Brunner Investment - Final Results
14/02/2024 07:00
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RNS Number : 0418D Brunner Investment Trust PLC 14 February 2024
Legal Entity Identifier: 529900S0Y9ZINCHB3O93
THE BRUNNER INVESTMENT TRUST PLC
Final Results for the year ended 30 November 2023.
The following comprises extracts from the company's Annual Financial Report
for the year ended 30 November 2023. 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 2023 Financial Year and Performance
2023 was another year of difficult and volatile stock markets in uncertain
economic conditions. The sheer pace and reach of how news now travels round
the world, coupled with the amount of short-term trading done in markets by
maths models, may mean that this is how most years will look in the future.
Global equities climbed out of a dip through December 2022 and January 2023,
but over February and early-March gave back most gains. It was a repeating
picture over the remainder of the year as gains from March to August were
largely given back up to a point in October which was barely above the start
of the year. From that point though markets rallied to finish the calendar
year strongly ahead. Our financial year reporting period is from 1 December
2022 to 30 November 2023 and therefore captures only a proportion of the gains
from the 2023 year-end rally, but the strong December will be in our 2024
fiscal year.
Globally inflation continued to be more persistent than expected, subduing
only towards the end of the year. This allowed central banks to make more
optimistic statements about future cuts in interest rates, spurring the year
end stock market rally.
In geopolitical terms we are approaching the second anniversary of the war in
Ukraine and are in the middle of another war in the Middle East; neither
conflict has a clear end in sight. Our thoughts remain firmly with all those
affected by conflicts and political instability around the world, as well as
those affected by the many natural disasters seen in 2023.
In environmental terms, global temperatures broke new records and COP-28 saw
nations further galvanise behind the movement away from fossil fuels, though
how that is achieved remains unclear.
The development and scale of implementation of Artificial Intelligence
dominated headlines through the year. (The mega-capitalisation companies -
dubbed 'The Magnificent Seven' (Alphabet, Amazon, Apple, Meta, Microsoft,
NVIDIA, and Tesla) were significant beneficiaries of this. AI offers both
opportunity and concern from the perspective of humanity. Whilst that debate
is not one to have here, from an investment perspective it will be crucial to
understand if regulation will be imposed and if it will ultimately help or
hinder those firms at the cutting edge.
Against this volatile backdrop, Brunner once again beat its benchmark over the
year to 30 November 2023. Brunner's Net Asset Value (NAV) per ordinary share
total return (calculated on a net dividends reinvested basis with debt at fair
value) was +8.7%, versus +5.5% for the composite benchmark (70% FTSE World Ex.
UK / 30% FTSE All-Share). This marks the 5(th) consecutive year of
outperformance of the benchmark by the trust. As we are only relatively small
holders of the noted stocks that led markets forward, the board is
particularly happy to report this consistent progress to shareholders.
The four largest contributors to performance were Microsoft, Jumbo SA (a Greek
listed retailer), Novo Nordisk and Munich Re, demonstrating the variety of
companies and sectors the manager selects to meet the company's performance
and risk objectives.
Brunner should be viewed as an 'all weather global equity portfolio'. Over
time we aim to demonstrate the substance of this claim, providing solid
outperformance through a variety of market and macroeconomic conditions.
The portfolio is constructed with a focus on high quality companies that are
expected to perform well over the long term. The managers do not look to build
a portfolio that will perform on a particular economic condition or trigger -
rather they remain aware of these external factors and review how they might
impact the individual companies within the portfolio. You can read more about
the portfolio managers' analysis of what happened to the portfolio during the
period on pages 23 to 58 of the annual report. The portfolio managers also
observe that stock market returns bear little resemblance to economic factors
or drivers over time. "Over time" is of course the important factor there as
markets can be over-sensitive to news flow and economic data. "Over time"
perfectly describes a key tenet of our investment philosophy though - thinking
about performance over longer time periods, not trying to time or profit from
short-term market movements.
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. Active stewardship is a
key task of any responsible asset owner.
Understanding the manager's approach to ESG and how it has been integrated
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 both the manager's internal analysis and external measures
and benchmarks.
We give a full and clear account of ESG considerations within the annual
report (see page 21). We also have a page on our website that describes the
manager's ESG processes 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 and combined ESG risk
measurements 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 measurement, the latest just at the end
of 2023 coming from the FCA. We see this as a further step forward towards
more universal 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 previous levels and there has been a contribution from special
dividends. This meant the portfolio's generation of income and earnings grew
once more through 2023, with earnings per share for the year rising by 16.3%,
from 22.7p to 26.4p. This has put Brunner in the strong position once again to
be able to cover our increased dividend payment to shareholders and still put
a sizeable amount into revenue reserves for a future 'rainy day'.
Dividend
The proposed final dividend of 6.05p, if approved by shareholders, will be
paid on 4 April 2024 to shareholders on the register on 1 March 2024. In line
with board's dividend policy, which is outlined on page 14 of the annual
report, the total dividend for 2023, including the proposed final dividend,
will be 22.7p. This represents an increase of 5.6% over the 2022 dividend of
21.5p and means Brunner has now reached 52 years of consecutive dividend
increases, cementing its place near the top of the AIC's "Dividend Heroes"
list.
Revenue reserves will remain strong at 29.6p after the payment of the proposed
final dividend.
Board Succession
As noted in the previous report, Elizabeth Field joined the board at the start
of the financial year on 1 December 2022. In addition, Andrew Hutton was
appointed as Senior Independent Director at the Annual General Meeting in
2023, succeeding Peter Maynard who stepped down.
Portfolio Management Team
At the Annual General Meeting at the end of March 2023, Julian Bishop became
Co-lead Portfolio Manager alongside Christian Schneider. Christian who was
Deputy CIO for AllianzGI's Global Growth franchise has since been promoted to
the CIO role, leading that team. Simon Gergel, AllianzGI's CIO UK Equities,
continues his involvement with the portfolio, having worked closely on the
management of Brunner for many years.
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 and Discount
Promoting Brunner to as wide an audience as possible remains a priority and
the board supports the manager's 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.
As noted in previous reporting, in 2022 we agreed that we should refer to
Brunner as "An all-weather global equity portfolio". We would like to think
that Brunner has been "doing what it says on the tin". It is something of an
obvious 'line' given the prevailing economic and fiscal conditions. Anyone
can claim to be 'all-weather': we believe we have been living and breathing it
for a long time; the consistent results achieved are the proof.
Despite the strong performance noted, Brunner traded at a larger than average
discount through most of the period. Some of this is sector-wide - investment
trusts in general have had a difficult year as investors shied away in the
prevailing macro environment. The AIC's statistics for 2023 show the impact on
average discounts. Although not within the reporting period, as I write at the
beginning of 2024 it has been pleasing to see the investment trust sector
rally from 2023 lows.
We have seen the discount of Brunner relative to its peers begin to narrow
which we believe is a reflection of the portfolio's out-performance and the
effectiveness of our marketing campaign. As a board, we are disappointed that
a trust that has delivered 5 consecutive years of outperformance over one of
the most volatile periods in stock market history, trades at a discount and
continue our strenuous efforts in marketing, sales and investor relations to
gain greater investor knowledge. We have been heartened by the steady increase
in ownership from private investors achieved.
Outlook
2024 will likely be another significant year in terms of 'headline' events
with 64 countries plus the European Union holding elections. Associated 'news'
is likely to be rampant. Along with two major conflicts, the geopolitical
landscape remains dangerous.
Markets have been acutely concerned with inflation and second-guessing central
bank's rate rhetoric. Inflation appears to be more under control but events
in the Middle East have the potential to disrupt that.
Not all economies are built equally, and we have already seen divergence in
economic performance. As you will read in the Investment Manager's Review on
pages 24 to 39 of the annual report, the portfolio managers are largely
agnostic to where a stock happens to be listed. A large proportion of world
class businesses derive their revenues from a diverse range of locations
around the globe, often unconnected with where their stock is listed. The
managers also argue in their report that the 'macro' factors, which
undoubtedly move markets (possibly dramatically) in the short term, ultimately
have limited impact on the long-term outcomes for individual businesses and
thus for stock market returns over the long term.
As ever this scenario provides a good hunting ground for stock pickers who can
look past the immediate noise and focus on the long-term opportunities
available from individual businesses, crafting a balanced portfolio of such
opportunities.
Annual General Meeting
At our 2023 Annual General Meeting in March, it was a pleasure to introduce
our now co-lead manager Julian Bishop to the audience. The event was well
attended by shareholders, with an interesting range of questions and
discussion. We look forward to welcoming shareholders once 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 Monday 25 March 2024. Attending shareholders
will receive a presentation from the portfolio managers before the formal
business takes place. 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 113 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
13 February 2024
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 78 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.
Macroeconomic factors and their causes may mean mitigation may not be possible
Macroeconomic factors could also cause significant market falls, unexpected for significant market movements caused by factors outside the board's
volatility, threat to income or increase in gearing. control.
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 and AI 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. Risk from traditional and generative Artificial Intelligence to any new threats as they arise. The board asks for and receives assurance
(AI) in respect of malicious AI, its rapid growth and the lack of regulation. from key suppliers on information security and AI developments and threats.
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
Geopolitical uncertainties, including the Israel - Gaza war, the supply chain updates received on regulatory changes that affect the company.
issues in the Red Sea, the ongoing invasion of Ukraine by Russian armed forces
and tension between the US and China, any of which could cause significant
market falls, threat to income or increase in gearing.
The board has asked the manager to report on its own careful consideration of
AI developments and threats within its own organisation and in its oversight
of investments.
Impact of AI on the investment portfolio.
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
2023, 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 2023, 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 5 of the annual report and the
portfolio managers discuss their view of the outlook for the company's
portfolio in their review on page 33 of the annual report.
On behalf of the board
Carolan Dobson
Chair
13 February 2024
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 regulation.
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 pages 60 to 62 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 13
February 2024 and signed on its behalf by:
Carolan Dobson
Chair
PORTFOLIO BREAKDOWN as at 30 November 2023
Region % of Invested Funds
North America 44.29
Continental Europe 26.15
United Kingdom 25.09
Pacific Basin 2.41
Japan 2.06
Total 100.00
TOP 20 HOLDINGS as at 30 November 2023
Name % of Invested Funds Sector
Value (£)
Microsoft 37,146,255 6.7 Software & Computer Services
United Health 24,464,485 4.4 Health Care Providers
Visa 21,878,979 4.0 Industrial Support Services
Microchip Technology 15,995,821 2.9 Technology Hardware & Equipment
Shell 15,130,484 2.7 Oil, Gas & Coal
Schneider Electric 14,306,587 2.6 Electronic & Electrical Equipment
Partners Group 14,200,035 2.6 Investment Banking & Brokerage
Thermo Fisher Scientific 14,166,513 2.6 Medical Equipment & Services
Charles Schwab 13,891,300 2.5 Investment Banking & Brokerage
Arthur J. Gallagher & Co. 13,204,751 2.4 Non-Life Insurance
Taiwan Semiconductor 13,059,369 2.4 Technology Hardware & Equipment
TotalEnergies 12,876,533 2.3 Oil, Gas & Coal
Munich Re 12,500,544 2.3 Non-Life Insurance
AMETEK 12,138,291 2.2 Electronic & Electrical Equipment
Intercontinental Hotels 12,026,666 2.2 Travel & Leisure
Itochu 11,411,833 2.1 General Industrials
ASML Holding 11,295,883 2.0 Technology Hardware & Equipment
Accenture 11,186,407 2.0 Industrial Support Services
DNB Bank 10,710,122 1.9 Banks
Atlas Copco 10,399,381 1.9 Industrial Engineering
301,990,239 54.6 % of Total Invested Funds
INCOME STATEMENT
for the year ended 30 November 2023
2023
Revenue Capital Total Return
£ £ £
(Note C)
Gains (losses) on investments held at fair value through profit or loss - 32,247,788 32,247,788
Losses on foreign currencies - (294,696) (294,696)
Income 14,426,006 - 14,426,006
Investment management fee (716,931) (1,672,839) (2,389,770)
Administration expenses (855,035) (1,887) (856,922)
Profit before finance costs and taxation 12,854,040 30,278,366 43,132,406
Finance costs: interest payable and similar charges (407,927) (898,583) (1,306,510)
Profit on ordinary activities before taxation 12,446,113 29,379,783 41,825,896
Taxation (1,195,066) - (1,195,066)
Profit after taxation attributable to ordinary shareholders 11,251,047 29,379,783 40,630,830
Earnings per ordinary share
(basic and diluted) (Note B) 26.35p 68.82p 95.17p
BALANCE SHEET
as at 30 November 2023
2023
£
Fixed assets
Investments held at fair value through profit or loss 553,377,318
Current assets
Other receivables 1,661,906
Cash at bank and in hand 9,864,904
11,526,810
Current liabilities
Other payables (11,593,648)
Net current liabilities (66,838)
Total assets less current liabilities 553,310,480
Creditors - amounts falling due after more than one year (25,100,721)
Total net assets 528,209,759
Capital and reserves
Called up share capital 10,673,181
Capital redemption reserve 5,326,819
Capital reserve 494,630,516
Revenue reserve 17,579,243
Total shareholders' funds 528,209,759
Net asset value per ordinary share 1,237.2p
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
Current assets
Other receivables 2,747,156
Cash at bank and in hand 7,918,710
10,665,866
Current liabilities
Other payables
(11,306,871)
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
STATEMENT OF CHANGES IN EQUITY
For the year ended 30 November 2023
Called up Share Capital Capital Redemption Reserve Capital Reserve Revenue Reserve Total
£ £ £ £ £
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
Net assets at 1 December 2022 10,673,181 5,326,819 465,250,733 15,846,230 497,096,963
Revenue profit - - - 11,251,047 11,251,047
Dividends on ordinary shares - - - (9,520,477) (9,520,477)
Unclaimed dividends - - - 2,443 2,443
Capital profit - - 29,379,783 - 29,379,783
Net assets at 30 November 2023 10,673,181 5,326,819 494,630,516 17,579,243 528,209,759
CASH FLOW STATEMENT
For the year ended 30 November 2023
2023 2022
£ £
Operating activities
Profit before finance costs and taxation* 43,132,406 5,748,142
(Less) add: (gains) losses on investments held at fair value through profit or (32,247,788) 3,737,462
loss
Less: Overseas tax suffered (1,195,066) (1,167,023)
Add: Losses on foreign currency 294,696 50,522 50,522
Purchase of fixed asset investments held at fair value through profit or loss (115,960,271) (79,629,586)
Sales of fixed asset investments held at fair value through profit or loss 118,633,336 85,530,947
Decrease (increase) in other receivables 111,737 (72,588)
Increase (decrease) in other payables 142,596 (93,914)
Net cash inflow from operating activities 12,911,646 14,103,962
Financing activities
Interest paid and similar charges (1,130,222) (829,048)
Dividend paid on cumulative preference stock (22,500) (22,500)
Dividends paid on ordinary shares (9,520,477) (8,986,818)
Unclaimed dividends over 12 years 2,443 8,969
Net cash outflow from financing activities (10,670,756) (9,829,397)
2,240,890 4,274,565
Increase in cash and cash equivalents
Cash and cash equivalents at the start of the year 7,918,710 3,694,667
Effect of foreign exchange rates (294,696) (50,522)
Cash and cash equivalents at the end of the year 9,864,904 7,918,710
Comprising:
Cash at bank 9,864,904 7,918,710
* Cash inflow from dividends was £12,717,117 (2022 - £11,034,636) and cash
inflow from interest was £196,203 (2022 - £12,814).
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 (2022 - 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 £231,783 (2022 -
£187,149) and transaction costs on sales amounted to £38,689 (2022 -
£18,885).
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
2023 2022
£ £
Dividends paid on ordinary shares:
Third interim dividend - 5.15p paid 12 December 2022 (2021 - 4.70p) 2,198,675 2,006,558
Final dividend - 6.05p paid 4 April 2023 (2022 - 6.05p) 2,582,910 2,582,910
First interim dividend - 5.55p paid 25 July 2023 (2022 - 5.15p) 2,369,446 2,198,675
Second interim dividend - 5.55p paid 15 September 2023 (2022 - 5.15p) 2,369,446 2,198,675
9,520,477 8,986,818
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.
2023 2022
£ £
Third interim dividend - 5.55p paid 12 December 2023 (2022 - 5.15p) 2,369,446 2,198,675
Final proposed dividend - 6.05p payable 4 April 2024 (2023 - 6.05p) 2,582,910 2,582,910
4,952,356 4,781,585
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 2023 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 2022 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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