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BUT Brunner Investment Trust Plc

1,305.00
15.00 (1.16%)
28 Mar 2024 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Brunner Investment Trust Plc LSE:BUT London Ordinary Share GB0001490001 ORD 25P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  15.00 1.16% 1,305.00 1,300.00 1,305.00 1,310.00 1,300.00 1,310.00 126,743 16:35:06
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
Unit Inv Tr, Closed-end Mgmt 46.66M 40.63M 0.9517 13.66 555.01M

Brunner Investment Trust PLC Half-year Report (9018F)

18/07/2019 7:00am

UK Regulatory


Brunner Investment (LSE:BUT)
Historical Stock Chart


From Mar 2019 to Mar 2024

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TIDMBUT

RNS Number : 9018F

Brunner Investment Trust PLC

18 July 2019

17 July 2019

THE BRUNNER INVESTMENT TRUST PLC

HALF-YEARLY FINANCIAL REPORT

For the six months ended 31 May 2019

Highlights

   --      Net asset value (debt at fair value) per share up by +1.8% (2018: +3.1%) 
   --      Net asset value (debt at par) per share up by +2.6% (2018: +2.4%) 
   --      Earnings per ordinary share 12.6p (2018: 10.6p) +18.9% 
   --      Dividends for the half year 9.32p(1) (2018: 8.1p) +15.1% 
   --      Net asset value total return (debt at fair value) per share up by +2.9% (2018: +4.0%) 
   --      Net asset value total return (debt at par) per share up by +3.7% (2018: +3.4%) 
   --      Share price up by 3.9% to 774.0p (2018: 745.0p) 

-- Discount of net asset value (debt at fair value) to share price 10.1% and an average of 9.6% over the period (2018: 11.9%, average over the year 9.5%)

   --      Benchmark Index increased by 3.4% (2018: +4.5%) 
 
                                           Six months                Six months                             % 
                                                ended                     ended                              change 
              Revenue                     31 May 2019               31 May 2018 
            Available for 
             ordinary 
             dividend                    GBP5,372,000              GBP4,502,000                                       +19.3 
            Earnings per 
             ordinary share                     12.6p                     10.6p                                       +18.9 
            Quarterly 
             dividends per 
             ordinary share                  9.32p(1)                      8.1p                                       +15.1 
            Retail price 
             index                              289.2                     280.7                                        +3.0 
 
            (1) First 
            quarterly 
            4.66p, 
            second 
            quarterly 4.66p 
 
                                            At 31 May                 At 30 Nov                             % 
            Assets                               2019                      2018                              change 
            Net asset value 
             per ordinary 
             share 
             (debt at fair 
             value)                            861.2p                    845.8p                                        +1.8 
            Net asset value 
             per ordinary 
             share (debt at 
             par)                              865.8p                    843.9p                                        +2.6 
            Ordinary share 
             price                             774.0p                    745.0p                                        +3.9 
            Total net 
             assets (debt 
             at 
             fair value)               GBP367,656,000            GBP361,105,000                                        +1.8 
            Total net 
             assets (debt 
             at 
             par)                      GBP369,616,000            GBP360,273,000                                        +2.6 
 
                                    Performance relative to the benchmark for the six months to 31 
                                                                May 2019 
 
             Net Asset                                               Capital                                Total Return(2) 
             Value with                                              Return 
             debt 
             at fair value 
             relative to 
             Benchmark* 
 
            Change in net 
             asset value                                                   1.8%                                        2.9% 
            Change in 
             benchmark                                                     1.7%                                        3.4% 
 
            Percentage 
             point 
             performance 
             against 
             benchmark*                                                     0.1                                        -0.5 
 
 
 

*The benchmark applied is 70% FTSE World Ex UK Index and 30% FTSE All-Share Index.

(2) Total returns are calculated with net dividends reinvested

 
 
            Reconciliation of Benchmark performance to total return 
             to shareholders 
 
            Equity portfolio return (excluding 
             cash)                                                  4.1% 
 
            Impact of gearing                                       0.2% 
            Finance costs                                          -0.1% 
            Increase in fair value of 
             debt                                                  -0.8% 
 
            Effect of gearing                                      -0.7% 
 
            Management fee                                         -0.2% 
            Administration expenses                                -0.1% 
            Other                                                  -0.2% 
            Total of above factors                                 -0.5% 
 
            Return to shareholders                                  2.9% 
            Change in benchmark                                     3.4% 
            Relative performance                                   -0.5 
 
 

Interim Management Report

Performance

The Net Asset Value per ordinary share of the company increased by 2.9% on a total return basis; the difference between this and the portfolio return of 4.1% is explained in the table above. The benchmark (70% FTSE Word Index Ex UK and 30% FTSE All-Share Index) rose by 3.4% over the period.

Earnings

Earnings increased by 18.9% to 12.6p per ordinary share in the six months to 31 May 2019 (2018: 10.6p).

Dividends

In continuation of the policy to distribute income more evenly throughout the year, the board declared a first quarterly dividend of 4.66p per ordinary share which is payable on 25 July 2019. The board has now declared a second quarterly dividend of 4.66p per ordinary share payable on 19 September 2019 to holders on the register of members at the close of business on 9 August 2019. A Dividend Reinvestment Plan (DRIP) is available for this dividend and the relevant Election Date is 23 August 2019.

The board is continuing to balance quarterly payments to bring them in line with the final. It is anticipated, subject to there being no unforeseen circumstances, that the third quarterly dividend will be maintained at this rate, and an unchanged final dividend of 6.00p will be proposed for the year ending 30 November 2019, giving a dividend for the year of 19.98p, a 10% increase on the previous year. The third quarterly payment will be made in December and the final dividend will be proposed for payment in March 2020.

Material events and transactions

In the six month period ended 31 May 2019 the following material events and transactions have taken place.

-- At the annual general meeting of the company held on 4 April 2019, all the resolutions put to shareholders were passed.

There were no share buy backs, share issuances and no related party transactions in the period or since the period end.

Principal Risks

The principal risks facing the company over the next six months are broadly unchanged from those described in the Annual Financial Report for the year ended 30 November 2018. These are set out in a table in the Strategic Report on page 16 of the annual report, together with commentary on the board's approach to mitigating the risks, under the following headings: Portfolio Risk; Business Risk; and Operational Risk.

In addition to the principal risks, the company faces the risks associated with the provision of services by third parties and general business risks including accounting, legal and regulatory matters. The board oversees a detailed review of the principal risks by the audit committee at least twice a year to ensure the risk assessment is current and relevant, adjusting mitigating factors and procedures as appropriate.

Going concern

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, the company has adequate financial resources to continue in operational existence for the foreseeable future.

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 and FRS 104, as set out in Note 2, and the Accounting Standards Board's Statement 'Half-Yearly Financial Reports'; and

-- The interim management report includes a fair review of the information required by Disclosure 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 and uncertainties for the remaining six months of the financial year; and

-- The interim management report includes a fair review of the information concerning related parties transactions as required by the Disclosure and Transparency Rule 4.2.8 R.

The half-yearly financial report was approved by the board on 17 July 2019 and the above responsibility statement was signed on its behalf by the Chairman.

Carolan Dobson

Chairman

Enquiries:

For further information, please contact:

Allianz Global Investors GmbH, UK Branch

Stephanie Carbonneil

Head of Investment Trusts

Tel: 020 3246 7256

Investment Manager's Review

Market Review

Our expectation for the equity market to provide moderate returns with higher volatility has been borne out in the past six months. Overall, global equity markets as measured by the MSCI All Country World Index, are up 3 per cent in GBP terms over the period. However, this modest return has encompassed a sharp correction followed by a rapid recovery. In May, markets experienced yet another, albeit more modest, correction.

The catalysts for this increased volatility have been US trade and monetary policy. Escalating trade tensions between the US and its trading partners and the potential impact on global growth have been a major source of concern. At the end of 2018, data revealed that President Trump's tariffs were starting to create a material economic drag. However, promising trade talks soon erased the equity market's losses and sustained markets for some months. Market sentiment was dented once more in May, with both the US and China imposing higher tariffs on each other's exports. Technology stocks were particularly hit after the US administration effectively banned US companies from using equipment made by China's Huawei, raising fears that Beijing would target US tech companies in return.

The US Federal Reserve's (Fed) about turn in policy has been the other defining influence on all asset markets. Over the period, the central bank has gone from raising interest rates and pursuing quantitative tightening to pausing and hinting at lower interest rates. This has led to a fall in bond yields and support for bond proxy investments in the equity markets. Against a background of weakening global growth and slumping financial markets, the Fed announced it would not raise rates for the remainder of 2019, and slowed the pace of its balance sheet reductions. Similarly, the European Central Bank (ECB) pledged to hold rates until the end of 2020 and reinstated its offer of cheap long-term loans to banks. The People's Bank of China also injected a record amount of liquidity into China's economy and cut the reserve requirement ratio for banks.

At a sector level, Real Estate, Utilities and Information Technology have made the most impressive gains. The latter has continued to demonstrate its ability to generate meaningful earnings growth amidst market volatility. Meanwhile, Real Estate and Utilities have benefited from lower bond yields. Conversely, Health Care has come under consistent pressure as Democratic nominees for the US Presidency push for greater state medical provision.

In terms of currencies, sterling has remained a Brexit bellwether, consistently reflecting investors' fluctuating concerns over the likelihood, timing and nature of the UK's exit from the European Union (EU). As a result, sterling strengthened steadily until March, in line with the prospects of either a soft Brexit or second referendum. Since then, the currency has weakened to December levels, reflecting Theresa May's departure and the likelihood of her being replaced by Boris Johnson, who is more vocal about leaving the EU without a deal.

Portfolio Review

Between December 2018 and May 2019 inclusive, the Trust's portfolio returned 4.1 per cent against a benchmark return of 3.4 per cent. The main driver of performance over this period has been stock selection. Holdings in the Consumer Goods, Utilities and Financials sectors have all contributed positively to returns.

Adidas, the maker of sports apparel, has made the strongest contribution to the portfolio. Its CEO, Kasper Rorsted, has made clear cultural and operational changes to the company, and these continue to bear fruit. In its Q1 results, the company reported strong growth, particularly in Russia and Asia Pacific. The company's focus on digitalisation is central to our investment case and e-commerce grew 40 per cent. Earlier in the year, some slowdown in sales growth led us to test our investment case by commissioning a report from Grassroots Research, our proprietary market research division. Using on the ground interviews and big data web-scraping, the report found that this slowdown was due to Adidas exercising its pricing power over retailers, leading to improved margin and profitability. This has since been borne out in the results, with margins clearly rising and Adidas maintaining a positive outlook for 2019.

Iberdrola, the Spanish based power company, is delivering revenue and net income growth of 9 and 15 per cent, respectively. Renewables are a key growth area, and the company has seen pricing, production and capacity all rise as countries try to move away from fossil fuels. Looking ahead, the company is optimistic about full year earnings and dividends, aided further by lower debt and tax costs.

In Financials, our positions in Munich Re, Visa and Ashmore have all distinguished themselves by virtue of their ability to generate fee-based revenues. Visa in particular continues to benefit from a structural move away from cash, and its strategic investment in new payment technologies.

Conversely, stock selection in Industrials and Health Care sectors was weaker.

Wabtec detracted from performance. We believe this has been mostly driven by arbitrage around the closure of Wabtec's General Electric deal, as well as the relatively high leverage this incurred. However, as rail companies move towards Precision Scheduled Railroading (PSR), Wabtec's merger with GE makes it the leading Original Equipment Manufacturer (OEM) supplier of the most efficient diesel-electric locomotives in the world and thus well positioned to benefit from this modernisation. Moreover, while economic weakness remains a potential risk, industry order backlog remains strong. With the company expecting to reduce leverage to 2.5 times net debt / EBITDA* by the end of the year thanks to its strong free cash flow, the company looks oversold.

UnitedHealth Group has had the largest negative impact on returns over this period. Shares in the integrated healthcare provider weakened following calls for universal state provision from US Democrats in the run up to 2020's presidential election. We regard this as a very low probability event and more of an excuse for profit-taking given the company's success in recent years. We believe that some reform of drug pricing and rebates is likely to emerge, and that rhetoric is likely to rise over the next year. However, we view the concerns towards the healthcare providers, who are drivers of lower healthcare costs, as overdone. Indeed, the stock has rebounded with recent results showing strong growth in premiums, services and products, with healthy medical loss ratios and good cost control.

*Earnings before interest, tax, depreciation and amortisation

Significant Transactions

Overall we have continued the strategic shift in the portfolio, concentrating the holdings on higher conviction, higher quality investments. The restructured balance sheet has provided higher dividend cover, allowing greater flexibility in stock selection.

Having monitored St James's Place for some time, we initiated a position in the UK financial services company in January. Brexit-induced weakness has made the shares increasingly cheap. However, the business has an exceptional growth record and there is substantial valuation support underpinned by its existing book of business.

In March, we initiated positions in Bright Horizons, Assa Abloy and Intuit. These are a provider of childcare and educational services, a manufacturer of door locking services and a developer of financial management software, respectively. Each company has demonstrated the ability to generate sustainable earnings growth at a time when this is in short supply and, at the time of purchase, the shares were reasonably valued.

More recently we have started a position in Intuitive Surgical, the manufacturer of the da Vinci surgical system. Growth is being driven by new product launches and increased adoption of robotic surgery in different procedures beyond its traditional areas of Gynaecology and Urology. A Grassroots study in the month showed strong intent among Chinese hospitals to buy or upgrade their systems, and a growing awareness of the product among surgeons and patients. The stock is likely to exhibit higher volatility than average but this is balanced by higher growth potential.

To fund these new holdings, we have continued to exit positions with lower medium term conviction, using short term strength where possible. Greene King, the UK pub company, was held primarily for yield, while growth was pedestrian. However, the shares rallied sharply following a strong Christmas trading statement, so we used the recovery to exit our holding. Similarly Ameriprise and Apple were sold after sharp recoveries in the first quarter.

Across the portfolio, we have also taken advantage of several bouts of market volatility to increase positions in favoured stocks. In December, despite good overall numbers, slightly weaker new business figures for Accenture caused the consultancy firm's share price to decline to overly pessimistic levels, so we took the position up. In January, we took the opportunity to add to TSMC, which was trading at a depressed valuation with earnings starting to stabilise.

Outlook

Monetary policy and trade are likely to remain key drivers of market behaviour in the foreseeable future.

US/China trade tensions and tariffs have the potential for further negative impacts on growth. At the micro level, the more uncertain operating environment for the corporate sector is increasingly hindering decision making and reducing visibility on demand. On balance, our base case assumption remains that some partial deal with be reached between US and China, potentially rolling back some of the recently increased tariffs. We are, however, expecting long term friction to feature in the technology sector with ongoing tension around state control, intellectual property and cyber security.

Global growth has slowed in the last six months as the stimulus from US tax reform faded and trade frictions hold back investment. The considerable stimulus being applied in China should lead to stabilisation later this year, but domestic demand is weaker in the meantime. Within Europe, the recent elections, with no further shift towards populism, have removed some risk but growth remains sluggish. Italy continues to be a long term source of instability, as now does the UK.

Monetary policy remains a source of uncertainty. In the US, the Fed has paused and is mulling over recent mixed data while conducting a major review of its tools, policies and communication methods, including what targets to aim for going forward. In Europe, the ECB also faces a potential shift when its President, Mario Draghi departs at the end of October. US ten-year treasury yields are at their lowest level in two years, lifting bond proxies in the equity markets as a result. Whether growth or value stocks are more likely to outperform in this event is a constant source of debate.

Our expectation of more moderate returns with higher volatility is therefore still a central case, with slight gains and considerable movement in between. With monetary policy on hold and optimistic rate expectations already embedded, earnings growth decelerating and valuations towards the upper end of historic ranges, there is no reason to expect equity markets overall to deliver strong nominal returns. Therefore, an active approach such as ours, driven by superior stock selection, is going to be required to provide additional upside.

Lucy Macdonald

Allianz Global Investors

BRUNNER INVESTMENT TRUST PLC

INVESTMENT PORTFOLIO AS AT 31 MAY 2019

Listed Equity Holdings

 
 
                                      Value   % of Invested 
 Name                              GBP'000s           Funds   Sector 
 Microsoft                           17,763            4.51   Software & Computer Services 
                                                              Health Care Equipment & 
 United Health                       13,127            3.34    Services 
 Royal Dutch Shell 'B' Shares        11,452            2.90   Oil & Gas Producers 
 Accenture                           10,440            2.65   Support Services 
 Visa                                10,108            2.56   Financial Services 
                                                              Health Care Equipment & 
 The Cooper                           9,923            2.52    Services 
 Ecolab                               9,639            2.44   Chemicals 
 Muenchener Rueckver                  9,407            2.39   Non-Life Insurance 
 Roche Holdings                       9,087            2.30   Pharmaceuticals & Biotechnology 
 Taiwan Semiconductor                 8,877            2.25   Technology Hardware & Equipment 
 BP                                   8,850            2.24   Oil & Gas Producers 
 Estée Lauder 'A' Shares         8,327            2.11   Personal Goods 
                                                              Electronic & Electrical 
 Agilent                              8,315            2.11    Equipment 
 AIA                                  8,015            2.03   Life Insurance 
 Adidas                               7,914            2.01   Personal Goods 
 GlaxoSmithKline                      7,634            1.94   Pharmaceuticals & Biotechnology 
 AbbVie                               7,244            1.84   Pharmaceuticals & Biotechnology 
 Amadeus                              6,934            1.76   Software & Computer Services 
 Informa                              6,601            1.67   Media 
 Unilever                             6,578            1.67   Personal Goods 
                                                              Electronic & Electrical 
 Schneider Electric                   6,448            1.63    Equipment 
 Compass                              6,446            1.63   Travel & Leisure 
                                                              Electronic & Electrical 
 AMETEK                               6,435            1.63    Equipment 
 Microchip Technology                 6,418            1.63   Technology Hardware & Equipment 
 Itochu                               6,221            1.58   General Industrials 
 Charles Schwab                       6,045            1.53   Financial Services 
 HSBC                                 5,870            1.49   Banks 
 Nestle                               5,714            1.45   Food Producers 
 Booking Holdings                     5,690            1.44   Travel & Leisure 
 Iberdrola                            5,524            1.40   Electricity 
 Cie Financiere Richemont             5,416            1.37   Personal Goods 
 Tyman                                5,333            1.35   Construction & Materials 
 Senior                               5,290            1.34   Aerospace & Defence 
 St. James's Place                    5,230            1.33   Life Insurance 
 Rio Tinto                            4,990            1.27   Mining 
 Prudential                           4,733            1.20   Life Insurance 
 SThree                               4,697            1.19   Support Services 
 Jiangsu Express                      4,659            1.18   Industrial Transportation 
 Enel                                 4,649            1.18   Electricity 
 Citigroup                            4,583            1.16   Banks 
                                                              Electronic & Electrical 
 Amphenol                             4,492            1.14    Equipment 
 Ashmore                              4,488            1.14   Financial Services 
 Sirius Real Estate                   4,466            1.13   Real Estate 
 Partners Group                       4,444            1.13   Financial Services 
 Wabtec                               4,415            1.12   Industrial Engineering 
 Brambles                             4,413            1.12   General Industrials 
 Howden Joinery                       4,396            1.11   Support Services 
 
 
 
                                          Value   % of Invested 
 Name                                  GBP'000s           Funds   Sector 
 Bright Horizons Family Solutions         4,335            1.10   General Retailers 
 EOG Resources                            4,199            1.06   Oil & Gas Producers 
 United Internet                          4,090            1.04   Software & Computer Services 
 Atlas Copco                              3,881            0.98   Industrial Engineering 
 Intuit                                   3,860            0.98   Software & Computer Services 
                                                                  Health Care Equipment 
 Intuitive Surgical                       3,826            0.97    & Services 
 Lloyds Banking Group                     3,722            0.94   Banks 
 Assa Abloy                               3,660            0.93   Construction & Materials 
 UBS                                      3,606            0.91   Banks 
 TP ICAP                                  3,567            0.90   Financial Services 
 Nielsen                                  3,554            0.90   Media 
 China Mobile                             3,503            0.89   Mobile Telecommunications 
                                                                  Health Care Equipment 
 Fresenius                                3,480            0.88    & Services 
 Merlin Properties                        3,422            0.87   Real Estate 
 Astellas Pharma                          3,416            0.87   Pharmaceuticals & Biotechnology 
 Australia & New Zealand Bank             3,354            0.85   Banks 
 Covestro                                 2,942            0.75   Chemicals 
 Albemarle                                2,766            0.70   Chemicals 
 Helical                                  1,469            0.37   Real Estate 
                                    -----------  -------------- 
                                      394,392          100.00 
                                    -----------  -------------- 
 
 
   Unlisted Equity Holdings 
 Fintrust Debenture                           4               -   Financial Services 
                                    -----------  -------------- 
                                              4               - 
                                    -----------  -------------- 
 
 
 
 
 

GEOGRAPHICAL ANALYSIS AS AT 31 MAY 2019

 
                        % 
 
 North America      39.44 
 United Kingdom     26.81 
 Europe             22.98 
 Pacific Basin       8.32 
 Japan               2.45 
 
 Total             100.00 
----------------  ------- 
 

SECTORAL ANALYSIS AS AT 31 MAY 2019

 
                            % 
 
 Financials             21.93 
 Industrials            21.06 
 Health Care            14.66 
 Technology             12.17 
 Consumer Goods          8.61 
 Consumer Services       6.74 
 Oil & Gas               6.20 
 Basic Materials         5.16 
 Utilities               2.58 
 Telecommunications      0.89 
 
 Total                 100.00 
--------------------  ------- 
 

SUMMARY OF UNAUDITED RESULTS

INCOME STATEMENT

for the six months ended 31 May 2019

 
                                        Revenue    Capital   Total Return 
                                       GBP'000s   GBP'000s       GBP'000s 
                                                                 (Note 2) 
 Gains on investments held at fair 
  value through profit or loss                -      9,227          9,227 
 Losses on foreign currencies                 -       (52)           (52) 
 Income from investments                  6,615          -          6,615 
 Other income                                11          -             11 
 Investment management fee                (258)      (601)          (859) 
 Administration expenses                  (340)          -          (340) 
                                      ---------  ---------  ------------- 
 Profit before finance costs and 
  taxation                                6,028      8,574         14,602 
 Finance costs: interest payable 
  and similar charges                     (148)      (318)          (466) 
                                      ---------  ---------  ------------- 
 Profit on ordinary activities 
  before taxation                         5,880      8,256         14,136 
 Taxation                                 (508)          -          (508) 
                                      ---------  ---------  ------------- 
 
 Profit after taxation attributable 
  to ordinary shareholders                5,372      8,256         13,628 
                                      =========  =========  ============= 
 Earnings per ordinary share (Note 
  1) 
 (basic and diluted)                     12.58p     19.34p         31.92p 
 

BALANCE SHEET

as at 31 May 2019

 
 
                                                            GBP'000s 
 
 Investments held at fair value through profit or loss 
  (Note 3)                                                   394,396 
 Net current assets                                              280 
                                                         ----------- 
 Total assets less current liabilities                       394,676 
 Creditors: amount falling due after more than one 
  year                                                      (25,060) 
 Total net assets                                            369,616 
                                                         ----------- 
 
 Called up share capital                                      10,673 
 Capital redemption reserve                                    5,327 
 Capital reserves                                            336,741 
 Revenue reserve                                              16,875 
 Equity Shareholders' funds                                  369,616 
                                                         ----------- 
 
 Net asset value per ordinary share                           865.8p 
 
 The net asset value is based on 42,692,727 ordinary 
  shares in issue at 31 May 2019 
 

SUMMARY OF UNAUDITED RESULTS

INCOME STATEMENT

for the six months ended 31 May 2018

 
                                        Revenue    Capital   Total Return 
                                       GBP'000s   GBP'000s       GBP'000s 
                                                                 (Note 2) 
 Gains on investments held at fair 
  value through profit or loss                -     10,156         10,156 
 Losses on foreign currencies                 -       (72)           (72) 
 Income from investments                  5,945          -          5,945 
 Other income                                10          -             10 
 Investment management fee                (272)      (636)          (908) 
 Administration expenses                  (349)        (1)          (350) 
                                      ---------  ---------  ------------- 
 Profit before finance costs and 
  taxation                                5,334      9,447         14,781 
 Finance costs: interest payable 
  and similar charges                     (415)      (939)        (1,354) 
                                      ---------  ---------  ------------- 
 Profit on ordinary activities 
  before taxation                         4,919      8,508         13,427 
 Taxation                                 (417)          -          (417) 
                                      ---------  ---------  ------------- 
 
 Profit after taxation attributable 
  to ordinary shareholders                4,502      8,508         13,010 
                                      =========  =========  ============= 
 Earnings per ordinary share (Note 
  1) 
 (basic and diluted)                     10.55p     19.93p         30.48p 
 

BALANCE SHEET

as at 31 May 2018

 
 
                                                            GBP'000s 
 
 Investments held at fair value through profit or loss 
  (Note 3)                                                   405,108 
 Net current assets                                            2,282 
                                                         ----------- 
 Total assets less current liabilities                       407,390 
 Creditors: amount falling due after more than one 
  year                                                      (30,422) 
 Total net assets                                            376,968 
                                                         ----------- 
 
 Called up share capital                                      10,673 
 Capital redemption reserve                                    5,327 
 Capital reserves                                            345,618 
 Revenue reserve                                              15,350 
 Equity Shareholders' funds                                  376,968 
                                                         ----------- 
 
 Net asset value per ordinary share                           883.0p 
 
 The net asset value is based on 42,692,727 ordinary 
  shares in issue at 31 May 2018 
 

BALANCE SHEET

as at 30 November 2018

 
 
                                                                 GBP'000s 
 
 Investments held at fair value through profit or loss 
  (Note 3)                                                        381,787 
 Net current assets                                                 3,541 
                                                              ----------- 
 Total assets less current liabilities                            385,328 
 Creditors: amount falling due after more than one year          (25,055) 
 Total net assets                                                 360,273 
                                                              ----------- 
 
 Called up share capital                                           10,673 
 Capital redemption reserve                                         5,327 
 Capital reserves                                                 328,485 
 Revenue reserve                                                   15,788 
 Equity shareholders' funds                                       360,273 
                                                              ----------- 
 
 Net asset value per ordinary share                                843.9p 
 
 The net asset value is based on 42,692,727 ordinary shares 
  in issue at 30 November 2018 
 

STATEMENT OF CHANGES IN EQUITY

 
                                                    Called              Capital 
                                                        up           Redemption      Capital      Revenue 
                                                     Share              Reserve      Reserve      Reserve        Total 
                                                   Capital             GBP'000s     GBP'000s     GBP'000s     GBP'000s 
                                                  GBP'000s 
 
 Six months ended 31 May 2018 
 Net assets at 1 December 2017                      10,673                5,327      337,110       14,904      368,014 
 Revenue profit                                          -                    -            -        4,502        4,502 
 Dividends on ordinary shares (Note 
  4)                                                     -                    -            -      (4,056)      (4,056) 
 Capital profit                                          -                    -        8,508            -        8,508 
 
 Net assets at 31 May 2018                          10,673                5,327      345,618       15,350      376,968 
                                       -------------------  -------------------  -----------  -----------  ----------- 
 
 
 
 Six months ended 31 May 2019 
 Net assets at 1 December 2018                      10,673                5,327      328,485       15,788      360,273 
 Revenue profit                                          -                    -            -        5,372        5,372 
 Dividends on ordinary shares (Note 
  4)                                                     -                    -            -      (4,291)      (4,291) 
 Unclaimed Dividends                                     -                    -            -            6            6 
 Capital profit                                          -                    -        8,256            -        8,256 
 
 Net assets at 31 May 2019                          10,673                5,327      336,741       16,875      369,616 
 
 

CASH FLOW STATEMENT

 
                                                 Six months   Six months 
                                                      ended        ended 
                                                     31 May       31 May 
                                                       2019         2018 
                                                   GBP000's     GBP000's 
                                                -----------  ----------- 
 Operating activities 
 Profit before finance costs and taxation            14,602       14,781 
 Less: Gains on investments at fair value 
  through profit or loss                            (9,227)     (10,156) 
 Add: Special dividends credited to capital             257            - 
 Less: Losses on foreign currency                        52           72 
 Less: Overseas tax suffered                          (508)        (417) 
 Increase in other receivables                        (288)         (36) 
 Decrease in other payables                            (96)         (31) 
 Purchases of fixed asset investments held 
  at fair value through profit or loss             (35,004)     (32,244) 
 Sales of fixed asset investments held 
  at fair value through profit or loss               31,365       23,312 
 Net cash inflow (outflow) from operating 
  activities                                          1,153      (4,719) 
 
 Financing activities 
 Interest paid                                        (451)      (2,333) 
 Repayment of Stepped Rate Interest Loan                  -     (18,200) 
 Dividends paid on cumulative preference 
  stock                                                (11)         (11) 
 Dividends paid on ordinary shares                  (4,291)      (4,056) 
 Unclaimed dividends                                      6            - 
                                                -----------  ----------- 
 Net cash outflow from financing activities         (4,747)     (24,600) 
 
 Decrease in cash and cash equivalents              (3,594)     (29,319) 
                                                -----------  ----------- 
 
 
 Cash and cash equivalents at the start 
  of the period                                      11,133       30,998 
 Effect of foreign exchange rates                      (52)         (72) 
 Cash and cash equivalents at the end of 
  the period                                          7,487        1,607 
 
 Comprising: 
 Cash at bank                                         7,487        1,607 
                                                -----------  ----------- 
 
 

NOTES

Note 1

The returns per ordinary share have been calculated using a weighted average number of shares in issue of 42,692,727 (31 May 2018: 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 2019 were GBP35,004,000 (31 May 2018: GBP31,682,000) and sales for the half year ended 31 May 2019 were GBP31,365,000 (31 May 2018: GBP19,687,000).

Included in the cost of investments are transaction costs on purchases which amounted to GBP69,000 (31 May 2018: GBP29,000) and transaction costs on sales which amounted to GBP7,000 (31 May 2018: GBP8,000).

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 fair value hierarchy disclosures (March 2016) 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 is unavailable) for the asset or liability

As at 31 May 2019, the financial assets at fair value through profit and loss of GBP394,396,000 (30 November 2018: GBP381,787,000) are categorised as follows:

 
             Six months    Year ended 
                  ended   30 November 
            31 May 2019          2018 
               GBP'000s      GBP'000s 
 Level 1        394,392       381,783 
 Level 2              -             - 
 Level 3              4             4 
           ------------  ------------ 
                394,396       381,787 
           ------------  ------------ 
 

Note 4

In accordance with section 32 FRS102 ' 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 payable on ordinary shares in respect of earnings for each period are as follows:

 
                                           Six months     Six months     Year ended 
                                                ended          ended    30 November 
                                          31 May 2019    31 May 2018           2018 
                                             GBP'000s       GBP'000s       GBP'000s 
 Final dividend 6.00p paid 5 April 
  2019 (2018: 6.00p)                            2,562          2,562          2,562 
 First quarterly dividend 4.05p paid 
  27 July 2018 (2017: 3.50p)                        -              -          1,729 
 Second quarterly dividend 4.05p paid 
  21 September 2018 (2017: 3.50p)                   -              -          1,729 
 Third quarterly dividend 4.05p paid 
  14 December 2018 (2017: 3.50p)                1,729          1,494          1,494 
                                                4,291          4,056          7,514 
                                        -------------  -------------  ------------- 
 

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      Six months             Year ended 
                                                    ended           ended            30 November 
                                              31 May 2019     31 May 2018                   2018 
                                                 GBP'000s        GBP'000s               GBP'000s 
 First quarterly dividend 4.66p payable 
  25 July 2019 (2018: 4.05p)                        1,989           1,729                      - 
 Second quarterly dividend 4.66p payable 
  19 September 2019 (2018: 4.05p)                   1,989           1,729                      - 
 Third quarterly dividend 4.05p                         -               -                  1,729 
  Final dividend 6.00p                                  -               -                  2,562 
                                           --------------  --------------  --------------------- 
                                                   3,978            3,458                  4,291 
                                           --------------  --------------  --------------------- 
 

The final and quarterly 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 2018 has been extracted from the statutory accounts for that year which have been delivered to the Registrar of Companies and restated by reference to the changes in the accounting policies detailed above. 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 half-yearly financial report will be sent to shareholders in late July 2019 and will be available to members of the public from the company's registered office at 199 Bishopsgate, London EC2M 3TY.

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 or visit www.rns.com.

END

IR LLFFDDLIDLIA

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July 18, 2019 02:00 ET (06:00 GMT)

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