Half-yearly Report
CAPITAL GEARING TRUST P.L.C.
Announcement of the Half-Year Financial Report for the six months ended 5 October 2014
Interim Management Report
Chairman's Overview
As at the half year to the 5th October 2014, the net asset value per share was
3,157.4p compared to 3,119.7p at the last year end. I am therefore pleased to
report that after a disappointing year to 5th April 2014, the Company is back
on track and has delivered a positive absolute return for shareholders.
Although the rise in its NAV per share during the past six months is
relatively modest, it has been achieved by continuing to adopt a low risk
investment strategy. After a prolonged period of rather benign market
conditions, the deteriorating macro-economic backdrop is now beginning to
increase the turbulence in financial markets. Fortunately for our investors,
the defensive investment stance that has been taken by our Investment Managers
should help to preserve capital values in what might be more volatile market
conditions ahead.
Investment Review
After a challenging period for the Company since May 2013, it is a relief to
achieve NAV growth in the first half of this year. A 1.2% return is not a
cause for wild celebration; however in an environment of overinflated asset
prices and significant macro-economic and capital markets risk any forward
progress is to be welcomed. The portfolio remains defensively positioned and
broadly spread with an emphasis on inflation protection. Portfolio
construction is designed to preserve the real value of capital after tax and
fees, with the objective of investing into riskier assets when pricing is more
reasonable.
The index linked bond portfolio performed well. In the UK and US, which are
experiencing moderate economic growth, underlying wage and domestic
inflationary pressures are starting to build. Whilst wage levels have been
slow to respond to falling unemployment, forward looking indicators are
suggesting a return to real wage growth within the next six months,
particularly in the US. At the same time ten year conventional yields have
been falling and this combination of firming domestic inflationary pressures
and falling conventional yields has allowed index linked bonds to make steady
progress.
The nominal bond holdings were increased and restructured. Close to half the
holding of Swiss bonds were sold and purchases were made of short UK gilts.
The Swiss holdings have performed well but with short Swiss bonds now trading
on negative nominal yields there seems limited opportunity for further
progress. The gilt additions were made as an alternative to holding sterling
cash. With increasing speculation around the timing of policy tightening,
short gilt yields have risen to a level that competes with cash, even if
absolute returns remain low.
Investment trust equities continue to trade at historically narrow discounts
to underlying net asset values. These narrow discounts, combined with very
poor liquidity, expose investors to significant downside risk. The Company
continues to focus on opportunities that self-liquidate whenever possible, and
when that is not possible on opportunities that offer either structural
protection through discount controls or that hold low beta underlying assets.
There also remain shorter term opportunities in market segments experiencing
structural change, most notably the hedge fund sector. The fund took
reasonable positions in BH Global Ltd and Blue Crest Blue Trend Ltd, both of
which were trading at significant discounts and have subsequently offered
return of cash at close to NAV. These strategies worked well with the
investment trust portfolio outperforming broader indices and delivering
moderate gains against a weak backdrop.
Strangely despite a dearth of secondary market liquidity (trading of existing
listed securities) there has been significant primary issuance (issuance of
new securities). The Company has participated in two new issues of convertible
bonds. These bonds have an attractive risk reward profile, with well covered
downside risk and some opportunity to participate in a portion of upside
movements should equity markets improve from their already elevated levels.
The Company also participated in a new issue of zero dividend preference
shares. These new additions to the investment trust fixed income and preferred
equity markets are welcome, expanding an area that has delivered strong risk
adjusted returns for the Company over many years.
Investment Outlook
Six years after the financial crisis struck, the world economy has yet to
address the underlying cause - excessive debt. Admittedly the implementation
of loose fiscal and monetary policy has saved the world from the threat of
depression, but the level of debt has not improved; indeed it has worsened. In
large part that is due to an explosion of credit in the emerging markets,
especially in China, where the increase in debt as a percentage of the world
GDP was comparable to the increase in developed economies in the period
leading up to the crisis. There are no obvious candidates to take over the
baton from here, now that China itself looks satiated.
That support from China may have supported corporate profit margins in the US,
which have remained at record levels. Historically, profit margins have
reverted to the mean and that pattern should continue. With a strong US
dollar; weak growth in Europe and Asia; moderate US growth and a narrowing of
the fiscal deficit, corporate profits can grow only through a diminishing
savings rate or rapidly expanding capital expenditure. Neither looks likely
and therefore earnings may disappoint from here. Equities, of course, are
still supported by unprecedented levels of stock buy-backs and these may
continue. The US market is very expensive, as measured by commonly used
fundamental measures of value (cyclically adjusted p/e ratios and Tobin's Q),
but also on forward p/e ratios which are at the same level as the 2007 peak.
The nature of the next bear market, whenever it happens, may differ from the
past. In part because of regulatory change in the banking system of Europe and
the US, liquidity in most asset classes, certainly including equities and
corporate bonds, has deteriorated markedly. In poor markets, bid prices could
fall away very fast for some smaller company equities and corporate bonds.
Meanwhile, the battle between the strong forces of inflation and deflation
continues. In the short term, the slowing world economy and late-cycle
increases in supply of commodities are leading to weak prices in oil, gas and
industrial raw materials. Good harvests have undermined food prices and, in
the UK, supermarket wars are adding further pressure. Nor have wages yet
responded to the better conditions in the US or the UK, though the
pre-conditions for acceleration are in place, so inflationary pressures are
suppressed. The monetary background, however, remains wildly expansionary and
inflation still looks to be the ultimate outcome. Indeed, inflation is
essential to reduce debt imbalances, as the Eurozone, where the threat of
deflation is greater, may find out.
In general, long term returns in all asset classes look poor at current levels
of valuation, but opportunities may be better after a bear market amplified by
illiquidity.
Issuance and Repurchase of Shares
As stated in our Annual Report, the Board operates an informal
discount/premium control mechanism in order to help satisfy market supply and
demand imbalances. As previously notified to the market, the Company entered
into an irrevocable, non-discretionary arrangement with its broker, J.P.
Morgan Securities Plc ("JP Morgan Cazenove"), to purchase ordinary shares of
£0.25 each on its own behalf during the close period beginning 6 October 2014,
consistent with the Board's long term view that there should be no significant
discount.
Principal Risks and Uncertainties
The principal risks and uncertainties facing the Company were explained in
detail within the Annual Report issued in May 2014. The directors are not
aware of any new risks or uncertainties and those stated within the Annual
Report continue to be the same for the Company and its investors for the
period under review and moving forward.
Related Party Transactions
Details of related party transactions are contained in the Annual Report
issued in May 2014. There have been no material changes in the nature and type
of the related party transactions as stated within the Annual Report.
Going Concern
The Company's investment objective and business activities, together with the
main trends and factors likely to affect its development and performance are
continuously monitored by the Board. The directors believe that the Company is
well placed to manage its business risks in the foreseeable future. The
directors consider that the Company has adequate resources, an appropriate
financial structure and suitable arrangements in place to continue in
operational existence for the foreseeable future. For this reason, they
continue to adopt the going concern basis in preparing the financial
statements.
Statement of Directors' Responsibilities
Each director confirms that, to the best of their knowledge:
(a) The condensed set of financial statements has been prepared in accordance
with the Accounting Standards Board's statement 'Half-Yearly Financial
Reports';
(b) The Interim Management Report includes a fair review of the information
required by Disclosure and Transparency Rule 4.2.7R (indication of important
events during the first six months of the financial year and description of
principal risks and uncertainties for the remaining six months of the
financial year); and
(c) The Interim Management Report includes a fair review of the information
required by Disclosure and Transparency Rule 4.2.8R (disclosure of related
party transactions and changes therein).
The condensed set of financial statements are published on the Company's
website, www.capitalgearingtrust.com, which is a website maintained by TMF
Corporate Secretarial Services Limited. The directors are responsible for the
maintenance and integrity of the Company's corporate website and financial
information included within the website. The work carried out by the Auditors
does not involve consideration of the maintenance and integrity of the website
or any other website upon which the financial statements may be published and
accordingly, the Auditors accept no responsibility for any changes that may
occur following presentation on a website. Legislation in the UK governing the
preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
Major GWC (Cecil) Harding
Since our Year-end report, I am sure that along with the Board, many long
standing shareholders will have been sorry to learn of the death of Major
Cecil Harding in his 99th year. Along with other family members, Cecil Harding
was one of the founders and principal architects of the Company. For many
years, he was its investment manager and served as a Director and its Chairman
from 1963 to 1998. It is true to say that without Cecil's foresight and
ingenuity, this Company, which has done so well for its shareholders over many
years, would not have existed. We should all be grateful for his invaluable
contribution to its success.
For and on behalf of the Board
Mr T R Pattison
Chairman
12 November 2014
Distribution of Investment Funds
at 5 October 2014
Distribution of Investment Funds of £92,257,000 (5 April 2014: £91,324,000)
5 October 5 April
North 2014 2014
UK America Europe Elsewhere Total Total
% % % % % %
Investment Trust Assets:
Ordinary shares 14.1 3.9 2.0 7.7 27.7 28.9
Zero dividend preference 20.6 - - - 20.6 19.0
shares
Other Assets:
Index linked 9.4 15.3 5.8 - 30.5 29.8
Fixed interest 11.1 1.1 2.3 - 14.5 12.5
Cash 2.2 4.5 - - 6.7 9.8
57.4 24.8 10.1 7.7 100 100
Investments of the Company
at 5 October 2014
5 October 2014
£'000
Investment Trust Ordinary Shares:
North Atlantic Smaller Companies 3,591
Prospect Japan Fund 1,464
Renewable Energy Generation 1,328
ETFS Metal Securities (physical gold) 1,243
Invesco Perpetual UK Smaller Companies Investment Trust 1,163
Mithras Investment Trust 1,128
Foresight Solar Fund 932
Foreign & Colonial Investment Trust 862
Henderson Global Trust 716
Renewable Energy Infrastructure 693
Oryx International Growth Fund 683
Private Equity Investor 659
Bluefield Solar 618
Candover Investments 596
Aurora Investment Trust 572
JP Morgan Private Equity USD 569
Strategic Equity Capital 563
Acencia Debt Strategies 501
JP Morgan Overseas Investment Trust 488
Japan Residential Investment Company 477
Castle Private Equity 451
Miton Worldwide Growth Investment Trust 430
Witan Pacific Investment Trust 412
Blackrock Absolute Return Strategies 411
Shape Capital 367
John Laing Environmental Assets Group 331
Rights & Issues Investment Trust 324
Marwyn Value Investors 243
Ground Rents Income Fund Ordinary 238
Rights & Issues 234
Greencoat UK Wind 219
Atlantis Japan Growth Fund 216
Aberdeen Latin American Income 212
LMS Capital 210
Dexion Absolute EUR 186
SQN Asset Finance Income Fund 181
Hansa Trust `A' Shares 172
JP Morgan Income & Growth 168
EPE Special Opportunities 167
Dexion Absolute USD 158
Better Capital PCC 154
Ruffer Investment Company 131
Crystal Amber Fund 110
Signet Global Fixed Income Strategies 96
Schroder UK Growth Fund 88
BlueCrest BlueTrend 80
GCP Infrastructure Investments 72
BACIT 65
JP Morgan Income & Growth Income 65
Alternative Liquidity Solutions 62
Alternative Investment Trust 61
F&C Commercial Property Trust 57
Henderson International Income Trust 55
Thames River Multi Hedge 50
North American Banks Fund 37
International Biotechnology Trust 32
Cambium Global Timberland 31
Dexion Absolute GBP Redemption 27
RENN Universal Growth Investment Trust 17
Close European Accelerated Fund 16
Dexion Absolute USD Redemption 13
Active Capital Trust 8
Henderson Private Equity Investment Trust 5
Thompson Clive Investments 3
Prospect Epicure J-REIT Value Fund 2
25,513
Investment Trust Zero Dividend Preference Shares:
M&G High Income Investment Trust 2,798
Ecofin Water & Power Opportunities Finance 2,423
Aberforth Geared Income Trust 2,009
JP Morgan Income & Capital Trust 1,467
F&C Private Equity 1,286
Electra Private Equity 1,196
JZ Capital Partners 2016 1,118
Premier Energy & Water Trust 1,083
Utilico Investments 2018 975
NB Private Equity Partners 897
Utilico Finance 2016 866
Jupiter Second Split Trust 860
Acorn Income Fund 2017 715
Jupiter Dividend & Growth Trust 538
JP Morgan Private Equity 2015 366
JP Morgan Private Equity 2017 228
Utilico Investments 2020 209
19,034
Index Linked Securities:
UK Treasury 0.125% 2024 3,766
UK Treasury 1.25% 2017 3,518
USA Treasury 1.375% 2018 3,235
USA Treasury 2.0% 2026 2,985
USA Treasury 0.625% 2021 2,500
Sweden (Kingdom of) 0.5% 2017 2,442
Sweden (Kingdom of) 3.5% 2028 2,209
USA Treasury 0.125% 2023 1,879
USA Treasury 1.125% 2021 895
UK Treasury 1.875% 2022 832
USA Treasury 1.375% 2020 734
Sweden (Kingdom of) 4.0% 2020 704
Canada (Govt of) 4.0% 2031 607
UK Treasury 0.125% 2019 542
USA Treasury 0.125% 2019 510
USA Treasury 0.125% 2018 456
USA Treasury 0.125% 2022 161
USA Treasury 1.625% 2018 111
28,086
Fixed Interest Securities:
UK Treasury 2.0% 2016 5,594
Switzerland (Govt of) 3.0% 2018 2,132
City Natural Resources 3.5% Convertible Unsecured Loan Stock 2018 979
The Cayenne Trust 3.25% Convertible Unsecured Loan Stock 2016 832
Ecofin Water & Power Opportunities plc 6.0%
Convertible Unsecured Loan Stock 2016 650
SVG Capital 8.25% Convertible 2016 649
Enterprise Inns 6.5% 2018 573
JZ Capital Partners 6.0% Convertible Unsecured Loan Stock 2021 501
F&C Global Smaller Companies plc 3.5% Convertible
Unsecured Loan Stock 2019 493
EPE Special Opportunities Convertible Loan Notes 442
Edinburgh Dragon Trust 3.5% 2018 202
Scottish American 8.0% 2022 180
The Mercantile Investment Trust plc 6.125% 2030 178
13,405
Total investments 86,038
Cash held by the custodian awaiting investment 6,219
Total investment funds 92,257
Independent Review Report to Capital Gearing Trust P.l.c.
Introduction
We have been engaged by the Company to review the condensed set of financial
statements in the Half-Year Financial Report for the six months ended 5
October 2014, which comprises the Income Statement, Statement of Total
Recognised Gains and Losses, Reconciliation of Movements in Shareholders'
Funds, Balance sheet, Cash Flow Statement and related notes. We have read the
other information contained in the Half-Year Financial Report and considered
whether it contains any apparent misstatements or material inconsistencies
with the information in the condensed set of financial statements.
Directors' responsibilities
The Half-Year Financial Report is the responsibility of, and has been approved
by, the Directors. The Directors are responsible for preparing the Half-Year
Financial Report in accordance with the Disclosure and Transparency Rules of
the UK's Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the Company are
prepared in accordance with applicable law and UK Accounting Standards (UK
Generally Accepted Accounting Practice). The condensed set of financial
statements included in this Half-Year Financial Report has been prepared in
accordance with the statement "Half-yearly financial reports" issued by the UK
Accounting Standards Board.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the Half-Year Financial Report based on our
review. This report, including the conclusion, has been prepared for and only
for the Company for the purpose of the Disclosure and Transparency Rules of
the Financial Conduct Authority and for no other purpose. We do not, in
producing this report, accept or assume responsibility for any other purpose
or to any other person to whom this report is shown or into whose hands it may
come save where expressly agreed by our prior consent in writing.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information
Performed by the Independent Auditor of the Entity' issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the Half-Year
Financial Report for the six months ended 5 October 2014 is not prepared, in
all material respects, in accordance with the Statement 'Half-Yearly Financial
Reports' issued by the UK Accounting Standards Board and the Disclosure and
Transparency Rules of the UK's Financial Conduct Authority.
PricewaterhouseCoopers LLP
Chartered Accountants
Belfast
12 November 2014
Income Statement (unaudited)
for the six months ended 5 October 2014
(unaudited) (unaudited) (audited)
6 months ended 6 months ended Year ended
5 October 2014 5 October 2013 5 April 2014
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Net - 1,069 1,069 - (727) (727) - 1,390 1,390
gains/(losses)
on investments
Exchange - 340 340 - (1,691) (1,691) - (3,059) (3,059)
gains/(losses)
Investment 602 - 602 485 - 485 999 - 999
income(note 2)
Gross 602 1,409 2,011 485 (2,418) (1,933) 999 (1,669) (670)
return/(loss)
Investment (110) (165) (275) (154) (230) (384) (307) (461) (768)
management fee
Transaction - (24) (24) - (19) (19) - (55) (55)
costs
Other expenses (179) (179) (185) - (185) (374) - (374)
Net 313 1,220 1,533 146 (2,667) (2,521) 318 (2,185) (1,867)
return/(loss)
on ordinary
activities
before tax
Tax on ordinary 23 13 36 (7) 7 - (3) 3 -
activities
(note 7)
Net 336 1,233 1,569 139 (2,660) (2,521) 315 (2,182) (1,867)
return/(loss)
attributable to
equity
shareholders
Return/(loss) 11.48p 42.13p 53.61p 4.75p (90.98)p (86.23)p 10.77p (74.59)p (63.82)p
per Ordinary
Share(note 3)
The total column of this statement represents the Profit and Loss Account 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 is no material difference between the net return on ordinary activities
before tax and the net return attributable to equity shareholders stated above
and their historical cost equivalents.
Statement of Total Recognised Gains and Losses (unaudited)
for the six months ended 5 October 2014
(unaudited) (unaudited) (audited)
6 months 6 months Year
ended ended ended
5 October 5 October 5 April
2014 2013 2014
£'000 £'000 £'000
Net return/(loss) attributable to equity shareholders 1,569 (2,521) (1,867)
Total gains and losses recognised for the period 1,569 (2,521) (1,867)
Reconciliation of Movements in Shareholders' Funds (unaudited)
for the six months ended 5 October 2014
Capital Capital
Called Share Capital reserve reserve
up premium redemption arising on arising on Revenue
share account reserve investments investments reserve Total
capital held sold
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 6 April 731 12,107 16 4,857 72,117 1,484 91,312
2014
Issue of shares - - - - - - -
(note 8)
Exchange gains on - - - 196 144 - 340
investments
Net gains on - - - - 1,762 - 1,762
realisation of
investments
Net decrease in - - - (693) - - (693)
unrealised
appreciation
Transfer on - - - 942 (942) - -
disposal of
investments
Transaction costs - - - (20) (4) - (24)
Costs charged to - - - - (165) - (165)
capital
Tax on costs - - - - 13 - 13
charged to capital
Net revenue for - - - - - 336 336
the period
Total 731 12,107 16 5,282 72,925 1,820 92,881
Dividends (note 4) - - - - - (468) (468)
Balance at 5 731 12,107 16 5,282 72,925 1,352 92,413
October 2014
for the six months ended 5 October 2013
Capital Capital
Called Share Capital reserve reserve
up premium redemption arising on arising on Revenue
share account reserve investments investments reserve Total
capital held sold
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 6 April 730 11,930 16 11,474 67,682 1,637 93,469
2013
Issue of shares 1 177 - - - - 178
(note 8)
Exchange losses on - - - (1,459) (232) - (1,691)
investments
Net gains on - - - - 1,953 - 1,953
realisation of
investments
Net decrease in - - - (2,680) - - (2,680)
unrealised
appreciation
Transfer on - - - (1,027) 1,027 - -
disposal of
investments
Transaction costs - - - (10) (9) - (19)
Costs charged to - - - - (230) - (230)
capital
Tax on costs - - - - 7 - 7
charged to capital
Net revenue for - - - - - 139 139
the period
Total 731 12,107 16 6,298 70,198 1,776 91,126
Dividends (note 4) - - - - - (468) (468)
Balance at 5 731 12,107 16 6,298 70,198 1,308 90,658
October 2013
Balance Sheet (unaudited)
at 5 October 2014
(unaudited) (unaudited) (audited)
5 October 5 October 5 April
2014 2013 2014
£'000 £'000 £'000
Fixed assets
Investments held at fair value 86,038 80,906 82,352
through profit or loss
Current assets
Debtors 6,570 10,012 9,301
Cash at bank and in hand 59 21 21
6,629 10,033 9,322
Creditors: amounts falling due (254) (281) (362)
within one year
Net current assets 6,375 9,752 8,960
Total assets less current 92,413 90,658 91,312
liabilities
Capital and reserves
Called up share capital 731 731 731
Share premium account 12,107 12,107 12,107
Capital redemption reserve 16 16 16
Capital reserve arising on 5,282 6,298 4,857
investments held
Capital reserve arising on 72,925 70,198 72,117
investments sold
Revenue reserve 1,352 1,308 1,484
Total equity shareholders' funds 92,413 90,658 91,312
Net asset value per Ordinary Share 3,157.4p 3,097.4p 3,119.7p
The Half-Year Financial Report for the six months ended 5 October 2014 was
approved by the Board of Directors on 12 November 2014 and signed on its
behalf by:
Mr T R Pattison
Chairman
12 November 2014
Cash Flow Statement (unaudited)
for the six months ended 5 October 2014
(unaudited) (unaudited) (audited)
6 months 6 months Year
ended ended ended
5 October 5 October 5 April
2014 2013 2014
£'000 £'000 £'000
Net cash inflow/(outflow) from operating 10 (187) (102)
activities (note 5)
Taxation
Foreign tax received/(paid) on investment 39 - (41)
income
Capital expenditure and financial investment
Payments to acquire investments (11,470) (8,269) (24,054)
Receipts from sale of investments 9,174 15,477 30,529
(2,296) 7,208 6,475
Equity dividends paid (note 4) (468) (468) (468)
Management of liquid resources
Change in cash held by the custodian awaiting 2,753 (6,731) (6,042)
investment
Financing
Issue of ordinary share capital (note 8) - 178 178
Increase in cash (note 6) 38 - -
Notes to the Financial Statements
1 Accounting policies
The financial information for the six months to 5 October 2014 and 5 October
2013, and for the year ended 5 April 2014 has been prepared under the
historical cost convention, modified to include the revaluation of investments
and in accordance with Accounting Standards applicable in the UK,
pronouncements on interim reporting issued by the UK Accounting Standards
Board and the Statement of Recommended Practice for Investment Trusts issued
in January 2009 by the Association of Investment Companies. The half-year
financial statements have been prepared on the basis of the accounting
policies set out in the financial statements for the year ended 5 April 2014.
2 Investment income
6 months 6 months Year
ended ended ended
5 October 5 October 5 April
2014 2013 2014
£'000 £'000 £'000
Income from investments
Income from UK bonds 206 127 253
Income from UK equity and non-equity 175 111 303
investments
Income from overseas equity and 70 - -
non-equity investments
Interest from overseas bonds 151 247 443
Total Income 602 485 999
3 Return per Ordinary Share
The calculation of return per Ordinary Share is based on results after tax
divided by the weighted average number of shares in issue during the period of
2,926,906 (5 October 2013: 2,923,764).
The revenue, capital and total return per Ordinary Share is shown in the
Income Statement.
4 Dividends
6 months 6 months Year
ended ended ended
5 October 5 October 5 April
2014 2013 2014
Pence per share 16.0p 16.0p 16.0p
Total cost £468,000 £468,000 £468,000
5 Reconciliation of net revenue before finance costs and taxation to net cash
inflow from operating activities
6 months 6 months Year
ended ended ended
5 October 5 October 5 April
2014 2013 2014
£'000 £'000 £'000
Net return before finance costs and 313 146 318
taxation
Investment management fee charged to (165) (230) (461)
capital
(Decrease)/increase in creditors (108) (47) 34
(Increase)/decrease in other debtors,
prepayments and accrued income
(30) (56) 7
Net cash inflow/(outflow) from 10 (187) (102)
operating activities
6 Reconciliation of net cash flow to movement in net funds
6 months 6 months Year
ended ended ended
5 October 5 October 5 April
2014 2013 2014
£'000 £'000 £'000
Net funds at the beginning of the 21 21 21
period
Increase in cash for the period 38 - -
Net funds at the end of the period 59 21 21
7 Taxation
Capital returns and dividend income are not subject to corporation tax within
an investment trust company. The provision for corporation tax arises from the
excess of unfranked investment income over management expenses. During the
period a refund of £39,000 (2013: £nil) of withholding tax in relation to
prior periods was received from the Swiss tax authorities.
8 Issue of Ordinary Shares
During the period the Company did not issue any Ordinary Shares (six-month
period ended 5 October 2013 and year ended 5 April 2014: 5,000 Ordinary Shares
for a consideration of £178,350).
9 General information
The financial information contained in this Half-Year Financial Report does
not constitute statutory accounts as defined in Section 434 of the Companies
Act 2006. The financial information for the half-years ended 5 October 2013
and 5 October 2014 has been reviewed but not audited by the Company's
Auditors. The abridged financial information for the year ended 5 April 2014
has been extracted from the Company's statutory accounts for that year, which
have been filed with the Registrar of Companies. The report of the Auditors on
those accounts was unqualified and did not contain a statement under either
Section 498(2) or Section 498(3) of the Companies Act 2006.
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