Last checked at 16 Feb 2022 07:00
THE BRUNNER INVESTMENT TRUST PLC
Final Results for the year ended 30 November 2021.
The following comprises extracts from the Company's Annual Financial Report for the year ended 30 November 2021. The full annual financial report is being made available to be viewed on or downloaded from the company's website at www.brunner.co.uk. Copies will be posted to shareholders shortly.
MANAGEMENT REPORT
Chairman's Statement
Dear Shareholder
Performance
Welcome to the Annual Report of the 2021 financial year. Stock markets in 2021 witnessed strong returns, led by the US and Europe, interspersed with bouts of volatility. Against this backdrop, we are pleased to report that the company's Net Asset Value (NAV) per ordinary share rose by 21.5% on a net dividends reinvested basis with debt at fair value, our key performance measure. This was marginally ahead of the composite benchmark index (70% FTSE World Ex-UK and 30% FTSE All-Share Index) which rose by 21.1% on a total return basis over the period.
This marks a third year of outperformance against the benchmark. It is particularly pleasing to see this outperformance in the radically different market conditions of these years.
Review of the 2021 Financial Year
This is the fourth time of writing to shareholders under the shadow of the COVID-19 pandemic, either in an Annual or Half-Year Report. It remains unclear how close we may be to the end of these conditions.
The individual human and broader social costs have been immense and the future path of the pandemic will influence global economic developments. The ability of economies to open and grow will continue to be balanced against the need to protect the vulnerable and we have seen the impact of frequent and abrupt changes to governments' responses. Certainly, the middle of 2021 had a very different outlook to either end of the year, though that was also dependent on where in the world you might be living. In 2021, economies reopened strongly earlier in the year, supported by emergency fiscal and monetary policies; supply and labour shortages started to drive a rise in inflation to levels not seen for a decade; and geopolitical instability around the world has steadily increased over the year. Despite these negative factors, recovering economic growth encouraged investors to commit record amounts of capital to flow to financial markets, supporting share price growth, if skewed somewhat towards in-favour sectors.
Brunner is about investing responsibly and sustainably in businesses across the globe with the aim of generating superior returns for the trust's shareholders. In normal times, company valuations reflect their ability to grow and be profitable. In the current market valuations have often been unduly influenced by sentiment. Sentiment can become distorted and amplified when there is a high degree of uncertainty in the future. Yet most companies have carried on doing what they have always done, adapting to the prevailing situation. Short-term sentiment driven stock markets are not wholly negative for the long-term active investor - such market volatility can prove beneficial where valuations of good quality companies become depressed on the back of wider sentiment, providing opportunity where valuation rigour is an integral part of the investment management process. There is more detail about this in the Investment Manager's Review on page 22 of the annual report.
Our manager remains alert to the ever-changing variety of extraneous factors which could have an effect in some way on the portfolio's companies and the investment process remains focused on finding sound businesses with clear business models which have the potential to provide sustainable returns for shareholders over the long term.
Whilst such an approach will inevitably mean missing out on some of the highest returns available - particularly in an environment where global stock markets have been dominated by a few titans of the technology space - it also means less exposure to the volatility that can sometimes accompany these very in-favour companies.
Environmental, Social and Governance (ESG)
The board considers that it is in shareholders' interests to be aware of and consider environmental, social and governance factors when selecting and retaining investments and believes that active stewardship is a key task of a responsible asset owner
Understanding the manager's approach to ESG and how it has been integrated within the investment process has been a specific focus for the board over the past year. We continue to take account of our performance in this area against our objectives using the manager's internal analysis and external measures and benchmarks.
We give a full and clear account of ESG considerations within this report (see page 19) and we also have a page on our website that describes the manager's Integrated ESG process in more detail. Since the beginning of 2020 we have included quarterly updated ESG measurements on our monthly factsheet, showing the rating of the Brunner portfolio on ESG risks and combined ESG risk
measurements compared to the rating of the benchmark, however imperfect that comparison may still be.
One of the complications surrounding ESG is terminology. Shareholders will be aware of the considerable variety in terms used to describe the same activities and the variety of ways to measure them. The development of the EU taxonomy regulation will be a key step forward to more universal descriptions and until ESG can be more reliably measured it remains difficult to reliably compare one portfolio to another.
Earnings per Share
Over the past year we have witnessed a good income recovery with many companies returning to paying dividends after a hiatus in the prior year. This rebound meant the portfolio's generation of income and earnings recovered through 2021, with earnings per share for the year rising by 27.5%, from 16.0p to 20.4p. This has put Brunner in the strong position this year to once again be able to cover our dividend payment to shareholders.
Dividend
The proposed final dividend of 6.05p, if approved by shareholders, will be paid on 1 April 2022 to shareholders on the register on 25 February 2022. In line with board's dividend policy, which is outlined on page 14 of the annual report, the total dividend for 2021, including the proposed final dividend will be 20.15p. This represents an increase over the 2020 dividend which was 20.06p and means Brunner has now reached a landmark 50 years of consecutive dividend increases, maintaining its place as one of the AIC's "Dividend Heroes".
Revenue reserves will remain strong at 24.7p after the payment of the proposed final dividend.
Board Succession
The board is continuing with its cycle of recruitment as existing directors reach the point of retirement from the board. The next planned change will be the recruitment of a new director to succeed Peter Maynard during 2022. Peter, the Senior Independent Director, has given long service, invaluable challenge and input and guidance to the board, staying slightly beyond his planned retirement date to provide additional continuity on the board through the ongoing pandemic. We thank Peter for his service and counsel and wish him well for the future after his retirement later in the year.
Marketing
Promoting Brunner to as wide an audience as possible remains a priority and the board supports the manager in sales and marketing efforts to further that aim. The trust's balanced nature means it is a long-term holding that can, in our view, form the cornerstone of an investor's diversified portfolio. Attracting more investors, particularly individual investors, generally has the effect of improving liquidity of the trust's shares and stabilising the share register. We were pleased that during the recent exit of a large institutional shareholder which was completed in the middle of the financial year, most shares were absorbed by demand from the investment platforms and many smaller wealth managers. This demand, helped by our marketing efforts, meant we were able to manage that exit without the need for share buybacks which would have decreased the size of the trust and increased the total expenses ratio. Maintaining the size of the trust and the liquidity of the shares is an important investment consideration.
Outlook
There is considerable concern that we may be at a turning point in global stock markets. There has been over a decade of falling interest rates which at their low reached a level where many central banks charged an investor for holding money with them. This is unsustainable unless economies never grow again and as we are now seeing positive global economic growth, and some sharp and possibly sustained rises in inflation, central banks are starting to indicate increasing interest rates and a wind down or reversal of their quantitative easing programmes. This is a big change in the background for markets and it remains to be seen how peacefully such a change can be implemented. The way modern stock markets are structured, with short term activity dominating trading, and geared strategies - often focused on quite narrow areas - offering the prospect of sharp volatile stock market price movements often unrelated to underlying company profit fundamentals. This will provide opportunities for the patient, thoughtful investor but it is likely to be bumpy.
In addition, geopolitical tensions with China and Russia may continue to have a significant impact on market sentiment and particularly on supply chains and energy prices.
For Brunner, we expect to continue to follow the same balanced strategy and approach, investing in well-run companies with high-quality business models but only at a fair price. Brunner remains a long-term balanced equity investment, aiming to provide investors with steady growth in capital as well as a rising income stream.
It is difficult to know whether stock markets will be higher or lower this time next year, but the board have confidence that many of the companies in our portfolio will continue to make good business progress.
Annual General Meeting
We are hoping that the Annual General Meeting this year, which is to be held at 10.30 a.m. on Wednesday 30 March 2022, can be an open meeting at which shareholders can receive a presentation from the managers before the formal business takes place. We would be delighted to meet with all those shareholders who are able to attend, however, the continuing impact of the COVID-19 pandemic remains uncertain and there is still a risk of further variants bringing about the need for restrictions to be re-introduced. To keep this event as inclusive as possible we would encourage shareholders who wish to attend to take precautions such as wearing face coverings for the protection of others from the spread of viruses. We intend to have only light refreshments before the meeting and will provide a status update on the AGM arrangements on the website www.brunner.co.uk in the week before the meeting is due to take place.
Shareholders can send any questions to be answered at the AGM by the board and manager care of the company secretary at investment-trusts@allianzgi.com or in writing to the registered office (further details are available on page 60 of the annual report) and we will publish questions and answers on the website after the meeting. We encourage all shareholders to exercise their votes in advance of the meeting by completing and returning the form of proxy.
Carolan Dobson
Chairman
15 February 2022
Risk Policy
The board operates a risk management policy to ensure that the level of risk taken in pursuit of the board's objectives and in implementing its strategy are understood. The principal risks identified by the board are set out in the table below and on the page opposite, together with the actions taken to mitigate these risks. The process by which the directors monitor risk is described in the Audit Committee Report on page 73 of the annual report.
Principal Risks
A more detailed version of the table below, in the form of a risk matrix, is reviewed and updated by the audit committee at least twice yearly.
Risk Appetite
The directors' approach to risk is to identify where there are risks and to note mitigating actions taken and then to look at the probability of the event and consider the extent to which the resulting residual risk is acceptable, which is defined as the board's risk appetite. As a result of this exercise the risks are rated as 'red' when the risk is of concern and sufficient mitigation measures are not possible or not yet in place; 'amber' when the risk is of concern but sufficient measures are defined and have been or are being implemented; and 'green' when the risk is acceptable and no additional measures are needed.
The nature of the company's business means that a certain amount of risk must be taken for the objectives to be met and it is not surprising that portfolio risk measures are allocated amber or red ratings.
Principal Risks identified | Controls and mitigation | Risk Appetite |
Portfolio Risk · Significant market movements may adversely impact the investments held by the company increasing the risk of loss or challenges to the investment strategy. · Reduction of dividends across the market affecting the portfolio yield and the ability to pay in line with dividend policy. · Exposure to significant exchange rate volatility could affect the performance of the investment portfolio. | · The board meets with the portfolio managers and considers asset allocation, stock selection and levels of gearing on a regular basis and has set investment restrictions and guidelines that are monitored and reported on by AllianzGI. · The board monitors yields and can modify investment parameters and consider a change to dividend policy. · The board receives reports from the manager on the stress testing of the portfolio at least twice each year and contact is made with the chairman and board if necessary between board meetings. · Currency movements are monitored closely and are reported to the board. · Extreme market volatility due to the combination of the pandemic and the economic downturn have caused increased uncertainty in relation to portfolio earnings and dividends which cannot be mitigated by factors within the board's control.
| Red
|
Business Risk · An inappropriate investment strategy e.g., asset allocation or the level of gearing may lead to underperformance against the company's benchmark index and peer group companies, resulting in the company's shares trading on a wider discount.
| · The board manages these risks by diversification of investments through its investment restrictions and guidelines which are monitored and on which the board receives reports at every meeting. The board monitors the implementation and results of the investment process with the investment managers, who attend all board meetings, and reviews data which shows risk factors and how they affect the portfolio. The manager employs the company's gearing tactically within a strategic range set by the board. The board also meets annually specifically to discuss strategy, including investment strategy.
| Green |
Operational Risk · Risk of inadequate procedures for the identification, evaluation and management of risks at outsourced providers including AllianzGI, and its outsourced administration provider, State Street Bank & Trust Company, HSBC Bank plc (Depositary and Custodian) and Link Asset Services (Registrar). | · AllianzGI carries out regular monitoring of outsourced administration functions, which includes compliance visits and risk reviews where necessary. Results of these reviews are monitored by the board. During the pandemic the board has been obtaining additional assurances on business resilience and cyber security · Agreed Service Level Agreements (SLAs) and Key Performance Indicators (KPIs) are in place and the board receives reports against these.
| Green |
Emerging Risks and Uncertainties · The board also considers the impact from emerging risks, the most significant of which is the continuing impact of the COVID-19 pandemic which could cause further market volatility and economic contraction, particularly if lockdowns and travel restrictions were to occur again. · Cyber Security Risks and Brexit Risks are also considered to be emerging risks and are discussed more fully below.
| · The controls and mitigation of portfolio and business risk will continue to operate, however, there remains a risk that the level of volatility and economic downturn caused by the pandemic may be such that the level of portfolio earnings and dividends cannot be mitigated by factors within the board's control. · The board maintains close relations with its advisers (auditors, lawyers and manager) and will make preparations for mitigation of emerging risks as and when they are known or can be anticipated.
| Red |
In addition to the principal risks described above, the board has identified more general risks, for example relating to compliance with accounting, tax, legal and regulatory requirements and to the provision of services from third parties. As in all companies, the board is alert to the risks of financial crime and threat of cyber attacks and monitors reports provided by third party service providers on how these threats are being handled.
Cyber Security Risks
The risk of cyber attacks continues to be monitored closely under the changed working conditions of the global pandemic and the company's suppliers provide specific assurances and regular updates on information security processes. This is identified in the company's risk matrix as being a moderately low impact risk, likely to occur with moderate frequency (every two to five years). The board has received details of the cyber security frameworks in place at each of the company's key suppliers, and it has concluded that there are sufficient safeguards in place for the risk profile in the matrix to remain unchanged.
Going Concern
The directors have considered the company's investment objective and capital structure both in general terms and in the context of the ongoing COVID-19 pandemic. Having noted that the portfolio, which is constructed by the portfolio manager on a bottom up basis, consists mainly of securities which are readily realisable. The directors have also continued to consider the risks and consequences of the COVID-19 pandemic on the operational aspects of the company. As a result the directors have concluded that the company has the ability to continue in operation and meet its objectives in the foreseeable future. For this reason the directors continue to adopt the going concern basis in preparing the financial statements.
The company held some short term debt as a current liability as at 30 November 2021, in the form of a Revolving Credit Facility (RCF), which is renewable within one year. While the company is in a net liability position as at 30 November 2021, if an obligation arose investments could be sold to raise cash.
Viability Statement
Brunner is an investment company and has operated as an investment vehicle since 1927 with the aim of offering a return to investors over the long term. The directors have formally assessed the prospects of the company for a period of longer than a year. The directors believe that five years is the suitable outlook period for this review as there is a realistic prospect that the company will continue to be viable whilst seeking to achieve its aim to provide growth in capital value and dividends over the long term. This reflects the longevity of the company and the expectation that investors will want to hold on to their shares for some time. The board also notes that as a high conviction investor, the portfolio manager has a five year view on stocks in the portfolio.
The board has assessed the long-term viability of the company against the principal risks faced by the company, outlined in the reporting under Risk Policy on page 16 of the annual report.
Many of these matters are subject to ongoing review and the final assessment, to enable this statement to be made, has been formally reviewed by the board.
The factors considered at each board meeting are:
· The company's investment strategy and the long-term performance of the company, together with the board's view that it can continue to provide attractive returns to investors;
· As an investment company Brunner is able to put aside revenue reserves in years of good income to cover a smooth payment of growing dividends in years when there are challenges to portfolio revenues;
· The financial position of the company, including the impact of foreseeable market movements on future earnings and cash flows. The board monitors the financial position in detail at each board meeting and at least twice each year it stress-tests the portfolio against significant market falls;
· In the current environment the board is reviewing earnings prospects, gearing and debt covenants on a continuous basis with the managers; and
· The liquidity of the portfolio, and the company's ability to pay dividends and to meet the budgeted expenses, including interest payments, of running the company.
Based on the results of this assessment, the directors have a reasonable expectation that the company will be able to continue in operation and meet its liabilities as they fall due over the five year period of their review.
The future
As we show in our page on the history of the trust on the inside cover of the annual report, the longevity of the trust and its importance to our investors continues to be a focus. The future attractiveness of Brunner as an investment proposition with relevance to a wide variety of investors is something we debate and evaluate continuously. We have to consider the investment environment and wider economic considerations, such as increasing inflationary pressures, and take soundings on the prospects for our markets, the returns on assets, economic growth and numerous other factors. Taking all this into account the board continues to believe that there is a place for Brunner in the range of options available to the investor and that the company remains viable for the five year period here under review.
Statement of Directors' Responsibilities
The directors are responsible for preparing the Statement of Directors' Responsibilitiesa and the financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have prepared the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland", and applicable law). Under company law directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
· select suitable accounting policies and then apply them consistently;
· make judgements and estimates that are reasonable and prudent;
· state whether applicable United Kingdom Accounting Standards comprising FRS102 have been followed, subject to any material departures disclosed and explained in the financial statements; and
· prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. The directors are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Statement under Disclosure Guidance and Transparency Rule 4.1.12
The directors, at the date of the approval of this Report, each confirm to the best of their knowledge that:
· the financial statements, prepared in accordance with United Kingdom Generally Accepted Accounting Practice, give a true and fair view of the assets, liabilities, financial position and profit of the company;
· the Strategic Report includes a fair review of the development and performance of the business and the position of the company, together with a description of the principal risks and uncertainties that they face; and
· the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the company's performance, business model and strategy.
This responsibility statement was approved by the board of directors on 15 February 2022 and signed on its behalf by:
Carolan Dobson
Chairman
PORTFOLIO BREAKDOWN as at 30 November 2021
Region | % of Invested Funds |
North America | 43.14 |
United Kingdom | 20.39 |
Continental Europe | 27.48 |
Pacific Basin | 6.55 |
Japan | 2.44 |
Total | 100.00 |
TOP 20 HOLDINGS as at 30 November 2021
Name |
Value (£) | % of Invested Funds | Sector |
Microsoft | 28,485,355 | 5.34 | Software & Computer Services |
UnitedHealth | 22,974,510 | 4.30 | Health Care Providers |
Roche Holdings | 15,968,854 | 2.99 | Pharmaceuticals & Biotechnology |
Taiwan Semiconductor | 15,046,865 | 2.82 | Technology Hardware & Equipment |
Visa | 15,013,192 | 2.81 | Industrial Support Services |
Accenture | 14,049,435 | 2.63 | Industrial Support Services |
The Cooper Companies | 13,654,061 | 2.56 | Medical Equipment & Services |
Munich Re | 13,225,377 | 2.47 | Non-Life Insurance |
Schneider Electric | 13,088,382 | 2.45 | Electronic & Electrical Equipment |
Estée Lauder | 13,055,028 | 2.45 | Personal Goods |
Novo Nordisk | 12,909,812 | 2.42 | Pharmaceuticals & Biotechnology |
Microchip Technology | 12,755,522 | 2.39 | Technology Hardware & Equipment |
AbbVie | 12,687,566 | 2.38 | Pharmaceuticals & Biotechnology |
Adidas | 12,625,185 | 2.35 | Personal Goods |
AMETEK | 10,219,343 | 1.91 | Electronic & Electrical Equipment |
Intuit | 9,799,786 | 1.84 | Software & Computer Services |
Partners Group | 9,737,165 | 1.82 | Investment Banking & Brokerage |
AIA | 9,550,104 | 1.79 | Life Insurance |
National Grid | 9,309,200 | 1.74 | Gas, Water & Multi-Utilities |
St. James's Place | 9,291,000 | 1.74 | Investment Banking & Brokerage |
273,445,742 | 51.20 | % of Total Invested Funds |
INCOME STATEMENT
for the year ended 30 November 2021
2021 | |||||
Revenue | Capital | Total Return | |||
£ | £ | £ | |||
(Note C) | |||||
Gains on investments at fair value through profit or loss | - | 82,406,614 | 82,406,614 | ||
Losses on foreign currencies | - | (24,280) | (24,280) | ||
Income | 11,487,165 | - | 11,487,165 | ||
Investment management fee | (666,745) | (1,555,738) | (2,222,483) | ||
Administration expenses | (723,214)) | (1,624) | (724,838) | ||
Profit before finance costs and taxation | 10,097,206 | 80,824,972 | 90,922,178 | ||
Finance costs: interest payable and similar charges | (269,638)) | (571,335) | (840,973)) | ||
Profit on ordinary activities before taxation | 9,827,568 | 80,253,637 | 90,081,205 | ||
Taxation | (1,138,517) | - | (1,138,517) | ||
Profit after taxation attributable to ordinary shareholders | 8,689,051 | 80,253,637 | 88,942,688 | ||
Earnings per ordinary share | |||||
(basic and diluted) (Note B) | 20.35p | 187.98p | 208.33p |
BALANCE SHEET
as at 30 November 2021
2021 £ | |||
Fixed assets | |||
Investments held at fair value through profit or loss | 533,923,937 | ||
Net current liabilities | (6,389,870) | ||
Total assets less current liabilities | 527,534,067 | ||
Creditors - amounts falling due after more than one year | (25,081,783) | ||
Total net assets | 502,452,284 | ||
Capital and reserves | |||
Called up share capital | 10,673,181 | ||
Capital redemption reserve | 5,326,819 | ||
Capital reserve | 471,302,177 | ||
Revenue reserve | 15,150,107 | ||
Equity shareholders' funds | 502,452,284 | ||
Net asset value per ordinary share | 1,176.9p |
INCOME STATEMENT
for the year ended 30 November 2020
2020 | |||||
Revenue | Capital | Total Return | |||
£ | £ | £ | |||
(Note C) | |||||
Gains on investments at fair value through profit or loss | - | 21,965,082 | 21,965,082 | ||
Losses on foreign currencies | - | (61,350) | (61,350) | ||
Income | 9,194,777 | - | 9,194,777 | ||
Investment management fee | (547,678) | (1,277,916) | (1,825,594) | ||
Administration expenses | (664,531) | (1,269) | (665,800) | ||
Profit before finance costs and taxation | 7,982,568 | 20,624,547 | 28,607,115, | ||
Finance costs: interest payable and similar charges | (277,709) | (590,008) | (867,717) | ||
Profit on ordinary activities before taxation | 7,704,859 | 20,034,539 | 27,739,398 | ||
Taxation | (889,117) | - | (889,117) | ||
Profit after taxation attributable to ordinary shareholders | 6,815,742 | 20,034,539 | 26,850,281 | ||
Earnings per ordinary share | |||||
(basic and diluted) (Note B) | 15.96p | 46.93p | 62.89p |
BALANCE SHEET
as at 30 November 2020
2020 £ | |||
Fixed assets | |||
Investments held at fair value through profit or loss | 445,115,537 | ||
Net current assets | 2,056,552 | ||
Total assets less current liabilities | 447,172,089 | ||
Creditors - amounts falling due after more than one year | (25,072,717) | ||
Total net assets | 422,099,372 | ||
Capital and reserves | |||
Called up share capital | 10,673,181 | ||
Capital redemption reserve | 5,326,819 | ||
Capital reserve | 391,048,540 | ||
Revenue reserve | 15,050,832 | ||
Equity shareholders' funds | 422,099,372 | ||
Net asset value per ordinary share | 988.7p |
STATEMENT OF CHANGES IN EQUITY
For the year ended 30 November 2021
Called up Share Capital | Capital Redemption Reserve | Capital Reserve | Revenue Reserve | Total | |
£ | £ | £ | £ | £ | |
Net assets at 1 December 2019 | 10,673,181 | 5,326,819 | 371,014,001 | 16,772,543 | 403,786,544 |
Revenue profit | - | - | - | 6,815,742 | 6,815,742 |
Dividends on ordinary shares | - | - | - | (8,538,545) | (8,538,545) |
Unclaimed Dividends | - | - | - | 1,092 | 1,092 |
Capital profit | - | - | 20,034,539 | - | 20,034,539 |
Net assets at 30 November 2020 | 10,673,181 | 5,326,819 | 391,048,540 | 15,050,832 | 422,099,372 |
Net assets at 1 December 2020 | 10,673,181 | 5,326,819 | 391,048,540 | 15,050,832 | 422,099,372 |
Revenue profit | - | - | - | 8,689,051 | 8,689,051 |
Dividends on ordinary shares | - | - | - | (8,589,776) | (8,589,776) |
Capital profit | - | - | 80,253,637 | - | 80,253,637 |
Net assets at 30 November 2021 | 10,673,181 | 5,326,819 | 471,302,177 | 15,150,107 | 502,452,284 |
CASH FLOW STATEMENT
For the year ended 30 November 2021
2021 | 2020 | ||
£ | £ | ||
Operating activities | |||
Profit before finance costs and taxation* | 90,922,178 | 28,607,115 | |
Less: Gains on investments held at fair value through profit or loss | (82,406,614) | (21,965,082) | |
Less: Overseas tax suffered | (1,138,517) 61,350 | (889,117) 61,350 | |
Add: Losses on foreign currency | 24,280 | 61,350 | |
Purchase of fixed asset investments held at fair value through profit or loss | (70,571,279) | (76,460,406) | |
Sales of fixed asset investments held at fair value through profit or loss | 64,919,529 | 87,195,302 | |
(Increase) Decrease in other receivables | (276,366) | 38,030 | |
Increase in other payables | 201,037 | 46,529 | |
Net cash inflow from operating activities | 1,674,248 | 16,633,721 | |
Financing activities | |||
Interest paid and similar charges | (804,243) | (878,777) | |
Proceeds from Revolving Credit Facility | 2,500,000 | - | |
Repayment of Revolving Credit Facility | - | (500,000) | |
Dividend paid on cumulative preference stock | (22,531) | (22,531) | |
Dividends paid on ordinary shares | (8,589,776) | (8,538,545) | |
Unclaimed dividends over 12 years | - | 1,092 | |
Net cash outflow from financing activities | (6,916,550) | (9,938,761) | |
(Decrease) increase in cash and cash equivalents | (5,242,302) | 6,694,960 | |
Cash and cash equivalents at the start of the year | 8,961,249 | 2,327,639 | |
Effect of foreign exchange rates | (24,280) | (61,350) | |
Cash and cash equivalents at the end of the year | 3,694,667 | 8,961,249 | |
Comprising: | |||
Cash at bank | 3,694,667 | 8,961,249 | |
* Cash inflow from dividends was £10,096,758 (2020 - £7,974,459) and cash inflow from interest was £nil (2020 - £2,139).
NOTES
Note A
The financial statements have been prepared under the historical cost convention, except for the revaluation of financial instruments held at fair value through profit or loss and in accordance with applicable United Kingdom law and UK Accounting Standards (UK GAAP), including Financial Reporting Standard 102 - the Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland (FRS 102), the requirements of the Companies Act 2006 and in line with the Statement of Recommended Practice "Financial Statements of Investment Trust Companies and Venture Capital Trusts" issued by the Association of Investment Companies (AIC SORP) in October 2019.
Note B
The earnings per ordinary share is based on a weighted number of shares 42,692,727 (2020 - 42,692,727) ordinary shares in issue.
Note C
The total return column of this statement is the profit and loss account of the company.
The supplementary revenue return and capital return columns are both prepared under the guidance published by the Association of Investment Companies.
All revenue and capital items in the Income Statement derive from continuing operations. No operations were acquired or discontinued in the year.
The net profit for the year disclosed in the Income Statement represents the company's total comprehensive income.
Transaction costs and stamp duty on purchases amounted to £199,265 (2020 - £257,091) and transaction costs on sales amounted to £16,862 (2020 - £26,139).
Note D
Investments - As the company's business is investing in financial assets with a view to profiting from their total return in the form of increases in fair value, financial assets are designated as held at fair value through profit or loss in accordance with FRS 102 Section 11: 'Basic Financial Instruments' and Section 12: 'Other Financial Instruments'. The company manages and evaluates the performance of these investments on a fair value basis in accordance with its investment strategy, and information about investments is provided on this basis to the board.
Note E
Dividends on Ordinary Shares
2021 | 2020 | |||
£ | £ | |||
Dividends paid on ordinary shares: | ||||
Third interim dividend - 4.67p paid 10 December 2020 (2019 - 4.66p) | 1,993,750 | 1,989,481 | ||
Final dividend - 6.05p paid 1 April 2021 (2020 - 6.00p) | 2,582,910 | 2,561,564 | ||
First interim dividend - 4.70p paid 22 July 2021 (2020 - 4.67p) | 2,006,558 | 1,993,750 | ||
Second interim dividend - 4.70p paid 16 September 2021 (2020 - 4.67p) | 2,006,558 | 1,993,750 | ||
8,589,776 | 8,538,545 |
Dividends payable at the year end are not recognised as a liability under FRS 102 Section 32 'Events After the End of the Reporting Period' (see page 88 - Statement of Accounting Policies). Details of these dividends are set out below.
2021 | 2020 |
| |||
£ | £ |
| |||
| |||||
Third interim dividend - 4.70p paid 10 December 2021 (2020 - 4.67p) | 2,006,558 | 1,993,750 |
| ||
Final proposed dividend - 6.05p payable 1 April 2022 (2021 - 6.05p) | 2,582,910 | 2,582,910 | |||
4,589,468 | 4,576,660 | ||||
The proposed final dividend accrued is based on the number of shares in issue at the year end. However, the dividend payable will be based on the numbers of shares in issue on the record date and will reflect any changes in the share capital between the year end and the record date.
All dividends disclosed in the tables above have been paid or are payable from the revenue reserves.
Note F
The financial information for the year ended 30 November 2021 has been extracted from the statutory accounts for that year. The auditor's report on those accounts was unqualified and did not contain a statement under either section 498(2) or (3) of the Companies Act 2006. The annual financial report has not yet been delivered to the registrar of companies.
The financial information for the year ended 30 November 2020 has been extracted from the statutory accounts for that year which have been delivered to the registrar of companies. The auditor's report on those accounts was unqualified and did not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006.
The full annual financial report will shortly be available to be viewed on or downloaded from the company's website at www.brunner.co.uk. Neither the contents of the company's website nor the contents of any website accessible from hyperlinks on the company's website (or any other website) is incorporated into, or forms part of this announcement.