Interim Results

Capital Gearing Trust PLC 27 November 2003 CAPITAL GEARING TRUST plc INTERIM REPORT FOR THE SIX MONTHS ENDED 5 OCTOBER 2003 CONTENTS Chairman's Interim Statement Distribution of Invested Funds at 5 October 2003 Major Investments of the Company at 5 October 2003 Statement of Total Return Balance Sheet Cash Flow Notes Capital Gearing Trust I am pleased to report further steady progress in the six months to 5th October, 2003. The net asset value per share increased by 14.8% to 1416p (excluding net revenue for the period of 8.3p). This may be compared with a rise in the FT All Share Index of 15.7%, a rise in the FT Investment Companies Index of 26.1% and a fall in the FTSE Government All Stocks Index of 2.7%. Given the defensive investment stance currently pursued by the Board as seen in the Distribution of Investment Funds on page 2, our capital performance has been rather better than might have been anticipated. We have benefited from some specific stock gains, such as Eurovestech, and also from a return in confidence to good quality zero coupon shares. To meet market demand, on 1st October the Board authorised the issue of 209,000 shares (8.2% of the issued share capital) at a premium to net asset value to the benefit of existing shareholders to meet market demand. The net asset value mentioned above of 1416p takes account of this issue. Earnings per share of 8.30p are calculated on a time weighted basis of the number of shares in issue during the period. Equity markets have enjoyed a useful recovery from the nadir seen last March prior to the outbreak of hostilities in Iraq. As anticipated, bond markets have noticeably weakened in the light of deteriorating government and consumer finances, particularly in the UK and USA. The resilience or otherwise of the economic upturn is now the focus of investor attention and equity and bond markets have probably done enough to reflect the new balance. However, in the short term there is a lot of institutional cash awaiting investment. The declared objective of the Trust is to 'achieve capital growth in absolute terms principally through investment in closed ended and other collective investment vehicles with a willingness to hold cash and bonds when appropriate'. It should be noted, following the publication of CP164 and the new Listing Rules requirements which came into force on 1st November 2003, that the Trust's investment policy does not include a commitment not to have more than 15% of its gross assets invested in other UK Listed Investment Companies at any time. Mark Cornwall-Jones 27 November, 2003 CAPITAL GEARING TRUST plc DISTRIBUTION OF INVESTED FUNDS Percentage of assets As at As at 5/10/03 5/4/03 North UK America Europe Asia Elsewhere Total Total Investment Trust Assets: % % % % % % % Ordinary Shares 20.0 1.4 - 0.6 0.7 22.7 17.0 Capital/Growth Shares - - - - - - 2.8 Zero Dividend Preference Shares 33.9 - - - - 33.9 32.7 Other assets: Fixed interest stocks 1.1 - 18.5 - - 19.6 30.7 Index linked - 6.0 13.7 - - 19.7 16.7 Cash 4.1 - - - - 4.1 0.1 59.1 7.4 32.2 0.6 0.7 100.0 100.0 MAJOR INVESTMENTS OF THE COMPANY AT 5 OCTOBER 2003 £'000 1. INVESTMENT TRUST ORDINARY SHARES American Opportunities Trust 520 Wigmore Property 621 London & St Lawrence Investment Trust 584 Martin Currie Portfolio 1,388 Electra Investment Trust 633 Eurovestech 650 2. INDEX LINKED SECURITIES AND FIXED INTEREST France (Govt of) 5.5% OAT 25/04/29 2,269 Germany (Federal Republic) 4.75% Bonds 04/07/2028 2,393 France (Govt.of) 3.4% OATI 25/07/29 1,721 Sweden (Kingdom of) 3.5% Inflation Linked Bonds 01/12/2028 2,734 USA Treasury Notes 3.625% Inflation Indexed 15/04/2028 1,354 3. INVESTMENT TRUST ZERO DIVIDEND PREFERENCE SHARES Aberdeen Development - Zero Dividend 1,732 Jupiter Split Investment Trust - Zero Dividend 2,304 Leggmason Investment Utilities Investment Trust - Zero Dividend 1,948 Leggmason Investment Euro Investment Trust - Zero Dividend 936 Total detailed above representing 61% of the market value of the investments 21,787 STATEMENT OF TOTAL RETURN (UNAUDITED) FOR THE SIX MONTHS ENDED 5 OCTOBER 2003 (Unaudited) (Unaudited) (Audited) 6 months to 5 October 2003 6 months to 5 October 2002 Year to 5 April 2003 Revenue Capital Total Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Gains/(losses) on - 4,633 4,633 - (1,238) (1,238) - 674 674 investments Income from investments 408 - 408 289 - 289 741 - 741 Bank interest 2 - 2 12 - 12 24 - 24 GROSS RETURN 410 4,633 5,043 301 (1,238) (937) 765 674 1,439 Management expenses (35) (140) (175) (23) (90) (113) (48) (190) (238) Other administrative expenses (111) - (111) (95) - (95) (148) - (148) (146) (140) (286) (118) (90) (208) (196) (190) (386) RETURN ON ORDINARY ACTIVITIES BEFORE 264 4,493 4,757 183 (1,328) (1,145) 569 484 1,053 TAX Tax on ordinary activities (52) 52 - (16) 16 - (57) 57 - RETURN ATTRIBUTABLE TO EQUITY 212 4,545 4,757 167 (1,312) (1,145) 512 541 1,053 SHAREHOLDERS DIVIDENDS - - - - - - (407) - (407) TRANSFER TO RESERVES 212 4,545 4,757 167 (1,312) (1,145) 105 541 646 RETURN PER ORDINARY SHARE (NOTE 2) 8.30p 178.10p 186.40p 7.15p (56.15)p (49.00)p 21.14p 22.34p 43.48p CAPITAL GEARING TRUST plc BALANCE SHEET (UNAUDITED) AS AT 5 OCTOBER 2003 (Unaudited) (Unaudited) (Audited) 5 October 5 October 5 April 2003 2002 2003 £'000 £'000 £'000 FIXED ASSETS Investments 36,051 27,034 31,454 CURRENT ASSETS Debtors 3,338 1,060 397 Bank - 144 99 3,338 1,204 496 CREDITORS: amount falling due within one year (150) (95) (538) NET CURRENT ASSETS/(LIABILITIES) 3,188 1,109 (42) NET ASSETS 39,239 28,143 31,412 CAPITAL EMPLOYED Called up share capital (note 3) 689 606 636 Share premium account 7,296 2,831 4,279 Capital reserve 30,713 24,315 26,168 Revenue reserve 541 391 329 TOTAL EQUITY SHAREHOLDERS' FUNDS 39,239 28,143 31,412 NET ASSETS PER ORDINARY SHARE 1,424.3p 1,160.1p 1,233.8p CAPITAL GEARING TRUST plc CASH FLOW (UNAUDITED) FOR THE SIX MONTHS ENDED 5 OCTOBER 2003 (Unaudited) (Unaudited) (Audited) 5 October 5 October 5 April 2003 2002 2003 £'000 £'000 £'000 Cash inflow from operating activities (see below) 164 24 230 Taxation recovered - 39 37 Capital expenditure and financial investment: Purchase of investments (2,981) (4,284) (13,230) Sales of investments 2,870 2,804 9,243 Equity dividends paid (407) (209) (209) Management of liquid resources - cash (received)/paid (954) 363 1,143 (from) /to brokers awaiting investment Financing - issue of new shares 1,204 1,248 2,726 (104) (15) (60) Cash and cash equivalents: Balance at beginning of period 99 159 159 Net cash movement (104) (15) (60) Balance at end of period (5) 144 99 Operating cash flows: Profit before tax 264 183 569 Expenses charged to capital (140) (90) (190) Change to accrued income and sundry debtors 26 (7) (123) Change to sundry creditors 14 (62) (26) 164 24 230 CAPITAL GEARING TRUST plc NOTES 1. Status of financial statements The financial information for the six months to 5 October 2003 and 5 October 2002, which is unaudited and does not constitute statutory accounts, has been prepared using accounting policies consistent with those set out in the Company's 5 April 2003 statutory accounts. The abridged financial information for the year ended 5 April 2003 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. 2. Earnings per share The calculations of earnings per share is based on results after tax divided by the weighted average number of shares in issue during the period of 2,551,647 (2002: 2,336,675). 3. Issue of new shares On 1st October 2003, 209,000 ordinary shares of 25p were issued for a consideration of £3,069,165. The current issued share capital is 2,754,906 shares. This information is provided by RNS The company news service from the London Stock Exchange

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