Coronavirus Update

The Brunner Investment Trust PLC Half-Year Report 2021

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For the six months ended 31 May 2021





Financial Headlines

For the six months from 30 November 2020 to 31 May 2021


· Net asset value (debt at fair value) per share rose by 11.4% (2020: -6.9%)

· Net asset value (debt at par) per share rose by 10.6% (2020: -5.9%)

· Earnings per ordinary share increased by 35.7% to 11.4p (2020: 8.4p)

· Dividends for the half year increased by 0.6% to 9.40p1 (2020: 9.34p)

· Net asset value total return (debt at fair value) per share rose by 12.4% (2020: -5.9%)

· Net asset value total return (debt at par) per share rose by 11.5% (2020: -4.9%)

· Benchmark index total return rose by 11.3% (2020: -5.4%)

· Share price total return rose by 18.2% (2020: -8.4%)

· Discount of net asset value (debt at fair value) to share price 9.3% and an average of 13.4% over the period (2020: 10.7%, average over the period 5.8%) 






Six months ended

31 May 2021

Six months ended

31 May 2020





Available for ordinary dividend





Earnings per ordinary share





Interim dividends per ordinary share





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At 31 May


At 30 November





Net asset value per ordinary share

(debt at fair value)





Net asset value per ordinary share (debt at par)





Ordinary share price





Total net assets (debt at fair value)





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Performance relative to the benchmark for the six months to 31 May 2021


Net Asset Value with debt at fair value relative to Benchmark2




Capital Return


Total Return 3






Change in net asset value





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Percentage point performance against benchmark2












1 First interim 4.7p, second interim 4.7p

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

3 Total returns are calculated with net dividends reinvested





Interim Management Report


Half-yearly report

The first six months of the company's financial year has in many ways been no less tumultuous than the preceding half-year in terms of global events. The COVID pandemic continues to cast a shadow over humanity worldwide, with many nations still witnessing a heavy toll on their populations. This is being mitigated as far as possible by the efforts of those working tirelessly to beat the virus, whether the frontline healthcare workers, medical profession and the scientific community, or policy makers looking to balance impact on health with impact on economies.


What investors have noted, however, is that whilst considerable near-term uncertainty about the 'post'-COVID outlook perpetuates around the globe, the backdrop has been one of opportunity for those prepared to look beyond the short-term.


Encouraging demand

There was continuing pressure on the company's share price during the period. As a result efforts were redoubled in sales (direct interaction with professional investors), marketing and PR (indirectly raising the profile of Brunner to both private and professional investors). We have seen first-hand the benefits of this approach with additional demand for shares generated which helped narrow the discount, as both new and existing investors bought shares. Such efforts to ensure continuing demand for shares are beneficial for all shareholders, both in terms of the discount, but also bringing new investors to the share register and improving the liquidity of the shares in the market. 

Your board remains confident that the Brunner investment philosophy is well suited to the increasing numbers of investors we see joining the share register, either as private self-directed investors through the investment platforms or underlying clients of the wealth management firms.



Against a continuing background over the period of competing positive and negative factors for companies to navigate, the company's Net Asset Value per ordinary share recorded an increase of 12.4% on a total return basis. The benchmark total return (70% FTSE World Index Ex UK and 30% FTSE All-Share Index) increased by 11.3% over the period. The attribution of the absolute and relative investment performance of the portfolio is examined in the Investment Manager's report.



We are pleased to report recovery in dividend payments amongst portfolio companies through the period. However, whilst many payments have been reinstated, aggregate earnings remain below pre-COVID levels of 12.6p for the six months to 31 May 2019. Earnings increased by 35.7% to 11.4p per ordinary share in the six months to 31 May 2021 (2020: 8.4p). Brunner continues to have strong revenue reserves which exist to support dividend payments in times when earnings are constrained. The board intends to continue to use these reserves as necessary to maintain our steadily growing dividend while earnings recover to a level where the dividend is covered. Encouragingly, the manager is seeing dividend payment expectations improving slightly beyond expectations for the year ahead and keeping us on track to return to covering the dividend in future years.



In June the board declared a first interim dividend of 4.70p per ordinary share which is payable on 22 July 2021, a small increase on the payment made for the first quarter in the previous year.  The board has now declared a second interim dividend of 4.70p per ordinary share payable on 16 September 2021 to holders on the register of members at the close of business on 6 August 2021.  A Dividend Reinvestment Plan (DRIP) is available for this dividend and the relevant election date is 20 August 2021.


The board anticipates that the third interim dividend will be maintained at this rate, and an unchanged final dividend of 6.05p will be proposed for the year ending 30 November 2021, giving a dividend for the year of 20.15p, a small increase on the previous year. As dividend payments for the year may not be fully covered by earnings per share we will be able to support the distribution from the company's substantial accumulated revenue reserves if required. As mentioned in the Annual Report for the year to 30 November 2020, the revenue reserves, after paying the 2020 dividends, were 24.5p per share, Revenue reserves are retained for this purpose and remain an important differentiator of the closed-end investment trust structure. The board is continuing to balance the interim payments to bring them in line with the final. 


Material events and transactions

In the six months ended 31 May 2021 there were no share buy backs or share issuances and no related party transactions nor have there been any since the period end.


Principal Risks

As noted in the Annual Report for the year to 30 November 2020, the impact of the COVID-19 pandemic has tested all companies. Since the publication of the Annual Report the board has kept in close contact with the manager regarding investments. The manager has also retained contact with other third party service providers to understand their responses to the pandemic and in particular actions taken to mitigate the effects of the pandemic on the company and its business. 


The principal risks facing the company are set out on in a table on pages 14 and 15 of the Annual Report for the year ended 30 November 2020 together with commentary on the board's approach to mitigating the risks, under the following headings: Portfolio Risk; Business Risk; Operational Risk; and Emerging Risks and Uncertainties.  These continue to be the principal risks facing the company.


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 have considered the company's investment objective and capital structure both in general terms and in the context of the 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 concluded that the company has adequate resources to continue in operational existence for the foreseeable future. The directors have also considered the risks and consequences of the COVID-19 pandemic on the operational aspects of the company and 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.


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 20 July 2021 and the above responsibility statement was signed on its behalf by the Chairman.



In the continuing pandemic-restricted environment earlier in the period, the company's AGM was once again held as a closed-meeting with voting conducted through the proxy voting process. All resolutions put to the AGM were passed. The directors and I look forward to meeting with shareholders when the situation allows a physical AGM to take place once again.



It is unclear how nations and economies will emerge from the pandemic over the coming months. That said, there appear to be good levels of confidence overall in the global recovery and potential headwinds are unlikely to derail well run businesses. Individual sectors still show a diverse range of outcomes though, depending on how they are being affected by the ongoing machinations of the pandemic. One of the biggest talking points right now is the spectre of rising inflation - however this is not a one size fits all scenario. Indeed, for many companies having strong pricing power, it could prove advantageous at controlled levels. Against this backdrop our investment manager looks through the noise of economic recovery and geopolitics, concentrating instead on the longer-term prospects for individual companies and the trends that will drive their growth. That approach underpins the Brunner investment philosophy and we would refer you to the manager's Investment Report where this is explored in more detail, both in terms of the events and performance of the past six months, and also the outlook for the future.