REG - Brunner Investment - Half-year Report
23/07/2025 07:00
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RNS Number : 1355S Brunner Investment Trust PLC 23 July 2025
LEI: 529900S0Y9ZINCHB3O93
The Brunner Investment Trust PLC
Half-Yearly Financial Report for the six months ended 31 May 2025
Financial Headlines for the six months ended 31 May 2025
· Net Asset Value total return (debt at fair value(2)) -1.5%
(31.05.24: +12.8%)
· Net Asset Value total return (debt at par(2)) -1.7% (31.05.24:
+13.0%)
· Benchmark total return index(3) -0.1% (31.05.24: +13.9%)
· Net assets per ordinary share(1 ()debt at fair value(2))1,425.2p
(30.11.24: 1,459.6p, -2.4%)
· Net assets per ordinary share(1) (debt at par) 1,401.7p
(30.11.24: 1,438.8p, -2.6%)
· Share price total return(2,4) -3.9% (31.05.25: 1,390.0p,
30.11.24: 1,460.0p)
· Earnings per ordinary share 17.3p (2024: 17.1p, +1.2%)
· Dividend per ordinary share 12.5p (2024: 11.8p, +5.9%)
· Discount - average in the period(2) 3.3% (2024: 7.6%)
· Consumer price index +3.4% (2025: 138.4, 2024: 133.9)
All figures are UK GAAP unless they are stated to be Alternative Performance
Measures. (Glossary below).
(1) All references to Net Asset Value (NAV) in our commentary and the
Strategic Report are to NAV with debt at fair value since this is the measure
that the board considers best reflects the value to shareholders. However, NAV
with debt at par value is reported above and in the Performance - half year
review below. (2) Alternative Performance Measures (APM). See Glossary below.
(3) The benchmark index of 70% FTSE World Ex UK Index and 30% FTSE All-Share
Index. (4) Share price total return is based on the movement in share price
including dividends reinvested.
Chair's Statement
Dear Shareholder,
The first half of the 2025 financial year has been marked by a complex and
evolving global backdrop. After several years of successive shocks - from the
pandemic to geopolitical tensions - the global economy is now contending with
a new set of challenges. The year began with heightened geopolitical tensions,
continued conflict in Eastern Europe and the Middle East, and a growing sense
of economic nationalism in several major economies. Trade tensions have
escalated, particularly between the United States and its trading partners,
contributing to a rise in protectionist policies and a more fragmented global
trading environment with ongoing concerns about the long-term trajectory of
global trade. Policy uncertainty remains elevated, and the effects are being
felt across both developed and emerging markets.
The World Bank recently downgraded its global growth forecast for 2025 to
2.3%, citing the slowest pace of expansion outside of global recessions since
2008. This deceleration is being driven by a combination of rising trade
barriers, fiscal imbalances, and the lingering effects of inflationary
pressures. In the United States, the reimposition of tariffs and a widening
fiscal deficit have weighed on investor sentiment for US assets. Meanwhile,
Europe has taken a more stimulative stance, with Germany in particular
announcing significant infrastructure and defence spending.
Against this backdrop, equity markets have diverged sharply. The US market,
which had led global returns for much of the past decade, experienced a
notable pullback as historically-strong valuations and currency effects
reversed. In contrast, European and UK equities delivered strong returns,
buoyed by more attractive valuations and a weaker US dollar. Sector
performance was mixed, with Financials leading and Energy and Healthcare
lagging.
Performance
Over the six months to 31 May 2025, the trust's net asset value (NAV) total
return (with debt at fair value) was -1.5%, compared with a benchmark return
of -0.1%. The NAV per share declined from 1,459.6p to 1,425.2p. The share
price total return was -3.9%, reflecting a modest widening of the discount to
NAV.
While this modest underperformance is disappointing, it is important to
understand the context, summarised below, but covered in more detail in the
Investment Manager's Review below which we encourage shareholders to read. The
portfolio's underweight to the US - which had previously been a headwind -
proved beneficial as US equities underperformed. However, sector-specific
challenges, particularly in Healthcare, weighed on returns. The trust's
holding in UnitedHealth was the most significant detractor and was fully
exited during the period. Broader policy uncertainty in the US healthcare
sector also affected holdings such as Thermo Fisher, Cooper, and Align.
On the positive side, Financials - particularly European banks DNB and Bank of
Ireland - were strong contributors, supported by favourable interest rate
conditions and robust capital returns. Other notable performers included Aena,
GE Aerospace, Visa, Admiral, and Brambles. These holdings reflect the trust's
focus on high-quality businesses with strong structural growth and disciplined
valuations. They also demonstrate the wide-ranging nature of the holdings in
the portfolio, and the inherent diversification of risk and return that this
brings for the benefit of shareholders.
Earnings
We are pleased to report continuing solid earnings from our portfolio
companies through the period. Earnings per ordinary share for the six months
to 31 May 2025 were 17.3p, slightly increased from 17.1p for the equivalent
period last year. Brunner continues to have strong revenue reserves, which
exist to support dividend payments in years (such as during the pandemic) when
earnings are constrained. This remains a primary advantage of investment
trusts in general. The board intends to continue both prudently accumulating
such reserves and utilising them as necessary to maintain a growing dividend.
The board has no current plans to pay dividends out of capital and foresees no
need to do so in the foreseeable future.
Dividends
In June, the board declared a first interim dividend of 6.25p per ordinary
share, payable on 24 July 2025. For the remainder of the year ending 30
November 2025, the Board also anticipates second and third interim dividends,
and the final dividend, being paid at a similar level. Brunner's revenue
reserves comfortably cover a full year's dividend payment, allowing the Board
to forecast this year's dividend with confidence. This would represent a full
year's dividend of 25.0p per ordinary share, an increase of 5.3% over the
previous year.
The board therefore declares a second interim dividend of 6.25p per ordinary
share payable on 19 September 2025 to shareholders on the register at the
close of business on 1 August 2025. The ex-dividend date is 31 July 2025. A
Dividend Reinvestment Plan (DRIP) is available for this dividend and the last
date for the DRIP election is 22 August 2025.
The importance of a stable income for shareholders remains front-of-mind for
the board. Cost of living pressures seem ever-present and remains a key
consideration when discussing and deciding on the appropriate dividend level.
At the end of the 2024 financial year, the trust proudly reached 53 years of
consecutive dividend increases, keeping us in the leading pack of the
Association of Investment Companies (AIC) 'Dividend Heroes' list. We see 2025
as firmly continuing this tradition in the interests of our shareholders.
Discount and shareholder demand
Whilst demand for the trust's shares dropped back slightly from the peak we
reported on at the end of the previous financial year, we are pleased to say
it remains steady at a good level on the back of our strong and steady
long-term performance and consistent dividend payment. Sales, marketing and PR
efforts continue and we believe that the overall makeup of the company's share
register is one of appropriate stability and diversity of investor type. Your
board remains very confident that the Brunner investment philosophy is well
suited to the increasing numbers of investors we see joining the share
register, either as private self-directed investors or underlying clients of
wealth management firms.
Cost disclosure
We remain engaged with the ongoing industry debate around cost disclosure for
investment trusts - currently enveloped in the FCA's Consumer Composite
Investments (CCIs) consultation, as it seeks to establish a new UK specific
framework in the wake of Brexit and the UK's decoupling from European
regulation. While transparency is essential, we support efforts to ensure that
disclosures are clear, consistent, and do not inadvertently disadvantage the
sector. We continue to work with the Association of Investment Companies and
other stakeholders to advocate for sensible reform.
AGM
It was a pleasure to see a very full room of shareholders at this year's
Annual General Meeting. All resolutions were passed on a show of hands. Our
Portfolio Managers presented an investment update, and we encourage
shareholders who were unable to attend to view the various recordings and
interviews available on the Brunner website. The Board values this opportunity
to engage directly with shareholders and thanks all those who participated.
Outlook
Looking ahead, the global outlook remains uncertain. Political risk is
elevated, and the economic consequences of recent policy shifts - particularly
in the US - are still unfolding. The reintroduction of tariffs, rising fiscal
deficits, and the potential for inflationary pressures all present challenges.
However, we take comfort in the breadth of market leadership seen this year,
with both traditional sectors and cutting-edge technology companies
contributing to returns.
This broader market participation is encouraging and aligns well with
Brunner's balanced investment approach. Our managers continue to focus on
identifying high-quality businesses with sustainable growth prospects and
attractive valuations. While macroeconomic and geopolitical developments are
closely monitored, the trust's investment strategy remains rooted in bottom-up
stock selection and long-term thinking.
We remain confident that this approach will continue to serve shareholders
well, particularly in a world where short-term noise often obscures long-term
opportunity.
Carolan Dobson
Chair
22 July 2025
Material events and transactions
In the six months ended 31 May 2025 there were no share buybacks, and no
related party transactions. The trust did issue new shares during the period,
raising £4.2 million in proceeds.
Principal risks
The principal risks facing the company remain consistent with those outlined
in the Annual Report, including Investment and Portfolio Risks, Business and
Strategic Risks, Operational Risks, and Emerging Risks. The Board oversees a
detailed review of these risks at least twice a year to ensure the assessment
remains current and relevant.
Going concern
The directors have considered the company's investment objective and capital
structure in the context of the current macroeconomic background. Given the
portfolio consists mainly of readily realisable securities, the directors have
concluded that the company has the ability to continue in operation and meet
its objectives for the foreseeable future. The going concern basis has
therefore been adopted in preparing the financial statements.
Responsibility Statement
The directors confirm to the best of their knowledge that:
The condensed set of financial statements contained within the half-yearly
financial report has been prepared in accordance with FRS 102 as set out in
Notes 3 and 4, and the Accounting Standards Board's Statement 'Half-Yearly
Financial Reports'; and
This report includes a fair review of the information required by Disclosure
Guidance and Transparency Rule 4.2.7 R of important events that have occurred
during the first six months of the financial year and their impact on the
condensed set of financial statements, and a description of the principal
risks for the remaining six months of the financial year; and
This report includes a fair review of the information concerning related party
transactions as required by the Disclosure Guidance and Transparency Rule
4.2.8 R. Note 17 of the company's 2024 Annual Report gives details of related
party transactions and transactions with the AIFM. The basis for these has not
changed during the six months under review.
The half-yearly financial report was approved by the board on 22 July 2025 and
the above responsibility statement was signed on its behalf by the Chair.
Performance - half-year review
Revenue
Six months ended 31 May 2025 2024 % change
Income available for ordinary dividend £7,481,000 £7,305,000 +2.4
Earnings per ordinary share 17.3p 17.1p +1.2
Dividends per ordinary share 12.5p 11.8p +5.9
Consumer price index 138.4 133.9 +3.4
Assets
31 May 30 November 2024 Capital return Total return(1)
2025
% change
% change
Net Asset Value per ordinary share with debt at fair value 1,425.2p 1,459.6p -2.4 -1.5
Net Asset Value per ordinary share with debt at par 1,401.7p 1,438.8p -2.6 -1.7
Share price 1,390.0p 1460.0p -4.8 -3.9
Total net assets with debt at fair value(2) £616,360,000 £627,112,000 -1.7
Total net assets with debt at par £606,219,000 £618,182,000 -1.9
Net Asset Value with debt at fair value(3) relative to benchmark(4)
Capital return Total return(1)
Change in Net Asset Value -2.4% -1.5%
Change in benchmark -1.5% -0.1%
Percentage point performance against benchmark -0.9 -1.4
A Glossary of Alternative Performance Measures (APMs) can be found below
.
(1) Total return is based on the capital Net Asset Value, including dividends
reinvested. (APM).
(2) Total net assets with debt at fair value. (APM).
(3) The board prefers to measure performance using Net Asset Value with debt
at fair value in line with industry practice, as demonstrated in the Chair's
statement below. (APM).
(4) For the period under review the benchmark was 70% FTSE World Ex UK Index
and 30% FTSE All-Share Index.
Portfolio Managers' report
Market review
In Brunner's 2024 Annual Report we wrote of the widening gap between
valuations in the US and Europe. We disaggregated historical returns for the
US vs UK market, showing that whilst earnings growth in the US had been
higher, cash returns from dividends in the UK had largely compensated. Much of
the reasons for America's outperformance over the prior decade for UK-based
investors was attributable to the strength of the dollar and relative multiple
expansion - factors unlikely to repeat. Given the divergence in multiples,
investors in America were paying ever more for a dollar of current profit
whilst UK investors were paying less. At the time, enthusiasm for the notion
of US exceptionalism seemed to be reaching a zenith, handicapping its market
with the burden of high expectations.
We share the general enthusiasm for American businesses. The US is home to
many of what can objectively described as the world's best, most profitable,
fastest growing companies. However, we also posit that whilst it is possible
to believe a business is excellent, this clearly does not mean it is worth an
unlimited amount of money. There is a point at which the importance of quality
and growth bangs its head on the ceiling of price. For all our holdings, it is
imperative that we can envisage a route to a decent investment return and the
current market price is a key input into that equation.
The first half of 2025 saw a sharp reversal of the American outperformance
seen last year, largely as transatlantic currencies and valuations converged.
The precise catalyst for this is unclear, but markets are ultimately elastic;
when overstretched, they tend to spring back to shape. Asides from high
valuations, reasons for the US market coming back to earth include concerns
around the impact of US tariffs on consumer and business confidence, the
contractionary impact of government efficiency (which sounds very similar to
the era of austerity we had over here) and Washington's ever widening budget
deficit. At the same time, Europe appears poised to stimulate. Unlike many
countries, prudent Germany can afford to do so, and announced measures to
boost expenditures on both defence and infrastructure.
Over the six months to the end of May, the MSCI Europe was up 10% in Euros but
18% in USD due to dollar weakness. Over the same period the S&P500 was
down slightly in local currency and down 7% in Euros. This is a huge
divergence which badly hurt those who had placed all their eggs in the
American basket. Americans have had little need to consider overseas equities
for a long time. This short sharp burst of strong performance coupled with
domestic disquiet about the dollar and lofty valuations has seen a renewal of
interest in equities beyond their shores.
In British Pounds, the UK's FTSE All Share rose over 7%, MSCI Europe rose 11%
and the S&P 500 fell 7%. The global index - the FTSE All World, which is
approx. 2/3 US, fell 2.6%.
Looking at sectors, the laggards were Energy and Healthcare. Energy returns in
the short term tend to be dominated by commodity prices, and the WTI oil price
dipped to a multi-year low of $60 towards the end of the period. The reasons
for the Healthcare sector's underperformance are more complex, but much of it
has to do with US policy. In some respects, the current administration is
plainly anti-science (see, for example, comments made by Robert F. Kennedy,
Jnr, Secretary of Health and Human Services, on vaccines, and proposed cuts to
academic research funding) but President Trump is also focused more broadly on
reducing spiralling healthcare costs. It is well understood that America often
pays more than other countries for drugs, for example; precisely the sort of
global iniquity that draws his ire. Various proposals to correct this have
been made which may undermine profitability for many companies in the sector.
Whilst the introduction of what are effectively price controls is profoundly
un-American, President Trump is clearly willing to dispatch with convention.
Time will tell how impactful this turns out to be.
Financials were, once again, the best performing sector. Much strengthened
balance sheets combined with higher interest rates and benign credit
conditions are permitting huge cash returns from what remains a lowly valued
sector. Technology and associated sectors like Consumer Discretionary (home of
Amazon and Tesla) were middling, struggling to build on their strong
performance at the end of last year.
Portfolio review
Overall, Brunner's 70/30 global/UK benchmark fell slightly in the first half
whilst the equity performance of the trust returned -1.1% and the NAV returned
-1.5%. The modest premium vs NAV in November drifted to a slight discount in
May. As such the share price fell 3.9%.
The top contributors to performance during the period included our two
European banks: DNB of Norway and Bank of Ireland. As mentioned above,
conditions for banks remain favourable and they continue to return huge
amounts of cash to shareholders. However, we are mindful that banks are very
leveraged entities and that a slight fall in either interest rates or credit
worthiness can quickly change this picture. Whilst we believe that more
appropriate micro and macro prudential regulation has made banks much safer
than in the past, we still recognise the fundamental risks that such
institutions run.
Other positive contributors include Spanish airport owner Aena, American jet
engine business GE Aerospace, payments processor Visa, UK car insurance
company Admiral and Australian logistics company Brambles, which manages
networks of pooled pallets. Aena, Admiral and Brambles are typical of our
steady growers, and provide us with an optimal balance of quality, value and
growth. Visa and, increasingly, GE Aerospace are both recognised as two of the
world's best businesses combining strong structural growth with exceptional
barriers to entry. Again, expect us to be mindful of valuations; GE Aerospace
particularly has seen its multiple expand to amongst the highest in the
portfolio. Whilst we think it is deserving of a high rating, we are also
mindful there is a limit to what any business is worth.
Our holding in UnitedHealth was most harmful to performance during the period.
We eventually chose to fully exit the position. The chain of events is
described in the 'Transactions' section below. We can only apologise for
continuing to own this as our doubts about the model started to mount. Whilst
we try to be long-termist and look through what appear to be short-term
challenges, sometimes reacting is the right thing to do.
Various other holdings in the healthcare sector were also problematic,
reflecting the sector wide pressures described above. Thermo Fisher Scientific
provides laboratory supplies and services and is sensitive to weakening demand
from a customer base under pressure. Cooper (contact lenses) and Align (clear
aligners for correcting teeth) are both somewhat discretionary and therefore
sensitive to wavering consumer confidence.
Elsewhere, some of our holdings faced what we believe to be standard,
temporary headwinds. Data from the US suggests hotel revenues are down year on
year, slightly impacting IHG and its peers. The down cycle at Microchip
continued to worsen, although the beginnings of a recovery became clear
towards the end of the half. American Financial Group reported some mediocre
results as insurance pricing comes under a little pressure. None of these are
of particular concern in a longer term context.
Significant transactions
We took positions in three new companies during the period. The rationale for
each is described below.
Tesco
Tesco is the market leader in UK grocery with around 28% share, almost two
times that of the next largest player. In what is undoubtedly a very
competitive business, this affords a modest competitive advantage based on
scale which is reflected in superior margins vs peers. As a result, Tesco
consistently accounts for around half of the market's total profit pool.
This puts them in control. With privately held Asda and Morrison both
struggling with high levels of debt and Aldi and Lidl no longer rapidly
gaining share, Tesco are in a privileged position. Growth is relatively
modest, largely coming from inflation, a slight shift back to food being
consumed at home due to the high costs of eating out and some market share
gains. The balance sheet is much improved and the company is generating
consistent, high cash flows which are being returned to shareholders via a
generous dividend and substantial buybacks. We think of Tesco as a resilient
'cash cow' that will generate good returns to shareholders with relatively low
risk.
Kia
Alongside parent company Hyundai, South Korea's Kia is now the third largest
auto group in the world after Toyota and Volkswagen. They have strong
positions in their domestic market, India, Europe and the US. Over time, their
reputation for quality and brand image has improved. This has been accompanied
by strong profitability; at present, they have the highest margins of the
mass-market auto makers and a surprisingly high return on invested capital.
We are under no illusions about how tough the auto industry can be. It is
hugely competitive and cyclical. Electrification, autonomy, tariffs and the
rise of Chinese competition at the low-end all represent challenges that will
require excellence to navigate. In this context, we think Kia is relatively
well placed. They are a leader in EVs and hybrids, which already account for
over a fifth of sales. They do not participate meaningfully in the Chinese
market. They have a good cost structure, without the burdens faced by many
legacy, Western manufacturers.
The most immediate threat comes from US tariffs. Whilst they manufacture in
the US for the local market, they also import from South Korea - historically
a profitable business given the weak Won. As proposed, tariffs will wipe out
profit in this lucrative corridor. Any renegotiation at lower levels or
compensatory price increases will help them sustain profits closer to their
current, high levels.
All equity investments require a balanced consideration of quality, value and
growth. The investment case for Kia is predicated on what we believe to be
extraordinary value. Looking backwards, the total value of Kia at time of
writing is US$28bn. Of this, almost half is represented by a net cash balance
sheet of over $13bn. In 2024 the company made after tax profits over $7bn. The
equity is therefore trading at a trailing multiple around 2x profit, ex cash.
For reference, the US market trades at around 23x. This is a vast gulf that we
believe provides a significant margin of safety.
There are many reasons why multiples vary substantially from business to
business and we do not argue that Kia deserves to trade at a high multiple.
However, the company is capable of generating huge amounts of cash and
committed to a clear cash return policy. The exceptional balance sheet
provides protection against intermittent adverse conditions. On balance, we
think this is an interesting, differentiated investment in a neglected part of
the market.
Amazon
Amazon has two main segments. First is the ubiquitous online retailer that has
achieved an enviable competitive position in the US and several other major
markets around the world. Second is Amazon Web Services (AWS), one of the
world's leading cloud computing providers. Key clients here include Netflix,
Spotify, Adobe and Airbnb who all rely upon AWS for their core digital
infrastructure.
Amazon has always been run for the long term. A re-read of the company's early
shareholder letters emphasises the importance of prioritising the interests of
customers, long term cash flows and scale. Today they are the largest retailer
in the world, as measured by the value of goods sold. Thanks to their ability
to offer leading price, range and convenience they continue to grow healthily
despite a muted overall consumer environment.
Because of their determination to invest for the long term, we believe their
potential profitability remains concealed. Adjusting for this, we think the
shares are less expensive than is first apparent. The investment case today is
predicated on a thesis that the equity offers a good balance between quality,
value and growth.
Sales
Nestlé
Whilst food companies like Nestlé offer stability, they will struggle to grow
much in an era when key end markets like coffee and pet food are increasingly
saturated and competition is intensifying. Given the multiple is relatively
high, we find it increasingly hard to chart a course to a decent return.
Abbvie
Abbvie is a US listed pharmaceutical company. Over the past few years, the
valuation multiple has expanded dramatically as they have replicated the
success of blockbuster drug Humira, which has now lost patent protection, with
Skyrizi and Rinvoq, which are used to treat inflammatory conditions such as
arthritis, Crohn's and psoriasis. Given these drugs also face loss of patent
expiration in a few years' time, we do not think the relatively high multiple
is tolerable given the risk inherent in replacing those profit streams.
UnitedHealth
UnitedHealth is an insurance business that sits at the heart of the US
healthcare system. It is a longstanding Brunner holding that has been very
profitable over time. However, the past several months have been painful,
culminating in a pair of profit warnings and an abrupt CEO change. Whilst we
cut our position at the end of last year in recognition of some pressure, with
the benefit of hindsight we should have sold our entire holding.
The company has changed a great deal since it was first bought by Brunner. Not
only has it become more complex it has also become more reliant upon
government business. It is increasingly apparent that the business has become
reliant on a single large customer, the US government. This is not a good
thing. Not only does it mean that prior growth rates have been exaggerated by
the acquisition of what is now clearly poor business, it also means that the
company may have been over-earning at the government's expense. Given the huge
budgetary pressures faced by the US healthcare system, we fail to see how the
company recovers to its prior levels of profitability. We therefore chose to
move on, regretfully late. We hope to learn from our mistake.
Comments and outlook
A King is crowned. To fund his agenda he raises taxes, which then crash the
economy, and 'all those who had enthusiastically welcomed his coming to power
now decided he was useless'.
The 'Anglo-Saxon Chronicles' are a collection of annals in Old English and a
key historical source for the period between the collapse of Roman authority
and the Norman Conquest. The King mentioned above is Harthacnut. Harthacnut
briefly sat on the Danish and English thrones some twenty years before Harold
Godwinson was defeated at the Battle of Hastings in 1066.
We couldn't fail to notice the similarities when investors dumped the US
market after President Trump announced the imposition of very high tariffs on
most of America's trading partners. Tariffs are a form of tax and the vast
majority of mainstream economists caution that they are detrimental to the
wealth of all parties. The economic principle of 'comparative advantage',
espoused by David Ricardo two centuries ago, is difficult to dispute and
explains why trade is to the benefit of all. Nations should focus on what they
are relatively most efficient at producing and then trade with others to
maximise overall output. There are few logical arguments against this.
A key word here, perhaps, is logical. Economists are often utilitarians,
focusing on the best overall outcome - the most units of wealth or general
utility. This ignores the human factor. The vast majority of economic or
political decisions involve trade-offs and inevitably some are left behind.
There are two books we would recommend to understand President Trump's trade
policy. The first is Vice President JD Vance's 'Hillbilly Elegy', the book
that bought him to prominence. It describes his upbringing in the deprived
Appalachian Mountains of Ohio, an area crushed by deindustrialisation, the
demise of the coal mining industry and now suffering from widespread
unemployment, opioid addiction and other 'diseases of despair'. The second is
Robert Lighthizer's 'No Trade is Free'. Lighthizer was President Trump's first
term Trade Representative. His book is a diatribe against both China and the
WTO. He squarely blames both for the demise of US manufacturing and calls for
a partial repeal of the offshoring that has characterised the global economy
in the era of the Washington Consensus. It is no coincidence that Lighthizer
is also from Ohio and therefore acutely sensitive to globalisation's
discontents: the unsympathetically treated working classes who have seen their
living standards stagnate or decline.
The US trade deficit is a focus of Lighthizer's book. In short, America
imports more than it exports. Returning to the dawn of modern economics, in
the eighteenth century Adam Smith wrote why trade deficits are not necessarily
a problem, although this is contentious. However, the focus on bilateral trade
balances (ie, those between two countries, such as South Korea and the US)
really does make little sense. As argued by Tim Harford in the FT, most people
have a large trade surplus with their employer; you are unlikely to spend
everything you earn just with them. You may have a large trade deficit with
the cheese shop at the bottom of your road, because you like cheese but have
none to sell them. Returning to Ricardo, specialisation is key to the
capitalist model and trade is what brings prosperity.
Since April's 'Liberation Day' it appears that tariffs may settle at lower
levels than at first feared. It seems likely that they are partly a
negotiating tactic to extract concessions from others, including the
repatriation of some manufacturing; fair enough. We are hopeful that their
materiality will be reduced with time. Tariffs are a tax, and Lighthizer's
book ignores the benefits that Americans have enjoyed by importing goods at
low prices from overseas and the higher prices that will inevitably follow
should they be fully imposed.
Another controversial element of President Trump's presidency is his 'big
beautiful bill'. Without wanting to dwell on the details, this budgetary
policy is very regressive (ie, redistributes from the poor to the rich) and
extends America's significant and persistent fiscal deficit, which is
currently running at more than 6% of gross domestic product. It is very
unusual for a responsible nation to run such a substantial deficit in benign
economic times, and ultimately unsustainable.
Ultimately, even President Trump is answerable to at least two constituencies:
the electorate and the bond market. If tariffs unleash inflationary pressures
his popularity is likely to wane. If his 'big, beautiful bill' is deemed too
costly, the market may reject it and American could face its 'Liz Truss
moment' as investors dump Treasuries. As Harthacnut's father Cnut the Great
famously discovered, even kings can't control the tide.
Julian Bishop
Christian Schneider
Listed equity holdings
at 31 May 2025
Name Sector Value % of
(£'000s)
invested
funds
Microsoft Software & Computer Services 40,450 6.36
Visa Industrial Support Services 27,997 4.40
Taiwan Semiconductor Technology Hardware & Equipment 20,725 3.26
Alphabet Software And Computer Services 19,714 3.10
Bank Of Ireland Group Banks 18,922 2.98
Intercontinental Hotels Travel & Leisure 18,348 2.89
Auto Trader Group Software And Computer Services 18,043 2.83
Charles Schwab Investment Banking & Brokerage 15,731 2.47
Aena Industrial Transportation 15,455 2.43
Shell Oil, Gas & Coal 14,817 2.33
DNB Bank Banks 14,600 2.30
Schneider Electric Electronic & Electrical Equipment 13,980 2.20
American Financial Group Non-Life Insurance 13,368 2.10
ASML Holding Technology Hardware & Equipment 13,120 2.06
SSE Electricity 13,036 2.05
General Electric Aerospace And Defence 13,000 2.04
Brambles General Industrials 12,711 2.00
Itochu General Industrials 12,431 1.96
Amazon.com Retailers 12,364 1.94
AMETEK Electronic & Electrical Equipment 12,288 1.93
Partners Group Investment Banking & Brokerage 12,129 1.91
Baltic Classifieds Software & Computer Services 11,975 1.88
GSK Pharmaceuticals & Biotechnology 11,741 1.85
Corpay Industrial Support Services 11,562 1.82
Unilever Personal Care, Drug & Grocery 11,474 1.80
Arthur J. Gallagher & Co. Non-Life Insurance 11,362 1.79
Assa Abloy Construction & Materials 11,169 1.76
Thermo Fisher Scientific Medical Equipment & Services 11,061 1.74
S&P Global Finance & Credit Services 11,018 1.73
TotalEnergies Oil, Gas & Coal 10,682 1.68
Roche Holdings Pharmaceuticals & Biotechnology 10,398 1.64
Roper Technologies Software And Computer Services 10,018 1.58
Microchip Technology Technology Hardware & Equipment 9,904 1.56
IG Group Investment Banking & Brokerage 9,761 1.54
KIA Automobiles And Parts 9,463 1.49
Admiral Group Non-Life Insurance 8,958 1.41
CME Group Investment Banking & Brokerage 8,786 1.38
Haleon Pharmaceuticals & Biotechnology 8,766 1.38
Barratt Redrow Household Goods & Home Construction 8,738 1.37
Munich Re Non-Life Insurance 8,313 1.31
Iberdrola Electricity 8,244 1.30
Atlas Copco Industrial Engineering 7,569 1.19
Align Technology Medical Equipment & Services 7,039 1.11
Tesco Personal Care, Drug and Grocer 6,713 1.06
RELX Media 6,556 1.03
Cooper Medical Equipment and Services 6,527 1.03
Amphenol Technology Hardware & Equipment 6,526 1.03
Inchcape Retailers 6,503 1.02
Accenture Industrial Support Services 5,350 0.84
DCC Industrial Support Services 4,982 0.78
SThree Industrial Support Services 4,753 0.75
AIA Life Insurance 4,669 0.73
Adobe Software & Computer Services 4,662 0.73
Jumbo Leisure Goods 4,422 0.70
Diageo Beverages 2,890 0.45
635,783 100.00
Income Statement
For the six months ended For the six months ended
31 May 2025
31 May 2024
Revenue Capital Total Return Revenue Capital Total Return
£'000s
£'000s
£'000s
£'000s
£'000s
£'000s
Notes 2 2
(Losses) gains on investments held at fair value through profit or loss - (16,996) (16,996) - 62,736 62,736
Losses on foreign currencies - (52) (52) - (87) (87)
Income from investments 9,371 - 9,371 9,170 - 9,170
Investment management fee (426) (995) (1,421) (402) (938) (1,340)
Administration expenses (465) (2) (467) (492) (2) (494)
Profit (loss) before finance costs and taxation 8,480 (18,045) (9,565) 8,276 61,709 69,985
Finance costs: interest payable and similar charges (200) (440) (640) (216) (473) (689)
Profit (loss) on ordinary activities before taxation 8,280 (18,485) (10,205) 8,060 61,236 69,296
Taxation (799) - (799) (755) - (755)
Profit (loss) after taxation attributable to ordinary shareholders 7,481 (18,485) (11,004) 7,305 61,236 68,541
Earnings (losses) per ordinary share (basic and diluted) 1 17.30p (42.75p) (25.45p) 17.11p 143.44p 160.55p
Balance Sheet
As at As at As at
31 May
31 May
30 November
2025
2024
2024
£'000s
£'000s
£'000s
Notes
Fixed assets
Investments held at fair value through profit or loss 3 635,783 616,883 644,737
Net current (liabilities) assets (4,448) 22 (1,444)
Total assets less current liabilities 631,335 616,905 643,293
Creditors: amounts falling due after more than one year (25,116) (25,106) (25,111)
Total net assets 606,219 591,799 618,182
Called up share capital 10,812 10,673 10,741
Share premium account 7,945 - 3,840
Capital redemption reserve 5,327 5,327 5,327
Capital reserve 560,511 555,867 578,996
Revenue reserve 21,624 19,932 19,278
Total shareholders' funds 606,219 591,799 618,182
Net Asset Value per ordinary share 1 ,401.7p 1,386.2p 1,438.8p
The net asset values is based on ordinary shares in issue: 43,247,727 42,692,727 42,963,736
Statement of Changes in Equity
Called up Share Capital redemption reserve Capital Revenue reserve Total
share
premium account
£'000s
reserve
£'000s
£'000s
capital
£'000s
£'000s
£'000s
Notes
Six months ended 31 May 2024
Net assets as at 1 December 2023 10,673 - 5,327 494,631 17,579 528,210
Revenue profit - - - - 7,305 7,305
Dividends on ordinary shares 4 - - - - (4,952) (4,952)
Capital profit - - - 61,236 - 61,236
Net assets as at 31 May 2024 10,673 - 5,327 555,867 19,932 591,799
Six months ended 31 May 2025
Net assets as at 1 December 2024 10,741 3,840 5,327 578,996 19,278 618,182
Revenue profit - - - - 7,481 7,481
Shares issued in period 71 4,105 - - - 4,176
Dividends on ordinary shares 4 - - - - (5,135) (5,135)
Capital loss - - - (18,485) - (18,485)
Net assets at 31 May 2025 10,812 7,945 5,327 560,511 21,624 606,219
Cash Flow Statement
Six months ended 31 May 2025 Six months ended 31 May 2024
£000's £000's
Operating activities
(Loss) profit before finance costs and taxation* (9,565) 69,985
Add (less): losses (gains) on investments held at fair value through profit or 16,996 (62,736)
loss
Add: losses on foreign currency 52 87
Less: overseas tax suffered (799) (755)
Increase in other receivables (1,862) (1,727)
(Decrease) increase in other payables (126) 188
Purchase of fixed asset investments held at fair value through profit or loss (76,640) (67,254)
Sales of fixed asset investments held at fair value through profit or loss 68,598 66,484
Net cash (outflow) inflow from operating activities (3,346) 4,272
Financing activities
Interest paid (797) (668)
Dividend paid on cumulative preference stock (11) (11)
Dividends paid on ordinary shares (5,135) (4,952)
Share issue proceeds 8,084 -
Net cash inflow (outflow) from financing activities 2,141 (5,631)
Decrease in cash and cash equivalents (1,205) (1,359)
Cash and cash equivalents at the start of the period 4,812 9,865
Effect of foreign exchange rates (52) (87)
Cash and cash equivalents at the end of the period 3,555 8,419
Comprising:
Cash at bank 3,555 8,419
* Cash inflow from dividends was £8,169,331 (2024: £7,965,405) and cash
inflow from interest was £46,676 (2024: £100,528).
Notes to the Financial Statements
Note 1
The returns per ordinary share have been calculated using a weighted average
number of shares in issue of 43,233,657 (31 May 2024: 42,692,727 shares).
Note 2
The total column of this statement is the profit and loss account of the
company.
All revenue and capital items derive from continuing operations. No operations
were acquired or discontinued in the period.
Purchases for the half year ended 31 May 2025 were £76,640,000 (31 May 2024:
£67,254,000) and sales for the half year ended 31 May 2025 were £68,678,000
(31 May 2024: £66,484,000).
Included in the cost of investments are transaction costs on purchases which
amounted to £174,000 (31 May 2024: £162,000) and transaction costs on sales
which amounted to £9,000 (31 May 2024: £15,000).
Note 3
Investments are designated as held at fair value through profit or loss in
accordance with FRS 102 sections 11 and 12. Investments are initially
recognised at fair value, which is determined to be their cost. Subsequently,
investments are revalued at fair value which is the bid market price for
listed investments.
FRS 102 sets out three fair value levels.
Level 1: The unadjusted quoted price in an active market for identical assets
or liabilities that the entity can access at the measurement date
Level 2: Inputs other than quoted prices included within Level 1 that are
observable (i.e., developed using market data) for the asset or liability,
either directly or indirectly
Level 3: Inputs are unobservable (i.e., for which market data are unavailable)
for the asset or liability
As at 31 May 2025, the financial assets at fair value through profit and loss
of £635,783,000 (30 November 2024: £644,737,000) are categorised as follows:
Six months ended Year ended
31 May 2025
30 November 2024
£'000s
£'000s
Level 1 635,783 644,737
Level 2 - -
Level 3 - -
635,783 644,737
Note 4
In accordance with section 32 FRS 102 'Events After the end of the Reporting
Period', dividends declared after the end of the reporting period shall not be
recognised as a liability.
Dividends paid on ordinary shares in respect of earnings for each period are
as follows:
Six months ended Six months ended Year ended
31 May 2025
31 May 2024
30 November 2024
£'000s
£'000s
£'000s
Final dividend - 6.05p paid 4 April 2025 (2024: 6.05p) 2,616 2,583 2,583
First interim dividend - 5.90p paid 25 July 2024 (2023: 5.55p) - - 2,519
Second interim dividend - 5.90p paid 12 September 2024 (2023: 5.55p) - - 2,519
Third interim dividend - 5.90p paid 12 December 2024 (2023: 5.55p) 2,519 2,369 2,369
5,135 4,952 9,990
Dividends declared after the period end are not recognised as a liability
under section 32 FRS 102 'Events after the end of the reporting period'.
Details of these dividends are set out below.
Six months ended Six months ended Year ended
31 May 2025
31 May 2024
30 November 2024
£'000s
£'000s
£'000s
First interim dividend - 6.25p payable 24 July 2025 (2024: 5.90p) 2,703 2,519 -
Second interim dividend - 6.25p payable 19 September 2025 (2024: 5.90p) 2,703 2,519 -
Third interim dividend - 5.90p - - 2,519
Final dividend - 6.05p - - 2,599
5,406 5,038 5,118
The final and interim dividends above are based on the number of shares in
issue at the period end. However, the dividend payable will be based upon the
number of shares in issue on the record date and will reflect any purchase or
cancellation of shares by the company settled subsequent to the period end.
Note 5
The directors believe it is appropriate to continue to adopt the going concern
basis in preparing the financial statements, as the assets of the company
consist mainly of securities which are readily realisable and accordingly,
that the company has adequate financial resources to continue in operational
existence for the foreseeable future.
Note 6
The half-yearly report has neither been audited nor reviewed by the company's
auditors. The financial information for the year ended 30 November 2024 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 (3) of the Companies Act 2006.
Note 7
Post Balance Sheet event: On 24 June 2025 the company repaid its £10m
revolving credit facility and subsequently the facility was closed.
Investor information
Directors
Carolan Dobson BSc Chartered FCSI (Chair)
Amanda Aldridge BSc FCA
Elizabeth Field MA
Andrew Hutton MA, CFA
Jim Sharp MA
Investment Manager
Julian Bishop and Christian Schneider, Co-Lead managers, representing Allianz
Global Investors UK Limited, 199 Bishopsgate, London EC2M 3TY (the manager).
Head of Investment Trusts
Stephanie Carbonneil
Email: stephanie.carbonneil@allianzgi.com
(mailto:stephanie.carbonneil@allianzgi.com)
Secretary and Registered Office
Kirsten Salt ACG
199 Bishopsgate
London EC2M 3TY
Telephone: +44 (0)20 3246 7513
Email: kirsten.salt@allianzgi.com
Registered Number: 226323
Registrars
MUFG Corporate Markets, Central Square, 29 Wellington Street, Leeds LS1 4DL.
Telephone: 0371 664 0300. Lines are open 9.00 a.m. to 5.30 p.m. (UK time)
Monday to Friday.
Email:shareholderenquiries@cm.mpms.mufg.com
Website: https://eu.mpms.mufg.com (https://eu.mpms.mufg.com)
Financial calendar
Year end 30 November.
Full year results announced and Annual Report posted to shareholders in
February.
Annual General Meeting held in March/April.
Half year results announced and half-yearly Financial Report posted to
shareholders in July.
Ordinary dividends
It is anticipated that dividends will be paid as follows:
1st quarterly June/July
2nd quarterly September
3rd quarterly December
Final March/April
Preference dividends
Payable half-yearly 30 June and 31 December.
Website
Further information about The Brunner Investment Trust PLC, including monthly
factsheets, daily share price and performance, is available on the company's
website: brunner.co.uk.
How to Invest
Information is available from AllianzGI UK either via Investor Services on
0800 389 4696 or on the company's website: brunner.co.uk. A list of providers
can be found on the company's website: brunner.co.uk/about-us/how-to-invest.
Shareholder enquiries
In the event of queries regarding their holdings of shares, lost certificates,
dividend payments, registered details, etc., shareholders should contact the
registrars on 0371 664 0300. Lines are open 9.00 a.m. to 5.30 p.m. (UK time)
Monday to Friday. Calls to the helpline number from outside the UK are charged
at applicable international rates. Different charges may apply to calls made
from mobile telephones and calls may be recorded and monitored randomly for
security and training purposes.
Changes of name and address must be notified to the registrars in writing. Any
general enquiries about the company should be directed to the Company
Secretary, The Brunner Investment Trust PLC, 199 Bishopsgate, London EC2M 3TY.
Telephone: 020 3246 7513
.
Association of Investment Companies (AIC)
The company is a member of the AIC, the trade body of the investment trust
industry, which provides a range of literature including fact sheets and a
monthly statistical service. Copies of these publications can be obtained from
the AIC, 9th Floor, 24 Chiswell Street, London EC1Y 4YY, or at theaic.co.uk.
AIC Category: Global.
Glossary
UK GAAP performance measures
Net Asset Value is the value of total assets less all liabilities. The Net
Asset Value, or NAV, per ordinary share is calculated by dividing this amount
by the total number of ordinary shares in issue. The debt in the company used
in the calculation is measured at par value, that is, the net proceeds on
issue plus accrued finance costs to date. As at 31 May 2025, the NAV with debt
at par value was £606,219,000 (30 November 2024: £618,182,000) and the NAV
per share was 1,401.7p (30 November 2024: 1,438.8p).
Earnings per ordinary share is the profit after taxation, divided by the
weighted average number of shares in issue for the period. For the period
ended 31 May 2025 earnings per ordinary share was 17.3p (2024: 17.1p),
calculated by taking the profit after tax of £7,481,000 (2024: £7,305,000),
divided by the weighted average shares in issue of 43,233,657 (2024:
42,692,727).
Alternative Performance Measures (APMs)
Net Asset Value, debt at fair value is the value of total assets less all
liabilities, with the company's debt measured at the fair value at the time of
calculation. The Net Asset Value, or NAV, per ordinary share with debt at fair
value is calculated by dividing this amount by the total number of ordinary
shares in issue. As at 31 May 2025, the NAV with debt at fair value was
£616,360,000 (30 November 2024: £627,112,000) and the NAV per share with
debt at fair value was 1,425.2p (30 November 2024: 1,459.6p).
Net Asset Value per ordinary share, total return represents the theoretical
return on NAV per ordinary share, assuming that dividends paid to shareholders
were reinvested at the NAV per ordinary share at the close of business on the
day the shares were quoted ex dividend.
Share price total return the theoretical return to a shareholder, on a closing
market price basis, assuming that all dividends received were reinvested,
without transaction costs, into the ordinary shares of the company at the
close of business on the day the shares were quoted ex dividend (see above).
The share price as at 31 May 2025 was 1,390.0p, a decrease of 70.0p from the
price of 1,460.0p as at 30 November 2024. The decrease in share price of 70.0p
plus the dividends declared for the period of 12.5p are divided by the opening
share price of 1,460.0p to arrive at the share price total return for the
period ended 31 May 2025 of -3.9% (2024: +26.0%).
Benchmark total return is the return on the benchmark, on a closing market
price basis, assuming that all dividends received were reinvested into the
shares of the underlying companies at the time their shares were quoted ex
dividend (see above).
Discount or premium is the amount by which the stock market price per ordinary
share is lower (discount) or higher (premium) than the Net Asset Value, or
NAV, with either debt at par or debt at market value, per ordinary share. The
discount/premium is normally expressed as a percentage of the NAV per ordinary
share (see below).
Ongoing charges are operating expenses incurred in the running of the company,
whether charged to revenue or capital, but excluding financing costs. These
are expressed as a percentage of the average net asset value during the year
and this is calculated in accordance with guidance issued by the Association
of Investment Companies.
Yield represents dividends declared in the past year as a percentage of share
price.
Gearing is the amount of debt as a percentage of the net assets.
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