Final Results
Brunner Investment Trust PLC
26 January 2007
For immediate release 26 January 2007
THE BRUNNER INVESTMENT TRUST PLC
ANNOUNCEMENT OF PRELIMINARY RESULTS
For the year ended 30 November 2006
Highlights
• Share price up by 12.1%.
• Net dividends of 9.70p (2005: 8.80p), an increase of 10.2%.
• Net asset value per ordinary share up 9.7% compared with a benchmark
return of 9.8%.
NAV and benchmark returns are capital only.
Net Asset Value
The net asset value per Ordinary Share at 30 November 2006 was 495.7p compared
with 451.7p (restated) at 30 November 2005, an increase of 9.7%. Over the same
period the benchmark index (60% FTSE All-Share Index, and 40% FTSE World Index,
ex-UK in sterling) increased by 9.8%.
Dividend
The Board recommends a final distribution of 5.70p to be payable on 23 March
2007 to shareholders on the register at the close of business on 23 February
2006, making a total distribution of 9.70p per share for the year ended 30
November 2006, an increase of 10.2%.
Review
The financial year has seen good returns from most world equity markets although
not on the scale of the previous year. Our net asset value per share increased
9.7%, close to the composite benchmark return of 9.8%. Over the last two years,
during which we adopted a more focused approach to our stock selection, the
cumulative return has been 34.3% compared with the benchmark return of 30.9%
Our earnings have increased substantially this year, supported by good dividend
increases across the board and a number of special dividends arising from our
investments in the resources and mining sector, where trading has been
exceptionally strong in 2006. As a consequence, we are proposing an increase in
our total dividend for the year from 8.8p to 9.7p, a rise of 10.2%.
It has also been a volatile period for equities. In the early summer we saw
significant weakness in markets when, for the first time in many years, concerns
emerged that the relatively benign inflationary environment we have enjoyed in
the last decade might be about to end. In the event, a sharp setback in the oil
price and a more subdued outlook for US growth have combined with more
reassuring US inflation figures to calm nerves.
A key driver of world equity markets has been the continuing merger and
acquisition activity. With interest rates still relatively low compared to the
cash return on investment available from equities, the financial attractions of
debt financed deals have remained persuasive. Although some of the largest
transactions have been in the US, in the private hospital and real estate
sectors, this period also saw the takeover of a number of well established UK
businesses including P&O, British Airports Authority and BOC. The European
utilities sector has also seen widespread corporate activity this year.
In most cases, earnings growth has exceeded the capital return on stock markets
in 2006 so that, although in absolute terms shares have made good progress,
valuations relative to underlying earnings remain attractive.
The economic outlook will, to a large degree, be determined by how the current
downturn in US housing impacts on consumer expenditure. Although it remains too
early to be certain, our Managers believe that the current slowdown in the US
will not develop into a full blown recession. Elsewhere, the picture looks
brighter, with the prospect of better economic growth in Germany and Japan after
many years of subdued activity. Indeed, a more balanced profile to world
economic activity, with less reliance on the US consumer, should be a positive
long term feature. Coupled with continuing progress in China, the outlook for
economic growth overall in 2007 currently appears reasonable.
The prospect of further interest rate rises in Europe, Japan and the UK may
dampen enthusiasm for stock markets in the short term, however, and the
potential for currency instability to disrupt world trade remains. In addition,
the increasing levels of bank borrowings now evident in private equity
transactions, and among consumers in the Anglo Saxon economies, mean that any
unforeseen shocks to the system will make markets and economies more vulnerable
as a consequence.
Share Buy Backs
We have maintained our active approach to buy backs and have purchased 1,326,000
shares for cancellation during the course of the financial year and a further
220,000 since the year end. Our objective remains to achieve a further
reduction in the share price discount to Net Asset Value, and buy backs have
again modestly enhanced returns over the last twelve months.
The Board will recommend to shareholders that the Company take renewed powers to
buy back its Ordinary Shares. Full details will be sent to shareholders with
the forthcoming Annual Report and Accounts.
Annual General Meeting
The Annual General Meeting of the Company will be held on Thursday 22 March 2007
at 12.00 noon.
Keith Percy
Chairman
155 Bishopsgate
London, EC2M 3AD
Unaudited preliminary results for the year ended 30 November 2006 were approved
for immediate release as undernoted:
RESULTS
INCOME STATEMENT
for the year ended 30 November 2006
2006
£'000s £'000s £'000s
Revenue Capital Total Return
(Note 2)
Net gains on investments at fair value - 24,248 24,248
Net losses on foreign currency - (2) (2)
Income 8,023 - 8,023
Investment management fee (464) (1,083) (1,547)
Expenses of administration (333) (16) (349)
Net return before finance costs and taxation 7,226 23,147 30,373
Finance costs: interest payable and similar charges (1,509) (3,276) (4,785)
Return on ordinary activities before taxation 5,717 19,871 25,588
Taxation (445) 259 (186)
Return attributable to Ordinary Shareholders 5,272 20,130 25,402
Return per Ordinary Share (Note 1) 10.72p 40.94p 51.66p
(basic and diluted)
BALANCE SHEET
as at 30 November 2006
2006
£'000s
Investments held at fair value through profit or loss 278,953
Net Current Assets 14,334
Total Assets less Current Liabilities 293,287
Creditors : Amounts falling due after one year (52,190)
Total Net Assets 241,097
Called up Share Capital 12,159
Capital Redemption Reserve 3,841
Capital Reserves: Realised 175,040
Unrealised 38,899
213,939
Revenue Reserve 11,158
Equity Shareholders' Funds 241,097
Net Asset Value per Ordinary Share 495.7p
The Net Asset Value is based on 48,636,838 Ordinary Shares in issue
Unaudited preliminary results for the year ended 30 November 2005 were approved
for release as undernoted:
RESULTS
INCOME STATEMENT
for the year ended 30 November 2005
2005
£'000s £'000s £'000s
Revenue Capital Total Return
(restated) (restated)
(Note 2)
Net gains on investments at fair value - 43,599 43,599
Net losses on foreign currency - - -
Income 7,365 - 7,365
Investment management fee (410) (956) (1,366)
Expenses of administration (301) (16) (317)
Net return before finance costs and taxation 6,654 42,627 49,281
Finance costs: interest payable and similar charges (1,419) (3,203) (4,622)
Return on ordinary activities before taxation 5,235 39,424 44,659
Taxation (505) 289 (216)
Return attributable to Ordinary Shareholders 4,730 39,713 44,443
Return per Ordinary Share (Note 1) 9.21p 77.36p 86.57p
(basic and diluted)
BALANCE SHEET
as at 30 November 2005
2005
£'000s
(restated)
Investments held at fair value through profit or loss 260,383
Net Current Assets 17,463
Total Assets less Current Liabilities 277,846
Creditors : Amounts falling due after one year (52,147)
Total Net Assets 225,699
Called up Share Capital 12,491
Capital Redemption Reserve 3,509
Capital Reserves: Realised 164,055
Unrealised 35,226
199,281
Revenue Reserve 10,418
Equity Shareholders' Funds 225,699
Net Asset Value per Ordinary Share
451.7p
The Net Asset Value is based on 49,962,838 Ordinary Shares in issue
Unaudited preliminary results for the year ended 30 November 2006 were approved
for immediate release as undernoted:
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUND
For the year ended 30 November 2006
Called up Preference Capital Capital Capital
Share Share Redemption Reserve Reserve
Capital Capital Reserve Realised Unrealised Revenue
Reserve
Total
£'000s £'000s £'000s £'000s £'000s £'000s £'000s
Net Assets at 30 November 2004 as 13,102 450 2,898 159,387 7,931 7,498 191,266
previously stated
Reclassification of 5% Cumulative - (450) - - - - (450)
Preference Stock as a long term
creditor
Dividends on Ordinary Shares not - - - - - 2,411 2,411
recognised as a current liability
Net Assets at 30 November 2004 13,102 - 2,898 159,387 7,931 9,909 193,227
(restated)
Revenue Return - - - - - 4,730 4,730
Shares repurchased during the year (611) - 611 (7,750) - - (7,750)
Dividends on Ordinary Shares - - - - - (4,221) (4,221)
Capital Return - - - 12,418 27,295 - 39,713
Net Assets at 30 November 2005 12,491 - 3,509 164,055 35,226 10,418 225,699
(restated)
Net Assets at 30 November 2005 as 12,491 450 3,509 164,055 35,226 7,820 223,551
previously stated
Reclassification of 5% Cumulative - (450) - - - - (450)
Preference Stock as a long term
creditor
Dividends on Ordinary Shares not - - - - - 2,598 2,598
recognised as a current liability
Net Assets at 30 November 2005 12,491 - 3,509 164,055 35,226 10,418 225,699
(restated)
Adjustment to record investments at - - - - (216) - (216)
bid value
Revenue Return - - - - - 5,272 5,272
Shares repurchased during the year (332) - 332 (5,256) - - (5,256)
Dividends on Ordinary Shares - - - - - (4,532) (4,532)
Capital Return - - - 16,241 3,889 - 20,130
Net Assets at 30 November 2006 12,159 - 3,841 175,040 38,899 11,158 241,097
Unaudited preliminary results for the year ended 30 November 2006 were approved
for immediate release as undernoted:
CASH FLOW STATEMENT
For the year ended 30 November 2006
2006 2006 2005
£'000s £'000s £'000s
Net cash inflow from operating activities 6,506 6,037
Servicing of Finance
Interest paid (4,720) (4,664)
Dividends paid on Preference Stock (22) (22)
Net cash outflow from servicing of finance (4,742) (4,686)
Financial Investment
Purchase of fixed asset investments (154,031) (181,836)
Sale of fixed asset investments 160,776 189,667
Net cash inflow from financial investments 6,745 7,831
Equity dividends paid (4,532) (4,221)
Net cash inflow before financing 3,977 4,961
Financing
Repurchase of Ordinary Shares for cancellation (5,254) (7,750)
Decrease in cash (1,277) (2,789)
Note 1
The return per Ordinary Share is based on a weighted average number of shares in
issue of 49,167,696 (30 November 2005: 51,334,348).
Note 2
The total column of this statement is the profit and loss of the Company.
All revenue and capital items derive from continuing operations. No operations
were acquired or discontinued in the year.
A Statement of Total Recognised Gains and Losses is not required as all gains
and losses of the Company have been reflected in the Income Statement.
Included in the cost of investments are transaction costs on purchases which
amounted to £511,656 (30 November 2005: £613,127) and transaction costs on sales
which amounted to £256,132 (30 November 2005: £339,776).
Note 3
Investments are designated as held at fair value through profit or loss in
accordance with FRS 26 'Financial Instruments: Measurement'. Listed investments
are valued at bid market prices. This represents a change in accounting policy.
However, in accordance with the exemption conferred by paragraph 108D of FRS
26, comparatives have not been restated. In prior periods listed investments
were valued at mid market prices. As a consequence the adoption of bid prices
on 1 December 2005 decreased the value of listed investments by £215,910 to
£260,167,513.
Note 4
In accordance with FRS21 'Events After the Balance Sheet Date' the final
dividend payable on Ordinary Shares is recognised as a liability when approved
by shareholders. Interim dividends are recognised only when paid. This is a
change in accounting policy and results in a restatement of the prior year
creditors and a consequential increase in the prior year Net Asset Value.
Dividends paid on Ordinary Shares in respect of earnings for each year are as
follows:
Year to Year to
30 November 2006 30 November 2005
£'000s £'000s
Final dividend 5.20p paid 24 March 2006 (2005 - 4.60p) 2,576 2,407
Interim dividend 4.00p paid 24 August 2006 (2005 - 3.60p) 1,956 1,814
4,532 4,221
The above dividend payments are after the adjustment for dividends proposed but
not paid following share buy backs.
Dividends payable at the period end are not recognised as a liability under FRS
21 'Events after the Balance Sheet Date'. Details of these dividends are set
out below.
Year to Year to
30 November 2006 30 November 2005
£'000s £'000s
Final dividend 5.70p payable 23 March 2007 (2006 - 5.20p) 2,772 2,598
The interim and final dividend above is based on the number of shares in issue
at the period end. However, the dividend payable will be based on the number of
shares in issue on the record date and will reflect any purchases or
cancellations of shares by the Company settled subsequent to the period end.
Note 5
Preference Stock - Following the introduction of FRS 25 'Financial Instruments:
Disclosure and Presentation', the 5% Cumulative Preference Stock is now
classified as a liability as the rights of the stockholders to receive dividend
payments are not calculated by reference to the Company's profits. This is a
change of accounting policy and prior year net assets have been restated
accordingly.
Note 6
Restatement of opening balances
As previously Adjustment Restated
stated
30 November 2004 30 November 2004
£'000s £'000s £'000s
Fixed Assets Investments 228,345 - 228,345
Net Current Assets 14,683 2,411 1 17,094
Total Assets less Current Liabilities 243,028 2,411 245,439
Less: Creditors - amounts falling due
after one year (51,762) (450) 2 (52,212)
Total Net Assets 191,266 1,961 193,227
Capital and Reserves
Called up Share Capital:
Ordinary 13,102 - 13,102
Preference 450 (450) 2 -
Capital Redemption Reserve 2,898 - 2,898
Capital Reserves: Realised 159,387 - 159,387
Unrealised 7,931 - 7,931
Revenue Reserve 7,498 2,411 1 9,909
Shareholders' Funds 191,266 1,961 193,227
Net Asset Value per Ordinary Share 364.1p 4.6p 368.7p
As previously Adjustment Restated
stated
30 November 2005 30 November 2005
£'000s £'000s £'000s
Fixed Assets Investments 260,383 - 260,383
Net Current Assets 14,865 2,598 1 17,463
Total Assets less Current Liabilities 275,248 2,598 277,846
Less: Creditors - amounts falling due
after one year (51,697) (450) 2 (52,147)
Total Net Assets 223,551 2,148 225,699
Capital and Reserves
Called up Share Capital:
Ordinary 12,491 - 12,491
Preference 450 (450) 2 -
Capital Redemption Reserve 3,509 - 3,509
Capital Reserves: Realised 164,055 - 164,055
Unrealised 35,226 - 35,226
Revenue Reserve 7,820 2,598 1 10,418
Shareholders' Funds 223,551 2,148 225,699
Net Asset Value per Ordinary Share 446.5p 5.2p 451.7p
1 Represents the effect of not recognising the final
dividend (FRS 21 'Events after the Balance Sheet Date').
2 Represents the effect of recognising the 5% Cumulative Preference
Stock holding as a creditor due after more than one year and not non-equity
Shareholder funds (FRS 25 'Financial Instruments: Disclosure and Presentation').
Note 7
The financial information set out in this announcement does not constitute the
Company's statutory accounts for the years ended 30 November 2006 or 30th
November 2005. The financial information for the year ended 30 November 2005
has been extracted from the statutory accounts for that year which have been
delivered to the Registrar of Companies and this information has now been
restated to reflect changes in certain accounting policies (see Note 6). The
auditors' report on those accounts was unqualified before this restatement and
did not contain a statement under either Section 237(2) or Section 237(3) of the
Companies Act 1985. The statutory accounts for the year ended 30 November 2006
will be finalised on the basis of the financial information presented by the
directors in this preliminary announcement and will be delivered to the
Registrar of Companies following the Company's Annual General Meeting.
Note 8
The increase in the Company's benchmark index of 9.8% over the year to 30
November 2006 is composed as follows:
60% FTSE All-Share Index 13.82%
40% FTSE World Index, ex-UK in sterling 3.97%
For further information, please contact:
RCM (UK) Limited
Simon White
Head of Investment Trusts
Tel: 020 7065 1539
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