Capital Gearing Trust PLC

Annual Report • Jul 1, 2022

Annual Report and Financial Statements For the period ended 31 March 2022 CAPITAL GEARING TRUST P.L.C. Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 n The Company  an investment trust with shares listed on the    n Investment Objective The Company’s objective is to preserve and over time to grow shareholders’ real wealth. n Capital Structure and Voting Rights The share capital comprises Ordinary shares of 25 pence each. As at 31 March 2022, 20,891,975 shares were in issue and no shares were held in treasury (5 April 2021: 13,813,113 shares in issue and no shares held in treasury).  n 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  n Dividends The Company pays an annual dividend but focuses on total return rather than any net income level. n Management and Administration Investment management is carried out  (“CGAM”) for an annual fee of 0.60% of net assets up to  up secretarial and various administrative services are provided by Juniper Partners. Custodial and depositary services are carried out by The  n Company’s Website italgearingtrust.com n ISA  a fully qualifying investment trust under the individual savings account (“ISA”) rules. n Annual General Meeting   The G  2022 at 11.00 a.m. Further details on the  68. Company Summary The Company is a member of the Association of Investment Companies. Information disclaimer This report is produced for members of the Company with the purpose of providing them with information relating to the Company and its      the future. Past performance is no guarantee of future performance. Investment returns are not guaranteed and you may not get back the  its advisers, including CG Asset Management and Juniper Partners, have endeavoured to produce these audited accounts in good faith and in accordance with legislation, regulations, reporting standards and to be useful to stakeholders in the Company, including its shareholders. 01 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022    Financial Statements  Shareholder InformationCompany Summary Company Summary Inside front cover Contents 1 Financial Summary 2 Performance 3 The Strategic Report Chairman’s Statement 4  7 Portfolio Analysis 9 Portfolio Investments 9 The  13 Management and Administration 14  15 Governance Report  25 Corporate Governance Statement 30  35  39  43 Independent Auditors’ Report 44 Financial Statements Income Statement 50  51 Statement of Financial Position 52 Cash Flow Statement 53  54 Notice of Annual General Meeting 68 Shareholder Information 71  76 Contents 02 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Financial Summary Total return performance (to 31 March 2022) 6 April 2021 to 31 March 2022 1 Year 3 Years 5 Years 10 Years Share Price 1 10.0% 10.6% 27.3% 38.1% 79.2%  1 10.5% 10.7% 27.0% 37.1% 85.1%  1 18.7% 19.1% 15.8% 24.4% 89.0%  9.0% 9.0% 13.5% 20.1% 34.3% Share Price relative to MSCI UK -7.3% -7.1% 9.9% 11.0% -5.2%  0.9% 1.5% 12.2% 15.0% 33.4% Key data (2022 data to 31 March, earlier periods to 5 April) 2022 2021 2020 2019 2018 2017 2012 Market Capitalisation (£m) 1,073.8 651.3 482.2 328.9 225.3 172.4 88.0 Shareholders’ Funds (£m) 1,049.8 634.0 470.1 321.9 219.5 169.5 84.6 Shares in issue 20,891,975 13,813,113 11,509,263 7,886,589 5,762,919 4,453,174 2,919,906 Share Price (pence) 5,140.0 4,715.0 4,190.0 4,170.0 3,910.0 3,870.5 3,015.0  5,025.1 4,590.2 4,084.2 4,082.0 3,809.0 3,805.0 2,898.6  1 2.3% 2.7% 2.6% 2.2% 2.6% 1.7% 4.0%  56.81 51.04 59.12 51.12 37.04 18.26 18.82 Total dividend per Share (pence) 46.00 45.00 42.00 35.00 27.00 20.00 18.50  1 0.52% 0.58% 0.65% 0.70% 0.77% 0.89% 1.31%  18,168.57 15,303.2 12,085.7 16,062.4 14,884.2 14,615.9 9,540.5  323.5 296.9 292.6 285.1 278.3 269.3 240.8 Allocation of portfolio  35.0% 29.9% 25.1% 33.0% 37.9% 34.7% 46.9%  3.9% 6.2% 18.8% 10.3% 1.1% 4.1% 5.9% Preference Shares/Corporate Debt 10.9% 10.3% 14.0% 17.6% 17.3% 21.5% 19.3%  44.1% 46.0% 34.1% 35.2% 36.9% 33.4% 23.2% Cash 4.8% 5.8% 6.9% 2.9% 5.8% 5.4% 2.5% Gold 1.3% 1.8% 1.1% 1.0% 1.0% 0.9% 2.2% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 1 Alternative Performance Measure.  03 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022    Financial Statements  Shareholder InformationCompany Summary Share price total return performance over 5 years to 31 March 2022  7. Share price Total Return MSCI UK Total Return 2017 2018 2019 2020 2021 As at 31 March 90 80 70 100 110 120 130 140 150 RPI 2022  Net asset value total return performance over 20 years to 31 March 2022  2. As at 31 March 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 NAV Total Return MSCI UK Total Return RPI 2022 500 400 300 200 100 0  Performance  measures over the medium to longer term. 04 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Forty years Capital Gearing Trust has passed several milestones this year, including its fortieth anniversary under the same investment management team, headed by Peter Spiller. Over the 40 years from 1982, the Company’s primary investment objective has been the same: to preserve shareholders’ wealth. It has achieved this objective comfortably, even during challenging market conditions. Only once in the last 40 years has the Company registered a negative annual return, which is a commendable record by any measure. The Company’s secondary objective has been to grow shareholders’ real wealth. The Company has provided a compound share price annual return (with dividends   with a market capitalisation of over £1 billion. This follows strong demand for the Company’s shares since the introduction of the discount and premium control policy   complacent. Shareholders are likely to be more interested in the future than the past. We remain intensely focused  the ever-changing challenges that investors face. However, it is worth pausing on this fortieth anniversary to congratulate CG Asset Management and Peter Spiller on their achievements and for their consistently good service to the Company. The past year The Company’s year-end has been changed to 31 March, from 5 April. This month end reporting period sits better with market comparisons and quarterly performance measurement statistics.   foreshortened year. The share price total return over the same period was 10.0%, ending the year with a share price of 5,140p. This is a very satisfactory performance   Whilst the Company does not have a formal benchmark, this performance compares with the equity return   the sameperiod. The main driver of performance over the last year has been the outperformance of both the equity and the bond portions of the portfolio. The percentage of the portfolio in i-related assets has increased over the last   -linked returns. Towards the end of last year, the Investment Manager initiated positions in power and energy plays which performed very well in the  asset classes, the Investment Manager has invested in  investments come under the heading of risk assets, and, along with other equity investments, account for around 44% of the portfolio. Our Investment Manager continues to believe that conventional equity assets remain overvalued in the main, and hence around 50% of the portfolio is held mainly in  in short-dated conventional bonds, preference shares and treasury bills – ready to deploy these funds should  of the portfolio invested in gold and cash, amounting to 6%. When the time is appropriate, these cash equivalent resources will be used to buy into equities at attractive   theCompany. Further details on the portfolio, individual share price movements and geographic markets are provided in the report from the Investment Manager and in the Strategport. Earnings and dividends  period was 56.81p. This is the fourth year  account. This year it has been driven by higher levels of equity income, in particular from infrastructure and property shares. The Company’s portfolio is not managed with any income criteria in mind, but with the payment of dividends being a consequence of meeting the income distribution tests for maintaining investment trust status.   believes that this dividend, which is not a material part of the Company’s total return and so recommends this for shareholder approval at the Company’s forthcom. Chairman’s Statement 05 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Company Summary   Financial Statements  Shareholder Information Costs  running the Company. The assets of the Company now  billion. As a lower investment management fee rate of 0.3% is charged on assets over £500 million, this  The key measure of overall costs is the ongoing charges  measured solely on the costs of running the Company, has declined from 0.58% last year to 0.52% this year. As disclosed in the Key Information Document (KID), when the management costs of the underlying funds in which the Company invests are also taken into account, the   The Company does not have any substantial marketing or promotional costs. Promotional service costs are largely included in the management fee. We have maintained competitive costs for all our third-party suppliers, not least to try and keep the cost of operating the Company, which  low as we can. Our secretarial and administration agreement with Juniper Partners has been reviewed in light of the Company’s changed circumstances since Juniper Partners assumed the contract in 2015. As a result, the company secretarial fee will be subject to an increase, the costs of operating the DCP will remain the same, and an ad valorem secretarial/administration fee has been introduced to  the Company. Full details of this are given in the Directors’  the . Board matters a non-independent member on  Peter Spiller and Chris Clothier, we see at least one, and usually more, of the portfolio managers at our oard  the markets and stocks, as well as being able to discuss and question them on their investment approach and    requisite skills to oversee the running of the Company on behalf of shareholders. As set out in the remuneration  individual remuneration more in line with the market.   consultant to provide a oard evaluation to make sure that we measure up to our obligations under corporate governance and regulatory  of recruiting a further Director in order to refresh the oard  Annual General Meeting The AGM will be held on Tuesday, 12 July 2022 at  the Company is set out on pages 68 and 69 Covid-19 restrictions have been lifted, we look forward to welcoming shareholders back in person to the meeting.   Further details on the resolutions can be found on pages 27 and 28  proposed are in the best interests of the Company and its shareholders and encourages shareholders to vote by  to do in respect of their own shareholdings. We would encourage shareholders to return their votes by electronic  to vote on their behalf if their shares as held through  Share issuance and buybacks  and serves shareholders well in providing good liquidity  more volatile market conditions. Demand for the Company’s shares continues to be strong. We have issued some 7,078,862 shares during the year, raising net proceeds of some £354.3 million – our busiest year of issuance since the DCP commenced. We have not needed to buy back any shares in the last year. At 31 March 2022, there were 20,891,975 shares in issue and net assets were £1,049.8 million. The Company incurs modest costs for operating the DCP and for renewing shareholder authority from time to time (which has involved publishing a prospectus and convening two general meetings in the last year). Issuance at a premium and buying back at a discount under the DCP more than compensates for costs and is consistently accretive to  DCP added 0.9% to shareholder total returns over the last  Chairman’s Statement (continued) 06 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Chairman’s Statement (continued)   in size has had no adverse impact on the investment  Investment Manager that the growth in assets under their management can be accommodated for some time  Whilst all recent DCP activity has been on issuance, in the event that shareholders were looking to sell stock, we would have no hesitation in operating an equally robust buy-back policy. The successful operation of the DCP has   stemming from issuance which has more than covered   Outlook The Company was formed in 1982 when interest rates were high, and potential returns looked very attractive as stockmarket valuations were low and interest rates were falling. It should come as no surprise to investors to realise that the reverse is now true, with historically low interest rates on the rise, and current stock market valuations making future returns distinctly less attractive. As our Investment Manager put it in a recent article “prospective returns look lousy for practically everything”. Investors are facing rising interest rates, substantially  “” which have helped keep asset prices up and economies from going into recession. That said, stockmarket concerns are overshadowed by the atrocities being perpetrated in Ukraine. Apart from the consequences of attacks on freedom, the economic impacts of the war are being felt throughout the world, with disruption to energy and agricultural supplies and the  That may sound a very gloomy outlook, but there are always interesting investment ideas and opportunities out  The Company holds a lot of near-cash investments, like   linked assets which will continue to be held to help protect  Company goes into the current year with its risk assets focused on a range of potentiallty rewarding areas, such as rented accommodation; renewable infrastructure, and energy and materials and commodities plays. It may not be possible to counteract the current levels  know that CGAM and its team will do its best and will look  It is certain to be a very challenging year but so too have other years in the past 40 where the Company has weathered well. Jean Matterson Chairman 27 07 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Company Summary   Financial Statements  Shareholder Information Review    performing assets were purchased in the aftermath of the Covid-19 bear market of 2020. In those dark days  and nervous that the pandemic had undermined the prospects for all assets, particularly property. This opened up a buying opportunity in alternative property companies, those in the logistics and residential subsectors (“beds   plc delivered ” returns were   holdings represented more than 22% of the total portfolio, although by year end, this level was reduced to 16%. Many  net asset values onto premia, so most positions were  acquired by other companies. The proceeds of these sales were invested into infrastructure assets, with a particular focus on renewable energy. Unlike property companies, infrastructure had not recovered strongly after the pandemic, many renewable energy companies had derated by as much as 30% from their late 2019 highs. This derating fortuitously coincided with a surge in power prices so provided an attractive entry point. Our infrastructure portfolio, which now represents 7% of our portfolio, delivered 20% returns over the year and still enjoys a strong tailwind. We also increased our broader  traded funds which have delivered strong returns  Only one meaningful risk asset allocation delivered double digit negative returns: German residential property. There are some crumbs of comfort: this sector has been a fantastic long-term performer for the Company  Deutschland, returned 16%. Today, German residential  market otherwise characterised by elevated valuations. The most notable area of relative outperformance came  was key. The wider bond market endured a poor year,    reported in sterling). Our bond portfolio delivered 8% with the stand out performers being our 21% holding in   more sticky than the market is currently forecasting in   conventional bonds for another year. It is pleasing that both the bond and equity portfolios delivered strong absolute and relative outperformance.  bond markets remain poor but recent weakness is opening up a range of discount opportunities and the potential for further rotation into areas of value over the  Outlook As the Company celebrates its fortieth year, it appears that the world economy may be undergoing a major transition. It seems that we are moving from an era of   put in place central banking policies that suppressed the  Certainly there was a recession, but companies and households were robust enough for it to be comparatively  of workers in the capitalist world doubled, due to China’s  Demographics helped too, with the growing working age population in the West boosted by the increasing participation and improving opportunity for women. Technology, always at the heart of productivity gains, made a particular contribution in easing price discovery through the internet. The result was that trend bond yields fell throughout the 40-year period, a fabulous background for above normal   could operate with a policy stance so stimulative that many nominal bond yields even went negative without  rising on the same waves of stimulus, have reached  Investment Manager’s Report 08 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Investment Manager’s Report (continued) Outlook (continued) Our situation today is the mirror image of the last 40 years. Globalisation is being rolled back both for reasons of security of supply and the geopolitical risks associated with of manufacturing is fading. Furthermore, there are no realistic candidates for any equivalent increases in the workforce of the capitalist economy from elsewhere. Manufacturing closer to home will be more secure, but  just goods; the bargaining power of labour is being at least partially restored. The scale of investment required to achieve net zero  least through higher commodity prices as demand for natural resources for infrastructure renewal meets the constrained supply of metals and minerals due to low  The greatest imbalance that has developed over the last  has been encouraged by abnormally low interest rates. History suggests that the only way to reduce the burden    repression is likely to cause some shocks but in time will bring debt into better balance. Our main objective is to keep shareholders’ capital whole during this period of repression, which with luck will end with an environment similar to 1982. That is to say,  and rising and debt no longer alarming. That would be a great environment from which to deliver the types of returns that shareholders of Capital Gearing Trust have enjoyed over the last 40 years. Peter Spiller Alastair Laing Christopher Clothier 2022 09 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Company Summary   Financial Statements  Shareholder Information Asset Allocation 2022 (2021) Index Linked Gov’t Bonds 35% (30%) Gold 1% (2%) Cash 5% (6%) Conventional Gov’ t Bonds 4% (6%) Pref Shares / Corp Debt 11% (10%) F unds / E quities 44% (46%) Currency Exposure 2022 (2021) GBP 49% (53%) USD 28% (26%) SEK 5% (4%) EUR 9% (7%) JPY 7% (8%) Other 2% (2%) Portfolio Investments 2022 £’000 2021 £’000 Index-Linked Government Bonds - 226,600 131,754 - 75,146 21,660 - 27,321 20,189 - 26,880 12,737 - 4,900 – - 3,871 2,500 364,718 188,840 Conventional Government Bonds  40,589 38,997 40,589 38,997 Portfolio Analysis 10 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 2022 £’000 2021 £’000 Zero Dividend Preference Shares  5,060 3,553 JZ Capital Partners 2022 3,450 1,647 Polar Capital 2024 2,204 1,348  2,144 831  1,869 1,110 Chelverton Smaller Companies ZDP 2025 1,851 464 2049 1,751 – Investments with a market value below £1,500,000 4,086 2,030 Acorn Income Fund 2022 – 2,455 Infrastructure Income – 1,858 22,415 15,296 Corporate Debt Tesco 3.322% 2025 4,484 854 Severn Trent 1.3% 2022 4,361 3,407 Unite (USAF) 3.374% 2028 3,887 1,386 2023 3,871 – A2D Fund 4.75% 2022 3,725 1,627 Sydney Airport Finance Company 3.12% 2030 3,560 – Highbury Finance 7.017% 2023 3,441 –  3,403 1,947 Aberdeen Asian Smaller Companies 2.25% 2025 3,268 2,844 2025 3,232 – Heathrow Funding 5.225% 2023 3,175 –  3,132 1,142  3,123 3,060 MPT Operating Partnership 2.55% 2023 2,969 2,030  2,779 2,751 2022 2,586 – Housing Finance Corp 8.625% 2023 2,575 – 2022 2,497 –  2,405 2,371  2,300 468 2023 2,107 – 2022 2,024 – Western Power 5.25% 2023 1,639 – 2022 1,632 –  1,559 1,407 2023 1,559 – Investments with a market value below £1,500,000 15,593 9,936 Pershing Square 5.5% 2022 – 4,963  – 3,149  – 2,518 Places for People Capital Markets 1% 2022 – 2,393  – 1,525 90,886 49,778 Portfolio Investments (continued) 11 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Company Summary   Financial Statements  Shareholder Information Portfolio Investments (continued) 2022 £’000 2021 £’000 Funds/Equities  37,753 –  25,652 19,461 Grainger 20,677 12,485  18,427 –  Investment Trust 16,302 13,260  15,551 13,395 Greencoat UK Wind 13,047 4,104  12,721 10,320  11,515 4,807  10,840 – Digital 9 Infrastructure 10,092 –  9,234 6,168 GCP Infrastructure Investments 8,825 3,278  8,578 5,538  7,425 4,922  7,138 1,947 Aker Asa 7,104 –  6,860 5,463  6,473 2,242  6,328 – Foresight Solar Fund 6,200 – Taylor Maritime Investments 6,130 –  5,923 2,170  5,906 6,445  5,767 12,326 Troy Income and Growth Trust 5,599 –  5,596 5,029 Finsbury Growth & Income Trust 5,492 –  5,259 1,636  5,124 2,565  4,933 1,976 Pershing Square 4,903 2,384  4,852 5,549  4,816 – Castellum 4,783 3,681  4,396 –  4,378 –  4,244 – Civitas Social Housing 4,233 5,366  4,217 1,907  4,174 – Securities Trust of Scotland 3,995 514 Cordiant Digital Infrastructure 3,935 1,452  3,713 57  3,381 –  3,339 1,928  3,131 1,602  2,990 931  2,935 1,686  2,869 – Miton UK Microcap Trust 2,799 1,793  2,748 2,438  2,605 – Tufton Oceanic Assets 2,525 –  2,436 –  2,404 – 12 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Portfolio Investments (continued) 2022 £’000 2021 £’000 Funds/Equities Grand City Properties 2,380 1,879  2,242 3,835  2,216 –  2,005 2,335  1,983 –  1,954 1,622  1,866 1,407  1,753 –  Investment Company 1,663 –  1,646 – Weiss Korea Opportunity Fund 1,632 3,720 Polar Capital Global Healthcare 1,602 1,319  1,578 1,754  1,576 – Crystal Amber Fund 1,567 1,193 Investments with a market value below £1,500,000 19,202 18,779  – 29,863  – 9,845  – 6,910  – 5,580  – 5,252 JP Morgan Multi Asset – 3,305  – 3,268 Kungsleden – 2,688 ADO Properties – 2,591  – 2,480 Deutsche Wohnen – 2,288  – 2,281  – 1,868 International Public Partnerships – 1,666  – 1,635 460,137 290,188 Gold Wisdomtree Physical Swiss Gold 13,148 11,131 13,148 11,131 Total Investments 991,893 594,230 Cash 50,611 37,242 Total 1,042,504 631,472 The full portfolio listing of the Company as at 31 March 2022 is published on its website at www.capitalgearingtrust.com. 13 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Company Summary   Financial Statements  Shareholder Information members who work closely with Juniper Partners and CGAM in the day to day operations of the Company. Apart from the scheduled   carry out  Non-executive Directors Jean Matterson (Chairman) Appointed a Director in May 2015 and assumed the position of Chair following the Annual General Meeting on ,  private client portfolio management with particular emphasis on investment trusts. She was previously with  Manager and director. She is a director of Herald   Robin Archibald (Chairman of the Audit Committee and Senior Independent Director) Appointed a Director in May 2015 and as Audit Chair in    subsequently worked with Samuel Montagu, SG Warburg    has concentrated on advising and managing transactions in the UK closed-ended funds sector. He is a non-   Property Investment Company plc and chairman of    Wendy Colquhoun (Chairman of the Remuneration Committee) Appointed a Director in January 2021. Until May 2020, Wendy was a senior corporate partner at international law    After qualifying as a solicitor in 1987, Wendy held roles with  UK corporate group at Dundas & Wilson (a leading   chair of Henderson Opportunities Trust plc and a non-   and chair of the risk and governance committee of  Paul Yates Appointed a Director in December 2019. Paul is chairman  , where he is also the senior independent director, and , where he is also chairman of thttee investment management began at Samuel Montagu & Co in 1980. He joined Phillips and Drew in 1985, being the year  a number of positions covering management, portfolio management, pensions, strategy and client service. He  between 2001 and 2005 and, after undertaking a number  The Board 14 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Management and Administration Investment Manager CG Asset Management Limited  Telephone: 020 3906 1633 CGAM currently has total funds under management of £3.9 billion. Depositary, Custodian and Banker The Northern Trust Company  Company Secretary and Administrator Juniper Partners Limited   Telephone: 0131 378 0500  Carson McDowell LLP  Registered number  AIC Association of Investment Companies www.theaic.co.uk Registrar Computershare Investor Services PLC  Telephone: 0370 873 5864 Independent auditors BDO LLP  Corporate stockbroker JP Morgan Cazenove  15 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Company Summary   Financial Statements  Shareholder Information Business model and investment strategy The Company, as an investment trust, is a UK closed- ended public limited company which invests in a  the investment  Company, are long-term investment vehicles and    outsources its entire operational infrastructure to third  and oversees CG Asset Management, an independent Investment Manager, to manage the investment portfolio. CG Asset Management also acts as the Company’s Alternative Investment Fund Manager. Company’s strategy, decides the  of the C and regulatory requirements and reports regularly to shareholders on the Company’s performance. The Directors do not envisage any change to this model in the foreseeable future. The Company also appoints an  to provide administration services for the Company, which includes company secretarial, accounting and management of discount and premium control services. The Company seeks to preserve shareholders’ real wealth and deliver absolute total returns through the construction of a multi asset portfolio with a specialist focus on investment company equities and related securities. Portfolio construction is the key tool 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   superior to those available in more liquid equity markets. 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  investment objective implies returns at least in line with   The Company does not have a formal benchmark but   does not have a target dividend payment. It is anticipated that capital return is likely to be the larger component of the returns. The Investment Manager has the authority to invest  investments are typically in listed collective investment  holding companies and property companies.  asset values and to the macro-economic environment. A   Investment Manager has the authority to invest in any geographical region and has no set limits on industry  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)  managed by the Investment Manager also requires  The Company has the authority to borrow up to 20% of  Promoting the success of the Company under Section 172  shareholders how the Directors have discharged their duties and responsibilities over the course of the  Act 2006 (the “Section 172 Statement”). This requires   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. Strategic Review 16 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Strategic Review (continued) Role of the Board  who have a broad range of skills and  the Company’s investment objective and policy, gearing, corporate governance and strategy, and for monitoring the performance of the Company’s various service providers. Gender and diversity disclosure can be found on page 32 The Company’s main stakeholders are shareholders, the Investment Manager and its service providers. The Company also engages with its investee companies where appropriate, particularly on performance and corporate governance issues. How the Board engages with stakeholders  interactions with them. Stakeholder How we engage Shareholders  with them, both through written communication from the Company and interaction with the Investment ’ views and aims to act fairly between shareholders. The Company’s shareholder register is retail investor dominated and has wealth managers and private client brokers on it representing private investors. As  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   Manager is in contact with investor platforms to identify how best to communicate with the direct retail investor community. The operation of the DCP is crucial to providing secondary market liquidity for investors and in providing stability of pricing at close to the prevailing net asset value.  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. 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  and to provide feedback on the Company. The Company Secretary also deals with regular shareholders to vote on all   Investment Manager 7 and 8 details the key investment decisions taken during the period. The Investment Manager has continued to manage the Company’s     strategy review meeting to ensure that the Company is positioned well for the future delivery of its objective for its stakeholders.   in operation.    17 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Company Summary   Financial Statements  Shareholder Information Strategic Review (continued) Stakeholder How we engage Communities and the environment Investment   importance of providing an investment product which meets the needs of its investors in both takes concerns and 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  engagement section on pages 20 to 23. Other Service Providers  either directly or through the Investment Manager with regular communications and meetings. A key relationship is with Juniper Partners who provide company secretarial, administration and accounting services, as well as  continued direct contact with Juniper Partners. During the year eted a comprehensive review of the service provision from Juniper Partners and the fee basis for their services.  terms and conditions of the Company’s main service providers to ensure they are performing   during the period  to the stakeholders of the Company, and this has been  between these meetings as required. Since the Covid-19 pandemic emerged in early 2020, there has been increased interaction with the Investment Manager, the Company Secretary and other agents of the Company to ensure that the Company continues to have  structure to meet the challenging circumstances. This included a complete review of the service provision from Juniper Partners. Jean Matterson, together with representatives of the Investment Manager, met a number of share dealing platform providers to gather views on the performance and general operation of the Company, including the DCP. This information was reported to the rest  strategic review on how the Company is operating. The Investment Manager also held an Investor Day in September 2021, which was well attended by shareholders and potential investors. The operation of the DCP is a fundamental part of 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.  requires constant monitoring, maintaining the requisite   responsible for maintaining the operational resilience for both buyback and issuance. The Company held general meetings and 25 April 2022 to request renewed shareholder authority to issue additional shares on a non pre-emptive basis. Shareholders were very supportive of the resolutions proposed both in the percentage voting in favour of the resolutions and the proportion of shares voted overall.  AIC, on matters which impact on the operations of the Company, with one of the key areas being the ability to access private investors with their shares held through investor platforms and the ability to encourage those shareholders to vote on Company business. 18 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Strategic Review (continued) Management of the portfolio and agents to the Company 7and 8 details the key investment decisions taken during the period  structure of the investment portfolio is an important factor in delivering the Company’s stated investment objective. 26, during the period,  the continuing appointment of the Investment Manager was in the best interests of shareholders. A similar conclusion was reached on the continued appointment of the Company’s other service providers and there were no changes during the period. The administration arrangements with Juniper Partners, including the administration fees, were re-negotiated during the year   levels required for the Company and its various activities. Key performance indicators (“KPIs”)  purpose of assessing and reporting investment performance and these are discussed further in the Chairman’s Statement  over the short-term (3 years) and the MSCI UK   Further information on these measures can be found on pages 74 and 75. Tables and graphs showing the performance of the  2 and 3.  n  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 period under 2.7%, compared with 2.3% at 31 March 2022, with an average of 3.0% for the period ended 31 March 2022; and n Ongoing charges ratio, calculated using the methodology recommended by the Association of  to measure and monitor the control of costs. This was 0.52% for the period to 31 March 2022 (2021: 0.58%). Since the introduction of the DCP in 2015 46% from 0.96% to 0.52%. Further information can be found on  Principal and emerging risks  challenges, largely as a result of the Covid-19 virus which    the longer term and the emerging risks that will be faced for the Company, not least the economic impact. The central aims remain to preserve value in the Company’s portfolio and liquidity in the Company’s shares. These aims were achieved in the last 12 months. The Directors are also trying to ensure that the Company maintains its investment strategy, has operational resilience, meets its regulatory requirements as an investment trust and  these continuing uncertaintimes. The 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 takes, are set out in  19 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Company Summary   Financial Statements  Shareholder Information Strategic Review (continued)  and more recently the geopolitical risks of events such as the invasion of    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 Risk Mitigation Investment strategy and performance  strategy of the Company and monitoring investment performance. Inappropriate strategy and/or poor investment performance may have an  There is increasing awareness of the challenges and emerging risks posed by climate change. The     Investment Manager will continue to monitor developments in this area. Geopolitical risks have always been part of the investment process. The risk has heightened as a    stockmarkets. Increased overall risk due to rising  global political tensions  annually, considering investment performance, shareholder views, developments in the marketplace and the structure of the Company.   and allows the monitoring of the spread of investments and associated investment risks. The Investment Manager’s approach is set out on pages 20 to 23.  detail by the Investment Manager at each meeting. The Investment Manager is formally appraised at least annually by  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   can create liquidity issues, restricting the ability of investors to buy and sell shares in the  Fluctuations in the share price can cause volatility  investment portfolio. Risk remains relatively unchanged The Company operates a discount/premium control policy, under which it will aim to purchase or issue shares to ensure, in normal market conditions, that the shares trade close to their underlying   and/or supply for the  of shareholders. The DCP continues to be reviewed to ensure liquidity for issuance and buyback.   the Investment Manager’s ability to invest new proceeds (in the case  to meet the demands of the DCP. The Company Secretary monitors the relevant authority levels, which  uninterrupted operation of the DCP. 20 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Strategic Review (continued) Risk Mitigation Operational The Company is reliant on third-party service providers including CGAM as Investment Manager, Juniper Partners as Company Secretary 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 to the Company’s assets. Risk remains relatively unchanged The Audit Committee formally reviews each service provider at least annually, considering their reports on internal controls and  Committee reviews the service levels and how the service providers have performed. The operational requirements of the Company, including from its service providers, have been subject to rigorous testing as to their application during the Covid-19 pandemic, where increased use of  date the operational arrangements have proven robust. Further details of the Company’s internal control and risk management system is provided on pages 33 and 34. Regulatory and governance The Company operates in a regulatory environment. Failure to comply with section 1158  Company losing investment trust status and being   or the suspension of the Company’s listing on the  Risk remains relatively unchanged Compliance with relevant regulations is monitored on an ongoing basis by the Company Secretary and Investment Manager who  increasing governance requirements and complies with them   receives regulatory updates from the Investment Manager, Company Secretary, lawyers and auditors as relevant. ised of corporate governance issues and changes and as far as practical the Company complies with governance guidance oroes not and meets the guidance of the AIC Code (refer to page 30). Financial and economic The Company’s investments are impacted by   and credit which could cause losses to the   increases and geopolitical events, including the invasion of Ukraine  market risk, interest rate risk, foreign currency risk and credit risk.  on pages 61 to 67. , and geopolitical risks, are considered a component of market risk, with the impact of ation and events in Ukraine taken into account. The ongoing economic impact of the Covid-19 pandemic is also considered.  portfolio to meet its operating requirements, including the operation of DCP. In common with most commercial operations, there are  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 issuance During the period the Company issued 7,078,862 new shares for an aggregate consideration of £354.3m. The shares were issued to satisfy investor demand and were  costs of the DCP, costs of investing the proceeds and to  were issued in accordance with the DCP, which is detailed further on page 19. Since the year end, the Company has issued a further 1,623,195 new shares. ESG and the investment process    institutional investors. 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  where appropriate. 21 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Company Summary   Financial Statements  Shareholder Information Strategic Review (continued) The Company has limited direct impact on the environment as it invests primarily in government bonds and closed-ended 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  The balance of the investment portfolio comprises corporate bonds, preference shares and equity funds. Within these 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   , the underlying investee companies’ policies to act with due regard to community, welfare and environmental factors. The Investment Manager  Investing. Further information on the Investment Manager’s governance and policies can be found at www.cgasset.com/governance-and-policies. In meeting its responsibilities to its own shareholders, the Company aims to preserve value in its portfolio and  stakeholders, including the employees of the agents who provide services to the Company and is operating to protect those interests in these challenging times. The Investment Manager’s investment approach  1. Be honest led initiatives, no jargon.   CGAM does not have an ethical fund range (and by implication an unethical fund range). The 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  be applied in a uniform way to every situation; CGAM emphasises judgement over simplistic third-party quantitative scoring. 4. Engagement over disinvestment  is most valuable to encourage positive transition rather than pursuing disinvestment. 5. Targeted, not scatter-shot Whilst supporting positive transition might be the   where it will have the most impact rather than taking a generalist approach. 6. Driven by governance Improved governance leads to improved social,   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’s entire team is collectively responsible for stewardship activities with the ultimate responsibility does not have a  analysts as this does not appear to represent true integration of approach. 22 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Strategic Review (continued) CGAM’s ESG approach to the Company’s investments by asset class 1. Direct government securities minority of the assets held by the Company are invested in direct holdings of securities issued by   criteria, CGAM considers indices compiled by a range of n-Governmental Organisations (refer to the table below) and requires to using third party indices, CGAM also overlays its own subjective assessments, which typically leads to material  Index Criteria  Top quartile  Good or satisfactory Global freedom score Free rating    Statement of intent by 2050 or earlier 2. Direct corporate credit and preference shares The Company holds small quantities of direct credit and preference share holdings issued by corporate issuers. Given  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, investment trust REITs and property companies    companies and typically have the following features: n they hold a broad portfolio of securities on behalf of their shareholders; n  n no employees or customers; and n have a board of directors to represent shareholder interests and concerns. 23 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Company Summary   Financial Statements  Shareholder Information Strategic Review (continued) Given the prominent role that directors play in investment companies, CGAM frequently undertakes activities that  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  Continuous  Continuous Shareholder co-ordination Frequent  Frequent  Frequent  Periodic  Periodic Publishing open letters Periodic  Periodic Threatening to requisition meetings Periodic 4. Exchange traded funds (‘ETFs’)    of securities. CGAM does engage directly with its    programme of identifying and conducting due diligence on these products is ongoing. Going concern The Audit Committee has undertaken an assessment of whether the Company is a going concern. The Company’s investment objective and business activities,  development and performance, are described above.    describes the Company’s processes for managing   to market price, interest rates, foreign currency, credit  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 believe that the Company is well placed to manage its business risks successfully and consider that the Company currently has adequate  management arrangements in place to continue in  of the DCP. For this reason, they continue to adopt the going concern basis in preparing the annual report and  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  Viability statement  principal risks facing the Company including those that would threaten its business model, future performance,  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  manage these, are detailed on pages 19 and 20.  believes it is appropriate to assess the Company’s viability over a three-year period in recognition of 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. 24 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 The Directors also take into account the liquidity of the portfolio and scenario stress testing when considering  and its ability to meet liabilities as they fall due and to  the ongoing operation of the DCP. The stress  a substantial fall in stockmarkets, and therefore asset values, with a considerable loss of income. The impact of  reduction in management fees and most . The results of the stress testing indicated that there for the Company to continue in operation. The stress tests the DCP in the event of the Company having to buy back a substantial number .   and the adequacy of the controls in place. Also, the Directors do not envisage any change in 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 downtkets, deteriorating economic circumstances, or other crises besetting global markets, could have an impact on thisassessment.   continue in operation and meet its liabilities as they fall  ained on pages 4 to 24 have been approveigned on its behalf by: Jean Matterson Chairman 27 Strategic Review (continued) 25 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Company Summary  Financial Statements  Shareholder Information  statements of Capital Gearing Trust P.l.c. for the period ended 31 March 2022. Company status  section 833 of the Companies Act 2006 and operates as an investment trust in accordance with Chapter 4 of  This legislation provides conditions that the Company must meet in respect of each accounting period. The  investment trust. The Company does not fall within the  Revenue and dividend The net return attributable to shareholders for the 9,813  The Company does not aim to invest for income to support any target dividend payment, and dividend    46p per share for the period ended 31 March 2022, (2021: 45p) for approval by shareholders at the forthcoming Annual General Meeting. The dividend will be payable on 15 July 2022 to shareholders on the register of members    approved by shareholders before the balance sheet date.   Net asset value per share The net asset value per share of the Company as at  5,025.1p, compared with 4,590.2p as  on of the Company is set out in detail i statements describes the Company’s processes for managing its capitsk management objectives, details of itsts and its 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 ,891,975 shares were in issue (5 April 2021: 13,813,113) and no shares were held in treasury  As at the date of this report, the issued share capital consisted of 22,515,170 shares and no shares were held in treasury. Whilst shares are held in treasury, no dividends are paid on them and they have no voting rights. Substantial shareholders At 31 March 2022, f the following interest in the voting rights of the Company: N % of Issued share capital held  7.1% Since 31 March 2022 to the date of this report, the Company has been informed that JM Finn & Co is interested in 5.0% of the issued share capital. In addition to the above, directors and employees of CGAM were interested in shares representing 2.2% of the issued share capital. Management and contracts Investment Manager The Company’s investments are managed by CG Asset  2017. Under this 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.  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  event of termination. CGAM was appointed as the Company’s AIFM in  The Investment Manager operates under the investment  page 15. Any proposed deviation from these guidelines is   meetings. In addition, the Investment Manager presents  the policy during the preceding quarter and outlining any instances where approval for investment decisions was  The Investment Manager also provides marketing and investor relation services under the investment management agreement. Directors’ Report 26 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Performance, evaluation and the continuing appointment of the Investment Manager The Directors held detailed reviews into the investment strategy adopted by the Investment Manager at the Committee meeting on 23 May 2022. The performance of the Investment Manager during the period to  the Investment Manager were discussed at this meeting. The Investment Manager was not present during the  In reviewing the Investment Manager’s performance, the Directors consider the following: n adherence to the pre-agreed investment policy and  n whether the strategy adopted by the Investment Manager has been and continues to be consistent with the Company’s aims; n the asset value performance achieved in the period under review as well as over the longer term and whether this satisfies the investment objective as communicated to shareholders; n performance comparison to a selected peer group; and n compliance and administration competence.   continuing appointment of the Investment Manager  shareholders as a whole. Company secretarial, administrative and accounting services Juniper Partners, previously known as PATAC, was appointed by the Company in 2015 to provide company secretarial, administrative and accounting services under an Administration Agreement. Juniper Partners also provides discount and premium control services to the Company. This agreement may be terminated on three months’ notice. For the period to 31 March 2022,  annum payable quarterly in arrears (2021: £152,291). In addition, in respect of its services in connection with the operation of the DCP, Juniper Partners is entitled to a fee of £30,000 per annum plus a commission of 0.1% of the aggregate consideration received or paid in respect of any Ordinary shares issued or bought back over the period. These fees amounted to £355,061  Following a review of the fees payable to Juniper  to Juniper Partners were behind market rates for the services received.  2022, Juniper Partners, in respect of administration and company secretarial services, will  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. In respect of services provided in connection with the DCPwill  of 0.1% of the aggregate consideration paid in respect of any Ordinary shares bought back by the Company or received in respect of any Ordinary shares issued by the Company up to and including £250 million: commission of 0.075% of the aggregate consideration paid in respect of any Ordinary shares bought back by the Company or received in respect of any Ordinary shares issued by the Company over £250 million up to and including £500 million: and commission of 0.05% of the aggregate consideration paid in respect of any Ordinary shares bought back by the Company or received in respect of any Ordinary shares issued by the Company over £500 million. Depositary and Custodian  was appointed in 2011 to provide custodial services for the portfolio and subsequently appointed to act  requirements of the AIFMD. Pursuant to the terms of  which 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  Details of the fees paid during the period are recorded in 57.    that may arise and impose such limits or conditions as it   to ensure all details are kept up to date. Appropriate authorisation is sought prior to the appointment of  arise. Directors’ Report (continued) 27 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Company Summary  Financial Statements  Shareholder Information Directors’ Report (continued) Directors   are set out on page 13, together with their biographies. Directors’ interests in the shares of the Company are set 37. There are no agreements between the Company and its  Retirement and re-election of Directors  themselves for re-election at the forthcoming AGM and on an annual basis going forward. After due consideration of the results of the   and that each Director demonstrates commitment to their role, including the necessary commitment of time   Directors is in the best interests of the Company and its shareholders. Directors’ indemnity  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   claims have been brought against the Company or  Whistleblowing policy  employees, a formal whistleblowing policy has not been  by means of which any Directors or employees of  the Chairman or Senior Independent Director matters  raised during the period to 31 March 2022. Information about securities carrying voting Rights The following information is disclosed in accordance with Section 992 of the Companies Act 2006: n the Company’s capital structure is summarised above; n the details of the substantial shareholders in the Company are listed above; n the rules on the appointment and replacement of the Directors are set out in the Articles and are summarised on page 32. Any change to the Articles would be governed by the Companies Act 2006; n the Directors’ powers to issue and buy back shares, in force at the financial year-end, are recorded on page 28; n 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; and Annual General Meeting (the “AGM”) The AGM of the Company will be held on 12 July 2022 at J.P. Morgan, The Great Hall, . The formal notice of such is set out on pages 68 to 69. Shareholders are strongly advised to appoint the Chairman of the meeting to vote on their behalf by completing and  votes through an investment platform. Shareholders are encouraged to submit questions   Thursday, 7 to any questions raised ahead of the AGM and the presentation from the Investment Manager will be made  There are 16 resolutions being proposed at the AGM, 12 of which are ordinary resolutions, two of which are being considered as special business, and four of which (resolutions 13 1 to 4 concern the receiving of the accounts, approving the Directors’ remuneration report and remuneration     Directors to determine their remuneration. 28 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Directors’ Report (continued) Additional information on the resolutions relating to special business is detailed below: Resolution 11 – Articles of Association The current Articles of Association provide that  in aggregate. Although there are currently no plans to   to increase the fee limit contained in the Articles of  including for any new appointments. It is proposed that the limit be increased to £180,000 per annum in aggregate, an increase of 9%. Directors’ remuneration will continue to be paid in accordance with the Directors’  Resolutions 12 and 13 – Directors’ authority to allot shares and disapply pre-emption rights At the AGM held on 6 July 2021 (the “2021 AGM”), the Directors were given the authority until the date of the following AGM to allot up to 4,905,987 shares and to disapply pre-emption rights in respect of up to 2,943,592 of these shares. At general meetings held on  and 25 April 2022, the Directors were given further authority to allot up to a total of 7,934,375 shares on a non pre-emptive basis. Details of the shares issued under these authorities can be found in note 11 on page 60. At this year’s AGM, the Directors are seeking authority to allot up to 7,505,056 shares, in aggregate a nominal value of £1,876,264.00, representing one third of the issued share capital as at 26 May 2022. 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 4,503,034 shares at 26 May 2022 with an aggregate nominal value of £1,125,758.50), including any shares which have been bought back as treasury shares.  which state that non pre-emptive issues should be  T  of ew shareholders. Resolution 14 – Authority to make market purchases of the Company’s shares At the 2021 AGM, the Directors were given the authority until the date of the following AGM to buy back up to 2,206,222 shares (14.99% of the issued share capital at the date of the 2021 AGM). There have been no shares bought back under these authorities. At this year’s AGM, the Directors are seeking authority to buy back up to 3,375,023 shares (14.99% of the issued share capital as at 26 May 2022) for cancellation or holding up to 10% in treasury for re-sale into the market during more favourable market conditions at values equal  If approved, the powers, as detailed above under 2 to 14 and in the formal notice of the AGM,  renewed, varied or revoked by the Company in general  is of the opinion that it would result in an enhancement   back shares is an important part of the operation of the DCP, if and when required. Resolution 15 – Cancellation of the Company’s share premium account The Company has built up a substantial share premium account owing to the high level of issuance since the introduction of the discount and premium control policy. This account is non-distributable. The Company may cancel the share premium account and convert the amount into a distributable reserve following approval by   account to a distributable reserve would provide a  future, if required, to fund share buybacks or other returns of capital in accordance with the applicable law.  operation of the DCP and provide the Company with   authority at its Annual General Meeting held in 2020 which was approved by shareholders. However, due to administrative delays during the Covid-19 pandemic this  in the share premium account since the previous  renewed approval from shareholders at the forthcoming AGM to cancel the amount standing to the credit of the current share premium account, following which it will make an application to the Court to obtain its approval to the cancellation and the creation of an equivalent distributable reserve. Resolution 16 – Notice of general meetings At the 2021 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  AGMs, which can only be held on 21 clear days’ notice. Without such shareholder authority, all general meetings need 21 clear days’ notice. 29 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Company Summary   Financial Statements  Shareholder Information Directors’ Report (continued)  general meetings other than AGMs on the shorter notice period of 14 clear days, and this resolution seeks such approval from shareholders. 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  independent of the Company and, as mentioned  Company’s auditors will be put to shareholders at the  Directors’ statement as to disclosure of information to auditors   page 13  n 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 auditors are unaware; and n each Director has taken all the steps a Director  aware of relevant audit information and to establish that the Company’s auditors are 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 predominately of professional advisers and service providers in the   that they comply with the provisions of the UK Modern Slavery Act 2015 and maintain adequate safeguards in  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  Greenhouse gas emissions 20 to 23 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  does not directly generate any greenhouse gas or other  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   Taskforce for Climate Related Financial Disclosures (‘TCFD’) The Company notes the TCFD recommendations on     Political and charitable contributions  political or charitable purposes (2021: nil). Post balance sheet events Since 31 March 2022, there are no post balance sheet events which would require adjustment of or disclosure   Juniper Partners Limited Company Secretary 27 30 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 This Corporate Governance Statement forms part of the  Compliance with the recommendations of AIC Code and UK Corporate Governance Code  of the AIC Code of Corporate Governance (the “AIC Code”). The AIC Code is endorsed by the Financial  provisions set out in the UK Corporate Governance Code to make them relevant to investment companies.  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  information to shareholders. The 2019 edition of the AIC Code is applicable to the period under review and can be found at www.theaic.co.uk. The UK Corporate Governance Code includes   internal audit function and workforce engagement. For   considers that these provisions are not relevant to the  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  and has therefore not reported further in respect of these provisions.  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     categorised under various headings, including strategy,  internal controls, gearing, asset allocation, share price  risk, investment restrictions, performance, corporate  It has delegated investment management, within  Asset Management and the company secretarial and administration functions have been delegated to Juniper   the Investment Manager.   and for compliance with applicable rules and regulations including the AIC Code.    of the Company. Key representatives of the Investment the Directors to probe on matters of concern or seek    13. Audit Committee The Audit Committee is a formally constituted   of the Audit Committee on page 39  was appointed a member of the audit committee with  members of the Audit Committee have relevant and   closed ended investment company sector and UK listed  as being independent, is invited to attend the Audit Committee meeting at which the annual accounts are considered and any other meetings that the Committee deems necessary. The Committee is chaired by  Nomination Committee  independent Directors, oversees the annual appraisal   for re-election each year, evaluates the overall    This Committee is chaired by Jean Matterson. Corporate Governance Statement 31 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Company Summary   Financial Statements  Shareholder Information The Committee, when assessing the performance of Directors and for making recommendations as to   questionnaires and reviews by the Chair. The Senior Independent Director is responsible for the appraisal of the Chair. The 2022 review did not identify any causes foncern. Management Engagement Committee  all the independent Directors of the Company and  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 terms and performance of the other key service suppliers to the Company on an annual basis, including  been during the year. Remuneration Committee  independent Directors of the Company and is chaired by Wendy Colquhoun. The Committee meets at least once  and the remuneration of the Directors. During the period, the Committee considered the Directors’ fees over the last eight years, fees paid by its investment trust peer group and the results of Trust Associate’s 2021 fee review. After considering this information and the work and responsibilities of the Directors, the Committee concluded that for the  10% increase to the fees of each of the Chairman and the Chairman of the Audit Committee. It was agreed to  by 9.09% to £30,000. The additional fee payable to the Senior Independent Director would remain at £2,000.  be found on pages 35 to 38. Directors’ meeting attendance The number of formal meetings held during the period from 6 April 2021 to 31 March 2022 and the Directors’ attendance is detailed below. Board Audit Committee Management Engagement Committee Nomination Committee Remuneration Committee Miss J G K Matterson 5/5 3/3 1/1 1/1 1/1  5/5 3/3 1/1 1/1 1/1 Ms W M Colquhoun 5/5 3/3 1/1 1/1 1/1  5/5 3/3 1/1 1/1 1/1  2/2       the period, for strategic discussions and continued implementation of the discount/ premium control policy. Members  informal and regular basis. Corporate Governance Statement (continued) 32 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Corporate Governance Statement (continued) Independence of the Directors  with the Investment Manager and has no other relationships or circumstances which might be perceived   the view that all of the Directors can be considered to  makes a clear distinction between the activities of an investment trust and a conventional trading company.   the Investment Manager. In overseeing this relationship  understanding and judgement of the Directors. The    Director, having been appointed to this role in January    director and audit chair for other investment companies. Director tenure In accordance with the AIC Code all Directors are subject  is based on the outcome of an annual performance evaluation. The Chair also speaks with each Director individually. The performance of each Director and nominations for re-election are then discussed by the   an issue, with the Director’s contribution, and ability being important factors in determining the value the individual     Company. The Chairman and Directors would generally up to nine years. However,  change and the need to maintain cohesion, and continuity may require this term to be adjusted. Director remuneration The Company’s policy on Director remuneration is set  35 to 38. Gender and diversity   can function well together and have a good operational knowledge of the Company and the closed ended investment company sector more generally. Accordingly,    boardroom diversity in its broadest sense, in terms of      and its corporate structure, including its third-party advisers. Any new appointee would make an appropriate  review its composition regularly and, when appropriate,  of having the blend of skills and attributes that will best serve shareholders in the future.   including the Chairman of the Company, thereby constituting 50% female representation.  appropriate to establish diversity targets or quotas at this time, however the Committee is mindful of the  and the Company’s aim is to have an appropriate level of diversity . Directorate  served by ensuring a smooth and orderly refreshment of  as the only non-independent Director, stepped down   meetings as a representative of the Investnager. Induction and training  an induction programme which is tailored to the particular  provided covering industry and regulatory matters and the Directors receive other relevant training as required. 33 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Company Summary   Financial Statements  Shareholder Information Corporate Governance Statement (continued) Ongoing evaluation    and contribution of the individual Directors, including the   was conducted by way of evaluation questionnaires, the results of which were discussed by the Directors in February 2022. The Senior Independent Director led the annual evaluation of the Chairman. The outcome was  250,  an  the Chair and the individual Directors, every three years.  take place in 2022/23. Shareholder communications Shareholder relations are given high priority by both  medium by which the Company communicates with shareholders is through half yearly and annual reports. The information contained therein is supplemented by  and quarterly report available on the Company’s website.  communication with shareholders to CGAM and, through  able to develop an understanding of shareholders’ views. There is also a communication line with shareholders through Juniper Partners in its role as company secretary  report from the Investment Manager summarising any  always happy to meet with shareholders for the purpose of discussing matters in relation to the operation and prospects of the Company. T welcomes questions and discussion on issues of concern or areas of uncertainty. Shareholders who have any questions are encouraged to address these through the  The Investment Manager typically makes a presentation at the AGM outlining the key investment issues that face the Company. The presentation will also be made available on the Company’s website. Accountability, internal controls and audit  documents released by the Company, including the  of the Company’s position and prospects.  systems of internal controls and for reviewing their    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 Committee does not consider it necessary for the Company to establish its own internal audit function.  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 for publication is reliable.  compliance and risk management, is embedded in the controls of the Company by a series of regular  risk analyses, Investment Manager reports and control  put in place to mitigate them, including those not directly the responsibility of the Investment Manager.  on a continuing basis by the Investment Manager, the custodian and the Company S  Audit Committee receive regular reports from them. The control systems 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. 34 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022  Company’s risk management and internal controls systems and, at least annually, carries out a review  process for identifying, evaluating and managing the principal risks faced by the Company in accordance with        controls during the period under review. These controls have been in place throughout the period under review  Since the Covid-19 pandemic emerged in 2020, the 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, which has proven to be the case. The systems and controls have proven to be robust to date, despite the  provisions and increased reliance on internet and phone communication.  Juniper Partners Limited Company Secretary 27 Corporate Governance Statement (continued) 35 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Company Summary   Financial Statements  Shareholder Information This section provides details of the remuneration policy for the Directors of the Company. All Directors are non-  appointment, and none have a service contract.  Director’s appointment is subject to their re-election every year at the AGM. The Company has no employees.  the requirements of the Companies Act 2006. The shareholders approved the remuneration policy at the Annual General Meeting in 2019 and it will be put to shareholders again at this year’s AGM. This policy, together with the Directors’ letters of appointment, may  n Committee consisting of all the independent Directors, chaired by Wendy Colquhoun. The Committee considers and determines all matters relating to the Directors’   in cash. There are no performance related elements to the Directors’ fees and the Company does not operate any type of incentive, share scheme 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  connection with their responsibilities, which largely relate  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  comparable to that of similar investment trusts within  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  The remuneration policy is not subject to employee consultation as the Company has no employees. As such, there are no employee comparative data to provide in relation to the setting of the remuneration policy of the Directors.  remuneration subject to the aggregate annual fees not  from time to time. The current limit of the total aggregate annual fees payable is £165,000. This limit can be increased by ordinary resolution of the shareholders. emuneration is solely composed of Directors’ fees and Directors are not eligible for any other remuneration for  approved by the .  shareholders on the remuneration policy on an ongoing basis and will take account of these views where appropriate. It is intended that this policy will remain in place for the  Shareholder views  in respect of the remuneration policy and the Directors’ remuneration.    Expenses All Directors are entitled to the reimbursement of  order to perform their duties as Directors of the Company. Review of remuneration policy  ensure that it remains appropriate. Amendment to Articles of Association As noted above, the current aggregate annual fee limited within the Articles is £165,000 per annum. A resolution to increase this limit to £180,000, will be proposed at the 2022 AGM. Increasing this cap is to allow for future increases to Directors’ fees and provide capacity to appoint a further Director should it ever be considered desirable to do so. Audit requirements The Company’s auditors are required to report on certain information contained within this report. These elements are described below as ‘audited’. The auditors’ opinion is included within the auditors’ report set out on pages 44 to 49. Directors’ Remuneration Report 36 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Directors’ fees (audited) 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 period, where a director is appointed or assumes additional responsibilities.   year and a detailed review was undertaken in February 2022 and the basis for the increase in fees is provided in the 12. Annual fee rates 2023 £ 2022 £ 2021 £ Chairman 42,350 38,500 35,000  36,300 33,000 30,000 All other Directors 30,000 27,500 25,000  Aggregate director’s remuneration , including Directors who have retired, over the previous   Fees £ To 31 March 2022 128,500 To 5 April 2021 113,577 To 5 April 2020 121,000 To 5 April 2019 99,000 To 5 April 2018 121,000  period ended 31 March 2022 was £128,500 (il 2021: £113,577 the prior year’s comparative, is set out in the table below: Directors Total 2022 £ 2021 £ Miss J G K Matterson 38,500 32,481 Mr R Archibald (Chairman of the Audit Committee and Senior Independent Director) 35,000 32,000 Mr A R Laing (retired on 6 July 2021) – – Ms W M Colquhoun 27,500 5,673 Mr P T Yates 27,500 25,000 Mr E G Meek – 18,423 128,500 113,577 For the period end received remuneration totalling £170,000 (2021: £126,000) from CG Asset Management in respect of its services to the Company. CG Asset Management does not recharge this remuneration to the Company.  to the nancial statements. There were no other transactions with Directors during the year.  period ended 31March 2022 ( ). Directors’ Remuneration Report (continued) 37 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Company Summary   Financial Statements  Shareholder Information Directors’ Remuneration Report (continued) Annual percentage change in remuneration of directors   period ended 31 March 20222021. oard compared to previous remuneration and less than full year appointment. Directors 2022 Total Fees % change 2021 Total Fees % change Miss J G K Matterson 18.5% 29.9% Mr R Archibald (Chairman of the Audit Committee and Senior Independent Director) 9.4% 10.3% Mr A R Laing (retired 6 July 2021) – – Ms W M Colquhoun 384.8% n/a Mr P T Yates 10.0% 212.5% Directors and their interests (audited) 31 March 2022 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 2022 1 Miss J G K Matterson  16,700 15,700 Mr R Archibald  2,432 2,079 Ms W M Colquhoun  400 400 Mr P T Yates  1,000 1,000 31 March 2022 up to the date of this report. The Company has  own shares in the Company. Performance graphs 2002 to 2022 3. Relative importance of spend on pay  are detailed in the table below: 2022 £’000 2021 £’000 Absolute change £’000  129 114 15  9,610 6,771 2,839  202220,891,975 shares, being the number of shares in issue at  2022). 38 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 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 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 6 July 2021, shareholders, on a show of hands,  (99.9%) were cast in favour and 3,971 (0.1%) were cast against. 4,364 votes were withheld. At the AGM held on 9 July 2019, shareholders, on a show of hands, passed the resolution to approve the Directors’  were cast against. 687 votes were withheld. Annual statement  period ended 31 March 2022: a) the major decisions on Directors’ remuneration; b) any substantial changes relating to Directors’ remuneration made during the year; and    Wendy Colquhoun  2022 39 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Company Summary   Financial Statements  Shareholder Information Audit Committee Report As Chairman of the Company’s Audit Committee (the “Committee”) I am pleased to present the Committee’s report to shareholders for the period to 31 March 2022. This report describes the range of work that the Committee has considered, been engaged in and the  Composition The Committee comprises Jean Matterson, Wendy        investment companies over the last ten years. My biography and those of the other Committee members can be found on page 13 Matterson, the C a member of the Audit C  meetings by invitation only. Collectively, the Committee brings considerable corporate and investment company  Role and responsibilities The principal objective of the Committee is to provide  Company’s internal controls and the integrity of its   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: n 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; n to consider the integrity of and recommend to  half-yearly and annual reports to shareholders and related announcements; n to review the accounting policies and significant financial reporting judgements; n to assess going concern and viability of the Company, including the assumptions used; n t balanced and understandable; n t 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; n together with the Company Secretary, to review the Company’s compliance with financial reporting, regulatory and governance requirements; and n to assess the need for an internal audit function, taking account of the assurances received from the  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   of internal control and management of risk, the audit process and the Company’s process for monitoring compliance with laws and regulations and its own code of  In particular, the Committee focussed on the  Financial reporting During the year, the Committee considered the   in the production of the interim accounts, including emerging risks and changes to the Company’s risk   areas of audit risk relevant to the Company had been  put in place to obtain reasonable assurance that the  misstatements and that the accounting policies applied continue to be appropriate. 40 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Audit Committee Report (continued) Financial reporting (continued)   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  by Juniper Partners via reconciliations to custodial records. The valuation of investments is undertaken in accordance with the accounting policies 54  held at the balance sheet date. Ongoing impact of the Covid-19 pandemic and review of recent  and geopolitical The Committee considered the ongoing impact of Covid-19 on the Company, its service providers, compliance with regulatory requirements,  The Committee also  and geopolicial risks as part of the review of the investment portfolio and the asset allocation. Revenue recognition, particularly from delisted trusts, where returns may be of capital rather than income, and any other returns from investments which constitute capital rather than revenue returns.  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 0.1% of the Company’s portfolio is invested in delisted investment trusts.  and Investment Manager to ensure they are appropriately allocated to revenue or capital. Potential for management override of controls and maintaining appropriate internal controls  responsibility between the Investment Manager, Custodian, Company Secretary and receive appropriate reports from each of them regarding the operation and review of those organisations’ internal controls. Going concern The content of the investment portfolio, trading activity, portfolio  After due consideration, the Committee concluded it was appropriate to   of liquidity of the portfolio was a key factor that led to this conclusion, as well as the Company being ungeared and its continued ability to meet the  control policy. Company’s accounting reference date The Committee reviewed the annual reporting timetable and concluded that using a month-end performance reporting adopted by the investment company is more appropriate than the historic basis of  recommendation of the Committee, agreed to amend the accounting reference date to 31 March. A change in accounting reference period does not require shareholder approval. Compliance with s1158 Corporation tax Act 2000 (Investment trust status) and other taxation issues impacting on the Company The Committee reviews the Company Secretary’s procedures for ensuring compliance with relevant regulations, so the Company maintains    41 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Company Summary   Financial Statements  Shareholder Information Audit Committee Report (continued) Financial statements The production and the audit of the Company’s Annual   contributors. One of the key governance requirements of  is that they are fair, balanced and understandable. The    Committee has given consideration to the following: a) the comprehensive reviews that are undertaken   Investment Manager, Company Secretary and Auditor and the Audit 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   As a result of the work performed, the Committee  Statements for the period ended 31 March 2022, 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   43. Audit appointment and tenure  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 auditors 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    put out to tender at least every ten years. The Company  complied with the provisions of The Statutory Audit Services Market Investigation (Mandatory Use of Competitive Tender Processes and Audit lities) Order 2014 dperiod ended 31 March 2022. Policy on non-audit services The Company operates on the basis whereby the provision of non-audit services by the auditor is  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   Grant Thornton. Audit plan and fees The Committee considered the plan and scope of the audit,  and proposed fees. The audit fee of £38,000 for the current year’s audit, an increase from £28,000 from the previous  Committee. There has been a trend for increased audit fees throughout the accounting industry, particularly for listed  that the Company will be impacted by this in future years but that the fees will remain competitive for what is being provided and for the circumstances of the Company.   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 Company Secretary.   The Audit Committee has adopted a framework in  process and audit quality. This includes a review of the  a) the quality of the audit engagement partner and the audit team;   available to it;    d) consideration of the appropriateness of the level of audit materiality adopted;    42 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Audit Committee Report (continued) f) communications by the auditor with the Audit Committee; g) how the auditor supports the work of the Audit Committee and contributes added value; and h) a review of independence and objectivity of the audit .     Company to meet its obligations, and to gain value from     remuneration for that year. Internal audit function Systems are in operation to safeguard the Company’s assets and shareholders’ investments, to maintain  information used within the business, or published, is   principally among them, the Investment Manager  the Company’s framework of internal control and the Committee’s view on reporting received from the Investment Manager and the Administrator has therefore concluded that it is not necessary for the Company to have its own internal audit function. Committee evaluation   questionnaire. The outcome was positive with no  2022-2023 action plan During the year to 31 March 2023, the Committee  governance and economic environment, and the risks and opportunities so presented. The annual report and   the resilience of the Company’s operations, the internal  ntinue to be monitored, particularly the impact of increasin and geopolitical risks, whether current or emerging. Robin Archibald Chairman of the Audit Committee  43 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Company Summary   Financial Statements  Shareholder Information The Directors are responsible for preparing the Annual  applicable law and regulation.    accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting   and applicable law). Under company law, the Directors     statements, the Directors are required to: n select suitable accounting policies and then apply them consistently; n state whether applicable UK Accounting Standards,   the financial statements; n make judgements and accounting estimates that are reasonable and prudent; and n prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business. 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 keeping adequate    the Company and enable them to ensure that the    published on the Company’s website which is maintained by the Investment Manager. The Investment Manager is responsible for the maintenance  in the United Kingdom governing the preparation and  legislation in other jurisdictions. Declaration   best of his or her knowledge: n the Company’s Financial Statements, which have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United  102, and applicable law), give a true and fair view of the assets, liabilities, financial position and net return of the Company; n  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; and n  and understandable and provides information necessary for shareholders to assess the Company’s position and performance, business model and strategy.  Jean Matterson Chairman 2022 Directors’ Responsibilities Statement in Respect of the Annual Report and the Financial Statements 44 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022   n give a true and fair view of the state of the Company’s affairs as at 31 March 2022 and of the Company’s net return attributable to equity shareholders for the period then ended; n have been properly prepared in accordance with United Kingdom Generally Accepted Practice; and n have been prepared in accordance with the requirements of the Companies Act 2006.  Gearing Trust P.l.c. (the ‘Company’) for the period ended 31 March 2022 which comprise the Income Statement,  Financial Position, the Cash Flow Statement and notes   framework that has been applied in their preparation is applicable law and United Kingdom Accounting  The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted  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  report. We believe that the audit evidence we have  for our opinion. Our audit opinion is consistent with the additional report to the audit committee. Independence Following the recommendation of the Audit Committee,    The period of total uninterrupted engagement including retenders and reappointments is 2 years, covering the year ending 5 April 2021 and the period ending  in accordance with the ethical requirements that are    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  that the Directors’ use of the going concern basis of  is appropriate. Our evaluation of the Directors’ assessment of the Company’s ability to continue to adopt the going concern basis of accounting included: n evaluating the appropriateness of the Directors’ method of assessing going concern by reviewing the revenue and cash forecast used by the Directors in completing the assessment; n assessing the Directors’ assumptions and judgements made with regards to the base case forecast including discretionary and non- discretionary cash outflows, assessing the reasonableness of these against historic outflows and considering the available cash resources; n assessing the Directors’ assumptions and judgements made with regards to stress-testing forecasts including considering the sufficiency of the liquidity of the portfolio.   or conditions that, individually or collectively, may cast  as a going concern for a period of at least twelve months   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  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. Independent auditors’ report to the members of Capital Gearing Trust P.l.c. 45 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Company Summary   Financial Statements  Shareholder Information Overview Key audit matters  2022 3 2021 3 Materiality Com statements as a whole  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  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      do not provide a separate opinion on this matter. Key audit matter How the scope of our audit addressed the key audit matter Valuation and ownership of quoted investments (note 1b and 8) We considered the valuation and ownership of investments to be  investments represent the most  statements and the key driver erformance. There is a risk that the investment balance includes investments which are no longer owned by the Company or that the bid price used to value the investment is incorrect leading to a material misstatement. We responded to this matter by testing the valuation and ownership of the portfolio of quoted investments. We performed the following procedures: n Confirmed the period-end bid price was used by prices (over 99% of ; n Assessing if there were contra indicators, such as liquidity considerations, to suggest bid price is not the most appropriate indication of fair value by considering the realisation period for individual holdings; n Obtained direct confirmation from the custodian regarding the ownership of all investments held at the balance sheet date. n  of shares held per the statement obtained from the custodian by the valuation per share. Key observations  any matters to suggest that the valuation and ownership of investments was not appropriate. Independent auditors’ report to the members of Capital Gearing Trust P.l.c. (continued) 46 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Independent auditors’ report to the members of Capital Gearing Trust P.l.c. (continued) Our application of materiality  misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could      statements as a whole.  performance materiality as follows:  2022 £m 2021 £m Materiality £10.4m £6.3m Basis for determining materiality   Rationale for the benchmark applied As an investment trust, the net asset value is the key measure of performance  As an investment trust, the net asset value is the key measure of performance  Performance materiality £7.87m £4.41m Basis for determining performance materiality 75% of materiality based on our    A more conservative performance materiality was used as this was year on the audit. Performance materiality was set at 70% of total materiality. Lower testing threshold    items impacting revenue return of £510,000 (2021: £670,000) based on 5  Reporting threshold   qualitative grounds. Other information The directors are responsible for the other information. The other information comprises the information included in the annual report     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  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. 47 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Company Summary   Financial Statements  Shareholder Information Independent auditors’ report to the members of Capital Gearing Trust P.l.c. (continued) Corporate governance statement  that part of the Corporate Governance Statement relating to the Company’s compliance with the provisions of the UK    during the audit. Going concern and longer-term viability n The Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any material uncertainties identified; and n  this assessment covers and why the period is appropriate. Other Code provisions n Directors’ statement on fair, balanced and understandable; n  principal risks; n The section of the annual report that describes the review of effectiveness of risk management and internal control systems; and n The section describing the work of the audit committee. Other Companies Act 2006 reporting  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: n the information given in the Strategic report and the Directors’ report for the financial period for which the financial statements are prepared is consistent with the financial statements; and n 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  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. Matters on which we are required to report by exception 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: n adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or n 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 n certain disclosures of Directors’ remuneration specified by law are not made; or n  48 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Independent auditors’ report to the members of Capital Gearing Trust P.l.c. (continued) Responsibilities of Directors  statement in respect of the annual repor statements, the Directors are responsible for the   internal control as the Directors determine is necessary  are free from material misstatement, whether due to fraud or error.  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  Our objectives are to obtain reasonable assurance about  material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.  not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement  error and are considered material if, individually or in    Extent to which the audit was capable of detecting irregularities, including fraud 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  our procedures are capable of detecting irregularities, including fraud is detailed below: We gained an understanding of the legal and regulatory framework applicable to the Company and the industry in which it operates, and considered the risk of acts by the Company which were contrary to applicable laws and regulations, including fraud through enquiries from the Company Secretary, revieng minutes and review of the risk register. We considered the   AIC Code of Corporate Governance, industry practice    would lead to the Company losing various deductions and  We focused on laws and regulations that could give rise  statements. Our tests included, but were not limited to: n agreement of the financial statement disclosures to underlying supporting documentation; n enquiries of the Company Secretary and those  of any fraud and non-compliance with laws andregulations; n review of minutes of board meetings and other committee meetings throughout the period; and for instances of non-compliance with laws and regulations and fraud n obtaining an understanding of the control environment in monitoring compliance with laws and regulations; and n reviewing the calculation in relation to Investment Trust compliance to check that the Company was meeting its requirements to retain their Investment Trust Status.  to material misstatement including fraud and considered the areas most susceptible to fraud to be management override of controls and the valuation of quoted investments. Our tests included, but were not limited to: n the procedures set out in the Key Audit Matters section above in relation to the valuation of quoted investments; and n testing a sample of journals which met a defined risk criteria by agreeing to supporting documentation and evaluating whether there was evidence of bias by the Investment Manager and Directors that represented a risk of material misstatement due to fraud. 49 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Company Summary   Financial Statements  Shareholder Information  regulations and potential fraud risks to all engagement team members and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit. The engagement team collectively had the appropriate competence and capabilities to identify or recognise non-compliance with laws  Our audit procedures were designed to respond to risks  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  misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and   become aware of it. A further description of our responsibilities is available on  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  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. Vanessa Bradley (Senior Statutory Auditor) For and on behalf of BDO LLP, Statutory Auditor  27 May 2022   Independent auditors’ report to the members of Capital Gearing Trust P.l.c. (continued) 50 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Period ended 31 March 2022 Ye a r ended 5 April 2021 Note Revenue £’000 Capital £’000 Total £’000 Revenue £’000 Capital £’000 Total £’000  8 – 57,875 57,875 – 57,452 57,452 gains/(losses) – 530 530 – (116) (116) Investment income 2 14,677 – 14,677 9,942 – 9,942 Gross return 14,677 58,405 73,082 9,942 57,336 67,278 Investment management fee 3 (3,627) – (3,627) (2,604) – (2,604)  4 (727) – (727) (612) – (612) Net return before tax 10,323 58,405 68,728 6,726 57,336 64,062  5 (510) – (510) (396) – (396) Net return attributable to equity shareholders 9,813 58,405 68,218 6,330 57,336 63,666 Net return per Ordinary share 7 56.81p 338.14p 394.95p 51.04p 462.35p 513.39p 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 54 to 67 Income Statement for the period ended 31 March 2022 51 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Company Summary     Shareholder InformationFinancial Statements Note Called-up share capital £’000 Share premium account £’000 Capital redemption reserve £’000 Capital reserve* £’000 Revenue reserve £’000 Total equity share- holders’ funds £’000 Opening b 2,903 362,726 16 97,081 7,333 470,059  and total comprehensive income for the year – – – 57,336 6,330 63,666 Shares issued from treasury – 389 – 3,961 – 4,350  550 100,322 – – – 100,872 Dividends paid 6 – – – – (4,901) (4,901) Total transactions with owners recognised directly in equity 550 100,711 – 3,961 (4,901) 100,321 Closing b 3,453 463,437 16 158,378 8,762 634,046 Opening b1 3,453 463,437 16 158,378 8,762 634,046  and total comprehensive income for the period – – – 58,405 9,813 68,218  1,770 352,572 – – – 354,342 Dividends paid 6 – – – – (6,771) (6,771) Total transactions with owners recognised directly in equity 1,770 352,572 – – (6,771) 347,571 Closing balance at 31 March 2022 5,223 816,009 16 216,783 11,804 1,049,835 31 March 2022 £159,561,000 (2021: £120,241,000) of the capital reserve together with the revenue reserve are regarded as being available for distribution. Unrealised capital gains are not available for distribution. The notes on pages 54 to 67 Statement of Changes in Equity for the period ended 31 March 2022 52 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Note 31 March 2022 £’000 5 April 2021 £’000 Fixed assets  8 991,893 594,230 Current assets Debtors 9 15,386 3,895 Cash at bank and in hand 50,611 37,242 65,997 41,137 Creditors: amounts falling due within one year 10 (8,055) (1,321) Net current assets 57,942 39,816 Total assets less current liabilities 1,049,835 634,046 Capital and reserves Called-up share capital 11 5,223 3,453 Share premium account 816,009 463,437 Capital redemption reserve 16 16 Capital reserve 216,783 158,378  11,804 8,762 Total equity shareholders’ funds 1,049,835 634,046 Net asset value per Ordinary share 12 5,025.1p 4,590.2p 50 to 672022 and signed on its behalf by: Jean Matterson Chairman The notes on pages 54 to 67 Statement of Financial Position as at 31 March 2022 53 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Company Summary    Shareholder InformationFinancial Statements Note Period ended 31 March 2022 £’000 Year ended 5 April 2021 £’000 N 13 9,759 7,256 Payments to acquire investments (833,682) (372,428)  496,426 269,854  (337,256) (102,574)  6 (6,771) (4,901) Proceeds from the issue of Ordinary shares 348,313 103,954 Cost of share issues (676) (134)  340,866 98,919 Increase in cash and cash equivalents 13,369 3,601 Cash and cash equivalents at start of period 37,242 33,641 Cash and cash equivalents at end of period 50,611 37,242 The notes on pages 54 to 67 Cash Flow Statement for the period ended 31 March 2022 54 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022   The current reporting period is 6 April 2022. The comparative information is for t 2020 to 5 April 2021. a) Basis of accounting Capital Gearing Trust P.l.c. is a public company limited by  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       of Investment Companies in April 2021. All of the Company’s operations are of a continuing nature. The accounts have been prepared on a going concern  by the revaluation of investments held at fair value  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 period and prior year.    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 11 and 12  instruments. The Company’s business is investing in  return in the form of income and capital growth. This  performance evaluated on a fair value basis in accordance with a documented investment strategy and information is provided internally on that basis to the  investments are designated by the Company as “held at  included initially at fair value which is taken to be their  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  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  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   share premium account. d) Dividends   by shareholders. e) Income Dividends receivable on listed equity shares are  and the return on zero dividend preference shares is recognised as a capital return.  dividend date is quoted are recognised when the Company’s right to receive payment is established. Special dividends receivable are taken to capital where relevant circumstances indicate that the dividends are capital in nature.    Income from securities where the return is linked to an      value is considered to represent a capital return, and is included in the Income Statement as such in accordance  Notes to the Financial Statements 55 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Company Summary     Shareholder InformationFinancial Statements  (continued) f) Expenses  are charged to revenue and include, where  g) Taxation Policy  period   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  the revaluation of investments.   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  risk of changes in value. i) Foreign currency   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  rates as at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the  at the year end. j) Capital reserve The following are accounted for in this reserve: n gains and losses on the realisation of investments; n increases and decreases in the valuation of investments held at the year end; n realised foreign currency differences of a capital nature; and n unrealised foreign currency differences of a capital nature. k) Repurchases of shares into treasury and subsequent re-issue The cost of repurchasing shares into treasury, including the related stamp duty and transaction costs is dealt with in the  transactions are accounted for on a trade date basis. Where shares held in treasury are subsequently cancelled, the nominal value of those shares is transferred out of “called- up share capital” and into “capital redemption reserve”. The sales proceeds of treasury shares re-issued are  purchase price of those shares and is transferred to  the purchase price is transferred to “share premium”. Notes to the Financial Statements (continued) 56 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Notes to the Financial Statements (continued) 2 Investment income 2022 £’000 2021 £’000 Income from investments: Interest from UK bonds 1,584 1,329 Income from UK equity and non-equity investments 8,163 4,194 Interest from overseas bonds 2,083 1,994 Income from overseas equity and non-equity investments 2,847 2,425 Total income 14,677 9,942 2022 £’000 2021 £’000 Total income comprises: Dividends 7,868 4,919 Property Income and Interest Distributions 3,142 1,700 Interest 3,667 3,323 14,677 9,942 2022 £’000 2021 £’000 Income from investments comprises:  9,747 5,523  4,930 4,419 14,677 9,942 3 Investment management fee 2022 £’000 2021 £’000 Investment management fee 3,627 2,604  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 (2021: the same basis). At 31 March 2022 £1,020,000 (5 April 2021: £710,000) was payable. The terms of the investment management agreement are detailed on page 25. 57 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Company Summary     Shareholder InformationFinancial Statements Notes to the Financial Statements (continued) 4 Other expenses 2022 £’000 2021 £’000 Fees payable to Company’s 46 34  129 114 Company secretarial, administration and accountancy services 154 152 Depositary fees 152 92 ge and FCA fees 50 39  49 36 Custody services 37 25  110 120 727 612  5 Taxation Revenue £’000 Capital £’000 2022 Total £’000 Revenue £’000 Capital £’000 2021 Total £’000   44 – 44 28 – 28  466 – 466 368 – 368  510 – 510 396 – 396 period is lower (2021: lower1:  Revenue £’000 Capital £’000 2022 Total £’000 Revenue £’000 Capital £’000 2021 Total £’000  10,323 58,405 68,728 6,726 57,336 64,062  1,961 11,097 13,058 1,278 10,894 12,172   (1,495) – (1,495) (936) – (936)  – (11,097) (11,097) – (10,894) (10,894)  44 – 44 28 – 28  – – – 26 – 26  510 – 510 396 – 396     charge of £466,000 is payable in respect of the period ended 31 March 2022 (to 5 April 2021: £342,000). 58 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Notes to the Financial Statements (continued) 6 Dividends 2022 £’000 2021 £’000 Ordinary shares 2021 dividend paid 161 (45p per share) 6,771 – 2020 dividend paid 1720 (42p per share) – 4,901 The 2021 dividend was paid on 161 to shareholders on the register on 111 when there were 15,047,463 Ordinary shares in issue. The 2020 dividend was paid on 1720 to shareholders on the register on 520 when there were 11,669,563 Ordinary shares. 46p per share for the period ended 31 March 2022. If approved, this dividend will be paid to shareholders on 15 July 2022. This dividend is subject to approval by  , based on the number of shares in issue at 31 March 2022, is £9,610,000. However the actual amount of the dividend to be paid will be based on the number of shares in 22, the dividend record date. 2022 £’000 2021 £’000  9,813 6,330 46p for the period ended 31 March 2022 (9,610) (6,771) 203 (441) 7 Net return per Ordinary share The net return per Ordinary share of 394.95p (2021: net return of 513.39p) is based on the total net return after period of £68,218,000 (2021: net return of £63,666,000) and on 17,272,426 (2021: 12,401,011) Ordinary shares, being the weighted average number of Ordinary shares in issue in each period. 56.81p (2021: 51.04 £9,813,000 (2021: £6,330,000) and on 17,272,426 (2021: 12,401,011) Ordinary shares, being the weighted average number of Ordinary shares in issue in each period. Capital return per Ordinary share of 338.14p (2021: net return of 462.35p) is based on the net capital return for the period of £58,405,000 (2021: net gain of £57,336,000) and on 17,272,426 (2021: 12,401,011) 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. 59 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Company Summary     Shareholder InformationFinancial Statements Notes to the Financial Statements (continued)   2022 £’000 2021 £’000 Investments comprise –  Ordinary shares UK 228,809 144,074 Ordinary shares overseas 164,043 86,094 Zero dividend preference shares UK 22,415 15,296  115,735 60,657  74,268 38,123  289,572 167,180  16,618 11,655  80,433 71,151 991,893 594,230 Opening cost of investments 556,030 450,139 Unrealised appreciation/(depreciation) 38,200 (5,288) Opening fair value of investments 594,230 444,851 Additions at cost 840,165 363,098  (135) (581) Sales proceeds (500,242) (270,590) Gains on investments 57,875 57,452 Closing fair value of investments 991,893 594,230 Closing book cost of investments 934,906 556,030 Unrealised appreciation 56,987 38,200 991,893 594,230  39,088 13,964 Increase in unrealised appreciation 18,787 43,488  57,875 57,452 The Company received proceeds of £500,242,000 (2021: £270,590,000) from investments sold in the period. The average book cost of these investments when they were purchased was £461,154,000 (2021: £256,626,000). These investments have been revalued over time and until they were sold any unrealised gains/losses were included in the fair value of investments. Included within these proceeds are capital repayments of £565,000 (2021: nil), which are considered to be capital dividends. The geographical spread of investments is shown on page 9. The total transaction costs on additions were £546,000 (2021: £417,000) and on sales were £124,000 (2021: £43,000). These costs are included in the book cost of acquisitions and the net proceeds of sales. 54 for a fuller description. 60 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Notes to the Financial Statements (continued) 9 Debtors 2022 £’000 2021 £’000 Other debtors 13,333 2,770 Prepayments and accrued income 2,041 1,116  12 9 15,386 3,895 10 Creditors: amounts falling due within one year 2022 £’000 2021 £’000 Other creditors 6,644 160 Accruals and deferred income 1,168 819  243 342 8,055 1,321 11 Called-up share capital 2022 £’000 2021 £’000 Allotted and fully paid Ordinary shares of 25p each At the beginning of the period: 13,813,113 Ordinary shares (2021: 11,611,563) 3,453 2,903 Allotted during the period: 7,078,862 Ordinary shares (2021: 2,201,550) 1,770 550 At the end of the period: 20,891,975 Ordinary shares (2021: 13,813,113) 5,223 3,453 During the period to 31 March 2022, no Ordinary shares were repurchased by the Company (2021: ). ary shares (2021: 102,300) were re-issued from treasury by the Company (2021: £4,350,000 for cancellation during the year (2021: nil) and at the year end no shares were held in treasury (2021: one). During the period to 31 March 2022, 7,078,862 (2021: 2,201,550) new Ordinary shares were issued by the Company for cash proceeds totalling £354,342,000 (2021: £100,872,000). 12 Net asset value per Ordinary share 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 2022 2021 Ordinary shares 5,025.1p 4,590.2p Net assets attributable to 2022 £’000 2021 £’000 Ordinary shares 1,049,835 634,046 20,891,975 (2021: 13,813,113) Ordinary shares, being the number of Ordinary shares in issue at the year end. 61 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Company Summary     Shareholder InformationFinancial Statements Notes to the Financial Statements (continued) 13  activities 2022 £’000 2021 £’000  68,728 64,062 Adjustments for:  (58,405) (57,336) (Increase)/ decrease in prepayments (32) 40 Increase in accruals and accrued income 349 114  (44) (28)  (3) (5)  (596) (90) (Increase)/decrease in dividends receivable (228) 22 (Increase)/decrease in accrued interest (540) 593 /(losses) on foreign currency transactions 530 (116)  9,759 7,256 14 Financial instruments  2022 £’000 2021 £’000   991,893 594,230 Financial assets that are debt instruments measured at amortised cost – Cash at bank and at hand 50,611 37,242 – Other debtors 13,333 2,770 – Accrued income 1,978 1,085 1,057,815 635,327 2022 £’000 2021 £’000 Financial liabilities measured at amortised cost – Other creditors 6,626 143 – Accruals 1,168 819 7,794 962  n   n cash and liquid resources that arise directly from the Company’s operations; and n debtors and creditors.   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. 62 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Notes to the Financial Statements (continued) 14 Financial instruments (continued) Market risk   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    investments. An appropriate spread of investments is held in the portfolio in order to reduce both the systemic risk   the investments held by the Company is shown on pages 9 to 12. All investments are stated at bid value, which in the Directors’ opinion is equal to fair value. Price risk sensitivity period and the net assets and net asset value per Ordinary share to an increase or decrease of 10% (2021: 5%) 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. 2022 10% increase in market prices £’000 2022 10% decrease in market prices £’000 2021 5% increase in market prices £’000 2021 5% decrease in market prices £’000   (294) 294 (105) 105 Capital return 99,190 (99,190) 29,712 (29,712)  98,896 (98,896) 29,607 (29,607)  98,896 (98,896) 29,607 (29,607)  473.36p (473.36)p 214.34p (214.34)p Interest rate risk  appropriate level of yields given the economic background. Key determinants include economic growth prospects,  Investment Manager takes all these factors into account when making any investment decisions as well as considering    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  63 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Company Summary     Shareholder InformationFinancial Statements Notes to the Financial Statements (continued) 14 Financial instruments (continued) Interest rate sensitivity      instruments at the Statement of Financial Position date with all other variables held constant. 2022 1% increase in interest rates £’000 2022 1% decrease in interest rates £’000 2021 1% increase in interest rates £’000 2021 1% decrease in interest rates £’000   410 (410) 301 (301)  410 (410) 301 (301)  410 (410) 301 (301)  1.96p (1.96)p 2.18p (2.18)p 31 March 2022 was as follows: Total (as per Statement of Financial Position) £’000 Floating rate £’000 Index- linked £’000 Other  rate £’000 Assets/ (liabilities) on which no interest is paid £’000 Weighted average interest rate % Weighted average period for which rate is  (years) Assets Investment trusts & other funds 495,700 – – – 495,700 – –  75,146 – 75,146 – – 0.38 1.87  18,175 – 18,175 – – 3.64 1.99 UK government bonds 40,589 – – – 40,589 – – UK non-government bonds 52,825 – – 52,825 – 3.93 2.21  289,572 – 289,572 – – 0.68 8.33  bonds 4,276 – 4,276 – – 1.44 7.71 Overseas non-government bonds 15,610 – – 15,610 – 2.99 1.88 Invested funds 991,893 – 387,169 68,435 536,289 Cash at bank 50,611 50,611 – – – – – Other debtors 15,386 – – – 15,386 – – Liabilities Creditors (8,055) – – – (8,055) – – Total net assets 1,049,835 50,611 387,169 68,435 543,620 64 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Notes to the Financial Statements (continued) 14 Financial instruments (continued) 1 was as follows: Total (as per Statement of Financial Position) £’000 Floating rate £’000 Index- linked £’000 Other  rate £’000 Assets/ (liabilities) on which no interest is paid £’000 Weighted average interest rate % Weighted average period for which rate is  (years) Assets Investment trusts & other funds 316,615 – – – 316,615 – –  21,660 – 21,660 – – 0.17 2.91  13,660 – 13,660 – – 2.85 1.03 UK government bonds 38,997 – – – 38,997 – – UK non-government bonds 21,619 – – 21,619 – 4.84 2.12  167,180 – 167,180 – – 0.97 10.98 Overseas non-government bonds 14,499 – – 14,499 – 4.76 1.19 Invested funds 594,230 – 202,500 36,118 355,612 Cash at bank 37,242 37,242 – – – – – Other debtors 3,895 – – – 3,895 – – Liabilities Creditors (1,321) – – – (1,321) – – Total net assets 634,046 37,242 202,500 36,118 358,186           assets, which equate to their fair values.  instruments traded in active markets is based on quoted market prices at the Statement of Financial Position date.  industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. 65 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Company Summary     Shareholder InformationFinancial Statements Notes to the Financial Statements (continued) 14 Financial instruments (continued)  31 March 2022 as follows: Financial assets at fair value  Level 1 £000 Level 2 £000 Level 3 £000 2022 Total £000 Level 1 £000 Level 2 £000 Level 3 £000 2021 Total £000 Quoted securities 988,276 2,842 – 991,118 593,804 – – 593,804 Delisted equities – – 775 775 – – 426 426  988,276 2,842 775 991,893 593,804 – 426 594,230  these investments has been determined by reference to their quoted bid prices at the reporting date. 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). During the period to 31 March 2022, two assets (Gabellint Trust and Weiss Korea Opportunities FundShares)) werethey   2022 Total £’000 2021 Total £’000 Opening balance 426 540 Purchases – – Sales (9,949) – Transfers 9,335 218 Total gains/(losses) on investments in the Income Statement: on assets sold 614 – on assets held at the end of the year 349 (332) Closing balance 775 426 Foreign currency risk   Company’s investments denominated in foreign currencies are: 2022 Investments £’000 2022 Accrued interest £’000 2021 Investments £’000 2021 Accrued interest £’000  78,916 5 32,884 – US Dollar 282,579 473 145,690 401 Swedish Krona 39,449 50 26,342 27 an Krone 7,104 – – – Australian Dollar 7,926 13 2,499 4  36,283 2 20,188 2 452,257 543 227,603 434 66 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Notes to the Financial Statements (continued) 14 Financial instruments (continued) Foreign currency sensitivity   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. 2022 10% appreciation of sterling £’000 2022 10% depreciation of sterling £’000 2021 10% appreciation of sterling £’000 2021 10% depreciation of sterling £’000   (399) 399 (358) 358 Capital return (45,226) 45,226 (22,760) 22,760  (45,625) 45,625 (23,118) 23,118  (45,625) 45,625 (23,118) 23,118  (218.39)p 218.39p (167.36)p 167.36p Liquidity risk  majority of the Company’s assets are investments in quoted securities which are readily realisable. All liabilities are payable within three months. Credit risk In addition to interest rate risk, the Company’s investment in bonds, the majority of which are government bonds, is  quality of the issue, the lower the interest rate at which the issuer can borrow money. Issuers of a lower quality will tend  carried out with a number of brokers whose standing is reviewed periodically by the Investment Manager. The    A further credit risk is the failure of a counterparty to a transaction to discharge its obligations under that transaction,  Credit risk exposure  2022 Statement of Financial Position £’000 2022 Maximum exposure £’000 2021 Statement of Financial Position £’000 2021 Maximum exposure £’000   991,893 496,193 594,230 277,095 Debtors – amounts due from the custodian, dividends and interest receivable 15,311 15,311 3,856 3,856 Cash at bank 50,611 50,611 37,242 37,242 1,057,815 562,115 635,328 318,193 67 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Company Summary     Shareholder InformationFinancial Statements 14 Financial instruments (continued) Capital management policies and procedures   shareholders. The Company’s capital comprises its equity share capital and reserves.   15 Related party transactions 25), and the Directors’ fees and shareholdings (as 35 and 38), there have been no related party transactions in the period ended 31 March 2022. 16 Company information  its Ordinary s  Notes to the Financial Statements (continued) 68 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 ninth Annual  of J.P. Morgan, The   on Tuesday, 122 for the following purposes: Ordinary business  resolutions which will be proposed as ordinary resolutions:   period ended 22.   the period ended , together with the report of the auditor thereon. 3. To approve the remuneration policy of the Company. 4 46 pence per Ordinary share. 5. To re-elect Jean Matterson as a Director. 6  7  8. To re-elect Wendy Colquhoun as a Director. 9  10. To authorise the Directors to determine the remuneration of the auditors. Special business  resolutions, of which resolutions 11 and 12 will be proposed as ordinary resolutions and resolutions 13 to 16 will be proposed as special resolutions: Ordinary resolution Aggregate Directors’ Remunerations 11. To increase the aggregate limit on Directors’ remuneration from £165,000 to £180,000  Directors’ authority to allot shares 12. THAT the Directors be generally and unconditionally authorised, pursuant to section 551 of the  powers of the Company to allot relevant securities (within the meaning of section 551 of the Act)  £1,876,264.00 (being one third of the issued share capital of the Company as at 262022, being the latest practicable date prior to the publication of this 7,505,056 Ordinary shares of 25 pence each), provided that such authority shall  to be held in 2023, unless previously revoked, varied or renewed by the Company in general meeting and provided that the Company shall be entitled to  or agreement which would or might require relevant     Special resolutions Directors’ authority to disapply pre-emption rights 13. THAT the Directors be and are hereby empowered pursuant to section 570 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 12 above or otherwise as if section 561 of the Act did not apply to any such allotment, and be empowered pursuant to section 573 of the Act 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  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:     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  arrangements in connection with the issue as   representing fractional entitlements or to deal with legal or practical problems arising in any overseas territory, the requirements of any  other matter whatsoever; and b) otherwise than pursuant to sub-paragraph a) above, up to an aggregate nominal value of £1,125,758.50 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; and Notice of Annual General Meeting 69 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Company Summary    Shareholder InformationFinancial Statements   of the Company to be held in 2023, unless previously renewed, varied or revoked by the Company in general meeting and provided that the Company   might require equity securities to be allotted or     Authority to make market purchases of the Company’s own shares 14. 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 25 pence each in the Company (the “Ordinary shares”), provided that:    shares to be purchased shall be 3,375,023 or, if less, the number representing 14.99% of the issued share capital of the Company at the date of the meeting at which this resolution  b) the minimum price which may be paid for an Ordinary share shall be 25 pence;    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   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;    the conclusion of the AGM of the Company to be held in 2023 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    Cancellation of the Company’s share premium account 15    cancelling the Company’s entire share premium   is sought; and (ii) the credit thereby arising in the Company’s books of account be available as  permitted by the Companies Act 2006 and The  Notice of general meetings 16. THAT a general meeting other than an Annual General Meeting may be called on not less than 14 clear days’ notice.  Juniper Partners Company Secretary   Murray House Murray Street  2022 Location of Annual General Meeting J.P. Morgan The Great Hall    Tuesday, 12 July 2022 Shareholders are encouraged to vote in favour of the resolutions to be proposed at the AGM by form of  (including through any platform) shareholders are encouraged to arrange for their nominee to vote on their behalf. Notice of Annual General Meeting (continued) 70 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Notes 1. Members are entitled to attend, speak and vote at the AGM. A member entitled to attend, speak and vote at the   need not be a member of the Company. A member may    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   working days) before the day of the AGM or any  after the relevant deadline shall be disregarded in determining the rights of any person to vote at    a pre-paid reply envelope. Completion and return of such   or submission of any  will not prevent a member from subsequently attending the AGM and voting in person if they so wish.     copy thereof, must be received by post or (during normal business hours only) by hand to Computershare Investor    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  under note 1 above. A nominated person may have a right under an agreement with the relevant member to be  for the AGM. If a nominated person does not have such a  he/she may have a right under an agreement with the  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  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  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  behalf all of its powers as a member provided that they do not do so in relation to the same shares.    may do so for the AGM and any adjournment(s) thereof  (available via www.euroclear.com). The message, regardless of whether it constitutes the   order to be valid, be transmitted so as to be received by the   AGM. For this purpose, the time of the receipt will be taken to be the time (as determined by the timestamp applied to  the Company’s agent is able to retrieve the message by  8. Any member attending the AGM has the right to ask questions. Shareholders are also invited to submit their  these questions will be posted on our website after the AGM. Please    which, to be passed, require more than half of the votes 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.  2 (being the last practicable date prior to the publication of this document) the total number of Ordinary shares of 25p each in issue and the total number of voting rights was 22,515,170.   re-election can be found at page 13 of the report and  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. Notice of Annual General Meeting (continued) 71 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Company Summary    Shareholder InformationFinancial Statements Financial Calendar March May July November Financial year end (31st) Annual results for the  2022 published Annual Report published Annual General Meeting Dividend payment date Interim results for the six months ended  Half Year Report published Financial Reporting  from the Company Secretary and electronic copies can be accessed on the Company’s website www.capitalgearingtrust.com. Contacting the Board  so via the Company Secretary. Capital Gains Tax  25p Ordinary shares was 21.25p. Frequency of NAV Publication Daily Share Price  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  Sources of Further Information Company’s website www.capitalgearingtrust.com AIC www.theaic.co.uk For registrar queries contact Computershare on 0370 873 5864.          TIDM: CGT    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. Disability Act Access for the hard of hearing to the services of the registrar to the    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  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  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 72 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Non-Mainstream Pooled Investment Rules   clients, subject to normal suitability requirements. Net asset value performance 1982 to 2022   100 80 200 300 500 1,000 2,000 4,000 6,000 8,000 10,000 16,000 As at 31 March 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2015 2013 2017 2018 2019 2020 2021 20,000 Capital Gearing Trust NAV Total Return MSCI UK Total Return 16,000 2022  Alternative Investment Fund Managers Directive (‘AIFMD’)  Company’s Alternative Investment Fund Manager (“AIFM”). CG Asset Management is authorised as a Full Scope   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 2021) are available from CG Asset Management on request. Shareholder Information (continued) 73 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Company Summary    Shareholder InformationFinancial Statements  Company’s C  31March 2022 and 5 April 2021, the C actual leverage levels at 31 March 2022 are shown below: Gross Method Commitment Method  200% 200% Actual 100% 100% The investor disclosure document and all additional periodic disclosures required in accordance with the requirements of the www.capitalgearingtrust.com). Shareholder Analysis  31 March 2022 % of Issued share capital 5 April 2021 % of Issued share capital  40.3 35.1 Private client stockbrokers 18.2 22.1 Wealth management 14.7 14.8 Private client fund management 6.4 6.1 Private investors 3.5 5.2 Asset managers 3.5 3.8  13.4 12.9 100.0 100.0   Beware of Share Fraud  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  risk shares.   If you are contacted, we recommend that you do not respond with any personal information, including access to   www.fca.org.uk/consumer/protect-yourself-scams Shareholder Information (continued) 74 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Shareholder Information (continued) Alternative Performance Measures  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    2022 2021  A 4,590.2 4,084.2p   5,025.1 4,590.2p   9.5% 12.4% Impact of dividend reinvested D 1.0% 1.2% NAV total return  10.5% 13.6% Share Price Total Return Share price total return measures the increase or decrease in share price plus the dividends paid in the period, which are assumed to be reinvested at the share price at the time that  2022 2021 Opening share price A 4,715.0p 4180.0p Closing share price  5,140.0p 4715.0p % change in share price  9.0% 12.8% Impact of dividend reinvested D 1.0% 1.1% Share price total return  10.0% 13.9% Premium/Discount to NAV The amount by which the share price is higher/lower than the net asset value per share,  2022 2021  A 5,025.1p 4,590.2p Share price  5,140.0p 4,715.0p Premium  2.3% 2.7% 75 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Company Summary    Financial Statements  Shareholder Information Shareholder Information (continued) MSCI UK Index Total Return  received were reinvested into the shares of the underlying companies at the time their  Ongoing Charges The Company publishes its ongoing charges (‘ongoing charges   percentage of the average daily net assets during the year.  within underlying investee funds: 2022 £0,000 2021 £0,000 Investment Management fee 3,627 2,535  727 612  30 30 Ongoing charges A 4,384 3,177 Average net assets  848,922 551,147 Ongoing charges ratio excluding costs of underlying funds  0.52% 0.58%  funds and the ongoing charges ratio including these costs: 2022 2021 Ongoing cost ratio from above A 0.52% 0.58% Impact of underlying investee fund costs  0.26% 0.32% Ongoing charges ratio including costs of underlying funds  0.78% 0.90% 76 Capital Gearing Trust P.l.c.Annual Report and Financial Statements 2022 Alternative Performance Measures Alternative performance measures are numerical measures of the Company’s current,     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   downside risk that can be used to assess the relative riskiness of one portfolio relative  Earnings per share  revenue return attributable to equity shareholders by the weighted average number of shares in issue. Equity ETF      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     Premium/Discount to NAV The amount by which the share price is higher/lower than the net asset value per share,  Total Return  value per share/share price plus the dividends paid in the period, which are assumed to  asset value or share price of the Company. Treasury shares Shares that have been repurchased by the Company but not cancelled. These shares 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.  Capital Gearing Trust P.l.c.  Murray House Murray Street  www.capitalgearingtrust.com