Legal Entity Identifier:  529900S0Y9ZINCHB3O93

THE BRUNNER INVESTMENT TRUST PLC

Final Results for the year ended 30 November 2022.

The following comprises extracts from the company's Annual Financial Report for the year ended 30 November 2022. 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

Chair's Statement

Dear Shareholder

Review of the 2022 Financial Year and Performance

2022 was a significant and distressing year in both economic and geopolitical terms. A war, of the scale we thought we would never see again, raged throughout the year in Ukraine and increasingly strident statements by China raised questions about the wisdom of extensive cross-border supply chains. Sanctions on Russia drove European gas prices to levels previously thought impossible. After years of central banks manipulating interest rates downwards and flooding the monetary system with excess money, the inevitable consequence of these actions eventually appeared in the very high inflation rates seen across the world, prompting central banks to raise interest rates sharply.

Stock prices swung wildly throughout the year driven by nervous sentiment on the back of news flow and data releases. There were wide divergences in returns between sectors and investment styles. The previous market focus on a few titans of the tech sector that I mentioned last year, in which we did not participate as our managers believed the valuations to be extreme, has contributed significantly to equity market price falls.

Against this backdrop, we are pleased to report that the company's Net Asset Value (NAV) per ordinary share rose 3.0% on a net dividends reinvested basis with debt at fair value, our key performance measure. This was ahead of the composite benchmark index (70% FTSE World Ex-UK and 30% FTSE All Share Index) which rose by 1.4% on a total return basis over the period. This marks a fourth year of outperformance against the benchmark. In the extremely varied and volatile conditions of these years we believe this is a continuing testament to the company's investment strategy.

Our manager describes the effects of these macroeconomic and geopolitical factors in more detail in the Investment Management Report starting on page 23 of the annual report.

Environmental, Social and Governance (ESG)

Whilst the strategy of the trust does not aim to meet any specific sustainability criteria, 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.

In addition to considering investment performance, understanding the manager's approach to ESG within the investment process has continued to be a focus for the board over the past year. We take account of our performance in this area against our objectives using the manager's internal analysis and external measures and benchmarks. We believe that well run companies will outperform in the long term.

We give a full and clear account of ESG considerations within this report (see page 21 of the annual report) and we also have a page on our website that describes the manager's 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 compared to the rating of the benchmark, however imperfect that comparison may still be.

We are pleased to see continued efforts by regulators and the industry in general to harmonise nomenclature and metrics. We hope this represents progress towards more universally accepted descriptions and reliable measurement for the benefit of all investors.

Earnings per Share

Over the past year most companies have been able to continue paying dividends at or above the recovery level of 2021 after the constrained 2020 year during the first Covid lockdown. This meant the portfolio's earnings grew once more in 2022, with earnings per share for the year rising by 11.3%, from 20.4p to 22.7p. This has put Brunner in the strong position once again to pay an increased dividend whilst increasing dividend reserves.

Dividend

The proposed final dividend of 6.05p, if approved by shareholders, will be paid on 4 April 2023 to shareholders on the register on 24 February 2023. In line with board's dividend policy, which is outlined on page 14, the total dividend for 2022, including the proposed final dividend, will be 21.5p. This represents an increase of 6.7% over the 2021 dividend which was 20.15p and means Brunner has now reached 51 years of consecutive dividend increases, maintaining its place as one of the AIC's "Dividend Heroes".

Revenue reserves will remain strong at 25.9p (2021: 24.7p) after the payment of the proposed final dividend.

Board Succession

The board is continuing its cycle of recruitment as existing directors retire from the board. We were pleased to welcome Elizabeth Field to the board with her appointment on 1 December 2022. Elizabeth was a senior corporate lawyer with extensive experience of advising public and private companies on a wide range of corporate transactions across a variety of sectors, specifically including investment trusts. As described in the company's previous annual report, Peter Maynard is to retire from the board at the Annual General Meeting in 2023. Following Peter's retirement, Andrew Hutton will be appointed as Senior Independent Director. Peter has given long service, invaluable challenge and guidance to the board, staying slightly beyond his planned retirement date to provide additional continuity on the board through the Covid pandemic. We thank Peter for his considerable service to the trust and wish him well for the future.

AIFM ("Alternative Investment Fund Manager")

As we had notified shareholders in 2021, our management contract with Allianz Global Investors GmbH ('AllianzGI') for investment management, accounting, company secretarial and administrative services as AIFM of the trust is due to transfer to Allianz Global Investors UK Limited ('AllianzGI UK') which is a new FCA authorised and regulated UK entity taking on all activities of the UK Branch of Allianz Global Investors GmbH. This change is taking place as a result of the UK leaving the EU and is to take place once the legal set up is arranged to ensure compliance with the UK regulatory regime. This process is continuing but is expected to be made final in the coming months. The board is assured that there will be no change to the portfolio management services nor to the administration services received by the trust. With this change there will be no increase in the management or administrative expenses of the company. Details of the existing arrangement with the AIFM are on page 108 of the annual report.

Lead Portfolio Manager Change

In July we announced that Christian Schneider, who is Deputy CIO for AllianzGI's Global Growth franchise, would be taking over from Matthew Tillett, who left AllianzGI. Christian, together with Marcus Morris-Eyton, an experienced investment manager at AllianzGI, had already been working directly alongside Matthew on the Brunner portfolio and Christian has worked in what is now the Global Growth team for more than two decades. He is consequently well versed in the strategy and investment approach. Christian took over as interim Lead Portfolio Manager on Matthew's departure for a minimum period of six months and will continue to work with Marcus and with Simon Gergel, AllianzGI's CIO UK Equities. All have worked closely on the management of Brunner for a number of years.

Matthew had worked on the Brunner portfolio for many years, and we wish him all the best in his future endeavours and thank him for his steadfast and valuable contribution to Brunner. Julian Bishop subsequently also joined the AllianzGI team managing the company's portfolio on 1 November 2022 as a senior portfolio manager. He will become Co-Lead Manager with Christian Schneider after the Annual General Meeting on 31 March and shareholders will have the opportunity to meet with him at the AGM. Julian has 25 years investment experience as a global equity analyst and portfolio manager, most recently as a senior global equity portfolio manager with Tesco Pension Investment and before that with Sarasin and Partners.

The Brunner Investment Trust will continue to be managed as an all-weather portfolio appropriate for a multitude of different market conditions with its balanced approach to portfolio construction and strong focus on valuation.

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.

The board met with the manager in early 2022 to discuss a refresh of how the trust is described. We agreed that we should refer to Brunner as an 'all-weather' global equity portfolio":

Brunner - an 'all-weather' global equity portfolio

Aiming to grow consistently your investment over time and pay out a regular and rising dividend, targeting stable long-term stock market returns whatever the economic or market background.

To do this we:

-      Invest in some of the world's best companies with superior business models delivering strong and consistent profitability with long-term growth potential

-      Manage a diversified portfolio with exposure to most major geographic regions and industries

-      Aim for growth in both capital and income, with a 51-year track record of continual dividend growth for shareholders

-      Employ the expertise and scale of global asset manager AllianzGI to provide robust investment processes and oversight

-      Provide all of this in a cost-effective, actively managed fund.

What does this mean in practice?

-      Not being skewed too heavily to any one sector or theme

-      Longer term view on investments

-      True bottom-up stock picking, where stock selection is the predominant driver of risk and return in the portfolio - looking at what an individual company does and considering how they will be affected by the macro environment rather than to pick a portfolio that will react well to the prevailing conditions.

Outlook

2023 continues with some of the most troubling factors currently affecting the world: the ongoing war in Ukraine which confounds both logic and decency; and the inflation-fuelled cost of living crisis being felt tangibly by so many closer to home.

However, there are indications of inflation moderating. That may mean interest rate rises may be nearing their high but there is definitely central bank rhetoric in conflicting directions on the subject. The more soothing comments from China, as it reopens the economy, is a welcome development. A more in-depth analysis of that backdrop and the possible outcomes is given in the Investment Manager's Review from page 24 of the annual report.

We continue to believe that the best approach for Brunner is to chart a steady path and continue to be an 'all-weather' global equity portfolio for investors, eschewing the biggest bets in the interest of long-term stability of capital return and provision of a steadily rising dividend to our shareholders.

Annual General Meeting

In 2022 we were happy to be able to welcome many shareholders to a physical Annual General Meeting after two years constrained by Covid lockdowns. We look forward to welcoming shareholders again this year to the AGM which is to be held at Trinity House, Trinity Square, Tower Hill, London, EC3N 4DH, at 12 noon on Friday 31 March 2023. Attending shareholders will receive a presentation from the investment managers before the formal business takes place and the meeting will be followed by a light lunch. We would be delighted to meet with all those shareholders who are able to attend.

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

Chair

14 February 2023

Risk Management 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 tables below 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 74 of the annual report and includes a review of a more detailed version of these tables, in the form of a risk matrix, at least twice yearly.

Risk Appetite

The directors assess the likelihood of occurrence and perceived impact of each risk after mitigating actions and consider the extent to which the resulting residual risk is acceptable, which is defined as the board's risk appetite. The results of this exercise are shown in the heat map on page 16 of the annual report. Risks are rated as 'red' when the risk is of concern and sufficient mitigation measures are not possible; '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.

Going Concern

The directors have considered the company's investment objective and capital structure both in general terms and in the context of the current macroeconomic background. 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 such external factors 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.

The company held some short term debt as a current liability as at 30 November 2022, in the form of a Revolving Credit Facility (RCF), which is renewable within one year.  While the company is in a net current liability position as at 30 November 2022, 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 Management 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 return 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.

The Strategy for the future

The development of the company is dependent on the success of the company's investment strategy against the economic environment and market developments. I give my view in the Chair's Statement on page 4 of the annual report and the investment manager discusses his view of the outlook for the company's portfolio in his review on page 23 of the annual report.

On behalf of the board

Carolan Dobson

Chair

14 February 2023

Statement of Directors' Responsibilities in respect of the financial statements

The directors are responsible for preparing the annual report 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 FRS 102 "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;

·      state whether applicable United Kingdom Accounting Standards, comprising FRS102 have been followed, subject to any material departures disclosed and explained in the financial statements;

·      make judgements and accounting estimates that are reasonable and prudent; 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 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 also 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 and the Directors' Remuneration Report comply with the Companies Act 2006.

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.

Directors' confirmations

Each of the directors, whose names and functions are listed in Directors, Managers and Advisers on page 58 of the annual report confirm that, to the best of their knowledge:

·      the company financial statements, which have been prepared in accordance with United Kingdom Accounting Standards, comprising FRS 102, give a true and fair view of the assets, liabilities, financial position and profit of the company; and

·      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 it faces.

In the case of each director in office at the date the directors' report is approved:

·      so far as the director is aware, there is no relevant audit information of which the company's auditors are unaware; and

·      they have taken all the steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the company's auditors are aware of that information.

This responsibility statement was approved by the board of directors on 14 February 2023 and signed on its behalf by:

Carolan Dobson

Chair

PORTFOLIO BREAKDOWN as at 30 November 2022

TOP 20 HOLDINGS as at 30 November 2022

INCOME STATEMENT

for the year ended 30 November 2022

BALANCE SHEET

as at 30 November 2022

INCOME STATEMENT

for the year ended 30 November 2021

BALANCE SHEET

as at 30 November 2021

STATEMENT OF CHANGES IN EQUITY

For the year ended 30 November 2022

CASH FLOW STATEMENT

For the year ended 30 November 2022

* Cash inflow from dividends was £11,034,636 (2021 - £10,096,758) and cash inflow from interest was £12,814 (2021 - £nil).

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 July 2022. 

Note B

The earnings per ordinary share is based on a weighted number of shares 42,692,727 (2021 - 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.

Profit after taxation attributable to ordinary shareholders disclosed in the Income Statement represents the company's total comprehensive income.

Transaction costs and stamp duty on purchases amounted to £187,149 (2021 - £199,265) and transaction costs on sales amounted to £18,885 (2021 - £16,862).

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 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

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 90 of the annual report - Statement of Accounting Policies). Details of these dividends are set out below.

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 2022 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 2021 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.