Interim Results

Temple Bar Investment Trust PLC 24 July 2001 Chairman's statement Post tax revenues for the six months to 30 June were £7.385m representing an increase of 10.0% on the equivalent period last year. Although revenues have remained robust, this increase does include some benefit from higher cash holdings, and should therefore not be seen as an indication of the expected outturn for the year. Temple Bar has for the last five years sustained a dividend increase of 10% per annum, well in excess of its peer group and indeed the equity market as a whole. The directors have reviewed carefully the Trust's ongoing dividend policy taking into account its current strong revenues and reserves, but also recognising the wider economic pressures that are emerging, and the need for the managers to retain the ability to hold lower yielding shares when appropriate. Taking all these factors into account the board has determined that the interim dividend should be raised by 6% to 7.98p per ordinary share. This compares with a current rate of inflation of 1.9%. The board fully recognises the importance of income to shareholders and believes that this move will enhance the capacity of the Trust to continue its long term record of income growth and in the absence of unforeseen circumstances it anticipates that the final dividend will be increased by a similar percentage. The interim dividend will be paid on 28 September 2001 to those shareholders on the register on 17 September 2001. Turning now to the asset performance, I am pleased to report a further most satisfactory result for the first half of the year with total assets rising by 0.77% whereas the All Share Index produced a negative capital return of 8.57%. It is also worth comparing performance against the FTSE Higher Yield Index which rose by 1.65% reflecting the continued rehabilitation of the more value orientated sectors of the market. The lack of progress by equities so far this year can clearly be attributed to the more widespread economic slowdown we are experiencing. Whilst the telecom and technology sectors have dominated the headlines in terms of trading disappointments, it was always going to be a severe leap of faith to assume that the rest of the economy would remain unscathed. Not surprisingly a range of other sectors are now starting to be affected, although the consumer related industries provide a notable exception because of low unemployment and falling interest rates. Investor nervousness means that the safe haven status of defensive higher yielding shares has had growing appeal, and the core of the Trust's portfolio continues to benefit from this uncertainty. We have, however, been willing to reduce some defensive stocks which we believe have performed a little too strongly - in the Retail sector for example. New investment has been concentrated in very specific situations where defensive earnings are not being recognised, such as Gallaher, Lattice and Northern Foods. We have found it very difficult to justify a significant move into the more technology orientated sectors even after their spectacular falls. Outlook That there are some disturbing features about the current economic environment is not in doubt. The sheer speed of the decline in business confidence, the lack of visibility in earnings forecasts and the still high valuations across many sectors invite concern, as does the over optimistic belief that monetary easing is going to solve what has been, after all, a business rather than consumer induced slowdown. However, two points are worth considering. Firstly, many of the uncertainties have at least been recognised, with the prevailing wisdom now being noticeably more bearish. Secondly, we believe that a distinction should be drawn between the outlook for the market as a whole, which is faced with some major international problems, and the Trust's portfolio. 24 July 2001 Ronald Scott Brown Twenty largest holdings at 30 June 2001 Company Valuation % of £'000 portfolio BP 25,094 5.98 Glaxo Smith Kline 21,187 5.05 Lloyds TSB 18,324 4.37 Shell Transport & Trading 15,236 3.63 Boots 13,746 3.27 Prudential 12,624 3.01 Cable & Wireless 11,581 2.76 Safeway 10,229 2.44 Rank 10,017 2.39 Rio Tinto 9,553 2.28 Marks & Spencer 9,432 2.25 HSBC 9,212 2.19 British Telecom 9,193 2.19 Lattice 9,084 2.16 Astra Zeneca 8,860 2.11 Halifax 8,613 2.05 Gallaher 7,945 1.89 Bass 7,929 1.89 Rolls-Royce 7,804 1.86 Diageo 7,528 1.79 233,191 55.56 Statement of total return (incorporating the revenue account) of the group for the six months ended 30 June 2001 Six Six months months ended ended 30 30 June June 2001 2000 (unaudited) (unaudited) Revenue Capital Total Revenue Capital Total Notes £'000 £'000 £'000 £'000 £'000 £'000 Gains on 4 - 2,081 2,081 - 51 51 investments Income 5 9,384 - 9,384 8,666 - 8,666 Investment (452) (452) (904) (337) (337) (674) management fee Other (195) - (195) (280) - (280) expenses Net return 8,737 1,629 10,366 8,049 (286) 7,763 before finance costs and taxation Interest (1,140) (1,140) (2,280) (1,140) (1,140) (2,280) payable Return on ordinary 7,597 489 8,086 6,909 (1,426) 5,483 activities before taxation Taxation (212) 212 - (193) 193 - Return on ordinary 7,385 701 8,086 6,716 (1,233) 5,483 activities after taxation Ordinary (4,612) - (4,612) (4,352) - (4,352) dividends Transfers 2,773 701 3,474 2,364 (1,233) 1,131 to reserves Return 12.78p 1.21p 13.99p 11.62p (2.13)p 9.49p per ordinary share Dividend 7.98p 7.53p per ordinary share Year ended 31 December 2000 (audited) Revenue Capital Total Notes £'000 £'000 £'000 Gains on investments 4 - 22,223 22,223 Income 5 17,357 - 17,357 Investment management fee (687) (687) (1,374) Other expenses (574) - (574) Net return before finance costs and taxation 16,096 21,536 37,632 Interest payable (2,279) (2,280) (4,559) Return on ordinary activities before taxation 13,817 19,256 33,073 Taxation (389) 383 (6) Return on ordinary activities after taxation 13,428 19,639 33,067 Ordinary dividends (13,541) - (13,541) Transfers to reserves (113) 19,639 19,526 Return per ordinary share 23.24p 33.98p 57.22p Dividend per ordinary share 23.43p Consolidated cash flow statement for the six months ended 30 June 2001 30 June 30 June 31 2001 2000 December 2000 £'000 £'000 £'000 (unaudited) (unaudited) (audited) Cash flow from operating activities 8,727 7,301 14,279 Return on investments and servicing of finance Interest paid (2,280) (2,280) (4,559) Taxation UK tax (paid)/recovered (110) (107) 268 Capital expenditure and financial investment 6,155 (6,467) 17,737 Purchases of investments (105,810) (59,875) (123,048) Sales of investments 111,965 53,408 140,785 Equity dividends paid (9,189) (8,351) (12,703) Cash inflow/(outflow) before management of liquid resources and financing 3,303 (9,904) 15,022 Management of liquid resources Money market deposits (placed)/withdrawn (5,553) 9,830 (7,430) (Decrease)/increase in cash (2,250) (74) 7,592 Reconciliation of net cash flow to movement in net debt (Decrease)/increase in cash (2,250) (74) 7,592 Cash used to increase/(decrease) liquid 5,553 (9,830) 7,430 resources Change in net debt 3,303 (9,904) 15,022 Net debt at 1 January (31,227) (46,249) (46,249) Net debt at 30 June (27,924) (56,153) (31,227) Consolidated summary balance sheet at 30 June 2001 30 June 2001 30 June 2000 31 December 2000 £'000 £'000 £'000 (unaudited) (unaudited) (audited) Investments 419,752 428,757 424, 437 Net current assets 35,639 4,765 27,480 Amounts falling due after one year (63,000) (63,000) (63,000) Net assets 392,391 370,522 388,917 Attributable to ordinary shareholders 392,391 370,522 388,917 Net asset value per ordinary share: 678.96p 641.12p 672.95p Notes to the interim results 1. Principal activity The principal activity of the Company remains that of an investment trust. The principal activity of its trading subsidiary is investment dealing. 2. Recharges to capital and accounting policies One half of the management fee and interest payable on the debenture stocks is charged to the revenue account and the other half is charged to capital reserves, net of corporation tax relief, and inclusive of any related irrecoverable value added tax. The unaudited interim financial statements have been prepared on a basis consistent with the statutory financial statements for the year ended 31 December 2000. 3. Dividend The interim dividend of 7.98p (2000, 7.53p) per ordinary share will absorb £4,611,898 and will be paid on 28 September 2001 to shareholders registered on 17 September 2001. 4. Gains on investments 30 June 30 June 31 December 2001 2000 2000 £'000 £'000 £'000 Net realised gains on sales 27,145 8,519 29,817 Net decrease in unrealised (25,064) (8,468) (7,594) appreciation Gains on investments 2,081 51 22,223 5. Income 30 June 30 June 31 December 2001 2000 2000 £'000 £'000 £'000 UK dividends net of tax credits 7,704 6,963 13,774 Income from UK fixed interest securities 903 1,087 2,003 Scrip dividends 87 177 459 Bank interest 690 331 955 Underwriting commission - - 15 Dealing profit - 108 151 9,384 8,666 17,357 6. Comparative figures The information for the year ended 31 December 2000 does not constitute statutory accounts, but has been extracted from the latest published audited accounts, which have been filed with the Registrar of Companies. The report of the auditors on those accounts contained no qualification or statement under section 237(2) or (3) of the Companies Act 1985. 7. Publication This interim report is being sent to shareholders and copies will be made available to the public at the registered office of the Company.

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Temple Bar Inv Trust (TMPL)
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