CT UK CAP AND INC INV TRUST PLC

Earnings Release • May 29, 2025

National Storage Mechanism | Additional information

RNS Number : 4717K

CT UK Capital and Income Investment

29 May 2025

CT UK Capital and Income Investment Trust PLC

Unaudited Statement of Results

for the half-year ended 31 March 2025

Date:                      29 May 2025

LEI:                          21380052ETTRKV2A6Y19

Highlights for the half-year ended 31 March 2025:

·    The dividend(1) for this half-year of 5.90p represents an increase of 3.5% in comparison to the six-months ended 31 March 2024 and provides Shareholders with an annual yield(2) of 4.0%.

·    The Company is recognised as a "Dividend Hero" by the Association of Investment Companies having increased its dividend over 31 consecutive years. 

·    The Company's Net Asset Value ("NAV") total return(3) was -1.6%, underperforming the FTSE All-Share Index (the "Benchmark") which returned 4.1% over the same period.

·    Share price total return(3) was -2.7%. The share price ended the period at 318p.

" In recent decades it is difficult to think of a parallel for the current economic and geo-political situation and there is very considerable uncertainty as to how this will evolve.  However, it is important for investors to focus on the long-term, to try to ignore the noise of current events and not to act hastily. Your investment manager believes valuations are one of the strongest indicators of future investment performance, and on that front the opportunities for the UK stock market and a considerable number of UK companies, look particularly attractive ."

Nicky McCabe

Chair

SUMMARY OF RESULTS

	Half-year ended 31 March 2025	Half-year ended 31 March 2024
Share price total return (3)	-2.7%	+9.5%
Net Asset Value total return (3)	-1.6%	+12.9%
FTSE All-Share Index total return	+4.1%	+6.9%
Dividends per ordinary share
First interim dividend in respect of year to 30 September 2025	(1) 2.95p	-
30 September 2024	-	2.85p
Second interim dividend in respect of year to 30 September 2025	(1) 2.95p	-
30 September 2024	-	2.85p
Total interim dividends relating to the period	5.90p	5.70p

(1)    The first interim dividend of 2.95 pence per share was paid on 31 March 2025 and the second interim dividend of 2.95 pence per share is payable on 30 June 2025 to Shareholders registered on 13 June 2025 with an ex-dividend date of 12 June 2025.

(2)    Calculated as the total of the four most recent quarterly dividends declared divided by the period end share price.

(3)    Total Return - the return to Shareholders calculated on a per share basis by adding dividends paid in the period to the increase or decrease in the Share Price or Net Asset Value in the period. The dividends are assumed to have been re-invested in the form of shares or net assets, respectively, on the date on which the shares were quoted ex-dividend.

The Chair, commenting on the results, said:

Dear Shareholder,

This is my first report to you since taking over as Chair at the Annual General Meeting.  I look forward to representing you while continuing to work with our investment manager and the Columbia Threadneedle team.

The first six months of our financial year saw the UK equity market make reasonable progress with a gain for the FTSE All-Share Index of 4.1%.  This was against a backdrop that might have been thought of as unsupportive: in the UK, the economy has proven to be slower growing and inflation generally higher and more persistent than expected.  So, whilst there were two cuts in the Base Rate from the Bank of England, taking the rate to 4.5%, the UK 10-year Government Bond saw its yield increase from 4.0% to 4.7%, signalling scepticism about the fiscal plans and making it more expensive for the Government to borrow.  While the clean sweep of the Republican Party in the November elections in the USA was initially taken well by stock markets, subsequent talk on tariffs was seen much less positively.

Total Return - The Company offers reliable income while at the same time seeking to grow the size of your investment

The headline strength of the UK market was heavily concentrated in a relatively small number of very large companies and this provided a challenging background for our performance.  Your investment manager firmly believes that there are more attractive investment opportunities outside of the very largest companies as many of these smaller companies are both better positioned for long-term growth while also being more attractively valued.  Thus, compared to the Index, the portfolio is positioned so that it has a greater weighting in medium- and smaller-sized companies. However, over the last six months this was disadvantageous for performance.  Whilst the FTSE All-Share Index (which is weighted by size) gained 4.1%, the median company in the Index fell 4.1%.  Against this background, the Net Asset Value total return per share for your Company was -1.6%.

For a number of years there has been a considerable difference in performance between different parts of the UK stock market, based more on size than underlying company performance. This has provided a headwind that is visible in our medium- and longer-term performance.  It is worth bearing in mind that we have been through periods similar to this in the past, which have typically come before a strong reversal in performance.

Income Growth - The Company has increased its dividend every year since it was launched, through the market's ups and downs

With these results, your Company announces a strong level of income growth, +26% relative to the comparable six-month period the previous year.  This is, however, really reflective of unusual circumstances a year ago, which were detailed in last year's interim report.  Positively, we are seeing reasonable levels of underlying dividend growth from most of our investee companies and in turn we aim to continue to grow the dividend we pay to our shareholders, as we have every year since 1993.

At the end of March 2025, we paid a dividend of 2.95 pence per share to shareholders and with these results we announce a further dividend of 2.95 pence per share to be paid on 30 June 2025.  The combined dividend for the first half of 5.9 pence per share represents an increase of 3.5% over the year, which in turn is ahead of the rate of Consumer Price Inflation of 2.6% to March 2025.

Dividend Cover and Revenue Reserve

Our revenue return per share in the first half was 5.0 pence so the dividend was 85% covered by earnings.  Our forecast anticipates a higher level of income receipts in the second half of our financial year and this, together with our Revenue Reserve of £9.2 million, provides a solid base from which to aim for further dividend growth.

We are very aware that our record of more than 31 years of dividend growth is an important attraction to many shareholders.  We are proud of this achievement and aim to continue to grow our dividend to extend the record further.

Share Buy-backs

The Board firmly believes the share price should not become too detached from the underlying NAV per share and in order to try to achieve this we are willing and able to buy and sell the Company's own shares when they are too far adrift from that reference point.

In the first six months of this financial year, we bought back a total of just under 1.6 million of our own shares across 16 separate occasions at an average discount to NAV of 4.1%.  These purchases added marginally to NAV for remaining shareholders and also helped to provide some liquidity to the stock market.

Share Price Rating

During the six months under review our share price traded at an average discount to NAV of around 3.5% and the shares traded within a fairly narrow band around this average for most of the period.  However, having started the period at a discount of 2.9% and ended at a discount of 4.1%, the share price total return of -2.7% lagged the NAV performance.

Balance Sheet and Gearing

We have a loan facility with The Royal Bank of Scotland International that was renewed in March.  At the start of the financial year, we had borrowed £28 million using the facility; following the realisations of some investments during the six months under review, the amount borrowed had reduced to £20 million and the size of the renewed facility is lower at £20 million to reflect that.

Directorate Change

I would like to thank Jane Lewis for her time as my predecessor as Chair of the Board of this Company and for her tenure on the Board before that.  Jane's hard work, enthusiasm and focus on the key issues have been of great benefit to the Company and we wish her well for the future.

As was announced at the Annual General Meeting in March, in order to refresh the Board, we have appointed John Blowers as a new director.  As a former marketing and managing director at Interactive Investor, John has direct experience of direct to consumer marketing which will be very relevant as we look to appeal to new and existing shareholders.

Outlook

Without risking hyperbole, in recent decades it is difficult to think of a parallel for the current economic and geo-political situation and there is very considerable uncertainty as to how this will evolve.  It is a truism to state that markets dislike uncertainty and this is causing a higher level of volatility in markets than during our first six months.  However, it is a fair observation to note that the epicentre of the uncertainty is in the United States, and that is where the most negative impact on markets is currently being felt.  In the UK, the Government's large working majority signals to international investors that we are a relative haven of stability, so whilst the UK as a considerable trading and strategic partner of the US is not immune to events there and internationally, neither are we completely swept up in them.

It is certainly important for investors to focus on the long-term, to try to ignore the noise of current events and not to act hastily; historically, it has been the case that trying to get the timing of investments in and out of markets has been a less profitable activity than remaining invested in profitable businesses.  Your investment manager believes valuations are one of the strongest indicators of future investment performance, and on that front the opportunities for the UK stock market and a considerable number of UK companies, look particularly attractive.

Finally, your Board believes that it is important at times like this to have a steady pair of hands in charge and this is what we have in Julian Cane who has now been your investment manager for 28 years.

On behalf of the Board

Nicky McCabe

28 May 2025

Forward -looking statements

This half-year report may contain forward-looking statements with respect to the financial condition, results of operations and business of the Company. Such statements involve risk and uncertainty because they relate to future events and circumstances that could cause actual results to differ materially from those expressed or implied by forward-looking statements. The forward-looking statements are based on the Directors' current view and on information known to them at the date of this report. Nothing should be construed as a profit forecast.

Directors' Statement of Principal Risks and Uncertainties

Most of the Company's principal risks and uncertainties are market related and no different from those of other investment trusts investing primarily in listed equities. They are described in more detail under the heading "Principal Risks and Future Prospects" within the Strategic Report in the Company's Annual Report for the year ended 30 September 2024.

The principal risks identified in the Annual Report were:

·      Market and Political Risks

·      Investment Performance Risks

·      Legal and Regulatory Risks

·      Product Strategy Risks

·      Cyber Risks

·      Third Party Service Provider Risks

At present the global economy continues to suffer disruption due to the effects of the war in Ukraine, events in the Middle East and the uncertainty surrounding the imposition of US trade tariffs. The Directors continue to review the key risk register for the Company which identifies the risks that the Company is exposed to, including those that are considered to be emerging, the controls in place and the actions being taken to mitigate them.

The Board considers that the principal risks have not changed materially since 28 November 2024, the date of the Company's Annual Report. The Board has also considered these principal risks in relation to going concern.

Directors' Statement of Responsibilities in Respect of the Half-Yearly Financial Report

We confirm that to the best of our knowledge:

·      the condensed set of financial statements have been prepared in accordance with applicable UK Accounting Standards on a going concern basis and give a true and fair view of the assets, liabilities, financial position and return of the Company;

·      the Chair's Statement and the Directors' Statement of Principal Risks and Uncertainties (together constituting the Interim Management Report) include a fair review of the information required by the Disclosure Guidance and Transparency Rule ('DTR') 4.2.7R, being an indication of important events that have occurred during the first six months of the financial year and their impact on the financial statements;

·      the Directors' Statement of Principal Risks and Uncertainties is a fair review of the principal risks and uncertainties for the remainder of the financial year; and

·      the half-yearly report includes a fair review of the information required by DTR 4.2.8R, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the Company during the period, and any changes in the related party transactions described in the last Annual Report that could do so.

On behalf of the Board

Nicky McCabe

Chair

28 May 2025

Condensed Income Statement

Half-year ended 31 March 2025  (Unaudited)	Half-year ended 31 March 2024 (Unaudited)

Note		Revenue	Capital	Total	Revenue	Capital	Total
		£'000s	£'000s	£'000s	£'000s	£'000s	£'000s
	(Losses)/gains on investments	-	(9,950)	(9,950)	-	36,440	36,440
	Foreign exchange gains/(losses)	2	(12)	(10)	(1)	(39)	(40)
	Income	6,164	-	6,164	4,897	-	4,897
	Management fee	(346)	(346)	(692)	(361)	(361)	(722)
	Other expenses	(448)	-	(448)	(407)	-	(407)
	Net return before finance costs and Taxation	5,372	(10,308)	(4,936)	4,128	36,040	40,168
	Finance costs	(355)	(355)	(710)	(398)	(398)	(796)
	Net return before taxation	5,017	(10,663)	(5,646)	3,730	35,642	39,372
	Taxation	(30)	-	(30)	(18)	-	(18)
	Net return attributable to Shareholders	4,987	(10,663)	(5,676)	3,712	35,642	39,354
2	Return per share - basic and diluted	5.01p	(10.72p)	(5.71p)	3.59p	34.45p	38.04p

The total column of this statement is the profit and loss account of the Company.  The revenue return and capital return columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies. 

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

A Statement of Comprehensive Income is not required as all gains and losses of the Company have been reflected in the above statement.

Condensed Statement of Changes in Equity

		Share	Capital				Total
	Share	premium	redemption	Special	Capital	Revenue	Shareholders'
Half-year ended 31 March 2025 (Unaudited)	Capital	account	reserve	Reserve	Reserves	reserve	Funds
	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s
Balance at 30 September 2024	26,822	141,367	4,146	-	160,600	11,059	343,994
Movements during the half-year ended 31 March 2024
Dividends paid	-	-	-	-	-	(6,844)	(6,844)
Ordinary shares bought back and held in treasury	-	-	-	-	(5,050)	-	(5,050)
Costs relating to broker	-	-	-	-	(5)	-	(5)
Net return attributable to Shareholders	-	-	-	-	(10,663)	4,987	(5,676)
Balance at 31 March 2025	26,822	141,367	4,146	-	144,882	9,202	326,419
Half-year ended 31 March 2024 (Unaudited)
Balance at 30 September 2023	26,822	141,367	4,146	-	130,082	12,330	314,747
Movements during the half-year ended 31 March 2024
Dividends paid	-	-	-	-	-	(6,964)	(6,964)
Ordinary shares bought back and held in treasury	-	-	-	-	(6,954)	-	(6,954)
Costs relating to broker	-	(6)	-	-	(5)	-	(11)
Net return attributable to Shareholders	-	-	-	-	35,642	3,712	39,354
Balance at 31 March 2024	26,822	141,361	4,146	-	158,765	9,078	340,172
Year ended 30 September 2024 (Audited)
Balance at 30 September 2023	26,822	141,367	4,146	-	130,082	12,330	314,747
Movements during the year ended 30 September 2024
Dividends paid	-	-	-	-	-	(12,710)	(12,710)
Ordinary shares bought back and held in treasury	-	-	-	-	(13,586)	-	(13,586)
Costs relating to broker	-	-	-	-	(10)	-	(10)
Net return attributable to Shareholders	-	-	-	-	44,114	11,439	55,553
Balance at 30 September 2024	26,822	141,367	4,146	-	160,600	11,059	343,994

Condensed Balance Sheet

	31 March 2025	31 March 2024	30 September 2024
	(Unaudited)	(Unaudited)	(Audited)
	£'000s	£'000s	£'000s
Fixed assets
Investments	343,470	360,881	370,968
Current assets
Debtors	4,266	1,836	1,312
Cash and cash equivalents	711	4,268	319
Total current assets	4,977	6,104	1,631
Current liabilities
Creditors: amounts falling within one year	(2,028)	(813)	(605)
Loan	(20,000)	(26,000)	(28,000)
Total current liabilities	(22,028)	(26,813)	(28,605)
Net current liabilities	(17,051)	(20,709)	(26,974)
Net assets	326,419	340,172	343,994
Capital and reserves
Share capital	26,822	26,822	26,822
Share premium account	141,367	141,361	141,367
Capital redemption reserve	4,146	4,146	4,146
Special reserve	-	-	-
Capital reserves	144,882	158,765	160,600
Revenue reserve	9,202	9,078	11,059
Total Shareholders' funds	326,419	340,172	343,994
Net Asset Value per ordinary share	331.45p	333.38p	343.84p

Condensed Statement of Cash Flows

	Half-year ended	Half-year ended
	31 March 2025 (Unaudited)	31 March 2024 (Unaudited)
	£'000s	£'000s
Cash flows from operating activities before interest and dividends received and interest paid	(1,256)	(902)
Dividends received	4,398	4,706
Interest and underwriting commission received Interest paid	85 (716)	91 (800)
Cash flows from operating activities	2,511	3,095
Investing activities
Purchase of investments	(16,580)	(16,457)
Sale of investments	34,370	28,221
Cash flows from investing activities	17,790	11,764
Cash flows before financing activities	20,301	14,859
Financing activities
Equity dividends paid	(6,844)	(6,964)
Costs associated with share issues and buybacks	(5)	(11)
Costs of shares bought back and held in treasury	(5,050)	(6,954)
(Repayment)/drawdown of bank loan	(8,000)	1,000
Cash flows from financing activities	(19,899)	(12,929)
Net movement in cash and cash equivalents	402	1,930
Cash and cash equivalents at the beginning of the period	319	2,378
Effect of movement in foreign exchange	(10)	(40)
Cash and cash equivalents at the end of the period	711	4,268
Represented by:
Cash at bank	361	98
Short term deposits	350	4,170
	711	4,268

Notes

1      Basis of preparation

These condensed financial statements, which are unaudited, have been prepared on a going concern basis in accordance with the Companies Act 2006, FRS 102, Interim Financial Reporting (FRS104) and the Statement of Recommended Practice "Financial Statements of Investment Trust Companies and Venture Capital Trusts" ("SORP") issued by the AIC.

The accounting policies applied in the condensed set of financial statements are set out in the Company's Annual Report for the year ended 30 September 2024.

2      Earnings per ordinary share

Earnings per ordinary share attributable to Shareholders reflects the overall performance of the Company in the period.  Net revenue recognised in the first six months is not necessarily indicative of the total likely to be received in the full accounting year.

	Half-year ended 31 March 2025 £'000s	Half-year ended 31 March 2024 £'000s
Revenue return	4,987	3,712
Capital return	(10,663)	35,642
Total return	(5,676)	39,354
	Number	Number
Weighted average ordinary shares in issue	99,451,204	103,462,593
Total return per share	(5.71p)	38.04p

3      Dividend

The second interim dividend of 2.95 pence per share in respect of the year ending 30 September 2025 will be paid on 30 June 2025 to all Shareholders on the register at close of business on 13 June 2025, with an ex-dividend date of 12 June 2025. The total cost of this dividend, based on 98,158,345 shares in issue, and entitled to the dividend on 27 May 2025, being the last practicable date before publication, is £2.9 million.

4      Going concern

In assessing the going concern basis of accounting the Directors have had regard to the guidance issued by the Financial Reporting Council. They have also considered the Company's objective, strategy and policy, the current cash position of the Company, the availability of the loan facility and compliance with its covenants and the operational resilience of the Company and its service providers.

At present, the global economy continues to suffer disruption due to the effects of the war in Ukraine, events in the Middle East and the uncertainty surrounding the imposition of US trade tariffs and the Directors have given careful consideration to the consequences for the Company.  The Company has a number of banking covenants and at present the Company's financial position does not suggest that any if these are close to being breached.

The primary risk is that there is a very substantial decrease in the Net Asset Value of the Company in the short to medium term. The Directors have considered the remedial measures that are open to the Company if such a covenant breach appears possible. As at 27 May 2025, the last practicable date before publication of this report, borrowings amounted to £10 million. This is in comparison to a Net Asset Value of £340 million. In accordance with its investment policy the Company is mainly invested in readily realisable, FTSE All-Share listed securities. These can be realised, if necessary, to repay the loan facility and fund the cash requirements for future dividend payments.

The Company operates within a robust regulatory environment. The Company retains title to all assets held by the Custodian. Cash is held with banks approved and regularly reviewed by the Manager and the Board.

Based on this information the Directors believe that the Company has the ability to meet its financial obligations as they fall due for a period of at least twelve months from the date of approval of these financial statements. Accordingly, these financial statements have been prepared on a going concern basis.

5      Results

The results for the half-year ended 31 March 2025 and 31 March 2024, which are unaudited, constitute non-statutory accounts within the meaning of Section 434 of the Companies Act 2006. The latest published accounts which have been delivered to the Registrar of Companies are for the year ended 30 September 2024; the report of the Independent Auditors thereon was unqualified and did not contain a statement under Section 498 of the Companies Act 2006. The abridged financial statements shown on prior pages for the year ended 30 September 2024 are an extract from those accounts.

6      Half-Year Report

The Company's Half-Year Report is available on the internet at www.ctcapitalandincome.co.uk.

Printed copies may be obtained by contacting the Company Secretary at the Company's Registered Office, Cannon Place, 78 Cannon Street, London EC4N 6AG.

By order of the Board

Columbia Threadneedle Investment Business Limited, Secretary

28 May 2025

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