Final Results

CHAIRMAN’S STATEMENT

Performance

During the year the total return on the net assets of Temple Bar was 27.9%*, outperforming the total return of the FTSE All Share Index of 19.2%. While it is always welcome to report on good performance over the year the Board attaches greater significance to the longer term performance and in this context I am pleased to report that on the same basis Temple Bar continues to outperform its benchmark over ten years.

Dividend

There have been three interim dividend payments during the year each of 11.0p per share and the directors are now recommending a final dividend payment for the year ended 31 December 2019 of 18.39p per share to be paid on 31 March 2020 to those shareholders on the register as at 13 March 2020. The ex-dividend date for this payment is 12 March 2020. If approved, this would give an increase in the total dividend payment for the year of 10.0%. In spite of this significant increase the dividend is fully covered by this year’s earnings and has not required recourse to the Company’s significant revenue reserves. Shareholders will note that the final dividend is lower than that paid in the previous year, reflecting the rebalancing exercise between the size of the final and interim dividends that was highlighted during the year. This will be the 36th consecutive year in which the Company has raised its annual dividend payment, such consistency being reflected in Temple Bar’s status as one of The Association of Investment Companies’ ‘Dividend Heroes’.

Gearing

At the year end, gearing (calculated net of cash and related liquid assets) was 8.0%*. The Company’s £38m 5.5% debenture stock matures in April 2021. During the year the Board will carefully consider all the available options for managing the Company’s borrowings going forward.

Culture and Purpose

It is a new requirement for all companies to set out their culture and purpose. It is perhaps more difficult for a conventional investment trust such as Temple Bar to articulate these matters given certain unique factors, such as an absence of any employees. Our defined purpose is relatively simple; it is to deliver attractive long term returns from a diversified portfolio of predominantly UK listed investments. Board culture promotes a desire for strong governance and long term investment, mindful of the interests of all stakeholders.

The Board

As highlighted in my Statement last year, Sir Richard Jewson will be retiring from the Board at the AGM and will not, therefore, be seeking re-election. Sir Richard has provided outstanding service to the Board over the 19 years that he has served, particularly in his capacity as Senior Independent Director and Chairman of the Audit and Risk Committee. We will greatly miss his wise counsel and wish him the very best for the future. Lesley Sherratt will succeed Sir Richard as Senior Independent Director and Chairman of the Audit and Risk Committee.

In October 2019 we appointed Sonita Alleyne and Shefaly Yogendra to the Board pursuant to the refreshment process to which I referred last year and both have already made strong contributions to Board discussion. It was very unfortunate that in January this year Sonita felt compelled to resign from the Board due to a conflict of interest in allowable investment categories between Temple Bar and one of her other portfolio positions.

The Board does not believe that long service should automatically render a director to be considered as non-independent. However, in recognition of the importance attached to tenure in the various corporate governance codes it has been agreed that a director will ordinarily serve on the Board for a maximum of nine years. This month I will have been on the Board for nine years and accordingly under normal circumstances I would be looking to stand down. However, a significant percentage of the Board has only recently been appointed, and indeed following Sonita’s resignation we will have to appoint another new director. Therefore, in the interests of optimising Board balance in terms of experience it has been proposed that I should continue to serve for a further three years.

Every year the Board undertakes a thorough evaluation of each director, including myself as Chairman. In addition, in line with best practice in this regard, all directors are subject to annual re-election by shareholders.

Secretary

Our company secretary, Martin Slade, will be retiring from this position after the AGM. Martin has provided the Company with exemplary secretarial services for over 26 years. He has kindly agreed to act as a consultant for the next 12 months to provide an orderly transfer of responsibilities. The Board would like to express its sincere thanks for everything Martin has done for the Company over this period and to wish him a long and happy retirement.

Share Capital Management

Temple Bar’s shares traded at a modest discount throughout most of the year but at the year end they stood at a small premium of 0.9%*. The Board is prepared to undertake share buy backs if the discount widens excessively, either in absolute terms or relative to the Company’s peer group. While no share repurchases took place during the year, the Board nonetheless recommends that the existing authorities to issue new ordinary shares and to repurchase shares in the market for cancellation or to hold in Treasury be continued. Accordingly, it is seeking approval from shareholders to renew the share issue and repurchase authorities at the forthcoming annual general meeting.

Investment Policy

As signaled in my statement last year, the Board consulted with shareholders as to whether they would support the Trust declining to invest in companies whose very business model was arguably unethical. Feedback suggested there was little support for this measure among shareholders, so at the present time the Board is not proposing to change policy in this regard. Shareholders should note, however, that the Manager does not invest in certain categories of stock, such as companies involved in cluster munitions.

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Annual General Meeting

The AGM this year will be held at the offices of our Manager at Woolgate Exchange, 25 Basinghall Street, London EC2V 5HA on Monday 30 March 2020 at 11am. Please note that this is a different building to that where the AGM was held last year.

In addition to the formal business of the meeting the portfolio manager will, as usual, make a presentation reviewing the past year and commenting on the outlook. He will also be available to answer questions, as will the directors. Shareholders who are unable to attend are encouraged to use their proxy votes.

Auditor

Regulations on compulsory auditor rotation mean that Ernst & Young LLP, the Company’s auditor, is stepping down to be replaced, following an audit tender, by BDO LLP. Ernst & Young LLP has audited the Company since 2003 and I should like to record our thanks for its service to the Company over this period.

Outlook

The current year has not started well for value investors, with January seeing a return of investors’ appetite for momentum stocks. Time will tell whether this situation will continue for an extended period. Nonetheless, with our experienced, well-resourced management team we believe that Temple Bar is well placed to generate significant returns for shareholders over the longer term.

_____________

Arthur Copple
Chairman

*Alternative Performance Measure – please see glossary of terms

Twenty Largest Investments

as at 31 December 2019

Company	Industry	Place of listing	Valuation £000	% of portfolio
Capita	Industrials	UK	85,282	7.8
GlaxoSmithKline	Healthcare	UK	74,573	6.9
Travis Perkins	Industrials	UK	71,010	6.5
Royal Dutch Shell	Oil & Gas	UK	56,336	5.2
BP	Oil & Gas	UK	47,458	4.4
Grafton Group	Industrials	UK	46,474	4.3
Tesco	Consumer Services	UK	41,843	3.9
Barclays	Financials	UK	41,234	3.8
Royal Bank of Scotland	Financials	UK	39,654	3.6
SIG	Industrials	UK	35,371	3.3
HSBC Holdings	Financials	UK	29,698	2.7
Kingfisher	Consumer Services	UK	29,150	2.7
Forterra	Industrials	UK	29,005	2.7
easyJet	Consumer Services	UK	28,486	2.6
Marks & Spencer	Consumer Services	UK	27,561	2.5
TP ICAP	Financials	UK	24,236	2.2
Citigroup	Financials	USA	23,411	2.2
Lloyds Banking Group	Financials	UK	21,680	2.0
Land Securities Group REIT	Financials	UK	21,473	2.0
McCarthy & Stone	Consumer Services	UK	20,027	1.8
			793,962	73.1

Statement of Comprehensive Income

For the year ended 31 December 2019

		2019 (unaudited)			2018 (audited)
		Revenue	Capital	Total	Revenue	Capital	Total
		£000	£000	£000	£000	£000	£000
Investment income		39,750	-	39,750	37,258	-	37,258
Other operating income		51	-	51	26	-	26
		39,801	-	39,801	37,284	-	37,284
Profit/(losses) on investments
Profit/(losses) on investments held at fair value through profit or loss		-	188,920	188,920	-	(131,528)	(131,528)
Total Income/(loss)		39,801	188,920	228,721	37,284	(131,528)	(94,244)
Expenses
Management fees		(1,555)	(2,244)	(3,799)	(1,503)	(2,168)	(3,671)
Other expenses		(585)	(533)	(1,118)	(559)	(1,427)	(1,986)
Profit/(loss) before finance costs and tax		37,661	186,143	223,804	35,222	(135,123)	(99,901)
Finance costs		(1,966)	(2,976)	(4,942)	(1,962)	(2,968)	(4,930)
Profit/(loss) before tax		35,695	183,167	218,862	33,260	(138,091)	(104,831)
Tax		(172)	-	(172)	(161)	-	(161)
Profit/(loss) for the year		35,523	183,167	218,690	33,099	(138,091)	(104,992)
Earnings per share (basic & diluted)		53.12p	273.90p	327.02p	49.50p	(206.50p)	(157.00p)

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 Association of Investment Companies. 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

for the year ended 31 December 2019 (unaudited)

	Ordinary	Share	Capital	Capital	Retained	Total
	share	premium	reserves	reserves	earnings	equity
	capital	account	realised	unrealised
	£000	£000	£000	£000	£000	£000
Balance at 1 January 2018	16,719	96,040	642,322	147,845	33,440	936,366
Unclaimed dividends	-	-	-	-	51	51
Profit/(loss) for the year	-	-	29,890	(167,981)	33,099	(104,992)
Dividends paid to equity shareholders	-	-	-	-	(29,243)	(29,243)
Balance at 31 December 2018	16,719	96,040	672,212	(20,136)	37,347	802,182
Unclaimed dividends	-	-	-	-	8	8
Profit for the year	-	-	(4,912)	188,079	35,523	218,690
Dividends paid to equity shareholders	-	-	-	-	(35,757)	(35,757)
Balance at 31 December 2019	16,719	96,040	667,300	167,943	37,121	985,123

Statement of Financial Position

as at 31 December 2019

	31 December 2019 (unaudited)		31 December 2018 (audited)
	£000	£000	£000	£000
Non-current assets Investments held at fair value through profit or loss		1,085,844		905,125
Current assets
Cash and cash equivalents	11,149		9,005
Receivables	3,245		3,231
		14,394		12,236
Total assets		1,100,238		917,361
Current liabilities
Payables		(1,066)		(1,208)
Total assets less current liabilities		1,099,172		916,153
Non-current liabilities
Interest bearing borrowings	(114,049)		(113,971)
Net assets		985,123		802,182
Equity attributable to equity holders
Ordinary share capital	16,719		16,719
Share premium	96,040		96,040
Capital reserves	835,243		652,076
Retained revenue earnings	37,121		37,347
Total equity attributable to equity holders		985,123		802,182
Net asset value per share		1,473.13p		1,199.56p

Statement of Cash Flows

for the year ended 31 December 2019

	2019 (unaudited) £000    £000		2018 (audited) £000    £000
Cash flows from operating activities
Profit/(loss) before tax		218,862		(104,831)
Adjustments for:
(Gains)/losses on investments	(188,920)		131,528
Finance costs	4,942		4,930
Purchases of investments	(152,237)		(513,298)
Sales of investments	160,040		512,712
Dividend income	(39,465)		(36,728)
Interest income	(313)		(545)
Dividends received	39,578		36,115
Interest received	336		1,365
Decrease in receivables	–		25
Increase/(decrease) in payables	106		(199)
Overseas withholding tax suffered	(172)		(161)
		(176,105)		135,744
Net cash flows from operating activities		42,757		30,913
Cash flows from financing activities
Unclaimed dividends Equity dividends paid Interest paid on borrowings	8 (35,757) (4,864)		51 (29,243) (4,877)
Net cash flows from financing activities		(40,613)		(34,069)
Net decrease/(increase) in cash and cash equivalents		2,144		(3,156)
Cash and cash equivalents at the start of the year		9,005		12,161
Cash and cash equivalents at the end of the year		11,149		9,005

Notes

1. The figures set out above are prepared on the same basis as set out in the previous year’s annual accounts and are derived from the audited accounts of Temple Bar Investment Trust Plc for the year ended 31 December 2018 and the unaudited accounts for the year ended 31 December 2019. The 2019 accounts will be sent to shareholders shortly.
2. The financial information contained in this announcement does not constitute full accounts within the meaning of Section 434 of the Companies Act 2006. The 2019 accounts, on which the report of the auditors is expected to be unqualified, will be filed with the Registrar of Companies in due course. The audited accounts for the year ended 31 December 2018 on which the report of the auditors was unqualified and did not contain a statement under Section 498 of the Companies Act 2006, have been filed with the Registrar of Companies.

19 February 2020

Contact:  Alastair Mundy
  Telephone [phone]
  Investec Fund Managers Limited

Glossary of Terms

Discount

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.

Net Gearing

In accounting terms, gearing is the amount of a company’s total borrowings divided by its share capital. Net gearing adjusts this amount by any cash and cash equivalents. High gearing means a proportionately large amount of debt, which may be considered more risky for equity holders. However, gearing also entails tax advantages. In investment analysis, a highly geared company is one where small changes in sales produce big swings in profits. Also known as leverage.

The gearing ratio as at 31 December 2019 is calculated as the ratio of the Trust’s net assets of £985,123,000 (2018: £801,182,000), divided by a sum of the total assets of £1,100,238,000 (2018: £ 917,361,000) less current liabilities of £1,066,000 (2018: £1,208,000), less cash and cash equivalents (including gilts) of £ 27,927,000 (2018: £ 33,521,000).

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.

Return on Net Asset Value

As at 31 December 2019, the difference between the Trust's opening and closing NAV stood at £182,941,000 (2019: £985,123,000; 2018: £802,182,000); adding the dividend paid in the current year of £35,757,000 results in a total return of £ 218,698,000 for the purposes of this calculation. Dividing this return by the opening NAV of the Trust results in the return of 27.9%.