of 2.8% at 31 March 2025, with an average
discount of 2.0% for the year ended 31 March 2025; and
■ Ongoing charges ratio (‘OCR’), calculated using the
methodology recommended by the Association of
Investment Companies which enables the Board
to measure and monitor the control of costs. This
was 0.56% for the year to 31 March 2025 (2024:
0.47%). Since the introduction of the DCP in 2015 the
Companies OCR has fallen by over 50% from 0.96% to
0.56%. Further information can be found on page 74.
Both share price discount/premium to NAV per share
and OCR are Alternative Performance Measures (‘APMs’).
Please refer to page 82 for a glossary of terms and
definitions and to pages 73 and 74 for a reconciliation of
the APMs to the year-end results.
Principal and emerging risks
The Company has been subject to significant economic
headwinds, such as substantial market movements,
inflationary pressures and increasing interest rates.
This makes preserving shareholders’ real wealth, far
less growing it, challenging. The central aims remain to
preserve value in the Company’s portfolio and liquidity in
the Company’s shares.
Strategic Review (continued)
22 Capital Gearing Trust P.l.c. Annual Report and Financial Statements 2025
The Directors aim to ensure that the Company maintains its investment strategy, has operational resilience, meets its
regulatory requirements as an investment trust and navigates the financial and economic circumstances.
Through the remit of the Audit and Risk Committee, 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 with the mitigating actions
the Board takes, are set out in the table below.
Whilst Directors have not identified any new emerging risks, the Company faces continuing risks arising from geopolitical
events such as conflict in the Middle East and Ukraine and volatility in the equity markets. It is difficult to assess how these
exogenous risks will impact the Company, but they do introduce caution on returns that might be achieved in the future given
the inflationary impact on equity and bond returns and the risk of market shocks caused by geopolitical risk. 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 to exploit these if they become available.
Risk Mitigation
Investment strategy
andperformance
The Board is responsible for setting the investment
strategy of the Company and monitoring
investment performance. Inappropriate strategy
and/or poor investment performance may have
an adverse effect on shareholder returns.
There is increasing awareness of the
challenges and emerging risks posed by
climate change. Theinvestment process
considers ESG factors, asset out in the
Strategic Review. Overall the specific potential
effects of climate change are difficult, if not
impossible, to predict and the Board and
Investment Manager will continue to monitor
developments in this area.
Assessing geopolitical risk has always been part
of the investment process. There are a growing
number of geopolitical conflicts which pose an
increased risk to market stability. In addition to
the ongoing conflict between Russia and Ukraine,
rising tensions in Southeast Asia and the Middle
East, U.S. trade policy under the second Trump
administration adds further complexity to the
geopolitical environment. These trade tensions,
along with uncertainty surrounding interest
rate and inflation and discounts on investment
companies’ shares have had and will continue to
have a significant impact on the Company and its
investment portfolio.
Increased overall risk due to inflation,
higher interest rates, supply issues and
ongoing and increasing global political
tensions and the impact of heightened
interest rates.
The Company’s strategy is formally reviewed by the Board at
least annually, considering investment performance, shareholder
views, developments in the marketplace and the structure of the
Company.
Investment performance is reviewed by the Board on a regular
basis against CPI. The composition of the portfolio is provided
at each Board meeting and allows the monitoring of the spread
of investments and associated investment risks. The Investment
Manager’s approach to ESG is set out on pages 13 to 17. The
Company has limited direct impact on the environment as it
invests primarily in government bonds and closed ended and
other collective investment vehicles. Stock selection, portfolio
composition and liquidity are explained in detail by the Investment
Manager at each meeting.
The Investment Manager is formally appraised at least annually by
the Management Engagement Committee.
Strategic Review (continued)
Key Features Strategic Report Governance Report Independent Auditor’s Report Financial Statements Notice of AGM Shareholder Information
Capital Gearing Trust P.l.c. Annual Report and Financial Statements 2025 23
Risk Mitigation
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 underlying NAV per share.
Excessive demand for, or supply of, shares can
create liquidity issues, restricting the ability
of investors to buy and sell shares in the
secondary market.
Fluctuations in the share price can cause
volatility which may not be reflective of the
underlying investment portfolio.
Risk remains relatively unchanged
The Company operates a discount/premium control policy (‘DCP’),
under which it aims to purchase or issue shares to ensure, in
normal market conditions, that the shares trade close to their
underlying NAV per share. The DCP increases liquidity and reduces
volatility by preventing the build-up of excessive demand and/
or supply for the Company’s shares which, the Board believes,
is in the best interests of shareholders. The DCP continues to be
reviewed to ensure liquidity for issuance and buyback.
The levels of issuance/buyback of shares are reported to the Board
on an ongoing basis and at each Board meeting the Board considers
the Investment Manager’s ability to invest new proceeds (in the case
of issuance) and maintain sufficient liquidity (in the case of buybacks)
to meet the demands of the DCP. Since the inception of the DCP,
the Company has issued and bought back a substantial number of
shares, with the more recent trend being buying back.
Operational
The Company is reliant on third-party service
providers 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
tothe Company’s assets.
Risk remains unchanged since it is
still less than a year since the new
suppliers have been in place. Given the
seamless transition of the applicable
roles to date it is expected that this
risk will reduce next year.
The Audit and Risk Committee formally reviews each service
provider at least annually, considering their reports on internal
controls, information security, and the resources available to them.
The Management Engagement Committee reviews the service
levels and how the service providers have performed.
The operational requirements of the Company from its service
providers are subject to rigorous testing including the use of
office/home working and online communication. Additionally,
the Investment Manager’s and Administrator’s technology
environments are continually maintained and subject to regular
testing, vulnerability scans and patch management. As part of this
review the Board considers the measures taken by each supplier to
mitigate its cybersecurity risk.
The transition of secretarial and administration services and
operation of the DCP to Frostrow Capital LLP and JP Morgan Securities
respectively was carefully planned and has not resulted in the
disruption of services required by the Company.
Further details of the Company’s internal control and risk
management system is provided on pages 37 and 46.
Regulatory and governance
The Company operates in a regulatory
environment. Failure to comply with section
1158 of the Corporation Tax Act 2010 could
result in the Company losing investment trust
status and being subject to tax on capital
gains. Failure to comply with other regulations
could result in financial penalties or the
suspension of the Company’s listing on the
London Stock Exchange.
Risk remains relatively unchanged
Compliance with relevant regulations is monitored on an ongoing
basis by the Company Secretary and Investment Manager who
report regularly to the Board. The Board also takes into account
increasing governance requirements and complies with them
wherever practical or explains why there is any divergence.
The Board monitors changes in the regulatory environment
and receives regulatory updates from the Investment Manager,
Company Secretary, lawyers and auditor as relevant.
The Board is appraised of corporate governance issues and changes
and as far as practical the Company complies with governance
guidance or explains where it does not and meets theguidance of
the AIC Corporate Governance Code (refer to page 33).
Strategic Review (continued)
24 Capital Gearing Trust P.l.c. Annual Report and Financial Statements 2025
Risk Mitigation
Financial and economic
The Company’s investments are impacted
by financial and economic factors including
market prices, interest rates, foreign exchange
rates and credit which could cause losses to
the investment portfolio.
Risk has been heightened by
geopolitical events
The Board regularly reviews and monitors the management of
market risk, interest rate risk, foreign currency risk and credit risk.
These are explained in detail in Note 15 to the financial statements
on pages 66 to 72. Inflation, and geopolitical risks, areconsidered a
component of market risk, with the impact of higher inflation and
interest rates and events in Ukraine and the Middle East taken into
account.
This year the Board authorised the purchase of hedged Japanese
and US Treasury Bills, which are hedged back to sterling to remove
some of the currency risk.
The Company has sufficient cash resources and liquidity in
its portfolio to meet its operating requirements, including the
operation of DCP. In common with most commercial operations,
there are always exogenous risks and consequences, which are
difficult to 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 buybacks
During the year the Company bought back 4,067,965
shares at an average price of 4,746.7p per share
and for an aggregate consideration of £194.5 million
(2024:repurchased 4,220,036 shares at an average
price of 4,585.2p per share and for an aggregate
consideration of £195.1 million). Shares are repurchased
at a discount to the NAV thereby covering the costs
of the DCP and associated portfolio transaction costs
and providing some accretion to the NAV per share. All
shares were bought back in accordance with the DCP,
which is detailed further on page 21. Since the year-end,
the Company has repurchased a further 372,609 shares.
Going concern
The Audit and Risk Committee has undertaken an
assessment of whether the Company is a going concern.
The Company’s investment objective and business
activities, together with the main factors likely to affect its
future development and performance, including prevailing
macro-economic conditions, are described above.
The financial position of the Company, including its cash
flows and liquidity positions, is set out in detail in the
financial statements. Note 15 to the financial statements
describes the Company’s processes for managing its
capital, its financial risk management objectives, details
of its financial instruments and its exposures to market
price, interest rates, foreign currency, credit and liquidity
risk. The Board works closely with the 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 also take into account the liquidity of the
portfolio and scenario stress testing when considering
theviability of the Company and its ability to meet
liabilities as they fall due and to fulfil the ongoing
operation of the DCP. The stress tests examineddownside
scenarios which combined a substantial fall (up to 25%)
in stock markets, and therefore asset values, with a
considerable loss of income. The impact of such severe
scenarios are then mitigated by a significant reduction in
management fees and most expenses. The results of the
stress testing indicated that there was sufficient portfolio
liquidity and net income for the Company to continue in
operation. The stress tests also examined the operation of
the DCP in the event of the Company having to buy back a
substantial number of shares.
The Directors believe that the Company is well placed to
manage its business risks successfully and consider that the
Company currently has adequate resources, an appropriate
financial structure and suitable management arrangements
in place to continue in operational existence. For this
reason, they continue to adopt the going concern basis
in preparing the annual report and financial statements.
The Directors do not consider that 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 financial statements.
Strategic Review (continued)
Key Features Strategic Report Governance Report Independent Auditor’s Report Financial Statements Notice of AGM Shareholder Information
Capital Gearing Trust P.l.c. Annual Report and Financial Statements 2025 25
Viability statement
The Board has carried out a robust assessment of the
principal risks facing the Company including those that
would threaten its business model, future performance,
solvency or liquidity. The Board has drawn up a matrix
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 have been identified, and the steps taken by the
Board to manage these, are detailed on pages 22 to 24.
The Company is a long-term investor and the Board
believes it is appropriate to assess the Company’s
viability over a five-year period in recognition of the
balance between 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.
As mentioned under the going concern paragraph
above, the Directors also take into account the liquidity
of the portfolio and scenario stress testing when
considering the viability of the Company. The results of
the stress testing indicated there was sufficient portfolio
liquidity and net income for the Company to continue in
operation for at least three years.
The Directors do not expect there to be any significant
change in the principal risks that have been identified
and the adequacy of the controls in place. Also, the
Directors do not envisage any change in the Company’s
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
downturn in financial markets, deteriorating economic
circumstances, or other crises besetting global markets,
could have an impact on this assessment.
Based on this assessment, the Directors have a
reasonable expectation that the Company will be able to
continue in operation and meet its liabilities as they fall
due over the next five years.
The Board’s Strategic Report contained on pages 4 to25
have been approved by the Board and signed on its
behalfby:
Jean Matterson
Chairman
28 May 2025
Strategic Review (continued)
26 CapitalGearingTrustP.l.c. Annual Report and Financial Statements 2025
The Board
The Board members are all experienced Directors who work closely with the Company’s key advisers in the day to day
operations of the Company. Apart from the scheduled Board meetings, the Board is in regular contact regarding matters
arising and all of the Directors have demonstrated sufficient commitment and experience to carry out their responsibilities.
Jean Matterson
Independent Non-Executive Director, Chairman
and Chairman of the Nomination Committee
Appointed a Director in May 2015 and assumed the position
of Chairman on 3 July 2020. Jean, until 2020, was a partner
of Rossie House Investment Management in Edinburgh
which specialises in private client portfolio management with
particular emphasis on investment trusts. She was previously
with Stewart Ivory & Co Ltd for 20 years, as an Investment
Manager and director. She is a director of Herald Investment
Management Limited and HIML Holdings Limited. Jean will
retire at the AGM having served over nine years on the Board.
Ravinder (Ravi) Anand
Independent Non-Executive Director and
Chairman of the Audit and Risk Committee
Appointed a Director in August 2023. Ravi is a highly experienced
corporate financier and commercial business director. He is
currently Managing Director at Thincats Group Limited, a leading
alternative lender focused on the funding needs of mid-sized
UK SMEs. Ravi has a wide-ranging role at Thincats from setting
strategic direction to heading up the day-to-day funding activities
for the group, as well as overseeing its analytics function, and
as a member of its investment committee. Ravi has more
than 34 years of financial services experience. He has created
businesses and led numerous corporate transactions, including
many in the investment companies sector. Prior to ThinCats,
Ravi was head of corporate finance at boutique investment bank
Dexion Capital, head of corporate finance and alternatives at New
Star Asset Management and a director of equity capital markets at
HSBC Investment Bank. He qualified as a chartered accountant at
KPMG.
Wendy Colquhoun
Independent Non-Executive Director, Senior
Independent Director and Chairman of the
Remuneration Committee
Appointed a Director in January 2021. Until May 2020, Wendy
was a senior corporate partner at international law firm
CMSCameron McKenna Nabarro Olswang LLP where she
specialised in financial services. She has over 25 years of
experience in providing advice to investment trusts. After
qualifying as a solicitor in 1987, Wendy held roles with Dickson
Minto WS and Linklaters before heading up the UK corporate
group at Dundas & Wilson (a leading Scottish law firm) prior
to its merger with CMS Cameron McKenna in 2014. She is
a non-executive director and senior independent director
of Schroder UK Mid Cap Fund plc and Murray International
Trustplc.
CapitalGearingTrustP.l.c. Annual Report and Financial Statements 2025 27
Key Features Strategic Report Governance Report Independent Auditor’s Report Financial Statements Notice of AGM Shareholder Information
Karl Sternberg
Independent Non-Executive Director
Appointed a director in September 2024. Karl is Chairman
of The Monks Investment Trust plc, Clipstone Industrial
REIT plc, Apax Global Alpha Limited, and a Non-Executive
Director of The Howard de Walden Estate. Prior to his non-
executive career, he held a number of positions at Morgan
Grenfell/Deutsche Asset Management between 1992 and
2004 including Chief Investment Officer for London, Australia,
Europe and the Asia Pacific. He left this firm to establish
institutional asset manager Oxford Investment Partners,
which was acquired by Towers Watson in 2013. Karl will
assume the role of Chairman from the conclusion of the AGM.
Paul Yates
Independent Non-Executive Director and
Chairman of the Management Engagement
Committee
Appointed a Director in December 2019. Paul is chairman
of the advisory board of 33 St James’s Limited and is a non-
executive director of Fidelity European Trust plc, where he
is also the senior independent director. His extensive career
in investment management began at Samuel Montagu &
Co in 1980. He joined Phillips and Drew in 1985, being the
year that it was acquired by UBS. During his time at UBS he
held a number of positions covering management, portfolio
management, pensions, strategy and client service. He was
CEO of UBS Global Asset Management (UK) Limited between
2001 and 2005 and, after undertaking a number of global
roles at UBS, he retired in 2007.
Dr Theodora (Theo) Zemek
Independent Non-Executive Director
Appointed a director in November 2024. Theo is a non-
executive director at BlackRock Fund Managers and EFG
Asset Management (UK) Limited. Theo has over 30 years’ of
experience within fixed income investment. She commenced
her city career in bonds sales, moving into fund management
in 1988. She spent nine years with M&G, rising to be chief
investment officer of M&G International, before joining New
Star Asset Management in November 2002. In March 2008,
she joined AXA Investment Managers, where she was global
head of fixed income and a member of AXA Investment
Manager’s management board.
The Board (continued)
28 CapitalGearingTrustP.l.c. Annual Report and Financial Statements 2025
Directors’ Report
TheDirectorspresenttheirreportandfinancial
statements of Capital Gearing Trust P.l.c. for the
year ended 31 March 2025.
Company status
The Company is an investment company as defined by
section 833 of the Companies Act 2006 and operates
as an investment trust in accordance with Chapter 4 of
Part 24 of the Corporation Tax Act 2010 (the ‘CT Act’).
This legislation provides conditions that the Company
must meet in respect of each accounting period. The
Company will continue to conduct its affairs as an
investment trust. The Company does not fall within the
definition of a ‘close company’ under the CT Act.
Revenue and dividend
The net revenue return attributable to shareholders for
the financial year to 31 March 2025 was £21,527,000
(31March 2024: £16,957,000).
The Company does not aim to invest for income to
support any target dividend payment or target yield,
and dividend payments are affected by the requirement
to distribute a certain level of income to maintain
investment trust status. It is anticipated that capital
return is likely to be the larger component of the returns
over the longer term. The Company is generating
considerable income from higher interest from bonds
and other fixed interest securities.
The Board recommends the payment of a dividend of
102p per share, comprising 66p in interest distribution
and 36p in ordinary equity dividends, for the year
ended 31 March 2025, (2024:78p) for approval by
shareholders at the forthcoming Annual General
Meeting. The dividend will be payable on 8 July 2025
to shareholders on the register of members on 6 June
2025, the associated ex-dividend date being 5 June
2025. As detailed in the Chairman’s Statement, part of
this year’s dividend represents an interest distribution.
Under FRS 102, final dividends should not be accrued
in the financial statements unless they are approved by
shareholders before the balance sheet date. As such,
the amount recognised in the 2025 financial statements
comprises the 2024 final dividend.
Net asset value per share
The net asset value per share of the Company as at
31March 2025 was 4,924.8p, compared with 4,810.5p as
at 31March 2024.
The financial position of the Company is set out in detail
in the financial statements. Note 15 to the financial
statements describes the Company’s processes for
managing its capital, its financial risk management
objectives, details of its financial investments and
its exposure 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 31 March
2025, the issued share capital consisted of 17,970,762
shares (31 March 2024: 22,038,727) and 8,609,501 shares
were held in Treasury (31 March 2024:4,541,536). During
the year to 31 March 2025, 4,067,965 shares were bought
back into treasury (31March 2024: 4,220,036).
As at 27 May 2025, the latest practicable date prior to
the publication of this report, the issued share capital
consisted of 26,580,263 shares, of which 8,982,110
shares were held in treasury. While shares are held in
treasury, no dividends are paid on them and they have
no votingrights.
Substantial shareholders
At 31 March 2025, the Board received notification of the
following interest in the voting rights of the Company:
Notifiedinterests
% of Issued share
capital held
LGT Wealth Management UK LLP
5.8%
Killick & Co LLP
4.3%
Brewin Dolphin Limited
3.0%
Since 31 March 2025 to the date of this report, the
Company has not been informed of any changes.
In addition to the above, as at 31 March 2025, directors
and employees of CGAM were interested in shares
representing 1.8% of the issued share capital.
Management and contracts
Investment Manager
The Company’s investments are managed by CGAM.
Under the investment management 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. Following the Company’s
detailed review of its service suppliers, CGAM also
receive an additional annual fee of £150,000 in
relation to AIFM services provided to the Company
(including investor relations and marketing) with effect
from 20May 2024. The agreement is terminable on
CapitalGearingTrustP.l.c. Annual Report and Financial Statements 2025 29
Key Features Strategic Report Governance Report Independent Auditor’s Report Financial Statements Notice of AGM Shareholder Information
Directors’ Report (continued)
six months’ notice, and 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 termination. No other
compensation would arise in the event of termination.
CGAM was appointed as the Company’s AIFM in
November 2017.
The Investment Manager operates under the investment
policy and guidelines drawn up by the Board as detailed on
page 18. Any proposed deviation from these guidelines is
required to be discussed with and agreed by the Board, or
by the Chairman where authority is required between Board
meetings. In addition, the Investment Manager presents
a report at each Board meeting detailing compliance with
the policy during the preceding quarter and outlining any
instances where approval for investment decisions was
sought from either the Board or the Chairman.
Performance, evaluation and the continuing
appointment of the Investment Manager
The Directors conducted a detailed review of the
investment strategy adopted by the Investment Manager
at a Board Strategy meeting held on 3 September 2024.
The performance of the Investment Manager during the
year to 31 March 2025 and the contractual arrangements
with the Investment Manager were discussed at the
Management Engagement Committee meeting held on
19 May 2025. The Investment Manager was not present
during the course of the Board discussions.
In reviewing the Investment Manager’s performance,
theDirectors consider the following:
■ adherence to the pre-agreed investment policy and
guidelines as prescribed by the Board;
■ whether the strategy adopted by the Investment
Manager has been and continues to be consistent
with the Company’s aims;
■ the asset value performance achieved in the year
under review as well as over the longer term and
whether this satisfies the investment objective as
communicated to shareholders;
■ performance comparison against a selected peer
group; and
■ compliance and administration competence.
Based on investment performance over the year to
31March 2025, as well as over the longer-term, the
Directors concluded that the continuing appointment of
the Investment Manager on the existing terms is in the
best interests of the shareholders as a whole.
Company secretarial and administration
services
Frostrow Capital LLP (‘Frostrow’) was appointed by
the Company from 1 July 2024 to provide company
secretarial and administration services under an
Administration Agreement which may be terminated on
six months’ notice.
Prior to this date and from 2017, these services
were provided by Juniper Partners. In respect of the
administration and company secretarial services provided
from 1 April 2024 to 30 June 2024, Juniper Partners received
a fixed 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.
Since its appointment on 1 July 2024 Frostrow has
received a fee of 0.11% on the first £150 million of
market capitalisation and 0.05% of market capitalisation
above £150 million.
Discount and premium control services
Up to 30 June 2024, discount and premium control
services were provided by Juniper Partners. With effect
from 1 July 2024, JP Morgan Securities, the Company’s
broker, has operated the Board’s discount and premium
control policy.
Depositary and custodian
The Northern Trust Company (‘Northern Trust’) was
appointed in 2011 to provide custodial services for
the portfolio and subsequently appointed to act
as depositary on 20 December 2019 to fulfil the
requirements of the AIFMD. Pursuant to the terms of
this agreement, Northern Trust receives a depositary
feewhich 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 requires six month’s written notice.
Details of the fees paid during the year are recorded in
note 4 of the financial statements on page 61.
Conflicts of interest
In line with the Companies Act 2006, the Board has the
power to authorise any potential conflicts of interest
that may arise and impose such limits or conditions as
it thinks fit. A register of interests and potential conflicts
is maintained and is reviewed at every Board meeting
to ensure all details are kept up to date. Appropriate
30 CapitalGearingTrustP.l.c. Annual Report and Financial Statements 2025
Directors’ Report (continued)
authorisation is sought prior to the appointment of
any new Director or if any new conflicts or potential
conflictsarise.
Directors
The Directors of the Company who held office at
31March 2025 and at the date of approval of this report
are set out on pages 26 and 27, together with their
biographies. Directors’ interests in the shares of the
Company are set out in the Directors’ Remuneration
Report on page 40.
There are no agreements between the Company and its
Directors concerning compensation for loss of office.
Retirement and re-appointment of
Directors
In accordance with the AIC Code, all Directors offer
themselves for either appointment or re-appointment
at the forthcoming AGM and on an annual basis
going forward. As noted in the Chairman’s Statement,
following over nine years on the Board, Jean Matterson,
the Chairman, will retire at the AGM and not stand for
re-appointment. Karl Sternberg will assume the role of
Chairman at the conclusion of the forthcoming AGM.
After due consideration of the results of the
performance evaluation, the Board confirms that the
performance of each Director continues to be effective
and that each Director demonstrates commitment to
their role, including the necessary commitment of time
for Board and Committee meetings and other duties as
required. The Board believes that the appointment or
re-appointment of all Directors standing at the AGM is in
the best interests of the Company and its shareholders.
Directors’ indemnity
The Company maintains directors’ and officers’
liability 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 provision was in force throughout
the financial year and at the date of approval of the
annual report. No claims have been brought against the
Company or the Directors.
Whistleblowing policy
As the Company has neither executive Directors nor
employees, a formal whistleblowing policy has not been
adopted. However, the Board has agreed a procedure
by means of which any Directors or employees of
external service providers can bring to the attention of
the Chairman or Senior Independent Director matters
of concern to them. No matters of concern have been
raised during the year to 31 March 2025.
Information about securities carrying
voting rights
The following information is disclosed in accordance
with Section 992 of the Companies Act 2006:
■ the Company’s capital structure is summarised on
page 28;
■ the details of the substantial shareholders in the
Company are listed on page 28;
■ the rules on the appointment and replacement
of the Directors are set out in the Articles and are
summarised on page 30. Any change to the Articles
would be governed by the Companies Act 2006;
■ the Directors’ powers to issue and buy back shares,
in force at the financial year-end, are recorded on
page 31; and
■ 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.
Annual General Meeting (the ‘AGM ’ )
The AGM of the Company will be held on 3 July 2025
at 11.30 a.m. at the Numis Auditorium, 45 Gresham
Street, London EC2V 7BF. If you are unable to attend in
person, a recording of the Manager’s presentation will
be available on the Company’s website shortly after the
AGM. The formal notice of such is set out on pages75
to77. Shareholders are strongly advised to appoint
the Chairman of the meeting to vote on their behalf by
completing and returning their form of proxy or when
submitting their votes through an investment platform.
Shareholders are encouraged to submit
questions to the Board using the email address
company.secretary@capitalgearingtrust.com by close
of businesson 26 June 2025. The proxy voting results,
CapitalGearingTrustP.l.c. Annual Report and Financial Statements 2025 31
Key Features Strategic Report Governance Report Independent Auditor’s Report Financial Statements Notice of AGM Shareholder Information
answers to any questions raised ahead of the AGM and
the presentation from the Investment Manager will be
made available on the Company’s website following
theAGM.
There are 16 resolutions being proposed at the AGM,
13of which are ordinary resolutions, two of which is
being considered as special business, and three of which
(resolutions 14 to 16) are special resolutions.
Resolutions 1 to 4 concern the receiving of the
accounts, approving the Directors’ remuneration
report and remuneration policy, and approving the
final dividend of 102.0p per share, comprising 66p
in interest distribution and 36p in ordinary equity
dividends. Resolutions 5 to 9 are for the appointment or
re-appointment of the existing Directors. Resolution10
is for the re-appointment of BDO as auditor and
resolution 11 is to authorise the Directors to determine
their remuneration.
Additional information on the resolutions relating to
special business is detailed below:
Resolution 12 – Aggregate Directors’ remuneration
The current Articles of Association provide that
Directors’ fees shall not, in aggregate, exceed £230,000
per annum. Although there are currently no plans
to increase the size of the Board, or to make any
significant changes to the levels of fees paid to the
non-executive Directors, the Board wish to propose
an increase to the fee limit contained in the Articles
of Association to facilitate future succession planning
and to accommodate any unforeseen circumstances,
which may include a sudden requirement to appoint
an additional Director. It is proposed that the fee limit
be increased to £250,000 per annum in aggregate.
Directors’ remuneration will continue to be paid in
accordance with the Directors’ Remuneration Policy.
Resolutions 13 and 14 – Directors’ authority to allot
shares and disapply pre-emption rights
At the AGM held on 2 July 2024 (the ‘2024 AGM’), the
Directors were given the authority until the date of
the following AGM to allot up to 7,126,742 shares and
to disapply pre-emption rights in respect of up to
4,167,921 of these shares. No shares were issued under
these authorities during the period.
At this year’s AGM, the Directors are seeking authority
to allot up to 5,866,051 shares, in aggregate a nominal
value of £1,466,512, representing one third of the issued
share capital as at 27 May 2025 (excluding treasury
shares). 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 5,316,052 shares at 27 May 2025 with an aggregate
nominal value of £1,329,013, including any shares which
have been bought back as treasury shares.
The Board recognises institutional investor guidelines
which state that non pre-emptive issues should
be limited to a maximum of 20% for investment
companies. The Board believes that the continued
operation of the DCP in a cost-effective manner is in the
best interests of both existing and new shareholders.
Resolution 15 – Authority to make market purchases
of the Company’s shares
At the 2024 AGM, the Directors were given the authority
until the date of the following AGM to buy back up to
3,123,857 shares (14.99% of the issued share capital at
the date of the 2024 AGM).
At a general meeting held on 26 March 2025,
shareholders granted authority until the date of the
following AGM to buy back up to 2,703,212 shares (being
14.99% of the issued share capital at the date of the
general meeting).
At this year’s AGM, the Directors are seeking authority
to buy back up to 2,637,963 shares (14.99% of the
issued share capital (excluding treasury shares) as at
27 May 2025) for cancellation or holding in treasury for
re-sale into the market during more favourable market
conditions at values equal or at a premium to NAV.
If approved, the powers, as detailed above under
Resolutions 13 to 15 and in the formal notice of the
AGM, will expire at the AGM to be held in 2026 unless
previously renewed, varied or revoked by the Company
in general meeting. These powers will be exercised only
if the Board is of the opinion that it would result in an
enhancement to the NAV per share of the Company and
therefore have a positive effect on shareholder funds.
The ability to buy back shares is an important part of the
operation of the DCP, if and when required.
Resolution 16 – Notice of general meetings
At the 2024 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
authority must be renewed annually, and must exclude
AGMs, which can only be held on 21 clear days’ notice.
Without such shareholder authority, all general
meetings need 21 clear days’ notice.
The Board considers it prudent to retain the ability to
call general meetings other than AGMs on the shorter
notice period of 14 clear days, and this resolution seeks
such approval from shareholders.
Directors’ Report (continued)
32 CapitalGearingTrustP.l.c. Annual Report and Financial Statements 2025
Directors’ Report (continued)
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
The Audit and Risk Committee is satisfied that BDO LLP is
independent of the Company and, as mentioned above, a
resolution to re-appoint BDO LLP as the Company’s auditor
will be put to shareholders at the forthcomingAGM.
Directors’ statement as to disclosure of
information to auditor
The Directors who were members of the Board at the
time of approving the Directors’ Report are listed on
pages 26 and 27. Each Director in office at the date of
this report confirms that:
■ 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 auditor is
unaware; and
■ each Director has taken all the steps a Director might
reasonably be expected to have taken to be aware of
relevant audit information and to establish that the
Company’s auditor is 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 predominantly of professional advisers and
service providers in the financial services industry, which
is highly regulated and the Board has sought assurances
from its suppliers that they comply with the provisions of
the UK Modern Slavery Act 2015 and maintain adequate
safeguards in keeping with the provisions of the Bribery Act
2010 and 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
towards the criminal facilitation of tax evasion.
Greenhouse gas emissions
The Company’s approach to ESG is set out on pages 13
to 17 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
its shareholders are effectively its customers. As such it
does not directly generate any greenhouse gas or other
emissions or pollution. Nor does it have any emissions-
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
past year, it is exempt from reporting under Streamlined
Energy and Carbon Reporting regulations.
Taskforce for Climate Related Financial
Disclosures (‘TCFD’)
The Company notes the TCFD recommendations on
climate-related financial disclosures. The Company is an
investment trust and, as such, it is exempt from the Listing
Rules requirement to report against the TCFD framework.
Political and charitable contributions
No contributions were made during the year for political
or charitable purposes (2024: nil).
Outlook and future developments
Please refer to the Chairman’s statement on pages4
to6 and the Investment Manager’s review on pages8
and 9 for an update on performance over the year and
the outlook for the Company.
Post balance sheet events
Since 31 March 2025, there are no post balance sheet
events which would require adjustment of or disclosure
in the financial statements.
CapitalGearingTrustP.l.c. Annual Report and Financial Statements 2025 33
Key Features Strategic Report Governance Report Independent Auditor’s Report Financial Statements Notice of AGM Shareholder Information
This Corporate Governance Statement forms part of the
Directors’ Report.
Compliance with the recommendations
of the AIC Code and UK Corporate
Governance Code
The Board has considered the principles and provisions
of the AIC Corporate Governance Code (the ‘AIC Code’).
The AIC Code is endorsed by the Financial Reporting
Council and adapts the principles and provisions set out
in the UK Corporate Governance Code to make them
relevant to investment companies.
The Board believes that the AIC Code, which
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 as
the Board believes this should provide more relevant
information to shareholders. The 2019 edition of the
AICCode is applicable to the year under review and can
be found at www.theaic.co.uk. The 2024 edition of the
AIC Code is applicable to accounting periods beginning
on or after 1 January 2025 and the Company will report
against this version of the AIC Code from next year.
The UK Corporate Governance Code includes provisions
relating to the role of the chief executive, executive
directors’ remuneration, the need for an internal audit
function and workforce engagement. For the reasons
set out in the AIC Code and as explained in the UK
Corporate Governance Code, the Board considers that
these provisions are not relevant to the position of the
Company, being an externally managed 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 no executive directors, employees or internal
operations and has therefore not reported further in
respect of these provisions.
During the financial year the Company has complied
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
The Board is ultimately responsible for framing and
executing the Company’s strategy and for closely
monitoring risks. The Board has a formal schedule of
matters specifically reserved for its decision, which are
categorised under various headings, including strategy,
management, structure, capital, financial reporting,
internal controls, gearing, asset allocation, share price
premium/discount, contracts, investment policy, finance,
risk, investment restrictions, performance, corporate
governance and Board membership and appointments.
It has delegated investment management, within
clearly defined parameters and dealing limits, to CG
Asset Management, and the company secretarial
and administration functions have been delegated
to Frostrow Capital LLP. The Board reviews the
performance of the Company at Board meetings and
sets the objectives for the Investment Manager.
The Company Secretary is responsible to the Board,
inter alia, for ensuring that Board procedures are
followed and for compliance with applicable rules and
regulations including the AIC Code.
The Board believes that the content and presentation
of Board papers circulated before each meeting contain
sufficient information concerning the financial condition
of the Company. Key representatives of the Investment
Manager attend each Board meeting enabling the
Directors to probe on matters of concern or seek
clarification on certain issues.
Biographies of those Directors in office at the date
of signing of the financial statements are set out on
pages26 and 27.
Audit and Risk Committee
The Audit and Risk Committee is a formally constituted
Committee of the Board with defined terms of
reference. The Committee is chaired by Ravi Anand. Its
role and responsibilities are set out in the Report of the
Audit and Risk Committee on page 43. As the Board is
small, Jean Matterson, the Chairman of the Board, was
appointed a member of the Audit and Risk Committee
with effect from 26 January 2022. The Board is satisfied
that members of the Audit and Risk Committee have
relevant and recent financial experience to fulfil their
role effectively and also have sufficient experience
relevant to the closed ended investment company
sector and UK listed companies. The auditor, who the
Board has identified as being independent, is invited
to attend the Committee meeting at which the annual
accounts are considered and any other meetings that
the Committee deems necessary.
Nomination Committee
A Nomination Committee, comprising all the
independent Directors, oversees the annual appraisal
of the Board members, including the Chairman, to
assess whether individual Board members should be
nominated for re-election each year, evaluates the
overall composition of the Board from time to time,
Corporate Governance Statement
34 CapitalGearingTrustP.l.c. Annual Report and Financial Statements 2025
Corporate Governance Statement (continued)
taking into account the existing balance of skills and
knowledge on the Board and considers succession
planning accordingly. The Committee comprises all the
independent Directors of the Company. The Committee
is chaired by Jean Matterson and will be chaired by Karl
Sternberg following his appointment at the conclusion
of the forthcoming AGM.
The Committee, when assessing the performance
of Directors and for making recommendations as
to whether they should remain in office and be put
forward for appointment or re-appointment at the
AGM, uses extensive questionnaires and reviews by
the Chairman. The Senior Independent Director is
responsible for the appraisal of the Chairman. This
review, which provided positive results, did not identify
any causes for concern.
Management Engagement Committee
A Management Engagement Committee comprises
all the independent Directors of the Company and
is chaired by Paul Yates. The Committee meets at
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 Management Engagement Committee also reviews
the terms and performance of the other key service
suppliers to the Company on an annual basis, including
the costs of these services and how effective they have
been during the year.
Remuneration Committee
A Remuneration Committee is chaired by Wendy
Colquhoun. As the Board is small, the Committee
comprises all the independent Directors of the
Company. The Committee meets at least once a year
to consider the Directors’ Remuneration Policy and the
remuneration of the Directors.
During the year, the Committee considered the
Directors’ fees over the last eight years, fees paid by its
investment trust peer group and other trusts of a similar
size and structure and the results of Trust Associate’s
2024 fee review. After considering this information
and the work and responsibilities of the Directors, the
Committee concluded that for the forthcoming financial
year it was appropriate to increase the fees as detailed
in the Directors’ Remuneration Report on page 39.
The additional fee payable to the Senior Independent
Director will remain at £2,000.
The Directors’ Remuneration Report can be found on
pages 38 to 42.
Directors’ meeting attendance
The number of formal meetings held during the year ended 31 March 2025 and the Directors’ attendance is detailed
below.
Board
Audit
and Risk
Committee
Management
Engagement
Committee
Nomination
Committee
Remuneration
Committee
Jean Matterson 5/5 3/3 1/1 1/1 1/1
Ravi Anand 5/5 3/3 1/1 1/1 1/1
Robin Archibald (retired 2 July 2024) 2/5 1/3 1/1 N/A 1/1
Wendy Colquhoun 5/5 3/3 1/1 1/1 1/1
Karl Sternberg
(appointed 5 September 2024)
2/5 2/3 N/A 1/1 N/A
Paul Yates 5/5 3/3 1/1 1/1 1/1
Theo Zemek
(appointed 1 November 2024)
2/5 2/3 N/A N/A N/A
Apart from regular Board meetings, members of the Board attended a number of ad hoc committee meetings during
the year, for strategic discussions, succession planning and continued implementation of the discount/premium
control policy. Members of the Board are also in contact with representatives of the Investment Manager and the
Company Secretary on an informal and regular basis. In addition, all members of the Board at that time attended the
2024 AGM.
CapitalGearingTrustP.l.c. Annual Report and Financial Statements 2025 35
Key Features Strategic Report Governance Report Independent Auditor’s Report Financial Statements Notice of AGM Shareholder Information
Independence of the Directors
Each of the Directors is independent of any association
with the Investment Manager and has no other
relationships or circumstances which might be
perceived to interfere with the exercise of independent
judgement on the affairs of the Company. The Directors
have a range of business and financial skills and
experience relevant to the direction of the Company.
Wendy Colquhoun is currently the Senior Independent
Director, having been appointed to this role in July 2024
following the retirement of Mr Archibald. Ms Colquhoun
has significant direct corporate and market experience
of investment companies and of acting as a senior
independent director and non-executive director for
other investment companies.
Director Time Commitments
Ahead of appointing a Director, candidates are asked
to confirm that they are able to allocate sufficient time
to the Company to discharge their responsibilities
effectively. Mr Sternberg will be assuming the role
of Chairman at the conclusion of the Company’s
forthcoming AGM. Upon this appointment he will
hold the positions of chairman on two investment
companies and non-executive director on a further
two investment companies. Although Mr Sternberg has
confirmed that he is able to allocate sufficient time to
these roles, the number of appointments may deem
some industry participants to state that Mr Sternberg
is ‘overboarded’. If this is the case it will be for a short
period of time since it has been announced that he will
be standing down as chairman and a director of The
Monks Investment Trust PLC on 9 September 2025. The
Board therefore believes that all Directors, including
Mr Sternberg, are able to allocate sufficient time to the
Company to discharge their responsibilities effectively.
Director tenure
In accordance with the AIC Code all Directors are subject to
annual re-appointment. Board support for re-appointment
is based on the outcome of an annual performance
evaluation. The Chairman also speaks with each Director
individually. The performance of each Director and
nominations for re-appointment are then discussed by the
Board as a whole.
The Board’s view is that length of tenure is not
necessarily an issue, with the Director’s contribution,
and ability being important factors in determining the
value the individual brings to the Board. The Directors
are conscious of the benefits of continuity on the Board
and believe that retaining Directors with sufficient
experience of both the Company and the markets is
of great benefit to the Company. The Chairman and
Directors will not generally seek reappointment at an
annual general meeting that falls after having served
nine years on the Board, unless there are certain
circumstances, such as succession planning and the
need to maintain cohesion and continuity, for doing so.
Director remuneration
The Company’s policy on Director remuneration is
set out within the Directors’ Remuneration Report on
pages38 to 42.
Board diversity
The Board is focused on having an effective Board
which consists of experienced non-executive Directors
who can function well together and have a good
operational knowledge of the Company and the closed
ended investment company sector more generally. The
Board currently consists of six independent Directors:
Jean Matterson, Ravi Anand, Wendy Colquhoun, Karl
Sternberg, Paul Yates and Theo Zemek.
The Board supports the principle of boardroom diversity
in its broadest sense, in terms of gender, expertise,
geographic background, age and race. The Company is
specialised and the Board’s priority is to have a relatively
small and effective independent Board of non-executive
Directors with the requisite abilities and experience to
oversee the Company, its investments and its corporate
structure, including its third-party advisers. Any new
appointee would make an appropriate contribution to
those skills. It is the Board’s policy to review its composition
regularly and, when appropriate, to refresh the Board
through recruitment, with the aim of having the blend of
skills and attributes that will best serve shareholders in the
future and will not discriminate on the grounds of gender,
race, ethnicity, socio-economic background, religion, sexual
orientation, age or physical ability.
The Nomination Committee is conscious of the diversity
targets set out in the FCA Listing Rules and the Board
complies with the AIC Code in appointing appropriately
diverse, independent non-executive Directors who set
the operational and moral standards of the Company
and aims to have an appropriate level of diversity on
theBoard.
In accordance with Listing Rule 9.8.6R (9), (10) and (11)
the Board has provided the following information in
relation to its diversity as at 31 March 2025, being the
financial year-end of the Company. The information
included in the tables below has been obtained
following confirmation from the individual Directors.
As shown in the tables, the Company meets all the FCA
diversity targets as at 31March 2025. The Board will
Corporate Governance Statement (continued)
36 CapitalGearingTrustP.l.c. Annual Report and Financial Statements 2025
continue to take all matters of diversity into account as
part of its succession planning.
Board gender as at 31 March 2025
1
Number
of Board
members
Percentage
of the
Board
Number
of senior
positions
on the
Board
Men 3 50% 1
Women 3 50%
2
1
3
Board ethnic background as at 31 March 2025
1
Number
of Board
members
Percentage
of the
Board
Number
of senior
positions
on the
Board
White British
or other White
(including
minority-white
groups) 5 83.3% 1
Mixed/Multiple
Ethnic Groups 1 16.7%
4
1
(1) The Company does not disclose the number of Directors in executive
management as this is not applicable for an investment trust. The
Listing Rules state that the senior board positions consist of Chair,
Chief Executive Officer, Senior Independent Director and Chief
Financial Officer. As an externally managed investment trust the
Company does not have the roles of CEO or CFO.
(2) This meets the Listing Rules target of 40% in terms of gender diversity.
(3) The Chairman of the Board is a woman. The position of the Chairman
of the Remuneration Committee is also held by a woman however
this is not currently defined as a senior position.
(4) This meets the Listing Rules target on ethnic diversity.
Directorate
The Board believes that shareholders’ interests are best
served by ensuring a smooth and orderly refreshment
of the Board with experienced candidates whilst
maintaining continuity of knowledge and expertise.
Induction and training
New Directors appointed to the Board are provided
with an induction programme which is tailored to the
particular circumstances of the appointee. Regular
briefings are provided covering industry and regulatory
matters and the Directors receive other relevant training
as required.
Ongoing evaluation
On an annual basis the Nomination Committee formally
reviews the Board’s performance, together with that
of the Audit and Risk and other Board committees and
the effectiveness and contribution of the individual
Directors, including the Chairman, within the context
of service on those bodies. The Senior Independent
Director led the annual evaluation of the Chairman.
Theoutcome of the external review was positive with no
significant concerns expressed.
As the Company is a constituent of the FTSE 250,
the Board intends to hold an externally facilitated
performance evaluation of the Board, its Committees, the
Chairman and the individual Directors, every three years.
The Board is due to conduct an externally facilitated
board evaluation in respect of the Company’s year ending
31 March 2026, since a period of three years have passed
since the last externally facilitated exercise. Given the
number of changes to the Board this year, to include the
appointment of two Directors and a change of Chairman
from the conclusion of the forthcoming AGM, the Board
has resolved to postpone this enhanced exercise until
2027.
Shareholder communications
Shareholder relations are given high priority by both
the Board and the Investment Manager. The principal
medium by which the Company communicates with
shareholders is through half yearly and annual reports.
The information contained therein is supplemented
by daily NAV announcements and by a monthly fact
sheet and quarterly report available on the Company’s
website.
The Board largely delegates responsibility for
communication with shareholders to CGAM and,
through feedback from the Investment Manager,
expects to be able to develop an understanding of
shareholders’ views. There is also a communication
line with shareholders through the Company Secretary.
The Board receives a quarterly report from the
Investment Manager summarising any shareholder
correspondence. Members of the Board are always
happy to meet with shareholders for the purpose of
discussing matters in relation to the operation and
prospects of the Company.
The Board encourages investors to attend the AGM
either in person or online and welcomes questions and
discussion on issues of concern or areas of uncertainty.
Shareholders who have any questions are encouraged
to address these through the Company Secretary and
the Board will respond accordingly.
The Investment Manager typically makes a presentation
at the AGM outlining the key investment issues that face
the Company. The presentation is made available on the
Company’s website.
Corporate Governance Statement (continued)
CapitalGearingTrustP.l.c. Annual Report and Financial Statements 2025 37
Key Features Strategic Report Governance Report Independent Auditor’s Report Financial Statements Notice of AGM Shareholder Information
Corporate Governance Statement (continued)
Accountability, internal controls and audit
The Board pays careful attention to ensuring that all
documents released by the Company, including the
Annual Report, present a fair and accurate assessment
of the Company’s position and prospects.
The Board has overall responsibility for the Company’s
systems of internal controls and for reviewing their
effectiveness. In common with the majority of
investment trusts, the Board has determined that
the most efficient and effective management of the
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 and
Risk Committee does not consider it necessary for the
Company to establish its own internal audit function.
Instead, the Audit and Risk Committee examines
internal control 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 the financial information
used within the business and for publication is reliable.
Control of risks identified covering financial, operational,
compliance and risk management, is embedded in the
controls of the Company through a series of regular
investment performance statements, financial and
risk analyses, Investment Manager reports and control
reports. Key risks have been identified and controls
put in place to mitigate them, including those not
directly the responsibility of the Investment Manager.
The effectiveness of the internal controls is assessed
on a continuing basis by the Investment Manager, the
custodian and the Company Secretary. Each maintains
its own system of internal controls, and the Board
and Audit and Risk Committee receive regular reports
from them. These control systems have been in place
throughout the year under review and up to the date of
signing the financial statements. They 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.
It is a requirement that the Board monitors the
Company’s risk management and internal controls
systems and, at least annually, carries out a review
of their effectiveness. The Board has established a
process for identifying, evaluating and managing the
principal risks faced by the Company in accordance with
the Financial Reporting Council’s guidance document
‘Guidance on Risk Management, Internal Control and
Related Financial and Business Reporting’. Business risks
have also been analysed by the Board and recorded in a
risk map that is reviewed regularly.
The Board continues to work 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.
By order of the Board
Frostrow Capital LLP
Company Secretary
28 May 2025
38 CapitalGearingTrustP.l.c. Annual Report and Financial Statements 2025
Directors’ Remuneration Report
This section provides details of the remuneration policy
for the Directors of the Company. All Directors are
non-executive, appointed under the terms of letters
of appointment, and none has a service contract. Each
Director’s appointment is subject to their appointment
or re-appointment by shareholders every year at the
AGM. The Company has no employees.
The Board has prepared this report in accordance with
the requirements of the Companies Act 2006. The
shareholders approved the remuneration policy at the
Annual General Meeting in 2022 and it will be put to
shareholders again at the forthcoming AGM. This policy,
together with the Directors’ letters of appointment, may
be inspected at the Company’s registered office.
The Board has established a Remuneration Committee
consisting of all the independent Directors, chaired
by Wendy Colquhoun. The Committee considers
and determines all matters relating to the Directors’
remuneration at the beginning of each financial year.
The Directors are remunerated exclusively by fixed fees
in cash. There are no performance related elements
to the Directors’ fees and the Company does not
operate any type of incentive, share 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 out of pocket expenses
incurred in connection with their responsibilities, which
largely relate to travel and accommodation expenses.
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 experience. The remuneration should also be
comparable to that of similar investment trusts within
the AIC Flexible Investment Sector and other 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 activities of the Board.
The remuneration policy is not subject to employee
consultation as the Company has no employees. As
such, there is no employee comparative data to provide
in relation to the setting of the remuneration policy of
the Directors.
The Board, at its discretion, shall determine Directors’
remuneration subject to the aggregate annual fees
not exceeding the amount set out in the Company’s
Articles from time to time. The current limit on the total
aggregate annual fees payable is £230,000. This limit can
be increased by ordinary resolution of the shareholders.
Fees for each financial year are agreed and approved by
the Remuneration Committee.
It is intended that this policy will remain in place for the
next and subsequent financial years.
Shareholder views
The Board will consider any comments received from
shareholders on the remuneration policy on an ongoing
basis and will take account of these views where
appropriate. No shareholder has expressed any views to
the Company in respect of the remuneration policy and
the Directors’ remuneration.
Loss of office
A Director may be removed from office without notice
and no compensation will be due on loss of office.
Expenses
All Directors are entitled to the reimbursement of
reasonable out of pocket expenses incurred by them
in order to perform their duties as Directors of the
Company.
Review of remuneration policy
The Board reviews the above remuneration policy at
least annually to ensure that it remains appropriate.
Amendment to the Articles
As noted above, the current aggregate annual
remunerationlimited within the Articles is £230,000 per
annum. Aresolution to increase this limit to £250,000 will
be proposed at the forthcoming AGM. Although there are
currently no plans to increase the size of the Board, or to
make any significant changes to the levels of fees paid to
the non-executive Directors, the Board wish to propose
an increase to the fee limit contained in the Articles
of Association to facilitate future succession planning
and to accommodate any unforeseen circumstances,
which may include a sudden requirement to appoint an
additionalDirector.
Audit requirements
The Company’s auditor is required to report on certain
information contained within this report. These
elements are described below as ‘audited’. The auditor’s
opinion is included within the auditor’s report set out on
pages 48 to 53.
CapitalGearingTrustP.l.c. Annual Report and Financial Statements 2025 39
Key Features Strategic Report Governance Report Independent Auditor’s Report Financial Statements Notice of AGM Shareholder Information
Directors’ Remuneration Report (continued)
Directors’ fees
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 year, from which a
director is appointed or assumes additional responsibilities.
Directors’ fees are reviewed every year and a detailed review was undertaken in May 2025. Following this review, fees
have been increased to ensure that the remuneration paid to Directors is in line with comparable peers, thus ensuring
that the Company remains able to attract suitably qualified candidates for future Board vacancies. The agreed new
fee rates shown in the table below took effect from 1 April 2025 and reflect an average fee increase of 4%.
Annual fee rates
2026
£
2025
£
2024
£
Chairman 52,000 50,000 46,500
Audit and Risk Committee Chairman 41,500 40,000 38,000
All other Directors 34,000 32,500 31,000
The Senior Independent Director receives an additional fee of £2,000 per annum.
Aggregate Director’s remuneration
The total remuneration for the Board as a whole, including Directors who have retired, over the previous five years is
summarised below and there were no performance related, pension or other taxable benefits paid:
Fees
£
To 31 March 2025 197,486
To 31 March 2024 169,167
To 31 March 2023 140,650
To 31 March 2022 128,500
To 31 March 2021 113,577
Single total figure of remuneration (audited)
The single total figure of remuneration for the Board as a whole for the year ended 31 March 2025 was £197,486
(yearto 31 March 2024: £169,167). The single total figure for the total remuneration of each Director, together with
the prior year’s comparative, is set out in the table below:
Total
Directors
2025
£
2024
£
Jean Matterson (Chairman of the Board)
50,000 46,500
Ravi Anand (appointed 1 August 2023) 38,071 20,667
Wendy Colquhoun 33,986 31,000
Karl Sternberg (appointed 5 September 2024) 18,583 –
Paul Yates 32,500 31,000
Theo Zemek (appointed 1 November 2024) 13,542 –
Robin Archibald (retired 2 July 2024) 10,804 40,000
197,486 169,167
40 CapitalGearingTrustP.l.c. Annual Report and Financial Statements 2025
Directors’ Remuneration Report (continued)
There were no other transactions with Directors during the year.
No payments were made to any former Directors and no loss of office payments were made to any person who has
previously served as a Director of the Company at any time during the financial year ended 31 March 2025 (year to
31 March 2024: nil).
Annual percentage change in remuneration of Directors
The table below is a disclosure requirement under The Companies (Directors’ Remuneration Policy and Directors’
Remuneration Report) Regulations 2019 and sets out the annual percentage change in each director’s remuneration
received in the most recent five financial years. The percentage change reflects changes in roles on the Board
compared to previous remuneration and less than full year appointment.
Directors
2025
Total Fees
% change
2024
Total Fees
% change
2023
Total Fees
% change
2022
Total Fees
% change
2021
Total Fees
% change
Jean Matterson (Chairman of the Board
with effect from 3July2020)
7.5 9.8 10.0 18.5 29.2
Ravi Anand (appointed to the Board on
1August 2023 and appointed Audit and
Risk Committee Chairman on 2 July 2024) 84.2 100 n/a n/a n/a
Wendy Colquhoun (appointed 5 January
2021 and Senior Independent Director
from 2 July 2024) 9.6 3.3 9.1 9.4 10.3
Karl Sternberg (appointed
5 September 2024) 100 n/a n/a 384.8 n/a
Paul Yates (appointed 2 December 2019) 4.8 3.3 9.1 10.0 212.5
Theo Zemek (appointed 1 November 2024) 100 n/a n/a n/a n/a
Robin Archibald (retired 2 July 2024) (73.0) 4.4 9.4 n/a n/a
Directors and their interests (audited)
The Directors in office at 31 March 2025 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
2025
31 March
2024
Jean Matterson 18,650 18,650
Ravi Anand 4,430 4,430
Wendy Colquhoun 400 400
Karl Sternberg 1,269 –
Paul Yates 2,000 1,000
Theo Zemek – –
No changes in these holdings have been notified since 31 March 2025 up to the date of this report. The Company has
no share options or any share schemes, and does not operate a pension scheme. None of the Directors are required
to own shares in the Company.
CapitalGearingTrustP.l.c. Annual Report and Financial Statements 2025 41
Key Features Strategic Report Governance Report Independent Auditor’s Report Financial Statements Notice of AGM Shareholder Information
Directors’ Remuneration Report (continued)
Performance graph
The following graph compares the Company’s share price total return to shareholders over the last ten years with
the MSCI UK IMI Total Return Index and CPI. Whilst Investment performance is reviewed by the Board against CPI
only, The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 require the
Company to include within the Directors’ Remuneration Report a graph comparing total shareholder return with the
performance of a broad equity market index. The Board has selected the MSCI UK IMI Total Return Index for this
purpose, as it is deemed to be an appropriate equity market index comparator.
As at 31 March
80
100
120
140
160
180
200
2016 2017 2018 2019 2020 2021 2022 2023 202520242015
Share price Total Return MSCI UK IMI Total Return CPI
Source: CG Asset Management Limited, data rebased to 100 in 2015.
Relative importance of spend on pay
Actual expenditure by the Company on remuneration and distributions to shareholders for the current and prior year
are detailed in the table below:
2025
£’000
2024
£’000
Absolute
change
£’000
Remuneration paid to all Directors 197 169 28
Distribution to shareholders by way of dividend
(1)
18,330 16,598 1,732
(1)
Dividend for 2025 comprises the final dividend proposed for the year but not yet paid (estimated on 17,970,762 shares, being the number of shares
in issue, excluding shares held in treasury, as at 31 March 2025).
42 CapitalGearingTrustP.l.c. Annual Report and Financial Statements 2025
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 any significant vote against approval of the remuneration report or policy 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 2 July 2024, shareholders, on a show of hands, passed the resolution to
approve the Directors’ Remuneration Report: of the 6,104,744 proxy votes cast, 6,061,887 (99.99%) were cast in favour
and 42,857 (0.01%) were cast against. 11,752 votes were withheld.
At the AGM held on 12 July 2022, shareholders, on a show of hands, passed the resolution to approve the Directors’
Remuneration Policy: of the 6,057,769 proxy votes cast, 6,047,109 (99.8%) votes were cast in favour and 10,660 (0.2%)
were cast against. 10,449 votes were withheld.
Annual statement
On behalf of the Board, I confirm that the above Directors’ Remuneration Report summarises as appropriate for the
year ended 31 March 2025:
a) the major decisions on Directors’ remuneration;
b) any substantial changes relating to Directors’ remuneration made during the year; and
c) the context in which those changes occurred and decisions were taken.
On behalf of the Board
Wendy Colquhoun
Chairman of the Remuneration Committee
28 May 2025
CapitalGearingTrustP.l.c. Annual Report and Financial Statements 2025 43
Key Features Strategic Report Governance Report Independent Auditor’s Report Financial Statements Notice of AGM Shareholder Information
Audit and Risk Committee Report
This report describes the range of work that the
Committee has been engaged in and the judgements it
has exercised.
Composition
The Committee comprises Jean Matterson, Wendy
Colquhoun, Karl Sternberg, Paul Yates, Theo Zemek
and Ravi Anand, as Chairman, all of whom have recent
and relevant financial experience from their senior
management and other non-executive roles in both the
closed-ended sector or from other investment products.
Ravi Anand is a chartered accountant, corporate financier
and commercial business director with considerable
financial and investment company experience. The
biographies of the Committee members can be
found on pages 26 and 27. As she is deemed to be
independent, Jean Matterson, the Chairman of the
Board, was appointed a member of the Audit and Risk
Committee with effect from 26 January 2022. Previously
Jean attended Committee meetings by invitation
only. Karl Sternberg will remain as a member of the
Audit and Risk Committee upon his appointment as
Chairman, since he is also deemed to be independent.
Collectively, the Committee brings considerable corporate
and investment company experience to bear on the
Company’s activities.
Role and responsibilities
The principal objectives of the Committee are to provide
assurance to the Board as to the effectiveness of the
Company’s internal controls and the integrity of its
financial reporting and to monitor the appointment,
effectiveness and objectivity of the external auditor. In
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:
■ 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;
■ to consider the integrity of and recommend to
the Board for approval the contents of the draft
half- yearly and annual reports to shareholders and
related announcements;
■ to review the accounting policies and significant
financial reporting judgements;
■ to assess going concern and viability of the
Company, including the assumptions used;
■ to ensure the Annual Report, taken as a whole, isfair,
balanced and understandable;
■ to review the external auditor’s independence,
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;
■ together with the Company Secretary, to review
the Company’s compliance with financial reporting,
regulatory and governance requirements; and
■ to assess the need for an internal audit function,
taking account of the assurances received from the
various external agents to the Company on their
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
the Board in fulfilling its oversight responsibilities,
reviewing the financial reporting process, the systems
of internal control and management of risk, the audit
process and the Company’s process for monitoring
compliance with laws and regulations.
In particular, the Committee focussed on the following
areas during the year:
Financial reporting
The Committee considered the significant issues and
areas of key audit risk in respect of the Annual Report
and Financial Statements and in the production of
the interim accounts, including emerging risks and
changes to the Company’s risk profile. The Committee
reviewed the external audit plan in November 2024
and concluded that the appropriate areas of audit
risk relevant to the Company had been identified and
that suitable audit procedures had been put in place
to obtain reasonable assurance that the financial
statements as a whole would be free of material
misstatements and that the accounting policies and how
they are applied continues to be appropriate.
44 CapitalGearingTrustP.l.c. Annual Report and Financial Statements 2025
Audit and Risk Committee Report (continued)
Financial reporting (continued)
As part of the review of the financial statements, the Committee considered the following significant issues:
Significantissue 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 place
to ensure that valuations are appropriate, and existence is verified by
Frostrow Capital LLP via reconciliations to custodial records. The valuation
of investments is undertaken in accordance with the accounting policies
disclosed in note 1 to the financial statements on page 58.
Ongoingimpactofhigherinflation,
risinginterestrates,andheightened
geopolitical risks
The Committee reviewed inflation, rising interest rates, and geopolitical
risks as part of the review of the investment portfolio and the asset
allocation. This was also considered in reviewing the level of income
received and the significant proportion of index linked securities now held.
Revenuerecognition,particularly
fromdelistedtrusts,wherereturns
maybeofcapitalratherthan
income,andanyotherreturns
from investments which constitute
capital rather than revenue returns
Revenue was recognised in accordance with investment policies and
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 0.3% of
the Company’s portfolio is invested in delisted investment trusts. Receipts
from these investments are reviewed by the Company Secretary and
Investment Manager to ensure they are appropriately allocated to revenue
or capital.
Potential for management override
of controls and maintaining
appropriate internal controls
The Committee together with the Board have established clear lines of
responsibility between the Investment Manager, Custodian, Company
Secretary and Administrator and receive appropriate reports from each of
them regarding the operation and review of those organisations’ internal
controls. There was also a review of the co-ordination between the
Investment Manager, the Administrator and Company Secretary.
Going concern The content of the investment portfolio, trading activity, portfolio
diversification and the cash balances are discussed at each Board meeting.
After due consideration, the Committee concluded it was appropriate to
prepare the Company’s financial statements on a going concern basis and
made this recommendation to the Board. The Company’s continued ability
to meet its investment objective, apply its investment policy, fulfil the aims
of the discount and premium control policy, having a widely diversified
and relatively liquid investment portfolio of largely listed securities and
being ungeared, with the operational expenses of the Company covered
by net income, were all factored into the consideration of both going
concern and viability of the Company.
Compliance with s1158 Corporation
tax Act 2000 (Investment trust
status) and other taxation issues
impactingontheCompany
The Committee reviews the Company Secretary’s procedures for
ensuring compliance with relevant regulations, including maintenance of
investment trust status and regularly seeks confirmation of compliance
with the relevant regulations. A separate accounting firm, Grant Thornton,
is appointed to oversee and advise on tax matters impacting on the
Company.
CapitalGearingTrustP.l.c. Annual Report and Financial Statements 2025 45
Key Features Strategic Report Governance Report Independent Auditor’s Report Financial Statements Notice of AGM Shareholder Information
Audit and Risk Committee Report (continued)
Financial statements
The production and the audit of the Company’s
Annual Report and Financial Statements is a
comprehensive process requiring input from a number
of different contributors. One of the main governance
requirements of the Company’s Annual Report and
Financial Statements is that they are fair, balanced
and understandable. The Board has requested that
the Committee advise on whether it considers that
the Annual Report and Financial Statements fulfil
these requirements, and that the Committee has given
consideration to the following:
a) the comprehensive reviews that are undertaken
at different levels in the production process of
the Annual Report and Financial Statements, by
the Investment Manager, Company Secretary and
Auditor and the 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
Company’s financial records and the security of the
Company’s assets.
As a result of the work performed, the Committee
has concluded that the Annual Report and Financial
Statements for the year ended 31 March 2025, 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 strategy as applied in the preceding year and
has reported on these findings to the Board. The Board’s
conclusions in this respect are set out in the Statement
of Directors’ Responsibilities on page 47.
Climate change
The Committee has considered the impact of climate
change insofar as it is reasonably able to do so,
particularly in the context of the climate-related risks.
These considerations did not have a material impact
on the financial reporting judgements and estimates
in the current year, nor were they expected to have
a significant impact on the Company’s going concern
orviability.
Audit appointment and tenure
The Company’s current auditor, BDO LLP, 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 auditor
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 least every five years. Chris Meyrick has
performed this role since November 2022. Based on
existing regulation the audit must be put out to tender
at least every ten years. The Company confirms that
it complied with the provisions of The Statutory Audit
Services for Large Companies Market Investigation
(Mandatory Use of Competitive Tender Processes and
Audit Committee Responsibilities) Order 2014 during
the financial year ended 31 March 2025.
Policy on non-audit services
The Company operates on the basis whereby the
provision of non-audit services by the auditor is
permissible where no conflict of interest arises, where
the 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 out during the year by BDO LLP, nor
since its appointment in 2020. Taxation services for the
Company are provided by a separate accounting firm,
GrantThornton.
Audit plan and fees
The Committee considered the plan and scope of the
audit, the principal risks that BDO LLP would address,
the timetable and proposed fees. The audit fee of
£54,800 for the current year’s audit, an increase from
£48,000 the previous year, both figures excluding VAT,
was approved by the Committee. This year’s audit fee
includes an additional one-off audit fee of £5,000 for
the change of administrator, which is the estimated
amount for system transitioning testing. There has
been a trend for increased audit fees throughout the
accounting industry, particularly for listed companies,
including investment companies. It is expected that
the Company will be impacted by this but that the fees
remain competitive for what is being provided and for
the circumstances of the Company and the Committee
will endeavour to ensure that value is provided for
feesrendered.
Representatives of BDO attend the Committee and
subcommittee meetings at which the draft Annual
Report 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 the Company Secretary.
46 CapitalGearingTrustP.l.c. Annual Report and Financial Statements 2025
Audit and Risk Committee Report (continued)
Assessment of the efficacy of the
external audit process
The Committee has adopted a framework in its review of
the effectiveness of the external audit process and audit
quality. This includes a review of the following areas:
a) the quality of the audit engagement partner and
the audit team;
b) the expertise of the audit firm and the resources
available to it;
c) planning, scope and execution of the audit,
including identification of areas of audit risk;
d) consideration of the appropriateness of the level of
audit materiality adopted;
e) role of the Board, Company Secretary, and third-
party service providers in an effective audit process;
f) communications by the auditor with the
Committee;
g) how the auditor supports the work of the
Committee and contributes added value; and
h) a review of independence and objectivity of the
audit firm.
Following the completion of the external audit each
year, the Committee reviews the effectiveness of the
external audit process against these criteria and is
satisfied that audit quality continues to be sufficient
to allow the Company to meet its obligations, and to
gain value from the services provided. The Committee
is satisfied that the external audit was carried out
effectively and recommends the re-appointment of BDO
as the Company’s auditor for the forthcoming financial
year and the authorisation of the Directors to determine
their remuneration for the year. The Committee
continues to believe that there is no requirement for
an interim review by the audit firm of the Company’s
interim accounts.
Internal audit function
Systems are in operation to safeguard the Company’s
assets and shareholders’ investments, to maintain
proper accounting records and to ensure that financial
information used within the business, or published,
is reliable. Being an investment company with no
employees, all executive activities are delegated
to service providers, principally among them, the
Investment Manager and the Administrator. The Board
places reliance on the Company’s framework of internal
controls and the Committee’s view on reporting received
from the Investment Manager and the Administrator.
The Board has therefore concluded that it is not
necessary for the Company to have its own internal
audit function.
As noted in the Chairman’s Statement, following a
review of the Company’s service providers the Board
appointed Frostrow Capital LLP and JP Morgan Securities
to provide company secretarial and administration and
DCP services respectively in place of Juniper Partners.
These new providers commenced provision of the
services on 1 July 2024.
In addition, it was agreed that the Company would
benefit from enhanced investor relations and marketing
services which will be provided by CGAM under the
existing investment management and AIFM service
arrangements. Together these new and revised service
arrangements has resulted in an increase to the
Company’s costs and OCR.
Committee evaluation
The Board conducts a formal annual review of the
Committee’s effectiveness, using an evaluation
questionnaire. The outcome was positive with no
concerns expressed.
2025-2026 action plan
During the year to 31 March 2026, the Committee
will continue to examine changes to the regulatory,
governance and economic environment, and the risks
and opportunities so presented. The annual report
and financial statements and the half yearly statement
will occupy much of the Committee time, as will
examining the resilience of the Company’s operations,
the internal controls of its agents and the integrity of
financial records and external financial reporting. Risks
will continue to be monitored, particularly the impact
of increasing inflation and geopolitical risks, whether
current or emerging.
Ravi Anand
Chairman of the Audit and Risk Committee
28 May 2025
CapitalGearingTrustP.l.c. Annual Report and Financial Statements 2025 47
Key Features Strategic Report Governance Report Independent Auditor’s Report Financial Statements Notice of AGM Shareholder Information
Directors’ Responsibilities Statement
in Respect of the Annual Report and the Financial Statements
The Directors are responsible for preparing the Annual
Report and the Financial Statements in accordance with
United Kingdom Generally Accepted Accounting Practice
(United Kingdom Accounting Standards, comprising FRS
102 ‘The Financial Reporting Standard applicable in the
UK and Republic of Ireland’, and applicable law) and
applicable law and regulation.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the
Directors have prepared the financial statements in
accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting
Standards, comprising FRS 102 ‘The Financial Reporting
Standard applicable in the UK and Republic of Ireland’,
and applicable law). Under company law, the Directors
must not approve the financial statements unless they
are satisfied that they give a true and fair view of the
state of affairs of the Company and of the net return of
the Company for that year. In preparing these financial
statements, the Directors are required to:
■ select suitable accounting policies and then apply
them consistently;
■ state whether applicable UK Accounting Standards,
comprising FRS 102, have been followed, subject to
any material departures disclosed and explained in
the financial statements;
■ make judgements and accounting estimates that are
reasonable and prudent;
■ prepare the financial statements on the going
concern basis unless it is inappropriate to presume
that the Company will continue in business; and
■ prepare a directors’ report, a strategic report and
directors’ remuneration report which comply with
the requirements of the Companies Act 2006.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the Company’s transactions and disclose with
reasonable accuracy at any time the financial position
of the Company and enable them to ensure that the
financial statements and the Directors’ Remuneration
Report comply with the Companies Act 2006.
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 ensuring that the
Annual Report and Financial Statements, taken as a
whole, are fair, balanced, and understandable and
provide the information necessary for shareholders to
assess the Company’s performance, business model
and strategy.
The Annual Report and Financial Statements are
published on the Company’s website which is
maintained by the Investment Manager. The Investment
Manager is responsible for the maintenance and
integrity of the Company’s website. Legislation in
the United Kingdom governing the preparation and
dissemination of financial statements may differ from
legislation in other jurisdictions.
The maintenance and integrity of the Company’s
website is the responsibility of the Directors. The
Directors’ responsibility also extends to the ongoing
integrity of the financial statements contained therein.
Declaration
Each of the Directors, whose names and functions are
listed in the Governance Report, confirms that, to the
best of his or her knowledge:
■ the Company’s Financial Statements, which have
been prepared in accordance with United Kingdom
Generally Accepted Accounting Practice (United
Kingdom Accounting Standards, comprising FRS 102,
and applicable law), give a true and fair view of the
assets, liabilities, financial position and net return of
the Company; and
■ the Board’s Strategic Report includes a fair review 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.
For and on behalf of the Board
Jean Matterson
Chairman
28 May 2025
48 CapitalGearingTrustP.l.c. Annual Report and Financial Statements 2025
Independent Auditor’s Report
to the members of Capital Gearing Trust P.l.c.
Opinion on the financial statements
In our opinion the financial statements:
■ give a true and fair view of the state of the
Company’s affairs as at 31 March 2025 and of its
profit for the year then ended;
■ have been properly prepared in accordance with UK
Generally Accepted Accounting Practice; and
■ have been prepared in accordance with the
requirements of the Companies Act 2006.
We have audited the financial statements of Capital
Gearing Trust P.l.c. (the ‘Company’) for the year ended
31 March 2025 which comprise the Income Statement,
Statement of Changes in Equity, Statement of Financial
Position, Cash Flow Statement and notes to the
financial statements, including a summary of significant
accounting policies. The financial reporting framework
that has been applied in their preparation is applicable
law and UK adopted international accounting standards.
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 the audit of the financial statements
section of our report. We believe that the audit evidence
we have obtained is sufficient and appropriate to
provide a basis for our opinion. Our audit opinion is
consistent with the additional report to the Audit and
Risk Committee.
Independence
Following the recommendation of the audit committee,
we were appointed by shareholders on 3 July 2020
to audit the financial statements for the year ended
5 April 2021 and subsequent financial periods. The
period of total uninterrupted engagement including
retenders and reappointments is five years, covering
the years ended 5 April 2021 to 31 March 2025. We
remain independent of the Company in accordance
with the ethical requirements that are relevant to our
audit of the financial statements in the UK, including
the FRC’s Ethical Standard as applied to listed public
interest entities, and we have fulfilled our 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
In auditing the financial statements, we have concluded
that the Directors’ use of the going concern basis
of accounting in the preparation of the financial
statements is appropriate. Our evaluation of the
Directors’ assessment of the Company’s ability to
continue to adopt the going concern basis of accounting
included:
■ Evaluating the appropriateness of the Directors’
method of assessing the going concern in light of
economic and market conditions by reviewing the
information used by the Directors in completing their
assessment;
■ Assessing the appropriateness of the Directors’
assumptions and judgements made in their revenue
forecast including consideration of the available
cash resources relative to forecast expenditure and
commitments;
■ Assessing the liquidity position available to meet
the future obligations and operating expenses for
a period of 12 months from the date of approval of
these financial statements;
■ Assessing the appropriateness of the Directors’
assumptions and judgements made in their
base case and stress tested forecasts including
consideration of the available cash resources relative
to forecast expenditure and commitments; and
■ Checking the accuracy of historical forecasting by
agreeing to actual results.
Based on the work we have performed, we have
not identified any material uncertainties relating to
events or conditions that, individually or collectively,
may cast significant doubt on the Company’s ability
to continue as a going concern for a period of at least
twelve months from when the financial statements are
authorised for issue.
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
to the Directors’ statement in the financial statements
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.
CapitalGearingTrustP.l.c. Annual Report and Financial Statements 2025 49
Key Features Strategic Report Governance Report Independent Auditor’s Report Financial Statements Notice of AGM Shareholder Information
Independent Auditor’s Report (continued)
to the members of Capital Gearing Trust P.l.c.
Overview
Key audit matters
Valuation and ownership of investments.
2025
4
2024
4
Materiality Companyfinancialstatementsasawhole:
£8.8m (2024: £10.6m) based on 1% (2024: 1%) of total equity shareholders’ funds.
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
system of internal control, and assessing the risks of material misstatement in the financial statements. We also
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
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) that we identified, including those which had the greatest effect on: the overall audit
strategy, the allocation of resources in the audit, and directing the efforts of the engagement team. These matters
were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
Key audit matter
Howthescopeofourauditaddressedthekey
audit matter
Valuation and
ownership of
investments
(Notes 8
and 15 to
the financial
statements)
The investment portfolio at the year-end
comprised of investments held at fair
value through profit or loss.
We considered there to be a risk of error
that the prices used for the investments
held by the Company are not reflective of
fair value.
The is also a risk that errors made in the
recording of investment holdings result in
the financial statements not appropriately
reflecting investments owned by the
Company.
We considered the valuation and
ownership of investments to be the most
significant audit area as the investments
represent the most significant balance in
the financial statements and underpin the
principal activity of the Company.
For these reasons and the materiality of
the balance in relation to the financial
statements as a whole, we considered
this to be a key audit matter.
We responded to this matter by testing the valuation
and ownership of the quoted portfolio of investments.
We performed the following procedures:
■ Confirmed the year-end bid price was used by
agreeing to externally quoted prices;
■ Obtained direct confirmation of the investment
holdings from the custodian regarding all
investments held at the balance sheet date; and
■ Recalculated the valuation by multiplying the
holdings per the statement obtained from the
custodian by the price per share obtained from
independent third party sources.
Keyobservations:
Based on our procedures performed we did not
identify any matters to suggest the valuation or
ownership of the quoted investments was not
appropriate.
50 CapitalGearingTrustP.l.c. Annual Report and Financial Statements 2025
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of
misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could
influence the economic decisions of reasonable users that are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we
use a lower materiality level, performance materiality, to determine the extent of testing needed. Importantly,
misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the
nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect
on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole and
performance materiality as follows:
Companyfinancialstatements
2025
£m
2024
£m
Materiality 8.8 10.6
Basisfordetermining
materiality
1% of Total equity shareholders’ funds.
Rationaleforthe
benchmarkapplied
As an investment trust, the total equity shareholders’ funds is the key measure of
performance for users of the financial statements.
Performancemateriality 6.6 7.9
Basisfordetermining
performancemateriality
75% of materiality. 75% of materiality.
Rationaleforthe
percentageappliedfor
performancemateriality
The level of performance materiality
applied was set after having considered
a number of factors including the
expected total value of known and
likely misstatements and the level of
transactions in the year.
The level of performance materiality
applied was set after having considered
a number of factors including the
expected total value of known and
likely misstatements and the level of
transactions in the year.
Reportingthreshold
We agreed with the Audit Committee that we would report to them all individual audit differences in excess of
£177,000 (2024: £212,000). We also agreed to report differences below this threshold that, in our view, warranted
reporting on qualitative grounds.
Other information
The directors are responsible for the other information. The other information comprises the information included in
the annual report other than the financial statements and our auditor’s report thereon. Our opinion on the financial
statements does not cover the other information and, except to the extent otherwise explicitly stated in our report,
we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial 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 gives rise
to a material misstatement in the financial statements themselves. If, based on the work we have performed, we
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.
Independent Auditor’s Report (continued)
to the members of Capital Gearing Trust P.l.c.
CapitalGearingTrustP.l.c. Annual Report and Financial Statements 2025 51
Key Features Strategic Report Governance Report Independent Auditor’s Report Financial Statements Notice of AGM Shareholder Information
Corporate governance statement
The UK Listing Rules require us to review the Directors’ statement in relation to going concern, longer-term viability
and that part of the Corporate Governance Statement relating to the Company’s compliance with the provisions of
the UK Corporate Governance Code specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the
Corporate Governance Statement is materially consistent with the financial statements or our knowledge obtained
during the audit.
Going concern and
longer-term viability
■ The Directors’ statement with regards to the appropriateness of adopting the going
concern basis of accounting and any material uncertainties identified set out on
page 24; and
■ The Directors’ explanation as to their assessment of the Company’s prospects, the
period this assessment covers and why the period is appropriate set out on page 25.
OtherCodeprovisions
■ Directors’ statement on fair, balanced and understandable set out on page 47;
■ Board’s confirmation that it has carried out a robust assessment of the emerging
and principal risks set out on page 22;
■ The section of the annual report that describes the review of effectiveness of risk
management and internal control systems set out on page 37; and
■ The section describing the work of the Audit and Risk Committee set out on page 43.
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during the course of the audit, we are
required 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:
■ the information given in the Strategic report and the Directors’ report for the
financial year for which the financial statements are prepared is consistent with the
financial statements; and
■ 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 the course of the audit, we have not identified material misstatements in
the strategic report or the 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.
Corporate governance
statement
In our opinion, based on the work undertaken in the course of the audit the information
about internal control and risk management systems in relation to financial reporting
processes and about share capital structures, given in compliance with rules 7.2.5 and
7.2.6 in the Disclosure Guidance and Transparency Rules sourcebook made by the
Financial Conduct Authority (the ‘FCA Rules’), is consistent with the financial statements
and has been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Company and its environment
obtained in the course of the audit, we have not identified material misstatements in
this information.
Independent Auditor’s Report (continued)
to the members of Capital Gearing Trust P.l.c.
52 CapitalGearingTrustP.l.c. Annual Report and Financial Statements 2025
Corporate governance
statement
In our opinion, based on the work undertaken in the course of the audit information
about the Company’s corporate governance code and practices and about its
administrative, management and supervisory bodies and their committees complies
with rules 7.2.2, 7.2.3 and 7.2.7 of the FCA Rules.
We have nothing to report arising from our responsibility to report if a corporate
governance statement has not been prepared by the Company.
Mattersonwhichwe
arerequiredtoreport
byexception
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:
■ adequate accounting records have not been kept, or returns adequate for our audit
have not been received from branches not visited by us; or
■ 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
■ certain disclosures of Directors’ remuneration specified by law are not made; or
■ we have not received all the information and explanations we require for our audit.
Responsibilities of Directors
As explained more fully in the Directors’ responsibilities statement, the Directors are responsible for the preparation
of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as
the Directors determine is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors 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 financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
Extenttowhichtheauditwascapableofdetectingirregularities,includingfraud
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 of irregularities, including
fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
Non-compliancewithlawsandregulations
Based on:
■ Our understanding of the Company and the industry in which it operates;
■ Discussion with the Investment Manager and Administrator and those charged with governance; and
■ Obtaining an understanding of the Company’s policies and procedures regarding compliance with laws and
regulations.
Independent Auditor’s Report (continued)
to the members of Capital Gearing Trust P.l.c.
Capital Gearing Trust P.l.c. Annual Report and Financial Statements 2025 53
Key Features Strategic Report Governance Report Independent Auditor’s Report Financial Statements Notice of AGM Shareholder Information
We considered the significant laws and regulations to
be Companies Act 2006, the FCA listing and DTR rules,
the principles of the AIC Code of Corporate Governance,
industry practice represented by the AIC SORP, the
applicable accounting framework, and qualification as an
Investment Trust under UK tax legislation as any non-
compliance of this would lead to the Company losing
various deductions and exemptions from corporation tax.
Our procedures in respect of the above included:
■ Agreement of the financial statement disclosures to
underlying supporting documentation;
■ Enquiries of management and those charged with
governance relating to the existence of any non-
compliance with laws and regulations;
■ Reviewing minutes of meeting of those charged with
governance throughout the period for instances of
non-compliance with laws and regulations; and
■ Reviewing the calculation in relation to Investment
Trust compliance to check that the Company was
meeting its requirements to retain their Investment
Trust Status.
Fraud
We assessed the susceptibility of the financial statement
to material misstatement including fraud.
Our risk assessment procedures included:
■ Enquiry with the Investment Manager, the
Administrator and those charged with governance
regarding any known or suspected instances of
fraud;
■ Review of minutes of meeting of those charged with
governance for any known or suspected instances of
fraud; and
■ Discussion amongst the engagement team as to
how and where fraud might occur in the financial
statements.
Based on our risk assessment, we considered the
areas most susceptible to be management override of
controls.
Our procedures in respect of the above included:
■ In addressing the risk of management override of
control, we:
■ Performed a review of estimates and judgements
applied by management in the financial
statements to assess their appropriateness and
the existence of any systematic bias;
■ Considered the opportunity and incentive
to manipulate accounting entries and tested
relevant adjustments made in the period end
financial reporting process;
■ Reviewed for significant transactions outside the
normal course of business; and
■ Performed a review of unadjusted audit
differences, if any, for indicators of bias or
deliberate misstatement.
We also communicated relevant identified laws and
regulations and potential fraud risks to all engagement
team members who were all deemed to have
appropriate competence and capabilities and remained
alert to any indications of fraud or non-compliance with
laws and regulations throughout the audit.
Our audit procedures were designed to respond to risks
of material misstatement in the financial statements,
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
involve deliberate concealment by, for example, forgery,
misrepresentations or through collusion. There are
inherent limitations in the audit procedures performed
and the further removed non-compliance with laws and
regulations is from the events and transactions reflected
in the financial statements, the less likely we are to
become aware of it.
A further description of our responsibilities is available
on the Financial Reporting Council’s website at:
www.frc.org.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 the fullest extent permitted by law, we do not accept
or 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.
Chris Meyrick (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
Edinburgh, UK
28 May 2025
BDO LLP is a limited liability partnership registered in
England and Wales (with registered number OC305127).
Independent Auditor’s Report (continued)
to the members of Capital Gearing Trust P.l.c.
54 CapitalGearingTrustP.l.c. Annual Report and Financial Statements 2025
Note
Year ended 31 March 2025 Year ended 31 March 2024
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Net gains/(losses) on
investments 8 – 13,059 13,059 – (3,113) (3,113)
Net gains on currency swap
contracts – 1,354 1,354 – – –
Net currency gains/(losses) – 51 51 – (109) (109)
Investment income 2 26,694 – 26,694 25,145 – 25,145
Other income 2 339 – 339 400 – 400
Gross return 27,033 14,464 41,497 25,545 (3,222) 22,323
Investment management fee 3 (3,950) – (3,950) (4,298) – (4,298)
Other expenses 4 (1,513) – (1,513) (1,070) – (1,070)
Net return before tax 21,570 14,464 36,034 20,177 (3,222) 16,955
Tax 5 (43) – (43) (3,220) – (3,220)
Net return attributable to
equity shareholders 21,527 14,464 35,991 16,957 (3,222) 13,735
Net return per Ordinary share 7 107.54p 72.26p 179.85p 69.74p (13.25)p 56.49p
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 58 to 72 form an integral part of these financial statements.
Income Statement
for the year ended 31 March 2025
CapitalGearingTrustP.l.c. Annual Report and Financial Statements 2025 55
Key Features Strategic Report Governance Report Independent Auditor’s Report Financial Statements Notice of AGM Shareholder Information
Note
Called-up
share
capital
£’000
Share
premium
account
£’000
Capital
redemption
reserve
£’000
Special
reserve
(1)
£’000
Realised
capital
reserve
(1)
£’000
Unrealised
capital
reserve
(1)
£’000
Revenue
reserve
(1)
£’000
Total
equity
share-
holders’
funds
£’000
Opening balance at
1 April 2023
6,645 1,101,753 16 – 140,426 (7,973) 18,852 1,259,719
Net return for
the year – – – – (1,980) (1,242) 16,957 13,735
Cancellation of share
premium account 12 – (1,101,753) – 1,101,753 – – – –
Shares bought back
into treasury 11 – – – (64,350) (130,776) – – (195,126)
Dividends paid
6 – – – – – – (18,155) (18,155)
Closing balance at
31 March 2024
6,645 – 16 1,037,403 7,670 (9,215) 17,654 1,060,173
Opening balance at
1 April 2024 6,645 – 16 1,037,403 7,670 (9,215) 17,654 1,060,173
Net return for the
year – – – – 21,205 (6,741) 21,527 35,991
Shares bought back
into treasury 11 – – – (194,541) – – – (194,541)
Dividends paid
6 – – – – – – (16,598) (16,598)
Closing balance at
31 March 2025 6,645 – 16 842,862 28,875 (15,956) 22,583 885,025
(1)
These reserves are available for distribution (except for the unrealised gains on Level 3 investments detailed in Note 15).
The notes on pages 58 to 72 form an integral part of these financial statements.
Statement of Changes in Equity
for the year ended 31 March 2025
56 CapitalGearingTrustP.l.c. Annual Report and Financial Statements 2025
Note
31 March
2025
£’000
31 March
2024
£’000
Fixed assets
Investments held at fair value through profit or loss 8 860,407 1,053,792
Current assets
Debtors 9 8,379 4,500
Cash at bank 42,859 11,643
51,238 16,143
Creditors: amounts falling due within one year 10 (26,620) (9,762)
Net current assets 24,618 6,381
Total assets less current liabilities 885,025 1,060,173
Capital and reserves
Called-up share capital 11 6,645 6,645
Capital redemption reserve 16 16
Special reserve 12 842,862 1,037,403
Capital reserve 12,919 (1,545)
Revenue reserve 22,583 17,654
Total equity shareholders’ funds 885,025 1,060,173
Net asset value per Ordinary share 13 4,924.8p 4,810.5p
The financial statements on pages 54 to 57 were approved by the Board on 28 May 2025 and signed on its behalfby:
Jean Matterson
Chairman
The notes on pages 58 to 72 form an integral part of these financial statements.
Statement of Financial Position
as at 31 March 2025
CapitalGearingTrustP.l.c. Annual Report and Financial Statements 2025 57
Key Features Strategic Report Governance Report Independent Auditor’s Report Financial Statements Notice of AGM Shareholder Information
Note
Year ended
31 March
2025
£’000
Year ended
31 March
2024
£’000
Netcashinflowfromoperatingactivities 14 10,740 10,612
Payments to acquire investments (1,072,259) (809,667)
Receipts from sale of investments 1,307,502 1,006,421
Settlement on currency swap contracts (1,577) –
Netcashinflowfrominvestingactivities 233,666 196,754
Equity dividends paid 6 (16,598) (18,155)
Repurchase of Ordinary shares (196,592) (191,334)
Netcashoutflowfromfinancingactivities (213,190) (209,489)
Increase/(decrease) in cash and cash equivalents 31,216 (2,123)
Cash and cash equivalents at start of year 11,643 13,766
Cash and cash equivalents at end of year 42,859 11,643
The notes on pages 58 to 72 form an integral part of these financial statements.
Cash Flow Statement
for the year ended 31 March 2025
58 CapitalGearingTrustP.l.c. Annual Report and Financial Statements 2025
1 Significantaccountingpolicies
The current reporting year is 1 April 2024 to 31 March
2025. The comparative information is for the period
1April 2023 to 31 March 2024.
a) Basis of accounting
Capital Gearing Trust P.l.c. is a public company limited by
shares, incorporated and domiciled in Northern Ireland
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
‘UK GAAP’) including Financial Reporting Standard
(FRS) 102 ‘The Financial Reporting Standard applicable
in the UK and Republic of Ireland’ and the Statement
of Recommended Practice ‘Financial Statements of
Investment Trust Companies and Venture Capital Trusts’
(the ‘SORP’) issued by the Association of Investment
Companies (‘AIC’) in 2022. All of the Company’s
operations are of a continuing nature.
The accounts have been prepared on a going concern
basis under the historical cost convention, as modified
by the revaluation of investments held at fair value
through profit or loss. A robust assessment of going
concern by the Audit and Risk Committee is set out
in the Board’s Strategic Report and can be found on
page24. 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 year and prior period.
Estimates and judgements are continually evaluated and
are based on historical experience and other factors,
including expectations of future events that are believed
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 11and12
of FRS 102 in respect of investments and other financial
instruments. The Company’s business is investing
in financial assets with a view to profiting from their
total return in the form of income and capital growth.
This portfolio of financial assets is managed and
its performance evaluated on a fair value basis in
accordance with a documented investment strategy
and information is provided internally on that basis
to the Board. Accordingly, upon initial recognition
the investments are designated by the Company as
“held at fair value through profit or loss”. Investments
are included initially at fair value which is taken to be
their cost, including expenses incidental to purchase.
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
valued at the Board’s estimate of its fair value following
a detailed review and appropriate challenge of the
valuations proposed by the Investment Manager.
TheInvestment Manager applies techniques consistent
with the International Private Equity and Venture
Capital Valuation Guidelines 2018 (‘IPEV’) (as detailed
in Note15). The investments are valued according to a
three monthly cycle of measurement dates, or where
there is an indication of a change in fair value as defined
in the IPEV guidelines.
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
year-end and foreign exchange gains and losses on cash
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 element
of the capital reserve. The costs relating to the issue of
new Ordinary shares are charged to the share premium
account.
d) Dividends
In accordance with FRS 102 the final dividend is included
in the financial statements in the year that it is approved
by shareholders.
e) Income
Dividends receivable on listed equity shares are
recognised on the ex-dividend date as a revenue return,
and the return on zero dividend preference shares is
recognised as a capital return.
Dividends receivable on equity shares where no
ex-dividend date is quoted are recognised when the
Company’s right to receive payment is established.
NotestotheFinancialStatements
CapitalGearingTrustP.l.c. Annual Report and Financial Statements 2025 59
Key Features Strategic Report Governance Report Independent Auditor’s Report Financial Statements Notice of AGM Shareholder Information
1 Significantaccountingpolicies
(continued)
Special dividends receivable are taken to capital where
relevant circumstances indicate that the dividends are
capital in nature.
Income from fixed-interest securities is recognised as
revenue on a time apportionment basis so as to reflect
their effective yield.
Income from securities where the return is linked to an
inflation index is accrued as earned and is included in the
income column of the Income Statement. In accordance
with the Company’s commercial objective and as permitted
by the AIC SORP, the movement in capital value is
recognised in the capital column of the Income Statement.
The amount recognised as a capital return on index-linked
securities in the year is disclosed in Note 8 – Investments
held at fair value through profit or loss.
f) Expenses
All expenses are charged to revenue and include, where
applicable, value added tax (‘VAT’). All expenses are
accounted for on an accruals basis.
g) Taxation policy
Current tax payable is based on the taxable profit
for the year. Deferred taxation is provided using the
liability method on all timing differences, calculated at
the rate at which it is anticipated the timing differences
will 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
deferred tax on any capital gains and losses arising on
the revaluation of investments.
h) Other debtors and creditors
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
known amount of cash and are subject to insignificant
risk of changes in value.
i) Foreign currency
The results and financial position of the Company are
expressed in pounds sterling, which is the functional
and 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
recorded in the functional currency at actual exchange
rates as at the date of the transaction. Monetary assets
and liabilities denominated in foreign currencies at
the year-end are reported at the rates of exchange
prevailing at the year-end.
j) Reserves
The following are accounted for in the capital reserve:
■ gains and losses on the realisation of investments;
■ increases and decreases in the valuation of
investments held at the year-end;
■ realised foreign currency differences of a capital
nature; and
■ unrealised foreign currency differences of a capital
nature.
Other reserves:
■ The share premium account includes the premium
above nominal value from proceeds on issue of any
equity share capital comprising Ordinary shares of
25p each and is not distributable.
■ The revenue reserve reflects all the income and costs
which are recognised in the revenue column of the
income statement and is distributable.
■ The special reserve results from the shareholder and
court approved cancellation of the share premium
account, is distributable and will be applied for share
buy backs.
■ The capital redemption reserve arises from the
buy back and cancellation of shares and is not
distributable.
k) Repurchases of shares into treasury and
subsequent re-issue
The proceeds from issuing Ordinary shares less issue
costs are taken to equity and the costs of repurchasing
Ordinary shares, including related stamp duty and
transaction costs, are taken directly to equity and
reported through the Statement of Changes in
Equity, with the cost of repurchase being charged to
a distributable reserve. Share issues and repurchase
transactions are accounted for on a trade-date basis. The
nominal value of Ordinary share capital repurchased and
cancelled is transferred out of called-up share capital and
into the capital redemption reserve, in accordance with
section 733 of the Companies Act 2006.
NotestotheFinancialStatements(continued)
60 CapitalGearingTrustP.l.c. Annual Report and Financial Statements 2025
1 Significantaccountingpolicies(continued)
Where shares are repurchased and held in treasury, the transfer to the capital redemption reserve is made if and
when such shares are subsequently cancelled.
The sales proceeds of treasury shares re-issued are treated as a realised profit up to the amount of the purchase
price of those shares and is transferred to capital reserves. The excess of the sales proceeds over the purchase price
is transferred to ‘share premium’.
l) Derivativefinancialinstruments
Derivative instruments are prohibited for the purpose of investment under the Company’s Investment Policy, but with
the Board’s prior approval, can be used to hedge certain market risk exposures such as foreign currency risk.
Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently
remeasured to their fair value at each reporting date. The resulting gain or loss is recognised in the Income Statement
and entirely recognised as capital.
2 Investmentincome
2025
£’000
2024
£’000
Income from Investments:
Income from overseas equity and non-equity investments 6,531 318
Income from UK equity and non-equity investments 6,200 9,435
Interest from conventional UK bonds 5,423 8,813
Interest from index-linked overseas bonds 4,759 2,160
Interest from index-linked UK bonds 2,688 1,159
Interest from conventional overseas bonds 1,093 3,260
Total income from investments 26,694 25,145
2025
£’000
2024
£’000
Total income comprises:
Interest from bonds 13,963 15,392
Dividends 11,266 7,460
Property income and interest distributions 1,465 2,293
Deposit interest 339 400
27,033 25,545
2025
£’000
2024
£’000
Income from investments comprises:
UK 14,311 19,407
Overseas 12,383 5,738
26,694 25,145
NotestotheFinancialStatements(continued)
CapitalGearingTrustP.l.c. Annual Report and Financial Statements 2025 61
Key Features Strategic Report Governance Report Independent Auditor’s Report Financial Statements Notice of AGM Shareholder Information
3 Investmentmanagementfee
2025
£’000
2024
£’000
Investment management fee 3,950 4,298
The Company’s Investment Manager CG Asset Management Limited received an annual management fee equal
to 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 (2024: the same basis). At 31 March 2025 £307,000 (31 March 2024: £1,028,000) was payable. The terms of
the investment management agreement are detailed on pages 28 and 29.
4 Otherexpenses
2025
£’000
2024
£’000
Company secretarial and administration services
(1)
571 259
Directors’ remuneration (refer to Directors’ Remuneration Report) 197 169
Depositary fees 96 115
Stock Exchange and FCA fees 110 106
Custody services 65 56
Registrar fees 48 50
Fees payable to the Company’s auditor for the audit of Company financial statements
(2)
82 48
General expenses 344 267
1,513 1,070
(1)
Frostrow Capital LLP was appointed as the Company Secretary and Administrator effective from 1 July 2024. The expenses balance for the year
to 31March 2024 in part reflects the waiver of certain elements of the previous Company Secretary and Administrator’s fees in recognition of the
service disruption experienced during 2024.
(2)
Audit fees for the year include additional charges of £27,000 relating to additional costs incurred in respect of the prior year audit. These costs were invoiced
and recognized in the current year, resulting in an increase in the total audit fees compared to the prior year. The current year charge also includes a £5,000
one-off charge for additional audit procedures performed in relation to the change in the Company’s Administrator to Frostrow Capital LLP.
The above expenses exclude VAT where appropriate. Irrecoverable VAT is included within general expenses.
5 Taxation
2025 2024
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Current tax:
Overseas withholding tax 43 – 43 41 – 41
Corporation tax – – – 3,179 – 3,179
Current tax charge 43 – 43 3,220 – 3,220
NotestotheFinancialStatements(continued)
62 CapitalGearingTrustP.l.c. Annual Report and Financial Statements 2025
5 Taxation(continued)
The tax assessed for the year is lower (2024: lower) than the standard rate of corporation tax in the UK of 25%
(2024:25%). The differences are explained below:
2025 2024
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Net return before tax 21,570 14,464 36,034 20,177 (3,222) 16,955
Return at the standard rate of
UK corporation tax 5,393 3,616 9,009 5,044 (806) 4,238
Adjusted for the effects of:
Non-taxable UK franked dividends (2,537) – (2,537) (1,865) – (1,865)
Non-taxable capital returns
(1)
– (3,616) (3,352) – 806 806
Tax impact on dividends designated as
interest distribution (2,856) – (2,856) – – –
Irrecoverable overseas withholding tax 43 – 43 41 – 41
Current tax charge 43 – 43 3,220 – 3,220
(1)
The Company is an Investment Trust as defined by section 1158 of the Corporation Tax Act 2010 and capital gains are not subject to UK corporation tax.
The Company has no unrelieved management expenses, a UK corporation tax charge of £nil is payable in respect of
the year ended 31 March 2025 (year to 31 March 2024: £3,179,000).
6 Dividends
2025
£’000
2024
£’000
Ordinary shares
2023 dividend paid 10 July 2023 (60p per share) – 15,577
2023 special dividend paid 23 February 2024 (11p per share) – 2,578
2024 dividend paid 5 July 2024 (78p per share) 16,598 –
16,598 18,155
The 2024 dividends were paid on 4 July 2024 to shareholders on the register on 7 June 2024 when there were
21,257,727 Ordinary shares in issue.
The 2023 dividends were paid on 10 July 2023 to shareholders on the register on 2 June 2023 when there were 25,916,313
Ordinary shares in issue and on 23 February 2024 to shareholders on the register on 2 February 2024 when there were
23,419,137 Ordinary shares in issue. Although the special dividend was paid in respect of the Company’s financial year ended
31 March 2023, for shareholders’ own tax purposes the dividend was received during the tax year ended 5 April 2024.
The Directors have recommended to shareholders a final dividend of 102p per share, comprising 66p in interest
distribution and 36p in ordinary equity dividends for the year ended 31March 2025. If approved, this dividend will be
paid to shareholders on 8 July 2025. This dividend is subject to approval by shareholders at the AGM and, therefore, in
accordance with FRS 102, it has not been included as a liability in these financial statements. The total estimated dividend
to be paid, based on the number of shares in issue at 31 March 2025, is £18,330,000. However the actual amount of the
dividend to be paid will be based on the number of shares inissue on6 June 2025, the dividend record date.
2025
£’000
2024
£’000
Revenue available for distribution by way of dividend for the year 21,527 16,957
Proposed final dividend of 102p for the year ended 31 March 2025 (2024: 78p) (18,330) (18,155)
Surplus/(deficit) available to carry forward 3,197 (1,198)
NotestotheFinancialStatements(continued)
CapitalGearingTrustP.l.c. Annual Report and Financial Statements 2025 63
Key Features Strategic Report Governance Report Independent Auditor’s Report Financial Statements Notice of AGM Shareholder Information
7 NetreturnperOrdinaryshare
The net return per Ordinary share of 179.85p (2024: 56.49p) is based on the total net gains for the financial year
of £35,991,000 (2024: net gains of £13,735,000) and on 20,011,591 (2024: 24,313,730) Ordinary shares, being the
weighted average number of Ordinary shares in issue in each period.
Revenue return per Ordinary share of 107.54p (2024: 69.74p) is based on the net revenue income for the financial
year of £21,527,000 (2024: £16,957,000) and on 20,011,591 (2024: 24,313,370) Ordinary shares, being the weighted
average number of Ordinary shares in issue in each period.
Capital return per Ordinary share of 72.26p (2024: capital loss of 13.25p) is based on the net capital gains for the
financial year of £14,464,000 (2024: net capital loss of £3,222,000) and on 20,011,591 (2024: 24,313,730 ) 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.
8 Investmentsheldatfairvaluethroughprofitorloss
2025
£’000
2024
£’000
Listed investment companies:
Ordinary shares UK 175,044 190,070
Ordinary shares overseas 35,647 13,633
Zero dividend preference shares UK 5,411 18,462
UK government bonds 91,684 348,068
UK non-government bonds 88,832 80,299
Overseas government bonds 418,034 269,836
Overseas non-government bonds 5,973 25,654
Exchange traded funds 39,782 107,770
860,407 1,053,792
Opening cost of investments 1,063,115 1,259,886
Unrealised (depreciation)/appreciation (9,323) (8,085)
Opening fair value of investments 1,053,792 1,251,801
Additions at cost 1,092,046 802,856
Effective yield adjustment
(1)
8,689 6,150
Sales proceeds (1,307,179) (1,003,902)
Gains/(losses) on investments 13,059 (3,113)
Closing fair value of investments 860,407 1,053,792
Closing book cost of investments 879,297 1,063,115
Unrealised losses (18,890) (9,323)
860,407 1,053,792
Realised gains/(losses) on disposals 22,626 (1,875)
Increase in cumulative unrealised losses (9,567) (1,238)
Net gains/(losses) on investments 13,059 (3,113)
The Company received proceeds of £1,307,179,000 (2024: £1,003,902,000) from investments sold in the year.
Thebook cost of these investments was £1,284,553,000 (2024: £1,005,777,000).
The total amount recognised as a capital return on index-linked securities in the year was £5,575,000 (2024:£4,686,000).
(1)
The effective yield adjustment is in relation to conventional fixed interest and index-linked securities. The accounting treatment for income on
securities held is set out in Note 1(e) on pages 58 and 59.
NotestotheFinancialStatements(continued)
64 CapitalGearingTrustP.l.c. Annual Report and Financial Statements 2025
8 Investmentsheldatfairvaluethroughprofitorloss(continued)
The geographical spread of investments is shown on page 10.
The total transaction costs on additions were £393,000 (2024: £390,000) and on sales were £98,000 (2024: £59,000).
These costs are included in the book cost of acquisitions and the net proceeds of sales.
9 Debtors
2025
£’000
2024
£’000
Due from brokers 1,818 2,141
Receivable from currency swap contracts 2,931 –
Accrued interest 1,803 1,855
Dividends receivable 1,002 397
Prepayments and other debtors 91 89
Corporation tax refund 734 18
8,379 4,500
10 Creditors:amountsfallingduewithinoneyear
2025
£’000
2024
£’000
Due to brokers 24,382 4,595
Repurchase of Ordinary shares into treasury 1,770 3,768
Accruals 451 1,231
Corporation tax – 141
Other creditors 17 27
26,620 9,762
11 Called-upsharecapital
2025 2024
Number of
shares £’000
Number of
shares £’000
Ordinary share of 25p
Ordinary shares in issue at beginning of year 22,038,727 5,510 26,258,763 6,565
Ordinary shares bought back into Treasury during year (4,067,965) (1,017) (4,220,036) (1,055)
Ordinary shares in issue at end of year 17,970,762 4,493 22,038,727 5,510
Treasury shares (Ordinary shares of 25p)
Treasury shares in issue at beginning of year 4,541,536 1,135 321,500 80
Ordinary shares bought back into Treasury during year 4,067,965 1,017 4,220,036 1,055
Treasury shares in issue at end of year 8,609,501 2,152 4,541,536 1,135
Total Ordinary shares in issue and in treasury
atendof year 26,580,263 6,645 26,580,263 6,645
NotestotheFinancialStatements(continued)
CapitalGearingTrustP.l.c. Annual Report and Financial Statements 2025 65
Key Features Strategic Report Governance Report Independent Auditor’s Report Financial Statements Notice of AGM Shareholder Information
11 Called-upsharecapital(continued)
During the years to 31 March 2025 and 31 March 2024, the Company issued no new Ordinary shares and no Ordinary
shares were sold from Treasury.
During the year to 31 March 2025, 4,067,965 (2024: 4,220,036) Ordinary shares were repurchased by the Company at
an average price of 4,746.7p per share for a total cost of £194,541,000 (2024: at an average price of 4,585.2p per share
for a total cost of £195,126,000). All shares were bought back at a discount to NAV. No shares were purchased for
cancellation during the year (2024: nil) and at the year-end 8,609,501 shares were held in treasury (2024: 4,541,536).
12 Sharepremiumaccountandspecialreserve
On 22 January 2024 the High Court of Justice in Northern Ireland (the ‘Court’) approved the cancellation of the
Company’s share premium account and the crediting of an equivalent amount to the Company’s distributable
reserves. The Order of the Court approving the cancellation became effective on 7 February 2024 when it was
registered with the Registrar of Companies in Northern Ireland and this special distributable reserve was therefore
established from that date.
The cost of share buybacks undertaken by the Company have been recognised through this reserve since 7 February 2024.
13 NetassetvalueperOrdinaryshare
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
2025 2024
Ordinary shares 4,924.8p 4,810.5p
Net assets attributable to
2025
£’000
2024
£’000
Ordinary shares 885,025 1,060,173
Net asset value per Ordinary share is based on the net assets, as shown above, and on 22,038,727 (2024: 26,258,763)
Ordinary shares, being the number of Ordinary shares in issue at the year-end, but excluding shares held in Treasury.
NotestotheFinancialStatements(continued)
66 CapitalGearingTrustP.l.c. Annual Report and Financial Statements 2025
14 Reconciliationofnetreturnonordinaryactivitiesbeforetaxtonetcashinflow
fromoperatingactivities
2025
£’000
2024
£’000
Net return on ordinary activities before tax 36,034 16,955
Capital (gains)/losses before tax (14,464) 3,222
Gains/(losses) on foreign currency transactions 51 (109)
Increase in prepayments (2) (16)
(Decrease)/increase in accruals (737) 18
Decrease in recoverable tax – 4
Increase in dividends receivable (605) (165)
Decrease/(increase) in accrued interest and effective interest income adjustments (8,637) (5,213)
Overseas withholding tax paid (43) (41)
UK Corporation tax paid (857) (4,043)
Net cash inflow from operating activities 10,740 10,612
During the year, the Company received dividend income of £9,045,000 (2024: £9,588,000) and interest income of
£7,006,000 (2024: £10,579,000) in cash.
15 Financialinstruments
The Company has the following financial instruments:
2025
£’000
2024
£’000
Financial assets at fair value through profit or loss
– Investments held at fair value through profit and loss 860,407 1,053,792
– Currency swap contracts 2,931 –
Financial assets that are measured at amortised cost
– Cash at bank 42,859 11,643
– Due from brokers 1,886 2,146
– Accrued interest and dividends receivable 2,805 2,252
910,888 1,069,833
2025
£’000
2024
£’000
Financial liabilities measured at amortised cost
– Due to brokers 24,399 8,363
– Accruals 2,221 1,231
26,620 9,594
The Company’s financial instruments comprise:
■ investment company ordinary shares, zero dividend preference shares, exchange traded funds and fixed and
index-linked securities that are held in accordance with the Company’s investment objective;
■ cash and liquid resources that arise directly from the Company’s operations; and
■ debtors and creditors.
NotestotheFinancialStatements(continued)
CapitalGearingTrustP.l.c. Annual Report and Financial Statements 2025 67
Key Features Strategic Report Governance Report Independent Auditor’s Report Financial Statements Notice of AGM Shareholder Information
15 Financialinstruments(continued)
The main risks arising from the Company’s financial instruments are market risk, interest rate risk, foreign currency
risk and credit risk. The Board regularly reviews and monitors the management of each of these risks and they are
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.
Market risk
Market risk arises mainly from uncertainty about the future prices of financial instruments held. It represents the
potential loss the Company might suffer through holding market positions in the face of price movements.
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
invest, and the market value of investment company shares may not reflect their underlying assets.
To mitigate these risks, the Investment Manager’s investment strategy is to select investments for their fundamental
value. Stock selection is therefore based on disciplined financial, market and sector analysis, with the emphasis
on long-term investments. An appropriate spread of investments is held in the portfolio in order to reduce both
the systemic risk and the risk arising from factors specific to a country or sector. The Investment Manager actively
monitors market prices throughout the year and reports to the Board, which meets regularly to consider investment
strategy. A list of the largest investments held by the Company is shown on pages 11 and 12. All investments are
stated at bid value, which in the Directors’ opinion is equal to fair value.
Price risk sensitivity
The following table illustrates the sensitivity of the net return after taxation for the year and the net assets to an
increase or decrease of 10% (2024: 10%) 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.
2025 2024
10% increase
in market
prices
£’000
10% decrease
in market
prices
£’000
10% increase
in market
prices
£’000
10% decrease
in market
prices
£’000
Income Statement – net return after tax
Revenue return (296) 296 (322) 322
Capital return 86,041 (86,041) 105,379 (105,379)
Total return after taxation 85,745 (85,745) 105,057 (105,057)
Change to net assets attributable to shareholders
85,745 (85,745) 105,057 (105,057)
Interest rate risk
Bond and preference share yields, and as a consequence their prices, are determined by market perception as
to the appropriate level of yields given the economic background. Key determinants include economic growth
prospects, inflation, the Government’s fiscal position, short-term interest rates and international market comparisons.
The Investment Manager takes all these factors into account when making any investment decisions as well as
considering the financial standing of the potential investee company.
Returns from bonds and preference shares are fixed at the time of purchase, as the fixed coupon payments are
known, as are the final redemption proceeds. This means that if a bond is held until its redemption date, the total
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 a price different from its purchase level and a profit or loss may be incurred.
NotestotheFinancialStatements(continued)
68 CapitalGearingTrustP.l.c. Annual Report and Financial Statements 2025
15 Financialinstruments(continued)
Interest rate changes affect the income the Company generates from its financial assets with floating rates, and
the fair value of the interest bearing assets in the Company’s portfolio. The following table illustrates the sensitivity
of the net returns and the net assets to an increase or decrease of 1% (2024: 1%) in regard to the Company’s
monetary financial assets and financial liabilities. The financial assets affected by interest rates comprise cash at
bank , conventional and index-linked bonds as well as corporate debt instruments. There are no financial liabilities
affected by interest rates. 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 monetary financial instruments at the
Statement of Financial Position date with all other variables held constant.
2025 2024
1% increase
in interest
rates
£’000
1% decrease
in interest
rates
£’000
1% increase
in interest
rates
£’000
1% decrease
in interest
rates
£’000
Income Statement – net revenue return 429 (429) 87 (87)
Income Statement - net capital return (54,955) 54,240 (31,231) 35,421
Change to net assets attributable to shareholders (54,526) 53,811 (31,144) 35,334
The interest rate profile of the Company’s assets at 31 March 2025 was as follows:
Total
(as per
Statement
of Financial
Position)
£’000
Floating
rate
£’000
Index-
linked
£’000
Other
fixed
rate
£’000
Assets/
(liabilities)
on which
no interest
is paid
£’000
Weighted
average
interest
rate
%
Weighted
average
period
for which
rate is
fixed
(years)
Assets
Investment trusts and
other funds 255,883 – – – 255,883 – –
UK index-linked
government bonds 75,829 – 75,829 – – 0.40 10.24
UK index-linked
non-government bonds 23,095 – 23,095 – – 1.03 4.58
UK government bonds 15,855 – – – 15,855 – –
UK non-government bonds 65,737 – – 65,737 – 4.26 5.15
Overseas index-linked
government bonds 258,992 – 258,992 – – 0.51 7.13
Overseas index-linked
non-government bonds 456 – 456 – – 3.05 0.39
Overseas government
bonds 159,043 – – 159,043 – 0.54 0.77
Overseas non-government
bonds 5,517 – – 5,517 – 6.22 4.34
Invested funds 860,407 – 358,372 230,297 271,738 – –
Cash at bank 42,859 42,859 – – – – –
Other debtors 8,379 – – – 8,379 – –
Liabilities
Creditors (26,620) – – – (26,620) – –
Total net assets 885,025 – 358,372 230,297 253,497
NotestotheFinancialStatements(continued)
CapitalGearingTrustP.l.c. Annual Report and Financial Statements 2025 69
Key Features Strategic Report Governance Report Independent Auditor’s Report Financial Statements Notice of AGM Shareholder Information
15 Financialinstruments(continued)
The interest rate profile of the Company’s assets at 31 March 2024 was as follows:
Total
(as per
Statement
of Financial
Position)
£’000
Floating
rate
£’000
Index-
linked
£’000
Other
fixed
rate
£’000
Assets/
(liabilities)
on which
no interest
is paid
£’000
Weighted
average
interest
rate
%
Weighted
average
period
for which
rate is
fixed
(years)
Assets
Investment trusts and
other funds 329,935 – – – 329,935 – –
UK index-linked
government bonds 238,005 – 238,005 – – 0.13 6.57
UK index-linked
non-government bonds 19,531 – 19,531 – – 2.20 5.25
UK government bonds 110,063 – – – 110,063 – –
UK non-government bonds 60,768 – – 60,768 – 5.29 10.49
Overseas index-linked
government bonds 229,446 – 229,446 – – 0.76 9.49
Overseas index-linked
non-government bonds 3,863 – 3,863 – – 3.31 6.63
Overseas government
bonds 40,390 – – 2,617 37,773 – 0.07
Overseas non-government
bonds 21,791 – – 21,791 – 7.51 4.84
Invested funds 1,053,792 – 490,845 85,176 477,771
Cash at bank 11,643 11,643 – – – – –
Other debtors 4,500 – – – 4,500 – –
Liabilities
Creditors (9,762) – – – (9,762) – –
Total net assets 1,060,173 11,643 490,845 85,176 472,509
Fairvalueoffinancialassetsandliabilities
Financial Reporting Standard 102 requires an entity to classify fair value measurements using a fair value hierarchy
that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the
following levels:
Level 1: valued using unadjusted quoted prices in active markets for identical assets.
Level 2: valued using observable inputs other than quoted prices included within Level 1.
Level 3: valued using inputs that are unobservable and are valued by the Directors using International Private Equity
and Venture Capital Valuation (‘IPEV’) guidelines, such as earnings multiples, recent transactions and net
assets, which equate to their fair values.
The Company’s assets are measured at fair value through profit or loss. The fair value of financial instruments traded
in active markets is based on quoted market prices at the Statement of Financial Position date. A market is regarded
as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing
service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an
arm’s length basis.
NotestotheFinancialStatements(continued)
70 CapitalGearingTrustP.l.c. Annual Report and Financial Statements 2025
15 Financialinstruments(continued)
The financial assets and liabilities measured at fair value in the Balance Sheet are grouped into the fair value
hierarchy at 31 March 2025 and 2024 as follows:
Financial assets at
fair value through
profitorloss
2025 2024 (restated)
Level 1
£’000
Level 2
£’000
Level 3
£’000
Total
£’000
Level 1
£’000
Level 2
£’000
Level 3
£’000
Total
£’000
Quoted securities 844,854 14,990 – 859,844 1,027,027 24,344 – 1,051,371
Currency swap contracts – 2,931 – 2,931 – – – –
Delisted equities – – 563 563 – – 2,421 2,421
Net fair value 844,854 17,921 563 863,338 1,027,027 24,344 2,421 1,053,792
Quoted securities included in fair value Level 1 are actively traded on recognised stock exchanges and the fair value
of these investments has been determined by reference to their quoted bid prices at the reporting date.
Quoted securities included in fair value Level 2 relate to some corporate bond holdings in the Company’s portfolio,
which are also traded on recognised stock exchanges but the fair value of these investments has been determined by
reference to prices indicated by a group contributing brokers at the reporting date.
The Company determined that its corporate bond holdings with a total fair value of £24,344,000 as at 31 March 2024
should be disclosed as Level 2 financial assets. Therefore the comparative disclosure has been restated to that effect.
This is a disclosure restatement only and does not affect the fair value of the financial assets already reported.
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). The fair value of unquoted investments is influenced by the estimates,
assumptions and judgements made in the valuation process, including probability of future cash flows, discounts to
net asset values, and recent transaction price.
During the year to 31 March 2025, four assets (Catco Reinsurance Opportunities Funds C shares, Catco Reinsurance
Opportunities Funds, NB Global Monthly Income, NB Private Equity Partners ZDP 2024, Premier Miton UK Microcap)
were moved from Level 1 to Level 3 as they delisted. During the year to 31 March 2024, three assets (Secured Income
Fund, Ediston Property Investment Company, and Troy Income & Growth Trust) were moved from Level 1 to Level 3 as
they delisted.
A reconciliation of fair value measurements in Level 3 is set out in the following table:
2025
Total
£’000
2024
Total
£’000
Opening balance 2,421 624
Purchases – –
Sales (8,569) (3,971)
Transfers 7,451 5,697
Total gains/(losses) on investments in the Income Statement:
on assets sold 38 1
on assets held at the end of the year (778) 70
Closing balance 563 2,421
NotestotheFinancialStatements(continued)
CapitalGearingTrustP.l.c. Annual Report and Financial Statements 2025 71
Key Features Strategic Report Governance Report Independent Auditor’s Report Financial Statements Notice of AGM Shareholder Information
15 Financialinstruments(continued)
Foreign currency risk
The Company’s investments in foreign currency securities are subject to the risk of currency fluctuations. The
Investment Manager monitors current and forward exchange rate movements in order to mitigate this risk. The
Company’s investments denominated in foreign currencies are:
2025 2024
Cash and
Investments
£’000
Currency
Swap
Contracts
(1)
Accrued
interest
£’000
Cash and
Investments
£’000
Currency
Swap
Contracts
(1)
Accrued
interest
£’000
Canadian Dollar 5 – – 5,036 – 38
Euro 9,506 – – 23,390 – 6
US Dollar 276,824 (93,824) 378 233,582 – 482
Swedish Krona 11,993 – 39 43,352 – 94
Norwegian Krone – – – 4,679 – 13
Australian Dollar 3,679 – 13 3,639 – 13
Japanese Yen 185,830 (137,165) 89 54,745 – 1
487,837 (230,989) 519 368,423 – 647
(1) Based on notional amounts of the currency swap contracts. The contracts were entered into for the purpose of fully hedge the FX exposures on certain
US and Japanese government bond investments. Notional exposure on local currency basis are Japanese Yen 25,750,000,000 and US Dollar 104,517,000.
As at 31 March 2025, the contracts in receivable position amount to £4,455,000 and contracts in payable position amount to £1,524,000. Overall the
Company is in a net receivable position of £2,931,000.
Foreign currency sensitivity
The following table illustrates the sensitivity of the net return after taxation for the year and the net assets to an
increase or decrease of 10% in the rates of exchange of foreign currencies relative 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.
2025 2024
10%
appreciation
of Sterling
£’000
10%
depreciation
of Sterling
£’000
10%
appreciation
of Sterling
£’000
10%
depreciation
of Sterling
£’000
Income statement – net return after taxation
Revenue return (929) 929 (430) 430
Capital return (48,367) 48,367 (36,842) 36,842
Total return after taxation (49,296) 49,296 (37,272) 37,272
Net assets attributable to shareholders (49,296) 49,296 (37,272) 37,272
Liquidity risk
Liquidity risk is not considered to be significant as the Company has no bank loans or other borrowings and the
majority of the Company’s assets are investments in quoted securities which are readily realisable. All liabilities are
payable within three months.
NotestotheFinancialStatements(continued)
72 CapitalGearingTrustP.l.c. Annual Report and Financial Statements 2025
15 Financialinstruments(continued)
Credit risk
In addition to interest rate risk, the Company’s investment in bonds, the majority of which are government bonds,
isalso exposed to credit risk which reflects the ability of a borrower to meet its obligations. Generally, the higher the
quality of the issue, the lower the interest rate at which the issuer can borrow money. Issuers of a lower quality will
tend to have to pay more to borrow money to compensate the lender for the extra risk taken. As at 31 March 2025,
68% (2024: 69%) of the portfolio was held in fixed income instruments. Of these, 56% (2024: 59%) was in government
bonds issued by governments which are rated AA or better. The Investment Manager judges these to have very low
credit risk given that each of the issuers are monetarily sovereign, that is to say they borrow in their own currency.
Ofthe 11% (2024: 10%) of the portfolio that was held in corporate debt, the majority is investment grade and
relatively short duration. Cash balances of 5% (2024: 1%) were held with Northern Trust which has a short-term
credit rating of A-1 with Standard & Poor’s. Investment transactions are carried out with a number of brokers whose
standing is reviewed periodically by the Investment Manager. The Investment Manager assesses the risk associated
with these investments by prior financial analysis of the issuing companies as part of his normal scrutiny of existing
and prospective investments and reports regularly to the Board. Cash is held with a reputable bank with a high-
quality external credit rating.
A further credit risk is the failure of a counterparty to a transaction to discharge its obligations under that transaction,
which could result in a loss to the Company. The following table shows the maximum credit risk exposure.
Credit risk exposure
Compared to the Statement of Financial Position, the maximum credit risk exposure is:
2025 2024
Statement
of Financial
Position
£’000
Maximum
exposure
£’000
Statement
of Financial
Position
£’000
Maximum
exposure
£’000
Fixed assets – investments at fair value
through profit and loss 860,407 604,522 1,053,792 723,856
Debtors – amounts due from brokers,
dividends and interest receivable 4,623 4,623 4,393 4,393
Cash at bank 42,859 42,859 11,643 11,643
907,889 652,004 1,069,828 739,892
Capital management policies and procedures
The Company’s capital management objectives are to ensure that it will be able to continue as a going concern and
to maximise the total return to its equity shareholders. The Company’s capital comprises its equity share capital and
reserves. The Board, with the assistance of the Investment Manager, monitors and reviews the broad structure of the
Company’s capital on an ongoing basis. Further details can be found in the Strategic Report.
16 Relatedpartytransactions
With the exception of the management fee (as disclosed on page 28), and the Directors’ fees and shareholdings (as
disclosed in the Directors Remuneration Report on pages 39 and 40), there have been no related party transactions in
the year ended 31 March 2025.
17 Companyinformation
Capital Gearing Trust P.l.c. is a closed-ended investment company, registered in Northern Ireland No NI005574,
with its Ordinary shares listed on the London Stock Exchange. The address of the registered office is Murray House,
Murray Street, Belfast BT1 6DN.
NotestotheFinancialStatements(continued)
Capital Gearing Trust P.l.c. Annual Report and Financial Statements 2025 73
Key Features Strategic Report Governance Report Independent Auditor’s Report Financial Statements Notice of AGM Shareholder Information
The Alternative Performance Measures (‘APMs’) detailed below are used by the Board to assess the Company’s
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 Net asset value total return measures the increase or decrease in net asset value per
share plus the dividends paid in the year, which are assumed to be reinvested at the
NAV at the time that the shares are quoted ex-dividend.
2025 2024
Opening NAV per share A 4,810.5p 4,797.3p
Closing NAV per share B 4,924.8p 4,810.5p
% change in NAV C=(B-A)/A 2.4% 0.3%
Impact of dividend reinvested D 1.7% 1.5%
NAV total return E=C+D 4.1% 1.8%
Share Price Total Return Share price total return measures the increase or decrease in share price plus the
dividends paid in the year, which are assumed to be reinvested at the share price atthe
time that the shares are quoted ex-dividend.
2025 2024
Opening share price A 4,695.0p 4,730.0p
Closing share price B 4,785.0p 4,695.0p
% change in share price C=(B-A)/A 1.9% (0.7%)
Impact of dividend reinvested D 1.7% 1.5%
Share price total return E=C+D 3.6% 0.8%
Discount/Premium toNAV The amount by which the share price is higher/lower than the net asset value
pershare, expressed as a percentage of the net asset value per share.
2025 2024
NAV per share A 4,924.8p 4,810.5p
Share price B 4,785.0p 4,695.0p
Discount C=(B-A)/A (2.8%) (2.4%)
Alternative Performance Measures
(unaudited)
74 Capital Gearing Trust P.l.c. Annual Report and Financial Statements 2025
Ongoing Charges The Company publishes its ongoing charges (‘ongoing charges ratio’ or ‘OCR’) on two
bases, the first excluding and the second including fees of collective funds invested
in by the Company. The management fee and all other administrative expenses
expressed as a percentage of the average daily net assets during the year.
The following calculation shows the ongoing charges ratio excluding the costs suffered
within underlying investee funds:
2025
£’000
2024
£’000
Investment Management fee 3,950 4,298
Other expenses 1,513 1,070
Fixed element of DCP fee – 19
Ongoing charges A 5,463 5,387
Average net assets during the year B 972,994 1,146,003
Ongoing charges ratio excluding
costsof underlying funds C=A/B 0.56% 0.47%
Alternative Performance Measures
(unaudited)
(continued)
Capital Gearing Trust P.l.c. Annual Report and Financial Statements 2025 75
Key Features Strategic Report Governance Report Independent Auditor’s Report Financial Statements Notice of AGM Shareholder Information
NOTICE IS HEREBY GIVEN THAT the sixty-second
Annual General Meeting of the Company will be held
at the Numis Auditorium, 45 Gresham Street, London
EC2V7BF on Thursday, 3 July 2025 at 11.30 a.m. for the
following purposes:
Ordinary business
To consider, and, if thought fit, pass the following
resolutions which will be proposed as ordinary resolutions:
1. To receive and adopt the audited financial
statements for the year ended 31 March 2025
together with the reports of the Directors and
auditor thereon.
2. To approve the Directors’ Remuneration Report for
the year ended 31 March 2025.
3. To approve the Directors’ Remuneration Policy Report.
4. To declare a final dividend for the year ended
31March 2025 of 102p per Ordinary share,
comprising 66p in interest distribution and 36p in
ordinary equity dividends.
5. To re-appoint Ravi Anand as a Director.
6. To re-appoint Wendy Colquhoun as a Director.
7. To appoint Karl Sternberg as a Director.
8. To re-appoint Paul Yates as a Director.
9. To appoint Theo Zemek as a Director.
10. To re-appoint BDO LLP as auditor of the Company.
11. To authorise the Directors to determine the
remuneration of the auditor.
Special business
To consider and, if thought fit, pass the following
resolutions, of which resolutions 12 and 13 will be
proposed as ordinary resolutions and resolutions 14
to16 will be proposed as special resolutions:
Ordinary resolutions
Aggregate Directors’ remuneration
12. To increase the aggregate limit on Directors’
remuneration from £230,000 to £250,000 per annum.
Directors’ authority to allot shares
13. THAT the Directors be generally and unconditionally
authorised, pursuant to section 551 of the Companies
Act 2006 (the ‘Act’), to exercise all powers of the
Company to allot relevant securities (within the
meaning of section 551 of the Act) up to a maximum
aggregate nominal value of £1,466,512 (being one
third of the issued share capital of the Company as
at 27 May 2025 (excluding treasury shares), being the
latest practicable date prior to the publication of this
Notice, and representing 5,866,051 Ordinary shares
of 25 pence each), provided that such authority shall
expire at the conclusion of the AGM of the Company
to be held in 2026, unless previously revoked, varied
or renewed by the Company in general meeting
and provided that the Company shall be entitled to
make, prior to the expiry of such authority, an offer
or agreement which would or might require relevant
securities to be allotted after such expiry and the
Board may allot relevant securities pursuant to such
offer or agreement as ifthe authority conferred
hereby had not expired.
Special resolutions
Directors’ authority to disapply pre-emption rights
14. THAT the Directors be and are hereby empowered
pursuant to sections 570 and 573 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 13 above or otherwise as if section 561
of the Act did not apply to any such allotment,
and 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 Company as treasury shares (as defined in
section 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:
a) an offer of equity securities open for
acceptance for a period fixed by the Board
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
them but subject to such exclusions or other
arrangements in connection with the issue as
the Board may consider necessary, appropriate
or expedient to deal with equity securities
representing fractional entitlements or to deal
with legal or practical problems arising in any
overseas territory, the requirements of any
regulatory body or stock exchange, or any other
matter whatsoever; and
Notice of Annual General Meeting
76 Capital Gearing Trust P.l.c. Annual Report and Financial Statements 2025
Notice of Annual General Meeting (continued)
b) otherwise than pursuant to sub-paragrapha)
above, up to an aggregate nominal value of
£1,329,013 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, such power to
expire at the conclusion of the AGM of the
Company to be held in 2026, unless previously
renewed, varied or revoked by the Company
in general meeting and provided that the
Company shall be entitled to make, prior to the
expiry of such power, an offer or agreement
which would or might require equity securities
to be allotted or treasury shares to be sold
after such expiry and the Board may allot
equity securities or sell treasury shares
pursuant to such offer or agreement as if the
power conferred hereby had not expired.
Authority to make market purchases of the Company’s
own shares
15. 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
25pence each in the Company (the “Ordinary
shares”), provided that:
a) the maximum aggregate number of Ordinary
shares to be purchased shall be 2,637,963 or,
if less, the number representing 14.99% of the
issued share capital of the Company (excluding
treasury shares) at the date of the meeting at
which this resolution is proposed;
b) the minimum price, excluding expenses,
whichmay be paid for an Ordinary share shall
be 25pence;
c) the maximum price, excluding expenses, which
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 derived from the Daily Official List of
the London Stock Exchange for the five
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;
d) the authority hereby conferred shall expire
atthe conclusion of the AGM of the Company
to be held in 2026 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
prior to the expiry of such authority which will
or may be completed or executed wholly or
partly after the expiration of such authority,
and may make a purchase of shares pursuant
to any such contract.
Notice of general meetings
16. THAT a general meeting other than an Annual
General Meeting may be called on not less than
14clear days’ notice.
By order of the Board
Frostrow Capital LLP
Company Secretary
Registered Office:
Carson McDowell LLP
Murray House
Murray Street
Belfast BT1 6DN
28 May 2025
Location of Annual General Meeting
Numis Auditorium
45 Gresham Street
London EC2V7BF
at 11.30a.m. on Thursday, 3 July 2025
If you are unable to attend in person, you can watch
a recording of the Manager’s presentation on the
Company’s website shortly after the AGM.
Shareholders are encouraged to vote in favour of
the resolutions to be proposed at the AGM by form
of proxy. Ifshares are not held directly (including
through any platform) shareholders are encouraged
to arrange for their nominee to vote on their behalf.
Capital Gearing Trust P.l.c. Annual Report and Financial Statements 2025 77
Key Features Strategic Report Governance Report Independent Auditor’s Report Financial Statements Notice of AGM Shareholder Information
Notice of Annual General Meeting (continued)
Notes
1. Members are entitled to attend, speak and vote at the
AGM. A member entitled to attend, speak and vote at the
AGM is also entitled to appoint one or more proxies to
attend, speak and vote instead of him/her. The proxy need
not be a member of the Company. A member may appoint
more than one proxy in relation to the AGM, provided that
each proxy is appointed to exercise the rights attached to
different shares.
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 Register of Members of the Company no later
than 6.30p.m. on the day which is two days (excluding
non-working days) before the day of the AGM or any
adjourned meeting. Changes to the Register of Members
after the relevant deadline shall be disregarded in
determining the rights of any person to vote at the
meeting.
2. A form of proxy is enclosed with this notice, together
with a pre-paid reply envelope. Completion and
return of such form of proxy either by post or through
www.investorcentre.co.uk/eproxy or submission of any
CREST Proxy Instruction (as described in note 7 below) will
not prevent a member from subsequently attending the
AGMand voting in person if they so wish.
3. To be valid any form of proxy or other instrument
appointing a proxy, together with any power of attorney
or other authority under which it is signed, or certified
copy thereof, must be received by post or (during normal
business hours only) by hand to Computershare Investor
Services PLC, The Pavilions, Bridgwater Road, Bristol
BS996ZY or through www.investorcentre.co.uk/eproxy or
no later than 48 hours (excluding non-working days) 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
person”), does not have a right to appoint any proxies
under note 1 above. A nominated person may have a
right under an agreement with the relevant member to
be appointed or to have somebody else appointed as a
proxy for the AGM. If a nominated person does not have
such a right, or has such a right and does not wish to
exercise it, he/she may have a right under an agreement
with the relevant member to give instructions as to the
exercise of 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
administration thereof). The only exception to this is 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
tenders the vote shall be accepted to the exclusion of the
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
more corporate representatives who may exercise on its
behalf all of its powers as a member provided that they do
not do so in relation to the same shares.
7. CREST members who wish to appoint a proxy or proxies
through the CREST electronic proxy appointment service
may do so for the AGM and any adjournment(s) thereof
by using the procedures described in the CREST Manual
(available via www.euroclear.com).
The message, regardless of whether it constitutes
the appointment of a proxy or an amendment to the
instruction given to a previously appointed proxy must, in
order to be valid, be transmitted so as to be received by the
Company’s agent (ID: 3RA50) by the latest time(s) for receipt
of proxy appointments specified in the notice of AGM. For
this purpose, the time of the receipt will be taken to be
the time (as determined by the timestamp applied to the
message by the CREST Applications Host) from which the
Company’s agent is able to retrieve the message by enquiry
to CREST in the manner prescribed by CREST.
8. Any member attending the AGM has the right to ask
questions. Shareholders are also invited to submit their
questions to the Board in advance and the answers to
these questions will be posted on our website after the
AGM. Please submit questions to the Board using the email
address company.secretary@capitalgearingtrust.com.
9. Resolutions 1 to 13 are proposed as ordinary resolutions
which, to be passed, require more than half of the votes
cast to be in favour of the resolution. Resolutions 14 to 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.
10. As at 27 May 2025 (being the last practicable date prior
to the publication of this document) the total number of
Ordinary shares of 25p each in issue with voting rights
attached was 17,598,153.
11. Biographical details of the Directors seeking appointment
and re-appointment can be found on pages 26 and 27.
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.
78 Capital Gearing Trust P.l.c. Annual Report and Financial Statements 2025
Financial Reporting Copies of the Company’s Annual and Half-Year Reports may be obtained from
the Company Secretary and electronic copies can be accessed on the Company’s
website www.capitalgearingtrust.com.
Contacting the Board Any shareholders wishing to communicate directly with the Board should do so
via the Company Secretary.
Capital Gains Tax As at 31 March 1982 the adjusted value for capital gains tax purposes of the
25pOrdinary shares was 21.25p.
Frequency of NAV Publication Daily
Share Price The Company’s share price can be found on the London Stock Exchange 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 Via your bank, stockbroker, execution only platforms or financial advisor.
ISA The Company manages its affairs to be a fully qualifying investment trust under
the individual savings account (‘ISA’) rules.
Sources of Further Information
Company’s website www.capitalgearingtrust.com
AIC www.theaic.co.uk
For registrar queries contact Computershare on 0370 873 5864.
Share Identification Codes SEDOL: 0173861
ISIN: GB0001738615
BLOOMBERG: CGT:LN
TIDM: CGT
FT: CGT:LSE
LEI: 213800T2PJTPVF1UGW53
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.
Substantial Shareholdings The Disclosure Guidance and Transparency Rules require shareholders of the
Company to simultaneously inform the Company and the Financial Conduct
Authority (the ‘FCA’) of changes to major holdings in the Company’s shares
within two trading days of the change.
For further information, please visit the FCA’s website:
https://www.fca.org.uk/markets/primary-markets/regulatory-disclosures/
shareholding-notification-disclosure.
Disability Act Access for the hard of hearing to the services of the registrar to the Company,
Computershare Investor Services PLC, is provided by their contact centre’s text
phone service on 0370 702 0005. Alternatively, if you prefer to go through a
‘typetalk’ operator (provided by the RNID) you should 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 In line with the European regulations for packaged investment products, which
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 are prescribed by law. These may not reflect the expected returns for the
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
Capital Gearing Trust P.l.c. Annual Report and Financial Statements 2025 79
Key Features Strategic Report Governance Report Independent Auditor’s Report Financial Statements Notice of AGM Shareholder Information
Shareholder Information (continued)
Non-Mainstream Pooled Investment Rules
The Company’s shares are ‘excluded securities’ for the purposes of the rules relating to non-mainstream pooled
investment products. This means they can be recommended by independent financial advisors to their ordinary retail
clients, subject to normal suitability requirements.
Alternative Investment Fund Managers Directive (‘AIFMD’)
The Company is an Alternative Investment Fund (‘AIF’) as defined by the AIFMD and CG Asset Management is the
Company’s Alternative Investment Fund Manager (‘AIFM’). CG Asset Management is authorised as a Full Scope UK AIFM.
Although the investment policy of the Company permits gearing, including the use of derivatives, the Board has no
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
relevant reporting period (year ending 30 April 2024) are available from CG Asset Management on request.
Leverage, for the purposes of the AIFM Directive, is any method which increases the company’s exposure to
stockmarkets whether through borrowings, derivatives, or any other means. It is expressed as a ratio of the
Company’s exposure to its NAV. In summary, the gross method measures the Company’s exposure before applying
hedging or netting arrangements. The commitment method allows certain hedging or netting arrangements to
be offset. As at 31 March 2025 and 2024, the Company had no hedging or netting arrangements. The Company’s
maximum and actual leverage levels at 31 March 2025 are shown below:
Gross
Method
Commitment
Method
Maximum limit 200% 200%
Actual 100% 100%
The investor disclosure document and all additional periodic disclosures required in accordance with the
requirements of the FCA Rules implementing the AIFMD in the UK are made available on the Company’s website:
(www.capitalgearingtrust.com).
Shareholder Analysis
Beneficial owner analysis
31 March 2025
% of
Issued
share
capital
31 March 2024
% of
Issued
share
capital
Platforms/Execution only brokers 38.7 41.1
Wealth management 15.9 14.1
Private client stockbrokers 18.3 15.7
Private client fund management 4.3 5.9
Asset managers 4.1 4.8
Private investors 4.0 3.2
Other
(1)
14.7 15.2
100.0 100.0
Source: RD:IR
(1)
which includes pension funds, insurance corporations and non-financial corporations.
80 Capital Gearing Trust P.l.c. Annual Report and Financial Statements 2025
Historic Data
to 31 March, with exception of data from 2015 to 2021 which are to 5 April
Key Data
Year
Total Net
Assets
(£m)
Market
Capitalisation
(£m)
Shares in
issue (with
voting
rights)
NAV per
Share
(pence)
Share Price
(pence)
Discount/
premium to
NAV
Ongoing
Charges
Ratio
2025 885.0 859.9 17,970,762 4,924.8 4,785.0 -2.8% 0.56%
2024 1,060.2 1,034.7 22,038,727 4,810.5 4,695.0 -2.4% 0.47%
2023 1,259.7 1,242.0 26,258,763 4,797.3 4,730.0 -1.4% 0.46%
2022 1,049.8 1,073.8 20,891,975 5,025.1 5,140.0 2.3% 0.52%
2021 634.0 651.3 13,813,113 4,590.2 4,715.0 2.7% 0.58%
2020 470.1 482.2 11,509,263 4,084.2 4,190.0 2.6% 0.65%
2019 321.9 328.9 7,886,589 4,082.0 4,170.0 2.2% 0.70%
2018 219.5 225.3 5,762,919 3,809.0 3,910.0 2.6% 0.77%
2017 169.5 172.4 4,453,174 3,805.0 3,870.5 1.7% 0.89%
2016 107.9 109.1 3,191,062 3,382.0 3,420.0 1.1% 1.04%
2015 96.5 97.1 2,926,906 3,297.6 3,316.5 0.6% 0.96%
Year
Earnings per
Share
(pence)
Total
Dividend
per Share
(pence)
Share Price
Total Return
NAV
Total Return
UK Retail
Price Index
(at 31 March)
UK
Consumer
Price Index
(at31March)
2025 112.85 102 3.6% 4.1% 2.6% 3.2%
2024 69.74 78 0.8% 1.8% 4.3% 3.2%
2023 70.67 71
(1)
-7.1% -3.6% 13.4% 10.1%
2022 56.81 46 10.0% 10.5% 9.0% 7.0%
2021 51.04 45 13.6% 13.9% 1,5% 0.7%
2020 59.12 42 1.3% 0.8% 2.6% 1.5%
2019 51.12 35 7.4% 7.9% 2.4% 1.9%
2018 37.04 27 1.5% 0.0% 3.3% 2.5%
2017 18.26 20 13.8% 13.4% 3.1% 2.3%
2016 16.91 20 3.7% 3.4% 1.6% 0.5%
2015 26.82 20 -0.7% 5.6% 0.8% 0.0%
(1)
Includes additional special dividend of 11p paid in February 2024 in respect of the financial year ending 31 March 2023.
Capital Gearing Trust P.l.c. Annual Report and Financial Statements 2025 81
Key Features Strategic Report Governance Report Independent Auditor’s Report Financial Statements Notice of AGM Shareholder Information
Historic Data (continued)
Allocation of portfolio
Year
Index-Linked
Government
Bonds
Conventional
Government
Bonds
Preference
Shares/
Corporate
Debt
Funds/
Equities Cash Gold
2025 37.1% 19.4% 11.1% 26.5% 4.7% 1.2%
2024 43.9% 14.1% 11.7% 28.2% 1.1% 1.0%
2023 46.1% 12.3% 13.6% 25.9% 1.1% 1.0%
2022 35.0% 3.9% 10.9% 44.1% 4.8% 1.3%
2021 29.9% 6.2% 10.3% 46.0% 5.8% 1.8%
2020 25.1% 18.8% 14.0% 34.1% 6.9% 1.1%
2019 33.0% 10.3% 17.6% 35.2% 2.9% 1.0%
2018 37.9% 1.1% 17.3% 36.9% 5.8% 1.0%
NAV performance 1982 to 2025
Based on the Company’s NAV per Ordinary share, the graph below illustrates the total return to investors in the
Company since 1982, compared with the Retail Price Index (‘RPI’). Each measure is rebased to 100 in 1982.
NAV Total Return
RPI
As at 31 March
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2025
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
(1)
Source: CG Asset Management Limited. Whilst Investment performance is reviewed by the Board against CPI, CPI has only been in
existence since 1996, hence for the purpose of this graph RPI is shown as the comparator.
82 Capital Gearing Trust P.l.c. Annual Report and Financial Statements 2025
Alternative Performance
Measures
Alternative performance measures are numerical measures of the Company’s
current, historical or future performance, financial position or cash flows, other
than financial measures defined or specified in the applicable financial framework.
The Company’s applicable financial framework includes UK GAAP, including
FRS102, and the AIC SORP. Further information is provided above. These numerical
measures are used by the Board 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 A maximum drawdown is the maximum observed negative period of return from
a peak to a trough, as measured at month end NAV. Maximum drawdown is an
indicator of downside risk that can be used to assess the relative riskiness of
oneportfolio relative to another.
Dry Powder Highly liquid assets such as cash, Treasury Bills and short term credit holdings
that are readily available for investment opportunities.
ETF An exchange-traded fund (‘ETF’) is a type of pooled investment security that
operates similarly to a mutual fund. Typically, ETFs will track a particular
index, sector, commodity, or other asset, but unlike mutual funds, ETFs can be
purchased or sold on a stock exchange the same way that a regular listed stock
can. The price of an ETF’s shares will change throughout the trading day reflecting
the underlying value of the security.
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 The Company publishes its ongoing charges (‘ongoing charges ratio’ or ‘OCR’) on
twobases, the first excluding and the second including fees of collective funds
invested in by the Company. The management fee and all other administrative
expenses are expressed as a percentage of the average daily net assets during
theyear.
Premium/Discount to NAV The amount by which the share price is higher/lower than the net asset value
pershare, expressed as a percentage of the net asset value per share.
Risk Assets Risk assets are any assets that carry an element of risk above high quality credit.
The term generally refers to any financial security or instrument, such as equities
(including investment trusts), commodities, high-yield bonds, and other financial
products that are likely to fluctuate in price.
Total Return Net asset value/share price total return measures the increase or decrease in net
asset value per share/share price plus the dividends paid in the period, which are
assumed to be reinvested at the time that the share price is quoted ex-dividend
either in the net asset value or share price of the Company.
Treasury shares Shares that have been repurchased by the Company but not cancelled. Theseshares
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.
Glossary of Terms and Definitions
Capital Gearing Trust P.l.c. Annual Report and Financial Statements 2025 83
Key Features Strategic Report Governance Report Independent Auditor’s Report Financial Statements Notice of AGM Shareholder Information
Investment Manager and AIFM
CG Asset Management Limited (‘CGAM’)
20 King Street
London EC2V 8EG
Telephone: 020 3906 1633
As at 31 March 2025, CGAM had total funds under
management of £2.6 billion.
Depositary, Custodian and Banker
Northern Trust Investor Services Limited
50 Bank Street
Canary Wharf
London E14 5NT
Company Secretary and Administrator
Frostrow Capital LLP
25 Southampton Buildings
London WC2A 1AL
E-mail: info@frostrow.com
Telephone: 0203 008 4910
Registered Office
Carson McDowell LLP
Murray House
Murray Street
Belfast BT1 6DN
Registered Number
NI005574
AIC
Association of Investment Companies
www.theaic.co.uk
Registrar
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol BS13 8AE
Telephone: 0370 873 5864
Independent Auditor
BDO LLP
City Point
65 Haymarket Terrace
Edinburgh EH12 5HD
Corporate Stockbroker
JP Morgan Cazenove
25 Bank Street
Canary Wharf
London E14 5JP
Corporate Information
84 Capital Gearing Trust P.l.c. Annual Report and Financial Statements 2025
In recent years there has been an increase in the number of sophisticated but fraudulent financial scams. 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 from
overseas ‘brokers’ who target UK shareholders offering to sell them what often turn out to be worthless or high risk
shares.
Shareholders may also be advised that there is an imminent offer for the Company, and the caller may offer to buy
shares at significantly above the market price if an administration fee is paid. This is known as ‘boiler room fraud’.
Please note that it is very unlikely that either the Company, or the Company’s Registrar, would make unsolicited
telephone calls to Shareholders and never in respect of ‘investor advice’.
If you are contacted, we recommend that you do not respond with any personal information, including access to
financial information or bank accounts. If you are in any doubt you should seek financial advice before taking any
action. You can find more information about investment scams at the Financial Conduct Authority (FCA) website:
www.fca.org.uk/consumer/protect-yourself-scams. You can also call the FCA Consumer Helpline on 0800 111 6768.
There has also been an increase in imposter websites and internet scams. Investors should take care to discriminate
between legitimate corporate websites and those that might try to represent corporates, where an objective of the
scam would be to data capture private investor information or encourage investors to provide banking information.
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86 Capital Gearing Trust P.l.c. Annual Report and Financial Statements 2025
Capital Gearing Trust P.l.c.
Carson McDowell LLP
Murray House
Murray Street
Belfast BT1 6DN
www.capitalgearingtrust.com