Brunner Investment Trust : Second Quarterly Dividend and Results for the Half Year Ended 31 May 2017

For immediate release 18 July 2017

THE BRUNNER INVESTMENT TRUST PLC HALF-YEARLY FINANCIAL REPORT

For the six months ended 31 May 2017

Highlights

• Net asset value (debt at fair value) per share up by 11.6% (2016: +1.5%)

• Net asset value (debt at par) per share up by 11.3% (2016: +1.3%)

• Earnings per ordinary share 10.2p (2016: 8.9p)

• Dividends for the half year 7.0p1 (2016: 6.6p)

• Net asset value total return (debt at fair value) per share up by 12.6% (2016: +2.6%)

• Net asset value total return (debt at par) per share up by 12.3% (2016: +2.3%)

   Share price up by 18.5% to 701.0p (2016: 591.8p)

• Discount of net asset value (debt at fair value) to share price 12.5% and an average of 14.1% over the period

At 31 May 2017	At 31 May 2016	% change
Revenue
Available for ordinary dividend	£4,343,000	£3,806,000	+14.1
Earnings per ordinary share	10.2p	8.9p	+14.6
Quarterly dividends per ordinary share	7.0p1	6.6p	+6.1
Retail price index	271.7	262.1	+3.7
1 First quarterly 3.5p, second quarterly 3.5p
Assets	At 31 May 2017	At 30 Nov 2016	% change
Net asset value per ordinary share (debt at fair value)	801.6p	718.0p	+11.6
Net asset value per ordinary share (debt at par)	826.8p	742.8p	+11.3
Ordinary share price	701.0p	591.8p	+18.5
Total net assets (debt at fair value)	£342,219,000	£307,707,000	+11.2
Total net assets (debt at par)	£352,984,000	£318,334,000	+10.9
Net Asset Value relative to Benchmark*	Capital Return2	Total Return3
Change in net asset value	11.6%	12.6%
Change in benchmark	9.3%	11.1%
Performance against benchmark*	2.3%	1.5%
Debt at fair value. Total returns are calculated with net dividends reinvested
Portfolio relative to benchmark*	Capital Return2	Total Return3
Net portfolio return (excluding cash)	11.2%	13.0%
Change in benchmark	9.3%	11.1%
Performance against benchmark*	1.9%	1.9%

*The benchmark applied was 50% FTSE All-Share Index and 50% FTSE World Ex UK Index until 21 March 2017, and 70% FTSE World Ex UK Index and 30% FTSE All-Share Index from 22 March 2017.

Interim Management Report Performance

The Net Asset Value per ordinary share of the company increased by 12.6% on a total return basis, outperforming the benchmark (50% FTSE All-Share Index and 50% FTSE World Ex UK Index until 21 March 2017, and 70% FTSE World Index and 30% FTSE All-Share Index from 22 March 2017), by 1.5%.

Earnings

Earnings increased by 14.6% to 10.2p per ordinary share in the six months to 31 May 2017 (2016: 8.9p).

Gearing

The gearing at 30 November 2016 was 6.9% and at 31 May 2017 was 5.7%. Gearing is calculated after deducting cash held to offset some of the long term debentures issued.

Dividends

In continuation of the policy to distribute income more evenly throughout the year, the board declared a first quarterly dividend of 3.50p per ordinary share which was paid on 30 June 2017. The board has now declared a second quarterly dividend of 3.50p per ordinary share payable on 20 September 2017 to holders on the register of members at the close of business on 18 August 2017. Accordingly, this has no implication for the growth of the final dividend for the year. A third quarterly payment will be made in December and the final dividend will be proposed for payment in March 2018.

Material events and transactions

In the six month period ended 31 May 2017 the following material events and transactions have taken place.

• At the annual general meeting of the company held on 21 March 2017, all the resolutions put to shareholders were passed.

• The change of the company's benchmark to 70% FTSE World Ex UK Index and 30% FTSE All- Share Index was approved at the AGM and took effect from 22 March 2017.

• During the period under review the company purchased 164,931 ordinary shares for cancellation. There were no related party transactions in the period.

  Since the period end, no further ordinary shares have been purchased for cancellation.

  Principal Risks

  The principal risks facing the company over the next six months are broadly unchanged from those described in the Annual Financial Report for the year ended 30 November 2016. These are set out in a table in the Strategic Report on page 12 of the annual report, together with commentary on the board's approach to mitigating the risks, under the following headings: Portfolio Risk; Business Risk; and Operational Risk.

  In addition to the principal risks, the company faces the risks associated with the provision of services by third parties and general business risks including accounting, legal and regulatory matters. 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 believe it is appropriate to continue to adopt the going concern basis in preparing the financial statements as the assets of the company consist mainly of securities which are readily realisable and accordingly, the company has adequate financial resources to continue in operational existence for the foreseeable future.

  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 18 July 2017 and the above responsibility statement was signed on its behalf by the Chairman.

Carolan Dobson Chairman Enquiries:

For further information, please contact:

Allianz Global Investors GmbH, UK Branch Melissa Gallagher

Head of Investment Trusts Tel: [phone]

Investment Manager's Review

Market Review

During the period, European and emerging market equities led market strength helped by further signs that global economic activity continued to improve. US equities were arguably held back somewhat by increasing political risks and uncertainties concerning the ability of President Trump's administration to enact its policy agenda. Strong corporate results and better-than-expected US jobless claims and regional manufacturing data at the end of May helped calm the nerves.

In terms of sectors, Information Technology stocks delivered robust returns. Utilities and Consumer Staples also performed well. On the other hand, Energy lagged as oil prices failed to build on earlier gains.

During the period, the Federal Reserve raised US interest rates twice - in December and again in March - taking the federal funds rate to a range of 0.75% to 1.0%. In contrast, in December the European Central Bank (ECB) extended its bond-buying programme until at least the end of 2017, but reduced the size of its monthly bond purchases. Subsequently, rising inflation in the first quarter of 2017 led to speculation that the ECB would need to wind down these measures, with President Mario Draghi noting that the battle against deflation had now been won. The Bank of England and Bank of Japan left monetary policy unchanged.

Diminishing political risk following Emmanuel Macron's victory in the French presidential elections and further signs of euro-zone recovery boosted the euro while the US dollar weakened amid rising political turmoil.

Oil prices initially strengthened following the news that OPEC had agreed to cut production, but later weakened amid signs of rising US supply.

Portfolio Review

On a total return basis, over the period the portfolio's NAV with debt at fair value rose 12.6%, compared to a 11.1% gain for the benchmark (50% FTSE All-Share Index and 50% FTSE World Ex UK Index until 21 March 2017, and 70% FTSE World Ex UK Index and 30% FTSE All-Share Index from 22 March 2017).

Overall stock selection contributed positively, particularly in Financials, Technology and Consumer Goods, which more than offset a negative contribution from Consumer Services, Health Care and Telecommunications. Industry weights, which are a result of bottom-up stock picking, also contributed.

The top contributor to performance was United Internet, which announced the merger of their consumer telecom operations with Drillisch to gain strength in the telecom sector in Germany. This deal represents significant synergies and a solution for the issue of credible 4G wholesale access for United Internet, one of the major market concerns for the company.

Tyman was another strong contributor. FY16 results were strong, with margins in both the US and Europe ahead of expectations. This margin momentum looks set to continue as the US footprint project delivers more savings and synergies come through early. Management continues to benefit from self-help initiatives and plans to manage higher cost inflation through pricing, effective purchasing and cost reductions. The company has made significant progress structurally improving the business and we expect continued progress over the next few years.

Firstgroup, the US and UK ground transportation company, also outperformed. Full year results for the year to 31 March 2017 were better than expected, primarily due to better performances in North America. The share price has risen strongly in recent months: up 22% since it announced the South Western rail franchise win on 25 March 2017 and supported by a stronger dollar.

Nielsen was the top detractor. First quarter results came slightly below expectations as the company continued to experience weakness in the Buy segment, attributed to continued spending pressure from retail customers in the US. We view this as a short-term issue and the rest of the business remains strong; we maintain our belief that Nielsen is one of the better positioned companies within the media sector, particularly given its leading position in the evolving and steadily growing Watch segment.

We reduced our exposure to the Energy sector in the first quarter this year and the underweight in the sector was positive to performance during the period. EOG Resources detracted, reflecting the overall fall in oil prices. EOG has grown mostly through internally generated projects over the last five years, only recently