Annual Financial Report

Temple Bar Investment Trust Plc

Full Year Results for the year ended 31 December 2021

Temple Bar Investment Trust Plc (the “Company”) is pleased to present its full year results for the year ended 31 December 2021.

The Company's Annual Report & Financial Statements for the year ended 31 December 2021 is also being published in hard copy format and an electronic copy will shortly be available to download from the Company's website: www.templebarinvestments.co.uk.  

Please click on the following link to view the document: https://mma.prnewswire.com/media/1772612/TBIT_RA21_7_29_web.pdf

CHAIRMAN’S STATEMENT

“ The UK market would appear still to be very cheap relative to its overseas counterparts. This valuation discount could well narrow.’

R eview
2021 was the first full year the Company was under the fund management of RWC Asset Management LLP (“Redwheel”). The year started extremely well as the post-vaccine bounce in value stocks continued into the new year. The first quarter brought a net asset value (“NAV”) return of 17.0% versus the benchmark index return of 5.2%. However, this outperformance did not continue into the following three quarters in all of which the portfolio underperformed, albeit marginally in the fourth quarter. All this resulted in the full-year NAV return of 24.5% versus the index’s 18.3% – a very pleasing result.

Less pleasing was the persistent discount at which the shares traded relative to their NAV. At times the discount was in double figures and for the year as a whole, it averaged about 7.1%. In reaction to this, and to accrete to shareholders’ NAV, the Board instigated a buy-back programme. Shares to the value of nearly £10 million (excluding costs) were purchased during the period and placed in treasury. At 31 December 2021, the discount was 7.8%. Encouragingly, after the year end the discount narrowed to between 1% and 2%, but the terrible events in Ukraine have created such market volatility that it has recently widened again.

Portfolio
The change of Investment Manager in 2020, along with elevated market volatility, saw a period of increased trading. As detailed in the Investment Manager’s Report below, by comparison there was very limited trading during the year under review.

Dividend
During the year the Company paid four interim dividends amounting to 39.5p. This compares to a dividend of 38.5p in the previous year (an increase of 2.6%). Although this did require a contribution from revenue reserves, it nonetheless represents a return to the previous pattern of annual dividend increases.

The Company saw a significant increase in income compared to 2020, receiving over £30.7 million, as investee companies resumed paying dividends following numerous suspensions and reductions in the early stages of the pandemic.

The Board does not intend to recommend a final dividend.

Gearing
At the year-end, gearing (net of cash and related liquid assets) was 6.5% and the level of gearing remained stable throughout the year.

Purpose a nd Culture
The purpose of the Company is to deliver long-term returns for shareholders from a diversified portfolio of investments. These investments will primarily be UK listed.

As an investment trust, the Company has no employees, but the culture of the Board is to promote strong governance and a long-term investment outlook with an emphasis on investing in businesses that can deliver sustainable value to shareholders. Therefore, the Board asks the Company’s Investment Manager to invest in stocks that fulfil the traditional metrics of the value style and possess a business model that is sustainable in the long term.

Environmental, Social & Governance ( “ ESG ” ) a nd Stewardship Issues
The Board believes that ESG issues can be a material factor in determining the valuation of a company. Bad practice can have a negative impact on society which could in time threaten a company’s social licence to operate and therefore detract from investors’ capital.

The Board embraces the concept of active stewardship, asking the Investment Manager to monitor, evaluate and actively engage with investee companies with the aim of preserving or adding value to the portfolio. Further, conscious that on some issues, particularly globally catastrophic negative externalities, one manager acting alone can have limited effect, the Board asks the Investment Manager to collaborate with other investors in working with investee companies. The Investment Manager reports back to the Board regularly on engagement in these specific areas.

The Board
There were no changes to the Board during the year. However, the Board is pleased to welcome Charles Cade, as a new non-executive Director and member of the Audit and Risk, Management Engagement and Nomination Committees, with effect from 24 March 2022. He brings a wealth of experience and expertise, not just in investment trusts, but in investment generally. The Board continues to operate efficiently and demonstrates great diversity of gender, ethnicity, knowledge and experience. As stated in previous annual reports, this will be the last Annual General Meeting ("AGM") at which I will offer myself for re-election. In line with best practice, the Board’s policy remains that Directors should serve a maximum of nine years. Only in exceptional circumstances will any Director serve more than this.

Share Split
The Board has been advised that a share split would help liquidity in the market and be helpful to shareholders who invest on a regular basis or who re-invest their dividends. Accordingly, as described in Resolution 10, the Board is recommending a five for one division. This should have no effect on the overall value of your holding.

Directors’ Fees
As presaged in my statement in the half-year report for the six months ended 30 June 2021, in the autumn the Board reviewed the level of Directors’ fees. A study was commissioned from Trust Associates, an independent investment trust advisory business, to establish the level of comparable investment trusts’ directors’ fees. Following this analysis, the Board concluded that it would be appropriate to set Directors’ fees at the anticipated 2022 average of comparable vehicles. Full details of the new fees are given in the full Annual Report & Financial Statements.

AGM
The AGM this year will be held at Verde 8th Floor, 10 Bressenden Place, London SW1E 5DH on Tuesday, 10 May 2022 at 12.30pm. Unlike last year, shareholders are welcome to attend in person where you will be able to hear a presentation from the Portfolio Managers Nick Purves and Ian Lance. Shareholders unable to attend are invited to submit their form of proxy in advance by 12.30pm on Friday, 6 May 2022 at the latest. Should circumstances or Government guidance change, including the introduction of regulations to prohibit or restrict public gatherings, the Company reserves the right to take further steps in respect of AGM attendance. To the extent this is necessary, we will provide an update via a Regulatory Information Service announcement and our website as soon as practicable.

Outlook
The last two years have taught us how dangerous it is to make any prediction about future events. The dreadful events unfolding in Ukraine painfully underline this point. Nevertheless, the UK market would appear still to be very cheap relative to its overseas counterparts. This valuation discount could well narrow.

Arthur Copple
Chairman

23 March 2022

INVESTMENT MANAGER’S REVIEW

”Our investment approach has always been to seek out fundamentally sound businesses which by virtue of their market positions can grow their profits over the long term, but where for one reason or another the shares are modestly valued as a low starting valuation ensures that shareholders benefit fully from improved profit growth, whilst often in the meantime drawing an attractive income.”

Equity markets delivered strong returns in 2021, driven higher by a sharp rebound in economic growth, a corresponding recovery in corporate profitability, and large quantities of both fiscal and monetary stimulus. Whilst the reflation narrative was challenged by the emergence of both the Delta and Omicron COVID-19 variants, investors came firmly to the view that the worst of the adverse economic effects of COVID-19 were behind us. The recovery was sufficiently vigorous that corporate earnings made up the ground lost in 2020 with the result that those earnings returned to record levels. Unsurprisingly perhaps, commodity prices were also strong in 2021, with Brent Oil rising around 50% and copper around 30%.

The Company’s portfolio performed well in 2021, continuing the sharp rebound that started at the end of 2020, when it was announced that vaccines would be largely successful in reducing severe illness from the virus. Top contributors to the Company’s portfolio return in the year included: Royal Mail (+3.3%), Marks & Spencer Group (+2.8%), Shell (+2.1%) and NatWest Group (+1.7%); from a total absolute return on net assets of +24.5%.

After several years of sluggish sales, declining productivity, and falling profits, Royal Mail looks to have turned a corner. The company was a beneficiary of the pandemic, seeing a meaningful increase in parcel volumes. This, coupled with improved labour relations, has resulted in a sharp rebound in earnings. We continue to see significant unrealised profit potential in the company’s UK business, which combined with continued growth in the company’s overseas operations should result in meaningful profit growth from here. Despite the strong recovery in the share price in 2021, the stock market still applies little or no value to the company’s UK operations.

At Marks & Spencer Group, there are signs that the recent overhaul of the business is really starting to bear fruit. In online food, the Ocado joint venture has been a significant success, whilst in store-based food the company is taking advantage of its niche to grow market share. Even in the troubled clothing business, performance has started to improve. In online clothing, the company is outgrowing its competitors and is now number two in the UK by market share. The company has a target that 40% of its clothing sales will be online within three years. The improved operating performance has led to significant upgrades to profit expectations and yet, despite the strong share price performance, the stock market continues to ascribe no value to the company’s clothing operations.

The Company holds three energy names: Shell, BP and TotalEnergies, which collectively added over 5% to the Company’s portfolio investment return in 2021. All benefitted from the sharp upward move in oil and gas prices, coupled with low starting valuations. Whilst we don’t attempt to predict oil or gas prices, we were not surprised by the upward move in 2021 given that demand for fossil fuels bounced back strongly after a period in which industry investment had been significantly curtailed. Some of this reduction in investment was no doubt an ongoing response to the weakness in energy prices in 2015/2016 and 2020, and some will have resulted from the sector’s desire to fund increased investment in green energy; however, the upshot is that when strong demand meets restricted supply, prices normally increase.

Again, despite the recent strength in share prices, sector valuations continue to be attractive. Shell is the world’s largest privately owned gas producer. Nevertheless, its enterprise value is around $250 billion at the end of 2021, the entirety of which can be accounted for by the company’s so-called transition assets (Gas Production, Marketing and Renewables), even though these assets currently account for less than 50% of group profits. Assigning even a modest valuation to the remaining assets (Upstream, Refining and Chemicals) suggests significant upside to the share price. Meanwhile, BP is valued at around 9x shareholder free cash flow (after all investment but before dividends) assuming Brent oil prices of just $60 per barrel, significantly below where oil prices sit today. All three companies have set out ambitious but credible plans to get to net zero carbon emissions by 2050 and, whilst it will no doubt be a challenge, we believe that these companies can therefore play a significant part in the forthcoming energy transition.

In the banking sector, the Company has exposure to four names: NatWest Group, Barclays, Citigroup and Standard Chartered. These companies collectively added over 4% to the portfolio’s return in 2021. We have for some time believed that the stock market is not giving enough credit to the banks for the very profound changes that the companies have made over the last few years. Their capital strength is much improved on where it was even a few years ago and lending standards are much better than they were. Whilst ultra-low interest rates have suppressed interest margins and have therefore been unhelpful, the banks have been using the benefits of technology to engineer cost out of their businesses. As a result, even assuming no pick up in interest rates, the companies are confident that they can deliver a 10% return on shareholder equity, as stated in their investor presentations. Nevertheless, the stock market has remained sceptical and many in the sector have continued to be valued at meaningful discounts to the value of that shareholder equity. Whilst the continued low level of loan losses and the spectre of rising interest rates were helpful for share prices in 2021, the companies continue to be valued at just mid-to-high single-digit multiples of earnings. In our view, therefore, the sector continues to be undervalued.

Pearson, easyJet and Capita all marginally detracted from portfolio returns in the year. easyJet has continued to be disrupted by COVID-19 induced lockdowns and has continued to burn through its cash reserves, albeit at a much-reduced rate. Pre-COVID-19, the company had no net financial debt on its balance sheet; however, its finances have since been undermined by cash losses that have accumulated over the last two years. Unsurprisingly therefore, last year the company took the decision to issue fresh equity and, whilst this restored the company’s balance sheet to health, it was dilutive to existing shareholder returns. Pearson has continued to struggle with the transition from physical print textbooks to a digital offering in its North American Higher Education business and although this journey is proving to be protracted and damaging to group profitability, we continue to believe that educational publishing is an attractive business offering the prospect of healthy returns. Accordingly, during the year, we used share price weakness to add to Temple Bar’s holding in the company. Likewise, the turnaround at Capita is proving more challenging than we had originally hoped. Nevertheless, we continue to believe that there is significant unrealised potential in the business, at a time when understandable scepticism in the stock market means that the shares are valued at a mid-single digit multiple of our conservative view of the company’s medium-term profit potential. Although Capita has been a poor investment for the Company, we think that ultimately patience will be rewarded in this instance.

We are long-term investors, who recognise the importance of keeping transaction costs to a minimum. At times of major stock market dislocation, such as that seen in 2020, we will rotate portfolios more aggressively to try and take advantage of other investors’ willingness to sell reasonable businesses at knock-down prices. More normally however, shareholders should expect that portfolio turnover will be low. This was the case in 2021, with just under £300 million of notional value trade. We established no new positions in the year although we did exit the Company’s positions in GlaxoSmithKline and Tesco in order to take advantage of what we believed were better opportunities elsewhere.

For some time now, UK equities have traded at a significant discount to other stock markets, and this resulted in high levels of corporate activity as overseas buyers sought to take advantage of this disconnect. Consequently, during the year the Company benefitted from the takeover of Royal & Sun Alliance Insurance (by an overseas competitor) and WM Morrison (by private equity), both at large premiums to the previously prevailing share price.

Our investment approach has always been to seek out fundamentally sound businesses which by virtue of their market positions can grow their profits over the long term, but where for one reason or another the shares are modestly valued. This may be because the company is underperforming its longer-term potential (Marks & Spencer Group) or because of a lack of interest or neglect (Shell). Either way, a low starting valuation looks to ensure that shareholders benefit fully from improved profit growth, whilst often in the meantime drawing an attractive income. Companies with low valuations also have a greater potential to re-rate as investor perceptions improve, further adding to investment returns. We believe investors should learn the lesson of stock market history which is that the starting valuation has proven to be the best predictor of investment return over time.

As we write, the economic outlook is particularly unclear. Following Russia’s invasion of Ukraine, commodity prices have increased very dramatically and this will squeeze corporate profit margins whilst

acting as a tax on consumers, thereby reducing their spending power. It is possible and maybe even likely that Europe and the US are on the verge of another recession, putting renewed short-term pressure on corporate profits. The direct effect of the Ukraine conflict on the holdings in the portfolio are largely limited to the holdings in the Energy companies. In response to the crisis, BP has announced that it will be selling its 20% holding in Rosneft, thereby ceasing its involvement with Russia.

We have assumed that the company will not receive anything in consideration for its stake and yet the company estimates that the annual hit to corporate cash flow is likely to be in the order of just 5%. Shell has announced it will exit its joint venture with Gazprom, including its stake in a liquefied natural gas facility. At the end of 2021, Shell had around $3 billion in non-current assets in these ventures in Russia and likewise will now cease its exposure to Russia. TotalEnergies has a 19% holding in NovaTek, a Russian producer of natural gas. The company has said that it will not supply capital to any new projects that NovaTek undertakes.

The stock market is a discounting mechanism and therefore some companies in the portfolio have already seen their share prices fall as investors attempt to price in increased risks in the short term. However, it is important to remember that a share represents a claim on a long-term stream of cash flows and therefore, a temporary reduction in those cash flows because of an economic downturn does very little to alter the long-run intrinsic value of a business.

In our minds, this serves to highlight the importance of investing for the long term (five years plus) in financially strong but lowly valued companies, where profits can grow, and any set back is likely to prove temporary. In this report we have attempted to highlight the undervaluation that exists in some of the Company’s largest holdings. It is our belief that if we are roughly correct in our view of the potential of these businesses then, despite the inherent economic uncertainties of today, patient shareholders are likely to be rewarded with outsized investment returns over the coming years.

Ian Lance and Nick Purves
Redwheel

23 March 2022

PRINCIPAL AND EMERGING RISKS

The Board has overall responsibility for reviewing the effectiveness of the system of risk management and internal control which is operated by the Investment Manager and the Company’s other service providers. The Company’s ongoing risk management process is designed to identify, evaluate and mitigate the significant risks that the Company faces.

The Board undertakes a risk review with the assistance of the Audit and Risk Committee, to assess the adequacy and effectiveness of the Investment Manager and other service providers’ risk management and internal control processes.

The Board has carried out a robust assessment of its principal and emerging risks during the period under review, including those that would threaten its business model, future performance, solvency or liquidity.

The principal and emerging risks and uncertainties faced by the Company are set out below. The risks arising from the Company’s financial instruments are set out in note 22 in the full Annual Report & Financial Statements.

RISK	MITIGATION AND MANAGEMENT
INVESTMENT STRATEGY RISK An inappropriate investment strategy on matters such as asset allocation or the level of gearing may lead to underperformance compared with the Company’s benchmark index or peer companies.	The Board manages such risks by diversification of investments through its investment restrictions and guidelines, which are monitored and reported on by the Investment Manager. The AIFM also monitors Redwheel against the investment guidelines. The Investment Manager provides the Directors with regular management information including absolute and relative performance data, attribution analysis, revenue estimates, liquidity reports and risk profile. The Board monitors the implementation and results of the investment process with the Portfolio Managers who attend Board meetings. During the year under review, the portfolio performed well relative to the benchmark index. Further details can be found on page in the full Annual Report & Financial Statements.
LOSS OF INVESTMENT TEAM OR PORTFOLIO MANAGER A sudden departure of the Portfolio Managers or several members of the investment management team could result in a short-term deterioration in investment performance.	The investments of the Company are managed by a team of two Portfolio Managers, Ian Lance and Nick Purves. The Investment Manager takes steps to reduce the likelihood of such an event by aligning the interests of the investment team with the wider organisation, as well as a high degree of autonomy with no overarching chief investment officer or investment committee. Furthermore, the AIFM, in consultation with the Board, may terminate the Investment Management Agreement should Ian Lance and Nick Purves cease to be able to perform their duties as Portfolio Managers or cease to be associated with the Investment Manager and not be replaced by people with relevant experience. The Board previously demonstrated its ability to effect change, while the current service provider model with an independent AIFM makes the future removal of an investment manager more straightforward.
INCOME RISK – DIVIDEND Generating the necessary level of income from portfolio investments to meet the Company’s expenses and to provide adequate reserves from which to base a sustainable programme of increasing dividend payments to shareholders is subject to the risk that income generation from investments fails to meet the level required.	The Board monitors this risk through the receipt of detailed income reports and forecasts which are considered at each meeting. As at 31 December 2021 the Company had distributable revenue reserves of £11.7 million. Furthermore, income risk is mitigated by the Company’s ability to distribute realised capital gains if required to meet any revenue shortfall. As investee company dividend payments began to recover in 2021, the Board again reviewed its approach and decided to maintain the Company’s own dividend at a similar level, from which it hopes to resume dividend growth in due course without recourse to reserves.
SHARE PRICE RISK Should the market price of the Company’s ordinary shares trade at a significant discount to the underlying NAV per share, shareholders might not be able to realise the full value of their investment and the Company might itself be vulnerable to some form of corporate activity.	The Company’s share price and premium or discount to NAV are monitored by the Investment Manager and the Board on a regular basis. The Directors attach considerable importance to the level of premium or discount to NAV at which the shares trade, both in absolute terms and relative to the rating at which the UK Equity Income sector of investment trusts is trading. Premiums judged to be excessive will be addressed by repeated share issues, either new or from treasury. Discounts judged to be excessive will be addressed by repeated share buy backs, for treasury or cancellation. The Directors are prepared to be proactive in premium/discount management to minimise potential disadvantages to shareholders, as was demonstrated in the fourth quarter of 2021.
RELIANCE ON THE INVESTMENT MANAGER AND OTHER SERVICE PROVIDERS The Company has no employees and relies on a number of third-party service providers, principally the Investment Manager, AIFM, Company Secretary, Registrar, Administrator, Custodian and Depositary. It is dependent on the effective operation of its service providers’ control systems with regard to the security of the Company’s assets, dealing procedures, accounting records and the maintenance of regulatory and legal requirements.	The Company operates through a series of contractual relationships with its service providers. These agreements set out the terms on which a service is to be provided to the Company. During the year the Board, through the Management Engagement Committee, monitored and evaluated the performance of the Company’s service providers. The Committee meets at least once a year and receives and reviews submissions from its service providers regarding their interactions with each other, most notably the Investment Manager’s assessment of services provided by other providers. The Audit and Risk Committee receives assurance or internal controls reports from key service providers and in the year under review paid close attention to the continued risks posed by disruption due to the ongoing COVID-19 pandemic. The AIFM carries out a comprehensive annual due diligence exercise on the Investment Manager on behalf of the Board, ensuring that the appropriate controls, processes and resourcing are in place to manage the portfolio within the stated investment policies and guidelines.
COMPLIANCE WITH LAWS AND REGULATIONS In order to qualify as an investment trust the Company must comply with Section 1158 of the Corporation Tax Act 2010. Were the Company to breach Section 1158 it might lose investment trust status and, as a consequence, inter alia, realised gains within the Company’s portfolio would be subject to capital gains tax. The Company must also comply with the provisions of the Companies Act 2006 and, since its shares are listed on the London Stock Exchange, the Listing Rules. A breach of the Companies Act 2006 could result in the Company being fined or subject to criminal proceedings. Breach of the Listing Rules could result in the Company’s shares being suspended from listing which in turn would breach Section 1158. This risk would be exacerbated by inadequate resources or insufficient training within the Company’s third-party service providers leaving them unable to properly manage compliance with current and future requirements. The Company’s business model could become non-viable as a result of new or revised rules or regulations arising from, for example, policy change or financial monitoring pressure.	Compliance with investment trust status regulations is reviewed at each Board meeting. The Board reviews compliance with other regulatory, tax and legal requirements and is kept informed of forthcoming regulatory changes.
CYBER SECURITY The Company has limited direct exposure to cyber risk. However, the Company’s operations or reputation could be affected if any of its service providers suffered a major cyber security breach. A State-backed cyber attack could also result in widespread disruption across the financial services industry.	The Audit and Risk Committee receives control reports and confirmation from its service providers regarding the measures that they take in this regard. The cyber security policies of all providers have also been reviewed by the Board. For more widespread disruption such as a State-backed cyber attack limited mitigation is possible, however all service providers remain vigilant given the increased likelihood of such an event in the current climate.
GLOBAL Unforeseen global emergencies such as a pandemic could lead to dramatically increased market and Company share-price volatility. Fraud and cyber security vulnerability could increase for key service providers.	During 2021, the world continued to adjust to the realities of life with COVID-19 and saw news of a succession of variants to the virus. With vaccines and boosters now largely a normal part of everyday life, at least in the Developed World, the impact to both global markets and the Company itself has been minimal. While market volatility has seen short-term spikes on the back of news regarding new variants or the efficacy of existing vaccines, overall portfolio performance has remained stable and company dividends continue to recover in line with the wider economy. The experiences of COVID-19 have evidenced the ability of both the Company and its service providers to react to severe global emergencies and to continue to manage shareholder assets with minimal disruption. Remote working is now widespread and seamless, allowing a switch away from using centralised office locations at any time if Government guidance requires it. Cyber security policies have been reviewed and strengthened to react to the new environment and no major incidents or outages have been experienced during the pandemic.

EMERGING RISKS
The Board has in place a robust process to identify, assess and monitor the principal risks and uncertainties and also to identify and evaluate newly emerging risks. The Board, through the Audit and Risk Committee, regularly reviews all risks to the Company, including emerging risks, which are identified by a variety of means, including advice from the Company’s professional advisors, the Association of Investment Companies (the “AIC”), and Directors’ knowledge of markets, changes and events. The following new or emerging risks were identified and reviewed during the year:

i) Following the COVID-19 pandemic in 2020 and the huge disruption it caused both to everyday life and financial markets across the world, the risk of new global pandemics must now be considered an ever-present emerging risk.

Indeed, epidemiologists and health organisations are already searching for the next possible candidate, which could originate from a number of different sources. Human interactions with animals as well as their integration into the food system, and ancient pathogens uncovered in melting permafrost caused by climate change are two such areas of concern. When these factors are combined with ever-increasing global travel and trade, a follow-up pandemic of equal or greater severity at some point in the future cannot be discounted.

ii) The impact of climate change came increasingly into focus in 2021 and its impact is now considered by both the Board and its Investment Manager as an emerging risk to the Company.

While the Company itself faces limited direct risk from climate change, the same is not the case for the underlying investments selected by the Company’s Investment Manager. Significant changes in climate, or indeed Government measures taken to combat it, could present a material risk to the value of investments held and therefore the NAV of the Company. This is addressed by the incorporation of ESG considerations into the investment process of Redwheel, as part of the drive to invest in companies with long-term viability.

The Investment Manager also uses its voting powers to engage with and influence companies towards taking positive steps against climate change and other environmental impacts.

iii) While it took place after the end of the period under review, the tragic recent events in Ukraine also highlight the risks that geopolitics and armed conflict can present to the Company. While the Company did not hold Russian investments, either via local equities or through depository receipts traded internationally, the impact of sanctions and exposure via the underlying businesses of multinational companies can have a material impact on investment returns. The Investment Manager complies with all sanctioning regimes and presently views Russia as uninvestable, while both the Board and Redwheel echo global calls for an urgent return to peace in the region.

GOING CONCERN
The Directors have reviewed the going concern basis of accounting for the Company. The Company’s assets consist substantially of equity shares in listed companies and in most circumstances are realisable within a short timescale. The use of the going concern basis of accounting is appropriate because there are no material uncertainties related to events or conditions that may cast significant doubt about the ability of the Company to continue as a going concern. The Directors therefore have a reasonable expectation that the Company has adequate resources to continue in operational existence for a period of at least 12 months from the date of the approval of these financial statements. Accordingly, the Directors continue to adopt the going concern basis in preparing the accounts. See note 1 in the full Annual Report & Financial Statements for further detail.

VIABILITY STATEMENT
The Board makes an assessment of the longer-term prospects of the Company beyond the timeframe envisaged under the going concern basis of accounting, having regard to the Company’s current position and the principal and emerging risks and uncertainties it faces. The AIFM and Investment Manager have assisted the Board in making this assessment via financial modelling and income forecasting, which demonstrates the financial viability of the Company. Stress-testing scenarios, such as an extreme drop in equity markets, have also been carried out and the projected financial position remains strong and all payment obligations meetable.

The stress-testing scenarios used to assess future viability incorporate a number of inputs. The financial structure of the Company is stable, with known payment obligations that can be modelled for future years with a low likelihood of any changes. Revenue expectations are modelled by the Investment Manager for future years with decreasing levels of certainty over time, based on the financial position and performance of investee companies. This is combined with an expectation of the rate of dividend payments to be made by the Company over the coming years to give an overall financial projection in normal market conditions.

To stress-test this projection, scenarios are then modelled for a 20% and 50% fall in both investee company valuations and the level of dividend payments made. In both cases, because the Company has both the ability to control its own dividend payments and a liquid portfolio of investments, the impact to reserves could be managed and the Company would remain viable during such periods. This was demonstrated during 2020 when markets reacted negatively to the onset of the COVID-19 pandemic.

The Company is a long-term investment vehicle and the Directors, therefore, believe that it is appropriate to assess its viability over a long-term horizon. For the purposes of assessing the Company’s prospects in accordance with the AIC Code of Corporate Governance (the “AIC Code”), the Board considers that assessing the Company’s prospects over a period of five years is appropriate given the nature of the Company and the inherent uncertainties over a longer time period.

The Directors believe that a five-year period appropriately reflects the long-term strategy of the Company and over which, in the absence of any adverse change to the regulatory environment and the favourable tax treatment afforded to UK investment trusts, they do not expect there to be any significant change to the current principal and emerging risks and to the adequacy of the mitigating controls in place.

In assessing the viability of the Company, the Directors have conducted a thorough assessment of each of the Company’s principal and emerging risks and uncertainties set out above. Particular scrutiny was given to the impact of a significant fall in equity markets on the value of the Company’s investment portfolio.

The Directors have also considered the Company’s leverage and liquidity in the context of its long-dated fixed-rate borrowings, its income and expenditure projections and the fact that the Company’s investments comprise mainly readily realisable quoted securities which can be sold to meet funding requirements if necessary. As a result, the Directors do not believe that there will be any impact on the Company’s long-term viability.

All of the key operations required by the Company are outsourced to third-party providers and alternative providers could be secured at relatively short notice if necessary.

Having taken into account the Company’s current position and the potential impact of its principal and emerging risks and uncertainties, the Directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due for a period of five years from the date of this Annual Report.

PORTFOLIO OF INVESTMENTS

AS AT 31 DECEMBER 2021

	COMPANY	INDUSTRY	PLACE OF PRIMARY LISTING	VALUATION £000	% OF PORTFOLIO
1.	Royal Mail	Industrials	UK	61,358	7.2
2.	Marks & Spencer Group	Consumer Services	UK	60,243	7.0
3.	BP	Oil & Gas	UK	51,440	6.0
4.	Shell	Oil & Gas	UK	48,272	5.6
5.	Anglo American	Basic Materials	UK	47,851	5.6
6.	NatWest Group	Financials	UK	45,506	5.3
7.	TotalEnergies	Oil & Gas	France	38,284	4.5
8.	Centrica	Utilities	UK	37,324	4.3
9.	WPP	Consumer Services	UK	35,195	4.1
10.	Aviva	Financials	UK	35,049	4.1
	Top Ten Investments			460,522	53.7
11.	Standard Chartered	Financials	UK	34,291	4.0
12.	ITV	Consumer Services	UK	33,124	3.9
13.	Pearson	Consumer Services	UK	29,063	3.4
14.	Barclays	Financials	UK	28,383	3.3
15.	Currys	Consumer Services	UK	26,398	3.1
16.	HP	Technology	USA	24,094	2.8
17.	Citigroup	Financials	USA	24,001	2.8
18.	Forterra	Industrials	UK	23,594	2.7
19.	Vodafone Group	Telecommunications	UK	22,778	2.7
20.	BT Group	Telecommunications	UK	20,815	2.4
	Top 20 Investments			727,063	84.8
21.	easyJet	Consumer Services	UK	18,838	2.2
22.	Capita	Industrials	UK	18,239	2.1
23.	Newmont	Basic Materials	USA	15,871	1.9
24.	Kingfisher	Consumer Services	UK	15,683	1.8
25.	Honda Motor	Consumer Goods	Japan	13,172	1.6
26.	CK Hutchison Holdings	Industrials	Hong Kong	12,531	1.5
27.	Continenta	Consumer Goods	Germany	11,204	1.3
28.	Barrick Gold	Basic Materials	Canada	10,389	1.2
29.	Sprott Physical Silver Trust	Financials	USA	5,128	0.6
30.	Vitesco Technologies Group	Consumer Goods	Germany	1,032	0.1
	Total Equity Investments			849,150	99.1
	Short-dated UK Gilts			7,944	0.9
	Total Valuation of Portfolio			857,094	100.0

PORTFOLIO DISTRIBUTION

AS AT 31 DECEMBER 2021

	INDUSTRY	TEMPLE BAR %	FTSE ALL-SHARE  %
1.	Consumer Services	25.2	11.9
2.	Financials	19.9	25.9
3.	Oil & Gas	15.9	7.9
4.	Industrials	13.3	13.4
5.	Basic Materials	8.5	9.3
6.	Telecommunications	5.0	2.0
7.	Utilities	4.3	3.3
8	Consumer Goods	2.9	14.9
9.	Technology	2.8	1.6
10.	Healthcare	-	9.8
	Total Equities	97.8	100.0
11.	Fixed Interest	0.9
12.	Cash	1.3
		100.0

STATEMENT OF DIRECTORS’ RESPONSIBILITIES

Directors’ r esponsibilities

The Directors are responsible for preparing the Annual Report & Financial Statements in accordance with UK-adopted international accounting standards and applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors are required to prepare the company financial statements in accordance with UK-adopted international accounting standards. Under company law the 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 for the Company for that period.

In preparing these financial statements, the Directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and accounting estimates that are reasonable and prudent;

• state whether they have been prepared in accordance with UK-adopted international accounting standards, subject to any material departures disclosed and explained in the financial statements;

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business; and

• prepare a Directors’ report, a strategic report and Directors’ remuneration report which comply with the requirements of the Companies Act 2006.

The Directors are 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 comply with the Companies Act 2006.

They are also 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 responsible for ensuring that the Annual Report & Financial Statements, taken as a whole, are fair, balanced, and understandable and provides the information necessary for shareholders to assess the Company’s position and performance, business model and strategy.

Website p ublication
The Directors are responsible for ensuring the Annual Report & Financial Statements are made available on a website. Financial statements are published on the Company’s website in accordance with legislation in the UK governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company’s website is the responsibility of the Directors. The Directors’ responsibility also extends to the ongoing integrity of the financial statements contained therein.

Directors’ r esponsibilities p ursuant t o DTR4
The Directors confirm to the best of their knowledge:

• the financial statements have been prepared in accordance with the applicable set of accounting standards give a true and fair view of the assets, liabilities, financial position and profit of the Company; and

• the Annual Report includes a fair review of the development and performance of the business and the financial position of the Company, together with a description of the principal risks and uncertainties that it faces.

On behalf of the Board

Arthur Copple
Chairman

23 March 2022

NON-STATUTORY ACCOUNTS

The financial information set out below does not constitute the Company’s statutory accounts for the year ended 31 December 2021 but is derived from those accounts. Statutory accounts for the year ended 31 December 2021 will be delivered to the Registrar of Companies in due course. The Independent Auditor has reported on those accounts; its report was (i) unqualified, (ii) did not include a reference to any matters to which the Independent Auditor drew attention by way of emphasis without qualifying its report and (iii) did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006. The text of the Independent Auditor’s Report can be found in the Company’s full Annual Report & Financial Statements.

STATEMENT OF COMPREHENSIVE INCOME

	2021			2020
	Revenue   000	Capital  £000	Total   000	Revenue  £000	Capital  £000	Total  £000
Investment Income	27,721	3,026	30,747	12,687	-	12,687
Other operating income	-	-	-	6	-	6
	27,721	3,026	30,747	12,693	-	12,693
Profit/(losses) on investments
Profit/(losses) on investments held at fair value through profit and loss	-	133,841	133,841	-	(277,554)	(277,554)
Currency exchange (loss)/gain	-	(12)	(12)	-	90	90
Total income/(loss)	27,721	136,855	164,576	12,693	(277,464)	(264,771)
Expenses
Management fees	(1,031)	(1,546)	(2,577)	(1,052)	(1,497)	(2,549)
Other expenses	(1,022)	(369)	(1,391)	(943)	(3,726)	(4,669)
Profit/(loss) before finance costs and tax	25,668	134,940	160,608	10,698	(282,687)	(271,989)
Finance costs	(1,267)	(1,901)	(3,168)	(1,977)	(2,963)	(4,940)
Profit/(loss) before tax	24,401	133,039	157,440	8,721	(285,650)	(276,929)
Tax	(664)	-	(664)	(331)	-	(331)
Profit/(loss) for the year	23,737	133,039	156,776	8,390	(285,650)	(277,260)
Earnings per share (basic and diluted)	35.57p	199.35p	234.92p	12.55p	(427.15)p	(414.60)p

The total column of this statement represents the Statement of Comprehensive Income prepared in accordance with IFRS. The supplementary revenue return and capital return columns are both prepared under guidance issued by the AIC. All items in the above statement derive from continuing operations.

No operations were acquired or discontinued during the year.

The Company does not have any income or expense that is not included in profit for the year. Accordingly, the profit for the year is also the Total Comprehensive Income for the year, as defined in IAS1 (revised).

STATEMENT OF CHANGES IN EQUITY

	Ordinary share capital £000	Share premium account £000	* Restated  capital  reserves  realised  £000	* Restated   capital  reserves  unrealised  £000	Retained  earnings  £000	Total  equity  £000
Balance at 1 January 2020	16,719	96,040	667,300	167,943	37,121	985,123
Total comprehensive (loss)/income for the year	-	-	(119,895)	(165,755)	8,390	(277,260)
Contributions by and distributions to owners
Transaction cost restatement adjustment	-	-	13,851	(13,851)	-	-
Dividends paid to equity shareholders	-	-	-	-	(32,527)	(32,527)
Balance at 31 December 2020	16,719	96,040	561,256	(11,663)	12,984	675,336
Total comprehensive income for the year	-	-	8,859	124,180	23,737	156,776
Contributions by and distributions to owners
Cost of shares bought back for treasury	-	-	(10,016)	-	-	(10,016)
Dividends paid to equity shareholders	-	-	-	-	(25,013)	(25,013)
Balance at 31 December 2021	16,719	96,040	560,099	112,517	11,708	797,083

As at 31 December 2021, the Company had distributable revenue reserves of £11,708,000 (2020: £12,984,000) and distributable realised

capital reserves of £560,099,000 (2020: £561,256,000*) for the payment of future dividends. The only distributable reserves are the retained earnings and realised capital reserves.

* A restatement of the realised capital reserves and unrealised capital reserves has been presented for the year ended 31 December 2020. The restatement increases the distributable capital reserve by £13,851,000 and reduces the non-distributable unrealised capital reserve by £13,851,000. There is no impact to the Statement of Financial Position. See note 12a in the full Annual Report & Financial Statements for further details.

STATEMENT OF FINANCIAL POSITION

	31 December 2021		31 December 2020
	£000	£000	£000	£000
Non-current assets
Investments held at fair value through profit or loss		849,150		718,423
Current assets
Investments held at fair value through profit or loss	7,944		55,193
Cash and cash equivalents	11,626		14,217
Receivables	5,172		2,466
		24,742		71,876
Total assets		873,892		790,299
Current liabilities
Payables		(2,138)		(1,675)
Interest bearing borrowings		-		(38,654)
Total assets less current liabilities		871,754		749,970
Non-current liabilities
Interest bearing borrowings	(74,671)		(74,634)
Net assets		797,083		675,336
Equity attributable to equity holders
Ordinary share capital	16,719		16,719
Share premium	96,040		96,040
Capital reserves	672,616		549,593
Retained revenue earnings	11,708		12,984
Total equity attributable to equity holders		797,083		675,336
Net asset value per share		1,208.59p		1,009.88p

The financial statements of Temple Bar Investment Trust Plc (registered number: 00214601) were approved by the Board of Directors and authorised for issue on 23 March 2022. They were signed on its behalf by:

A rthur Copple

Chairman

STATEMENT OF CASH FLOWS

	31 December 2021		31 December 2020
	£000	£000	£000	£000
Cash flows from operating activities
Profit/(loss) before tax		157,440		(276,929)
Adjustments for:
Gains/(losses) on investments	(133,841)		277,554
Finance costs	3,168		4,940
Dividend income	(30,761)		(12,558)
Interest income	14		(135)
Dividends received	28,065		13,362
Interest received	932		1,223
Increase in receivables	(276)		(139)
Increase/(decrease) in payables	69		(230)
Overseas withholding tax suffered	(664)		(331)
		(133,294)		283,686
Net cash flows from operating activities		24,146		6,757
Cash flows from investing activities
Purchases of investments	(124,529)		(1,061,110)
Sales of investments	174,213		1,094,811
Net cash flows from investing activities		49,684		33,701
Cash flows from financing activities
Repayment of borrowing	(38,000)		-
Equity dividends paid	(25,013)		(32,527)
Interest paid on borrowings	(3,818)		(4,863)
Shares bought back for treasury	(9,590)		-
Net cash flows used in financing activities		(76,421)		(37,390)
Net (decrease)/increase in cash and cash equivalents		(2,591)		3,068
Cash and cash equivalents at the start of the year		14,217		11,149
Cash and cash equivalents at the end of the year		11,626		14,217

21 RELATED PARTY TRANSACTIONS AND TRANSACTIONS WITH THE INVESTMENT MANAGER

IAS 24 ‘Related party disclosures’ requires the disclosure of material transactions between the Company and any related parties. Accordingly, the disclosures required are set out below:

Directors – The remuneration of the Directors is set out in the Report on Directors’ Remuneration in the full Annual Report & Financial Statements. There were no contracts existing during or at the end of the year in which a Director of the Company is or was interested and which are or were significant in relation to the Company’s business. There were no other material transactions during the year with the Directors of the Company.

At 31 December 2021, there was £nil (2020: £nil) payable to the Directors for fees and expenses.

AIFM and Investment Manager – On 30 October 2020, Link Fund Solutions Limited was appointed the AIFM of the Company and has delegated portfolio management to Redwheel, who is deemed to be Key Management Personnel for the purposes of disclosing related party information under IAS24. Details of the services provided by the Investment Manager are given in the full Annual Report & Financial Statements. Fees of £1,593,000 were accrued during the year (2020: £nil). Prior to 30 October 2020, these roles were carried out by Ninety One and the fees paid for these services are set out in the full Annual Report & Financial Statements.

23 POST BALANCE SHEET EVENTS

Subsequent to the year end and up to the date of this Annual Report, the Company bought back 9,300 ordinary shares for treasury, at a total cost of £108,667, representing 0.01% of the issued share capital as at 31 December 2021.

On 15 February 2022, the Board approved a fourth interim dividend for the year ended 31 December 2021, of 10.25 pence per ordinary share payable on 31 March 2022.

GLOSSARY OF TERMS

AIC
The Association of Investment Companies.

Benchmark
A comparative performance index.

Borrowing
Borrowing is the amount of finance taken out by the Company.
See net gearing

D iscount*
The amount by which the market price per share of an investment trust is lower than the net asset value per share. The discount is normally expressed as a percentage of the net asset value per share.

Dividend
The portion of company net profits paid out to shareholders.

Dividends p er o rdinary s hare
Dividends per share paid or proposed for the financial year for Section 1158 purposes.

In 2021 there were three interim payments of 9.75p per share and a declared fourth interim dividend of 10.25p per share, totalling 39.5p.

In 2020 there were two interim payments of 11.0p per share, one interim payment of 8.25p per share and a declared fourth interim dividend of 8.25p per share, totalling 38.5p.

FTSE All-Share Index
A comparative index that tracks the market price of the UK’s leading companies listed on the London Stock Exchange. Covering around 600 companies, including investment trusts, the name FTSE is taken from the Financial Times and the London Stock Exchange, who are its joint owners.

Liquidity
The ease with which an asset can be purchased or sold at a reasonable price for cash.

The gearing ratio as at 31 December 2021 is calculated as the ratio of the Company’s borrowings of £74,671,000 (2020: £113,288,000) less cash and cash equivalents (including gilts) of £19,570,000 (2020: £69,409,000), divided by investments of £849,150,000 (2020: £718,423,000). The resultant ratio of 6.5% can be seen in the summary of results on page in the full Annual Reports & Financial Statements.

Net Gearing*
In accounting terms, gearing is the amount of a company’s total borrowings divided by its shareholder funds. The gearing ratio as at 31 December 2021 is calculated as the ratio of the Company’s borrowings of £74,671,000 (2020: £113,288,000) less cash and cash equivalents (including gilts) of £19,570,000 (2020: £69,409,000), divided by investments of £849,150,000 (2020: £718,423,000). The resultant ratio of 6.5% can be seen in the full Annual Report & Financial Statements.

Peer Companies
Companies that operate in the same industry sector and are of similar size.

Premium*
The amount by which the market price per share of an investment trust exceeds the net asset value per share. The premium is normally expressed as a percentage of the net asset value per share.

Relative Performance
The return that an asset achieves over a period of time, compared to a benchmark.

Share Buy back
When a company buys some of its own shares in the market, which may lead to a narrowing of the discount to net asset value. It changes the company’s debt-to-equity ratio and is a tax-efficient alternative to paying out dividends.

Total Return*
Captures both the capital appreciation/depreciation of an investment as well as the dividends generated over a holding period.

Return on Net Asset Value

Expressed in percentage terms, Morningstar’s calculation of total return is determined each month by taking the change in monthly net asset value, reinvesting all income, and dividing by the starting net asset value. Reinvestments are made using the actual reinvestment net asset value.

The total returns account for management and administrative fees and other costs taken out of assets.

Valuation
Determination of the value of a company’s stock based on earnings and the market value of assets.

Value Investing
An investment strategy that aims to identify under-valued yet good quality companies with strong cash flows and robust balance sheets, putting an emphasis on financial strength.

Yield*
A measure of the income return earned on an investment. In the case of a share the yield expresses the annual dividend payment as the percentage of the market price of the share. In the case of a bond the running yield (or flat or current yield) is the annual interest payable as a percentage of the current market price. The redemption yield (or yield to maturity) allows for any gain or loss of capital which will be realised at the maturity date.

* Alternative Performance Measures,

CORPORATE INFORMATION

DIRECTORS Arthur Copple – Chairman Lesley Sherratt – Senior Independent Director Richard Wyatt Shefaly Yogendra		DEPOSITARY, BANKERS AND CUSTODIAN The Bank of New York Mellon (International) Limited One Canada Square London E14 5AL
ALTERNATIVE INVESTMENT FUND MANAGER Link Fund Solutions Limited 6th Floor 65 Gresham Street London EC2V 7NQ		STOCKBROKER Cenkos Securities plc 6.7.8 Tokenhouse Yard London EC2R 7AS
INVESTMENT MANAGER RWC Asset Management LLP Verde 4th Floor 10 Bressenden Place London SW1E 5DH		SOLICITORS Gowling WLG (UK) LLP 4 More London Riverside London SE1 2AU
REGISTERED OFFICE Beaufort House 51 New North Road Exeter EX4 4EP		INDEPENDENT AUDITOR BDO LLP 55 Baker Street London W1U 7EU
COMPANY SECRETARY Link Company Matters Limited Beaufort House 51 New North Road Exeter EX4 4EP		REGISTRAR Equiniti Limited Aspect House Spencer Road Lancing West Sussex BN99 6DA
FUND ADMINISTRATOR Link Alternative Fund Administrators Limited Beaufort House 51 New North Road Exeter EX4 4EP		Telephone number s: [phone] (overseas shareholder helpline) 0371 384 2432 (shareholder helpline)* 0906 559 6025 (broker helpline) *Lines open 8.30 a.m. to 5.30 p.m., Monday to Friday.
TEMPLE BAR IDENTIFIERS ISIN (ordinary shares) – GB0008825324 SEDOL (ordinary shares) – 0882532 Legal Entity Identifier – 213800O8EAP4SG5JD323
REGISTERED NUMBER Registered in England Number 00214601

National Storage Mechanism

A copy of the Annual Report & Financial Statements will shortly be submitted to the National Storage Mechanism (‘NSM’) and will be available for inspection at the NSM, which is situated at: https://data.fca.org.uk/a/nsm/nationalstoragemechanism.

END

Neither the contents of the Company’s website nor the contents of any website accessible from hyperlinks on this announcement (or any other website) is incorporated into, or forms part of, this announcement.