US growth earns pay-off for Bunzl

PROFITS at outsourcing firm Bunzl rose sharply in the first half of the year as it reaps the rewards of growth in the US.

The group posted a 20 per cent increase in revenue to £4.1 billion and pre-tax profit rose 17 per cent to £181.9 million in the six months to June 30.

Bunzl has been buoyed by a string of acquisitions in North America, where it books the vast majority of its revenue, and the Brexit induced collapse in sterling.

Bunzl, which supplies food packaging to restaurants and hotels and shopping bags to the retail sector, has committed to spending £546m on acquisitions this year. ABERDEENSHIRE craft-beer maker BrewDog has expanded a fund it launched a year ago so charities as well as its staff can share in what is expected to be a £45 million pool of profits over the next five years.

The company launched its Unicorn Fund in July last year to allow all staff to receive an equal share of 10 per cent of the profits generated in their business division. Brewery staff therefore share in the brewery profits while those working in bars receive a share of the profits generated in their particular bar.

The company, which was valued at £1 billion earlier this year when it sold a stake to US private equity house TSG Consumer Partners, has now extended the fund so charities chosen by staff and investors can also benefit.

While the firm has committed to giving away 20 per cent of its profits each year “forever”, chairman James Watt said that over the next five years it expects to hand over in excess of £45m “if we hit our targets”. That means as-yet unnamed charities stand to benefit by about £4.5m in each of the next five years.

Mr Watt said the move would “change our business forever”.

“The BrewDog Unicorn Fund is destined to become central to our business as we look to democratise positive impact and use craft beer to make the world a better place for everyone,” he said.

“We are going to share 10 per cent of our profits evenly with our entire team and, furthermore, we are going to donate 10 per cent of our profits each year to charities directly chosen by our team members and by our equity-punk community.

“In addition, we are formally committing to reinvest the entire balance of our profits each year, for at least the next seven years, into the two things we care about most – our beer and our people – to fuel further growth.”

BrewDog has grown dramatically

BrewDog’s James Watt said sharing profits with staff and charity would “change our business”.

since Mr Watt and cofounder Martin Dickie launched the business from a shed in Fraserburgh 10 years ago.

From a standing start in 2007 it turned over £71.9m last year and generated a gross profit of £24.8m and pre-tax profit of £3.8m, with Mr Watt and Mr Dickie each pocketing in the region of £50m after TSG paid £213m for a 22.3 per cent stake in the business in April.

It has not all been plain sailing though, with the firm this year falling well short of its US crowdfunding round, in addition to closing a number of newly launched bars and being forced to pull the plug on three further launches.

Having targeted $50m to fund its expansion in the US, where it

recently opened a brewery in Ohio, the company closed its Equity for Punks USA round earlier this month after raising just $7m of the total.

Its bars in Hong Kong and Finnish city Turku, which opened in 2016 and 2015 respectively, have closed since the start of the year and it has also shelved plans for new openings in London, Dublin and Paris after failing to iron out issues with landlords and licence partners.

BrewDog, which prides itself on its distinctive branding, also ran into difficulties after the estate of music legend Elvis Presley opposed its application to trademark the name Elvis Juice for an American IPA that it brought to market in March 2016.

In June the UK Intellectual Property Office sided with Elvis Presley Enterprises (EPE) and rejected BrewDog’s application, although the company is still selling the beer.

It would be possible for BrewDog to appeal that decision, either directly to an appointed person at the UKIPO or to the Court of Session in Edinburgh, although the company has not confirmed whether it plans to do this or whether it has applied to EPE to license the name.

If it did choose to appeal to the Court of Session it would be breaking new legal ground, with the court only ever ruling on one appeal of a UKIPO decision.

That case was decided month.

last THE chairman of EP Global Opportunities Trust has highlighted increased UK economic and political uncertainty following June’s General Election, as the country begins detailed negotiations to leave the European Union.

Fund management industry veteran Teddy Tulloch underlined the uncertainty as the £147 million investment trust announced it had achieved a 5.6 per cent rise in net asset value per share to 317.1p during the six months to June 30.

Including a total of 5.3p-a-share of dividends paid in May, Mr Tulloch noted the trust’s total return over the six months was 7.5 per cent, ahead of a corresponding 6.3 per cent for the FTSE All-World Index and 5.5 per cent for the FTSE All-Share.

Contemplating the domestic outlook, Mr Tulloch said: “In the UK, the Conservative party, although it remained the governing party, was unsuccessful in obtaining an increase in its number of MPs at the General Election.

“This has resulted in increased economic and political uncertainty as the basis by which the UK will exit the European Union remains uncertain, with detailed negotiations just beginning.”

Mr Tulloch said the positive investment performance achieved by the trust in the period had

been the result of a number of factors, including a significant exposure to European and Asia-Pacific stocks and a lower weighting in the underperforming US market.

He highlighted good returns for EP Global Opportunities, which is run by Edinburgh Partners, from equity holdings in France and Germany. Mr Tulloch said that French video games publisher Ubisoft Entertainment and Commerzbank of Germany had been the two bestperforming stocks in the portfolio in the first half.

He added that, overall, the trust’s holdings in Japan had performed well.

Television to washing machine manufacturer Panasonic was the best-performing of EP Global Opportunities’ Japanese stocks during the first half.

Mr Tulloch noted there had been a “small negative return” from US stocks.

Commenting on Continental Europe, Mr Tulloch said: “In Europe, economic data continues to indicate improving economic prospects. Share prices rose following the election of centrist governments in the Netherlands and France as more extreme parties failed to obtain an electoral breakthrough.

“The election of President [Emmanuel] Macron in France has provided a more stable political backdrop for European reform.”

He added: “In the US, the inauguration of Donald Trump as President in January boosted equity markets, in anticipation of the proposed increased infrastructure spending and reduced corporate tax rates although, to date, there has been relatively little progress.” A POST-BREXIT trading agreement with Europe will not work for Scottish arable farmers if the EU continues to provide support for its growers, but the UK does not.

NFU Scotland president Andrew McCornick this week described such an outcome as “unacceptable” and insisted our farmers must not be disadvantaged because of the political machinations of Brexit.

The continuing need for support and a sense of long-term stability had, said Mr McCornick, been highlighted by the “stopstart” progress of this year’s harvest due to the vagaries of the weather.

“Regardless of how well the crop has been established, it is no good until it is in the barn and tradeable,” said the union president. “By this time, all growing costs have been incurred, all compliance has been met, and all the risk is in the growers’ business, or more likely out of their bank account.”

There were, he said, risks involved in Brexit that industry representatives had to be keenly aware of when pressing politicians to get proper trade deals. However good those deals might be, they cannot overlook the need for support in the domestic arable sector.

“It can be argued that our cereal growers are much closer to world market prices, suggesting that they are less exposed, and that trade with Europe and the rest of the world is a result of how well the home-grown harvest has gone,” he noted.

“Therein lies another issue. A post-Brexit trading agreement with Europe will not work if Europe provides support for its arable sector and we in the UK do not have an equivalent support package for our growers.”