Brunner Investment - Final Results
13/02/2025 07:00
For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20250213:nRSM9297Wa&default-theme=true
RNS Number : 9297W Brunner Investment Trust PLC 13 February 2025
Legal Entity Identifier: 529900S0Y9ZINCHB3O93
THE BRUNNER INVESTMENT TRUST PLC
Final Results for the year ended 30 November 2024.
The following comprises extracts from the company's Annual Financial Report
for the year ended 30 November 2024. 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,
I wanted to start by sharing the excitement of your board and managers that,
in the past year, our trust won the 'Investment Company of the Year - Global'
award from Investment Week and was promoted to the FTSE 250 Index.
Welcome
A warm welcome to shareholders old and new - those that have been with us on a
longer journey over many years and through various market cycles and those
joining more recently. Brunner pleasingly saw a marked increase in demand in
the second half of the financial year, so as well as thanking those
longer-term shareholders who may have topped-up or more materially increased
their holdings, we also have the pleasure of welcoming many new holders. I
hope that whichever of these categories you fall into that you are pleased
with your investment in the trust and will have many fruitful years with
Brunner as a part of your own investment portfolio. We will cover it more
formally, but I would like to note that the increased demand for Brunner
shares resulted in the share price discount to Net Asset Value (NAV) narrowing
considerably, followed by a period where it went to a premium - trading above
NAV . That scenario allowed us to issue new shares for the first time,
something that will benefit existing as well as new shareholders as we will
describe later.
As noted, the year culminated with the long-term performance and success of
the strategy being recognised with a win in the Investment Week 'Investment
Company of the Year Awards' - a badge now proudly displayed on the cover of
this report. This recognises the efforts of a large team - from the board
through the investment manager, our many advisers and suppliers and all those
looking after the promotion and distribution of our shares. The award not only
examines the performance record over a three year period but also looks at
many other factors such as the investment approach, how we look at risk, and
how we make use of the investment trust structure.
Global backdrop
2024 provided no shortage of world events and geopolitical shocks, continuing
the trend of the past many years. In a year that saw a heating up of the space
race, Paris host the latest Olympic Games and significant surges forward in
the development of Artificial Intelligence (AI), we also witnessed political
upheaval and regime changes in a year dominated by elections across the globe,
the ongoing Russian offensive in Ukraine and further globally-unsettling
conflict engulfing the Middle East.
Whilst these many events inevitably drove some market volatility, overall
global markets managed to continue trending upwards and provided good gains
again this year, though somewhat more selectively compared to other years when
disaggregating geographies and sectors. The US in particular has surged
further forward and cemented its 'leadership' position in equity market terms
- the Portfolio Managers' Report on page 26 of the Annual Report looks at this
in more detail and we would like to commend shareholders to read that detailed
analysis of the drivers and make up of that stock market dominance, as well as
the examination of if that scenario can continue.
Performance
Against this volatile backdrop, Brunner was unfortunately unable to extend its
previous five year record of outperformance, trailing its benchmark over the
year to 30 November 2024. Brunner's NAV per ordinary share total return
(calculated on a net dividends reinvested basis with debt at fair value) was
+17.9%, versus +23.6% for the composite benchmark (70% FTSE World Ex. UK / 30%
FTSE All-Share). By virtue of the strongly narrowing discount, the share price
return recorded was some measure ahead however at +39.3%.
Although the NAV return generated by the portfolio was behind benchmark, this
should be viewed in the context of continued narrow dominance in terms of
companies and sectors driving overall market performance. Without any need to
paraphrase, I include the following quote from the Portfolio Managers' Report
which neatly sums up the main reasons for falling behind the benchmark this
year, but also describes the counterbalance that the associated positioning
remains appropriate in their view and aligned with Brunner's long term
strategy.
"Most of the underperformance is best explained at the stock level within the
Financials and Technology sectors. Both of these important sectors roared
ahead. Our holdings participated but did not keep up. To a large extent, this
reflects our balanced approach, but also our bias to prudency. For example,
within the diverse Financials sector our skew is to higher quality, recurring
fee-based business models. This year saw the outperformance of lower quality,
more asset intensive businesses like traditional banks and insurers. We had
exposure here, but not enough to keep up with the market. Where we have
exposure, it is generally at the less levered and less risky end of the
spectrum. This means that we always run the risk of underperforming in a
cyclical rally, as happened this year, but we should be better protected on
the downside in the event of a cyclical downturn."
Ultimately, our "All-Weather" approach does not mean chasing some kind of
absolute return or constant outperformance of the benchmark - rather it means
the pursuit of consistent performance, delivered with a strong focus on risk
management, finding companies with dominant market positions that the
portfolio managers believe should provide steady long-term returns for
shareholders.
We believe that, over time, we continue to demonstrate the substance of our
'all weather global equity portfolio' claim, providing solid returns through a
variety of market and macroeconomic conditions.
Environmental, Social and Governance (ESG)
As noted in previous reporting, whilst the strategy of the trust does not aim
to meet any specific sustainability criteria, the board remains of the view
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.
We give a full and clear account of ESG considerations within this report. We
also have a page on our website that describes the investment manager's ESG
processes in more detail. Over the year the board has maintained a focus on
understanding the investment manager's approach to ESG and how it has been
integrated within the investment process. We take account of our performance
in this area against our objectives using both the investment manager's
internal analysis and external measures and benchmarks.
We are pleased to see further efforts by regulators and the industry in
general to ensure fair treatment of investors in terms of ESG and
sustainability in relation to investments. The latest of these moves is the
SDR (Sustainability Disclosure Requirements) regulation which is now in place
and aims to harmonise sustainability naming conventions as well as requiring
investment managers to meet certain criteria in the management of a portfolio
should they want to claim any sustainability credentials in their fund names
or marketing materials. In addition, the regulation aims to ensure that
nothing either explicitly or implicitly creates the impression of
sustainability if it does not genuinely exist (known as greenwashing).
Earnings per Share
Over the past year our portfolio companies have been able to continue paying
dividends at levels that meant the portfolio's generation of income and
earnings grew once more through 2024, with earnings per share for the year
rising by 3.8%, from 26.4p to 27.4p. 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 to help
with any future dividend drought, such as that witnessed during the pandemic.
Dividend
The proposed final dividend of 6.05p, if approved by shareholders, will be
paid on 4 April 2025 to shareholders on the register on 21 February 2025, with
an ex-dividend date of 20 February 2025. For those shareholders in the
Dividend Reinvestment Plan (DRIP), the last date for this will be 7 March
2025. In line with board's dividend policy, which is outlined on page 16 of
the Annual Report, the total dividend for 2024, including the proposed final
dividend, will be 23.75p. This represents an increase of 4.6% over the 2023
dividend which was 22.7p and means Brunner has now reached 53 years of
consecutive dividend increases, remaining in place near the top of the AIC's
"Dividend Heroes" list.
Revenue reserves will remain strong at 32.6p after the payment of the proposed
final dividend.
Marketing & discount
We have spoken previously about our belief in the power of demand generation
through effective promotional activity being a stronger lever than purely
financial measures such as share buy backs for narrowing the trust's discount.
As illustration of this, without having to buy back any stock, but by
highlighting Brunner's steady philosophy and approach, combined with our
notable long-term performance and lower volatility versus some peers, has seen
us progress from a double-digit discount at the start of the financial year to
a premium at the end of the year. In the latter half of the year a definite
momentum appeared in the trading of the company's shares, which combined with
our entry into the FTSE 250 to spark even further investor interest. This in
turn led to Brunner issuing shares for the first time. The board very
carefully considered the issuance of new ordinary shares when the shares began
to trade at a premium and issued when it became clear that it would be
destabilising to existing shareholders not to go ahead.
Share issuance will only be carried out when the trust is trading at an
established premium to NAV - thereby being naturally accretive to existing
shareholders. In addition, the organic growing of the otherwise fixed pool of
capital is beneficial to investors both in terms of additional investable
capital being available to the portfolio managers but also allowing fixed
costs to be spread over a wider share base, thereby marginally reducing their
impact.
Cost disclosure
2024 was the year that the investment trust industry consolidated behind a
rallying cry of 'disclose but don't double count'. There were certainly
nuances to the debate, but credit must go to the campaigners who tirelessly
brought the campaign up from its genesis to the eventual curtailment of the
perpetuation of misleading information requirements and the commitment of the
UK Government to make the FCA re-think the application of disclosure
requirements for investor protection, to the particular model that investment
trusts fall into.
We supported our manager's initial conservative stance, wanting to make sure
we were not barred from being traded by retail investors on the investment
'platforms', and we have encouraged our manager to take advantage of the
interim rulings to harmonise the Key Information Document to include the same
ongoing charge figure as we disclose in this report with the Association of
Investment Companies (AIC) methodology, rather than the previous
European-derived PRIIPS (packaged retail and insurance-based investment
products) methodology which was felt to be misleading for investment trusts.
Furthermore there is now a narrative statement within that document, as well
as on our monthly factsheets, the essence of which is to remind prospective
investors and shareholders that the 'charges' disclosed are already accounted
for within the NAV and therefore also the price paid - investors do not have
to pay any further charges to their investment trust or its manager after
purchasing shares, though of course the platform or stockbroker used to
execute the trade will likely levy some kind of charge.
There will be further changes in terms of cost disclosure over the coming
year. There is an ongoing FCA consultation on its proposed Consumer Composite
Investments (CCI) regime, which will replace PRIIPS. There is concern in the
investment trust industry that current proposals could be as unfavourable as
PRIIPS, though we are not at the final point yet and lobbying continues from
the AIC and many other market participants. From Brunner's perspective, please
be assured that we will continue to do all we can to ensure investors have
access to the appropriate information, whatever the requirements of any
prevailing regulation may be.
Outlook
Brunner's new financial year has already begun with a mix of optimism and
turmoil. Markets have been anything but calm or predictable and, in the world
at large, we have seen the momentous toppling of the Assad regime in Syria,
continuation of the conflict in Gaza up to a brokered ceasefire in January, a
South Korean martial law crisis and the shock resignation of Justin Trudeau in
Canada. Extreme weather events continued around the world including major
storms at home in the UK and the recent wildfires devastating L.A.
Many western nations are becoming uneasy at the deepening military and trade
links between Russia, China, Iran and North Korea (dubbed the 'Axis of
Upheaval' amongst a collection of similar monikers). Whether this (as yet
informal) alliance will exacerbate any of the current world conflicts or
stand-offs remains to be seen, but what is certain is that it has refocused
most nations on defence and assured spending in that area is both bolstered,
but also more accepted by a public at large.
Trump's second term has already seen both mixed signals and reactions. We will
have to wait to see how much will change under his premiership. In investment
terms we will also have to see whether the anticipative moves already made by
markets will prove to be correct, or whether more volatility will ensue. The
latter could be highly likely given the news flow sensitivity of markets, and
what we have seen before of the Trump 'playbook'.
Although we have come a long way in the taming of inflation across the globe
and central banks have generally been able to start moderating interest rates,
we must acknowledge that this is not a 'done deal' yet. Certainly, markets
remain jittery over any contra-indications.
All of these factors can pose risks on the global stage - to society as well
as to economies and financial systems. We remain stoic that the key benefit we
offer our shareholders is maintaining a strategy focused solely on
constructing a well-diversified portfolio of companies which overall should
provide steady performance under the myriad of global 'conditions' - the
reason behind our "All-Weather" tagline. Amidst all the 'macro' signals we
remain a 'bottom-up' trust, seeking diverse opportunities from individual
companies - cognisant of the effect that external factors could have on that
portfolio of companies, but not trying to predict outcomes or have investment
decisions guided in a wholesale fashion by those factors.
To end on a high note in what has been a positive year for the recognition of
the trust by investors, the world remains at a high cadence in terms of
advancement. AI springs immediately to mind here, but the world in general is
seeing technological advancement across so many fields. As prudent investors
we have to recognise the risks that carries (particularly market
over-exuberance), however there can be no doubt that opportunities to invest
in great companies continue to abound.
Communication
The board and portfolio managers believe that as the trust is owned by its
shareholders, they must do all they can to honestly and clearly describe what
the trust is trying to offer and accurately critique whether this is being
delivered. To this end enormous effort goes into the preparation of all our
literature and this report and accounts.
So, we are very happy to report that in 2024 we received a 'Highly Commended'
award for last year's Report & Accounts in the AIC's Shareholder
Communications Awards. The judges noted that they felt that the 2023 report
was a 'delight to read' - we hope shareholders and other readers feel the same
about this year's report.
Annual General Meeting
At our 2024 Annual General Meeting (AGM) in March, it was a pleasure to once
again host an event 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 12.00 noon on Wednesday 2 April 2025.
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
portfolio managers care of the company secretary at
investment-trusts@allianzgi.com or in writing to the registered office
(further details are available on page 106 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
12 February 2025
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 73 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 18 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 the benchmark or other trusts in our peer which are monitored at each meeting. The board reviews the investment
group leads to decline in 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. Additional assurances on
management of risks at outsourced providers including AllianzGI and its business resilience and cyber security are obtained by the board. Agreed
outsourced administration provider, State Street Bank & Trust Company, Service Level Agreements (SLAs) and Key Performance Indicators (KPIs) are in
HSBC Bank plc (Depositary and Custodian) and MUFG Corporate Markets, place and the board receives reports against these.
formerly Link Group, (Registrar).
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 AI in respect of malicious to any new threats as they arise.
AI, its rapid growth and the lack of regulation.
The board asks for and receives assurance 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.
4.1 Emerging - geopolitical uncertainty 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 challenging membership of international updates received on regulatory changes that affect the company.
alliances and agencies, the conflict in Israel - Gaza and the ongoing invasion
of Ukraine by Russia, any of which could cause significant market falls,
threat to income or increase in gearing.
4.2 Emerging - impact of AI on the investment portfolio. The board carries out horizon scanning by keeping informed through its manager Red
and advisers on the political, economic and legal
landscape, and reviews updates received on regulatory changes that affect the
The rapidly changing landscape for the tech sector and impact of disruptive company.
use of AI on other sectors which could cause significant shifts in valuations
of companies in the portfolio.
The manager reports on its consideration of AI developments and threats within
its own organisation and in its oversight of investments.
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
2024, in the form of a Revolving Credit Facility (RCF), which matures within
one year. The board is currently evaluating whether to seek a renewal, to
refinance the RCF, or to repay the facility at the maturity date in June
2025. While the company is in a net current liability position as at 30
November 2024, 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 18 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 returns 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 and the portfolio managers discuss
their view of the outlook for the company's portfolio in their review on page
26 of the annual report.
On behalf of the board
Carolan Dobson
Chair
12 February 2025
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 58 to 60 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 12
February 2025 and signed on its behalf by:
Carolan Dobson
Chair
PORTFOLIO BREAKDOWN as at 30 November 2024
Region % of Invested Funds
North America 48.7
United Kingdom 27.3
Continental Europe 19.8
Pacific Basin 2.4
Japan 1.8
Total 100.00
TOP 20 HOLDINGS as at 30 November 2024
Name % of Invested Funds Sector
Value (£)
Microsoft 41,347,211 6.4 Software & Computer Services
UnitedHealth 26,921,235 4.2 Health Care Providers
Visa 26,789,910 4.2 Industrial Support Services
Taiwan Semiconductor 22,618,867 3.5 Technology Hardware & Equipment
Intercontinental Hotels 21,290,172 3.3 Travel & Leisure
Alphabet 20,115,714 3.1 Software & Computer Services
Auto Trader Group 16,544,635 2.6 Software & Computer Services
American Financial Group 16,457,071 2.6 Non-Life Insurance
Partners Group 15,510,265 2.4 Investment Banking & Brokerage
Charles Schwab 15,298,332 2.4 Investment Banking & Brokerage
Arthur J. Gallagher & Co. 15,091,701 2.3 Non-Life Insurance
Thermo Fisher Scientific 15,086,581 2.3 Medical Equipment & Services
Shell 14,962,008 2.3 Oil, Gas & Coal
General Electric 14,150,594 2.2 Aerospace & Defence
AMETEK 13,863,951 2.2 Electronic & Electrical Equipment
Aena 12,891,115 2.0 Industrial Transportation
Bank Of Ireland Group 12,520,413 1.9 Banks
Unilever 12,337,500 1.9 Personal Care, Drug & Grocery
DNB Bank 12,305,014 1.9 Banks
Accenture 12,116,536 1.9 Industrial Support Services
358,218,825 56.6 % of Total Invested Funds
INCOME STATEMENT
for the year ended 30 November 2024
2024
Revenue Capital Total Return
£ £ £
(Note C)
Gains on investments held at fair value through profit or loss 87,449,624
- 87,449,624
Losses on foreign currencies - (208,121) (208,121)
Income 15,233,118 - 15,233,118
Investment management fee (822,531) (1,919,239) (2,741,770)
Administration expenses (954,818) (3,198) (958,016)
Profit before finance costs and taxation 13,455,769 85,319,066 98,774,835
Finance costs: interest payable and similar (433,648) (953,784) (1,387,432)
charges
Profit on ordinary activities before taxation 13,022,121 84,365,282 97,387,403
Taxation (1,336,376) - (1,336,376)
Profit after taxation attributable to ordinary shareholders 11,685,745 84,365,282 96,051,027
Earnings per ordinary share
(basic and diluted) (Note B) 27.37p 197.57p 224.94p
BALANCE SHEET
as at 30 November 2024
2024
£
Fixed assets
Investments held at fair value through profit or loss 644,737,006
Current assets
Other receivables 5,471,482
Cash at bank and in hand 4,812,419
10,283,901
Current liabilities
Other payables (11,727,937)
Net current liabilities (1,444,036)
Total assets less current liabilities 643,292,970
Creditors - amounts falling due after more than one year (25,110,610)
Total net assets 618,182,360
Capital and reserves
Called up share capital 10,740,934
Share premium account 3,840,467
Capital redemption reserve 5,326,819
Capital reserve 578,995,798
Revenue reserve 19,278,342
Total shareholders' funds 618,182,360
Net asset value per ordinary share 1,438.8p
INCOME STATEMENT
for the year ended 30 November 2023
2023
Revenue Capital Total Return
£ £ £
(Note C)
Gains 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
STATEMENT OF CHANGES IN EQUITY
For the year ended 30 November 2024
Called up Share Capital Share Premium Account Capital Redemption Reserve Capital Reserve Revenue Reserve Total
£ £ £ £ £ £
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
Net assets at 1 December 2023 10,673,181 - 5,326,819 494,630,516 17,579,243 528,209,759
Revenue profit - - - - 11,685,745 11,685,745
Shares issued during the year 67,753 3,840,467 - - - 3,908,220
Dividends on ordinary shares - - - - (9,990,098) (9,990,098)
Unclaimed dividends - - - - 3,452 3,452
Capital profit - - - 84,365,282 - 84,365,282
Net assets at 30 November 2024 10,740,934 3,840,467 5,326,819 578,995,798 19,278,342 618,182,360
CASH FLOW STATEMENT
For the year ended 30 November 2024
2024 2023
£ £
Operating activities
Profit before finance costs and taxation* 98,774,835 43,132,406
Less: Gains on investments held at fair value through profit or loss (87,449,624) (32,247,788)
Less: Overseas tax suffered (1,336,376) (1,195,066)
Add: Losses on foreign currency 208,121 294,696
Purchase of fixed asset investments held at fair value through profit or loss (121,280,716) (115,960,271)
Sales of fixed asset investments held at fair value through profit or loss 117,370,652 118,633,336
Decrease in other receivables 98,644 111,737
Increase in other payables 127,369 142,596
Net cash inflow from operating activities 6,512,905 12,911,646
Financing activities
Interest paid and similar charges (1,348,216) (1,130,222)
Dividend paid on cumulative preference stock (22,407) (22,500)
Dividends paid on ordinary shares (9,990,098) (9,520,477)
Unclaimed dividends over 12 years 3,452 2,443
Net cash outflow from financing activities (11,357,269) (10,670,756)
(4,844,364) 2,240,890
(Decrease) Increase in cash and cash equivalents
Cash and cash equivalents 9,864,904 7,918,710
Effect of foreign exchange rates (208,121) (294,696)
Cash and cash equivalents at the end of the year 4,812,419 9,864,904
Comprising:
Cash at bank 4,812,419 9,864,904
* Cash inflow from dividends was £13,372,249 (2023 - £12,717,117) and cash
inflow from interest was £161,411 (2023 - £196,203).
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
42,701,544 (2023 - 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 £267,885 (2023 -
£231,783) and transaction costs on sales amounted to £26,855 (2023 -
£38,689).
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
2024 2023
£ £
Dividends paid on ordinary shares:
Third interim dividend - 5.55p paid 12 December 2023 (2022 - 5.15p) 2,369,446 2,198,675
Final dividend - 6.05p paid 4 April 2024 (2023 - 6.05p) 2,582,910 2,582,910
First interim dividend - 5.90p paid 25 July 2024 (2023 - 5.55p) 2,518,871 2,369,446
Second interim dividend - 5.90p paid 12 September 2024 (2023 - 5.55p) 2,518,871 2,369,446
9,990,098 9,520,477
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 88 of
the annual report - Statement of Accounting Policies). Details of these
dividends are set out below.
2024 2023
£ £
Third interim dividend - 5.90p paid 12 December 2024 (2023 - 5.55p) 2,518,871 2,369,446
Final proposed dividend - 6.05p payable 4 April 2025 (2024 - 6.05p) 2,599,306 2,582,910
5,118,177 4,952,356
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 2024 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 2023 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.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR UUAURVKUUAUR
Recent news on Brunner Investment Trust
See all newsBrief: Brunner Investment Trust Says 2025 Presented Challenges In Relative Performance Terms
Brunner Investment - Final Results replacement
Brunner Investment - Final Results
Focus: Britain's Tesco turns rapid-delivery threat into competitive edge
RCS - Brunner Investment - Kepler Trust Intelligence: New Research