Brunner Investment - Final Results
15/02/2023 07:00
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RNS Number : 9502P Brunner Investment Trust PLC 15 February 2023
Legal Entity Identifier: 529900S0Y9ZINCHB3O93
THE BRUNNER INVESTMENT TRUST PLC
Final Results for the year ended 30 November 2022.
The following comprises extracts from the company's Annual Financial Report
for the year ended 30 November 2022. The full annual financial report is being
made available to be viewed on or downloaded from the company's website at
www.brunner.co.uk (http://www.brunner.co.uk) . Copies will be posted to
shareholders shortly.
MANAGEMENT REPORT
Chair's Statement
Dear Shareholder
Review of the 2022 Financial Year and Performance
2022 was a significant and distressing year in both economic and geopolitical
terms. A war, of the scale we thought we would never see again, raged
throughout the year in Ukraine and increasingly strident statements by China
raised questions about the wisdom of extensive cross-border supply chains.
Sanctions on Russia drove European gas prices to levels previously thought
impossible. After years of central banks manipulating interest rates downwards
and flooding the monetary system with excess money, the inevitable consequence
of these actions eventually appeared in the very high inflation rates seen
across the world, prompting central banks to raise interest rates sharply.
Stock prices swung wildly throughout the year driven by nervous sentiment on
the back of news flow and data releases. There were wide divergences in
returns between sectors and investment styles. The previous market focus on a
few titans of the tech sector that I mentioned last year, in which we did not
participate as our managers believed the valuations to be extreme, has
contributed significantly to equity market price falls.
Against this backdrop, we are pleased to report that the company's Net Asset
Value (NAV) per ordinary share rose 3.0% on a net dividends reinvested basis
with debt at fair value, our key performance measure. This was ahead of the
composite benchmark index (70% FTSE World Ex-UK and 30% FTSE All Share Index)
which rose by 1.4% on a total return basis over the period. This marks a
fourth year of outperformance against the benchmark. In the extremely varied
and volatile conditions of these years we believe this is a continuing
testament to the company's investment strategy.
Our manager describes the effects of these macroeconomic and geopolitical
factors in more detail in the Investment Management Report starting on page 23
of the annual report.
Environmental, Social and Governance (ESG)
Whilst the strategy of the trust does not aim to meet any specific
sustainability criteria, the board considers that it is in shareholders'
interests to be aware of and consider environmental, social and governance
factors when selecting and retaining investments and believes that active
stewardship is a key task of a responsible asset owner.
In addition to considering investment performance, understanding the manager's
approach to ESG within the investment process has continued to be a focus for
the board over the past year. We take account of our performance in this area
against our objectives using the manager's internal analysis and external
measures and benchmarks. We believe that well run companies will outperform in
the long term.
We give a full and clear account of ESG considerations within this report (see
page 21 of the annual report) and we also have a page on our website that
describes the manager's ESG process in more detail. Since the beginning of
2020 we have included quarterly updated ESG measurements on our monthly
factsheet, showing the rating of the Brunner portfolio on ESG risks compared
to the rating of the benchmark, however imperfect that comparison may still
be.
We are pleased to see continued efforts by regulators and the industry in
general to harmonise nomenclature and metrics. We hope this represents
progress towards more universally accepted descriptions and reliable
measurement for the benefit of all investors.
Earnings per Share
Over the past year most companies have been able to continue paying dividends
at or above the recovery level of 2021 after the constrained 2020 year during
the first Covid lockdown. This meant the portfolio's earnings grew once more
in 2022, with earnings per share for the year rising by 11.3%, from 20.4p to
22.7p. This has put Brunner in the strong position once again to pay an
increased dividend whilst increasing dividend reserves.
Dividend
The proposed final dividend of 6.05p, if approved by shareholders, will be
paid on 4 April 2023 to shareholders on the register on 24 February 2023. In
line with board's dividend policy, which is outlined on page 14, the total
dividend for 2022, including the proposed final dividend, will be 21.5p. This
represents an increase of 6.7% over the 2021 dividend which was 20.15p and
means Brunner has now reached 51 years of consecutive dividend increases,
maintaining its place as one of the AIC's "Dividend Heroes".
Revenue reserves will remain strong at 25.9p (2021: 24.7p) after the payment
of the proposed final dividend.
Board Succession
The board is continuing its cycle of recruitment as existing directors retire
from the board. We were pleased to welcome Elizabeth Field to the board with
her appointment on 1 December 2022. Elizabeth was a senior corporate lawyer
with extensive experience of advising public and private companies on a wide
range of corporate transactions across a variety of sectors, specifically
including investment trusts. As described in the company's previous annual
report, Peter Maynard is to retire from the board at the Annual General
Meeting in 2023. Following Peter's retirement, Andrew Hutton will be appointed
as Senior Independent Director. Peter has given long service, invaluable
challenge and guidance to the board, staying slightly beyond his planned
retirement date to provide additional continuity on the board through the
Covid pandemic. We thank Peter for his considerable service to the trust and
wish him well for the future.
AIFM ("Alternative Investment Fund Manager")
As we had notified shareholders in 2021, our management contract with Allianz
Global Investors GmbH ('AllianzGI') for investment management, accounting,
company secretarial and administrative services as AIFM of the trust is due to
transfer to Allianz Global Investors UK Limited ('AllianzGI UK') which is a
new FCA authorised and regulated UK entity taking on all activities of the UK
Branch of Allianz Global Investors GmbH. This change is taking place as a
result of the UK leaving the EU and is to take place once the legal set up is
arranged to ensure compliance with the UK regulatory regime. This process is
continuing but is expected to be made final in the coming months. The board is
assured that there will be no change to the portfolio management services nor
to the administration services received by the trust. With this change there
will be no increase in the management or administrative expenses of the
company. Details of the existing arrangement with the AIFM are on page 108 of
the annual report.
Lead Portfolio Manager Change
In July we announced that Christian Schneider, who is Deputy CIO for
AllianzGI's Global Growth franchise, would be taking over from Matthew
Tillett, who left AllianzGI. Christian, together with Marcus Morris-Eyton, an
experienced investment manager at AllianzGI, had already been working directly
alongside Matthew on the Brunner portfolio and Christian has worked in what is
now the Global Growth team for more than two decades. He is consequently well
versed in the strategy and investment approach. Christian took over as interim
Lead Portfolio Manager on Matthew's departure for a minimum period of six
months and will continue to work with Marcus and with Simon Gergel,
AllianzGI's CIO UK Equities. All have worked closely on the management of
Brunner for a number of years.
Matthew had worked on the Brunner portfolio for many years, and we wish him
all the best in his future endeavours and thank him for his steadfast and
valuable contribution to Brunner. Julian Bishop subsequently also joined the
AllianzGI team managing the company's portfolio on 1 November 2022 as a senior
portfolio manager. He will become Co-Lead Manager with Christian Schneider
after the Annual General Meeting on 31 March and shareholders will have the
opportunity to meet with him at the AGM. Julian has 25 years investment
experience as a global equity analyst and portfolio manager, most recently as
a senior global equity portfolio manager with Tesco Pension Investment and
before that with Sarasin and Partners.
The Brunner Investment Trust will continue to be managed as an all-weather
portfolio appropriate for a multitude of different market conditions with its
balanced approach to portfolio construction and strong focus on valuation.
Marketing
Promoting Brunner to as wide an audience as possible remains a priority and
the board supports the manager in sales and marketing efforts to further that
aim. The trust's balanced nature means it is a long-term holding that can, in
our view, form the cornerstone of an investor's diversified portfolio.
Attracting more investors, particularly individual investors, generally has
the effect of improving liquidity of the trust's shares.
The board met with the manager in early 2022 to discuss a refresh of how the
trust is described. We agreed that we should refer to Brunner as an
'all-weather' global equity portfolio":
Brunner - an 'all-weather' global equity portfolio
Aiming to grow consistently your investment over time and pay out a regular
and rising dividend, targeting stable long-term stock market returns whatever
the economic or market background.
To do this we:
- Invest in some of the world's best companies with superior
business models delivering strong and consistent profitability with long-term
growth potential
- Manage a diversified portfolio with exposure to most major
geographic regions and industries
- Aim for growth in both capital and income, with a 51-year track
record of continual dividend growth for shareholders
- Employ the expertise and scale of global asset manager AllianzGI
to provide robust investment processes and oversight
- Provide all of this in a cost-effective, actively managed fund.
What does this mean in practice?
- Not being skewed too heavily to any one sector or theme
- Longer term view on investments
- True bottom-up stock picking, where stock selection is the
predominant driver of risk and return in the portfolio - looking at what an
individual company does and considering how they will be affected by the macro
environment rather than to pick a portfolio that will react well to the
prevailing conditions.
Outlook
2023 continues with some of the most troubling factors currently affecting the
world: the ongoing war in Ukraine which confounds both logic and decency; and
the inflation-fuelled cost of living crisis being felt tangibly by so many
closer to home.
However, there are indications of inflation moderating. That may mean interest
rate rises may be nearing their high but there is definitely central bank
rhetoric in conflicting directions on the subject. The more soothing comments
from China, as it reopens the economy, is a welcome development. A more
in-depth analysis of that backdrop and the possible outcomes is given in the
Investment Manager's Review from page 24 of the annual report.
We continue to believe that the best approach for Brunner is to chart a steady
path and continue to be an 'all-weather' global equity portfolio for
investors, eschewing the biggest bets in the interest of long-term stability
of capital return and provision of a steadily rising dividend to our
shareholders.
Annual General Meeting
In 2022 we were happy to be able to welcome many shareholders to a physical
Annual General Meeting after two years constrained by Covid lockdowns. We look
forward to welcoming shareholders again this year to the AGM which is to be
held at Trinity House, Trinity Square, Tower Hill, London, EC3N 4DH, at 12
noon on Friday 31 March 2023. Attending shareholders will receive a
presentation from the investment managers before the formal business takes
place and the meeting will be followed by a light lunch. We would be delighted
to meet with all those shareholders who are able to attend.
Shareholders can send any questions to be answered at the AGM by the board and
manager care of the company secretary at investment-trusts@allianzgi.com or in
writing to the registered office (further details are available on page 60 of
the annual report) and we will publish questions and answers on the website
after the meeting. We encourage all shareholders to exercise their votes in
advance of the meeting by completing and returning the form of proxy.
Carolan Dobson
Chair
14 February 2023
Risk Management Policy
The board operates a risk management policy to ensure that the level of risk
taken in pursuit of the board's objectives and in implementing its strategy
are understood. The principal risks identified by the board are set out in the
tables below together with the actions taken to mitigate these risks. The
process by which the directors monitor risk is described in the Audit
Committee Report on page 74 of the annual report and includes a review of a
more detailed version of these tables, in the form of a risk matrix, at least
twice yearly.
Risk Appetite
The directors assess the likelihood of occurrence and perceived impact of each
risk after mitigating actions and consider the extent to which the resulting
residual risk is acceptable, which is defined as the board's risk appetite.
The results of this exercise are shown in the heat map on page 16 of the
annual report. Risks are rated as 'red' when the risk is of concern and
sufficient mitigation measures are not possible; 'amber' when the risk is of
concern but sufficient measures are defined and have been or are being
implemented; and 'green' when the risk is acceptable and no additional
measures are needed.
Principal Risks identified Controls and mitigation Risk Appetite
1.1 Market volatility The board meets with the portfolio managers and considers asset allocation, Red
stock selection and levels of gearing on a regular basis and has set
Significant market movements may adversely impact the investments held by the investment restrictions and guidelines that are monitored and reported on by
company increasing the risk of loss or challenges to the investment strategy, AllianzGI. The board monitors yields and can modify investment parameters and
reduction of dividends across the market affecting the portfolio yield and the consider a change to dividend policy.
ability to pay in line with dividend policy.
1.2 Market liquidity and pricing The board receives reports from the manager on the stress testing of the Green
portfolio at least twice each year and contact is made with the Chair and
Failure of investments. board if necessary between board meetings.
1.3 Counterparty risk The manager operates on a delivery versus payment system, reducing the risk of Green
counterparty default.
Non-delivery of stock by a counterparty.
1.4 Currency Currency movements are monitored closely and are reported to the board. Green
Exposure to significant exchange rate volatility could affect the performance
of the investment portfolio.
2.1 Investment Strategy The board manages these risks by diversification of investments through its Green
investment restrictions and guidelines which are monitored and on which the
An inappropriate investment strategy e.g., asset allocation or the level of board receives reports at every meeting. The board monitors the implementation
gearing may lead to underperformance against the company's benchmark index and and results of the investment process with the investment managers, who attend
peer group companies, resulting in the company's shares trading on a wider all board meetings, and reviews data which shows risk factors and how they
discount. affect the portfolio. The manager employs the company's gearing tactically
within a strategic range set by the board. The board also meets annually
specifically to discuss strategy, including investment strategy.
2.2 Shareholder relations Reports on shareholder sentiment are received from the manager and brokers and Green
reviewed by the board. Shareholders are actively encouraged to make their
The investment objectives, or views on decisions such as gearing, discount views known.
management, dividend policy, of existing shareholders may not coincide with
those of the board leading investors to sell their shares.
2.3 Investment performance The investment manager attends all board meetings to discuss performance with Amber
the directors. The board manages these risks by giving investment guidelines
Persistent poor performance against benchmark or peers leads to decline in which are monitored at each meeting. The board reviews the investment
attractiveness of the company to investors. performance of the company against the benchmark and peer group.
2.4 Financial A rolling income forecast (including special dividends), balance sheet and Green
expenses are reviewed at every board meeting. Reporting from the custodian
Range of risks including incorrect calculation of NAV, inaccurate revenue covering internal controls in place over custody of investments and over
forecasts, incorrectly calculated management fees, issues with title to appointment and monitoring of sub-custodians is produced and reviewed at least
investment holdings. annually. The board's investment restrictions are input in trading systems to
impose a pre-trade check.
2.5 Liquidity and gearing The board meets with the portfolio managers and considers asset allocation, Green
stock selection and levels of gearing on a regular basis. Investment
Insufficient income generated by the portfolio and due to stock market falls, restrictions and guidelines are monitored and reported on by AllianzGI.
gearing increases to levels unacceptable to shareholders and the market which Regular compliance information is prepared on covenant requirements.
in extreme circumstances results in a breach of loan covenants.
2.6 Market demand The board regularly reviews the level of premium and discount and existing Green
shares can be bought back by the company when the board considers this
The level of discount of the share price to the NAV moves to unacceptable expedient.
levels, threatening confidence in the company's shares.
3.1 Organisation set up and process The manager and the other key service providers report on business continuity Green
plans and the resilience of their response to extreme situations. Third party
Failure in the operational set up of the company, through people, processes, internal controls reports are also received from these service providers.
systems or external events could result in financial loss to the company or
its inability to operate.
3.2 Outsourcing and third party AllianzGI carries out regular monitoring of outsourced administration Amber
functions, which includes compliance visits and risk reviews where necessary.
Risk of inadequate procedures for the identification, evaluation and Results of these reviews are monitored by the board. And since the pandemic
management of risks at outsourced providers including AllianzGI and its the board has been obtaining additional assurances on business resilience and
outsourced administration provider, State Street Bank & Trust Company, cyber security. Agreed Service Level Agreements (SLAs) and Key Performance
HSBC Bank plc (Depositary and Custodian) and Link Group (Registrar). Indicators (KPIs) are in place and the board receives reports against these.
3.3 Regulatory The board maintains close relations with its advisers and makes preparations
for mitigation of these risks as and when they are known or can be
Failure to be aware of or comply with legal, accounting and regulatory anticipated. Green
requirements which could result in censure, financial penalty or loss of
investment company status.
3.4 Corporate governance The board is highly experienced and knowledgeable about corporate governance Green
best practice and includes directors who are board members of other UK plcs
Weak adherence to best practice in corporate governance can result in and other investment companies. The board takes regular advice on best
shareholder discontent and potential reputational damage to the company. practice.
3.5 Key person Manager and board succession plans are in place. Cover is available for core Green
members of the relevant teams of the manager, and work can be carried out by
Departure of the portfolio manager, certain professional individuals, and/or other team members should the need arise.
board members, may impact the management of the portfolio, the achievement of
the company's investment objective and/or disruption to its operations.
3.6 Financial crime, fraud and cyber security AllianzGI has anti-fraud, anti-bribery policies and robust procedures in Green
place. The board is alert to the risks of financial crime and threat of cyber
That the company and the manager's firm, its employees, or clients are subject attacks and reviews how third party service providers handle these threats.
to financial crime or breach elements of the Bribery Act. Risk of increased These reports confirm that all systems are secure and are updated in response
cyber attacks continue after COVID-19, and the changed working arrangements to any new threats as they arise and more frequent assurances have been sought
that have remained in place. and received throughout and since the COVID-19 pandemic.
3.7 Reputational The portfolio management team is in constant interaction with AllianzGI's Green
Environmental, Social and Governance (ESG) and Stewardship function and
Association with poor governance in portfolio companies and operational issues actively engages with investee companies on ESG issues and makes investments
in service providers which can affect the reputation of the company. incorporating ESG factors in the decision process. Service providers are
monitored and the manager provides oversight.
4.0 Emerging The board carries out horizon scanning by keeping informed through its manager Red
and advisers on the political, economic and legal landscape, and reviews
Continuing impact of the geopolitical situation including the attack on updates received on regulatory changes that affect the company.
Ukraine by Russian armed forces and tension between the US and China; the
impact of macroeconomic changes, including inflation; and the risks of further
virus variants; any which could cause significant market falls, threat to
income or increase in gearing. The board maintains close relations with its advisers (auditors, lawyers and
manager) and will make preparations for mitigation of emerging risks as and
when they are known or can be anticipated.
Going Concern
The directors have considered the company's investment objective and capital
structure both in general terms and in the context of the current
macroeconomic background. Having noted that the portfolio, which is
constructed by the portfolio manager on a bottom up basis, consists mainly of
securities which are readily realisable, the directors have also continued to
consider the risks and consequences of such external factors on the
operational aspects of the company and have concluded that the company has the
ability to continue in operation and meet its objectives in the foreseeable
future. For this reason the directors continue to adopt the going concern
basis in preparing the financial statements.
The company held some short term debt as a current liability as at 30 November
2022, in the form of a Revolving Credit Facility (RCF), which is renewable
within one year. While the company is in a net current liability position as
at 30 November 2022, if an obligation arose investments could be sold to raise
cash.
Viability Statement
Brunner is an investment company and has operated as an investment vehicle
since 1927 with the aim of offering a return to investors over the long term.
The directors have formally assessed the prospects of the company for a period
of longer than a year. The directors believe that five years is the suitable
outlook period for this review as there is a realistic prospect that the
company will continue to be viable whilst seeking to achieve its aim to
provide growth in capital value and dividends over the long term. This
reflects the longevity of the company and the expectation that investors will
want to hold on to their shares for some time. The board also notes that as a
high conviction investor, the portfolio manager has a five year view on stocks
in the portfolio.
The board has assessed the long-term viability of the company against the
principal risks faced by the company, outlined in the reporting under Risk
Management Policy on page 16 of the annual report. Many of these matters are
subject to ongoing review and the final assessment, to enable this statement
to be made, has been formally reviewed by the board.
The factors considered at each board meeting are:
· The company's investment strategy and the long-term performance of
the company, together with the board's view that it can continue to provide
attractive returns to investors;
· As an investment company Brunner is able to put aside revenue
reserves in years of good income to cover a smooth payment of growing
dividends in years when there are challenges to portfolio revenues;
· The financial position of the company, including the impact of
foreseeable market movements on future earnings and cash flows. The board
monitors the financial position in detail at each board meeting and at least
twice each year it stress-tests the portfolio against significant market
falls;
· In the current environment the board is reviewing earnings prospects,
gearing and debt covenants on a continuous basis with the managers; and
· The liquidity of the portfolio, and the company's ability to pay
dividends and to meet the budgeted expenses, including interest payments, of
running the company.
Based on the results of this assessment, the directors have 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 of their review.
The future
As we show in our page on the history of the trust on the inside cover of the
annual report, the longevity of the trust and its importance to our investors
continues to be a focus. The future attractiveness of Brunner as an investment
proposition with relevance to a wide variety of investors is something we
debate and evaluate continuously. We have to consider the investment
environment and wider economic considerations, such as increasing inflationary
pressures, and take soundings on the prospects for our markets, the return on
assets, economic growth and numerous other factors. Taking all this into
account the board continues to believe that there is a place for Brunner in
the range of options available to the investor and that the company remains
viable for the five year period here under review.
The Strategy for the future
The development of the company is dependent on the success of the company's
investment strategy against the economic environment and market developments.
I give my view in the Chair's Statement on page 4 of the annual report and the
investment manager discusses his view of the outlook for the company's
portfolio in his review on page 23 of the annual report.
On behalf of the board
Carolan Dobson
Chair
14 February 2023
Statement of Directors' Responsibilities in respect of the financial
statements
The directors are responsible for preparing the annual 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 Generally Accepted Accounting
Practice (United Kingdom Accounting Standards, comprising FRS 102 "The
Financial Reporting Standard applicable in the UK and Republic of Ireland",
and applicable law).
Under company law 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;
· state whether applicable United Kingdom Accounting Standards,
comprising FRS102 have been followed, subject to any material departures
disclosed and explained in the financial statements;
· make judgements and accounting estimates that are reasonable and
prudent; and
· prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the company will continue in
business.
The directors are responsible for safeguarding the assets of the company and
hence for taking reasonable steps for the prevention and detection of fraud
and other irregularities
The directors are also 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.
The directors are responsible for the maintenance and integrity of the
company's website. Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from legislation in other
jurisdictions.
Directors' confirmations
Each of the directors, whose names and functions are listed in Directors,
Managers and Advisers on page 58 of the annual report confirm that, to the
best of their knowledge:
· the company financial statements, which have been prepared in
accordance with United Kingdom Accounting Standards, comprising FRS 102, give
a true and fair view of the assets, liabilities, financial position and profit
of the company; and
· 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 it faces.
In the case of each director in office at the date the directors' report is
approved:
· so far as the director is aware, there is no relevant audit
information of which the company's auditors are unaware; and
· they have taken all the steps that they ought to have taken as a
director in order to make themselves aware of any relevant audit information
and to establish that the company's auditors are aware of that information.
This responsibility statement was approved by the board of directors on 14
February 2023 and signed on its behalf by:
Carolan Dobson
Chair
PORTFOLIO BREAKDOWN as at 30 November 2022
Region % of Invested Funds
North America 42.23
United Kingdom 21.95
Continental Europe 27.11
Pacific Basin 5.83
Japan 2.88
Total 100.00
TOP 20 HOLDINGS as at 30 November 2022
Name % of Invested Funds Sector
Value (£)
United Health 25,718,899 4.92 Health Care Providers
Microsoft 24,412,979 4.67 Software & Computer Services
Visa 19,593,985 3.75 Industrial Support Services
Munich Re 19,434,001 3.72 Non-Life Insurance
Shell 14,444,750 2.76 Oil, Gas & Coal
Microchip Technology 13,451,962 2.57 Technology Hardware & Equipment
Roche Holdings 13,021,337 2.49 Pharmaceuticals & Biotechnology
TotalEnergies 12,512,462 2.39 Oil, Gas & Coal
Taiwan Semiconductor 11,876,731 2.27 Technology Hardware & Equipment
AMETEK 11,843,628 2.27 Electronic & Electrical Equipment
Schneider Electric 11,830,830 2.26 Electronic & Electrical Equipment
Novo Nordisk 11,326,437 2.17 Pharmaceuticals & Biotechnology
Partners Group 11,057,258 2.12 Investment Banking & Brokerage
Itochu 10,982,090 2.10 General Industrials
Unilever 10,878,000 2.08 Personal Care, Drug & Grocery
Accenture 10,733,310 2.05 Industrial Support Services
Yum China Holdings 10,635,737 2.03 Travel & Leisure
Agilent Technologies 10,399,529 1.99 Medical Equipment & Services
Charles Schwab 10,203,335 1.95 Investment Banking & Brokerage
AIA 10,131,404 1.94 Life Insurance
274,488,664 52.50 % of Total Invested Funds
INCOME STATEMENT
for the year ended 30 November 2022
2022
Revenue Capital Total Return
£ £ £
(Note C)
Losses on investments held at fair value through profit or loss - (3,737,462) (3,737,462)
Losses on foreign currencies - (50,522) (50,522)
Income 12,622,989 - 12,622,989
Investment management fee (688,660) (1,606,874) (2,295,534)
Administration expenses (789,354) (1,975) (791,329)
Profit (loss) before finance costs and taxation 11,144,975 (5,396,833) 5,748,142
Finance costs: interest payable and similar charges (303,980) (654,611) (958,591)
Profit (loss) on ordinary activities before taxation 10,840,995 (6,051,444) 4,789,551
Taxation (1,167,023) - (1,167,023)
Profit (loss) after taxation attributable to ordinary shareholders 9,673,972 (6,051,444) 3,622,528
Earnings per ordinary share
(basic and diluted) (Note B) 22.66p (14.17p) 8.49p
BALANCE SHEET
as at 30 November 2022
2022
£
Fixed assets
Investments held at fair value through profit or loss 522,829,082
Net current liabilities (641,005)
Total assets less current liabilities 522,188,077
Creditors - amounts falling due after more than one year (25,091,114)
Total net assets 497,096,963
Capital and reserves
Called up share capital 10,673,181
Capital redemption reserve 5,326,819
Capital reserve 465,250,733
Revenue reserve 15,846,230
Total shareholders' funds 497,096,963
Net asset value per ordinary share 1,164.4p
INCOME STATEMENT
for the year ended 30 November 2021
2021
Revenue Capital Total Return
£ £ £
(Note C)
Gains on investments held at fair value through profit or loss - 82,406,614 82,406,614
Losses on foreign currencies - (24,280) (24,280)
Income 11,487,165 - 11,487,165
Investment management fee (666,745) (1,555,738) (2,222,483)
Administration expenses (723,214) (1,624) (724,838)
Profit before finance costs and taxation 10,097,206 80,824,972 90,922,178
Finance costs: interest payable and similar charges (269,638) (571,335) (840,973)
Profit on ordinary activities before taxation 9,827,568 80,253,637 90,081,205
Taxation (1,138,517) - (1,138,517)
Profit after taxation attributable to ordinary shareholders 8,689,051 80,253,637 88,942,688
Earnings per ordinary share
(basic and diluted) (Note B) 20.35p 187.98p 208.33p
BALANCE SHEET
as at 30 November 2021
2021
£
Fixed assets
Investments held at fair value through profit or loss 533,923,937
Net current liabilities (6,389,870)
Total assets less current liabilities 527,534,067
Creditors - amounts falling due after more than one year (25,081,783)
Total net assets 502,452,284
Capital and reserves
Called up share capital 10,673,181
Capital redemption reserve 5,326,819
Capital reserve 471,302,177
Revenue reserve 15,150,107
Total shareholders' funds 502,452,284
Net asset value per ordinary share 1,176.9p
STATEMENT OF CHANGES IN EQUITY
For the year ended 30 November 2022
Called up Share Capital Capital Redemption Reserve Capital Reserve Revenue Reserve Total
£ £ £ £ £
Net assets at 1 December 2020 10,673,181 5,326,819 391,048,540 15,050,832 422,099,372
Revenue profit - - - 8,689,051 8,689,051
Dividends on ordinary shares - - - (8,589,776) (8,589,776)
Capital profit - - 80,253,637 - 80,253,637
Net assets at 30 November 2021 10,673,181 5,326,819 471,302,177 15,150,107 502,452,284
Net assets at 1 December 2021 10,673,181 5,326,819 471,302,177 15,150,107 502,452,284
Revenue profit - - - 9,673,972 9,673,972
Dividends on ordinary shares - - - (8,986,818) (8,986,818)
Unclaimed dividends - - - 8,969 8,969
Capital loss - - (6,051,444) - (6,051,444)
Net assets at 30 November 2022 10,673,181 5,326,819 465,250,733 15,846,230 497,096,963
CASH FLOW STATEMENT
For the year ended 30 November 2022
2022 2021
£ £
Operating activities
Profit before finance costs and taxation* 5,748,142 90,922,178
Add (Less): Losses (gains) on investments held at fair value through profit or 3,737,462 (82,406,614)
loss
Less: Overseas tax suffered (1,167,023) (1,138,517)
61,350
Add: Losses on foreign currency 50,522 50,522 24,280
Purchase of fixed asset investments held at fair value through profit or loss (79,629,586) (70,571,279)
Sales of fixed asset investments held at fair value through profit or loss 85,530,947 64,919,529
Increase in other receivables (72,588) (276,366)
(Decrease) increase in other payables (93,914) 201,037
Net cash inflow from operating activities 14,103,962 1,674,248
Financing activities
Interest paid and similar charges (829,048) (804,243)
Proceeds from Revolving Credit Facility - 2,500,000
Dividend paid on cumulative preference stock (22,500) (22,531)
Dividends paid on ordinary shares (8,986,818) (8,589,776)
Unclaimed dividends over 12 years 8,969 -
Net cash outflow from financing activities (9,829,397) (6,916,550)
4,274,565 (5,242,302)
Increase (decrease) in cash and cash equivalents
3,694,667 8,961,249
Cash and cash equivalents at the start of the year
Effect of foreign exchange rates (50,522) (24,280)
Cash and cash equivalents at the end of the year 7,918,710 3,694,667
Comprising:
Cash at bank 7,918,710 3,694,667
* Cash inflow from dividends was £11,034,636 (2021 - £10,096,758) and cash
inflow from interest was £12,814 (2021 - £nil).
NOTES
Note A
The financial statements have been prepared under the historical cost
convention, except for the revaluation of financial instruments held at fair
value through profit or loss and in accordance with applicable United
Kingdom law and UK Accounting Standards (UK GAAP), including Financial
Reporting Standard 102 - the Financial Reporting Standard applicable in the
United Kingdom and Republic of Ireland (FRS 102), the requirements of the
Companies Act 2006 and in line with the Statement of Recommended Practice
"Financial Statements of Investment Trust Companies and Venture Capital
Trusts" issued by the Association of Investment Companies (AIC SORP) in July
2022.
Note B
The earnings per ordinary share is based on a weighted number of shares
42,692,727 (2021 - 42,692,727) ordinary shares in issue.
Note C
The total return column of this statement is the profit and loss account of
the company.
The supplementary revenue return and capital return columns are both prepared
under the guidance published by the Association of Investment Companies.
All revenue and capital items in the Income Statement derive from continuing
operations. No operations were acquired or discontinued in the year.
Profit after taxation attributable to ordinary shareholders disclosed in the
Income Statement represents the company's total comprehensive income.
Transaction costs and stamp duty on purchases amounted to £187,149 (2021 -
£199,265) and transaction costs on sales amounted to £18,885 (2021 -
£16,862).
Note D
Investments - As the company's business is investing in financial assets with
a view to profiting from their total return in the form of increases in fair
value, financial assets are held at fair value through profit or loss in
accordance with FRS 102 Section 11: 'Basic Financial Instruments' and Section
12: 'Other Financial Instruments'. The company manages and evaluates the
performance of these investments on a fair value basis in accordance with its
investment strategy, and information about investments is provided on this
basis to the board.
Note E
Dividends on Ordinary Shares
2022 2021
£ £
Dividends paid on ordinary shares:
Third interim dividend - 4.70p paid 10 December 2021 (2020 - 4.67p) 2,006,558 1,993,750
Final dividend - 6.05p paid 1 April 2022 (2021 - 6.05p) 2,582,910 2,582,910
First interim dividend - 5.15p paid 21 July 2022 (2021 - 4.70p) 2,198,675 2,006,558
Second interim dividend - 5.15p paid 15 September 2022 (2021 - 4.70p) 2,198,675 2,006,558
8,986,818 8,589,776
Dividends payable at the year end are not recognised as a liability under FRS
102 Section 32 'Events After the End of the Reporting Period' (see page 90 of
the annual report - Statement of Accounting Policies). Details of these
dividends are set out below.
2022 2021
£ £
Third interim dividend - 5.15p paid 12 December 2022 (2021 - 4.70p) 2,198,675 2,006,558
Final proposed dividend - 6.05p payable 4 April 2023 (2022 - 6.05p) 2,582,910 2,582,910
4,781,585 4,589,468
The proposed final dividend accrued is based on the number of shares in issue
at the year end. However, the dividend payable will be based on the numbers of
shares in issue on the record date and will reflect any changes in the share
capital between the year end and the record date.
All dividends disclosed in the tables above have been paid or are payable from
the revenue reserves.
Note F
The financial information for the year ended 30 November 2022 has been
extracted from the statutory accounts for that year. The auditor's report on
those accounts was unqualified and did not contain a statement under either
section 498(2) or (3) of the Companies Act 2006. The annual financial report
has not yet been delivered to the registrar of companies.
The financial information for the year ended 30 November 2021 has been
extracted from the statutory accounts for that year which have been delivered
to the registrar of companies. The auditor's report on those accounts was
unqualified and did not contain a statement under either section 498(2) or
section 498(3) of the Companies Act 2006.
The full annual financial report will shortly be available to be viewed on or
downloaded from the company's website at www.brunner.co.uk. Neither the
contents of the company's website nor the contents of any website accessible
from hyperlinks on the company's website (or any other website) is
incorporated into, or forms part of this announcement.
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. END FR UVAAROBUUARR
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