Report and Accounts 2023
CT UK Capital and
Income Investment
Trust PLC
Forward looking statements
This document may contain forward looking statements with respect to the financial condition, results of operations and business of CT UK Capital
and Income Investment Trust PLC. Such statements involve risk and uncertainty because they relate to future events and circumstances that could
cause actual results to differ materially from those expressed or implied by forward looking statements. The forward looking statements are based
on the Directors’ current view and on information known to them at the date of this document. Nothing should be construed as a profit forecast.
Report and Accounts 2023 | 1
Overview
Company Overview 2
Financial Highlights for the year ended 30 September 2023 3
Chair’s Statement 4
Strategic Report
Thirty Years of Dividend Growth 8
Fund Manager’s Review 9
Purpose, Strategy and Business Model 13
Key Performance Indicators 15
Twenty Largest Holdings 16
Investment Portfolio by Sector 18
List of Investments 21
The Fund Manager’s Investment Philosophy and Process 22
Our Approach to Responsible Investment 24
Principal Risks and Future Prospects 28
Promoting the Success of the Company
– Section 172 statement 31
Policy Summary 33
Governance Report
Directors 36
Directors’ Report 37
Corporate Governance Statement 42
Report of the Nomination and Remuneration Committee 45
Directors’ Remuneration Report 47
Report of the Audit and Risk Committee 50
Report of the Management Engagement Committee 53
Statement of Directors’ Responsibilities 54
Management and Advisers 55
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the action you should take,
you are recommended to seek your own independent financial advice from your stockbroker, bank manager, solicitor, accountant or other
independent financial adviser authorised under the Financial Services and Markets Act 2000 if you are in the United Kingdom or, if not,
from another appropriately authorised financial adviser. If you have sold or otherwise transferred all your ordinary shares in CT UK Capital
and Income Investment Trust PLC please forward this document, together with the accompanying documents, immediately to the purchaser
or transferee or to the stockbroker, bank or agent through whom the sale or transfer was effected for transmission to the purchaser or
transferee. If you have sold or otherwise transferred only part of your holding of shares, you should retain these documents.
Contents
Independent Auditors’ Report 56
Financial Report
Income Statement 61
Statement of Changes in Equity 62
Balance Sheet 63
Statement of Cash Flows 64
Notes to the Accounts 65
Ten Year Record (Unaudited) 82
Analysis of Ordinary Shareholders (Unaudited) 83
Notice of Annual General Meeting 84
Other Information
Information for Shareholders 88
How to Invest 89
Alternative Performance Measures 91
Glossary of Terms 93
Financial calendar
Fourth interim dividend for 2023 18 December 2023
Annual General Meeting 7 March 2024
First interim dividend for 2024
March 2024
Interim results for 2024 announced May 2024
Second interim dividend for 2024 June 2024
Third interim dividend for 2024 September 2024
Final results for 2024 announced November 2024
Fourth interim dividend for 2024 December 2024
2 | CT UK Capital and Income Investment Trust PLC
Company Overview
Consistently growing income from investing in some of the UK’s best businesses
With an objective to secure long term capital and income growth from a portfolio consisting
mainly of FTSE All-Share companies, we offer Shareholders a reliable income while at the same
time seeking to grow the size of your investment.
We have been searching out the very best of the UK’s large and medium sized businesses
since 1992 to give our Shareholders access to a range of quality UK stocks in one place.
We carefully identify companies that are growing and profitable today and have the sustainable
foundations to be able to continue that profitable growth into the future.
We choose to invest in companies we strongly believe in. Most of them generate much of their
revenues outside the UK which means you benefit from international growth and diversification.
Our fund manager, Julian Cane, has managed the Company’s investments for over 25 years,
outperforming its Benchmark over that period. The Manager’s results have driven the increase
in dividend every year since the launch of the Company, through the market’s ups and downs.
We are an “AIC Dividend Hero” in recognition of 30 consecutive years of increased annual
dividends.
Our Ongoing Charges figure of 0.66% represents very good value for Shareholders.
Whether you are looking for regular income now, or to reinvest your dividends for
long term growth, we believe that CT UK Capital and Income Investment Trust
can play an important part in your investments.
Visit our website at ctcapitalandincome.co.uk
DIVIDEND
HERO
Potential investors are reminded that the value of investments and the income from them may go down as well as up and investors may not receive back the full amount
invested. Tax benefits may vary as a result of statutory changes and their value will depend on individual circumstances.
CT UK Capital and Income Investment Trust is suitable for retail investors in the UK, professionally advised private clients and institutional investors who seek growth over
the longer term in capital and income, and who understand and are willing to accept the risks and rewards of exposure to equities.
Registered in England and Wales with company registration number 02732011. Legal Entity Identifier: 21380052ETTRKV2A6Y19
Report and Accounts 2023 | 3
Overview
Strategic Report Governance Report Financial Report Notice of Meeting
Other Information
Chair’s StatementOverview Auditors’ Report
Financial Highlights
for the year ended 30 September 2023
Ordinary dividends – 30th consecutive annual increase
Dividends for the year represent a 3.0% increase on the prior year, our
thirtieth consecutive annual rise.
12.15p
Dividend Yield
The annual dividend yield for the Company is 4.1% based on the paid
and proposed dividends for the 2023 financial year and the share price
as at 30 September of 298.0p.
4.1%
Share price total return*
With the shares trading at a discount of 1.2% at 30 September 2023 in
comparison to a premium of 0.8% at the prior year end, the share price
total return for the year of 10.9% was lower than the Net Asset Value
total return.
10.9%
Net Asset Value per share total return*
The Net Asset Value per share total return for the year was 13.1%,
underperforming the Benchmark FTSE All-Share Index which returned
13.8%.
13.1%
Shares ended the year at a discount of 1.2%
The shares traded at an average discount to NAV of 3.1% over the year.
(1.2)%
* Total return – the return to Shareholders calculated on a per share basis by adding gross dividends paid in the period to the increase or decrease in the Share Price or
NAV in the period. The dividends are assumed to have been re-invested in the form of shares or net assets, respectively, on the date on which the shares were quoted
ex-dividend.
4 | CT UK Capital and Income Investment Trust PLC
Chair’s Statement
Dear Shareholder,
I am pleased to write to you with my first report as Chair following the
retirement of Jonathan Cartwright on 1 July 2023. Jonathan joined
the Board in 2019 and became Chair in 2020. We thank him for his
leadership and guidance throughout his tenure.
Total Return – The Company offers a reliable income while at
the same time seeking to grow the size of your investment
After the political turmoil of the previous year with three Prime
Ministers and four Chancellors, Russia’s invasion of Ukraine and then
the unsettling Mini-Budget from the Truss/Kwarteng administration,
the year under review was much more stable. This helped to provide
Performance over three years (%)
Source: Refinitiv Eikon
Sep 22Sep 21Sep 20
90
100
110
120
140
150
130
Sep 23
Performance over one year (%)
Sep 23Jul 23May 23Mar 23Jan 23Nov 22Sep 22
90
95
100
110
115
120
105
Source: Refinitiv Eikon
a more positive background against which the UK stock market was
able to record a strong return of +13.8% for the FTSE All-Share Index
(the “Index”). Having been ahead of the Index at our half yearly stage
and through Spring, the total return of our Net Asset Value (“NAV”) of
13.1% was modestly behind the Index at our year end.
The Fund Manager’s Review contains greater analysis of performance
and the companies identified with strong, sustainable foundations to
deliver profitable growth into the future.
During the year, the transition to a new period of higher interest rates
and bond yields brought about some apparently contradictory moves in
the portfolio. Our performance over the last twelve months was helped
by strong returns from a number of cyclically sensitive companies such
Rebased to 100 at 30 September 2020Rebased to 100 at 30 September 2022
*See Alternative Performance Measures on pages 91 and 92 for explanation.
“Our long term dividend record provides evidence for the success of our
steady, incremental approach. Over 30 years, our dividend has grown 257.4%,
providing considerably greater growth than either CPI at 103.7% or the FTSE
All-Share Index at 169.7%.”
Jane Lewis, Chair
CT UK Capital and Income - NAV total return*
FTSE All-Share – total return
CT UK Capital and Income - share price total return*
CT UK Capital and Income - NAV total return*
FTSE All-Share – total return
CT UK Capital and Income - share price total return*
Report and Accounts 2023 | 5
Chair’s Statement
Strategic Report Governance Report Financial Report Notice of Meeting
Other Information
Chair’s StatementOverview Auditors’ Report
Income Growth – The Company has increased its dividend
every year since it was launched, through the market’s ups
and downs
During the year, in addition to rebounding capital values, the increase
in dividends from our investee companies led to growth in our revenue
return per share of 10.2%. This is encouraging as it is clearly a strong
rate of growth for any one year. In these more inflationary times,
companies with pricing power for their services and products should
be able to raise their prices, protect their profits and pay increased
dividends. In this way, they should be able to provide some cover
against inflation for their shareholders.
With these results, the Board is declaring a dividend for our fourth
quarter of 3.9 pence per share to give a total for the year of 12.15p.
Over one year, this is a rate of growth for our dividend of 3.0%, which
compares to the Consumer Price Index (“CPI”) of 6.7% and growth
in the implied dividend from the FTSE All-Share Index of 9.1%. While
our dividend growth may lag these two comparators in the short term,
there are echoes of Aesop’s Fable of the Tortoise and the Hare as we,
the Tortoise, aim to grow our dividend each and every year – and have
done so over our 30 years since launch. So, while the Index, the Hare,
may grow its dividend rapidly some years, there are other periods
(such as during COVID-19 and in response to the Global Financial
Crisis) when the dividend from the market is cut sharply.
Our long term dividend record provides evidence for the success of
our steady, incremental approach. Over 30 years, our dividend has
grown 257.4%, providing considerably greater growth than either CPI at
103.7% or the FTSE All-Share Index at 169.7%.
as the housebuilder Vistry and kitchen manufacturer and seller Howden
Joinery, as the economy proved to be more stable than some had
feared, but the rise in interest rates had a negative impact on others,
such as the specialist bank OSB, property owner LXi REIT and brick
manufacturer Forterra.
Our financial year end three years ago was close to the bottom of
the equity market, driven by fears over the impact of COVID-19. Our
recovery from that low point was initially much stronger even than that
of the Index, but we subsequently lost relative performance in the latter
stages, most notably during Russia’s initial invasion of Ukraine and
the Truss/Kwarteng administration period. Performance of the Index
during the three year period has been driven largely by some of the very
biggest stocks, in particular Shell (which rose 207.5% with an average
weight in the FTSE All-Share Index of 6.1%) and HSBC (+145.2% with
an average weight in the Index of 4.3%). Partly by virtue of their size
and international exposure, these companies have been seen as quite
defensive and therefore more resilient than the average UK company in
difficult conditions. Our portfolio had only a relatively small investment
in Shell and nothing in HSBC, so compared to the Index these positions
were detrimental to our performance. Over three years, our NAV total
return of 35.5% lagged that of the Index, which returned 39.8%.
Looking at longer term performance, we are ahead of the benchmark
over both 10 and 25 years, with our performance in more stable
or rising markets outweighing the more challenging periods. This
is evidence that our investment process and its attention to long
term fundamentals does generate attractive investment returns, an
important component of which is our track record of annual dividend
growth.
Rebased to 100 at 30 September 2013
Performance over ten years (%)
Sep 13
Sep 15 Sep 17 Sep 19 Sep 23
145
120
95
170
195
Sep 21
Source: Refinitiv Eikon
CT UK Capital and Income - NAV total return*
FTSE All-Share – total return
CT UK Capital and Income - share price total return*
Rebased to 100 at 30 September 1998
Performance over twenty five years (%)
460
100
Sep 98
Sep 03 Sep 08 Sep 13
Sep 18
Sep 23
340
300
260
220
180
140
60
380
420
580
500
540
Source: Refinitiv Eikon
*See Alternative Performance Measures on pages 91 and 92 for explanation.
CT UK Capital and Income - NAV total return*
FTSE All-Share – total return
CT UK Capital and Income - share price total return*
6 | CT UK Capital and Income Investment Trust PLC
Cost of running the Company as a % of average net assets*
Source: Columbia Threadneedle Investments
0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
0.62
0.64
0.66
0.64
0.59
0.58
0.58
0.58
0.59
0.59
0.66
*See Alternative Performance Measures on pages 91 and 92 for explanation.
Share price premium/(discount) to NAV over one year (%)*
Source: Columbia Threadneedle Investments
1
0
-1
-2
-3
-4
-5
-6
May 23 Sep 23Mar 23Jan 23Nov 22Sep 22 Jul 23
*See Alternative Performance Measures on pages 91 and 92 for explanation.
buy back at a discount. This will assist the Company in continuing to
protect the discount to NAV at which the shares may trade.
Gearing
Throughout the year we have borrowed additional money to invest in
our portfolio, with the amount borrowed ranging from £24 million to
£29 million. This is decided on an assessment of the returns available
from the portfolio and individual investments in comparison with the
cost of borrowing. Our interest costs for the borrowing are linked to
short term interest rates, so with the increases in the Bank of England
Base Rate, these have been increasing during the course of the year.
Overall, the cost of our borrowing was lower than the returns achieved
from the portfolio so gearing has been advantageous for shareholders.
Costs
One of our objectives is to run your Company as efficiently as possible.
This year there was an increase in the ratio of ongoing charges which
was a combination of two effects. First, although the management fee
was lower (reflecting the fact that assets were on average lower across
the last four quarter ends than the previous year), other expenses did
rise. While total recurring expenses rose 4.6%, this was lower than
CPI for the year. Secondly, average daily net assets were lower year
on year. This reflects the timing of market movements and also the
impact of share buy backs reducing the size of the Company. The cost
ratio at 0.66%, although a little higher than the previous eight years,
still remains at a very competitive level.
ESG
Consideration of Environmental, Social and Governance (“ESG”)
issues have long been an important part of the investment process
of your investment manager, which has one of the largest and
longest established teams dedicated to ESG issues. There is a
Translating these figures to compound annual rates of growth, over 30
years we have grown our dividend by a rate of 4.3%, compared to 2.4%
for CPI and 3.4% for the FTSE All-Share Index.
In addition to our dividend growing faster than the dividend from the
Index over the long term, our dividend yield as at the financial year end
was 4.1%, which is above the yield from the Index of 3.8%.
We are proud to be one of the Association of Investment Companies’
(“AIC”) Dividend Heroes as we have increased our dividend every year
since launch in 1992. It remains firmly our intention to continue to
extend this record and the recovering strength of our Revenue Reserve
of £12.3 million or 11.8 pence per share gives us considerable
confidence that this will be achievable.
Share Price discount to NAV
The Board has long believed it is in Shareholders’ interests that the
Company’s shares should not trade at a price that is too detached
from the underlying NAV per share. In order to try to create the right
conditions for this, the Company has the ability to buy back its own
shares if the price stands at a discount compared to the underlying
NAV per share and to issue its own shares if the price is at a premium.
In total during the year, the Company bought back almost 2.5 million
shares at an average discount of 4.1% and issued 75,000 shares at
an intraday premium of 1.7%.
Over the year the shares traded on average at a discount of 3.1% to
the underlying NAV, with the share price trading in a range between
being in line with the NAV and a 6.0% discount.
At the forthcoming Annual General Meeting, the Board will again ask
Shareholders to renew its authority to issues shares at a premium and
Chair’s Statement
Report and Accounts 2023 | 7
Strategic Report Governance Report Financial Report Notice of Meeting
Other Information
Chair’s StatementOverview Auditors’ Report
detailed commentary on pages 24 to 27 which explains Columbia
Threadneedle’s ESG policies, how these are implemented with respect
to management of the investment portfolio, and its engagement with
our investee companies.
Directorate Change
The Board recognises the value in both attracting fresh talent and the
maintenance of continuity and accordingly a plan has been developed
to ensure an orderly succession as Directors retire.
As part of this plan, at the Annual General Meeting to be held on
7 March 2024, Tim Scholefield, the Company’s Senior Independent
Director will retire from the Board. Tim has served as a Director since
November 2014. I wish to place on record the Board’s appreciation for
his support and guidance throughout his tenure and to thank him for
his contribution to the Company’s success. Upon his retirement Nicky
McCabe will be appointed Senior Independent Director.
With Tim Scholefield’s forthcoming retirement, a search company was
commissioned to find a replacement. Following this selection process,
the Board is pleased to announce that Christopher Metcalfe, will be
appointed to the Board and its committees with effect from 8 March
2024.
Christopher is Chairman of Martin Currie Global Portfolio Trust plc
and the Senior Independent Non Executive Director of JP Morgan US
Smaller Companies Investment Trust plc. He has extensive equity
fund management and investment trust experience having previously
worked in senior positions at Newton Investment Management,
Schroder Investment Management and Henderson Administration
Group.
AGM
The Annual General Meeting (“AGM”) will be held at 12.30pm on
7 March 2024 at the offices of Columbia Threadneedle Investments,
Cannon Place, 78 Cannon Street, London, EC4N 6AG. This will be
followed by a presentation by our manager, Julian Cane, on the
Company and its investment portfolio.
For Shareholders who are unable to attend, any questions they
may have regarding the resolutions proposed at the AGM or the
performance of the Company can be directed to a dedicated email
account, ctukagm@columbiathreadneedle.com, by Thursday 29
February 2024. We will endeavour, in so far as reasonably practicable,
to address all such questions at the meeting. In addition, the meeting
will be recorded and will be available to view on the Company’s
website, www.ctcapitalandincome.co.uk shortly thereafter.
To ensure that your votes will count, I would encourage all
Shareholders especially those that cannot attend in person to
complete and submit their Form of Proxy or Form of Direction in
advance of the AGM.
Outlook
The immediate economic background is far from promising with growth
expected to be at only very pedestrian levels in the UK and many other
developed economies, but as we have seen over the last year and
many years in the past, it would be wrong to believe that stock market
performance is linked too closely to domestic economic growth. On a
more positive front, inflation and interest rates are widely expected to
fall and this should be supportive of markets.
Over the next twelve months, the UK is likely to have another General
Election and most probably, on present polling, to face a change in
government. It seems though, whichever political party is in power,
that the government of the day will be fairly heavily constrained in the
actions it can take by a range of factors. Moreover, it is far from just
the UK that is facing elections as it is estimated that 2024 will be
the biggest election year in history with more than 40% of the world’s
population having the chance to cast a ballot.
There have been a number of substantial challenges for the UK
and international economies and stock markets to face in recent
years, most obviously the impact of COVID-19, Russia’s invasion of
Ukraine, rising inflation and interest rates. Since our financial year
end, Hamas’s attack on Israel has increased the chance of war in the
Middle East, while China, experiencing rapid economic deterioration of
its own, has ongoing aspirations with regard to Taiwan.
Against this somewhat uncertain and difficult background we remain
confident that valuations in our portfolio are attractive and with a
combination of its dividend generating capacity and our revenue
reserve we will strive to extend our record of dividend growth into the
future.
Jane Lewis
Chair
29 November 2023
8 | CT UK Capital and Income Investment Trust PLC
Cumulative income received by Shareholders from a £1,000
investment at launch in September 1992
£2,000
2023
£1,500
£1,000
£500
£0
£2,500
1992 1997 2002 2007 2012 2017
Source: Columbia Threadneedle Investments and Refinitiv Eikon
CT UK Capital & Income Investment TrustFTSE All-Share Index
Consistently growing income from investing in some of the UK’s best businesses
A key feature of the structure of an investment trust is that it allows
companies such as ours to accumulate a Revenue Reserve from
undistributed income in good years and then to draw down from it when
circumstances are more challenging. The Board knows that Shareholders
appreciate a steadily rising dividend and, for example, during COVID-19,
chose to pay dividends to Shareholders in two years that were not fully
covered by annual earnings.
Thirty Years of Dividend Growth
Over that time, an initial investment of
£1,000 in CT UK CAPITAL AND INCOME
INVESTMENT TRUST
has yielded £2,376
in gross income, assuming dividends had
not been reinvested.
This compares to just
£1,076 paid out on
the FTSE ALL-SHARE INDEX
based on the
annual dividend yield, and
£1,132 earned from a SAVINGS ACCOUNT
paying the Bank of England base rate over
the same period.
Dividend Progression since launch in September 1992
12.00
1993 1998 2003 2008 2018 2023
11.00
10.00
13.00
2013
8.00
7.00
6.00
9.00
4.00
3.00
2.00
5.00
1.00
0.00
pence per share
Source: Columbia Threadneedle Investments
Annual Dividends Special Dividends
AIC Dividend Hero
Companies which have consistently grown their annual dividend for over
twenty years are classed by the AIC as Dividend Heroes. Our Company
is one of a small group of investment trusts which have achieved this
standard. The Board is proud that the Company is an AIC Dividend Hero
and it is our intention to continue to extend this record of continuous
growth in annual dividend.
Savings Account
DIVIDEND
HERO
2023 is the thirtieth consecutive year that the Company has increased
its annual dividend paid to Shareholders. This is despite facing diverse
challenges including the UK recession of the early 1990s, the Asian
Financial Crisis, the September 11 attack on the New York World Trade
Centre, the Global Financial Crisis, COVID-19 and more recently the
ongoing war in Ukraine.
Report and Accounts 2023 | 9
Strategic Report
Strategic Report Governance Report Financial Report Notice of Meeting
Other Information
Chair’s StatementOverview Auditors’ Report
This report marks your Company’s thirtieth consecutive annual dividend
increase, a period which has seen considerable change and many
major events. The cumulative effect has driven substantial income
return to Shareholders as well as share price appreciation.
Review of the UK Stock Market
Our financial year started amongst the fall out from the Truss-Kwarteng
‘Mini-Budget’ which had been so badly received by investment markets.
The rapid replacement of the Prime Minister and Chancellor of the
Exchequer stabilised the UK’s political position and restored some
confidence in the bond market. This in turn allowed the FTSE All-Share
to record a strong gain through until mid-February, but at this point the
recovery was complete and the equity market did not make any further
progress for the rest of the year.
The UK and most other developed economies, last year had to face
the twin difficulties of higher inflation and very pedestrian rates of
economic growth. The CPI in the UK peaked at 11.1% in October 2022
and has since been on a downward trajectory, falling to 6.7% for the
year to September 2023. This decline has been broadly in line with the
forecasts of the Bank of England, but its concerns have been around
the extent to which inflation might persist in the economy for longer by
becoming embedded in wage settlements. The latest inflation adjusted
GDP figures show the UK economy has grown by less than 0.6% over
the year to September 2023, so although it is clear that inflation
is not the result of excess economic growth, the Bank of England
has continued to raise short term base rates in order to dampen
inflationary pressure and reduce expectations of future inflation. Base
rates started the year at 2.25% and finished the year at 5.25%, while
the yields on the 10 year UK government bond for the same dates
were 4.1% and 4.4%. While the move in bond yields between the start
and end points of the year is fairly modest, the longer term move over
the last three years from a yield of 0.2% in September 2020 is very
significant and a medium term headwind for equity markets.
“We are confident in the companies in which we have invested as they have an
attractive balance of good products or services with strong market positions,
sound finances and quality management.”
Fund Manager’s Review
Julian Cane, Fund Manager
Individual Stock Performance
Table A overleaf shows the list of the strongest and weakest share
prices over the last year. Amongst the ten strongest share prices over
the last year, there are five companies which featured on the list of
the ten weakest share prices during the previous year. As was said
in last year’s annual report, we felt that the falls in share prices of
those companies were not justified by fundamental factors and that
consequently those share prices were attractively valued. We had been
selectively adding to some of those holdings and therefore the rebound
in those share prices was particularly positive.
The company in the portfolio with the strongest share price, Burford
Capital, is a ground breaking business in the UK, providing finance to
companies to pursue litigation claims. The strength of its share price
over the last year is largely a result of its successful claim in the US
courts against the Government of Argentina over the nationalisation
of YPF, an oil business. This is a large, high profile case, which could
potentially be worth multiples of Burford’s market capitalisation, but the
case does rather obscure the growing success the rest of the business
has had.
The list of the weakest share prices shows the impact of rising interest
rates as well as some company specific effects. Forterra, a brick
manufacturer, LXi REIT, an owner of property, and OSB, a mortgage
provider, have all been impacted by the rise in interest rates, but we
believe in each case the share price moves exaggerate any change in
the companies’ long term value. These companies are strategically well
positioned with sound finances and their greater intrinsic value should
be realised in future.
St. James’s Place was a new addition to the portfolio during the year,
and the timing of the purchase was clearly poor as it was before
the recent fee restructuring. St. James’s Place’s level of customer
satisfaction has been relatively high and its charges, which were
historically broadly in line with its peer group, are being restructured to
10 | CT UK Capital and Income Investment Trust PLC
be more customer friendly. We will monitor carefully how this evolution
develops.
The fall in the share price of Pennon Group was partly in response to
rising bond yields, but also ahead of the five yearly determination by
OFWAT of future pricing. This has proven to be relatively benign with the
share price starting to recover some of its losses.
Table B, below, shows the ten stocks that made the greatest
contribution (both positive and negative) to our performance relative
to that of the Index. This analysis builds on Table A as it also takes
into account the impact of the size of the investment position in the
portfolio as well as the size and performance of every stock included in
the Benchmark Index.
In addition to the positive contributions from the strongest performers
as shown in Table A, we can also see the benefit of not having invested
in Anglo American and Vodafone, whose share prices were very weak,
and similarly the benefit of not having a full index weighting in British
American Tobacco.
The list of the negative contributors shows the effect of not owning
three large companies that performed well, HSBC, Rolls-Royce and 3i,
as well as the impact of the share price falls on some of the larger
interest rate sensitive holdings noted previously.
Table A: Absolute performance of stocks held during the year
10 Strongest share prices
Portfolio Average
Weight (%)
Total Return to
the Company (%) 10 Weakest share prices
Portfolio Average
Weight (%)
Total Return to
the Company (%)
Burford Capital 2.92 71.94 IG Group 1.57 -10.05
Vistry Group 3.75 67.58 FDM Group (Holdings) 0.44 -11.92
CRH 2.07 59.31 British American Tobacco 1.52 -13.36
Melrose Industries 0.64 53.52 Smith & Nephew 0.97 -13.80
Howden Joinery Group 1.84 50.74 OSB Group 5.88 -14.10
Ferguson 1.40 49.16 Diageo 4.40 -18.20
Intermediate Capital Group 3.76 48.96 Pennon Group 1.24 -21.35
Babcock International Group 0.45 48.38 LXI REIT 2.92 -22.16
XP Power 1.22 47.70 St. James’s Place 0.64 -28.05
Sage Group 0.79 45.17 Forterra 1.42 -31.79
Source: Columbia Threadneedle Investments
Table B: Relative to the Benchmark Index
Top 10
Contributors
Portfolio
Average
Weight
(%)
Average
Weight
Relative to
the Index (%)
Total
Return
to the
Company
(%)
Contribution
To Relative
Performance
(%)
Bottom 10
Contributors
Portfolio
Average
Weight
(%)
Average
Weight
Relative to
the Index (%)
Total
Return
to the
Company
(%)
Contribution
To Relative
Performance
(%)
Vistry Group 3.75 3.64 67.58 1.52 Diageo 4.40 1.01 -18.20 -0.34
Burford Capital 2.92 2.92 71.94 1.30 IG Group 1.57 1.45 -10.05 -0.34
Intermediate Capital
Group
3.76 3.60 48.96 0.94 3i Group 0.00 -0.68 – -0.35
Howden Joinery
Group
1.84 1.69 50.74 0.47 Pennon Group 1.24 1.15 -21.35 -0.37
Ferguson 1.40 1.40 49.16 0.39 Beazley 3.54 3.38 0.34 -0.38
Anglo American 0.00 -1.40 – 0.38 Rolls-Royce Holdings 0.00 -0.50 – -0.50
British American
Tobacco
1.52 -1.31 -13.36 0.38 Forterra 1.42 1.40 -31.79 -0.74
CRH 2.07 0.85 59.31 0.35 LXI REIT 2.92 2.85 -22.16 -1.13
XP Power 1.22 1.20 47.70 0.31 HSBC Holdings 0.00 -4.93 – -1.25
Vodafone Group 0.00 -0.89 – 0.31 OSB Group 5.88 5.80 -14.10 -1.37
Source: Columbia Threadneedle Investments
Report and Accounts 2023 | 11
Strategic Report
Strategic Report Governance Report Financial Report Notice of Meeting
Other Information
Chair’s StatementOverview Auditors’ Report
Portfolio Turnover
When we analyse and evaluate the companies in which we wish to
invest, we do this with a long term perspective. We are not looking for
short term trading opportunities or where there are only relatively small
uplifts in value, but for companies which have considerable potential
to drive long term value. Although this value could be realised rapidly,
it is generally our intention to be stable, supportive shareholders and
for our returns to be driven by a mixture of share price appreciation,
dividends and dividend growth.
Net total sales from the portfolio last year were £25 million and net
total new investments (excluding share buy backs) were £17 million.
The total number of investee companies in the portfolio remained
at 47, as 3 companies left the portfolio and were replaced by 3 new
additions. Compared to average assets of £322 million, the rate of
turnover was 7%.
Revenue and Earnings Per Share
Our portfolio’s income has continued to grow from the low point caused
by the COVID-19 pandemic, but within this, there has been considerable
variation in the growth rates of the dividends paid by our investee
companies. Below is a table showing the dividend growth rates and
dividend yield of those stocks that were the ten largest contributors to
income last year.
Dividend Growth and Yield from the Ten Largest Contributors to
Income
% increase in
dividends per share
dividend yield
as at 30.9.23
OSB 7.4% 9.8%
Legal & General 5.0% 8.8%
Vistry -8.3% 6.0%
Rio Tinto -38.9% 6.2%
Intermediate Capital 2.0% 5.6%
Phoenix 4.8% 10.8%
LXi REIT 23.9% 7.0%
Unilever 4.1% 3.7%
AstraZeneca No change 2.6%
British American Tobacco 4.8% 8.8%
The increase in dividend from OSB of 7.4% reflects only the ordinary
dividends paid by the company. During the course of the year OSB also
paid a special dividend to reflect the exceptional returns the company has
been making and the fact it does not need the capital for further growth or
to strengthen its finances. Including the special dividend that we received
during the year takes the dividend increase to 46.6% and a yield of 13.3%.
Valuation
The most straightforward valuation measures for equity markets are the
price/earnings multiple and the dividend yield. The price/earnings
(“p/e”) multiple relates the price of an index (or share) to the earnings
that are generated by the index (or share) in a year, so all other things
being equal a lower p/e is a sign of a cheaper investment. The dividend
yield by contrast records the cash dividend received in a year from an
investment relative to the price, so a higher yield will be more attractive
than a lower yield.
The charts below and overleaf show how these ratios have changed
over 30 years, together with an average for this period. These are far
from perfect measures of value and are backward looking, but do have
the benefit of consistency and a long data series which covers a number
of economic cycles. On both measures, UK equities appear to be more
cheaply valued than the historic average.
There were substantial cuts in the dividends paid by Rio Tinto and GSK.
Rio Tinto has explicitly linked its dividend to its profitability, which in turn
is closely linked to commodity prices, in particular, that of iron ore. A
fall in profits at Rio Tinto therefore resulted in lower dividends, but the
dividend yield is still very attractive.
The fall in dividend from GSK stems from its demerger of Haleon and the
rebasing of the dividend to reflect the smaller size of the business that is
left, but from this lower level the dividend should now grow.
FTSE All-Share - Average Price Earnings Ratio
FTSE All-Share - Price Earnings Ratio
FTSE All-Share Index – Price/Earnings Ratio (%)
5.0
10.0
15.0
20.0
25.0
30.0
35.0
Sep 98Sep 93 Sep 03 Sep 23Sep 08 Sep 13 Sep 18
Source: Refinitiv Eikon
12 | CT UK Capital and Income Investment Trust PLC
Yields from investment assets (%)
0.0
2.0
4.0
6.0
8.0
10.0
Sep 98Sep 93 Sep 03 Sep 23Sep 08 Sep 13 Sep 18
Source: Refinitiv Eikon
UK Benchmark Bond 10 Year Yield
FTSE All-Share – Dividend Yield UK Clearing Banks Base Rate
As a further comparison, it is worth looking at the dividend yield from
equities versus the yields available from alternative assets. This clearly
shows how the yield on the 10 year UK government bond reduced from
over 8% in 1994 to less than 1% in 2020 with the Bank of England’s
base rate following a fairly similar course of travel. Equity yields by
contrast have remained in a much smaller range over the period, thus
suggesting that the headline yields on bonds and cash may not be that
instrumental in determining the valuation of equities. The sharp recent
rise in both bond and cash yields definitely marks a significant change
to the post Great Financial Crisis period that started in 2008/09 as
rising bond and cash yields do now have a competitive investment
yield and so provide a headwind to equities for the first time in well
over a decade. However, the long term perspective shown in the chart
indicates that bond and cash yields of around 5% were prevalent in the
market between 2000 and 2008, when equity yields were even lower.
This suggests there is no inherent reason why equity yields would need
to be higher now (and therefore prices lower) just because interest
rates and bond yields have themselves moved higher.
Outlook
It is an important distinction to make that stock market prices and
company results are all reported in nominal terms, while economic
growth is always quoted in real terms, after adjusting for inflation. In the
short term and during periods of low inflation the distinction may not be
so important, but in periods of higher inflation and over longer periods
of time, it is an important factor that should help to give investors in
equities some protection from inflation, and it is a point of difference
when comparing equities against bonds, where returns are fixed.
Last year, the UK economy barely grew in real terms as inflation rose
into double digits, yet the stock market rose reasonably strongly;
this should be seen as an example of equities giving protection from
inflation. The rise in the market was also not a consequence of its
valuation changing materially. Arguably the largest factor driving an
investor’s future returns is the price they pay for the investment. The
valuation charts discussed hopefully give Shareholders confidence that
the UK stock market remains attractively valued. The immediate future
course of inflation is expected to decrease in the UK and most major
markets, which combined with lower rates of interest, should help to
provide some more support to equities.
At times there can be an undue focus put on forecasts for the UK
economy, with this being assumed to be a major determinant in the
subsequent performance of UK shares, but the UK equity market and
your portfolio derive well over 50% of their income from overseas. Even
beyond the geographical mis-match, individual company performance
is mostly driven by very company specific factors. In this regard, we are
confident in the companies in which we have invested as they have
an attractive balance of good products or services with strong market
positions, sound finances and quality management.
Julian Cane
Fund Manager
29 November 2023
Source: Refinitiv Eikon
FTSE All-Share Index – Dividend Yield (%)
2.0
2.5
3.0
3.5
4.0
4.5
5.5
5.0
6.0
Sep 98Sep 93 Sep 03 Sep 23Sep 08 Sep 13 Sep 18
FTSE All-Share – Average Dividend Yield
FTSE All-Share – Dividend Yield
Report and Accounts 2023 | 13
Strategic Report
Strategic Report Governance Report Financial Report Notice of Meeting
Other Information
Chair’s StatementOverview Auditors’ Report
Purpose and strategy
The purpose of CT UK Capital and Income Investment Trust (the
“Company”) is to provide investors with long term capital and income
growth.
The strategy is to invest in companies, mainly in the FTSE All-Share
Index, that have good long term prospects with attractive returns on
invested capital.
The investment philosophy and processes underpinning this strategy
are set out on pages 22 and 23.
The aim is to position the Company as a compelling investment choice,
particularly for retail investors.
Business model
CT UK Capital and Income Investment Trust PLC is a listed, closed-end
investment company, known as an investment trust.
The Company’s Board of non-executive Directors looks after the
interests of Shareholders. It has the responsibility for decisions on
strategy, corporate governance, risk and control assessment, setting
policies as detailed on pages 33 to 35, setting limits on gearing and
asset allocation, monitoring investment performance and setting and
monitoring marketing budgets.
Within these policies the management of the Company’s assets
including asset allocation, gearing, stock selection and portfolio
risk, has been contractually delegated to Columbia Threadneedle
Investment Business Limited (the “Manager”).
As an investment trust, the Company does not need to sell investments
to meet redemptions. This allows the Company to take a longer term
view and to remain invested whatever the market conditions.
Having the ability to borrow to invest is also a significant advantage
over a number of other investment fund structures. Borrowing allows
the Company to have more resources to invest on behalf of its
Shareholders.
Alignment of values and culture
In addition to strong investment performance from the Manager, the
Board expects it to adhere to the very highest standards of responsible
investment and that its values, culture, expectations and aspirations
align with its own. As an original signatory to the United Nations
Principles for Responsible Investment (“UNPRI”), the Manager has
achieved the maximum rating of A+ for key areas of its responsible
investment approach and active ownership in listed equities.
The Board considers the Manager’s culture and values as part of the
annual assessment of its performance and in determining whether its
reappointment is in the interests of Shareholders. As part of Columbia
Threadneedle Investments, the Manager can be expected to continue
its long established culture of diversity, collaboration and inclusion, all
of which are anchored by shared values, in keeping with the Board’s
own expectations and beliefs.
Responsible investment impact
The Company’s ESG approach is set out on page 24 and helps deliver
sustainable investment performance over the longer term.
The direct carbon 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 its Shareholders are
effectively its customers. In consequence, it does not directly generate
any greenhouse gas or other emissions or pollution. The Company’s
indirect impact occurs through the investments that it makes and this
is mitigated by the Manager’s responsible investment approach as
explained on pages 24 to 27.
Manager evaluation
Investment performance and responsible ownership are fundamental
to delivering sustainable long term growth in capital and income for
Shareholders and the Board therefore exercises a robust annual
evaluation of the Manager’s performance.
The process for the evaluation for the year under review and the basis
on which the decision to reappoint the Manager for another year are
set out on page 53.
Purpose, Strategy and Business Model
14 | CT UK Capital and Income Investment Trust PLC
Fund Manager and management of the assets
As Fund Manager on behalf of the Manager, Julian Cane is responsible
for developing and implementing the Company’s investment strategy
with the Board and for the day-to-day management of the portfolio. He
is supported in carrying out research and in the selection of stocks by
a team of investment professionals.
Managing risks and opportunities
Like all businesses, investment opportunities do not come without
risks and uncertainties and so the performance of the Manager is
monitored at each Board meeting on a number of levels. In addition
to managing the Company’s assets, the ancillary functions of
administration, secretarial, accounting and marketing services are
all carried out by the Manager. The Board receives reports on the
investment portfolio; the wider portfolio structure; risks; compliance
with borrowing covenants; income, dividend and expense forecasts; any
errors; internal control procedures; marketing; Shareholder and other
stakeholder issues, including the Company’s share price premium or
discount to NAV; and accounting and regulatory updates.
Shareholders can assess the financial performance from the Key
Performance Indicators that are set out on page 15 and, on page 28,
can see what the Directors consider to be the Principal Risks that the
Company faces. The risk of not achieving the Company’s objective or
of consistently underperforming the Benchmark or competitors, may
arise from any or all of inappropriate asset allocation, poor market
conditions, ineffective or expensive gearing, poor cost control, loss of
assets and service provider governance issues. In addition to regularly
monitoring the Manager’s performance, its commitment and available
resources and its systems and controls, the Directors also review the
services provided by other principal suppliers. These include JP Morgan
Chase Bank, (the “Custodian”) and JP Morgan Europe Limited (the
“Depositary”) in their duties towards the safeguarding of the assets.
The principal policies that support the strategy are set out from page
33, whilst the Fund Manager’s Review of activity in the year begins
on page 9. In light of the strategy, investment processes and control
environment (relating to both the oversight of the Company’s service
providers and the effectiveness of the risk mitigation activities), the
Board has set out on page 38 its reasonable expectation that the
Company will continue in operation and meet its liabilities over the
coming five years.
Communications and marketing with key stakeholders
The Company fosters good working relationships with its key
stakeholders: Shareholders, the Manager, suppliers and service
providers. As an investment trust, the Company has no employees.
With approximately 90% of the shares held by retail investors with share
saving schemes and platforms representing an increasingly significant
and growing element of the Shareholder base, the Board remains
focused with the Manager on promoting its success to this audience. All
appropriate channels are used including the internet and social media.
During the year, the Company employed an external agency to review its
marketing strategy. The outcomes of this review will drive the marketing
strategy of the Company for retail investors for future years.
Communication with Shareholders includes reporting the Company’s
activities and performance through the publication of its financial
statements. The vast majority of Shareholders and CT Savings Plan
investors prefer not to receive such detailed information. To avoid losing
this essential line of communication, we instead make available a short
notification summary of the main highlights of our half yearly and annual
results. Shareholders and CT Savings Plan investors are able to locate
the full information on our website, ctcapitalandincome.co.uk.
The Annual General Meeting (“AGM”) of the Company provides a forum,
both formal and informal, for Shareholders to meet and discuss issues
with the Directors and the Fund Manager. Through the Manager, the
Company ensures that the CT Savings Plan investors are encouraged
to attend and vote at AGMs alongside those who hold their shares as
members on the main Shareholder register. Details of the proxy voting
results on each resolution are published on the Company’s website
where there is also a link to the daily publication of our NAV and our
monthly factsheet.
The Company holds a five yearly continuation vote. At the AGM held on
9 March 2023, Shareholders voted 99.5% in favour of the continuation
of the Company. In advance of the vote, during 2022, the Board
surveyed investors who held the Company’s shares within the CT
Savings Plans. Common themes amongst responses included
the importance of performance, dividend growth, low fees and the
reputation of the Manager. The next continuation vote is scheduled to
be held in 2028.
The Company’s next AGM will be held at 12.30pm on 7 March 2024 at
Cannon Place, 78 Cannon Street, London, EC4N 6AG.
The Manager also has in place a programme of visits designed to
foster good relations with wealth managers and underlying investors
in promoting the Company’s investment proposition. These visits are
reported regularly to the Board. The Chair and Senior Independent
Director are available to meet with major investors on request.
Report and Accounts 2023 | 15
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Strategic Report Governance Report Financial Report Notice of Meeting
Other Information
Chair’s StatementOverview Auditors’ Report
(1) See Alternative Performance Measures on pages 91 and 92 for explanation.
Ongoing charges as at 30 September
2023
%
2022
%
2021
%
Ongoing charges
(1)
0.66 0.59 0.59
This shows whether the Company is being run efficiently. It measures the
running costs as a percentage of the average net assets.
Source: Columbia Threadneedle Investment Business Limited
Share price (discount)/premium to NAV per share as at 30 September
2023
%
2022
%
2021
%
(Discount) / premium
(1)
(1.2) 0.8 (2.0)
This is the difference between the share price and the NAV per share. It is
an indicator of excess supply over demand in the case of a discount and
the excess demand over supply in the case of a premium.
Average discount to NAV during the
year
(1)
(3.1) (1.8) (1.6)
Source: Columbia Threadneedle Investment Business Limited
Compound annual dividend growth
1 Year
%
3 Years
%
5 Years
%
10 Years
%
Company dividend 3.0 1.8 2.1 2.5
This shows the Company's dividend growth which is compared to the
changes in the UK Consumer Price Index ("CPI") and the average dividend
paid by the broad UK stock market, as represented by the FTSE All-Share
Index.
Inflation (CPI) 6.7 6.6 4.4 2.9
FTSE All-Share Index - implied dividend 9.1 1.7 0.0 3.0
Source: Columbia Threadneedle Investment Business Limited, Refinitiv Eikon and Office of National Statistics
Total return performance
1 Year
%
3 Years
%
5 Years
%
10 Years
%
NAV per share
(1)
13.1 35.5 12.7 74.4
This is used to measure the performance of the Manager in terms of
Capital and Income growth by comparison to the return of the benchmark
index.
Benchmark index: FTSE All-Share 13.8 39.8 19.7 71.8
Share Price
(1)
10.9 34.5 10.5 71.6
This is used to measure the return to Shareholders in terms of capital
growth and the dividends they have received in comparison to the return of
the benchmark index.
Source: Columbia Threadneedle Investment Business Limited and Refinitiv Eikon
The Board assesses its performance in meeting the Company’s objective against the following key
measures. Commentary can be found in the Chair’s Statement and Fund Manager’s Review.
Key Performance Indicators
16 | CT UK Capital and Income Investment Trust PLC
Twenty Largest Holdings
2023 2022
2023
% of total
investments
2023
Value
£’000s
2022
Value
£’000s
1 2
AstraZeneca
(Health Care)
A major international pharmaceutical company. Its pipeline of new drugs is proving
successful and producing strong growth now with more potential further out.
5.8 19,647 17,892
2 18
Vistry Group (Consumer Discretionary)
The company will be refocusing solely on its partnership operations, where it
builds new homes in conjunction with others, such as local authorities, housing
associations and Homes England. This should make the business less exposed
to the economic cycle than traditional housebuilders.
5.0 16,872 6,297
3 8
RELX
(Consumer Discretionary)
RELX is a global provider of information based analytics and decision tools for
professional and business customers across a range of industries. It also has
a leading global events business. It generates high returns which we expect will
improve further.
4.5 14,985 11,885
4 1
OSB Group
(Financials)
This specialist challenger bank continues to generate good returns and to grow
well at carefully controlled risk levels. The sharp rise in interest rates did bring
about a substantial accounting hit to profits this year, but we believe the longer-
term results should not be impacted much.
4.4 14,733 18,918
5 11
Intermediate Capital
(Financials)
A specialist lender to private companies both on its own behalf and increasingly
for third party investors. It has been generating good returns despite the difficult
conditions and has great long term potential to grow the business further.
4.2 14,107 10,023
6 4
Unilever
(Consumer Staples)
A leading manufacturer of branded fast moving consumer goods with more than
half of its sales in emerging markets which have greater growth potential.
4.1 13,809 14,288
7 3
Diageo
(Consumer Staples)
The largest producer of premium branded spirits in the world and also a major
brewer. The strength of the brands and substantial exposure to markets with
greater growth potential should lead to attractive returns.
3.9 13,198 16,517
8 15
Burford Capital (Financials)*
Burford is the leading international provider of litigation funding. It is a fast
evolving and growing market with attractive returns for those able to navigate its
complexities well.
3.9 13,180 7,744
9 6
Rio Tinto
(Basic Materials)
One of the world’s foremost mining companies. It has a diversified asset base,
but its most significant interests are in low cost, high quality iron ore. It is our
only current exposure to the mining sector.
3.8 12,935 12,240
10 9
Legal and General
(Financials)
A focus on generating a strong and growing cash flow allows this UK life assurer
to pay an attractive and growing dividend. Although a slowing economy and
rising interest rates are a more challenging background, concerns over its credit
exposure and solvency appear overdone.
3.6 12,015 11,691
Strategic Report
Report and Accounts 2023 | 17
Strategic Report Governance Report Financial Report Notice of Meeting
Other Information
Chair’s StatementOverview Auditors’ Report
2023 2022
2023
% of total
investments
2023
Value
£’000s
2022
Value
£’000s
11 12
Shell
(Energy)
A leading international oil exploration, production and marketing group. For a while
the industry struggled to generate good returns, but a higher oil price is causing
profits and returns to increase sharply.
3.3 11,075 9,548
12 5
Beazley (Financials)
A specialist insurer with a diverse underwriting portfolio that has historically
generated good returns and growth. It has become increasingly recognised
for the strength of its cyber insurance operations, which complement its other
underwriting activities.
3.3 11,060 12,408
13 10
Compass
(Consumer Discretionary)
Compass is the global leader in outsourced catering. A structural shift towards
more outsourcing was disrupted by the pandemic, but good rates of growth have
returned. It has unrivalled scale helping it to offer its clients great value.
2.8 9,400 10,108
14 7
LXi REIT
(Real Estate)
This company invests in commercial property assets, mostly in the UK. These are
100% occupied on very long leases, 98% of which are inflation linked or with fixed
uplifts. Its debt is all either fixed or with a capped rate and the tenant covenants
are strong.
2.6 8,742 11,919
15 17
BP
(Energy)
A leading international oil exploration, production and marketing group, returns
are improving with a higher oil price.
2.5 8,502 6,930
16 24
CRH (Industrials)
CRH manufactures and supplies a wide range of building materials, used across
the range from public infrastructure projects to residential homes. It operates in
more than 30 countries, with the US accounting for over half of sales.
2.4 8,176 5,528
17 14
GSK
(Health Care)
After many years of lacklustre performance, current management is under
significant pressure to reinvigorate the business. The demerger of the health care
business (Haleon) focuses more attention on the revival of the pharmaceutical
business.
2.4 8,130 7,835
18 16
Phoenix
(Financials)
A UK domestic life assurer growing both by taking on new customers and through
taking part in consolidation of the sector. Increased scale drives operational
and capital efficiencies and diversification benefits that underpin an attractive
dividend.
2.1 6,941 7,582
19 30
Howden Joinery
(Consumer Discretionary)
This business designs, manufactures and sells fitted kitchens, mostly in the UK.
Its integrated value chain and efficiency make it a high returning business with
the potential to grow and improve returns further.
2.0
6,775
4,949
20 28
Round Hill Music Royalty Fund
(Financials)
This business owns high quality music intellectual property which generates a
growing income, particularly from digital streaming. As at our year end, it was in
the process of being taken over by another music industry business.
1.9
6,308
5,096
The value of the twenty largest holdings represents 68.5% (30 September 2022: 67.1%) of the Company’s total investments.
*Quoted on the Alternative Investment Market in the UK.
18 | CT UK Capital and Income Investment Trust PLC
Performance
of this
sector in the
portfolio
%
Performance
of this sector
in the FTSE
All-Share
Index
%
Average
Portfolio
weighting
%
Average FTSE
All-Share
weighting
%
Impact on
relative
performance
%
Energy
The oil majors BP and Shell together represent 11% of the
FTSE All-Share Index and therefore very nearly all of this
industry segment. They both gained strongly in value last year
(+28.1% and +20.6% respectively), helped by the rising price
of oil. The price of a barrel of Brent crude was at the same
level of $75 at the end of June as it was at the start of our
year, but experienced a sharp rise to over $90 by the end of
September. Our investment weight in those companies and
the industry is less than that of the Index as we observe that
the oil price and therefore returns from the industry is
unpredictable and it is not clear how companies will manage
the transition of the majority of their existing operations to a
zero-carbon future, particularly with the risk of governments
becoming more interventionist.
+23.7 +21.3 5.2 11.4 –0.3
Basic Materials
Our only investment in this industry is Rio Tinto (+12.3%). We
believe that amongst its peers it has some of the highest
quality mining assets and that over the long-term these
should provide attractive returns and performance superior to
the industry average.
+12.3 +3.5 3.8 7.8 +0.7
Industrials
Our performance within this industry grouping was reasonably
strong, but didn’t match the rise of the same segment in the
Index. Ferguson and CRH were the two most significant
contributors to performance (+49.2% and +59.3%
respectively) as they are not only showing operational
strength but are both moving their listings from the UK and
heading towards the more highly rated US markets. Our
investments in Babcock International, Melrose Industries and
XP Power all also rose by around 50% during the year, but our
industry return was held back by the brick manufacturers
Forterra (-31.8%) and Ibstock (-8.2%) as well as not owning
Rolls-Royce (+217.4%) and BAE Systems (+30.0%).
+19.7 +25.2 12.8 11.4 –0.4
Consumer Staples
The performance of one of our larger investments in this area,
Diageo (-18.2%) was disappointing on a combination of
weaker than expected trading and a lower valuation. Our
strongest performer was Coca-Cola HBC (+22.1%) which was
rebounding from its weak performance in the prior year,
helped by strong growth in its emerging markets.
–2.4 –1.7 13.8 15.5 +0.2
Investment Portfolio by Sector
Strategic Report
Report and Accounts 2023 | 19
Strategic Report Governance Report Financial Report Notice of Meeting
Other Information
Chair’s StatementOverview Auditors’ Report
Performance
of this
sector in the
portfolio
%
Performance
of this sector
in the FTSE
All-Share
Index
%
Average
Portfolio
weighting
%
Average FTSE
All-Share
weighting
%
Impact on
relative
performance
%
Health Care
Our long-standing investments in the pharmaceutical
companies AstraZeneca (+14.0%) and GSK (+18.9%)
performed reasonably well, but our newer investment in Smith
& Nephew (-13.8% since purchase) has struggled somewhat.
The business is in a turn-around phase with a relatively new
Chief Executive and we believe the longer-term potential is
considerable.
+11.6 +15.4 9.0 11.3 –0.3
Consumer Discretionary
This is a wide-ranging industry, including retail, travel, media
and housebuilding. It was the strongest contributing industry
in our portfolio, led by the recovery of Vistry (+67.6%) and
Howden Joinery (+50.7%). Both of these had been particularly
depressed at the start of the financial year by rising bond
yields and the UK’s political chaos.
+36.7 +27.0 14.3 11.3 +1.5
Telecommunications
Our investment process has long led us to be sceptical of
investments in the telecommunications industry. It is plain
that demand for telecommunications products and services
has increased materially over many years, but a mixture of
poor pricing power and heavy required levels of investment
has so far stopped companies being able to turn this demand
and growth into attractive returns for shareholders.
– –13.7 0.0 1.5 +0.4
Utilities
Our longer-standing investments in National Grid (+10.9%)
and SSE (+11.5%) performed adequately last year, but our
newer investment in Pennon, bought in September 2022
(-21.4%) was disappointing. We had bought it at a discount to
its Regulatory Asset Value, which has historically been an
attractive price point, but continued adverse publicity and
concerns about future regulation drove the share price lower.
+0.5 +14.8 4.0 3.5 –0.5
Financials
There were two major factors that held back performance in
this industry group. First, we have no investment in HSBC
(+46.0%), which was the strongest performing of the UK
banks and secondly, as our exposure to UK domestic banks is
mostly in OSB (-14.1%), which had a profit warning as a result
of rising interest rates. These two factors countered the
considerable success of our investments in Burford Capital
(+71.9%) and Intermediate Capital (+49.0%) and the take-
over of Round Hill Music Royalty Fund (+31.2%).
+11.9 +17.2 30.5 22.7 –1.2
20 | CT UK Capital and Income Investment Trust PLC
Performance
of this
sector in the
portfolio
%
Performance
of this sector
in the FTSE
All-Share
Index
%
Average
Portfolio
weighting
%
Average FTSE
All-Share
weighting
%
Impact on
relative
performance
%
Technology
Our only investment in this industry is Sage Group which rose
strongly in the year on the back of accelerating growth and
expanding margins.
+45.2 +23.0 0.8 1.2 +0.1
Real Estate
Within this industry segment, there was a considerable range
of outcomes for our investments, from the strength of Sirius
Real Estate (+29.0%) to the fall of LXi REIT (-22.2%), with
LondonMetric Property (+3.9%) in between. Rising interest
rates and bond yields provided a headwind for property
valuations, but the movements of some share prices to large
discounts to the revised property valuations seems
excessive.
–6.7 –0.0 5.8 2.5 –0.9
The figures shown in the first two columns compare the total return of the group of investments held within the portfolio in each
Industry sector against the total return of all Industry sector constituents of the FTSE All-Share Index over the year to
30 September 2023. All figures shown are before operating costs and the effect of gearing.
Strategic Report
Report and Accounts 2023 | 21
Strategic Report Governance Report Financial Report Notice of Meeting
Other Information
Chair’s StatementOverview Auditors’ Report
30 September 2023
Quoted investments Holding
Value
£’000s
% of total
investments
UNITED KINGDOM – EQUITIES
AstraZeneca 177,000 19,647 5.8
Babcock International 500,000 2,067 0.6
Beazley 2,000,000 11,060 3.3
BP 1,600,000 8,502 2.5
Bridgepoint 500,000 963 0.3
British American Tobacco 180,000 4,638 1.4
Burberry 185,000 3,531 1.1
Burford Capital* 1,165,362 13,180 3.9
Close Brothers Group 455,000 4,031 1.2
Coca-Cola HBC 145,000 3,260 1.0
Compass 470,000 9,400 2.8
CRH 180,000 8,176 2.4
Diageo 435,000 13,198 3.9
DS Smith 1,272,727 3,654 1.1
Experian 156,000 4,198 1.2
FDM 226,881 1,178 0.4
Ferguson 40,000 5,426 1.6
Forterra 2,550,000 3,794 1.1
GSK 545,000 8,130 2.4
Hipgnosis Songs Fund 6,500,000 5,213 1.6
Howden Joinery 920,000 6,775 2.0
Ibstock 3,400,000 4,842 1.4
IG 740,000 4,758 1.4
Intermediate Capital 1,020,000 14,107 4.2
Intertek 100,000 4,111 1.2
Legal and General 5,400,000 12,015 3.6
LondonMetric Property 3,420,474 5,883 1.8
LXi REIT 9,628,000 8,742 2.6
M&G 1,100,000 2,170 0.6
National Grid 590,000 5,782 1.7
OSB Group 4,500,000 14,733 4.4
Pearson
500,000 4,342 1.3
Pennon Group 735,000 4,303 1.3
Phoenix 1,439,776 6,941 2.1
RELX 540,000 14,985 4.5
Rio Tinto 250,000 12,935 3.8
Round Hill Music Royalty Fund 6,813,160 6,308 1.9
Sage 332,716 3,291 1.0
Shell 425,000 11,075 3.3
Sirius Real Estate 4,728,140 4,073 1.2
Smith & Nephew
500,000 5,113 1.5
SSE 210,000 3,380 1.0
St James's Place
350,000 2,913 0.9
Unilever 340,000 13,809 4.1
Vistry Group 1,850,000 16,872 5.0
XP Power 200,000 4,720 1.4
UNITED KINGDOM TOTAL
EQUITIES
332,224 98.8
30 September 2023
Quoted investments Holding
Value
£’000s
% of total
investments
EUROPE (EX UK) – EQUITIES
Heineken 63,000 3,888 1.2
EUROPE (EX UK) TOTAL EQUITY 3,888 1.2
TOTAL INVESTMENTS 336,112 100.0
The number of investments in the portfolio is 47 (2022: 47).
*Quoted on the Alternative Investment Market in the UK.
Investments shown in italics are new additions to the portfolio during the year.
List of Investments
22 | CT UK Capital and Income Investment Trust PLC
The Fund Manager’s Investment
Philosophy and Process
The Investment Process Focuses on Three Aspects for Each Company
We have been searching out the very best of the UK’s large and
medium sized businesses since 1992 to give our Shareholders
access to a range of quality UK stocks in one place.
We believe share prices may not fully reflect the future prospects and
returns of companies. We believe it is possible to identify significant
differences between market prices and a conservative assessment of
a business’s value.
By investing in such companies at attractive prices, superior
investment performance can be generated. In particular, we believe
that companies with the potential to compound returns at sustainably
high rates over many years are frequently underestimated by the
market initially, and are therefore undervalued. The valuations of
companies can also become attractive because of adverse market
reaction to short term difficulties or simply because a sector has
become unfashionable. If companies are able to generate attractive
returns over long periods, there is evidence the market eventually
rewards this success with higher valuations.
This philosophy leads naturally to long term investment thinking and
the generation and preservation of value over the longer term. We
are not looking to trade shares, nor are we making short term bets
on market movements, but instead are looking to the longer term.
Over time, we expect high corporate returns to be reflected in share
prices, which will in turn benefit further from valuation increases as
the market recognises the level and sustainability of those returns.
As shareholders, we are part owners of businesses, and take our
With an objective to secure long term capital and income growth from a portfolio consisting
mainly of FTSE All-Share companies, we offer Shareholders a reliable income while at the same time
seeking to grow the size of your investment.
• Understandable
• Durable competitive
advantages
• Attractive business model
• Strong sustainability
characteristics
Q
u
a
l
i
t
y
V
a
l
u
a
t
i
o
n
M
a
n
a
g
e
m
e
n
t
• Margin of safety
• Present value of future
cash flows
• Sustainable superior
returns
• ESG score embedded
in proprietary valuation
method
• Proven operators
• Responsible capital
allocators
• Aligned interests
• Appropriate incentives
• Strong governance
Report and Accounts 2023 | 23
Strategic Report
Strategic Report Governance Report Financial Report Notice of Meeting
Other Information
Chair’s StatementOverview Auditors’ Report
C
o
n
t
i
n
u
o
u
s
m
o
n
i
t
o
r
i
n
g
Pre-defined
review triggers
Clear sell
discipline
Peer review
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e
w
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Implementation of the Investment Process
responsibilities seriously, engaging with the company’s management
and non-executives if necessary, and voting on all resolutions at
company meetings.
Risk is often seen as the flipside of return. The standard economic and
business academic approach to risk measures it in terms of volatility.
Sharp upward moves in share prices are seen as just as “risky” as an
equivalent downward move. We prefer an approach which focuses on
companies with attractive returns and relatively little debt where we
expect to be able to reduce the risk of a permanent loss of capital.
We carry out detailed analysis of all the companies in which we invest,
looking in particular at three aspects: the Quality of the company; its
Management; and the Valuation of the shares. Amongst the most
important issues examined are a thorough assessment of the
sustainability of the company’s competitive position and the returns
it can generate, and the ability of the management team and its
alignment with shareholders. Integral to our assessment of these
factors is an analysis of the ESG issues that face the company and
its responses to them. More detail on this is given on pages 24 to
27. Our valuation approach focuses on discounted cash flows but is
pragmatic enough to realise this does not work for all companies in all
sectors so other valuation methods are also used. Before buying, we
look at whether the share price is cheap relative to the intrinsic value
of the business, giving us a margin of safety on the investment.
Our research is conducted in-house and is peer reviewed by the
wider investment team prior to any purchase decision. This ensures
the benefit of shared knowledge and experience is brought to bear
on each investment. Subsequent to a purchase of the shares, the
progress of the company and its share price will then be monitored
regularly with in-depth reviews and retesting of the original investment
thesis particularly if the company or its share price do not perform as
initially expected.
Like all investors, we are having to make assessments about the
future and take decisions in the face of uncertainty. There is a real
possibility of being wrong. We believe that we can mitigate this risk
by following this long term philosophy, emphasising a number of
factors: thorough analysis; peer review; the need for a margin of
safety on purchase; continuous monitoring; and diversification of
the investment portfolio. Reasons to sell can be driven by positive
or negative factors: positive, if the value of the company has risen to
our assessment of its value, or negative, if the assessment of the
company’s long term value deteriorates significantly. An investment
may also be sold if, for example, a similar, but cheaper alternative can
be found or if the size of the investment position has become larger
than is preferred for risk purposes.
Julian Cane
Fund Manager
29 November 2023
“We carefully identify
companies that are growing
and profitable today and
have the strong, sustainable
foundations to be able to
continue that profitable
growth into the future.
We choose to invest in
companies we strongly
believe in.”
24 | CT UK Capital and Income Investment Trust PLC
Our approach
Responsible Investment issues can present both opportunities and
threats to the long term investment performance we, the Board,
aim to deliver to you, our Shareholders. We, believe in the power of
engaged, long term ownership as a force for positive change.
We have a Manager that applies high standards of responsible
investment in managing the investments on behalf of the Company.
Our approach covers our own governance responsibilities too on
matters such as the composition of the Board.
The primary purpose of this report is to provide you with a clear
understanding of our approach to responsible investment and how it
is integrated into the Fund Manager’s investment process. We also
explain our stewardship in terms of:
• engagement with portfolio companies and our voting practice;
• how we measure our progress, including with regard to climate
change; and
• how we have performed against those measures through
milestone examples.
We recognise the importance of disclosing information that is
relevant, reliable and, as far as possible, ensuring that it is presented
in a consistent way from year to year in order that our progress can
be assessed.
Our governance responsibilities
The Company’s compliance with the revised AIC Code of Corporate
Governance is detailed in the Corporate Governance Statement on
pages 42 to 44. In addition, the Policy Summary statement on pages
33 to 35 notes the Company’s policies towards board diversity,
integrity and business ethics, prevention of the facilitation of tax
evasion and the Modern Slavery Act 2015.
Responsible ownership
We and the Manager believe that companies with strong management
focus on Environmental, Social and Governance (“ESG”) have the
potential to reduce risks facing their business and deliver sustainable
performance over the longer term.
Investee company boards are expected to disclose to their
shareholders that they are applying appropriate oversight on material
issues such as labour standards, environmental management and
tax policies. If we have concerns, we also believe that engaging with
companies is usually best in the first instance rather than simply
divesting or excluding investment opportunities.
Active use of our voting rights is also an important component of
our stewardship approach. The Manager has been empowered by
the Board to exercise discretion in the use of the Company’s voting
rights, in accordance with its own corporate governance policies.
These policies take a robust line on key governance issues such
as executive pay and integrate sustainability issues into the voting
process, particularly climate change.
We recognise that the most material way in which the Company
can have an impact is through its responsible ownership of its
investments. We have therefore appointed a manager that engages
actively with the management of investee companies to encourage
that high standards of ESG practice are adopted. The Manager
has long been at the forefront of the investment industry in its
consideration of these issues and has one of the longest established
and largest teams focused solely on Responsible Investment.
The Manager is a signatory of the UK Stewardship Code and
its statement of compliance can be found on its website at
columbiathreadneedle.com. The Manager is also a signatory to the
United Nations Principles for Responsible Investment (“UNPRI”)
under which signatories contribute to the development of a more
sustainable global financial system. As a signatory, the Manager aims
to incorporate ESG factors into its investment processes.
As stewards of £315 million of assets, we support positive change. The Company benefits from the
Manager’s leadership in this field and its £481 billion of assets under management.
Our Approach to Responsible Investment
Strategic Report
Report and Accounts 2023 | 25
Strategic Report Governance Report Financial Report Notice of Meeting
Other Information
Chair’s StatementOverview Auditors’ Report
In the year under review, the Manager engaged with 16 investee
companies held by the Company on the range of ESG topics above.
Labour standards were a key theme for engagement over the reporting
period. This is a central focus for companies when managing social
issues. The Manager spoke to companies on potential forced
labour risks in global supply chains both individually and as part of
collaborative engagement on requirements of the UK Modern Slavery
Act. The Manager also engaged with companies on their corporate
governance practices. Good corporate governance is instrumental to
supporting the delivery of strategic objectives and in driving sustainable
performance, as well as maintaining legal requirements and ethical
standing. Topics raised with investee companies included ESG oversight,
namely requesting that modern slavery statements be approved at
board level, and board effectiveness. Another topic of engagement was
climate change, including Net Zero, energy transition and resilience and
adaptation.
The Manager’s strategic approach to engagement helps to achieve
positive outcomes, or ‘milestones’, relating to the targets that
have been set under each of the sustainable development goals.
These are instances of change in company practice which they
rank from one to three stars, three being the highest, based on
their assessment of the importance of the change. Examples of
engagement and milestones achieved in the reporting period are set
out overleaf.
ESG and the investment process
ESG issues are an integral part of the Manager’s investment process,
forming part of the assessment of the Quality and Management
criteria for possible and ongoing investments. The Manager’s
Responsible Investment team works closely with the Fund Manager
to create an internally generated assessment of the relevant ESG
issues for each company. As part of the review process, the Manager
will also note if the investment is aligned explicitly with any of the UN
Sustainable Development Goals. Details of these goals can be found
at www.un.org/sustainabledevelopment/sustainable-development-
goals/.
The Manager’s own ESG assessment is cross referenced against
external sources, for example MSCI ESG Research, to check it is
comprehensive. There are two main outcomes of this research.
First, the research is used to initiate discussions with the investee
company, to clarify the Manager’s understanding of the issues
involved, to create a dialogue and to encourage higher standards
where appropriate. In this the Manager may join with other major
investors in order to be a yet more powerful force to drive change.
Secondly, it is used to adjust the Manager’s assessment of the
weighted average cost of capital for the investee company; this is an
important component of the valuation model, such that companies
with higher ESG standards will warrant a lower cost of capital
and in turn a higher valuation, and vice-versa. In these ways, ESG
affects each of the cornerstones of the investment process, Quality,
Management and Valuation, as well as driving an ongoing dialogue
between the Manager and the investee company.
Engagement
Source: Columbia Threadneedle Investments
Labour Standards 26
Corporate Governance 17
Climate Change 13
Environmental Standards 12
Human Rights 12
Public Health 9
Business Conduct 1
Issues raised with companies on engagement
26 | CT UK Capital and Income Investment Trust PLC
Examples in the reporting period
Unilever
Unilever has set a new benchmark for the industry in terms of disclosure. The company will disclose the performance of its product
portfolio against six government endorsed nutrient profiling models and their own internal model. The commitment followed a series
of collaborative engagement calls that the Manager’s Responsible Investment team participated in coordinated by ShareAction Healthy
Markets and is an important step in continuing to develop their strategy and targets for healthier products.
Compass
Compass published a Global Supplier Code of Conduct outlining expectations for suppliers in relation to food quality and safety. The
Manager’s Responsible Investment team had engaged the company on this topic in 2021, at the time of the school meals scandal in the
UK.
BP
BP’s Modern Slavery Statement has now been approved by its Board of Directors, as required by the Modern Slavery Act 2015. The
Manager’s Responsible Investment team engaged with BP as part of a collaborative investor initiative. Adherence to the requirements of
the Modern Slavery Act signifies a culture of appropriate human rights risk management and places accountability for effectiveness of the
policy with the Board and senior management.
CRH
CRH is the biggest contributor to the portfolio’s carbon emissions.
In November 2022 the Manager’s Responsible Investment team conducted a site visit to CRH’s Platin cement plant and Roadstone quarry in
Ireland to understand more about its decarbonisation and ESG strategy. The visit continued an ongoing engagement with CRH on its climate
change and net zero strategy; CRH used the trip to stress the importance of aligning capex with its net zero strategy, and to illustrate to
investors clearly which levers are being utilised to achieve its target of operation wide net zero emissions by 2030. CRH showcased some
promising ‘win-win’ products such as reclaimed asphalt (up to 60% recycled materials) and cement with recycled materials and lower clinker
factor (cost and carbon saving). The Manager is interested to see how the demand for these products grows.
CRH published its updated climate reporting in March 2023, which was a significant improvement on last year’s disclosure, including an
analysis on physical risks, and clearer assumptions in its scenario analysis. The Manager’s Responsible Investment team has since met with
the company on two occasions to discuss climate risks and the transition to Net Zero.
Key: As discussed on page 25, stars represent positive outcomes from engagement with three stars being the highest based on the Manager’s assessment of the change.
Strategic Report
Report and Accounts 2023 | 27
Strategic Report Governance Report Financial Report Notice of Meeting
Other Information
Chair’s StatementOverview Auditors’ Report
Voting on portfolio investments
The Manager’s Corporate Governance Guidelines set out
expectations of the boards of investee companies in terms of good
corporate governance. The Board expects to be informed by the
Manager of any sensitive voting issues involving the Company’s
investments. The Manager has been empowered by the Board to
exercise discretion in the use of the Company’s voting rights and
reports at each meeting to the Board on its voting record. The
Manager will vote on all investee company resolutions.
The Manager has long been an active and leading voice in support
of robust corporate governance standards and environmental, social
and business ethics practices for companies in all jurisdictions
where the Manager invests. The Manager has supported, and in
many cases led, the development of high standards of stewardship
and recognises the UK Stewardship Code 2020 as a significant step
in the further raising of those standards – indeed under the previous
Code, the Manager was ranked in the highest tier.
We expect the Company’s shares to be voted on all holdings where
possible. During the year, the Manager voted at 53 meetings of
investee companies held by the Company. With respect to all
items voted, the Manager supported over 97% of all management
resolutions. The most contentious issues were director related,
followed by compensation.
Of all the ESG issues the Manager considers, climate change is
one of the most important, both in terms of the scale of potential
impact and in how widespread this impact could be across sectors
and regions. The Company expects the Manager to incorporate
considerations around climate change risks and opportunities in its
investment processes.
In June 2023 the Manager published an update to its 2022 climate
change report, which details how it manages climate related risks
and opportunities, in line with the recommendations of the Taskforce
on Climate related Financial Disclosures (“TCFD”).
In the adjacent table, the Company is disclosing the carbon footprint
of its investments. This measures the amount of greenhouse gas
emissions produced by each investee company, per US$1m of
revenue they generate. This is then aggregated for the Company as
a whole, using the portfolio weights of the investee companies, and
compared with the Benchmark.
The carbon footprint is a measure of the carbon intensity of the
companies the Company invests in. Whilst it does not provide a full
picture of climate risks – since it does not, for instance, capture the
innovation that companies may be undertaking to find solutions – it
is a valuable starting point both for analysis and for shareholder
dialogue. The table highlights that the Company’s portfolio has a
higher exposure to high carbon emitters than the Benchmark.
2023
CT UK Capital and Income Investment Trust PLC
FTSE All-Share
Tons CO₂e / sales $m
20
40
60
80
120
Source: MSCI ESG
0
100
2024
In 2024 the Manager will continue focusing on its priority engagement themes: climate change; environmental stewardship; public
health; labour standards; human rights; corporate governance and business conduct. The Manager will identify and prioritise companies
for engagement based on a number of factors including: the impact of ESG risk and opportunity factors; the investment team’s and
research analysts’ judgement and expertise; previous engagement track record and level of exposure.
Climate change
The biggest contributor to the portfolio’s carbon emissions was
CRH.
In the last year the Manager has intensified its focus on the
materials and building supplies industry, given this sector’s
contribution to the overall carbon intensity of the Company’s assets.
This included the site visit to CRH outlined on page 26. The Manager
published research on the challenges of net zero cement, and some
of the potential solutions which will inform its engagement with
the sector going forward. www.columbiathreadneedle.co.uk/en/
inst/insights/esg-viewpoint-the-challenges-of-realising-zero-carbon-
cement/
28 | CT UK Capital and Income Investment Trust PLC
The Board has carried out a robust assessment of the Company’s principal and emerging risks and
the disclosures in the Annual Report that describe the principal risks, the procedures in place to
identify emerging risks and explain how they are being managed or mitigated.
The principal risks together with their mitigations are set out in the
table below. The Board’s processes for monitoring them and identifying
emerging risks are set out on page 51 and in note 21 to the accounts.
The global economy continues to suffer considerable disruption due to
the effects of the war in Ukraine, recent events in Israel and Gaza and
inflationary pressures.
The Directors continue to review the key risk register for the Company
which identifies the risks that the Company is exposed to, the controls
in place and the actions being taken to mitigate them.
The principal risks identified as most relevant to the assessment of
the Company’s future prospects and viability are detailed below.
Principal Risks and Future Prospects
Principal Risks Mitigation Actions taken on Principal Risks in the year
Market and Political Risks
Macroeconomic and geopolitical risk including rising international
tensions arising from the war in Ukraine, dispute in the South
China Sea and recent events in Israel and Gaza.
The Company has a clearly defined and approved strategy which is reviewed and approved on an annual
basis. The Board can hold additional board meetings at short notice to discuss the impact of significant
changes in the macroeconomic and geopolitical environment. The Company maintains a portfolio of
diversified stocks.
Forward looking stress tests ranging from moderate to extreme scenarios are provided by the Manager to the
Board to support the Five Year Horizon Statement.
At each meeting of the Board, the Directors consider and discuss the investment performance of the Company with Julian Cane, the Company’s Fund Manager. The Board held its
annual strategy meeting in July 2023. At this meeting, after due consideration, the Board confirmed that the Company’s strategy remained appropriate.
At the November 2023 Audit and Risk Committee meeting, the Directors reviewed updated forward looking stress tests prepared by the Manager providing support for the Five Year
Horizon Statement disclosed on page 30.
Investment Performance Risks
Unfavourable markets or asset allocation, sector and stock
selection and use of gearing and derivatives are inappropriate
giving rise to investment underperformance as well as impacting
capacity to pay dividends.
The portfolio of quoted securities is diversified and the Company’s structure enables it to take a long term
view notwithstanding the current market volatility. Investment policy, performance, revenue and gearing are
reviewed at each Board meeting. The Manager’s Investment Risk team provides independent oversight on
investment risk management. The Board regularly considers operating costs along with underlying dividend
income and the implications for the dividend payment capacity of the Company taking into account revenue
reserves. The Company had no derivative exposure during the year.
At each meeting of the Board, the Directors consider and discuss the investment performance of the Company with Julian Cane, the Company’s Fund Manager. The Board held a
strategy meeting in July 2023 which considered, amongst other topics, investment performance and wider economic issues.
Cyber, Legal and Regulatory Risks
Errors, fraud or control failures at service providers or loss of data
through increasing cyber threats or business continuity failure could
damage reputation or investors’ interests or result in losses.
The Board receives regular control reports from the Manager covering risk and compliance including oversight
of third party service providers. The Board has access to the Manager’s Risk Manager and requires any
significant issues directly relevant to the Company to be reported immediately. The Depositary is specifically
liable for loss of any of the Company’s securities and cash held in custody.
The Manager continues to strengthen and develop its Risk, Compliance and Internal Control functions including IT security. Supervision of third party service providers has been
maintained by the Manager and includes assurances regarding IT security and cyber threat. The Depositary oversees custody of investments and cash and reports to the Company
in accordance with the Alternative Investment Fund Managers Directive (“AIFMD”).
Product Strategy Risks
Inappropriate business or marketing strategy particularly in
relation to investor needs or sentiment giving rise to a share price
discount to NAV per share.
To gauge investor sentiment, the Board holds an investor satisfaction survey which is conducted every
five years ahead of a vote on whether the Company should continue. The Board holds a separate annual
meeting to consider the Company’s strategy and performance together with opportunities and threats to
its business. The appointment of the Manager is also reviewed annually in terms of sustainable long term
growth in capital and income, which includes the growing recognition of the importance of the application of
high standards of ESG practice. Share buybacks can be employed to help moderate discount volatility, while
share issues can be made when the shares are trading at a premium. At each Board meeting the Directors
receive an update on the marketing activities undertaken by the Manager. This includes details of the level of
maturing Child Trust Funds and the decisions, if any, taken by their holders. The Company’s Broker provides
periodic updates to the Board relating to the Company’s trading in the wider market.
At the Annual General Meeting held on 9 March 2023, Shareholders voted 99.5% in favour of continuation of the Company. In July 2023, the Board agreed to the continuing appointment
of the Manager, which has continued to deliver on the Company’s objective. At each Board meeting the marketing activities of the Manager are reported. To encourage the retention of
maturing CTF funds, the Manager has introduced a Lifetime ISA and undertaken specific marketing targeted at holders of the maturing Child Trust Funds. Further proposals to encourage
retention are being investigated by the Manager. An external consultancy was appointed to undertake a strategic marketing review for the Company. The outcomes of this process will drive
the Company’s marketing strategy for future years. During the year 2,445,358 shares were bought back at a small discount to NAV. The Company also re-issued from treasury 75,000
shares at a small premium to NAV. Since the year end to 28 November 2023, the Company has bought back 600,000 shares to be held in treasury. No shares have been issued. These
actions moderated share price volatility and enhanced NAV per share for continuing Shareholders.
No change in overall risk during the year.
No change in overall risk during the year.
No change in overall risk during the year.
Increase in overall risk during the year.
Strategic Report
Report and Accounts 2023 | 29
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Other Information
Chair’s StatementOverview Auditors’ Report
Principal Risks Mitigation Actions taken on Principal Risks in the year
Market and Political Risks
Macroeconomic and geopolitical risk including rising international
tensions arising from the war in Ukraine, dispute in the South
China Sea and recent events in Israel and Gaza.
The Company has a clearly defined and approved strategy which is reviewed and approved on an annual
basis. The Board can hold additional board meetings at short notice to discuss the impact of significant
changes in the macroeconomic and geopolitical environment. The Company maintains a portfolio of
diversified stocks.
Forward looking stress tests ranging from moderate to extreme scenarios are provided by the Manager to the
Board to support the Five Year Horizon Statement.
At each meeting of the Board, the Directors consider and discuss the investment performance of the Company with Julian Cane, the Company’s Fund Manager. The Board held its
annual strategy meeting in July 2023. At this meeting, after due consideration, the Board confirmed that the Company’s strategy remained appropriate.
At the November 2023 Audit and Risk Committee meeting, the Directors reviewed updated forward looking stress tests prepared by the Manager providing support for the Five Year
Horizon Statement disclosed on page 30.
Investment Performance Risks
Unfavourable markets or asset allocation, sector and stock
selection and use of gearing and derivatives are inappropriate
giving rise to investment underperformance as well as impacting
capacity to pay dividends.
The portfolio of quoted securities is diversified and the Company’s structure enables it to take a long term
view notwithstanding the current market volatility. Investment policy, performance, revenue and gearing are
reviewed at each Board meeting. The Manager’s Investment Risk team provides independent oversight on
investment risk management. The Board regularly considers operating costs along with underlying dividend
income and the implications for the dividend payment capacity of the Company taking into account revenue
reserves. The Company had no derivative exposure during the year.
At each meeting of the Board, the Directors consider and discuss the investment performance of the Company with Julian Cane, the Company’s Fund Manager. The Board held a
strategy meeting in July 2023 which considered, amongst other topics, investment performance and wider economic issues.
Cyber, Legal and Regulatory Risks
Errors, fraud or control failures at service providers or loss of data
through increasing cyber threats or business continuity failure could
damage reputation or investors’ interests or result in losses.
The Board receives regular control reports from the Manager covering risk and compliance including oversight
of third party service providers. The Board has access to the Manager’s Risk Manager and requires any
significant issues directly relevant to the Company to be reported immediately. The Depositary is specifically
liable for loss of any of the Company’s securities and cash held in custody.
The Manager continues to strengthen and develop its Risk, Compliance and Internal Control functions including IT security. Supervision of third party service providers has been
maintained by the Manager and includes assurances regarding IT security and cyber threat. The Depositary oversees custody of investments and cash and reports to the Company
in accordance with the Alternative Investment Fund Managers Directive (“AIFMD”).
Product Strategy Risks
Inappropriate business or marketing strategy particularly in
relation to investor needs or sentiment giving rise to a share price
discount to NAV per share.
To gauge investor sentiment, the Board holds an investor satisfaction survey which is conducted every
five years ahead of a vote on whether the Company should continue. The Board holds a separate annual
meeting to consider the Company’s strategy and performance together with opportunities and threats to
its business. The appointment of the Manager is also reviewed annually in terms of sustainable long term
growth in capital and income, which includes the growing recognition of the importance of the application of
high standards of ESG practice. Share buybacks can be employed to help moderate discount volatility, while
share issues can be made when the shares are trading at a premium. At each Board meeting the Directors
receive an update on the marketing activities undertaken by the Manager. This includes details of the level of
maturing Child Trust Funds and the decisions, if any, taken by their holders. The Company’s Broker provides
periodic updates to the Board relating to the Company’s trading in the wider market.
At the Annual General Meeting held on 9 March 2023, Shareholders voted 99.5% in favour of continuation of the Company. In July 2023, the Board agreed to the continuing appointment
of the Manager, which has continued to deliver on the Company’s objective. At each Board meeting the marketing activities of the Manager are reported. To encourage the retention of
maturing CTF funds, the Manager has introduced a Lifetime ISA and undertaken specific marketing targeted at holders of the maturing Child Trust Funds. Further proposals to encourage
retention are being investigated by the Manager. An external consultancy was appointed to undertake a strategic marketing review for the Company. The outcomes of this process will drive
the Company’s marketing strategy for future years. During the year 2,445,358 shares were bought back at a small discount to NAV. The Company also re-issued from treasury 75,000
shares at a small premium to NAV. Since the year end to 28 November 2023, the Company has bought back 600,000 shares to be held in treasury. No shares have been issued. These
actions moderated share price volatility and enhanced NAV per share for continuing Shareholders.
Emerging risks represent new information which could significantly
change how an existing risk is perceived, but where the impact or
likelihood remains uncertain.
Through a series of connected stress tests ranging from moderate to
extreme scenarios and based on historical information, but forward
looking over the five years commencing 1 October 2023, the Board
assessed the risks of :
• potential illiquidity of the Company’s portfolio;
• the effects of any substantial future falls in investment values
and income receipts on the ability to repay and renegotiate
borrowings;
• potential breaches of loan covenants, the maintenance of
dividend payments and retention of investors; and
• the potential need for extensive share buybacks in the event of
share price volatility and a move to a wide discount.
The Board also took into consideration the perceived viability of its
principal service providers, potential effects of anticipated regulatory
changes and the potential threat from competition. The Board’s
conclusions are set out under the Five Year Horizon Statement on
page 30. A five year period is considered to be a reasonable time
frame for measuring and assessing medium to long term investment
performance. A five year period has also been selected as the shares
may not be suitable for investors intending to hold them for less than
that period.
30 | CT UK Capital and Income Investment Trust PLC
Viability Statement – Five Year Horizon
In accordance with the UK Corporate Governance Code, the Directors
have assessed the future prospects of the Company over the coming
five years. Factors that the Board considered were:
• The Company has a long term investment strategy under which
it invests mainly in readily realisable, UK publicly listed securities
and which restricts the level of borrowings.
• At the Annual General Meeting of the Company held on 9 March
2023, Shareholders voted 99.5% in favour of the continuation
of the Company. The next continuation vote for the Company is
scheduled to be held in 2028.
• The Company is inherently structured to generate long term
returns, with a five year period viewed as a reasonable time frame
for measuring and assessing medium to longer term investment
performance.
• The Company is able to take advantage of its closed-end
investment trust structure, including the ability to use short term
borrowings by way of loans and overdrafts and the capacity to
secure additional finance well in excess of five years.
• There is robust monitoring of the headroom under the Company’s
bank borrowing covenants.
• Regular and robust review of revenue and expenditure forecasts
is undertaken throughout the year.
• The Company retains title to all of its assets which are
safeguarded as described under “Safe custody of assets” and
“Depositary” on page 40.
The Board gave careful consideration to the impact of the war in
Ukraine, recent events in Israel and Gaza and inflationary pressures
and the resulting volatility in stockmarkets and economic disruption
when making this assessment.
As discussed in note 20 to the Financial Report on page 75, the
Company has a number of banking covenants and at present the
Company’s financial position does not suggest that any of these
are close to being breached. The primary risk is that there is a very
substantial decrease in the NAV of the Company in the short to
medium term. The Directors have considered the remedial measures
that are open to the Company if such a covenant breach appears
possible. As at 28 November 2023, the last practicable date before
publication of this report, borrowings amounted to £25 million. This
is in comparison to a net asset value of £310 million. In accordance
with its investment policy the Company is invested mainly in readily
realisable, FTSE All-Share listed securities. These can be realised, if
necessary, to repay the loan facility and fund the cash requirements
for future dividend payments.
The Company operates within a robust regulatory environment. The
Company retains title to all assets held by the Custodian. Cash is
held with banks approved and regularly reviewed by the Manager.
Based on this assessment, and in the context of the Company’s
business model, strategy and operational arrangements set out
above, the Board has a reasonable expectation that the Company will
be able to continue in operation and meet its liabilities as they fall
due over the five year period ending November 2028.
Strategic Report
Report and Accounts 2023 | 31
Strategic Report Governance Report Financial Report Notice of Meeting
Other Information
Chair’s StatementOverview Auditors’ Report
Under Section 172 of the Companies Act 2006, the Directors have a
duty to act in the way they consider, in good faith, would be most likely
to promote the success of the Company for the benefit of its members
as a whole, and in doing so, have regard, amongst other matters, to:
• the likely consequences of any decision in the long term;
• the interests of the Company’s Shareholders;
• the need to foster the Company’s business relationships with
suppliers, customers and others;
• the impact of the Company’s operations on the community and
environment;
• the desirability of the Company maintaining a reputation for
high standards of business conduct; and
• the need to act fairly as between members of the Company.
As explained on page 13, the Company is an externally managed
investment company and has no employees, customers or premises.
The key stakeholders are the Shareholders, the Manager, suppliers,
regulators and service providers.
The Board believes that the optimum basis for meeting its duty to
promote the success of the Company is by appointing and managing
third parties with the requisite performance records, resources,
infrastructure, experience and control environments to deliver the
services required to achieve the investment objective and successfully
operate the Company. By developing strong and constructive working
relationships with these parties, the Board seeks to ensure high
standards of business conduct are adhered to at all times and service
levels are enhanced whenever possible. This combined with the careful
management of costs is for the benefit of all Shareholders who are
also key stakeholders.
The Company’s primary working relationship is with the Manager. The
portfolio activities undertaken by the Fund Manager and the impact of
decisions taken are set out in the Fund Manager’s Review on pages 9
to 12. On pages 24 to 27 information is provided on the Company’s
approach towards responsible investment. The Directors are supportive
of the Manager’s approach, which focuses on engagement with the
investee companies on ESG issues and how this links with the United
Nations Sustainable Development Goals (“SDGs”). Further information
on the annual evaluation of the Manager, to ensure its continued
appointment remains in the best interests of Shareholders, is set out
on page 53.
Service providers such as, JP Morgan Chase Bank (the “Bank” and
“Custodian”), JP Morgan Europe Limited (the “Depositary”), Cavendish
(the “Broker”) and Computershare Investor Services PLC (the
“Registrar”) are also considered key stakeholders. The Board receives
regular reports from them and evaluates them to ensure expectations
on service delivery are met.
The Directors value engagement with Shareholders. The Company’s
website www.ctcapitalandincome.co.uk is available to all Shareholders
and key decisions are announced to the London Stock Exchange
through a Regulatory News Service. The Company holds an Annual
General Meeting. Shareholders are invited to attend, and this provides
an open forum for them to discuss issues and matters of concern
with the Board and representatives of the Manager and the Company’s
advisors.
At the Annual General Meeting held on 9 March 2023, Shareholders
voted 99.5% in favour of continuation of the Company. In advance
of the continuation vote, the Board surveyed Shareholders. The next
continuation vote is scheduled to be held in 2028.
Shareholders are invited to communicate with the Board through the
Chair or Company Secretary. Alternatively, issues can be discussed with
the Company’s Senior Independent Director, who can be contacted at
the Company’s registered office address detailed on page 55.
The Company’s Shareholders are always considered when the Board
makes decisions and examples include:
Dividends
The Board is aware that dividend income is important to Shareholders
and dividend growth is therefore a Key Performance Indicator of the
Company. Prudent stewardship in prior years combined with careful
stock selection has given the Company distributable reserves providing
some resilience to pay dividends in years when there is a shortfall in
investment income. Therefore, despite the COVID-19 pandemic, the war
in Ukraine, recent events in Israel and Gaza and inflationary pressures,
Promoting the Success of the Company
– Section 172 Statement
32 | CT UK Capital and Income Investment Trust PLC
the Company has increased its annual dividends paid to Shareholders,
and maintained its “AIC Dividend Hero” status.
As part of the decision making process, the Manager has provided the
Board with estimates of dividend income for the forthcoming year and
the estimated impact upon the distributable reserves of the Company.
Share issuance and buy-backs
Ensuring that liquidity is maintained for the Company’s shares is
important to Shareholders. During the year, the Company bought back
for treasury 2,445,358 shares at a small discount. The Company also
reissued from treasury 75,000 shares at a small premium to NAV.
These actions moderated share price volatility.
Board succession planning
The Board is committed to ensuring that its composition is compliant
with best corporate governance practice under the revised AIC Code
including guidance on tenure. Following a thorough selection process
which included the services of a search company, Dunke Afe was
appointed to the Board with effect from 1 June 2023. Dunke Afe is an
accomplished marketing executive with extensive experience in raising
brand and product awareness.
On 1 July 2023 Jonathan Cartwright retired from the Board. Following
Board discussion, Jane Lewis, who joined the Board in April 2015 was
appointed Chair upon his retirement. Jane Lewis has extensive sector
experience through her career in investment company corporate broking
at Winterflood and business development at leading investment trust
houses. She has also been appointed to a number of investment trust
boards including as Chair.
Tim Scholefield will retire from the Board at the conclusion of the
Company’s Annual General Meeting to be held on 7 March 2024
having served nine years. Upon Tim Scholefield’s retirement Nicky
McCabe will be appointed Senior Independent Director. These changes
allow for the retirement of the Company’s longest serving Director while
maintaining an appropriate balance of skills and experience on the
Board.
As a further part of the Board’s succession planning, another search
company was commissioned to find a new Director for the Board.
Following this selection process, the Board is pleased to announce
that Christopher Metcalfe, will be appointed to the Board and its
committees with effect from 8 March 2024.
Christopher is Chairman of Martin Currie Global Portfolio Trust plc
and the Senior Independent Non Executive Director of JP Morgan US
Smaller Companies Investment Trust plc. He has extensive equity fund
management and investment trust experience having previously worked
in senior positions at Newton Investment Management, Schroder
Investment Management and Henderson Administration Group.
Retail investors
The Company’s Shareholders are predominantly retail investors who
invest through savings or execution only platforms. A significant
proportion invest through the CT Savings Plans and the Board remains
focused with the Manager on the optimal delivery of the Company’s
investment proposition for the benefit of all Shareholders. The Manager
remains committed to its savings plans and its relationship with its
customers and is investing significantly to improve digital capabilities,
access and information for Shareholders through the savings plans.
An external consultancy was appointed to undertake a strategic
marketing review of the Company. The objective of the work was to
differentiate the Company, making clear the benefits of investing with it
and to inform how to efficiently attract new investors. These outcomes
from the process will drive the Company’s marketing strategy for future
years.
Report and Accounts 2023 | 33
Strategic Report
Strategic Report Governance Report Financial Report Notice of Meeting
Other Information
Chair’s StatementOverview Auditors’ Report
Investment
The Company is required to have a publicly stated investment
objective and policy from which Shareholders, prospective investors
and other stakeholders can understand the scope of its investment
remit and constraints imposed under it. Any material changes to
this objective and policy can only be made with the approval of
Shareholders and the Financial Conduct Authority.
The Company’s investment objective is to secure long term capital
and income growth from a portfolio consisting mainly of UK listed
companies.
The Company seeks to achieve this objective by identifying
investments in companies which have good long term prospects but
whose share prices do not reflect their intrinsic value, either because
of relative short term underperformance giving rise to adverse
investor sentiment or simply because they are unfashionable. Many
of the stocks purchased have a higher than average dividend yield.
Investment risk is reduced by investing mainly in FTSE All-Share
companies. The majority of holdings are in large and mid-
capitalisation companies, although the Company also holds
investments in smaller companies. At the year end the Company
was invested in 47 holdings. During the year the Company had no
exposure to derivatives.
There are no maximum limits across sectors. The Company can
invest in securities listed on the Alternative Investment Market
(“AIM”) up to a limit of 10% of gross assets at the time of
investment.
No single investment in the portfolio may exceed 10% of the
Company’s gross assets at the time of purchase and no unquoted
securities may be purchased without the prior approval of the Board.
No holding in an unquoted security should exceed 5% of the value
of gross assets at the time of investment and no more than five
unquoted securities may be held in the portfolio at any one time.
The total value of its investments held outside the UK must
not exceed 10% of the Company’s gross assets at the time of
investment but no individual country limits are imposed. The
proportion of the portfolio held in FTSE All-Share and AIM listed
companies as at 30 September 2023 was 96% and 4% respectively.
Only 1% of the total portfolio was held outside the UK, all in a
continental European stock.
No more than 10% of its gross assets can be invested in other listed
investment companies (including investment trusts) unless they
themselves have stated they will invest no more than 15% of their
gross assets in other listed investment companies. Provided they
have, the Company’s limit becomes 15%.
The Company may use derivatives principally for the purpose of
income enhancement and efficient portfolio management. Options
may only be written on quoted stocks and the total notional exposure
is limited to a maximum of 5% of gross assets at the time of
investment for both put and call options. The exposure arising from
any futures contracts entered by the Company is included within the
calculation of the 20% limit on cash and gearing.
The Board carries out due diligence with regard to the investment
policy and underlying policies at each of its Board meetings receiving
regular reports from the Fund Manager. Confirmation of adherence
to the investment restrictions and limitations set by the Board are
required at each meeting. The Fund Manager’s Review on pages 9 to
12 provides an overview of the outcome from the application of the
investment policy and the underlying policies during the course of
the year.
Using its closed-end investment company structure, the Company
can borrow over short, medium or long term periods within a range of
0 to 20% of gross assets to enhance Shareholder returns. Gearing
was a modest contributor to returns for the year under review. As at
30 September 2023 the Company had borrowings of £25 million.
The Board monitors borrowing levels and covenant headroom at
each Board meeting.
Policy Summary
34 | CT UK Capital and Income Investment Trust PLC
Dividend
The Company’s revenue account is managed with the objective of
continuing the Company’s record of delivering a stable and growing
dividend to Shareholders over time. Prudent use of long established
revenue reserves is made whenever necessary to help meet any
revenue shortfall. Dividends can also be paid from capital reserves.
The Board determines payments by taking account of timely income
forecasts, brought forward distributable reserves, prevailing inflation
rates, the dividend payment record and Corporation Tax rules
governing investment trust status. Risks to the dividend policy have
been considered as part of the Principal Risks and Future Prospects
reviews noted on pages 28 to 30.
The consistent application of this policy has enabled the Company to
pay an increased dividend every year since launch in 1992.
Premium/Discount
The Company issues shares in order to meet Shareholder demand
which cannot be satisfied through the market and to moderate any
premium at which the shares have traded in relation to the NAV per
share. When the shares revert to trading at a price lower than the
NAV per share, the Board has the flexibility to buy back shares in
accordance with the authority given by Shareholders. Shares bought
back can either be cancelled or held in treasury for potential resale
at a premium. This policy has the benefit of enhancing NAV per share
for continuing Shareholders. The Board reviews the discount and
premium levels at each meeting. The shares traded at an average
discount of 3.1% throughout the year. The shares ended the year at
a 1.2% discount. During the year ended 30 September 2023, the
Company bought back for treasury 2,445,358 shares at a small
discount. The Company also reissued from treasury 75,000 shares
at a small premium to NAV. During the year ended 30 September
2022, the Company bought back for treasury 757,819 shares and
re-issued 175,000 of them. Since the year end to 28 November
2023, the Company has bought back 600,000 shares to be held in
treasury. No shares have been issued.
Taxation
The policy towards taxation is one of full commitment to complying
with applicable legislation and statutory guidelines. It is essential
that the Company always retains its investment trust tax status
by complying with Section 1158 of the Corporation Tax Act 2010
(“Section 1158”) such that it does not suffer UK Corporation Tax
on capital gains. In applying due diligence towards the retention
of Section 1158 status and adhering to its tax policies, the
Board receives regular reports from the Manager. The Company
has received approval from HMRC as an investment trust under
Section 1158 and has since continued to comply with the eligibility
conditions. The Manager also ensures that the Company submits
correct taxation returns annually to HMRC; settles promptly any
taxation due; and claims back, where possible, all taxes suffered in
excess of taxation treaty rates on non UK dividend receipts.
Board diversity
The policy towards the appointment of non-executive Directors is
based on the Board’s belief in the benefits of having a diverse range
of experience, skills, length of service and backgrounds, including
gender.
The policy is always to appoint the best person for the job and, by
way of this policy statement it is confirmed that there will be no
discrimination on the grounds of gender, ethnicity, socioeconomic
background, religion, sexual orientation, age or physical ability.
The overriding aim of the policy is to ensure that the Board is
composed of the best combination of people to deliver the objective.
The policy is applied for the purpose of appointing individuals that,
together as a Board, will continue to achieve that aim as well as
ensuring optimal promotion of the Company’s investment proposition
in the marketplace.
The Board is conscious of the diversity targets set out in the FCA
Listing Rules.
In accordance with Listing Rule 9.8.6R (9), (10) and (11) the Board
has provided the following information in relation to its diversity. The
information has been voluntarily disclosed by each Director and is
correct as at 30 September 2023.
Board Gender as at 30 September 2023
(1)
Number of
Board Members
Percentage of
the Board
Number of
senior positions
on the Board
(2)
Men 2 40% 1
Women 3 60%
(3)
1
(4)
(1) The Company has opted not to disclose against the number of Directors in executive
management as this is not applicable for an investment trust.
(2) Composed of the Chair and the Senior Independent Director.
(3) This meets the Listing Rules target of 40%.
(4) This meets the Listing Rules target of 1.
Report and Accounts 2023 | 35
Strategic Report
Strategic Report Governance Report Financial Report Notice of Meeting
Other Information
Chair’s StatementOverview Auditors’ Report
UK Financial Sanctions and Prevention of the Facilitation
of Tax Evasion
The Board is fully committed to complying with all legislation,
regulation and relevant guidelines including those relating to the UK
financial sanctions regime in the context of the Company’s business
and also the UK’s Criminal Finances Act 2017, designed to prevent
tax evasion and the facilitation of tax evasion in the jurisdictions in
which the Company operates. Professional advice is sought as and
when deemed necessary.
Jane Lewis
Chair
29 November 2023
Board Ethnic Background as at 30 September 2023
(1)
Number of
Board Members
Percentage of
the Board
Number of
senior positions
on the Board
(2)
White British
or other white
(including
minority-white
groups)
4 80% 2
Black/African/
Caribbean/
Black British
1
(3)
20% –
(1) The Company has opted not to disclose against the number of Directors in executive
management as this is not applicable for an investment trust.
(2) Composed of the Chair and the Senior Independent Director.
(3) This meets the Listing Rules target of 1.
As evidenced above, the Company has met all the diversity targets
set out in Listing Rule 9.8.6R (9). The Board will continue to take all
matters of diversity into account as part of its succession planning.
The information included in the above tables has been obtained
following confirmation from the individual Directors. The Board will
continue to take diversity into account as part of its succession
planning and recruitment process.
Integrity and business ethics
The Company applies a strict anti-bribery and anti-corruption policy
insofar as it applies to any Directors or employee of the Manager
or of any other organisation with which the Company conducts
business. The Board also ensures that adequate procedures
are in place and followed in respect of third party appointments,
acceptance of gifts and hospitality and similar matters.
Prevention of the facilitation of tax evasion
The Company is committed to compliance with the UK’s Criminal
Finances Act 2017, designed to prevent tax evasion in the
jurisdictions in which it operates. The policy is based on a risk
assessment undertaken by the Board and professional advice is
sought as and when deemed necessary.
Modern Slavery Act 2015
As an investment company with no employees or customers and
which does not provide goods or services in the normal course of
business, the Company considers that it does not fall within the
scope of the Modern Slavery Act 2015 and it is not, therefore,
obliged to make a human trafficking statement. The Company’s
own supply chain which consists predominantly of professional
advisers and service providers in the financial services industry,
which is highly regulated, is considered to be low risk in relation to
this matter. A statement by the Manager under the Act has been
published on its website columbiathreadneedle.co.uk.
36 | CT UK Capital and Income Investment Trust PLC
Directors
Jane Lewis, Chair of the Company
Jane was appointed to the Board on 24
November 2015 and became Chair on
1 July 2023. She was last re-elected by
Shareholders on 9 March 2023. She is a
non-executive director of BlackRock World
Mining Trust PLC, Majedie Investments PLC
and the Senior Independent Director of
JPMorgan Global Growth and Income PLC.
She was Chairman of Invesco Perpetual UK
Smaller Companies Investment Trust PLC
and until August 2013 was a Director of
Corporate Finance and Broking at Winterflood
Investment Trusts. Prior to this she worked
at Henderson Global Investors and Gartmore
Investment Management Limited in
investment trust business development and
at WestLB Panmure as an investment trust
broker.
Dunke Afe, Chair of the Nomination and
Remuneration Committee
Dunke was appointed to the Board on 1 June
2023 and became Chair of the Nomination
and Remuneration Committee on 20 July
2023. Dunke is an accomplished global
marketing and commercial professional
with extensive experience in raising brand
and product awareness. She has previously
worked with top blue chip multinationals
including Unilever, Kimberly Clark and Estee
Lauder Companies.
Patrick Firth, Chair of the Audit and Risk
Committee
Patrick was appointed to the Board on 21 July
2022 and became Chair of the Audit and Risk
Committee on 1 January 2023. He was elected
by Shareholders on 9 March 2023. Patrick is a
qualified Chartered Accountant and a member
of the Chartered Institute for Securities and
Investment. He worked in the fund industry
in Guernsey since 1992 and was Managing
Director of third party fund administration
businesses and a non-executive director of a
number of management companies, general
partners and investment companies. Currently
he is Chair of the Audit and Risk Committees
of Riverstone Energy Limited, NextEnergy Solar
Fund Limited and India Capital Growth Fund.
Nicky McCabe, Chair of the Management
Engagement Committee
Nicky was appointed to the Board on 1 January
2021 and was last re-elected by Shareholders
on 9 March 2023. Nicky has extensive sector
experience as she was formerly Head of
Product and Investment Trusts at Fidelity
International as well as a director and Chief
Operating Officer of a number of Fidelity
companies. Nicky is currently a non-executive
director of Aberdeen Asian Income Fund Ltd,
Artemis Investment Management Limited and
EFG Asset Management (UK) Limited.
Tim Scholefield, Senior Independent Director
Tim was appointed to the Board on 25 November
2014 and last re-elected by Shareholders on
9 March 2023. He is Chairman of Invesco
Bond Income Plus Ltd and Chairman of Allianz
Technology Trust PLC. He is a non-executive
director of Abrdn UK Smaller Companies
Growth Trust PLC and Jupiter Unit Trust
Managers Limited. Tim has 35 years of
investment experience, including his role as
Head of Equities at Baring Asset Management
until April 2014. Tim will retire from the
Board at the conclusion of the Company’s
forthcoming Annual General Meeting to be
held on 7 March 2024.
No Director holds a directorship elsewhere in common with other members of the Board.
All Directors are members of the Management Engagement Committee and the Nomination
and Remuneration Committee.
All Directors with the exception of Jane Lewis are members of the Audit and Risk Committee.
Report and Accounts 2023 | 37
Strategic Report Governance Report Financial Report Notice of Meeting
Other Information
Chair’s StatementOverview Auditors’ Report
Governance Report
Directors’ Report
The Directors submit the Report and Accounts of the Company for the year ended 30 September
2023. The Directors’ biographies, Corporate Governance Statement; the Report of the Nomination
and Remuneration Committee; the Directors’ Remuneration Report; the Report of the Audit and Risk
Committee Report and the Report of the Management Engagement Committee form part of this
Directors’ Report.
Statement regarding Report and Accounts
The Directors consider that following advice from the Audit and
Risk Committee, the Report and Accounts, taken as a whole, is
fair, balanced and understandable and provides the information
necessary for Shareholders to assess the Company’s position and
performance, business model and strategy. The Audit and Risk
Committee has reviewed the draft Report and Accounts for the
purposes of this assessment. The market outlook for the Company
can be found on page 12. Principal risks can be found on page 28
with further information on page 76.
Shareholders will be asked to approve the adoption of the Report
and Accounts for the financial year ended 30 September 2023 at
the AGM (Resolution 1).
Results and dividends
The results for the year are set out in the attached accounts. The
Company’s dividend payments are set out below.
Dividends paid in the year ended 30 September 2023
£’000s
Fourth of four interims for the year ended 30 September 2022
of 3.85p per share
4,108
First of four interims for the year ended 30 September 2023
of 2.75p per share
2,928
Second of four interims for the year ended 30 September 2023
of 2.75p per share
2,907
Third of four interims for the year ended 30 September 2023
of 2.75p per share
2,876
12,819
Further details are provided in note 9 to the financial statements.
As explained in the Chair’s Statement, the Board has announced a
fourth interim dividend of 3.90 pence per share. This will be paid on
18 December 2023 to Shareholders on the register on 8 December
2023. This dividend, together with the other three interim dividends
paid in respect of the financial year ended 30 September 2023
makes a total dividend of 12.15 pence per share. This represents an
increase of 3.0% over the 11.80 pence per share paid in respect of
the previous financial year.
As dividends are paid quarterly as interim dividends in March,
June, September and December, the Company does not pay a final
dividend in February that would require formal Shareholder approval
at the AGM. However, formal approval of the Company’s dividend
policy of paying four quarterly interim dividends in each financial
year will be sought at the AGM.
Company status
The Company is a public limited company and an investment
company as defined by section 833 of the Companies Act 2006.
The Company is limited by shares and is registered in England and
Wales with company registration number 02732011. It is subject
to the FCA’s listing rules, UK legislation and regulations including
company law, financial reporting standards, taxation law and its own
articles of association.
The Company is exempt from Streamlined Energy and Carbon
Reporting Disclosures as it has consumed less than 40,000 Kwh
of energy in the United Kingdom during the year.
Taxation
As set out on page 34 and in note 7 to the accounts, as an
investment trust, the Company is exempt from UK Corporation Tax
on its worldwide dividend income and from UK Corporation Tax on
any capital gains arising from its portfolio of investments, provided
it complies at all times with section 1158 of the Corporation Tax
Act 2010. Dividends received from investee companies domiciled
outside the UK are subject to taxation in those countries in
accordance with relevant double taxation treaties.
38 | CT UK Capital and Income Investment Trust PLC
Accounting and going concern
The financial statements, starting on page 61, comply with current
UK financial reporting standards, supplemented by the Statement
of Recommended Practice “Financial Statements of Investment
Trust Companies and Venture Capital Trusts” (“SORP”). The
significant accounting policies of the Company are set out in note
2 to the accounts. The unqualified auditor’s opinion on the financial
statements appears on pages 56 to 60. As discussed in the Five
Year Horizon Statement on page 30 and note 20 to the financial
statements on page 75, additional considerations were given to
assessing the applicability of the going concern basis of accounting
this year. Recently, the war in Ukraine, events in Israel and Gaza
and inflationary concerns have resulted in increased volatility in
financial markets and economic disruption. When assessing going
concern the Directors have therefore considered these in addition
to the Company’s objective, strategy and policy, its current cash
position, the availability of its loan facility and compliance with its
covenants and the operational resilience of the Company and its
service providers.
The Board has considered the impact of falls in the NAV of the
Company and the ability of it to meet its banking covenants. The
primary risk is that there is a very substantial decrease in the NAV
of the Company in the short to medium term. The Board considers
that the possibility of a fall of this magnitude is remote. In addition,
the Company has remedial measures if such a covenant breach
appeared possible.
Further details on this assessment are provided on pages 29, 30
and 75.
Based on this assessment, and in light of the controls and
monitoring processes that are in place, the Directors believe that
the Company has adequate resources to continue in operational
existence for the twelve month period from the date of the approval
of the financial statements. Accordingly, it is reasonable for the
financial statements to continue to be prepared on a going concern
basis. The Company’s longer term viability is considered in the
Future Prospects “Five Year Horizon” Statement on page 30.
Capital structure
As at 30 September 2023 there were 107,289,022 ordinary
shares of 25 pence each in issue including 2,953,177 shares held
in treasury.
As at 28 November 2023 (being the latest practicable date before
publication of this report) the number of ordinary shares in issue
was 107,289,022 including 3,553,177 shares held in treasury.
All ordinary shares rank equally for dividends and distributions
and carry one vote each. 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 agreement which the Company is party to that affects its
control following a takeover bid. Details of the capital structure can
be found in note 15 to the accounts. The revenue profits of the
Company (including accumulated revenue reserves), together with
the realised capital profits, are available for distribution by way of
dividends to the holders of the ordinary shares. Upon a winding
up, after meeting the liabilities of the Company, the surplus assets
would be distributed to Shareholders pro rata to their holdings of
ordinary shares. Full details are set out in the Company’s articles
of association.
Issue and buyback of shares
At the AGM held on 9 March 2023 Shareholders renewed the
Board’s authority to issue ordinary shares up to 10% of the number
then in issue. To satisfy demand for the Company’s shares, mainly
from holders through the CT Savings Plans, the Company issued
shares on one occasion in the year under review. A total of 75,000
shares with an aggregate nominal value of £18,750 were issued
at a price of 298.0 pence per share for a total consideration of
£223,500 before the deduction of issue costs.
Subject to annual Shareholder approval, the Company may also
purchase up to 14.99% of its own issued ordinary shares at a
discount to NAV per share. The shares bought back can either be
cancelled or held in treasury to be sold as and when the share
price returns to a premium. At the AGM held on 9 March 2023
Shareholders gave the Board authority to buy back ordinary shares
up to 14.99% of the number then in issue. During the year under
review 2,445,358 shares were purchased, representing 2.3% of the
number of shares issued and fully paid at 30 September 2022, in
21 tranches and held in treasury. The price paid ranged from 276.5
pence per share to 310.0 pence per share. As noted above, the
Company also re-issued from treasury 75,000 shares at a small
premium to NAV.
Since the year end to 28 November 2023, the Company has bought
back 600,000 shares to be held in treasury. No shares have been
issued.
Voting rights
As at 28 November 2023 the Company had 107,289,022 ordinary
shares in issue including 3,553,177 shares held in treasury. Total
voting rights were therefore 103,735,845. As at 30 September
2023 and 28 November 2023 no notifications of significant voting
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rights had been received under the Financial Conduct Authority’s
Disclosure Guidance and Transparency Rules.
Borrowings and financial risk management
The Company has a one year multicurrency revolving facility
agreement of up to £40 million with The Bank of Nova Scotia,
London Branch (“Scotiabank”) expiring in March 2024. The
interest rate margin and the commitment fees on the Scotiabank
facility have been set at commercial rates. It is anticipated that
a replacement facility will be entered into upon the expiry of the
current facility.
Details of the financial risk management of the Company are
provided in note 21 beginning on page 76. An ongoing overdraft
arrangement is available to the Company by the Custodian for
settlement of investment trades if necessary.
Remuneration Report
The Directors’ Remuneration Report, which can be found on pages
47 to 49, provides detailed information on the remuneration
arrangements for Directors of the Company including the Directors’
Remuneration Policy. Shareholders are asked to approve the policy
at an AGM every three years. There have been no changes to the
policy since approval by Shareholders at the Company’s AGM held
in March 2023. Remuneration is set at a level commensurate with
the skills and experience necessary for the effective stewardship
of the Company and the expected contribution of the Board as
a whole in continuing to achieve the investment objective. It is
intended that this policy will continue for the three year period
ending at the AGM in 2026. Shareholders will be asked to approve
the Remuneration Report in respect of the financial year ended
30 September 2023 at the upcoming AGM (Resolution 3).
As detailed on page 47, the Directors’ fees are reviewed each
year. Following this review in respect of the financial year ended
30 September 2023, the Directors have agreed that the annual
remuneration of the Chair will increase from £40,500 to £42,750,
the Chair of the Audit and Risk Committee from £32,500 to
£35,750, the Senior Independent Director from £28,500 to
£31,500 and other Directors from £27,000 to £28,500. These
increases were effective from 1 October 2023. The previous
increase to Directors’ annual remuneration occurred on 1 October
2022.
The Company’s articles of association limit the aggregate fees
payable to the Board to a total of £250,000 per annum.
Director election or re-elections
The names of the current Directors, along with their biographical
details, are set out on page 36.
During the year, Sharon Brown retired on 31 December 2022 and
Jonathan Cartwright on 1 July 2023.
All Directors, with the exception of Tim Scholefield, will seek
election or re-election at the forthcoming AGM. Tim Scholefield
will retire from the Board at the conclusion of the Company’s
forthcoming AGM to be held on 7 March 2024, having served nine
years. Following a review of their performance, the Board believes
that each of the Directors standing for election or re-election has
made a valuable and effective contribution to the Company. The
skills and experience each Director brings to the Board for the long
term sustainable success of the Company are set out below. The
Board recommends that Shareholders vote in favour of the election
or re-election of the Directors (Resolutions 4 to 7).
Resolution 4 relates to the re-election of Jane Lewis who has
served eight years on the Board. She has extensive sector
experience through her career in investment company corporate
broking at Winterflood and business development at leading
investment trust houses. She has held a number of investment
trust directorships including as Chair. Jane became Chair of the
Board on 1 July 2023.
Resolution 5 relates to the election of Dunke Afe who was
appointed to the Board on 1 June 2023 and became Chair of the
Nomination and Remuneration Committee on 20 July 2023. Dunke
is an accomplished global marketing and commercial professional
with extensive experience in raising brand and product awareness.
She has previously worked with top blue chip multinationals
including Unilever, Kimberly Clark and Estee Lauder Companies.
Resolution 6 relates to re-election of Patrick Firth who was
appointed to the Board on 21 July 2022 and became Chair of the
Audit and Risk Committee on 1 January 2023. Patrick is a qualified
Chartered Accountant and a member of the Chartered Institute
for Securities and Investment. He worked in the fund industry in
Guernsey from 1992 and was Managing Director of third party
fund administration businesses and a non-executive director
of a number of management companies, general partners and
investment companies. Currently he is Chair of the Audit and Risk
Committees of Riverstone Energy Limited, NextEnergy Solar Fund
Limited and India Capital Growth Fund.
Resolution 7 relates to the re-election of Nicky McCabe who was
appointed to the Board on 1 January 2021. Nicky has extensive
sector experience as she was formerly Head of Product and
Investment Trusts at Fidelity International as well as a director and
Chief Operating Officer of a number of Fidelity companies. Nicky
is currently a non-executive director of Aberdeen Asian Income
40 | CT UK Capital and Income Investment Trust PLC
Fund Ltd, Artemis Investment Management Limited and EFG Asset
Management (UK) Limited.
Directors’ interests and indemnification
There were no contracts to which the Company was a party and in
which a Director is, or was, materially interested during the year.
There are no agreements between the Company and its Directors
concerning compensation for loss of office.
The Company has granted a deed of indemnity to the Directors
in respect of liabilities that may attach to them in their capacity
as Directors of the Company. This covers any liabilities that may
arise to a third party for negligence, default or breach of trust or
duty. This deed of indemnity is a qualifying third party provision
(as defined by section 234 of the Companies Act 2006) and has
been in force throughout the period under review and remains in
place as at the date of this report. It is available for inspection
at the Company’s registered office during normal business hours
and will be available for inspection at the AGM. The Company also
maintains directors’ and officers’ liability insurance.
Statement as to disclosure of information to the auditors
Each of the Directors confirms that, to the best of his or her
knowledge and belief, there is no information relevant to the
preparation of the Report and Accounts of which BDO LLP are
unaware and they have taken all the steps a Director might
reasonably be expected to have taken to be aware of relevant
audit information and to establish that BDO LLP is aware of that
information.
Appointment of auditor and auditor’s remuneration
The auditor of a company has to be appointed at each Annual
General Meeting at which accounts are laid before Shareholders.
BDO LLP has expressed their willingness to continue in office as
auditor and resolutions proposing their re-appointment and for the
Audit and Risk Committee to determine their remuneration for the
financial year ended 30 September 2024 will be proposed at the
AGM. (Resolutions 8 and 9).
Safe custody of assets
The Company’s listed investments are held in safe custody by JP
Morgan Chase Bank (the “Custodian”). Operational matters with
the Custodian are carried out on the Company’s behalf by the
Manager in accordance with the provisions of the management
agreement. The Custodian is paid a variable fee dependent on the
number of trades transacted and location of the securities held.
Depositary
JPMorgan Europe Limited acts as the Company’s Depositary (the
“Depositary”) in accordance with the AIFMD. The Depositary’s
responsibilities, which are set out in an Investor Disclosure
Document on the Company’s website, include: cash monitoring;
ensuring the proper segregation and safekeeping of the Company’s
financial instruments that are held by the Custodian; and
monitoring the Company’s compliance with investment and leverage
limits requirements. The Depositary receives for its services a fee
of one basis point per annum on the value of the Company’s net
assets, payable monthly in arrears.
Although the Depositary has delegated the safekeeping of all
assets held within the Company’s investment portfolio to the
Custodian, in the event of loss of those assets that constitute
financial instruments under the AIFMD, the Depositary will be
obliged to return to the Company financial instruments of an
identical type, or the corresponding amount of money, unless it can
demonstrate that the loss has arisen as a result of an external
event beyond its reasonable control, the consequences of which
would have been unavoidable despite all reasonable efforts to the
contrary.
The Manager’s fee
A quarterly fee of 0.1% of funds under management is payable
in arrears to the Manager in respect of the management,
administration and ancillary services provided to the Company (see
note 4 to the accounts).
AGM
The Notice of the AGM to be held on 7 March 2024 is set out on
pages 84 to 87.
As well as the matters set out above, the Board will propose at the
AGM resolutions in relation to the following matters.
Authority to allot shares and sell shares from treasury
(resolutions 10 and 11)
Resolutions 10 and 11 are similar in content to the authorities
and power previously given to the Directors by Shareholders. By
law, the Directors are not permitted to allot new shares (or to grant
rights over shares) unless authorised to do so by Shareholders. In
addition, the Directors require specific authority from Shareholders
before allotting new shares (or granting rights over shares) or
selling shares out of treasury for cash without first offering them to
existing Shareholders in proportion to their holdings.
Resolution 10 gives the Directors, for the period until the
conclusion of the Annual General Meeting in 2025 or, if earlier,
15 months from the passing of the resolution, the necessary
authority to allot securities up to an aggregate nominal amount of
£2,593,396 (10,373,584 ordinary shares). This is equivalent to
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approximately 10% of the issued share capital of the Company as
at 28 November 2023 excluding shares held in treasury.
Resolution 11, which will be proposed as a special resolution
and which is conditional on the passing of Resolution 10, seeks
authority for the Directors to allot shares or sell shares held in
treasury on a non pre-emptive basis for cash up to an aggregate
nominal amount of £2,593,396 (representing 10% of the issued
ordinary share capital of the Company (excluding shares held in
treasury) as at 28 November 2023). These authorities and powers
will provide the Directors with a degree of flexibility to increase the
assets of the Company by the issue of new shares or the sale of
treasury shares, in accordance with the policies set out on page 34
or should any other favourable opportunities arise to the advantage
of Shareholders. The Directors anticipate that they will principally
use the authorities granted by Resolutions 10 and 11 to satisfy
demand from participants in the CT Savings Plans when they
believe it is advantageous to plan participants and the Company’s
Shareholders to do so. In no circumstances would the Directors
use these authorities to issue or sell any shares from treasury
unless the existing shares in issue are trading at a premium to
NAV. As at 28 November 2023, 3,553,177 ordinary shares were
held by the Company in treasury.
Authority for the Company to purchase its own shares
(resolution 12)
Resolution 12, which will be proposed as a special resolution,
authorises the Company to purchase up to a maximum of
15,550,003 ordinary shares (equivalent to approximately 14.99%
of the issued share capital excluding shares held in treasury as
at 28 November 2023) at a minimum price of 25 pence per share
and a maximum price per share (exclusive of expenses) of the
higher of (i) 5% above the average of the middle market quotations
for an ordinary share (as derived from the London Stock Exchange
Daily Official List) for the five business days immediately before
the date of purchase and (ii) the higher of the last independent
trade and the highest current independent bid on the London
Stock Exchange. The Directors intend to use this authority with the
objective of enhancing Shareholder value. Purchases would only
be made, within guidelines established from time to time by the
Board, through the market for cash at prices below the prevailing
Net Asset Value per ordinary share which would have the effect
of enhancing that value for remaining Shareholders. Any ordinary
shares that are purchased would either be placed into treasury
or cancelled. The authority will expire at the conclusion of the
2025 annual general meeting of the Company or, if earlier, on the
date which is 15 months after the date on which Resolution 12 is
passed.
Form of proxy
Registered Shareholders will find enclosed a form of proxy for use
at the AGM. Shareholders also have the option of lodging their
proxy votes electronically as set out in Note 4 of the Notice of
AGM. For shares held through CREST, proxy appointments may be
submitted via the CREST proxy voting system. Proxy appointments
should be lodged as soon as possible and, in any event, not later
than 12.30pm on 5 March 2024.
Form of direction
If you are an investor in any of the CT Savings Plans you will have
received a form of direction for use at the AGM and you will also
have the option of lodging your voting directions electronically as
set out in Note 4 of the Notice of AGM.
All voting directions should be submitted as soon as possible in
accordance with the instructions on the form of direction and, in
any event, not later than 12:30pm on 29 February 2024.
Recommendation
The Board considers that the resolutions to be proposed at the
meeting are in the best interests of the Company and Shareholders
as a whole. The Directors recommend that Shareholders vote in
favour of each resolution, as they intend to do in respect of their
own beneficial holdings.
By order of the Board
Columbia Threadneedle Investment Business Limited
Secretary
29 November 2023
42 | CT UK Capital and Income Investment Trust PLC
Company’s strategy, operations and compliance with regulations.
The Manager is the Company’s AIFM.
Articles of association
The Company’s articles of association may only be amended by
special resolution at general meetings of Shareholders.
The Board
The Board’s responsibilities are outlined on page 13. More
specifically, the Board is responsible for the effective stewardship
of the Company’s affairs and has adopted a formal schedule
of matters reserved for its decision. It has responsibility for all
corporate strategic issues, corporate governance matters, dividend
policy, share issue and buyback policy, risk and control assessment,
investment performance monitoring and budget approval. It is also
responsible for the review and approval of annual and half yearly
reports and other public documents.
In order to enable the Directors to discharge their responsibilities,
they all have full and timely access to relevant information. The
Board normally meets at least four times a year and also holds a
strategy meeting. At each meeting, the Board reviews the Company’s
management information, which includes reports on investment
performance and strategic matters and financial analyses.
Income forecasts and costs are reviewed within set budgets. The
Board monitors compliance with the Company’s objectives and
is responsible for setting the asset allocation, investment and
gearing ranges within which the Manager has discretion to act. Key
representatives of the Manager attend each Board meeting. Board
meetings are also held on an ad hoc basis to consider particular
issues as they arise. The following table sets out the Directors’
meeting attendance in the year under review. Committees of the
Board met during the year to undertake business such as the
approval of the Company’s final results and dividends.
Each Director has a signed letter of appointment to formalise the
terms of their engagement as a non-executive Director, copies of
which are available for inspection at the Company’s registered
office during normal business hours and are also available at each
Shareholder meeting.
Introduction
The Board adheres to the principles and recommendations of
the revised AIC Code of Corporate Governance (the “AIC Code”)
published in 2019.
The Board believes that the Company has complied with the current
recommendations of the AIC Code during the year under review and
up to the date of this report and, except as regards the provisions
set out below, has thereby complied with the relevant provisions
of the 2018 revision to the UK Corporate Governance Code (“UK
Code”):
The UK Code includes provisions relating to:
• the role of the chief executive;
• executive directors’ remuneration; and
• the need for an internal audit function.
For the reasons set out in the AIC Corporate Governance Guide for
Investment Companies, the Board considers these provisions as
not being relevant to the Company, as it is an externally managed
investment company. In particular, all of the Company’s day-to-day
management and administrative functions have been delegated to
the Manager. As a result, the Company has no executive Directors,
employees or internal operations. Therefore, with the exception
of the need for an internal audit function, which is addressed on
page 51, the Company has not reported further in respect of these
provisions.
Detailed information on the Directors’ Remuneration can be found in
the Directors’ Remuneration Report on pages 47 to 49 and in note 5
to the accounts.
Copies of both codes may be found on the respective websites
theaic.co.uk and frc.org.uk.
AIFMD
The Company is defined as an Alternative Investment Fund (“AIF”)
under the AIFMD issued by the European Parliament, and which
has been implemented into UK law. This requires that all AIFs must
appoint a Depositary and an Alternative Investment Fund Manager
(“AIFM”). The Board remains fully responsible for all aspects of the
Corporate Governance Statement
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way of confidential interviews between the Chair and each Director.
The appraisal of the Chair was carried out by the Board under
the leadership of the Senior Independent Director. The Board
considers that the appraisal process is a constructive means of
evaluating the contribution of individual Directors and identifying
ways to improve the functioning and performance of the Board and
its committees and building on and improving collective strengths,
including assessing any training needs. The option of using external
consultants to conduct this evaluation is kept under review.
Independence of Directors
The Board, which is composed solely of independent non-executive
Directors, regularly reviews the independence of the individual
Directors. All the Directors have been assessed by the Board as
remaining independent of the Manager and of the Company itself;
none has a past or current connection with the Manager and
each remains independent in character and judgement with no
relationships or circumstances relating to the Company that are likely
to affect that judgement.
Conflicts of interest
A company director has a statutory obligation to avoid a situation
in which he or she has, or potentially could have, a direct or
indirect interest that conflicts with the interests of the Company (a
“situational conflict”). The Board therefore has procedures in place
for the authorisation and review of situational conflicts relating to the
Company’s Directors.
Other than the formal authorisation of the Directors’ other
directorships and appointments, no authorisations have been
sought. They are reviewed throughout the year at each Board
meeting and the authorisation of each individual Director’s conflicts
or potential conflicts annually. These authorisations were reviewed in
Director attendance – year ended 30 September 2023
Board
Annual General
Meeting
Audit and Risk
Committee
Management
Engagement Committee
Nomination and
Remuneration
Committee
No. of meetings
Jane Lewis
(4)
6 1 3 2 3
Dunke Afe
(1)
2 N/A 1 1 1
Patrick Firth 6
1 3 2
3
Nicky McCabe 6 1 3 2 3
Tim Scholefield 6 1 3 2 3
Sharon Brown
(2)
1 N/A 1 1 1
Jonathan Cartwright
(3) (4)
4 1 2 1 2
(1) Attended all meetings since appointment on 1 June 2023.
(2) Attended all meetings until retirement on 31 December 2022.
(3) Attended all meetings until retirement on 1 July 2023.
(4) The Chair of the Company is invited to attend the Audit and Risk Committee although he or she is not a member.
The Board also held three committee meetings during the year.
Directors are able to seek independent professional advice at the
Company’s expense in relation to their duties. No such professional
advice was taken by Directors during the year under review. The
Board has direct access to the company secretarial advice and
services of the Manager which, through its nominated representative,
is responsible for ensuring that Board and committee procedures
are followed and applicable regulations are complied with. The
proceedings at all Board and other meetings are fully recorded
through a process that allows any Director’s concerns to be recorded
in the minutes. The Board has the power to appoint or remove
the Secretary in accordance with the terms of the management
agreement. The powers of the Board relating to the buying back or
issuance of the Company’s shares are explained on pages 40 and 41.
Appointments
Under the articles of association of the Company, the number of
Directors on the Board cannot exceed ten. An induction process
takes place for new appointees and all Directors are encouraged
to attend relevant training courses and seminars. Directors may be
appointed by the Company by ordinary resolution or by the Board. All
new appointments by the Board are subject to subsequent election
by Shareholders at the next Annual General Meeting. All Directors
will stand for re-election by Shareholders annually.
Directors must seek Board approval prior to accepting additional
listed external roles.
Board effectiveness
During the year, in order to review the effectiveness of the Board,
its Committees and the individual Directors, the Board carried out
a process of formal annual self appraisal. This was facilitated by
44 | CT UK Capital and Income Investment Trust PLC
July 2023 when it was concluded that in each case these situational
conflicts had not affected any individual in their role as a Director
of the Company. Aside from situational conflicts, the Directors must
also comply with the statutory rules requiring Company Directors
to declare any interest in an actual or proposed transaction or
arrangement with the Company.
In the year under review there have been no instances of a Director
being required to be excluded from a discussion or abstain from
voting because of a conflict of interest.
Relations with Shareholders
The Company welcomes the views of Shareholders and places
importance on communication with its members. Representatives
of the Manager hold meetings with the Company’s largest
Shareholders and report back to the Board on these meetings.
Each year, the Company will hold an Annual General Meeting to be
followed by a presentation by the Fund Manager in London.
In accordance with the UK Code, in the event that votes of 20 per
cent or more are cast against a resolution at a General Meeting
the Company will announce the actions it intends to take to consult
Shareholders to understand the reasons behind the result. A
further update will be published within six months. No such votes
were received during 2023.
Tim Scholefield will be the Senior Independent Director until his
retirement at the conclusion of the Company’s AGM to be held on 7
March 2024. Upon his retirement Nicky McCabe will be appointed
Senior Independent Director. The Senior Independent Director is
available to Shareholders if they have concerns which initial contact
through the Chair or Company Secretary has failed to resolve or
for which such contact is inappropriate. Shareholders wishing to
communicate with the Chair or other members of the Board may do
so by writing to CT UK Capital and Income Investment Trust PLC,
Cannon Place, 78 Cannon Street, London, EC4N 6AG.
By order of the Board
Columbia Threadneedle Investment Business Limited
Secretary
29 November 2023
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agreeing the selection criteria and the method of recruitment, selection
and appointment.
On 1 July 2023 Jonathan Cartwright retired from the Board. Following
Board discussion, Jane Lewis, who joined the Board in April 2015 was
appointed Chair upon his retirement. Jane Lewis has extensive sector
experience through her career in investment company corporate broking
at Winterflood and business development at leading investment trust
houses. She has also been appointed to a number of investment trust
boards including as Chair.
As part of the Board’s succession planning, Audeliss, a search company
without connection to the Company or any individual Director, was
commissioned to find a new Director to join the Board. Following a
thorough selection process, Dunke Afe was appointed as a Director
of the Company with effect from 1 June 2023. Dunke Afe is an
accomplished global marketing and commercial professional with
extensive experience in raising brand and product awareness. She has
previously worked with top blue chip multinationals including Unilever,
Kimberly Clark and Estee Lauder Companies.
Tim Scholefield, the Company’s Senior Independent Director, who joined
the Board in November 2014, will retire at the conclusion of the 2024
Annual General Meeting, having served nine years. Upon his retirement
Nicky McCabe will be appointed Senior Independent Director.
As a further part of the Board’s succession planning, Fletcher Jones, a
search company without connection to the Company or any individual
Director, was commissioned to find a new Director for the Board.
Following this selection process, the Board is pleased to announce that
Christopher Metcalfe, will be appointed to the Board and its committees
with effect from 8 March 2024.
Christopher is Chairman of Martin Currie Global Portfolio Trust plc
and the Senior Independent Non Executive Director of JP Morgan US
Smaller Companies Investment Trust plc. He has extensive equity fund
management and investment trust experience having previously worked
in senior positions at Newton Investment Management, Schroder
Investment Management and Henderson Administration Group.
Role of the Nomination and Remuneration Committee (“the
Committee”)
The Committee met three times during the year. Its primary role is to
review and make recommendations to the Board with regard to Board
structure, size and composition, the balance of knowledge, experience,
skill ranges and diversity, consider succession planning and tenure
policy and remuneration policy and levels. Its responsibilities include:
• Board structure and size of the Board and its composition,
particularly in terms of succession planning and the experience and
skills of the individual Directors and diversity across the Board as a
whole;
• tenure policy;
• the criteria for future Board appointments and the methods of
recruitment, selection and appointment;
• the reappointment of those Directors standing for re-election at
Annual General Meetings;
• the attendance and time commitment of the Directors in fulfilling
their duties, including the extent of their other directorships;
• the question of each Director’s independence prior to publication of
the Report and Accounts;
• the authorisation of each Director’s situational conflicts of interests
in accordance with the provisions of the Act and the policy and
procedures established by the Board in relation to these provisions;
• remuneration policy; and
• the periodic review of the level of Directors’ fees, including the Chair
of the Board and Committees.
Composition of the Committee
All of the Directors are members of the Committee.
In accordance with corporate governance best practice and following
her appointment as Chair of the Company, Jane Lewis stepped down
as Chair of the Committee on 20 July 2023. With effect from that date,
Dunke Afe was appointed Chair of the Committee.
The terms of reference of the Committee can be found on the
Company’s website at ctcapitalandincome.co.uk.
Directorate change and succession planning
Appointments of all new Directors are made on a formal basis, normally
using independent, professional search consultants, with the Committee
Report of the Nomination and
Remuneration Committee
46 | CT UK Capital and Income Investment Trust PLC
Diversity and tenure
The Board’s diversity policy, objective and progress in achieving it are set
out on page 34. In normal circumstances the Chair and Directors are
expected to serve for no more than nine years, but this may be adjusted
for reasons of flexibility and continuity.
Committee evaluation
The activities of the Committee were considered as part of the Board
appraisal process completed in accordance with standard governance
arrangements as summarised on page 53. The conclusion from the
process was that the Committee was operating effectively, with the right
balance of membership, experience and skills.
Dunke Afe
Chair of the Nomination and Remuneration Committee
29 November 2023
Report and Accounts 2023 | 47
Strategic Report Governance Report Financial Report Notice of Meeting
Other Information
Chair’s StatementOverview Auditors’ Report
Governance Report
The Board is composed solely of non-executive Directors, none of whom
has a service contract with the Company. Each new Director is provided
with a letter of appointment. There is no provision for compensation
upon early termination of appointment. The letters of appointment
are available for inspection at the Company’s registered office during
business hours and will be available for 15 minutes before and during
the forthcoming AGM.
The dates on which each Director was appointed to the Board and
was last elected or re-elected by Shareholders are set out on page 36.
Each Director’s appointment is subject to election at the first Annual
General Meeting and continues thereafter subject to re-election at
each subsequent Annual General Meeting. The appointment can be
terminated on one month’s notice. All the Directors, with the exception
of Tim Scholefield, will stand for election or re-election at the AGM on
7 March 2024.
The fees for specific responsibilities are set out in the table below.
Annual fees for Board Responsibilities
For the year ending 30 September
2024
£’000s
2023
£’000s
2022
£’000s
Chair 42.8 40.5 38.5
Director 28.5 27.0 25.5
Senior Independent Director 31.5 28.5 27.0
Audit and Risk Committee Chair 35.8 32.5 31.0
Dear Shareholder,
I am pleased to introduce the Directors’ Remuneration Report for the
year ended 30 September 2023. This report sets out the Company’s
forward looking Directors’ Remuneration Policy and the Remuneration
Report which describes how this policy has been applied during the
year. I would welcome any comments you may have.
Directors’ Remuneration Policy
The Board’s policy is to set Directors’ remuneration at a level
commensurate with the skills and experience necessary for the
effective stewardship of the Company and the expected contribution of
the Board as a whole in continuing to achieve the investment objective.
The policy aims to be fair and reasonable in relation to comparable
investment trusts and other similar sized financial companies. Time
committed to the Company’s affairs and the role that individual
Directors fulfil in respect of Board and Committee responsibilities
are taken into account. The policy also provides for the Company’s
reimbursement of all reasonable travel and associated expenses
incurred by the Directors in attending Board and committee meetings,
including those treated as a benefit in kind subject to tax and national
insurance. The Directors are not eligible for bonuses, pension benefits,
share options, long term incentive schemes or other benefits. This
policy was last approved by Shareholders in March 2023 with 94.5%
voting in favour and 5.5% against. The policy will next be put to
Shareholders for renewal at the AGM to be held in 2026. The Board
has not received any views from Shareholders in respect of the levels
of Directors’ remuneration.
The Company’s articles of association limit the aggregate fees payable
to the Board to a total of £250,000 per annum. Within that limit, it is
the responsibility of the Board as a whole to determine and approve the
Directors’ fees, following a recommendation from the Nomination and
Remuneration Committee.
The fees are fixed and are payable in cash, quarterly in arrears. The
fees are reviewed each year. Following this review the Board agreed that
the annual remuneration of the Chair will increase from £40,500 to
£42,750, the Chair of the Audit and Risk Committee from £32,500 to
£35,750, the Senior Independent Director from £28,500 to £31,500
and other Directors from £27,000 to £28,500. These increases were
effective from 1 October 2023. The previous increase to Directors’
annual remuneration occurred on 1 October 2022.
Directors’ Remuneration Report
48 | CT UK Capital and Income Investment Trust PLC
Directors’ Shareholdings – Directors’ share interests (audited)
At 30 September 2023 2022
Number of shares held
(audited)
Number of shares held
(audited)
Jane Lewis 3,095 3,095
Dunke Afe* – n/a
Patrick Firth – –
Nicky McCabe 3,420 3,420
Tim Scholefield 8,500 8,500
As at 30 September 2023 the shareholding of the Company’s fund manager, Julian Cane, was
337,329 shares (2022: 324,122 shares).
The Company’s register of Directors’ interests contains full details of Directors’
shareholdings.
*Appointed as a non-executive Director with effect from 1 June 2023.
There have been no changes in any of the Directors’ shareholdings
detailed above between 30 September 2023 and the date of this
report. No Director held any interests in the issued shares of the
Company other than as stated above. There is no requirement for
the Directors to hold shares in the Company.
Policy implementation
The Directors’ Remuneration Report is subject to an annual advisory
vote and therefore an ordinary resolution for its approval will be
put to Shareholders at the forthcoming AGM. At the last meeting,
Shareholders approved the Directors’ Remuneration Report in
respect of the year ended 30 September 2022. 95.4% of votes were
cast in favour of the resolution and 4.6% against.
Directors’ remuneration report
The Directors who served during the year received the following
amounts for services as non-executive Directors for the years ended
30 September 2023 and 2022.
Fees for services to the Company (audited)
Fees
£’000s
(audited)
Taxable
Benefits
(1)
£’000s
(audited)
Total
£’000s
(audited)
Director 2023 2022 2023 2022 2023 2022
Jonathan Cartwright
(2)
30.5 38.5 2.0 0.1 32.5 38.6
Jane Lewis
(3)
30.3 25.5 2.4 2.0 32.7 27.5
Sharon Brown
(4)
8.1 31.0 1.6 4.8 9.7 35.8
Patrick Firth
(5)
31.1 5.0 2.6 0.4 33.7 5.4
Tim Scholefield
28.5 27.0 1.8 0.1 30.3 27.1
Nicky McCabe
27.0 25.5 5.0 1.8 32.0 27.3
Dunke Afe
(6)
9.0 n/a – n/a 9.0 n/a
Total
164.5 152.5 15.4 9.2 179.9 161.7
(1) Comprises amounts reimbursed for expenses incurred in carrying out
business for the Company, which have been grossed up to include PAYE and NI
contributions.
(2) Retired 1 July 2023.
(3) Appointed Chair with effect from 1 July 2023.
(4) Retired 31 December 2022.
(5) Appointed Audit Committee Chair with effect from 1 January 2023.
(6) Appointed as a non-executive Director with effect from 1 June 2023.
The table below sets out the annual percentage change in fees for
each Director who served in the year under review.
Fees annual percentage change
Director
2023
%
2022
%
2021
%
2020
%
Jonathan Cartwright
-20.8
(1)
+4.1 +37.0
(2)
n/a
Jane Lewis
+18.8
(3)
+4.1 - +2.1
Sharon Brown
-73.9
(4)
+3.3 - +3.4
Patrick Firth
+522.0
(5)
n/a n/a n/a
Tim Scholefield
+5.6 +8.4
(6)
+1.6 +2.1
Nicky McCabe
+5.9 +38.8
(7)
n/a n/a
Dunke Afe
n/a n/a n/a n/a
(1) Retired 1 July 2023.
(2) Appointed as non executive Director on 26 November 2019, became Chair with effect
from 1 April 2020. Increase reflects the first full year in the role.
(3) Appointed Chair with effect from 1 July 2023, increase reflects the change in position
held.
(4) Retired 31 December 2022.
(5) Appointed as non executive Director on 21 July 2022, became Audit and Risk
Committee Chair with effect from 1 January 2023. Increase reflects the first full year
with the Company and change in position held.
(6) Appointed Senior Independent Director on 14 July 2021.
(7) Appointed as a non executive Director with effect from 1 January 2021, increase
reflects the first full year with the Company.
Report and Accounts 2023 | 49
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Other Information
Chair’s StatementOverview Auditors’ Report
Governance Report
90
100
110
120
130
140
150
160
170
180
190
FTSE All-Share – total return
CT UK Capital and Income - share price total return
2013 2014 2015 2016 2017 2018 2019 202220212020 2023
Shareholder total return vs Benchmark total return over ten years
(rebased to 100 at 30 September 2013) (%)
Source: Refinitiv Eikon
The table below shows the actual expenditure during the year in
relation to Directors’ remuneration (excluding taxable benefits) and
Shareholder distributions:
Relative importance of pay
Actual Expenditure
Year ended 30 September
2023
£’000s
2022
£’000s
%
Change
Aggregate Directors’ fees 164.5 152.5 7.9
Management and other expenses
(1)
2,129.0 2,109.0 0.9
Dividends paid to Shareholders 12,819.0 12,532.0 2.3
(1) Includes Directors’ remuneration.
Company performance
The Board is responsible for the Company’s investment strategy
and performance. The management of the investment portfolio is
delegated to the Manager. An explanation of the performance of the
Company for the year ended 30 September 2023 is given in the
Chair’s Statement and Fund Manager’s Review.
A comparison of the Company’s performance over the required
ten year period is set out in the graph. This shows the total return
(assuming all dividends are reinvested) to ordinary Shareholders
against the Benchmark.
Dunke Afe
Chair of the Nomination and Remuneration Committee
29 November 2023
50 | CT UK Capital and Income Investment Trust PLC
the impact of the war in Ukraine, recent events in Israel and Gaza and
inflationary pressures upon the risks, operations and accounting basis
of the Company.
Mindful of the guidance issued by the Financial Reporting Council, when
assessing going concern the Directors have considered this in addition
to taking note of the Company’s objective, strategy and policy, its cash
position, availability of the loan facility and the operational resilience
of its service providers. Further analysis of the application of the going
concern principle is detailed in note 20 to the Financial Report.
The Board retains ultimate responsibility for all aspects relating to
external financial statements and other significant published financial
information as is noted in the Statement of Directors’ Responsibilities
on page 54. On broader control policy issues, the Committee has
received confirmation that bribery and corruption are managed by
the Manager’s Global Code of Conduct and Anti-Corruption Policy and
Guidelines. The Manager and its employees are subject to both the
Code and the Policy. The Committee has also received confirmation
that the Manager has in place a Whistleblowing Policy under which its
directors and staff may, in confidence, raise concerns about possible
improprieties in financial reporting or other matters. The necessary
arrangements are in place for communication to this Committee
where matters might impact the Company with appropriate follow up
action. In the year under review, there were no such concerns raised
with the Committee.
Composition of the Committee
All the Directors of the Company are independent. All Directors, with
the exception of the Chair of the Company, were members of the
Committee. This is in accordance with developing Corporate Governance
best practice. The Chair, however, has been invited to attend. Until
31 December 2022 Sharon Brown was Chair of the Committee. On
that date she retired from the Board and the Committee. Upon this
retirement Patrick Firth was appointed Chair of the Committee. He is a
qualified Chartered Accountant and a member of the Chartered Institute
for Securities and Investment. He has worked in the fund industry in
Guernsey since 1992 and has been, and continues to be a director of
a number of management companies, general partners and investment
companies, including Chair of the Audit and Risk Committees.
Role of the Committee
The Committee met on three occasions during the year, and the
attendance of each of the members is set out on page 43. The Trust
Accountant, the Fund Manager and Risk Managers of the Manager
were invited to attend certain meetings to report on relevant matters.
The external auditor, BDO LLP, attended two of the committee meetings
and also met in private session with the Committee Chair.
The Committee considered, monitored and reviewed the following
matters:
• The audited annual results statement and Report and Accounts
and the unaudited half yearly results statement and Report and
Accounts;
• The accounting policies of the Company;
• The principal risks faced by the Company and the effectiveness of
the Company’s internal control and risk management environment,
including consideration of the assumptions underlying the Board’s
future prospects statement on viability;
• The effectiveness of the external audit process and the current
independence and objectivity of BDO LLP;
• The policy on the engagement of the external auditor to supply non-
audit services and approval of any such services;
• The need for the Company to have its own internal audit function;
• The ISAE/AAF and SSAE16 reports or their equivalent from the
Manager, the Custodian, Depositary and a due diligence report
from the Company’s share registrar; and
• The Committee’s terms of reference, which can be found on the
website at ctcapitalandincome.co.uk.
Comprehensive papers and reports relating to each of these matters
were considered by the Committee and recommendations were then
made to the Board as appropriate.
As noted within Principal Risks and Future Prospects on page 28 the
Directors have reviewed the risk register of the Company.
Throughout the preparation processes for both the interim report for
the six month period ended 31 March 2023 and the annual report for
the year ended 30 September 2023 the Committee has considered
Report of the Audit and Risk Committee
The primary responsibilities of the Audit and Risk Committee (the “Committee”) are to ensure the
integrity of the financial reporting of the Company and the appropriateness of the internal controls
and risk management processes.
Report and Accounts 2023 | 51
Strategic Report Governance Report Financial Report Notice of Meeting
Other Information
Chair’s StatementOverview Auditors’ Report
Governance Report
control systems. The assessment included a review of the Manager’s
risk management infrastructure and the report on policies and
procedures in operation and tests for the year to 31 October 2022 (the
“ISAE/AAF Report”). The Manager has provided further assurance
that controls have operated satisfactorily since that date. This had
been prepared by the Manager for all its investment trust clients to the
International Standard on Assurance Engagement (“ISAE”) No.3402
and to the standards of the Institute of Chartered Accountants in
England and Wales Technical Release AAF (01/20).
The ISAE/AAF Report, containing an unqualified opinion from
independent reporting accountants KPMG, sets out the Manager’s
control policies and procedures with respect to the management of its
clients’ investments and maintenance of their financial records. The
effectiveness of these controls is monitored by the Manager’s Group
Audit and Compliance Committee, which receives regular reports from
its Internal Audit department. Procedures are also in place to capture
and evaluate any failings and weaknesses within the Manager’s control
environment and those extending to any outsourced service providers
to ensure that action would be taken to remedy any significant issues.
Any errors or breaches relating to the Company are reported at each
Board meeting by the Manager. No failings or weaknesses material to
the overall control environment and financial statements were identified
in the Company’s year under review. The Committee also reviewed
the control reports of the Custodian, the Depositary and the Share
Registrar and were satisfied that there were no material exceptions.
Through the reviews and reporting arrangements set out above and
by direct enquiry of the Manager and other relevant parties, the
Committee and the Board have satisfied themselves that there were
no material control failures or exceptions affecting the Company’s
operations during the year or to the date of this report.
Based on review, observation and enquiry by the Committee and Board
of the processes and controls in place within the Manager, including
the unqualified opinion of a reputable independent accounting firm that
those controls operated satisfactorily, the Committee has concluded
that there is no current need for the Company to have an internal audit
function and the Board has concurred.
External audit process and significant issues considered by
the Committee
In carrying out its responsibilities, the Committee has considered the
planning arrangements, scope, materiality levels and conclusions of
the 2023 external audit. The table on the next page describes the
significant judgements and issues considered by the Committee in
conjunction with BDO LLP in relation to the financial statements for
the year and how these issues were addressed. The Committee also
included in their review the areas of judgements and estimates referred
to in note 2(c)(xv) to the accounts.
The other members of the Committee have a combination of relevant
financial, investment and business experience through the senior posts
held throughout their careers. The Committee considers that collectively
the members have sufficient recent and relevant sector and financial
experience to discharge their responsibilities. The performance of the
Committee was evaluated as part of the Board appraisal process.
Management of risk
The Manager’s Business Risk department provides regular control
report updates to the Committee covering risk and compliance while
any significant issues of direct relevance to the Company are required
to be reported to the Board immediately. During the year the internal
audit function of the Manager presented to the Board on their recent
and planned activities within Columbia Threadneedle Investments.
A key risk register is produced by the Manager in consultation with
the Board to identify the risks to which the Company is exposed, the
controls in place and the actions being taken to mitigate them. The
Board has a robust process for considering the resulting risk matrix and
reviews the significance of the risks and the reasons for any changes.
The Company’s Principal Risks and their mitigations are set out on
pages 28 and 29 with additional information given in note 21 to the
accounts. The integration of these risks into the analyses underpinning
the “Five Year Horizon” Statement on page 30 was fully considered
and the Committee concluded that the Board’s statement was soundly
based.
Internal controls
The Board has overall responsibility for the Company’s systems of
internal controls, for reviewing their effectiveness and ensuring that
risk management and control processes are embedded in the day-to-
day operations, which are managed by the Manager. The Committee
has reviewed and reported to the Board on these controls, which aim
to ensure that the assets of the Company are safeguarded, proper
accounting records are maintained, and the financial information used
within the business and for publication is reliable. Control of the risks
identified, covering financial, operational, compliance and overall risk
management, is exercised by the Committee and the Board through
regular reports provided by the Manager. The reports cover investment
performance, compliance with agreed and regulatory investment
restrictions, financial analyses, revenue estimates, performance of the
third party administrators of the CT Savings Plans and other relevant
management issues.
The systems of internal controls are designed to manage rather than
eliminate risk of failure to achieve business objectives and can only
provide reasonable, but not absolute, assurance against material
misstatement, loss or fraud. Further to the review by the Committee,
the Board has assessed the effectiveness of the Company’s internal
52 | CT UK Capital and Income Investment Trust PLC
Significant judgements and issues considered by the Committee in 2023
Matter Action
Investment Portfolio Valuation
The Company’s portfolio is invested
in listed securities. Although the
vast majority of the securities
are highly liquid and listed on
recognised stock exchanges,
errors in the valuation could have a
material impact on the Company’s
Net Asset Value per share.
The Board reviews the full portfolio valuation at each Board meeting and receives quarterly
monitoring and control reports from the AIFM and Depositary. The Committee reviewed the
Manager’s ISAE/AAF Report for the year ended 31 October 2022, which is reported on by
independent external accountants and which details the systems, processes and controls
around the daily pricing of equity and fixed interest securities. The Manager has provided further
assurance that controls have operated satisfactorily since that date. The valuation and existence
of investments were tested and reported on by the auditors as set out on page 57.
Misappropriation of Assets
Misappropriation or non-existence
of the Company’s investments
or cash balances could have a
material impact on its Net Asset
Value per share.
The Committee reviewed the Manager’s ISAE/AAF Report for the year ended 31 October 2022, which
details the controls around the reconciliation of the Manager’s records to those of the Custodian. The
Committee also reviewed the Custodian’s annual internal control report to 31 March 2023, which
is reported on by independent external accountants and which provides details regarding its control
environment. Regular updates from the Manager, Depositary and Custodian, in respect of controls
operating in subsequent periods up to 30 September 2023, were also reviewed and agreed as being
satisfactory.
Income Recognition
Incomplete or inaccurate income
recognition could have an adverse
effect on the Company’s Net Asset
Value and earnings per share and
its level of dividend cover.
The Committee reviewed the Manager’s ISAE/AAF Report and subsequent confirmation referred to
above. It also assessed the final level of income received for the year against the budget which was
set at the start of the year and discussed the accounting treatment of special dividends with the
Manager. Investment income was also tested and reported on by the auditors as set out on page 57.
The Committee met in November 2023 to discuss the draft
Report and Accounts, with representatives of BDO LLP and the
Manager in attendance. BDO LLP submitted their Year End report
to the Committee and confirmed that they anticipated issuing an
unqualified audit opinion in respect of the Report and Accounts.
The Committee established that there were no material issues
or findings arising which needed to be brought to the attention of
the Board and confirmed that the Report and Accounts were in
their view fair, balanced and understandable in accordance with
accounting standards, regulatory requirements and best practice. The
Independent Auditors’ Report, which sets out their unqualified audit
opinion, the scope of the audit and the areas of focus, in compliance
with applicable auditing standards, can be found on pages 56 to 60.
Auditor assessment and independence
The Committee has been satisfied with the effectiveness of BDO LLP’s
performance on the audit of the Company’s accounts. BDO LLP has
confirmed its independence of the Company and has complied with
relevant auditing standards. In evaluating BDO LLP , the Committee
took into consideration the standing, skills and experience of the
firm and the audit team and also took note of BDO LLP’s audit
performance through the FRC’s Audit Quality Review. The fee for
the audit was £42,000 (2022: £35,000) as shown in note 5 to the
accounts.
Non-audit services
The Committee regards the continued independence of the auditor to be
a matter of the highest priority. The Company’s policy with regard to the
provision of non-audit services by the external auditor ensures that no
engagement will be permitted if:
• the provision of the services would contravene any regulation or
ethical standard;
• the auditors are not considered to be expert providers of the non-
audit services;
• the provision of such services by the auditor creates a conflict of
interest for either the Board or the Manager; and
• the services are considered to be likely to inhibit the auditor’s
independence or objectivity as auditors.
In particular, the Committee has a policy that the costs of all non-audit
services sought from the auditors in any one year should not exceed 70%
of the average audit fee paid over the last three consecutive years.
There were no non-audit services for the year ended 30 September 2023.
Patrick Firth
Chair of the Audit and Risk Committee
29 November 2023
Report and Accounts 2023 | 53
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Other Information
Chair’s StatementOverview Auditors’ Report
Governance Report
Role of the Management Engagement Committee (“the
Committee”)
The primary role of the Committee is to review annually the
performance of and the fee paid to the Manager for the services it
provides under the management agreement together with the terms
of the agreement. As part of this process it receives reports on any
services delegated by the Manager to outsourced service providers.
The Committee considers any extra charges and services proposed by
the Manager in addition to the management fees.
The Committee reviews annually the performance of all service
providers to the Company and monitors fees payable to them. It will
make any necessary recommendations to the Board.
Composition of the Committee
All of the Directors are members of the Committee. The Committee is
chaired by Nicky McCabe. The terms of reference can be found on the
website at ctcapitalandincome.co.uk.
Manager and supplier evaluation process
Investment performance is considered by the Board at every meeting,
with the formal annual evaluation undertaken by the Committee
including the wider services provided by the Manager. In evaluating the
performance, the Committee considers a range of factors including
the investment performance of the portfolio and the skills, experience
and depth of the team involved in managing the Company’s assets.
For the purposes of its ongoing monitoring, the Board had received
detailed reports and views from the Fund Manager on investment
policy, asset allocation, gearing and risk. The Board had also received
comprehensive performance and risk management schedules to
enable it to assess: the success or failure of the management of
the portfolio against the performance objectives set by the Board;
the sources of positive and negative contribution to the portfolio in
terms of gearing, asset allocation and stock selection; and the risk/
return characteristics. The Committee also monitors the level of the
Manager’s fee, the service provided by the Manager and the service
and fees of all of the Company’s third party service providers.
Manager reappointment
The annual evaluation that took place in July 2023 included a
presentation from the Manager’s Head of Investment Trusts. The
Report of the Management
Engagement Committee
Manager continued to commit the necessary resources in all areas
of their responsibilities, including investment, ESG, marketing and
administrative services towards the achievement of the Company’s
objective. The Committee met in closed session following the
presentation and concluded that in its opinion, in the light of longer-
term investment performance and the quality of the overall service
provided, the continuing appointment of the Manager on the terms
agreed was in the interests of Shareholders as a whole. The Board
ratified this recommendation.
Nicky McCabe
Chair of the Management Engagement Committee
29 November 2023
54 | CT UK Capital and Income Investment Trust PLC
reasonable steps for the prevention and detection of fraud and
other irregularities.
The Report and Accounts is published on the
ctcapitalandincome.co.uk website, which is maintained by the
Manager. The Directors are responsible for the maintenance and
integrity of the Company’s website. Visitors to the website need
to be aware that legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
Statement under Disclosure Guidance and Transparency
Rule 4.1.12
Each of the Directors listed on page 36 confirm to the best of their
knowledge that:
• the financial statements, prepared in accordance with
applicable accounting standards give a true and fair view of the
assets, liabilities, financial position and profit of the Company;
• the Strategic Report includes a fair review 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 they face; and
• the Annual Report and financial statements, taken as a
whole, are fair, balanced and understandable and provide
the information necessary for Shareholders to assess the
Company’s position and performance, business model and
strategy.
On behalf of the Board
Jane Lewis
Chair
29 November 2023
The Directors are responsible for preparing the Report and
Accounts, the Directors’ Remuneration Report and the financial
statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements
for each financial year. Under that law the Directors have prepared
the financial statements in accordance with United Kingdom
Accounting Standards, comprising FRS 102 and applicable law
(United Kingdom Generally Accepted Accounting Practice).
Under company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Company and of the profit or
loss of the Company for that period. In preparing these financial
statements, the Directors are required to:
• select suitable accounting policies and then apply them
consistently;
• make judgements and accounting estimates that are
reasonable and prudent;
• state whether applicable UK Accounting Standards have been
followed, subject to any material departures disclosed and
explained in the financial statements respectively;
• prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business; and
• prepare a Directors’ Report, a Strategic Report and a Directors’
Remuneration Report which comply with the requirements of
the Companies Act 2006.
The Directors confirm that they have complied with the above
requirements in preparing the financial statements.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements and the Directors’ Remuneration Report
comply with the Companies Act 2006. They are also responsible
for safeguarding the assets of the Company and hence for taking
Statement of Directors’ Responsibilities
Report and Accounts 2023 | 55
Strategic Report Governance Report Financial Report Notice of Meeting
Other Information
Chair’s StatementOverview Auditors’ Report
Governance Report
Management and Advisers
The Manager
CT UK Capital and Income Investment Trust
PLC is managed by Columbia Threadneedle
Investment Business Limited, a wholly-
owned subsidiary of Columbia Threadneedle
AM (Holdings) PLC which is ultimately owned
by Ameriprise Financial, Inc. Columbia
Threadneedle Investment Business Limited
is authorised and regulated in the UK by the
Financial Conduct Authority and is appointed
under a management agreement with the
Company setting out its responsibilities for
investment management, administration and
marketing.
The Manager also acts as the Alternative
Investment Fund Manager.
Julian Cane Fund Manager and director of
UK equities at the Manager, has managed
the Company’s investments since March
1997. He joined the Manager in 1993.
Marrack Tonkin Head of Investment Trusts
at the Manager. He has responsibility for the
relationship with the Company. He joined the
Manager in 1989.
Scott McEllen Represents the Manager as
Company Secretary and is responsible for
the Company’s statutory compliance. He
joined the Manager in 2007.
.
The Secretary and the Company’s
Registered Office
Columbia Threadneedle Investment
Business Limited
Cannon Place, 78 Cannon Street
London EC4N 6AG
Telephone: 0131 573 8300
Website: ctcapitalandincome.co.uk
Email: invest@columbiathreadneedle.com
The Auditors
BDO LLP
55 Baker Street
London W1U 7EU
The Bank
JPMorgan Chase Bank
25 Bank Street, Canary Wharf
London E14 5JP
The Custodian
JPMorgan Chase Bank
25 Bank Street, Canary Wharf
London E14 5JP
The Depositary
JPMorgan Europe Limited
25 Bank Street, Canary Wharf
London E14 5JP
The Registrars
Computershare Investor Services PLC
The Pavilions, Bridgwater Road
Bristol BS99 6ZZ
Telephone: 0370 889 4094
The Legal Counsel
Dickson Minto W.S.
Broadgate Tower, 20 Primrose Street
London EC2A 2EW
The Broker
Cavendish (formerly Cenkos Securities plc)
1 Bartholomew Close
London EC1A 7BL
56 | CT UK Capital and Income Investment Trust PLC
Independent Auditors’ Report
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the
Directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our evaluation
of the Directors’ assessment of the Company’s ability to continue to
adopt the going concern basis of accounting included:
• Evaluating the appropriateness of the Directors’ method of
assessing going concern in light of market volatility by reviewing
the information used by the Directors in completing their
assessment;
• Assessing the liquidity of the investment portfolio, which
underpins the ability to meet the future obligations and operating
expenses for a period of 12 months from the date of approval of
these financial statements;
• Reviewing the loan agreements to identify relevant covenants and
assessing the likelihood of them being breached based on the
Directors’ forecast and sensitivity analysis;
Based on the work we have performed, we have not identified
any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
Company’s ability to continue as a going concern for a period of
at least twelve months from when the financial statements are
authorised for issue.
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 to the Directors’ statement in the financial
statements 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.
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 system of internal control,
and assessing the risks of material misstatement in the financial
statements. We also 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.
Opinion on the financial statements
In our opinion the financial statements:
• give a true and fair view of the state of the Company’s affairs as
at 30 September 2023 and of its profit for the year then ended;
• have been properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice; and
• have been prepared in accordance with the requirements of the
Companies Act 2006.
We have audited the financial statements of
CT UK Capital and
Income Investment Trust PLC
(the “Company”) for the year ended 30
September 2023 which comprise the income statement, statement
of changes in equity, the Balance sheet, the statement of cash
flows and notes to the financial statements, including a summary
of significant accounting policies. The financial reporting framework
that has been applied in their preparation is applicable law and
United Kingdom Accounting Standards, including Financial Reporting
Standard 102
The Financial Reporting Standard applicable in the
UK and Republic of Ireland
(United Kingdom Generally Accepted
Accounting Practice).
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 the audit of the financial statements section of our report. We
believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion. Our audit opinion is
consistent with the additional report to the audit committee.
Independence
Following the recommendation of the audit committee, we were
appointed by the Board of Directors on 11 February 2020 to audit
the financial statements for the year ending 30 September 2020
and subsequent financial periods. The period of total uninterrupted
engagement including retenders and reappointments is four years,
covering the years ended 30 September 2020 to 30 September
2023. We remain independent of the Company in accordance with
the ethical requirements that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical Standard as applied
to listed public interest entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. The non-audit
services prohibited by that standard were not provided to the Company.
Independent auditor’s report to the members of CT UK Capital and Income Investment Trust PLC
Report and Accounts 2023 | 57
Independent Auditors’ Report
Strategic Report Governance Report Financial Report Notice of Meeting
Other Information
Chair’s StatementOverview Auditors’ Report
Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to fraud)
that we identified, including those which had the greatest effect on:
the overall audit strategy, the allocation of resources in the audit, and
directing the efforts of the engagement team. These matters were
addressed in the context of our audit of the financial statements as
a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
Key audit matter How the scope of our audit addressed the key audit matter
Valuation and
ownership
quoted of
investments
(Note 2c (i) on
page 68 and
10 on page 74)
The investment portfolio at the year-end comprised of
100% of listed equity investments held at fair value
through profit or loss.
There is a risk that the prices used for the valuation of the
listed investments held by the Company are not reflective
of fair value and the risk that errors made in the recording
of investment holdings result in the incorrect reflection of
investments owned by the Company.
Therefore we considered the valuation and ownership
of quoted investments to be the most significant audit
area as the quoted investments also represent the most
significant balance in the financial statements and
underpin the principal activity of the entity.
For these reasons and the materiality of the balance
in relation to the financial statements as a whole, we
considered this to be a key audit matter.
We responded to this matter by testing the valuation and ownership of the whole portfolio of
quoted investments. We performed the following procedures:
• Confirmed the year-end bid price was used by agreeing to externally quoted prices;
• Assessed if there were contra indicators, such as liquidity considerations, to suggest bid
price was not the most appropriate indication of fair value by considering the realisation
period for individual holdings;
• Obtained direct confirmation of the number of shares held per equity investment from the
custodian regarding all investments held at the balance sheet date; and
• Recalculated the valuation by multiplying the number of shares held per the statement
obtained from the custodian by the valuation per share.
Key observations:
Based on our procedures performed we did not identify any matters to suggest that the
valuation and ownership of quoted investments was not appropriate.
Revenue
recognition
(Note 2c (v) on
page 67 and
Note 3 on page
68)
Income arises from dividends and is a key factor in
demonstrating the performance of the portfolio. As
such there may be an incentive to recognise income as
revenue where it is more appropriately of a capital nature.
Additionally, judgement is required by management
in determining the allocation of dividend income to
revenue or capital for certain corporate actions or special
dividends.
For this reason, we considered revenue recognition to be
a key audit matter
We assessed the treatment of dividend income from corporate actions and special dividends and
challenged if these had been appropriately accounted for as income or capital by reviewing the
underlying reason for issue of the dividend and whether it could be driven by a capital event.
We analysed the whole population of dividend receipts to identify items for further discussion
that could indicate a capital distribution, for example where a dividend represents a particularly
high yield. In these instances we performed a combination of inquiry with management and our
own independent research, including inspection of financial statements of investee companies, to
ascertain whether the underlying event was indeed of a capital nature.
We derived our own expectation of income for the whole portfolio during the year using data
analytics based on the investment holdings and distributions from independent sources and
traced a sample of dividend income receipts to bank.
Key observations:
Based on our procedures performed we found the judgements made by management in
determining the allocation of income to revenue or capital to be appropriate.
Overview
2023 2022
Key audit matters Valuation and ownership of quoted investments
Revenue recognition
Materiality Company financial statements as a whole
£3.1m (2022: £2.9m) based on 1% (2022: 1%) of
Net assets
Specific materiality
£0.71m based on 5% (2022: 5%) of net revenue returns attributable to equity
Shareholders before tax (2022: £0.60m).
58 | CT UK Capital and Income Investment Trust PLC
performance materiality, to determine the extent of testing needed.
Importantly, misstatements below these levels will not necessarily
be evaluated as immaterial as we also take account of the nature of
identified misstatements, and the particular circumstances of their
occurrence, when evaluating their effect on the financial statements as
a whole.
Based on our professional judgement, we determined materiality for the
financial statements as a whole and performance materiality as follows:
Our application of materiality
We apply the concept of materiality both in planning and performing
our audit, and in evaluating the effect of misstatements. We consider
materiality to be the magnitude by which misstatements, including
omissions, could influence the economic decisions of reasonable
users that are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any
misstatements exceed materiality, we use a lower materiality level,
Specific Materiality
We also determined that for items impacting revenue return, a
misstatement of less than materiality for the financial statements as
a whole, specific materiality, could influence the economic decisions
of users. As a result, we determined materiality for these items
to be £0.71m (2022: £0.64m) based on 5% (2022: 5%) of net
revenue returns attributable to equity Shareholders before tax. We
further applied a performance materiality level of 75% (2022:75%) of
specific materiality to ensure that the risk of errors exceeding specific
materiality was appropriately mitigated.
Reporting threshold
We agreed with the Audit Committee that we would report to them all
individual audit differences in excess of £62,000 (2022: £60,000)
for the financial statements as a whole. We also set a separate
reporting threshold of £35,000 (2022: £30,000) for the transactions
and balances that impact on the revenue return. We also agreed to
report differences below these thresholds that, in our view, warranted
reporting on qualitative grounds.
Other information
The directors are responsible for the other information. The other
information comprises the information included in the Report and
Accounts other than the financial statements and our auditor’s report
thereon. Our opinion on the financial statements does not cover the
other information and, except to the extent otherwise explicitly stated in
our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with
the financial 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 gives rise to a material misstatement
in the financial statements themselves. If, based on the work we have
performed, we 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.
Corporate governance statement
The Listing Rules require us to review the Directors’ statement in
relation to going concern, longer-term viability and that part of the
Corporate Governance Statement relating to the Company’s compliance
with the provisions of the UK Corporate Governance Code specified for
our review.
Based on the work undertaken as part of our audit, we have concluded
that each of the following elements of the Corporate Governance
Statement is materially consistent with the financial statements or our
knowledge obtained during the audit.
Company financial statements 2023 £m 2022 £m
Materiality 3.1 2.9
Basis for determining materiality 1% of Net assets 1% of Net assets
Rationale for the benchmark applied As an investment trust, the net asset value is the key
measure of performance for users of the financial
statements.
As an investment trust, the net asset value is the key
measure of performance for users of the financial
statements.
Performance materiality 2.3 2.2
Basis for determining performance
materiality
75% of materiality 75% of materiality
Rationale for the percentage applied
for performance materiality
The level of performance materiality applied was set after
having considered a number of factors including the
expected total value of known and likely misstatements
and the level of transactions in the year.
The level of performance materiality applied was set after
having considered a number of factors including the
expected total value of known and likely misstatements
and the level of transactions in the year.
Report and Accounts 2023 | 59
Independent Auditors’ Report
Strategic Report Governance Report Financial Report Notice of Meeting
Other Information
Chair’s StatementOverview Auditors’ Report
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during the course of the audit, we are required by the Companies Act
2006 and ISAs (UK) to report on certain opinions and matters as described below.
Going concern and longer-term viability • The Directors’ statement with regards to the appropriateness of adopting the going concern basis of
accounting and any material uncertainties identified set out on page 38; and
• The Directors’ explanation as to their assessment of the Company’s prospects, the period this assessment
covers and why the period is appropriate set out on page 30.
Other Code provisions
• Directors’ statement on fair, balanced and understandable set out on page 54;
• Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set
out on page 28;
• The section of the annual report that describes the review of effectiveness of risk management and
internal control systems set out on page 51; and
• The section describing the work of the audit committee set out on page 50.
Strategic report and Directors’ report In our opinion, based on the work undertaken in the course of the audit:
• the information given in the Strategic report and the Directors’ report for the financial year for which the
financial statements are prepared is consistent with the financial statements; and
• 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 the course of the
audit, we have not identified material misstatements in the strategic report or the 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:
• adequate accounting records have not been kept, or returns adequate for our audit have not been received
from branches not visited by us; or
• 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
• certain disclosures of Directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of Directors
As explained more fully in the statement of Directors’
responsibilities, the Directors are responsible for the preparation of
the financial statements and for being satisfied that they give a true
and fair view, and for such internal control as the Directors determine
is necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors 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 financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
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 of irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including fraud is
detailed below:
60 | CT UK Capital and Income Investment Trust PLC
Our procedures in respect of the above included:
• The procedures set out in the Key Audit Matters section above;
• Recalculating investment management fees in total;
• Obtaining independent confirmation of bank balances; and
• Testing material period end journals 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.
We also communicated relevant identified laws and regulations and
potential fraud risks to all engagement team members who were
all deemed to have appropriate competence and capabilities and
remained alert to any indications of fraud or non-compliance with
laws and regulations throughout the audit.
Our audit procedures were designed to respond to risks of material
misstatement in the financial statements, 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 involve
deliberate concealment by, for example, forgery, misrepresentations
or through collusion. There are inherent limitations in the audit
procedures performed and the further removed non-compliance with
laws and regulations is from the events and transactions reflected in
the financial statements, the less likely we are to become aware of
it.
A further description of our responsibilities is available on
the Financial Reporting Council’s website at: www.frc.org.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 the fullest extent
permitted by law, we do not accept or 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.
Peter Smith (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London
29 November 2023
BDO LLP is a limited liability partnership registered in England and
Wales (with registered number OC305127).
Non-compliance with laws and regulations
Based on:
• Our understanding of the Company and the industry in which it
operates;
• Discussion with management and those charged with
governance and Audit Committee; and
• Obtaining and understanding of the Company’s policies and
procedures regarding compliance with laws and regulations.
We considered the significant laws and regulations to be Companies
Act 2006, the FCA listing and DTR rules, the principles of the AIC
Code of Corporate Governance, industry practice represented by the
AIC SORP, the applicable accounting framework, and qualification as
an Investment Trust under UK tax legislation as any non-compliance
of this would lead to the Company losing various deductions and
exemptions from corporation tax.
Our procedures in respect of the above included:
• Agreement of the financial statement disclosures to underlying
supporting documentation;
• Enquiries of management and those charged with governance
relating to the existence of any non-compliance with laws and
regulations;
• Reviewing minutes of meetings of those charged with
governance throughout the period for instances of non-
compliance with laws and regulations; and
• Reviewing the calculation in relation to Investment Trust
compliance to check that the Company was meeting its
requirements to retain its Investment Trust Status.
Fraud
We assessed the susceptibility of the financial statement to material
misstatement including fraud.
Our risk assessment procedures included:
• Enquiry with management and those charged with governance
regarding any known or suspected instances of fraud;
• Obtaining an understanding of the Company’s policies and
procedures relating to:
• Detecting and responding to the risks of fraud; and
• Internal controls established to mitigate risks related to
fraud.
• Review of minutes of meeting of those charged with governance
for any known or suspected instances of fraud; and
• Discussion amongst the engagement team as to how and
where fraud might occur in the financial statements.
Based on our risk assessment, we considered the areas most
susceptible to be revenue recognition and management override of
controls.
Report and Accounts 2023 | 61
Strategic Report Governance Report Financial Report Notice of Meeting
Other Information
Chair’s StatementOverview Auditors’ Report
Financial Report
Income Statement
for the year ended 30 September
Revenue
£’000s
Capital
£’000s
2023
Total
£’000s
Revenue
£’000s
Capital
£’000s
2022
Total
£’000s
10
Gains/(losses) on investments – 25,619 25,619 – (57,259) (57,259)
Foreign exchange (losses)/gains (4) 4 – (1) – (1)
3 17
Income 16,179 – 16,179 14,495 – 14,495
4 4
Management fee (693) (693) (1,386) (714) (714) (1,428)
5 5
Other expenses (742) (1) (743) (680) (1) (681)
Net return before finance costs and taxation 14,740 24,929 39,669 13,100 (57,974) (44,874)
6 6
Finance costs (662) (662) (1,324) (192) (192) (384)
Net return before taxation 14,078 24,267 38,345 12,908 (58,166) (45,258)
7 7
Taxation (22) – (22) (18) – (18)
Net return attributable to Shareholders 14,056 24,267 38,323 12,890 (58,166) (45,276)
8 8
Return per share – basic and diluted 13.26p 22.89p 36.15p 12.03p (54.29p) (42.26p)
The total column of this statement is the profit and loss account of the Company. The revenue return and capital return columns are supplementary to this and are prepared under
guidance published by the AIC.
All revenue and capital items in the above statement derive from continuing operations.
A statement of Comprehensive Income is not required as all gains and losses of the Company have been reflected in the above statement.
The notes on pages 65 to 81 form an integral part of the financial statements.
Revenue notes
Capital notes
62 | CT UK Capital and Income Investment Trust PLC
Statement of Changes in Equity
for the year ended 30 September 2023
Notes
Share
capital
£’000s
Share
premium
account
£’000s
Capital
redemption
reserve
£’000s
Special
reserve
£’000s
Capital
reserve
£’000s
Revenue
reserve
£’000s
Total
Shareholders’
funds
£’000s
Balance at 30 September 2022 26,822 141,380 4,146 2,642 110,200 11,093 296,283
Movements during the year ended 30 September 2023
9
Dividends paid – – – – – (12,819) (12,819)
16
Ordinary shares issued from treasury – – – 224 – – 224
16,17
Ordinary shares bought back and held in treasury – – – (2,866) (4,380) – (7,246)
16
Costs relating to broker – (13) – – (5) – (18)
Net return attributable to Shareholders – – – – 24,267 14,056 38,323
Balance at 30 September 2023 26,822 141,367 4,146 – 130,082 12,330 314,747
for the year ended 30 September 2022
Notes
Share
capital
£’000s
Share
premium
account
£’000s
Capital
redemption
reserve
£’000s
Special
reserve
£’000s
Capital
reserve
£’000s
Revenue
reserve
£’000s
Total
Shareholders’
funds
£’000s
Balance at 30 September 2021 26,822 141,374 4,146 4,432 168,366 10,735 355,875
Movements during the year ended 30 September 2022:
9
Dividends paid – – – – – (12,532) (12,532)
16
Ordinary shares issued from treasury – 21 – 568 – – 589
16
Ordinary shares bought back and held in treasury – – – (2,358) – – (2,358)
16
Costs relating to broker – (15) – – – – (15)
Net return attributable to Shareholders – – – – (58,166) 12,890 (45,276)
Balance at 30 September 2022 26,822 141,380 4,146 2,642 110,200 11,093 296,283
The notes on pages 65 to 81 form an integral part of the financial statements.
Report and Accounts 2023 | 63
Strategic Report Governance Report Financial Report Notice of Meeting
Other Information
Chair’s StatementOverview Auditors’ Report
Financial Report
Balance Sheet
at 30 September
Notes
2023
£’000s
2022
£’000s
Fixed assets
10
Investments 336,112 318,796
Current assets
11
Debtors 2,833 5,106
14
Cash and cash equivalents 2,378 906
Total current assets 5,211 6,012
Current liabilities
12
Creditors: amounts falling due within one year (1,576) (4,525)
13,14
Bank loan (25,000) (24,000)
Total current liabilities (26,576) (28,525)
Net current liabilities (21,365) (22,513)
Total assets less current liabilities 314,747 296,283
Capital and reserves
15
Share capital 26,822 26,822
16
Share premium account 141,367 141,380
16
Capital redemption reserve 4,146 4,146
16
Special reserve – 2,642
17
Capital reserve 130,082 110,200
17
Revenue reserve 12,330 11,093
Total Shareholders’ funds 314,747 296,283
18
Net Asset Value per ordinary share – pence 301.67 277.66
The notes on pages 65 to 81 form an integral part of the financial statements.
The Financial Statements were approved by the Board on 29 November 2023 and signed on its behalf by
Jane Lewis, Chair
64 | CT UK Capital and Income Investment Trust PLC
Statement of Cash Flows
for the year ended 30 September
Notes
2023
£’000s
2022
£’000s
19
Cash flows from operating activities before dividends and interest (2,162) (2,241)
Dividends received 15,777 14,133
Interest received 91 9
Interest paid (1,298) (376)
Cash flows from operating activities 12,408 11,525
Investing activities
Purchase of investments (20,000) (22,303)
Sale of investments 27,924 25,189
Other capital charges (1) (1)
Cash flows from investing activities 7,923 2,885
Cash flows before financing activities 20,331 14,410
Financing activities
9
Equity dividends paid (12,819) (12,532)
16
Net proceeds from issuance of shares from treasury 224 589
16
Broker costs associated with share issues and buybacks (18) (15)
16,17
Costs of shares bought back and held in treasury (7,246) (2,358)
13,14
Drawdown/(repayment) of bank loan 1,000 (1,000)
Cash flows from financing activities (18,859) (15,316)
14
Net movement in cash and cash equivalents 1,472 (906)
14
Cash and cash equivalents at the beginning of the year 906 1,813
14
Effect of movement in foreign exchange – (1)
14
Cash and cash equivalents at the end of the year 2,378 906
Represented by:
Cash at bank 88 36
Short term deposits 2,290 870
2,378 906
The notes on pages 65 to 81 form an integral part of the financial statements.
Report and Accounts 2023 | 65
Strategic Report Governance Report Financial Report Notice of Meeting
Other Information
Chair’s StatementOverview Auditors’ Report
Financial Report
1. General information
CT UK Capital and Income Investment Trust PLC is an investment company incorporated in England (UK) with a premium listing on the London
Stock Exchange. The Company registration number is 02732011 and the registered office is Cannon Place, 78 Cannon Street, London, EC4N
6AG, United Kingdom.
The Company has conducted its affairs so as to qualify as an investment trust under the provisions of Section 1158 of the Corporation Tax
Act 2010. Approval of the Company under Section 1158 has been received. The Company intends to conduct its affairs so as to enable it to
continue to comply with the requirements. Such approval exempts the Company from UK Corporation Tax on gains realised in the relevant year
on its portfolio of fixed asset investments.
The accounting policies have been applied consistently throughout the year ended 30 September 2023 with no significant changes, as set out in
note 2 below.
2. Significant accounting policies
(a) Going concern
As referred to on page 38 and note 20 to the accounts, the Directors believe that it is appropriate for the accounts to be prepared on
a going concern basis.
(b) Basis of accounting
The accounts of the Company have been prepared on a going concern basis under the historical cost convention, modified to include
fixed asset investments, and in accordance with the Companies Act 2006, Financial Reporting Standards (FRS) 102 applicable in the
United Kingdom and with the Statement of Recommended Practice ‘Financial Statements of Investment Trust Companies and Venture
Capital Trusts’ (“SORP”) issued by the Association of Investment Companies.
All of the Company’s operations are of a continuing nature. The functional and reporting currency of the Company is pounds sterling
because that is the currency of the primary economic environment in which the Company operates.
The Directors are of the opinion that the Company’s activities comprise a single operating segment, which is investing in the UK and
Europe in equities to secure long term growth in income and capital.
In accordance with the SORP, the Income Statement has been analysed between a revenue account (dealing with items of a revenue
nature) and a capital account (relating to items of a capital nature). Revenue returns include, but are not limited to, dividend income,
operating expenses and tax (insofar as the expenses and tax are not allocated to capital, as described in note 2(c)). Net revenue
returns are allocated via the revenue account to the revenue reserve, out of which four interim dividend payments are made. Capital
returns include, but are not limited to, realised and unrealised profits and losses on investments, income identified as being capital
in nature, expenses allocated to capital and currency profits and losses on cash and borrowings. Net capital returns are allocated via
the capital account to the capital reserve. Dividends paid to Shareholders are shown in the Statement of Changes in Equity.
(c) Principal accounting policies
The policies set out below have been applied consistently throughout the year ended 30 September 2023 and the prior year.
Notes to the Accounts
66 | CT UK Capital and Income Investment Trust PLC
(i) Financial instruments
Financial instruments include fixed asset investments, cash and short term deposits, debtors and creditors. Accounting standards
recognise a hierarchy of fair value measurements for financial instruments which gives the highest priority to unadjusted quoted prices
in active markets for identical assets or liabilities (level 1) and the lowest priority to unobservable inputs (level 3). The classification of
financial instruments depends on the lowest significant applicable input, as follows:
Level 1 – The unadjusted quoted price in an active market for identical assets or liabilities that the Company can access at the
measurement date.
Level 2 – Inputs other than quoted prices included within Level 1 that are observable (i.e. developed using market data) for the asset or
liability, either directly or indirectly.
Level 3 – External inputs are unobservable for the asset or liability. Value is the Directors’ best estimate, based on advice from relevant
knowledgeable experts, use of recognised valuation techniques and on assumptions as to what inputs other market participants would
apply in pricing the same or similar instrument. Included within this category are unquoted investments.
All of the Company’s investments held during the year have been classified as Level 1.
(ii) Fixed asset investments and derivative financial instruments
As an investment trust, the Company measures its fixed asset investments at “fair value through profit or loss” and treats all
transactions on the realisation and revaluation of investments as transactions on the Capital Account. Purchases and sales are
recognised on a trade date basis.
Quoted investments are valued at bid value at the close of business on the relevant date on the exchange on which the investment
is quoted. Investments which are not quoted or which are not frequently traded are stated at Directors’ best estimate of fair value.
In arriving at their estimate, the Directors make use of recognised valuation techniques and may take account of recent arms’ length
transactions in the same or similar instruments. Where no reliable fair value can be estimated, investments are carried at cost or,
where subsequently revalued, at their previous carrying amount less any provision for impairment.
(iii) Debt Instruments
Loans and overdrafts are recorded initially at proceeds received, less direct issue costs, and subsequently measured at amortised
cost using the effective interest method.
Finance charges, including interest, are accrued using the effective interest method and are added to the carrying amount of the
instrument to the extent that they are not settled in the period. See 2(c)(vi) on page 67 for allocation of finance charges within the
Income Statement.
(iv) Foreign currency
Monetary assets, monetary liabilities and equity investments denominated in a foreign currency are expressed in sterling at rates
of exchange ruling at the Balance Sheet date. Purchases and sales of investment securities, dividend income, interest income and
expenses are translated at the rates of exchange prevailing at the respective dates of such transactions.
Foreign exchange profits and losses on fixed asset investments are included within the changes in fair value in the capital account.
Foreign exchange profits and losses on other currency balances are separately credited or charged to the capital account except
where they relate to revenue items when they are credited or charged to the revenue account.
(v) Income
Income from equity shares is brought into the revenue account (except where, in the opinion of the Directors, its nature indicates it should
be recognised within the capital account) on the ex-dividend date or, where no ex-dividend date is quoted, when the Company’s right to
receive payment is established. Fixed returns on non-equity shares and debt securities are recognised on a time apportionment basis so
as to reflect the effective yield on the investment.
Dividends are accounted for in accordance with FRS 102 on the basis of income actually receivable. Dividends from overseas companies
are shown gross of withholding tax.
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Where the Company has elected to receive its dividends in the form of additional shares rather than in cash (scrip dividends), the amount
of the cash dividend foregone is recognised as income. Any excess in the value of the shares received over the amount of the cash
dividend foregone is recognised in the capital account.
Underwriting commission is recognised when the Company’s right to receive payment is established. Deposit interest is accounted for on
an accruals basis.
(vi) Expenses, including finance charges
Expenses, inclusive of associated value added tax (VAT), are charged to the revenue account of the Income Statement, except as
noted below:
– expenses incidental to the acquisition or disposal of fixed asset investments which are recognised immediately in the capital
return of the Income Statement and are thus charged to capital reserve – realised; and
– 50% of management fees and 50% of finance costs are allocated to capital reserve – realised, in accordance with the Board’s
long term expected split of returns from the investment portfolio of the Company.
All expenses are accounted for on an accruals basis.
(vii) Taxation
Deferred tax is provided for in accordance with FRS102 on all timing differences that have been enacted at the Balance Sheet date
and are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax assets are only recognised
if it is considered more likely than not that there will be suitable profits from which the future reversal of timing differences can be
deducted. In line with the recommendations of the SORP, the allocation method used to calculate the tax relief on expenses charged
to capital is the “marginal” basis. Under this basis, if taxable income is capable of being offset entirely by expenses charged through
the revenue account, then no tax relief is transferred to the capital account.
(viii) Dividends payable
Dividends are included in the financial statements on the date on which they are declared.
Dividends paid and payable in respect of the year are set out in note 9. The amount estimated to be transferred to revenue reserves
is less than the maximum allowed under rules in the Corporation Tax Act 2010. The Board assesses the minimum level of dividend
payable in respect of any period in accordance with section 1158 rules, after taking into account the audited annual net revenue
available for distribution, and ensures that payments for each period comfortably exceed that minimum level.
(ix) Share capital
Share capital represents the nominal value of ordinary shares in issue.
(x) Share premium account (non-distributable reserve)
The following is accounted for in this reserve:
– proceeds of shares issued, net of the 25p nominal value of the shares and after deducting any associated costs of issuance.
– proceeds less cost of purchasing and selling shares from treasury.
(xi) Capital Redemption Reserve
The nominal value of ordinary share capital purchased and cancelled is transferred out of called-up share capital and into the capital
redemption reserve on the trade date.
(xii) Special reserve (distributable reserve)
The following are accounted for in this reserve:
– costs of purchasing shares for cancellation; and
– costs of purchasing or selling shares to be held in, or sold out of, treasury.
(xiii) Capital reserves (distributable reserves)
Capital reserve – arising on investments sold
The following are accounted for in this reserve:
68 | CT UK Capital and Income Investment Trust PLC
– gains and losses on the disposal of fixed asset investments and derivatives;
– settled foreign exchange differences of a capital nature;
– costs of professional advice, including related irrecoverable VAT, relating to the capital structure of the Company;
– other capital charges and credits charged or credited to this account in accordance with the above policies.
– costs of purchasing shares for cancellation; and
– costs of purchasing or selling shares to be held in, or sold out of, treasury.
Capital reserve – arising on investments held
The following are accounted for in this reserve:
– increases and decreases in the valuation of fixed asset investments and derivatives held at the year end; and
– unsettled foreign exchange valuation differences of a capital nature.
(xiv) Revenue reserve
The revenue reserve represents accumulated revenue profits retained by the Company that have not currently been distributed to
Shareholders as a dividend.
(xv) Use of judgements and estimates
The presentation of the financial statements in accordance with accounting standards requires the Board to make judgements,
estimates and assumptions that affect the accounting policies and reported amounts of assets, liabilities, income and expenses.
Estimates and judgements are continually evaluated and are based on perceived risks, historical experience, expectations of
plausible future events and other factors. Actual results may differ from these estimates.
The areas requiring the most significant judgement and estimation in preparation of the financial statements include: accounting for
the value of unquoted investments and recognising and classifying unusual or special dividends received as either revenue or capital
in nature.
The policy for valuation of unquoted securities is set out in note 2(c)(ii).
Dividends received which appear to be unusual in size or circumstance are assessed on a case-by-case basis, based on
interpretation of the investee companies’ relevant statements, to determine their allocation in accordance with the SORP to either
the Revenue or Capital accounts. Dividends which have clearly arisen out of the investee company’s reconstruction or reorganisation
are usually considered to be capital in nature and allocated to Capital Reserves. Investee company dividends which appear to be
paid in excess of current year profits may nevertheless still be considered to be wholly revenue in nature unless evidence suggests
otherwise. The value of dividends received in the year treated as capital in nature is disclosed in note 17 to the accounts. The value
of special dividends receivable in any period cannot be foreseen as such dividends are declared and paid by investee companies
without prior reference to the Company.
3. Income
2023
£’000s
2022
£’000s
Income from investments:
UK dividend income 14,270 13,742
UK dividend income – special dividends
(1)
527 114
Overseas dividend income 390 364
Property income distributions 901 266
16,088 14,486
Other income:
Interest on cash and cash equivalents 91 9
Total income 16,179 14,495
(1) Special dividends classified as revenue in nature in accordance with note 2(c)(xv).
There were no dividends recognised as capital in nature, per judgements & estimates note 2(c)(xv), during the year (2022: none).
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4. Management fee
2023 2022
Revenue
£’000s
Capital
£’000s
Total
£’000s
Revenue
£’000s
Capital
£’000s
Total
£’000s
Management fee 693 693 1,386 714 714 1,428
The Manager provides investment management and general administrative services to the Company for a quarterly management fee payable
in arrears equal to 0.1% of the funds under management. Funds under management represents total assets less current liabilities excluding
borrowings and adjusted for the proceeds of recent share issues and buybacks. The management agreement may be terminated upon six months’
notice given by either party. The Company may terminate this agreement upon 60 days’ written notice to the Manager if there is a change of control
of the Manager, provided such notice is served within six months of the said change of control. Management fees have been allocated 50% to
capital reserve in accordance with the Company’s accounting policy.
5. Other expenses
2023 2022
Revenue
£’000s
Capital
£’000s
Total
£’000s
Revenue
£’000s
Capital
£’000s
Total
£’000s
Auditors’ remuneration:
– for audit services
(1)
50 – 50 43 – 43
Directors’ fees for services to the Company
(2)
165 – 165 153 – 153
Directors’ and Officers’ liability insurance 12 – 12 10 – 10
Loan commitment fee 10 – 10 11 – 11
Marketing
(3)
88 – 88 126 – 126
Professional fees 117 – 117 98 – 98
Printing and postage 85 – 85 75 – 75
Registrars’ fees 31 – 31 28 – 28
Subscriptions and listing fees 58 – 58 55 – 55
Sundry expenses
(4)
126 1 127 81 1 82
Total other expenses 742 1 743 680 1 681
All expenses are stated gross of irrecoverable VAT, where applicable.
(1) Total Auditors’ remuneration for 2023 audit services, exclusive of VAT amounts to £42,000 (2022: £35,000).
(2) See the Directors’ Remuneration Report on pages 47 to 49.
(3) 2022 marketing figure included an under accrual brought forward from the prior year.
(4) Sundry expenses have increased primarily as a result of additional one-off consultancy fees related to the marketing of the Company.
6. Finance costs
2023 2022
Revenue
£’000s
Capital
£’000s
Total
£’000s
Revenue
£’000s
Capital
£’000s
Total
£’000s
Loan interest 661 661 1,322 190 190 380
Overdraft interest 1 1 2 2 2 4
Total finance cost 662 662 1,324 192 192 384
Finance costs have been allocated 50% to capital reserve in accordance with the Company’s accounting policy.
70 | CT UK Capital and Income Investment Trust PLC
7. Taxation on ordinary activities
(a) Analysis of tax charge for the year
2023 2022
Revenue
£’000s
Capital
£’000s
Total
£’000s
Revenue
£’000s
Capital
£’000s
Total
£’000s
Overseas taxation 22 – 22 18 – 18
Total taxation charge (see note 7(b)) 22 – 22 18 – 18
The tax assessed for the year is lower than the standard rate of corporation tax in the UK (25%) (2022: 19%). Factors affecting the
taxation charge are set out below.
(b) Factors affecting the current tax charge for the year
2023 2022
Revenue
£’000s
Capital
£’000s
Total
£’000s
Revenue
£’000s
Capital
£’000s
Total
£’000s
Net return on ordinary activities before taxation 14,078 24,267 38,345 12,908 (58,166) (45,258)
Return on ordinary activities multiplied by the pro rata effective rate of corporation tax of
22% (2022: 19%) 3,097 5,339 8,436 2,452 (11,052) (8,600)
Effects of:
Dividends (3,341) – (3,341) (2,752) – (2,752)
Excess expenses not utilised in the year 244 298 542 300 172 472
Overseas taxation not relieved 22 – 22 18 – 18
Capital returns – (5,637) (5,637) – 10,880 10,880
Total taxation (see note 7(a)) 22 – 22 18 – 18
The potential deferred tax asset of £7.7 million based on the 25% Corporation Tax rate in respect of unutilised expenses and unrelieved
overseas taxation at 30 September 2023 (2022: £6.6 million) has not been recognised as it is unlikely that these expenses will be utilised.
8. Return per share
2023 2022
Revenue Capital Total Revenue Capital Total
Net return attributable to equity Shareholders – £’000s 14,056 24,267 38,323 12,890 (58,166) (45,276)
Return per share – pence 13.26 22.89 36.15 12.03 (54.29) (42.26)
Both the revenue and capital returns per share are based on a weighted average of 106,023,426 ordinary shares in issue during the year
(2022: 107,131,967).
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9. Dividends
Dividends on ordinary shares Register date Payment date
2023
£’000s
2022
£’000s
Fourth of four interims for the year ended 30 September 2021 of 3.75p per share 03-Dec-21 17-Dec-21 – 4,019
First of four interims for the year ended 30 September 2022 of 2.65p per share 11-Mar-22 31-Mar-22 – 2,841
Second of four interims for the year ended 30 September 2022 of 2.65p per share 10-Jun-22 30-Jun-22 – 2,839
Third of four interims for the year ended 30 September 2022 of 2.65p per share 02-Sep-22 30-Sep-22 – 2,833
Fourth of four interims for the year ended 30 September 2022 of 3.85p per share 09-Dec-22 19-Dec-22 4,108 –
First of four interims for the year ended 30 September 2023 of 2.75p per share 10-Mar-23 31-Mar-23 2,928 –
Second of four interims for the year ended 30 September 2023 of 2.75p per share 16-Jun-23 30-Jun-23 2,907 –
Third of four interims for the year ended 30 September 2023 of 2.75p per share 08-Sep-23 30-Sep-23 2,876 –
12,819 12,532
The Directors have declared a fourth interim dividend in respect of the year ended 30 September 2023 of 3.90 pence per share, payable
on 18 December 2023 to all Shareholders on the register at close of business on 8 December 2023. The fourth interim dividend has not
been included as a liability in these financial statements. The dividends paid and payable in respect of the financial year ended
30 September 2023, which form the basis of the retention test for section 1159 of the Corporation Tax Act 2010, are set out below:
2023
£’000s
Net revenue return attributable to Shareholders 14,056
First of four interims for the year ended 30 September 2023 of 2.75p per share (2,928)
Second of four interims for the year ended 30 September 2023 of 2.75p per share (2,907)
Third of four interims for the year ended 30 September 2023 of 2.75p per share (2,876)
Fourth of four interims for the year ended 30 September 2023 of 3.90p per share
(1)
(4,046)
Transferred to revenue reserve 1,299
(1) Based on shares in issue and their entitlement to the dividend at 28 November 2023.
72 | CT UK Capital and Income Investment Trust PLC
10. Investments
2023
Total
(Level 1)
£’000s
2022
Total
(Level 1)
£’000
Cost brought forward 260,060 256,643
Gains brought forward 58,736 121,777
Fair value of investments brought forward 318,796 378,420
Purchases at cost 16,946 26,398
Sales proceeds (25,353) (28,876)
Gains on investments sold in year 4,771 5,781
Gains/(losses) on investments held at year end 20,952 (62,927)
Fair value of investments at 30 September 336,112 318,796
Cost at 30 September 256,528 260,060
Gains at 30 September 79,584 58,736
Fair value of investments at 30 September 336,112 318,796
2023
£’000s
2022
£’000s
Gains on investments sold in year 4,771 5,781
Gains/(losses) on investments held at year end 20,952 (62,927)
Investment transaction costs (104) (113)
Total gains/(losses) in year 25,619 (57,259)
All investments held by the Company were classified as Level 1 in nature as described in note 2(c)(i) and are listed on recognised stock
exchanges.
Investments sold during the year have been revalued over time since their original purchase, and until they were sold any unrealised gains
or losses were included in the fair value of the investments.
The investment portfolio is set out on page 21.
11. Debtors
2023
£’000s
2022
£’000s
Accrued income 1,607 1,318
Investments sold awaiting settlement 1,116 3,687
Prepayments 24 16
Overseas taxation recoverable 86 85
2,833 5,106
12. Creditors: amounts falling due within one year
2023
£’000s
2022
£’000s
Management fee 339 318
Investments purchased awaiting settlement 1,041 4,095
Loan interest 35 9
Accruals 161 103
1,576 4,525
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13. Loans
2023
£’000s
2022
£’000s
Sterling loans: falling due within one year 25,000 24,000
In March 2018 the Company entered into a £30 million multi-currency revolving loan facility with The Bank of Nova Scotia. This was
increased to £40 million in March 2022 and extended on revised terms in March 2023 for a further one year period. The loan is subject to
compliance with the loan covenants which have all been met during the period. The amount utilised and the interest rate thereon are set
on a short term basis. Interest rates and commitment fees payable on non-utilised amounts are based on the commercial terms agreed
with The Bank of Nova Scotia.
As at 30 September 2023 the Company had drawn down £25 million of the loan facility.
14. Analysis of changes in net debt
Cash
£’000s
Bank loans
£’000s
2023
Total
£’000s
Cash
£’000s
Bank loans
£’000s
2022
Total
£’000s
Net debt brought forward 906 (24,000) (23,094) 1,813 (25,000) (23,187)
Cash flows:
Drawdown of bank loan – (7,000) (7,000) – (2,500) (2,500)
Repayment of bank loan – 6,000 6,000 – 3,500 3,500
Net movement in cash and cash equivalents 1,472 – 1,472 (906) – (906)
Non-cash:
Effect of movement in foreign exchange – – – (1) – (1)
Net debt carried forward as at 30 September 2,378 (25,000) (22,622) 906 (24,000) (23,094)
15. Share capital
Total Listed Held in Treasury
2023
Issued and fully paid
2022
Issued and fully paid
Number £’000s Number £’000s Number £’000s Number £’000s
Ordinary shares of 25 pence each
Balance brought forward 107,289,022 26,822 582,819 145 106,706,203 26,677 107,289,022 26,822
Ordinary shares issued from
treasury
– – (75,000) (19) 75,000 19 175,000 44
Ordinary shares bought back &
held in treasury
– – 2,445,358 611 (2,445,358) (611) (757,819) (189)
Balance at 30 September 107,289,022 26,822 2,953,177 737 104,335,845 26,085 106,706,203 26,677
During the year ended 30 September 2023, 75,000 (2022: 175,000) ordinary shares of 25p each in nominal value were issued from
treasury with a total consideration of £223,000 (2022: £589,000) and 2,445,358 (2022: 757,819) ordinary shares were bought back
and held in treasury at a cost of £7,245,000 (2022: £2,358,000).
From 30 September 2023 until 28 November 2023, the last practicable date prior to publication, the Company has bought back 600,000
shares to be held in treasury. No shares have been issued.
74 | CT UK Capital and Income Investment Trust PLC
16. Reserves
Share
Premium
account
£’000s
Capital
Redemption
Reserve
£’000s
Special
Reserve
£’000s
Balance brought forward as at 1 October 2022 141,380 4,146 2,642
Ordinary shares issued from treasury – – 224
Ordinary shares bought back and cancelled or held in treasury – – (2,851)
Stamp duty on shares bought back – – (15)
Broker costs associated with the issue of new issues (13) – –
Balance carried forward as at 30 September 2023 141,367 4,146 –
Balance brought forward as at 1 October 2021 141,374 4,146 4,432
Ordinary shares issued from treasury – – 568
Ordinary shares bought back and cancelled or held in treasury – – (2,346)
Stamp duty on shares bought back – – (12)
Premium on issue of shares from treasury 21 – –
Broker costs associated with the issue of new issues (15) – –
Balance carried forward as at 30 September 2022 141,380 4,146 2,642
17. Other reserves
Capital reserve
– realised
£’000s
Capital reserve
– unrealised
£’000s
Capital reserve
– total
£’000s
Revenue
reserve
£’000s
Movements during the year ended 30 September 2023:
Gains on investments sold in year (see note 10) 4,771 – 4,771 –
Gains on investments held at year end (see note 10) – 20,952 20,952 –
Transaction costs – (104) (104) –
Foreign exchange gains 4 – 4 –
Management fee (see note 4) (693) – (693) –
Finance costs (see note 6) (662) – (662) –
Ordinary shares bought back and held in treasury (4,359) – (4,359) –
Stamp duty on shares bought back (21) – (21) –
Broker costs associated with share buybacks (5) – (5) –
Other capital charges (see note 5) (1) – (1) –
Revenue return – – – 14,056
Return attributable to Shareholders (966) 20,848 19,882 14,056
Dividends paid in year (see note 9) – – – (12,819)
Balance at 30 September 2022 51,463 58,737 110,200 11,093
Balance at 30 September 2023 50,497 79,585 130,082 12,330
Included within the capital reserve movement for the year are £91,000 of transaction costs including stamp duty on purchases of
investments (2022: £97,000) and £13,000 of transaction costs on sales of investments (2022: £16,000).
There were no dividends recognised as capital during the year (2022: none).
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18. Net Asset Value per ordinary share
2023 2022
Net asset value per share – pence 301.67 277.66
Net assets attributable at the year end – (£'000s) 314,747 296,283
Number of ordinary shares in issue at the year end 104,335,845 106,706,203
19. Reconciliation of total return before taxation to net cash flows from operating activities
2023
£’000s
2022
£’000s
Net return on ordinary activities before taxation 38,345 (45,258)
Adjustments for non-cash flow items, dividend income and interest:
(Gains)/losses on investments (note 10) (25,619) 57,259
Transaction costs on investments (note 10) (104) (113)
Foreign exchange movements – 1
Non-operating expenses of a capital nature (note 5) 1 1
Dividend income receivable (note 3) (16,088) (14,486)
Interest receivable (note 3) (91) (9)
Interest payable (note 6) 1,324 384
(Increase)/decrease in other debtors (9) 3
Increase/(decrease) in other creditors 79 (23)
(40,507) 43,017
Cash outflows from operating activities before dividends and interest (2,162) (2,241)
20. Going concern
In assessing the going concern basis of accounting the Directors have had regard to the guidance issued by the Financial Reporting
Council. They have also considered the Company’s objective, strategy and policy, the current cash position of the Company, the availability
of the loan facility and compliance with its covenants and the operational resilience of the Company and its service providers.
At present the global economy continues to suffer disruption due to the effects of the war in Ukraine, recent events in Israel and Gaza
and inflationary pressures and the Directors have given serious consideration to the consequences for this Company. The Company has
a number of banking covenants and at present the Company’s financial position does not suggest that any of these are close to being
breached.
The primary risk is that there is a very substantial decrease in the Net Asset Value of the Company in the short to medium term. The
Directors have considered the remedial measures that are open to the Company if such a covenant breach appears possible. As at
28 November 2023, the last practicable date before publication of this report, borrowings amounted to £25 million. This is in comparison
to a Net Asset Value of £310 million. In accordance with its investment policy the Company is invested mainly in readily realisable, FTSE
All-Share listed securities. These can be realised, if necessary, to repay the loan facility and fund future dividend payments.
The Company operates within a robust regulatory environment. The Company retains title to all assets held by the Custodian. Cash is held
with banks approved and regularly reviewed by the Manager and the Board.
At the Annual General Meeting of the Company held on 9 March 2023, Shareholders voted 99.5% in favour of the continuation of the
Company. The next continuation vote for the Company is scheduled to be held in 2028.
Accordingly, based on this information the Directors believe that the Company has the ability to meet its financial obligations as they fall
due for a period of twelve months from the date of approval of these financial statements. Accordingly, these financial statements have
been prepared on a going concern basis.
76 | CT UK Capital and Income Investment Trust PLC
21. Financial Risk Management
The Company is an investment company, listed on the London Stock Exchange, and conducts its affairs so as to qualify in the United
Kingdom (“UK”) as an investment trust under the provisions of section 1158 of the Corporation Tax Act. In so qualifying, the Company is
exempted in the UK from Corporation Tax on capital gains on its portfolio of investments.
The Company’s investment objective is to secure long term capital and income growth from a portfolio consisting mainly of FTSE All-Share
companies. The Company can also have exposure to overseas companies, with the value of the non-UK portfolio not exceeding 10% of the
Company’s gross assets. In pursuing this objective, the Company is exposed to financial risks which could result in a reduction of either or
both of the value of the net assets and the profits available for distribution by way of dividend. These financial risks are principally related
to the market (currency movements, interest rate changes and security price movements), liquidity and credit. The Board, together with
the Manager, is responsible for the Company’s risk management, as set out in detail in the Strategic Report and Directors’ Report. The
Directors’ policies and processes for managing the financial risks are set out in (a), (b) and (c) on the following pages.
The accounting policies which govern the reported Balance Sheet carrying values of the underlying financial assets and liabilities, as well
as the related income and expenditure, are set out in note 2 to the accounts. The policies are in compliance with UK accounting standards
and best practice. The Company does not make use of hedge accounting rules.
Sensitivity analysis tables presented in the following sections relating to currency, interest and market exposures have been calculated on
the level of change considered to be a reasonable illustration based on observation of current market and economic conditions.
(a) Market risks
The fair value of equity and other financial securities including derivatives held in the Company’s portfolio fluctuates with changes in
market prices. Prices are themselves affected by movements in currencies and interest rates and by other financial issues, including the
market perception of future risks. The Board sets policies for managing these risks within the Company’s objective and meets regularly to
review full, timely and relevant information on investment performance and financial results. The Manager assesses exposure to market
risks when making each investment decision and monitors ongoing market risk within the portfolio.
As up to 10% of the Company’s gross assets can be invested in non-UK assets, other assets and liabilities may be denominated in
currencies other than sterling and may also be exposed to interest rate risks. The Manager and the Board regularly monitor these risks.
The Company does not normally hold significant cash balances. Whilst it is not the Board’s general policy to borrow in currencies other
than sterling and euros, any such borrowings would be limited to amounts and currencies commensurate with the portfolio’s exposure to
those currencies, thereby limiting the Company’s exposure to future changes in foreign exchange rates.
Gearing may be short or long term in foreign currencies and enables the Company to take a long term view of the countries and markets in
which it is invested without having to be concerned about short term volatility.
Income earned in foreign currencies is converted to sterling on receipt. The Board regularly monitors the effects on net revenue of interest
earned on deposits and paid on gearing.
Currency Exposure
The principal foreign currencies to which the Company was exposed during the year were the euro and US dollar. As stated above, the
exposure to investments listed in currencies other than sterling cannot exceed 10% of the Company’s gross assets.
The exchange rates for the euro and US dollar applying against sterling at 30 September and the average rates during the year ended
30 September were as follows:
At 30 September
2023
2023
Average for
the year
At 30 September
2022
2022
Average for
the year
Euro 0.867 0.870 0.877 0.847
US dollar 0.819 0.815 0.895 0.781
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The following calculations demonstrate the approximate effect of a weakening or strengthening of sterling against other currencies and are
based on the following:
– applicable balance sheet date exchange rates;
– for capital returns the financial assets and liabilities held at the year end date, including investments, cash, debtors and creditors;
– for revenue returns the current year income received in currencies other than sterling as a best estimate of future receipts; and
– for both capital and revenue, the management fee adjusted for changes in the funds under management as a result of changes in
investment values when applying different exchange rates.
A 10% change in the sterling exchange rate would have the following approximate effect on returns attributable to Shareholders and
on the NAV per share:
Weakening of sterling by 10% against other currencies
Local currency Return Local currency
Sterling
equivalent
£’000s
10% weakened
sterling fx rate
Adjusted
income, assets
and liabilities
£’000s
Impact on
management fee
£’000s
2023
Movement in
net return
£’000s
2022
Movement in
net return
£’000s
Euro Revenue 883 766 0.7807 689 – (77) 81
Euro Capital 4,582 3,975 0.7807 3,577 – (398) 443
US Dollar Revenue 302 247 0.7373 223 – (24) 23
US Dollar Capital 7,776 6,370 0.7373 5,733 – (637) 567
Movement in net return attributable to Shareholders (1,136) 1,114
Shares in issue 104,335,845 106,706,203
Effect on NAV per share - pence (1.09) 1.04
Strengthening of sterling by 10% against other currencies
Local currency Return Local currency
Sterling
equivalent
£’000s
10%
strengthened
sterling fx rate
Adjusted
income, assets
and liabilities
£’000s
Impact on
management fee
£’000s
2023
Movement in
net return
£’000s
2022
Movement in
net return
£’000s
Euro Revenue 883 766 0.9542 843 – 77 (66)
Euro Capital 4,582 3,975 0.9542 4,372 – 398 (362)
US Dollar Revenue 302 247 0.9011 272 – 24 (19)
US Dollar Capital 7,776 6,370 0.9011 7,007 – 637 (463)
Movement in net return attributable to Shareholders 1,136 (910)
Shares in issue 104,335,845 106,706,203
Effect on NAV per share - pence 1.09 (0.85)
These effects are representative of the exposure to currencies other than sterling by the Company as at 30 September 2023
although the level of exposure will fluctuate in accordance with the investment and risk management process.
78 | CT UK Capital and Income Investment Trust PLC
21. Financial Risk Management (continued)
The fair values of the Company’s assets and liabilities at 30 September by currency are shown below:
2023
Short term
debtors
£’000s
Cash and cash
equivalents
£’000s
Short term
creditors – other
£’000s
Short term
creditors – loans
£’000s
Net monetary
(liabilities)/assets
£’000s
Investments
£’000s
Net
exposure
£’000s
Sterling 2,747 2,315 (1,576) (25,000) (21,514) 325,916 304,402
Other 86 63 – – 149 10,196 10,345
Total 2,833 2,378 (1,576) (25,000) (21,365) 336,112 314,747
2022
Short term
debtors
£’000s
Cash and cash
equivalents
£’000s
Short term
creditors – other
£’000s
Short term
creditors – loans
£’000s
Net monetary
(liabilities)/assets
£’000s
Investments
£’000s
Net
exposure
£’000s
Sterling 5,021 906 (4,525) (24,000) (22,598) 309,802 287,204
Other 85 – – – 85 8,994 9,079
Total 5,106 906 (4,525) (24,000) (22,513) 318,796 296,283
Interest rate exposure
The exposure of the financial assets and liabilities to interest rate movements at 30 September was:
Within
one year
£’000s
More than
one year
£’000s
2023
Total
£’000s
Within
one year
£’000s
More than
one year
£’000s
2022
Total
£’000s
Exposure to floating rates:
Cash and cash equivalents 2,378 – 2,378 906 – 906
Loans (25,000) – (25,000) (24,000) – (24,000)
Net exposure (22,622) – (22,622) (23,094) – (23,094)
The Company had no exposure to fixed interest rates at the year end.
Exposures vary throughout the year as a consequence of changes in the composition of the net assets of the Company arising out of the
investment and risk management processes.
Interest received on cash balances, or paid on bank overdrafts and borrowings, is at ruling market rates.
The Company’s total returns and net assets are sensitive to changes in interest rates on cash and borrowings.
Based on the financial assets and liabilities held that are affected by changes in interest rates, such as cash and bank loans, and the
interest rates ruling at each balance sheet date, an increase or decrease in interest rates of 2% (2022: 2%) would have the following
approximate effects on the Income Statement revenue and capital returns after tax and on the NAV per share:
Increase
in rate
£’000s
2023
Decrease
in rate
£’000s
Increase
in rate
£’000s
2022
Decrease
in rate
£’000s
Revenue return (202) 202 (222) 222
Capital return (250) 250 (240) 240
Total return (452) 452 (462) 462
NAV per share – pence (0.43) 0.43 (0.43) 0.43
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Other market risk exposures
The portfolio of investments, valued at £336,112,000 at 30 September 2023 (2022: £318,796,000) is exposed to market price changes.
The Manager assesses these exposures at the time of making each investment decision. The Board reviews overall exposures at each meeting
against indices and other relevant information. An analysis of the portfolio by country and major industrial sector is set out in the investment
portfolio by sector and list of investments on pages 18 to 21.
Based on the portfolio of investments held at each Balance Sheet date, and assuming other factors, including the management charge, remain
constant, an increase or decrease in the fair value of the portfolio in sterling terms by 20% would have had the following approximate effects on
the net capital return attributable to Shareholders and on the NAV per share:
Increase
in value
£’000s
2023
Decrease
in value
£’000s
Increase
in value
£’000s
2022
Decrease
in value
£’000s
Capital return 67,222 (67,222) 63,759 (63,759)
NAV per share – pence 64.43 (64.43) 59.75 (59.75)
(b) Liquidity risk
The Company is required to raise funds to meet commitments associated with financial instruments and share buybacks. These funds
may be raised either through the realisation of assets or through increased borrowing. The risk of the Company not having sufficient
liquidity at any time is not considered by the Board to be significant, given: the number of quoted investments held in the Company’s
portfolio (100% at 30 September 2023 and 100% at 30 September 2022); the liquid nature of the portfolio of investments; the industrial
and geographical diversity of the portfolio (see pages 18 to 21); and the existence of an ongoing loan and overdraft facility agreement.
Cash balances are held with approved banks, usually on overnight deposit. The Manager reviews liquidity at the time of making each
investment decision. The Board reviews liquidity exposure at each meeting.
The Company has a £40 million unsecured revolving floating rate credit facility available until March 2024.
As at 30 September 2023 the Company had drawn down £25 million of the loan facility and bank overdrafts of £nil.
The contractual maturities of the financial liabilities at each Balance Sheet date, based on the earliest date on which payment can be
required, were as follows:
2023
Three
months
or less
£’000s
More than three
months but less
than one year
£’000s
More than
one year
£’000s
Total
£’000s
Current liabilities – others 1,576 – – 1,576
Loans 25,000 – – 25,000
26,576 – – 26,576
2022
Three
months
or less
£’000s
More than three
months but less
than one year
£’000s
More than
one year
£’000s
Total
£’000s
Current liabilities – others 4,525 – – 4,525
Loans 24,000 – – 24,000
28,525 – – 28,525
80 | CT UK Capital and Income Investment Trust PLC
21. Financial Risk Management (continued)
(c) Credit risk and counterparty exposure
The Company is exposed to potential failure by counterparties to deliver securities for which the Company has paid, or to pay for securities
which the Company has delivered. Such transactions must be settled on the basis of delivery against payment (except where local market
conditions do not permit).
Responsibility for the approval, limit setting and monitoring of counterparties is delegated to the Manager. Counterparties are selected
based on a combination of criteria, including credit rating, balance sheet strength and membership of a relevant regulatory body. The rate
of default in the past has been negligible. Cash and deposits are held with approved banks.
The Company has an ongoing contract with its custodian for the provision of custody services. The contract is reviewed periodically. Details
of securities held in custody on behalf of the Company are received and reconciled monthly. The Company’s Depositary, JP Morgan Europe
Limited, has regulatory responsibilities relating to segregation and safe keeping of the Company’s financial assets, amongst other duties,
as set out in the Directors’ Report. The Board has direct access to the Depositary and receives regular reports from it via the Manager.
To the extent that the Manager carries out management and administrative duties (or causes similar duties to be carried out by third
parties) on the Company’s behalf, the Company is exposed to counterparty risk. The Board assesses this risk through regular meetings
with the management of Columbia Threadneedle Investments (including the Fund Manager) and with Columbia Threadneedle Investments’
Risk Management function. In reaching its conclusions, the Board also reviews the Manager’s parent group’s annual audit and assurance
faculty report.
None of the Company’s financial liabilities is past their due date or impaired.
(d) Fair values of financial assets and liabilities
The assets and liabilities of the Company are, in the opinion of the Directors, reflected in the Balance Sheet at fair value, or at a reasonable
approximation thereof. Borrowings under loan and overdraft facilities do not have a value materially different from their capital repayment
amount.
(e) Capital risk management
The objective of the Company is stated as being to secure long term capital and income growth from a portfolio consisting mainly of FTSE
All-Share companies. In pursuing this long term objective, the Board has a responsibility for ensuring the Company’s ability to continue
as a going concern. It must therefore maintain an optimal capital structure through varying market conditions. This involves the ability to:
issue and buy back share capital within limits set by the Shareholders in general meeting; borrow monies in the short and long term; and
pay dividends to Shareholders out of current year revenue earnings as well as out of brought forward revenue reserves.
Changes to ordinary share capital are set out in note 15, dividend payments in note 9 and details of loans in note 13.
22. Transactions with related parties and Manager
The following are considered related parties: the Board, including their spouses and dependents, and the Manager (Columbia
Threadneedle Investment Business Limited).
There are no transactions with the Board other than: aggregated remuneration for services as Directors as disclosed in the Directors’
Remuneration Report on page 48 and as set out in note 5; and the beneficial interests of the Directors in the ordinary shares of the
Company as disclosed on page 48. There are no outstanding balances with the Board at the year end. Transactions between the Company
and the Manager are detailed in note 4 on management fees and the outstanding balance is detailed in note 12.
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23. AIFMD
In accordance with the AIFM Directive, information in relation to the Company’s leverage and the remuneration of the Company’s AIFM,
Columbia Threadneedle Investment Business Limited, is required to be made available to investors. Detailed regulatory disclosures
including those on the AIFM’s remuneration policy and costs are available on the Company’s website or from Columbia Threadneedle
Investments on request.
The Company’s maximum and average actual leverage levels at 30 September 2023 are shown below:
Leverage exposure
Gross
method
Commitment
method
Maximum limit 200% 200%
Actual 107% 107%
The leverage limits are set by the AIFM and approved by the Board and are in line with the maximum leverage levels permitted in the
Company’s articles of association. The AIFM is also required to comply with the gearing parameters set by the Board in relation to
borrowings.
24. Securities financing transactions (“SFR”)
The Company has not, in the year to 30 September 2023 (2022: same), participated in any: repurchase transactions; securities lending
or borrowing; buy-sell back transactions; margin lending transactions; or total return swap transactions (collectively called SFT). As such, it
has no disclosure to make in satisfaction of the EU regulations on transparency of SFT, issued in November 2015.
82 | CT UK Capital and Income Investment Trust PLC
Ten Year Record (Unaudited)
All Company data are based on assets, liabilities, earnings and expenses as reported in accordance with the Company’s accounting policies
and is unaudited but derived from the audited Accounts or specified third party data providers.
Assets
at 30 September
£'000s 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Total assets (before debt) 244,708 251,387 256,876 297,027 332,463 347,472 348,149 286,395 380,875 320,283 339,747
Loans 20,000 20,000 20,000 25,000 20,000 20,000 10,000 20,000 25,000 24,000 25,000
Net assets 224,708 231,387 236,876 272,027 312,463 327,472 338,149 266,395 355,875 296,283 314,747
Net Asset Value (NAV)
at 30 September
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
NAV per share – pence 251.4 251.8 250.5 281.1 317.1 324.0 329.0 249.7 331.7 277.7 301.7
Total Returns
(1)
(rebased to 100 at 30 September 2013)
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
NAV per share 100.0 103.9 107.5 125.5 146.6 154.7 163.0 128.7 177.4 154.1 174.4
Middle market price per share 100.0 106.0 109.3 127.4 147.5 155.3 160.2 127.6 172.9 154.8 171.6
FTSE All-Share Index 100.0 106.1 103.6 121.1 135.5 143.5 147.3 122.9 157.2 150.9 171.8
Returns excluding dividends
(1)
(rebased to 100 at 30 September 2013)
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
NAV per share 100.0 100.2 99.6 111.8 126.1 128.9 130.9 99.3 131.9 110.5 120.0
Middle market price per share 100.0 102.2 101.4 113.7 127.1 129.5 128.7 98.6 128.7 110.9 118.0
FTSE All-Share Index 100.0 102.6 96.9 109.0 117.6 119.9 117.9 95.3 117.9 109.3 119.8
(1) See Alternative Performance Measures on pages 91 and 92 for explanation.
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Share Price
at 30 September
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Middle market price per share – pence 252.5 258.0 256.0 287.0 321.0 327.0 325.0 249.0 325.0 280.0 298.0
Premium/(discount)to NAV – % 0.4 2.5 2.2 2.1 1.2 0.9 (1.2) (0.3) (2.0) 0.8 (1.2)
Share price high – pence 269.0 271.8 277.0 289.8 327.5 350.0 337.0 358.0 339.0 343.5 317.0
Share price low – pence 222.8 248.0 233.8 234.8 274.0 309.5 276.5 193.8 237.5 273.0 259.0
Revenue
for the year ended 30 September
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Available for ordinary shares (£’000s) 9,941 9,575 9,475 10,785 11,459 11,710 13,426 8,758 11,310 12,890 14,056
Return per share – pence 11.26 10.56 10.10 11.26 11.71 11.70 13.12 8.34 10.56 12.03 13.26
Dividends per share – pence 9.45 9.85 10.10 10.30 10.65 10.95 11.40 11.50 11.60 11.80 12.15
Revenue Performance
(rebased to 100 at 30 September 2013)
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Return per share 100.0 93.8 89.7 100.0 104.0 103.9 116.5 74.1 93.8 106.8 117.8
Dividends per share 100.0 104.2 106.9 109.0 112.7 115.9 120.6 121.7 122.8 124.9 128.6
CPI 100.0 101.2 101.1 102.1 105.1 107.7 109.5 110.1 113.5 124.9 133.2
Cost of running the Company (Ongoing charges)
(1)
for the year ended 30 September
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Expressed as a percentage of average net assets:
Ongoing charges 0.62 0.66 0.64 0.64 0.59 0.58 0.58 0.58 0.59 0.59 0.66
Gearing
(1)
at 30 September
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Net gearing % 3.81 4.43 10.32 9.32 4.81 4.51 1.71 7.06 6.52 7.79 7.19
(1) See Alternative Performance Measures pages 91 and 92 for explanation
Analysis of Ordinary Shareholders (Unaudited)
Category Holding % at 30 September 2023 Holding % at 30 September 2022
CT Savings Plans 80.3 79.5
Retail Investors (excluding those investing through CT Savings Plans) 9.9 9.6
Institutions 5.0 6.1
Intermediaries 4.8 4.8
100.0 100.0
Source: Columbia Threadneedle Investments
84 | CT UK Capital and Income Investment Trust PLC
Company in general meeting) save that the Company may at
any time prior to the expiry of this authority make offers or
enter into agreements which would or might require shares
in the Company to be allotted or Rights to be granted after
such expiry and notwithstanding such expiry the Directors may
allot shares in the Company or grant Rights in pursuance of
such offers or agreements as if the authority conferred by this
resolution had not expired.
Special Resolutions:
To consider and, if thought fit, pass the following resolutions as special
resolutions:
11. THAT, subject to the passing of Resolution 10 set out in the
notice of the annual general meeting to be held on 7 March
2024 (“Resolution 10”) and in substitution for any existing
power, but without prejudice to the exercise of any such power
prior to the passing of this resolution, the directors of the
Company (the “Directors”) be and are hereby generally and
unconditionally empowered, pursuant to sections 570 and 573
of the Companies Act 2006 (the “Act”), to allot or make offers
or agreements to allot, equity securities (within the meaning
of section 560 of the Act) for cash pursuant to the authority
conferred by Resolution 10, and/or by way of a sale of treasury
shares for cash, as if section 561(1) of the Act did not apply to
any such allotment or sale, provided that this power:
(i) shall be limited to the allotment of equity securities and the
sale of treasury shares up to an aggregate nominal amount
of £2,593,396 (representing approximately 10 per cent. of
the issued share capital of the Company (excluding treasury
shares) as at 28 November 2023); and
(ii) shall expire at the conclusion of the next annual general
meeting of the Company held after the passing of this
resolution or, if earlier, on the date which is 15 months
after the date on which this resolution is passed (unless
previously renewed, varied or revoked by the Company in
general meeting), save that the Company may before such
expiry make offers and enter into agreements which would
or might require equity securities to be allotted or treasury
shares to be sold after such expiry and the Directors may
allot equity securities or sell treasury shares in pursuance
Notice is hereby given that the thirty-first Annual General Meeting of the
Company will be held at Cannon Place, 78 Cannon Street, London EC4N
6AG on Thursday 7 March 2024 at 12.30pm for the following purposes:
Ordinary Resolutions:
To consider and, if thought fit, pass the following resolutions as ordinary
resolutions:
1. To receive and adopt the audited financial statements of the
Company for the financial year ended 30 September 2023
together with the reports of the directors and the auditor on
those financial statements.
2. To approve the Company’s dividend policy as set out on page
37 of the Annual Report and Accounts for the financial period
ended 30 September 2023.
3. To receive, adopt and approve the Directors’ Remuneration
Report for the financial year ended 30 September 2023.
4. To re-elect Jane Lewis as a director of the Company.
5. To elect Dunke Afe as a director of the Company.
6. To re-elect Patrick Firth as a director of the Company.
7. To re-elect Nicky McCabe as a director of the Company.
8. To re-appoint BDO LLP as auditors to the Company to hold
office from the conclusion of the annual general meeting until
the conclusion of the next annual general meeting of the
Company.
9. To authorise the Audit and Risk Committee to determine the
remuneration of the Company’s auditors.
10. THAT, in substitution for any existing authority, but without
prejudice to the exercise of any such authority prior to the
passing of this resolution, the directors of the Company (the
“Directors”) be and are hereby generally and unconditionally
authorised, in accordance with section 551 of the Companies
Act 2006 (the “Act”), to exercise all the powers of the
Company to allot shares in the Company and to grant rights
to subscribe for, or convert any security into, shares in the
Company (“Rights”) up to an aggregate nominal amount
of £2,593,396 (being equal to approximately 10 per cent
of the Company’s issued share capital (excluding treasury
shares) as at 28 November 2023) generally from time to
time on such terms as the Directors may determine, such
authority to expire at the conclusion of the Annual General
Meeting of the Company in 2025 or, if earlier, on the date
which is 15 months after the date on which this resolution is
passed (unless previously revoked, varied or extended by the
Notice of Annual General Meeting
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of such an offer or agreement as if the power conferred by
this resolution had not expired.
This power applies in relation to the sale of treasury shares
as if in the opening sentence of this resolution the words
“subject to the passing of Resolution 10 set out in the notice
of the annual general meeting to be held on 7 March 2024
(“Resolution 10”) and” were omitted.
12. THAT, in substitution for any existing authority but without
prejudice to the exercise of any such authority prior to the
passing of this resolution, the Company be and is hereby
generally and unconditionally authorised, pursuant to and
in accordance with section 701 of the Companies Act 2006
(the “Act”), to make market purchases (within the meaning of
section 693(4) of the Act) of fully paid ordinary shares of 25
pence each in the capital of the Company (“ordinary shares”)
on such terms and in such manner as the directors of the
Company (the “Directors”) may from time to time determine
(either for retention as treasury shares for future reissue,
resale or transfer, or cancellation), provided that:
(a) the maximum aggregate number of ordinary shares hereby
authorised to be purchased is 15,550,003 or, if less, the
number being 14.99 per cent. of the issued ordinary share
capital of the Company (excluding ordinary shares held in
treasury) immediately prior to the passing of this resolution;
(b) the minimum price which may be paid for an ordinary share
purchased pursuant to this authority shall be 25 pence;
(c) the maximum price which may be paid for an ordinary share
purchased pursuant to this authority shall be the higher of (i)
an amount equal to 105% of the average of the middle market
quotations for an ordinary share (as derived from the London
Stock Exchange Daily Official List) over the five business days
immediately preceding the date on which the ordinary share is
contracted to be purchased; and (ii) the higher of the price of
the last independent trade of an ordinary share and the highest
current independent bid for such a share on the London Stock
Exchange at the time the purchase is carried out;
(d) the minimum and maximum prices per ordinary share referred
to in sub-paragraphs (b) and (c) of this resolution are in each
case exclusive of any expenses payable by the Company;
(e) the authority hereby conferred shall expire at the conclusion
of the next annual general meeting of the Company held after
the passing of this resolution or, if earlier, on the date which is
15 months after the date on which this resolution is passed,
unless such authority is varied, revoked or renewed prior to
such time by the Company in general meeting;
(f) the Company may, prior to the expiry of the authority hereby
conferred, enter into a contract to purchase ordinary shares
under such authority which will or may be completed or
executed wholly or partly after such expiry and may make a
purchase of ordinary shares pursuant to any such contract.
By Order of the Board
Columbia Threadneedle Investment Business Limited,
Secretary
29 November 2023
Registered office:
Cannon Place
78 Cannon Street
London EC4N 6AG
Registered number: 02732011
Notes:
1. A member is entitled to appoint one or more proxies to exercise
all or any of the member’s rights to attend, speak and vote at
the meeting. A proxy need not be a member of the Company but
must attend the meeting for the member’s vote to be counted. If
a member appoints more than one proxy to attend the meeting,
each proxy must be appointed to exercise the rights attached to a
different share or shares held by that member.
2. Any person holding 3% or more of the voting rights in the Company
who appoints a person other than the Chair of the meeting as his/
her proxy will need to ensure that both he/she and such person
complies with their respective disclosure obligations under the
Disclosure Guidance and Transparency Rules.
3. A Form of Proxy is provided with this notice for members. If a
member wishes to appoint more than one proxy and so requires
additional proxy forms, the member should contact Computershare
Investor Services PLC on 0370 889 4094. To be valid, the Form of
Proxy and any power of attorney or other authority under which it
is signed (or a notarially certified copy of such authority) must be
received by post or (during normal business hours only) by hand
at the Company’s Registrar, Computershare Investor Services PLC,
The Pavilions, Bridgwater Road, Bristol BS99 6ZZ, not less than 48
hours excluding non-working days before the time of the holding of
the meeting or any adjourned meeting. Amended instructions must
also be received by the Company’s Registrar by the deadline for
receipt of Forms of Proxy.
4. Alternatively, members may register the appointment of a proxy
for the meeting electronically, by accessing the website
www.eproxyappointment.com where full instructions for the
procedure are given. The Control Number, Shareholder Reference
and PIN as printed on the Form of Proxy will be required in order
to use the electronic proxy appointment system. This website
is operated by Computershare Investor Services PLC. The proxy
appointment and any power of attorney or other authority under
86 | CT UK Capital and Income Investment Trust PLC
as you will be bound by them and they will govern the electronic
appointment of your proxy.
9. CREST members who wish to appoint a proxy or proxies through
the CREST electronic proxy appointment service may do so for the
meeting and any adjournment(s) thereof by using the procedures
described in the CREST Manual. CREST Personal Members or other
CREST sponsored members, and those CREST members who have
appointed a voting service provider(s), should refer to their CREST
sponsor or voting service provider(s), who will be able to take the
appropriate action on their behalf.
10. In order for a proxy appointment or instruction made using the
CREST service to be valid, the appropriate CREST message
(a “CREST Proxy Instruction”) must be properly authenticated
in accordance with Euroclear UK & International Limited’s
specifications and must contain the information required for such
instruction, as described in the CREST Manual (available via www.
euroclear.com/CREST). The message, regardless of whether it
constitutes the appointment of a proxy or is an amendment to the
instruction given to a previously appointed proxy must, in order
to be valid, be transmitted so as to be received by the issuer’s
agent (ID number 3RA50) by the latest time(s) for receipt of proxy
appointments specified in notes 3 and 4. For this purpose, the time
of receipt will be taken to be the time (as determined by the time
stamp applied to the message by the CREST Application Host) from
which the issuer’s agent is able to retrieve the message by enquiry
to CREST in the manner prescribed by CREST. After this time, any
change of instructions to proxies appointed through CREST should
be communicated to the appointee through other means.
11. CREST members and, where applicable, their CREST sponsors
or voting service provider(s) should note that Euroclear UK &
International Limited does not make available special procedures
in CREST for any particular messages. Normal system timings and
limitations will therefore apply in relation to the input of CREST
Proxy Instructions. It is the responsibility of the CREST member
concerned to take (or, if the CREST member is a CREST personal
member or sponsored member or has appointed a voting service
provider(s), to procure that his CREST sponsor or voting service
provider(s) take(s)) such action as shall be necessary to ensure
that a message is transmitted by means of the CREST system by
any particular time. In this connection, CREST members and, where
applicable, their CREST sponsors or voting service provider(s)
are referred, in particular, to those sections of the CREST Manual
concerning practical limitations of the CREST system and timings
(www.euroclear.com/CREST).
12. The Company may treat as invalid a CREST Proxy Instruction in the
circumstances set out in Regulation 35(5)(a) of the Uncertificated
Securities Regulations 2001 (as amended).
13. Any corporation which is a member can appoint one or more
corporate representatives who may exercise on its behalf all of its
powers as a member provided that, if it is appointing more than one
corporate representative, it does not do so in relation to the same
shares.
14. Under section 527 of the Act, members meeting the threshold
requirements set out in that section have the right to require the
Company to publish on a website a statement setting out any
matter relating to:
which the proxy appointment is made must be received by
Computershare Investor Services PLC not less than 48 hours
excluding non-working days before the time for holding the meeting
or adjourned meeting or (in the case of a poll taken otherwise than
at or on the same day as the meeting or adjourned meeting) for the
taking of the poll at which it is to be used. If you want to appoint
more than one proxy electronically please contact Computershare
Investor Services PLC on 0370 889 4094.
5. Investors holding shares in the Company through the CT Investment
Trust ISA, Junior ISA, Child Trust Fund, General Investment
Account and/or Junior Investment Account should ensure that
forms of direction are returned to Computershare Investor
Services PLC not later than 12.30pm on 29 February 2024.
Alternatively, voting directions can be submitted electronically
at www.eproxyappointment.com by entering the Control Number,
Shareholder Reference Number and PIN as printed on the form of
direction. Voting directions must be submitted electronically no
later than 12.30pm on 29 February 2024.
6. Any person receiving a copy of this notice as a person nominated
by a member to enjoy information rights under section 146 of
the Act (a “Nominated Person”) should note that the provisions
in notes 1 to 4 above concerning the appointment of a proxy or
proxies to attend the meeting in place of a member do not apply
to a Nominated Person as only Shareholders have the right to
appoint a proxy. However, a Nominated Person may have a right
under an agreement between the Nominated Person and the
member by whom he or she was nominated to be appointed, or
to have someone else appointed, as a proxy for the meeting. If a
Nominated Person has no such proxy appointment right or does
not wish to exercise it, he/she may have a right under such an
agreement to give instructions to the member as to the exercise of
voting rights at the meeting.
7. Pursuant to Regulation 41(1) of the Uncertificated Securities
Regulations 2001 (as amended) and for the purposes of section
360B of the Act, the Company has specified that only those
members registered on the register of members of the Company
as at close of business on 5 March 2024 (the “Specified Time”)
(or, if the meeting is adjourned to a time more than 48 hours
after the Specified Time, by close of business on the day which
is two working days prior to the time of the adjourned meeting)
shall be entitled to attend and vote at the meeting in respect of
the number of shares registered in their name at that time. If the
meeting is adjourned to a time not more than 48 hours after the
Specified Time, the Specified Time will also apply for the purpose of
determining the entitlement of members to attend and vote (and for
the purposes of determining the number of votes they may cast) at
the adjourned meeting. Changes to the register of members after
the relevant deadline shall be disregarded in determining the rights
of any person to attend and vote at the meeting.
8. If you are an institutional investor you may be able to appoint a
proxy electronically via the Proxymity platform, a process which has
been agreed by the Company and approved by the Registrar. For
further information regarding Proxymity, please go to www.proxymity.
io. Your proxy must be lodged by 12.30pm on 5 March 2024 in
order to be considered valid. Before you can appoint a proxy via
this process you will need to have agreed to Proxymity’s associated
terms and conditions. It is important that you read these carefully
Report and Accounts 2023 | 87
Notice of Meeting
Strategic Report Governance Report Financial Report Notice of Meeting
Other Information
Chair’s StatementOverview Auditors’ Report
(a) the audit of the Company’s Accounts (including the auditors’
report and the conduct of the audit) that are to be laid before
the meeting; or
(b) any circumstances connected with an auditor of the Company
ceasing to hold office since the previous meeting at which
annual Accounts and Reports were laid in accordance with
section 437 of the Act.
15. The Company may not require the members requesting any such
website publication to pay its expenses in complying with sections
527 or 528 of the Act. Where the Company is required to place
a statement on a website under section 527 of the Act, it must
forward the statement to the Company’s auditor not later than the
time when it makes the statement available on the website. The
business which may be dealt with at the meeting includes any
statement that the Company has been required under section 527
of the Act to publish on a website.
16. Any member attending the meeting has the right to ask questions.
The Company must cause to be answered any question relating
to the business being dealt with at the meeting put by a member
attending the meeting. However, members should note that no
answer need be given in the following circumstances:
(a) if to do so would interfere unduly with the preparation of
the meeting or would involve a disclosure of confidential
information; or
(b) if the answer has already been given on a website in the form
of an answer to a question; or
(c) if it is undesirable in the interests of the Company or the
good order of the meeting that the question be answered.
17. As at 28 November 2023, being the latest practicable date
before the publication of this notice, the Company’s issued capital
consisted of 107,289,022 ordinary shares of 25p each including
3,553,177 shares held in treasury. Therefore, the total voting rights
in the Company as at 28 November 2023 were 103,735,845.
18. This notice, together with the information required by Section 311A
of the Act, will be available at ctcapitalandincome.co.uk.
19. Copies of the letters of appointment between the Company and its
Directors; a copy of the Articles of Association of the Company; the
register of Directors’ holdings; and a deed relating to the Directors’
deeds of indemnity will be available for inspection at the registered
office of the Company during usual business hours on any weekday
(Saturdays, Sundays and Bank Holidays excluded) until the date of
the meeting and also at the place of the meeting from 15 minutes
prior to the commencement of the meeting until the conclusion
thereof.
20. No Director has a service agreement with the Company.
21. Under section 338 of the Act, a member or members meeting
the qualification criteria set out at note 23 below, may, subject to
certain conditions, require the Company to circulate to members
notice of a resolution which may properly be moved and is intended
to be moved at that meeting. The conditions are that: (i) the
resolution must not, if passed, be ineffective (whether by reason
of inconsistency with any enactment or the Company’s constitution
or otherwise); (ii) the resolution must not be defamatory of any
person, frivolous or vexatious; and (iii) the request: (a) may be in
hard copy form or in electronic form; (b) must identify the resolution
of which notice is to be given by either setting out the resolution in
full or, if supporting a resolution sent by another member, clearly
identifying the resolution which is being supported; (c) must be
authenticated by the person or persons making it; and (d) must
be received by the Company not later than six weeks before the
meeting to which the requests relate.
22. Under Section 338A of the Act, a member or members meeting
the qualification criteria set out at note 23 below, may, subject to
certain conditions, require the Company to include in the business
to be dealt with at the meeting a matter (other than a proposed
resolution) which may properly be included in the business (a
matter of business). The conditions are that: (i) the matter of
business must not be defamatory of any person, frivolous or
vexatious; and (ii) the request: (a) may be in hard copy form or in
electronic form; (b) must identify the matter of business by either
setting it out in full or, if supporting a statement sent by another
member, clearly identify the matter of business which is being
supported; (c) must be accompanied by a statement setting out the
grounds for the request; (d) must be authenticated by the person
or persons making it; and (e) must be received by the Company not
later than 6 weeks before the meeting to which the requests relate.
23. In order to be able to exercise the members’ right to require: (i)
circulation of a resolution to be proposed at the meeting (see note
21); or (ii) a matter of business to be dealt with at the meeting
(see note 22), the relevant request must be made by: (a) a member
or members having a right to vote at the meeting and holding at
least 5% of total voting rights of the Company; or (b) at least 100
members having a right to vote at the meeting and holding, on
average, at least £100 of paid up share capital.
88 | CT UK Capital and Income Investment Trust PLC
Information for Shareholders
Share dealing
Investors wishing to purchase more shares in the Company or sell
all or part of their existing holding may do so through a stockbroker.
Most banks also offer this service. Alternatively, please go to
www.computershare.com/dealing/uk for a range of dealing
services made available by Computershare.
Common reporting standards
Tax legislation requires investment fund companies to provide
information annually to the local tax authority on the tax
residencies of a number of non-UK based certificated Shareholders
and corporate entities who have purchased shares in investment
trusts. All new Shareholders, excluding those whose shares are
held in CREST, who are entered onto the share register are sent a
certification form for the purpose of collecting this information.
For further information, please see HMRC’s Quick Guide: Automatic
Exchange of Information – information for account holders gov.uk/
government/publications/exchange-of-information-account-holders.
Registered in England and Wales with Company Registration No
02732011.
Net Asset Value and share price
The Company’s NAV, or Net Asset Value, per share is released
daily to the London Stock Exchange on the working day following
the calculation date. The current share price of CT UK Capital and
Income Investment Trust PLC is shown in the investment trust
section of the stock market page in most leading newspapers,
under “CT UK Capital and Income” and on the London Stock
Exchange website.
Performance information
Information on the Company’s performance is provided in the half-
yearly and final reports which are sent to Shareholders in June and
December respectively. More up-to-date performance information is
available on the Internet at ctcapitalandincome.co.uk. This website
also provides a monthly update on the Company’s geographic spread
and largest holdings, along with comments from the Fund Manager.
AIC
The Company is a member of the AIC, which publishes a monthly
statistical information service in respect of member companies.
The publication also has details of ISA and other investment plans
available. For further details, please contact the AIC on 020 7282
5555, or visit the website: theaic.co.uk
Electronic communications
Computershare provides a service to enable Shareholders to
receive Shareholder correspondence electronically (including annual
and half yearly financial reports) if they wish. If a Shareholder opts
to receive documents in this way, paper documents will only be
available on request. Shareholders who opt for this service will
receive a Notice of Availability via e-mail from Computershare with
a link to the relevant section of the Company’s website where the
documents can be viewed or printed. For more information, to view
the terms and conditions and to register for this service, please
visit Computershare’s internet site at investorcentre.co.uk (you will
need your Shareholder reference number which can be found on
your share certificate or dividend confirmation).
Report and Accounts 2023 | 89
Other Information
Strategic Report Governance Report Financial Report Notice of Meeting
Other Information
Chair’s StatementOverview Auditors’ Report
How to Invest
Charges
Annual management charges and other charges apply
according to the type of plan.
Annual account charge
ISA/LISA: £60+VAT
GIA: £40+VAT
JISA/JIA/CTF: £25+VAT
You can pay the annual charge from your account, or by
direct debit (in addition to any annual subscription limits).
Dealing charges
£12 per fund (reduced to £0 for deals placed through the
online Columbia Threadneedle Investor Portal) for ISA/
GIA/LISA/JIA and JISA. There are no dealing charges on a
C T F.
Dealing charges apply when shares are bought or sold but
not on the reinvestment of dividends or the investment
of monthly direct debits. Government stamp duty of 0.5%
also applies on the purchase of shares (where applicable).
The value of investments can go down as well as up
and you may not get back your original investment. Tax
benefits depend on your individual circumstances and
tax allowances and rules may change. Please ensure
you have read the full Terms and Conditions, Privacy
Policy and relevant Key Features documents before
investing. For regulatory purposes, please ensure you
have read the Pre-sales Cost & Charges disclosure related
to the product you are applying for, and the relevant Key
Information Documents (KIDs) for the investment trusts
you want to invest in, these can be found at ctinvest.
co.uk/documents.
How to Invest
To open a new Columbia Threadneedle Savings Plan, apply
online at ctinvest.co.uk. Online applications are not available
if you are transferring an existing Savings Plan with another
provider to Columbia Threadneedle Investments, or if you are
applying for a new Savings Plan in more than one name but
paper applications are available at ctinvest.co.uk/documents
or by contacting Columbia Threadneedle Investments.
One of the most convenient ways to invest in CT UK Capital and Income Investment Trust PLC is through one of the savings plans run by Columbia
Threadneedle Investments.
CT Individual Savings Account (ISA)
You can use your ISA allowance to make an annual tax efficient
investment of up to £20,000 for the current tax year with a lump
sum from £100 or regular savings from £25 a month. You can
also transfer any existing ISAs to us whilst maintaining the tax
benefits.
CT Junior Individual Savings Account (JISA)*
A tax efficient way to invest up to £9,000 per tax year for
a child. Contributions start from £100 lump sum or £25 a
month. JISAs or CTFs with other providers can be transferred to
Columbia Threadneedle Investments.
CT Lifetime Individual Savings Account (LISA)
For those aged 18-39, a LISA could help towards purchasing
your first home or retirement in later life. Invest up to £4,000 for
the current tax year and receive a 25% Government bonus up to
£1,000 per year. Invest with a lump sum from £100 or regular
savings from £25 a month.
CT General Investment Account (GIA)
This is a flexible way to invest in our range of Investment Trusts.
There are no maximum contributions, and investments can be
made from £100 lump sum or £25 a month.
CT Junior Investment Account (JIA)
This is a flexible way to save for a child in our range of
Investment Trusts. There are no maximum contributions, and the
plan can easily be set up under bare trust (where the child is
noted as the beneficial owner) or kept in your name if you wish
to retain control over the investment. Investments can be made
from a £100 lump sum or £25 a month per account. You can
also make additional lump sum top-ups at any time from £100
per account.
CT Child Trust Fund (CTF)*
If your child already has a CTF, you can invest up to £9,000 per
birthday year, from £100 lump sum or £25 a month. CTFs with
other providers can be transferred to Columbia Threadneedle
Investments.
90 | CT UK Capital and Income Investment Trust PLC
© 2023 Columbia Threadneedle Investments. Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies. Financial promotions are issued for marketing and information
purposes by Columbia Threadneedle Management Limited, authorised and regulated in the UK by the Financial Conduct Authority.
Notes
*The CTF and JISA accounts are opened by parents in the child’s name and they have access to the money at age 18.
**Calls may be recorded or monitored for training and quality purposes.
To find out more,
visit ctinvest.co.uk
0345 600 3030, 9.00am – 5.00pm,
weekdays, calls may be recorded or
monitored for training and quality purposes.
New Customers:
Call: 0800 136 420** (8:30am – 5:30pm, weekdays)
Email: invest@columbiathreadneedle.com
Existing Savings Plan Holders:
Call: 0345 600 3030** (9:00am – 5:00pm, weekdays)
Email: investor.enquiries@columbiathreadneedle.com
By post: Columbia Threadneedle Management Limited
PO Box 11114
Chelmsford CM99 2DG
You can also invest in the trust through online dealing platforms for private investors that offer share dealing and ISAs.
Companies include: AJ Bell, Barclays Stockbrokers, EQi, Halifax, Hargreaves Lansdown, HSBC, Interactive Investor, Lloyds Bank, The
Share Centre.
Manage your
investments on
the go
With our CT UK app you can:
– Make changes to your investment choices
– Add cash to invest later, or withdraw cash
– Make lump sum investments
Search 'CT UK' to download the app
Report and Accounts 2023 | 91
Other Information
Strategic Report Governance Report Financial Report Notice of Meeting
Other Information
Chair’s StatementOverview Auditors’ Report
Alternative Performance Measures
The Company uses the following Alternative Performance Measures (“APMs”). APMs do not have a standard meaning prescribed by GAAP
and therefore may not be comparable to similar measures presented by other entities. No new APMs have been identified or added since
the prior year end.
Premium or Discount – the share price of an Investment Company is derived from buyers and sellers trading their shares on the stock
market. This price is not identical to the Net Asset Value (“NAV”) per share of the Company. If the share price is lower than NAV per share,
the shares are trading at a discount. This usually indicates that there are more sellers of shares than buyers. The discount is shown as a
percentage of the NAV per share. Shares trading at a price above NAV per share are deemed to be at a premium.
30 September
2023
pence
30 September
2022
pence
Net Asset Value per share (a) 301.67 277.66
Share price per share (b) 298.00 280.00
Premium or (Discount) (c= (b-a)/a) (c) (1.2%) 0.8%
Gearing – this is the ratio of the borrowings of the Company to its net assets. Borrowings have a “prior charge” over the assets of a
company, ranking before ordinary Shareholders in their entitlement to capital and/or income. They may include: preference shares;
debentures; overdrafts and short and long term loans from banks; and derivative contracts. If the Company has cash assets, these may
be assumed either to net off against borrowings, giving a “net” or “effective” gearing percentage, or to be used to buy investments, giving
a “gross” or “fully invested” gearing figure. Where cash assets exceed borrowings, the Company is described as having “net cash”. The
Company’s maximum permitted level of gearing is set by the Board and is described within the Strategic Report and Directors’ Report.
30 September
2023
£’000
30 September
2022
£’000
Loan 25,000 24,000
Less cash and cash equivalents (2,378) (906)
Total (a) 22,622 23,094
Net Asset Value (b) 314,747 296,283
Gearing (c = a/b) (c) 7.19% 7.79%
92 | CT UK Capital and Income Investment Trust PLC
Ongoing Charges – are those expenses of a type which are likely to recur in the foreseeable future, whether charged to capital or revenue,
and which relate to the operation of the investment company, expressed as a proportion of the average net assets of the Company over
the reporting year (see Ten Year Record). The costs of buying and selling investments and derivatives are excluded, as are interest costs,
taxation, non-recurring costs and the costs of buying back or issuing shares. Ongoing charges are based on costs incurred in the year as
being the best estimate of future costs.
Ongoing charges calculation
30 September
2023
£’000
30 September
2022
£’000
Management fees 1,386 1,428
Other expenses 742 680
Broker fee 18 15
Less loan arrangement fees – (16)
Ad-hoc non-recurring expenses (24) (80)
Total (a) 2,122 2,027
Average daily net assets (b) 322,195 343,168
Ongoing charges (c = a/b)
(c) 0.66% 0.59%
Total Return – the theoretical return to Shareholders calculated on a per share basis by adding dividends paid in the period to the
increase or decrease in the share price or NAV in the period. The dividends are assumed to have been re-invested in the form of shares or
added to net assets respectively, on the date on which the shares were quoted ex-dividend.
Net Asset Value Share price
NAV/Share price per share at 30 September 2022 (pence) 277.66 280.00
NAV/Share price per share at 30 September 2023 (pence) 301.67 298.00
Change in the year 8.6% 6.4%
Impact of dividend reinvestments 4.5% 4.5%
Total return for the year 13.1% 10.9%
Report and Accounts 2023 | 93
Other Information
Strategic Report Governance Report Financial Report Notice of Meeting
Other Information
Chair’s StatementOverview Auditors’ Report
AAF Report – Report prepared in accordance with Audit and Assurance Faculty guidance issued by the Institute of Chartered Accountants
in England and Wales.
Administrator – State Street Bank and Trust Company.
AIC – Association of Investment Companies, the trade body for Closed-end Investment Companies.
AIC Code – the principles set out in the Association of Investment Companies Code of Corporate Governance.
AIM – the Alternative Investment Market.
AIFMD – Alternative Investment Fund Managers Directive requires that all investment vehicles (“AIFs”) must appoint a Depositary and an
Alternative Investment Fund Manager (“AIFM”). The Board of Directors of an Investment Trust, nevertheless, will remain fully responsible
for all aspects of the Company’s strategy, operations and compliance with regulations. The Company’s AIFM is the Manager.
Broker – The Broker is Cavendish, previously known as Cenkos Securities plc. The duties of the Broker include transacting buy or sell
orders in the Company’s shares, maintain a regular dialogue with core Shareholders, and provide advice on trading of the Company’s
shares and significant movements in share price.
CT UK Capital and Income Investment Trust PLC – the “Company”.
CT Savings Plans – the CT General Investment Account, CT Junior Investment Account, CT Investment Trust ISA, CT Junior ISA, CT Lifetime
ISA and CT Child Trust Fund operated by Columbia Threadneedle Management Limited, a company authorised and regulated by the
Financial Conduct Authority.
Benchmark – the FTSE All-Share Index (the “Index”) is the benchmark against which the increase or decrease in the Company’s Net Asset
Value is measured. The Index averages the performance of a defined selection of companies on the London Stock Exchange and gives
an indication of how a wide range of companies traded on the London Stock Exchange taken as a whole have performed in any period.
As the investments within the Index are not identical to those held by the Company, the Index does not take account of operating costs
and the Company’s strategy does not include replicating (tracking) this index, there is likely to be some level of divergence between the
performance of the Company and the Index.
Closed-end company – a company, including an Investment Company, with a fixed issued ordinary share capital which is traded on an
exchange at a price not necessarily related to its Net Asset Value and the shares of which can only be issued or bought back by the
Company in certain circumstances.
Cum-dividend – shares are classified as cum-dividend when the buyer of a security is entitled to receive a dividend that has been
declared, but not paid. Shares which are not cum-dividend are described as ex-dividend.
Custodian – The Custodian is JPMorgan Chase Bank. A custodian is a specialised financial institution responsible for safeguarding,
worldwide, the listed securities and certain cash assets of the Company, as well as the income arising therefrom, through provision of
custodial, settlement and associated services.
Glossary of Terms
94 | CT UK Capital and Income Investment Trust PLC
Depositary – The Depositary is JPMorgan Europe Limited. Under AIFMD rules, the Company must appoint a depositary, whose duties in
respect of investments, cash and similar assets include: safekeeping; verification of ownership and valuation; and cash monitoring. The
appointed depositary has strict liability for the loss of the financial assets in respect of which it has safe keeping duties. The Depositary’s
oversight duties will include, but are not limited to, oversight of share buy backs, dividend payments and adherence to investment limits.
Derivative – a contract between two or more parties, the value of which fluctuates in accordance with the value of an underlying security.
The contract is usually short term (for less than one year). Examples of derivatives are Put and Call Options, Swap contracts, Futures and
Contracts for Difference. A derivative can be an asset or a liability and is a form of gearing because the fluctuations in its value are usually
greater than the fluctuations in the underlying security’s value.
Distributable Reserves – Reserves distributable by way of dividend or for the purpose of buying back ordinary share capital (see note 2
to the accounts). Company Law requires that Share Capital, the Share Premium Account and the Capital Redemption Reserve may not be
distributed. The Company’s articles of association allow distributions by way of dividend out of Capital Reserves. Dividend payments are
currently made out of Revenue Reserve. The cost of any share buybacks are deducted from the Special and Capital Reserves.
Dividend Dates – Reference is made in announcements of dividends to three dates. The “record” date is the date after which buyers of
the shares will not be recorded on the register of Shareholders as qualifying for the pending dividend payment. The “payment” date is the
date that dividends are credited to Shareholders’ bank accounts. The “ex-dividend” date is normally the business day prior to the record
date.
Fund Manager – Julian Cane, an employee of the Manager with overall management responsibility for the total portfolio.
GAAP – Generally Accepted Accounting Practice. This includes UK GAAP and International GAAP (IFRS or International Financial Reporting
Standards applicable in the European Union).
Investment Company (section 833) – UK Company Law allows an Investment Company to make dividend distributions out of realised
distributable reserves, even in circumstances where it has made capital losses in any year (see note 2 to the accounts), provided the
Company’s assets remaining after payment of the dividend exceed 150% of the liabilities. An Investment Company is defined as investing
its funds in shares, land or other assets with the aim of spreading investment risk.
Investment Trust taxation status (section 1158) – UK Corporation Tax law allows an Investment Company (referred to in tax law as an
Investment Trust) to be exempted from tax on its profits realised on investment transactions, provided it complies with certain rules.
These are similar to section 833 Company law rules but further require that the Company must be listed on a regulated stock exchange
and that it cannot retain more than 15% of income received. The Directors’ Report contains confirmation of the Company’s compliance
with this law and its consequent exemption from taxation on capital gains.
ISAE Report – Report prepared in accordance with the International Standard on Assurance Engagements.
Leverage – as defined under AIFMD rules, leverage is any method by which the exposure of an AIF (being an investment vehicle under the
AIFMD) is increased through borrowing of cash or securities or leverage embedded in derivative positions. Leverage is broadly equivalent
to gearing, but is expressed as a ratio between the net assets (excluding borrowings) and the net assets (after taking account of
borrowings). Under the gross method, exposure represents the sum of the Company’s positions after deduction of cash balances, without
taking account of any hedging or netting arrangements. Under the commitment method, exposure is calculated without the deduction of
cash balances and after certain hedging and netting positions are offset against each other.
Manager – Columbia Threadneedle Investment Business Limited, (AIFM), and its sister company Columbia Threadneedle Management
Limited. These two companies are owned by Ameriprise Financial, Inc.
Report and Accounts 2023 | 95
Other Information
Strategic Report Governance Report Financial Report Notice of Meeting
Other Information
Chair’s StatementOverview Auditors’ Report
Net Asset Value (NAV) – the assets less liabilities of the Company, as set out in the Balance Sheet, all valued in accordance with
the Company’s Accounting Policies (see note 2 to the accounts) and UK Accounting Standards. The net assets correspond to Total
Shareholders’ Funds, which comprise the share capital account, capital redemption reserve, share premium account, special reserve and
capital and revenue reserves.
Non-executive Director – a Director who has a contract for services, rather than a contract of employment, with the Company.
The Company does not have any executive Directors. Non-executive Directors’ remuneration is described in detail in the Directors’
Remuneration Report. The duties of the Directors, who govern the Company through the auspices of a Board and Committees of the
Board, are set out in the Corporate Governance Statement.
Open-end investment vehicle – a collective investment scheme which issues shares or units directly to investors, and redeems directly
from investors, at a price that is linked to the Net Asset Value of the fund.
Price/earnings multiple – This is a calculation carried out as a simple assessment of a company’s valuation. It is the result of dividing
the share price of a company by its earnings per share, therefore showing the multiple of earnings at which the shares trade.
Registrar – Computershare Investor Services PLC provide share registration services to the Company. They maintain the register of
members and arrange the payment of dividends. Shares held by investors in the CT Savings Plans are held on the register in one nominee
account under the name of State Street Nominees Limited.
SORP – Statement of Recommended Practice. The accounts of the Company are drawn up in accordance with the Investment Trust SORP,
issued by the AIC, as described in note 2 to the accounts.
SSAE16 – Statement on Standards for Attestation Engagements 16, issued by the American Institute of Certified Public Accountants, is an
independent snapshot of an organisation’s control environment.
UK Code of Corporate Governance (UK Code) – the standards of good practice in relation to board leadership and effectiveness,
remuneration, accountability and relations with Shareholders that all companies with a Premium Listing on the London Stock Exchange are
required to report on in their Annual Report and Accounts.
96 | CT UK Capital and Income Investment Trust PLC
Warning to Shareholders – Beware of Share Fraud.
Fraudsters use persuasive and high-pressure tactics to lure investors into scams. They may offer to sell to you shares that turn out to be worthless or
non-existent, or to buy your shares at an inflated price in return for an upfront payment following which the proceeds are never received.
If you receive unsolicited investment advice or requests:
• Check the Financial Services Register from fca.org.uk to see if the person or firm contacting you is authorised by the FCA
• Call the Financial Conduct Authority (“FCA”) on 0800 111 6768 if the firm does not have contact details on the Register or you are told they are out
of date
• Search the list of unauthorised firms to avoid at fca.org.uk/scams
• Consider that if you buy or sell shares from an unauthorised firm you will not have access to the Financial Ombudsman Service or Financial Services
Compensation Scheme
• Think about getting independent financial and professional advice
If you are approached by fraudsters please tell the FCA by using the share fraud reporting form at fca.org.uk/scams where you can find out more
about investment scams. You can also call the FCA Consumer Helpline on 0800 111 6768. If you have already paid money to share fraudsters you
should contact Action Fraud on 0300 123 2040.
CT UK Capital and Income
Investment Trust PLC
Report and Accounts
2023
To find out more visit columbiathreadneedle.com
© 2023 Columbia Threadneedle Investments. Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies.
Contact us
Registered office:
Cannon Place, 78 Cannon Street, London EC4N 6AG
0131 573 8300
ctcapitalandincome.co.uk
invest@columbiathreadneedle.com
Registrars:
Computershare Investor Services PLC
The Pavilions, Bridgwater Road
Bristol BS99 6ZZ
0370 889 4094
computershare.com
web.queries@computershare.co.uk