Final Results

Capital Gearing Trust PLC
5 June 2002

CAPITAL GEARING TRUST plc

PRELIMINARY ANNOUNCEMENT

5 April 2002





Chairman's Statement

I am pleased to report another satisfactory result for Capital Gearing Trust in
the year to 5th April, 2002. The Net Asset Value per share on an AITC basis
(ex-dividend) rose by 9.7% to 1208p. This may be compared with a fall in the
FTSE Investment Companies Index of 12.4%, a fall in the FTSE All Share Index of
5.9% and a fall of 3.7% in the FTSE All Stocks Gilt Index. In a difficult year
for markets and for investment trusts in particular this may be considered a
creditable performance.

Over the course of the year we have been running down the Trust's exposure to
zero dividend preference shares as stocks mature and increasing holdings of
sovereign backed index linked issues. One of the effects of this switch in
emphasis has been to enhance earnings per share. Accordingly, the Directors
recommend a dividend for the year of 9p (2001 - 8p) from available earnings of
11.30p.

Having taken a notably cautious stance towards markets over the last few years,
it is reasonable to ask whether and when it may be appropriate to take a more
positive line. Certainly within the investment trust sector value is becoming
more visible as trusts are marked down indiscriminately in the wake of the rout
in the split capital market. Our concern is that the pumping of money into the
system by central bankers and governments to stave off fears of recession and
the after-effects of 11th September has yet to rekindle a convincing broad-based
economic recovery and the necessary improvement in corporate profitability to
justify a significant change in policy.

The opportunity arose in early October 2001 to issue a further 55,000 shares to
meet market demand at a premium to Net Asset Value to the benefit of existing
shareholders. As in previous years, the Board wishes to renew the powers granted
by shareholders to buy in (or sell out) small amounts of stock on advantageous
terms. Resolutions to this effect are set out in the notice of meeting.







Investment Manager's Report and Portfolio Analysis

In the year to 5th April 2002, the NAV per share rose by 9.7%, this compares to
falls in the FT All Share Index of 5.9% and in the Investment Trust Index of
12.4%. As a result of the events of September 11th, the market was volatile as
well as weak. The defensive asset allocation of the trust contributed to this
performance, but chief features were the successful reconstruction of the Asia
High Yield Bond Fund and the outperformace of the All Share Index by our equity
holdings. Other positive factors include the growth in value of our holdings in
Zero Coupon Preference shares in investment trusts, despite the problems of the
sector generally. On the negative side, the European bonds were slightly down in
sterling terms with the Euro Index Linked Bonds and the U.S. TIPS breaking even
in capital terms.

The sale of our holdings in the Asia High Yield Bond Fund, after its capital
reconstruction had eliminated its discount and with good underlying performance,
crystallized a gain of over 70% since April 2001. This accounted for about 4% of
the 9.7% gain on the portfolio.

Within the equity holdings, the portfolio benefitted from a bias away from TMT
and towards smaller companies and a holding in Merrill Lynch World Mining, whose
exposure to gold gave good asset performance and a narrower discount. That same
combination led to a 16% return in Aberforth Split Capital shares, where good
management continued to give outperformance of the asset class. The largest
holding last year was Investors Capital and this trust reconstructed in an
efficient manner last summer, again providing strong gains for our portfolio.
Group Trust was taken over by Dunedin Enterprise, but the latter remains on a
large discount. London and St. Lawrence marked time but remains interesting at
its current large discount and its defensive portfolio accords with our view of
the outlook.

Turning to the outlook for the future, the imbalances that characterise the U.S.
economy still suggest caution. Excessive consumer spending, supported by a
buoyant housing market, has led to dangerously high levels of debt in private
households. Corporate debt too, following a splurge of capital expenditure (much
of it now revealed to be misallocated) is far too high for comfort, whether on
or off balance sheets. Allied to these, the current account deficit shows signs
of deteriorating even further. That gives rise to the fear that a weak U.S.
dollar could be a catalyst to further weakness both in the economies of Europe
and Asia and in the equity markets.

Unfortunately, equity markets are in general still richly valued. The ratings of
the S & P 500 look high relative to history whether judged on dividend yields,
book values or p/e ratios. The p/e ratio is expensive even on announced
earnings, but in fact, the failure to account for options, the write-offs, the
aggressive taking of pension funds into profits even when the funds have fallen,
all combine to overstate earnings by 25%-30%.

Luckily not all markets are as stretched as the S & P 500 and smaller companies
in particular look better value, not least in the UK. More importantly, though
monetary policy is likely to be stimulative in the face of any problems. The
tremendous bias towards ease demonstrated by the Federal Reserve will eventually
aggravate the problems for the U.S. economy but it will also defer them. So, as
ever with problematic balance sheets, timing remains uncertain. The Trust,
though, remains very defensive in its posture on equities and maintains an
emphasis on smaller companies and venture capital.

Bond markets should do well where central banks remain conservative;
index-linked government bonds look attractive on real rates of interest that
still range from 3.1% to 3.7% outside the U.K. Allied to good returns from our
zero coupon preference shares, we hope to produce another modest but
satisfactory year for the trust.



Statement of Total Return

(incorporating the Revenue Account)

for the year ended 5 April 2002


                                                                   2002                                        2001
                                    Revenue         Capital       Total         Revenue         Capital       Total
                                    £'000           £'000         £'000         £'000           £'000         £'000

Realised gains on investments       -               3,266         3,266         -               2,249         2,249
Net change in unrealised            -               (707)         (707)         -               146           146
appreciation
Income                              500             -             500           425             -             425

GROSS RETURN                        500             2,559         3,059         425             2,395         2,820

Investment management fees          (43)            (165)         (208)         (44)            (178)         (222)
Other expenses                      (185)           -             (185)         (141)           (4)           (145)

RETURN ON ORDINARY ACTIVITES BEFORE 272             2,394         2,666         240             2,213         2,453
TAXATION

Tax on ordinary activities          (13)            13            -             (12)            12            -

RETURN ATTRIBUTABLE TO EQUITY       259             2,407         2,666         228             2,225         2,453
SHAREHOLDERS

Dividend on ordinary shares:
Dividend payable 9p per ordinary    (209)           -             (209)         (181)           -             (181)
share (2001-8p)

TRANSFER TO RESERVES                50              2,407         2,457         47              2,225         2,272

RETURN PER ORDINARY SHARE*          11.30p          104.97p       116.27p       9.92p           96.82p        106.74p

The revenue column of this statement is the profit and loss account of the
company.

All revenue and capital items in the above statement derive from continuing
operations.

* There was no dilution in either year.

Balance Sheet - 5 April 2002


                                                                              2002               2001
FIXED ASSETS                                                                  £'000              £'000

Investments:
Listed investments                                                            26,793             24,980

CURRENT ASSETS

Debtors                                                                       1,455              572
Cash at bank                                                                  159                172

                                                                              1,614              744

CREDITORS: amounts falling due within one year                                (366)              (773)

NET CURRENT LIABILITIES                                                       1,248              (29)

NET ASSETS                                                                    28,041             24,951



CAPITAL AND RESERVES

Called up share capital                                                       580                566
Share premium account                                                         1,610              991
Capital redemption reserve                                                    16                 16
Capital reserve - unrealised                                                  3,087              3,794
Capital reserve - realised                                                    22,524             19,410
Revenue reserve                                                               224                174

TOTAL SHAREHOLDERS' FUNDS - EQUITY                                            28,041             24,951


NET ASSET VALUE PER ORDINARY SHARE*                                           1208.2p            1101.1p

* There was no dilution of the above net asset value at either date.



Cash Flow Statement

for the year ended 5 April 2002


                                                                            2002               2001
                                                                            £'000              £'000

NET CASH (OUTFLOW)/INFLOW FROM OPERATING ACTIVITIES                         14                 103

TAXATION

Income tax recovered                                                        -                  40

CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT

Payments to acquire investments                                             (13,518)           (11,455)

Receipts from sale of investments                                           14,239             12,147

                                                                            721                692

EQUITY DIVIDENDS PAID                                                       (181)              (163)

MANAGEMENT OF LIQUID RESOURCES

Cash paid to brokers deposit                                                (1,199)            -


FINANCING

Issue of new shares                                                         632                -

Purchase of own shares                                                      -                  (605)

(DECREASE)/INCREASE IN CASH                                                 (13)               67


The financial information set out above does not constitute the company's
statutory accounts for the years ended 5 April 2001 and 2002 but is derived from
those accounts. Statutory accounts for 2001 have been delivered to the Registrar
of Companies and those for 2002 will be delivered following the company's Annual
General Meeting. The auditors have reported on those accounts; their reports
were unqualified and did not contain statements under Article 245 (2) or (3) of
the Companies (Northern Ireland) Order 1986.

Dividend

The dividend will be paid on 10th July 2002 to shareholders on the register as
at 21st June 2002.



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