Final Results
Brunner Investment Trust PLC
28 January 2008
For immediate release
28 January 2008
THE BRUNNER INVESTMENT TRUST PLC
ANNOUNCEMENT OF PRELIMINARY RESULTS
For the year ended 30 November 2007
Highlights
• Net asset value per ordinary share up 15.6% compared with a benchmark
return of 6.3%.
• Share price up by 13.7%.
• Net dividends of 10.70 p (2006: 9.70p), an increase of 10.3%.
• Proposed change in benchmark to 50% FTSE All Share and 50% FTSE World
Index ex UK.
NAV and benchmark returns are capital only.
Net Asset Value
The net asset value per Ordinary Share at 30 November 2007 was 573.2p compared
with 495.7p at 30 November 2006, an increase of 15.6%. Over the same period the
benchmark index (60% FTSE All-Share Index, and 40% FTSE World Index, ex-UK in
sterling) increased by 6.3%.
Dividend
The Board recommends a final distribution of 6.30p to be payable on 25 March
2008 to shareholders on the register at the close of business on 22 February
2008, making a total distribution of 10.70 p per share for the year ended 30
November 2007, an increase of 10.3%.
Review
I am delighted to report a year of strong returns, both in absolute terms and
relative to the benchmark. During the year, our net asset value per share rose
by 15.6% to 573.2p, well ahead of our benchmark index of 6.3%. Your managers
have correctly anticipated the most important investment themes in 2007, which
was a year characterised by a wide divergence of performance between different
industrial sectors. It has also been a good year for income and earnings per
ordinary share increased by 20.0%. With a proposed final dividend of 6.30p,
total distributions to shareholders will be up 10.3% in the current financial
year.
The outlook for world markets and economic growth in 2008 is clouded by
continuing uncertainty in global credit markets. Until investors are confident
that asset writedowns and recapitalisations in the financial sector have peaked,
markets are likely to be characterised by further volatility and risk aversion.
It now seems clear that the financial crisis has spilled over into economic
activity in the major developed economies, with evidence of deteriorating
consumer confidence and falling property prices. This may be expected to have
some continuing impact on company earnings, particularly if banks react to their
problems by significantly restricting credit.
Valuations are now attractive by almost all historic measures. These low
valuations will be brought into sharp relief if, as we expect, interest rates
are cut to stabilise the financial system and revive economic activity.
Although it may be difficult to envisage amid the prevailing uncertainty, stock
markets are likely to anticipate brighter prospects as the year progresses,
given some stabilisation of the background and so long as corporate
profitability is not unduly affected.
Share Buy Backs
We have maintained our policy of repurchasing shares for cancellation as and
when attractive opportunities arise and during the course of the year 1,211,723
shares were repurchased for cancellation, and a further 110,000 shares have been
repurchased since the year end. This policy, as well as enhancing the net asset
value per share, has resulted in lower volatility in the share price discount to
net assets than would otherwise have been the case.
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.
Benchmark
For some time now your Board has been considering whether to increase the
international component of the company's benchmark and we are now recommending
that shareholders approve the adoption of a composite benchmark at the
forthcoming Annual General Meeting which comprises 50% FTSE All Share and 50%
FTSE World Index ex UK, a change from the current 60:40 split.
Brunner follows a 'bottom-up' investment strategy, meaning that the portfolio is
assembled, in the first instance, on the basis of the attractiveness and quality
of the underlying companies, and not by reference to their stock market listing.
Backed by RCM's Grassroots(R) research process, this investment approach has
worked well and the shift to a greater proportion overseas builds on this
success. Indeed as capital markets have become increasingly global, the
location of a company's stockmarket listing often bears little relation to its
principal operations or the geographical source of its sales.
Dividend distributions on many overseas markets have improved markedly in recent
years so that the income penalty historically suffered through adopting an
overseas investment policy is lower than in the past.
We therefore believe that our proposed new benchmark better reflects these
recent trends, builds on the strength of our fund mangers and should enhance the
potential for shareholder returns in the medium term.
The proposed change in benchmark will be put before shareholders at the
company's AGM on 20 March.
Annual General Meeting
The Annual General Meeting of the Company will be held on Thursday 20 March 2008
at 12.00 noon.
Keith Percy
Chairman
155 Bishopsgate
London, EC2M 3AD
Unaudited preliminary results for the year ended 30 November 2007 were approved
for immediate release as undernoted:
RESULTS
INCOME STATEMENT
for the year ended 30 November 2007
2007
£'000s £'000s £'000s
Revenue Capital Total Return
(Note 2)
Net gains on investments at fair value - 38,714 38,714
Net losses on foreign currency - (2) (2)
Income 8,926 - 8,926
Investment management fee (461) (1,077) (1,538)
Administration expenses (304) (12) (316)
Net return before finance costs and taxation 8,161 37,623 45,784
Finance costs: interest payable and similar charges (1,381) (3,112) (4,493)
Net return on ordinary activities before taxation 6,780 34,511 41,291
Taxation (596) 355 (241)
Net return attributable to Ordinary Shareholders 6,184 34,866 41,050
Return per Ordinary Share (Note 1) 12.88p 72.62p 85.50p
(basic and diluted)
BALANCE SHEET
as at 30 November 2007
2007
£'000s
Investments held at fair value through profit or loss 306,774
Net Current Assets 17,034
Total Assets less Current Liabilities 323,808
Creditors : Amounts falling due after more than one year (51,989)
Total Net Assets 271,819
Called up Share Capital 11,856
Capital Redemption Reserve 4,144
Capital Reserves: Realised 197,212
Unrealised 46,113
243,325
Revenue Reserve 12,494
Equity Shareholders' Funds 271,819
Net Asset Value per Ordinary Share 573.2p
The Net Asset Value is based on 47,425,115 Ordinary Shares in issue
Unaudited preliminary results for the year ended 30 November 2006 were 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 8,024 - 8,024
Investment management fee (464) (1,083) (1,547)
Administration expenses (324) (16) (340)
Net return before finance costs and taxation 7,236 23,147 30,383
Finance costs: interest payable and similar charges (1,509) (3,276) (4,785)
Net return on ordinary activities before taxation 5,727 19,871 25,598
Taxation (448) 262 (186)
Net return attributable to Ordinary Shareholders 5,279 20,133 25,412
Return per Ordinary Share (Note 1) 10.73p 40.95p 51.68p
(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 14,344
Total Assets less Current Liabilities 293,297
Creditors : Amounts falling due after more than one year (52,190)
Total Net Assets 241,107
Called up Share Capital 12,159
Capital Redemption Reserve 3,841
Capital Reserves: Realised 175,043
Unrealised 38,899
213,942
Revenue Reserve 11,165
Equity Shareholders' Funds 241,107
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 year ended 30 November 2007 were approved for
immediate release as undernoted:
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
For the year ended 30 November 2007
Called up Capital Capital Capital
Share Redemption Reserve Reserve Revenue
Capital Reserve Realised Unrealised Reserve Total
£'000s £'000s £'000s £'000s £'000s £'000s
Net Assets at 30 November 2005 12,491 3,509 164,055 35,010 10,418 225,483
Revenue Return - - - - 5,279 5,279
Shares repurchased during the year (332) 332 (5,256) - - (5,256)
Dividends on Ordinary Shares - - - - (4,532) (4,532)
Capital Return - - 16,244 3,889 - 20,133
Net Assets at 30 November 2006 12,159 3,841 175,043 38,899 11,165 241,107
Net Assets at 30 November 2006 12,159 3,841 175,043 38,899 11,165 241,107
Revenue Return - - - - 6,184 6,184
Shares repurchased during the year (303) 303 (5,483) - - (5,483)
Dividends on Ordinary Shares - - - - (4,855) (4,855)
Capital Return - - 27,652 7,214 - 34,866
Net Assets at 30 November 2007 11,856 4,144 197,212 46,113 12,494 271,819
Unaudited preliminary results for the year ended 30 November 2007 were approved
for immediate release as undernoted:
CASH FLOW STATEMENT
For the year ended 30 November 2007
2007 2007 2006
£'000s £'000s £'000s
Net cash inflow from operating activities 8,181 6,506
Servicing of Finance
Interest paid (4,671) (4,720)
Dividends paid on Preference Stock (22) (22)
Net cash outflow from servicing of finance (4,693) (4,742)
Capital expenditure and financial investment
Purchase of fixed asset investments (168,006) (154,031)
Sale of fixed asset investments 178,671 160,776
Net cash inflow from capital expenditure and 10,665 6,745
financial investments
Equity dividends paid (4,855) (4,532)
Net cash inflow before financing 9,298 3,977
Financing
Repurchase of Ordinary Shares for cancellation (5,483) (5,254)
Increase (Decrease) in cash 3,815 (1,277)
Note 1
The return per Ordinary Share is based on a weighted average number of shares in
issue of 48,010,277 (30 November 2006: 49,167,696).
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 £593,260 (30 November 2006: £511,656) and transaction costs on sales
which amounted to £211,890 (30 November 2006: £256,132).
Note 3
Investments are designated as held at fair value through profit or loss in
accordance with FRS 26 'Financial Instruments: Recognition and Measurement'.
Listed investments are valued at bid market prices.
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.
Dividends paid on Ordinary Shares in respect of earnings for each year are as
follows:
Year to Year to
30 November 2007 30 November 2006
£'000s £'000s
Final dividend 5.70p paid 23 March 2007 (2006 - 5.20p) 2,753 2,576
Interim dividend 4.40p paid 23 August 2007 (2006 - 4.00p) 2,102 1,956
4,855 4,532
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 2007 30 November 2006
£'000s £'000s
Final dividend 6.3p payable 25 March 2008 (2007 - 5.70p) 2,988 2,772
The proposed and final dividend above is based on the number of shares in issue
at the year 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 year end.
Note 5
The announcement is prepared on the basis of the accounting policies as stated
in the previous year's financial statements. The financial information set out
in this announcement does not constitute the Company's statutory accounts for
the years ended 30 November 2007 or 30 November 2006. The financial information
for the year ended 30 November 2006 has been extracted from the statutory
accounts for that year which have been delivered to the Registrar of Companies.
The auditors' report on those accounts was unqualified 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 2007 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. The audit report on
the full financial statements has yet to be signed.
Note 6
The increase in the Company's benchmark index of 6.3% over the year to 30
November 2007 is composed as follows:
60% FTSE All-Share Index 5.2%
40% FTSE World Index, ex-UK in sterling 8.0%
Note 7
The annual report will be sent to shareholders in mid February 2008 and will be
available to members of the public from the Company's registered office at 155
Bishopsgate, London, EC2M 3AD.
For further information, please contact:
RCM (UK) Limited
Simon White
Head of Investment Trusts
Tel: 020 7065 1539
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