Interim Results
Brunner Investment Trust PLC
12 July 2006
For immediate release 12 July 2006
THE BRUNNER INVESTMENT TRUST PLC
ANNOUNCEMENT OF INTERIM RESULTS
For the six months ended 31 May 2006
Highlights
• Earnings per ordinary share of 6.05p, up 29.6%.
• Net Asset Value per ordinary share of 470.8p, up 4.2% in the period, versus
3.4% for the benchmark index.
• Dividend per share 4.0p.
Interim Results
The Trust outperformed its benchmark in the first half of its financial year
with the Net Asset Value increasing by 4.2% compared with an increase in the
composite benchmark of 3.4%.
Net Asset Value
A summary of the results for the six months ended 31 May 2006 is set out below.
The Net Asset Value attributable to each Ordinary Share at 31 May 2006 was
470.8p. This compares with 451.7p at 30 November 2005, an increase of 4.2% over
the period. The capital return on the benchmark index (60% FTSE All-Share, 40%
FTSE World Index- £) was 3.4% over the period.
Earnings
Earnings in the six months to 31 May 2006 were 6.05p per Ordinary Share (2005:
4.67p).
Interim Dividend
The Board has declared an interim dividend of 4.0p net (2005: 3.6p) per Ordinary
Share payable on 24 August 2006 to holders on the Register of Members at the
close of business on 28 July 2006.
Share Buy Backs
During the period under review the Company purchased 893,500 Ordinary Shares for
cancellation. In the period since 31 May 2006, a further 62,500 Ordinary Shares
have been purchased for cancellation.
Investment Review
The first half of the financial year was set against a backdrop of increasing
volatility within global equity markets and latterly a period of profit-taking
as investors shifted their focus towards more defensive sectors. Adverse
inflation data in the US triggered the initial weakness in May, before a series
of global sell-offs became self sustaining as investors reflected on concerns
that inflation was more of a threat than many commentators had previously
thought. In May, the US Fed raised interest rates for a sixteenth consecutive
time - a move which had been widely anticipated but which was accompanied by the
comment that 'further policy firming may yet be needed to address inflation
risks'. Subsequently, in June, the Federal Open Market Committee raised its
target for the Federal Funds Rate by a further 25 basis points to 5.25%.
Recovery in Europe remains on track and the European Central Bank, having raised
its benchmark interest rate for the first time in five years in December, raised
the rate a further 0.25% to 2.5% in March, as an improving economic sentiment
survey indicated positive growth momentum. In Germany, the IFO Business Climate
Index fell in May, although this was after having risen continuously for the 5
previous months. In France, consumer spending remained strong despite weak
consumer confidence data and a subdued job market. In the UK, economic growth
is currently at the lower range of trend growth, suggesting spare capacity has
not been fully utilised. Nonetheless expectations are for a further modest rise
in interest rates later this year. Consumer spending remains on an improving
trend, with the Confederation of British Industry noting its gauge of retail
sales for April was at its highest level since February 2005. In Japan, the
economy remains on an improving trend, although monetary policy tightening has
contributed to disappointing returns from Japanese equities this year. Elsewhere
in the Far East, continuing growth in China and intra-regional trade has
underpinned company profits in the region.
In this period, performance came from a diversified selection of stocks with
significant contributions from Man Group, the UK hedge fund group, which
increased by 32%, and Hong Kong Exchange, the operator of the main financial
exchange in Hong Kong, which was up by 74%. Vallourec, a French steel producer
specialising in the supply of piping for use in the oil sector, and Atlas Copco,
in the Industrials sector, were also strong performers. Shares in the mining
companies, Rio Tinto and BHP Billiton, also contributed to the performance,
despite profit-taking towards the end of the period. On a less positive note,
Carnival was disappointing with difficult trading and high oil prices affecting
sentiment. This holding has now been sold.
Outlook
Given the prevailing market environment we continue to monitor closely the risks
inherent within the portfolio, which remains diversified across major sectors
and regions. Despite recent market movements, we believe that we remain in an
environment where equities in general remain reasonably valued and that
inflationary concerns are unlikely to prompt a disproportionate and potentially
destabilising increase in interest rates. Whilst we expect that volatility will
remain within markets in the near term, and that we will see some further modest
tightening of monetary policy in most regions, equities have the capacity to
deliver another positive year for investors in 2006.
Keith Percy
Chairman
Enquiries:
For further information, please contact:
RCM (UK) Limited
Simon White
Head of Investment Trusts
Tel: 020 7065 1539
SUMMARY OF UNAUDITED RESULTS
INCOME STATEMENT
for the six months ended 31 May 2006
Revenue Capital Total
£'000s £'000s £'000s
(Note 2)
Net gains on investments at fair value - 10,648 10,648
Income from Investments 4,020 - 4,020
Other Income 397 - 397
Investment management fee (230) (537) (767)
Expenses of administration (199) (7) (206)
Net Return before finance costs and taxation 3,988 10,104 14,092
Finance costs: interest payable and similar charges (714) (1,601) (2,315)
Return on ordinary activities before taxation 3,274 8,503 11,777
Taxation
Overseas taxation (117) - (117)
UK taxation (163) 163 -
Return attributable to Ordinary Shareholders 2,994 8,666 11,660
Return per Ordinary Share (Note 1)
(basic and diluted) 6.05p 17.51p 23.56p
BALANCE SHEET
as at 31 May 2006
£'000s
Investments held at fair value through profit or loss 273,023
Net Current Assets 10,124
Total Assets less Current Liabilities 283,147
Creditors-Amounts falling due after one year (52,115)
Total Net Assets 231,032
Called Up Share Capital 12,267
Capital Redemption Reserve 3,733
Capital Reserves: Realised 172,129
Unrealised 32,066
Revenue Reserve 10,837
Shareholders' Funds 231,032
Net Asset Value per Ordinary Share 470.8p
The net asset value is based on 49,069,338 Ordinary Shares in issue
SUMMARY OF UNAUDITED RESULTS
INCOME STATEMENT
for the six months ended 31 May 2005
Revenue Capital Total
(restated) (restated) (restated)
£'000s £'000s £'000s
(Note 2)
Net gains on investments at fair value - 11,484 11,484
Income from Investments 3,472 - 3,472
Other Income 402 - 402
Investment management fee (197) (458) (655)
Expenses of administration (210) - (210)
Net Return before finance costs and taxation 3,467 11,026 14,493
Finance costs: interest payable and similar charges (707) (1,598) (2,305)
Return on ordinary activities before taxation 2,760 9,428 12,188
Taxation
Overseas taxation (133) - (133)
UK taxation (190) 190 -
Return attributable to Ordinary Shareholders 2,437 9,618 12,055
Return per Ordinary Share (Note 1)
(basic and diluted) 4.67p 18.44p 23.11p
BALANCE SHEET
as at 31 May 2005
£'000s
(restated)
Investments held at fair value through profit or loss 236,336
Net Current Assets 16,477
Total Assets less Current Liabilities 252,813
Creditors-Amounts falling due after one year (52,180)
Total Net Assets 200,633
Called Up Share Capital 12,912
Capital Redemption Reserve 3,088
Capital Reserves: Realised 160,736
Unrealised 13,959
Revenue Reserve 9,938
Shareholders' Funds 200,633
Net Asset Value per Ordinary Share 388.0p
The net asset value is based on 51,708,416 Ordinary Shares in issue
SUMMARY OF UNAUDITED RESULTS
INCOME STATEMENT
for the year ended 30 November 2005
Revenue Capital Total
(restated) (restated) (restated)
£'000s £'000s £'000s
(Note 2)
Net gains on investments at fair value - 43,599 43,599
Income from Investments 6,566 - 6,566
Other Income 801 - 801
Investment management fee (410) (956) (1,366)
Expenses of administration (301) (16) (317)
Net Return before finance costs and taxation 6,656 42,627 49,283
Finance costs: interest payable and similar charges (1,419) (3,203) (4,622)
Return on ordinary activities before taxation 5,237 39,424 44,661
Taxation
Overseas taxation (217) - (217)
UK taxation (289) 289 -
Return attributable to Ordinary Shareholders 4,731 39,713 44,444
Return per Ordinary Share (Note 1)
(basic and diluted) 9.21p 77.36p 86.57p
BALANCE SHEET
as at 30 November 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
Revenue Reserve 10,418
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
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
For the six months ended 31 May 2006
Called Up Preference Capital Capital Capital Revenue Total
Share Share Redemption Reserve Reserve Reserve
Capital Capital Reserve Realised Unrealised
£'000s £'000s £'000s £'000s £'000s £'000s £'000s
Six months ended 31 May 2006
Net Assets at 30 November
2005 as previously stated 12,491 450 3,509 164,055 35,226 7,820 223,551
Reclassification of 5%
Cumulative Preference Stock
as a long term creditor - (450) - - - - (450)
Dividends on Ordinary Shares
not recognised as a current
liability - - - - - 2,598 2,598
Net Assets at 30 November
2005 (restated) 12,491 - 3,509 164,055 35,226 10,418 225,699
Adjustment to record
investments at bid value - - - - (216) - (216)
Revenue Return - - - - - 2,994 2,994
Shares repurchased during the
period (224) - 224 (3,536) - - (3,536)
Dividends on Ordinary Shares - - - - - (2,575) (2,575)
Capital Return - - - 11,610 (2,944) - 8,666
Net Assets at 31 May 2006 12,267 - 3,733 172,129 32,066 10,837 231,032
Six months ended 31 May 2005
Net Assets at 30 November
2004 as previously stated 13,102 450 2,898 159,387 7,931 7,497 191,265
Reclassification of 5%
Cumulative Preference Stock
as a long term creditor - (450) - - - - (450)
Dividends on Ordinary Shares
not recognised as a current
liability - - - - - 2,411 2,411
Net Assets at 30 November
2004 (restated) 13,102 - 2,898 159,387 7,931 9,908 193,226
Revenue Return - - - - - 2,437 2,437
Shares repurchased during the
period (190) - 190 (2,241) - - (2,241)
Dividends on Ordinary Shares - - - - - (2,407) (2,407)
Capital Return - - - 3,590 6,028 - 9,618
Net Assets at 31 May 2005 12,912 - 3,088 160,736 13,959 9,938 200,633
(restated)
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
For the year ended 30 November 2005
Continued
Called Up Preference Capital Capital Capital Revenue Total
Share Share Redemption Reserve Reserve Reserve
Capital Capital Reserve Realised Unrealised
£'000s £'000s £'000s £'000s £'000s £'000s £'000s
Year ended 30 November 2005
Net Assets at 30 November
2004 as previously stated 13,102 450 2,898 159,387 7,931 7,497 191,265
Reclassification of 5%
Cumulative Preference Stock
as a long term creditor - (450) - - - - (450)
Dividends on Ordinary Shares
not recognised as a current
liability - - - - - (4,221) (4,221)
Net Assets at 30 November
2004 (restated) 13,102 - 2,898 159,387 7,931 9,908 193,226
Revenue Return - - - - - 4,731 4,731
Shares repurchased during the
period (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 12,491 - 3,509 164,055 35,226 10,418 225,699
2005 (restated)
SUMMARY OF UNAUDITED RESULTS
CASH FLOW STATEMENT
Six Months to Six Months to Year to
31 May 31 May 30 November
2006 2005 2005
£'000s £'000s £'000s
Net cash inflow from operating activities 2,973 2,823 6,037
Servicing of finance
Interest paid (2,336) (2,326) (4,663)
Dividends paid on Preference Stock (11) (11) (23)
Net cash outflow from servicing of finance (2,347) (2,337) (4,686)
Financial investment
Purchases of fixed asset investments (83,882) (78,663) (181,836)
Sales of fixed asset investments 83,909 76,566 189,667
Net cash inflow (outflow) from investing activities 27 (2,097) 7,831
Equity dividends paid (2,575) (2,407) (4,221)
Net cash inflow (outflow) before financing (1,922) (4,018) 4,961
Financing
Purchase of Ordinary Shares for cancellation and (3,536) (2,241) (7,750)
held in treasury
Decrease in cash (5,458) (6,259) (2,789)
BRUNNER INVESTMENT TRUST plc
TOP 20 HOLDINGS AS AT 31 MAY 2006
Valuation % of
31 May 2006 Total Principal Activities
£'000s Assets*
Treasury Stock 4.5% 07/03/2007 24,956 8.81 UK Government Bond
GlaxoSmithKline 11,275 3.98 Pharmaceuticals
BP 11,235 3.97 Oil and Gas
Royal Dutch Shell 'B' shares 10,631 3.75 Oil and Gas
HSBC 7,470 2.64 Banking
Rio Tinto 6,014 2.12 Mining
BHP Billiton 5,816 2.05 Mining
Vodafone 5,676 2.00 Mobile Telecommunication
Royal Bank of Scotland 5,655 2.00 Banking
Barclays 5,335 1.88 Banking
HBOS 5,056 1.79 Banking
BG 4,029 1.42 Oil & Gas
BAE Systems 3,945 1.39 Aerospace and Defence
Xstrata 3,823 1.35 Mining
Sage 3,783 1.34 Software & Computer Services
Cobham 3,726 1.32 Aerospace and Defence
Spectris 3,561 1.26 Electronic & Electrical Equipment
Informa 3,491 1.23 Media and Entertainment
Astrazeneca 3,165 1.12 Pharmaceuticals
Reuters 2,952 1.04 Media and Entertainment
131,594 46.46
* Total assets are stated net of current liabilities
PORTFOLIO ANALYSIS AS AT 31 MAY 2006
%
United Kingdom 54.31
North America 15.08
Europe 10.37
Japan 4.32
Pacific Basin 3.15
Other 0.31
Cash and fixed interest 12.46
Total 100.00
NOTES
Note 1
The return per Ordinary Share is based on a weighted average number of shares in
issue 49,481,205 (31 May 2005: 52,168,537; 30 November 2005: 51,334,348).
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.
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 £348,154 (31 May 2005 - £296,958; 30 November 2005 - £617,290) and
transaction costs on sales which amounted to £147,761 (31 May 2005- £151,881; 30
November 2005 - £343,202).
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 period are as
follows:
Six months to Six months to Year to
31 May 31 May 30 November 2005
2006 2005 £'000s
£'000s £'000s
Interim dividend 3.60p paid 25 August 2005 - - 1,814
Final dividend 5.20p paid 24 March 2006 (2005 - 2,575 2,407 2,407
4.60p)
2,575 2,407 4,221
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.
Six months to Six months to Year to
31 May 31 May 30 November 2005
2006 2005 £'000s
£'000s £'000s
Interim dividend 4.0p payable 24 August 2006 (2005:
3.60p)
1,962 1,862 -
Final dividend 5.20p - - 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.
Restatement of opening balances
As previously stated Restated
31 May 2005 Adjustment 31 May 2005
£'000s £'000s £'000s
Fixed Assets Investments 236,336 - 236,336
Net Current Assets 14,615 1,862 1 16,477
Total Assets less Current Liabilities 250,951 1,862 252,813
Less: Creditors-amounts falling due after
one year
(51,730) (450) 3 (52,180)
Total Net Assets 199,221 1,412 200,633
Capital and Reserves
Called up Share Capital: Ordinary 12,912 - 12,912
: Preference 450 (450) 3 -
Capital Redemption Reserve 3,088 - 3,088
Capital Reserves: Realised 160,736 - 160,736
Unrealised 13,959 - 13,959
Revenue Reserve 8,076 1,862 1 9,938
Shareholders' Funds 199,221 1,412 200,633
Net asset value per Ordinary Share 384.4p 3.6p 388.0p
Notes (continued)
As previously stated Restated
30 November Adjustment 30 November
2005 £'000s 2005
£'000s £'000s
Fixed Assets Investments 260,383 - 260,383
Net Current Assets 14,865 2,598 2 17,463
Total Assets less Current Liabilities 275,248 2,598 277,846
Less: Creditors-amounts falling due after
one year (51,697) (450) 3 (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) 1 -
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 2 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 interim dividend (FRS 21).
2 Represents the effect of not recognising the final dividend (FRS 21).
3 Represents the effect of recognising the 5% Cumulative Preference Stock
holding as a creditor due after more than one year (FRS 25).
Note 6
The interim statement has neither been audited nor reviewed by the Company's
auditors. The financial information for the year ended 31 October 2005 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
accounting policies detailed above. The auditor's 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 interim report will be sent to shareholders in mid July 2006 and will be
available to members of the public from the Company's registered office at 155
Bishopsgate, London EC2M 3AD.
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