Half-yearly Report

Half-yearly report

for the six months ended 30 June 2012

The total return on the net assets of Temple Bar during the first
half of 2012 was 9.5%, which compares with a total return for the FTSE
All-Share Index of 3.3%. Post-tax revenue earnings for the half year were
£12.6m compared with £11.5m in the equivalent period last year. The Board has
declared an interim dividend of 14.65p, an increase of 4.6% over last year, to
shareholders on the register at 14 September.

Market conditions in the first half were perfect for investors who
enjoy reacting to the meaningless flow of economic statistics and media sound
bites. These investors talked enthusiastically about `risk on, risk off'
markets, implying they were sufficiently skilful to fine-tune their equity
strategies and benefit from the volatility. However, even this group appeared
to lose heart during the six month period, whipsawed by market movements as
the market swayed between concerns over the Eurozone banking crisis and
slowdowns in the US and Chinese economies on one hand and the hope for further
financial easing (and damn the consequences) if conditions deteriorated too
much.

As we have often stated, we claim no competitive advantage in
economic forecasting and therefore consider it futile to participate in such
pastimes. Our preference is to analyse companies from a `bottom-up'
perspective. Of course, all companies are affected by the economic backdrop,
but our long-term focus accepts that economic conditions will not always be
ideal throughout our holding period. We must, however, be confident that the
companies in which we invest have balance sheets strong enough to weather
hazardous economic conditions.

Although the universe of underperforming shares from which we
select our stocks is reasonably large, our dealing activity remains subdued.
Of great concern to us over our investment horizon is the impact that
technological progress may have on the companies we analyse. The likes of
Amazon, Apple and Facebook have disrupted companies across a number of
industries in recent years and it is impossible for an investor confidently to
assert where future disruptive behaviour may take hold. It is amazing that
Facebook is only eight years old and that the next decade's great companies
may currently be embryonic or as yet non-existent organizations.

Our preference in a fast moving world is therefore to select from
those companies where we can be reasonably sure their business model will be
fairly similar in five years' time. Within this group our purchases, which in
most cases were top-ups of existing holdings, were focused on those companies
currently generating weaker profitability than peers but which we believe can
close the gap (eg Avon and Grafton), companies that have had `good'
recessions, mainly by virtue of their weak competitors becoming weaker (eg
Grafton, Carnival and HSBC) and those companies where other investors were
reluctant to recognise prospects for a significant sales bounce back (SIG,
Grafton).

We had sold BP in the first half of 2011, concerned that the
longer-term consequences of the Gulf of Mexico spill would be higher costs and
lower growth. The shares fell significantly following the sale and while a
number of doubts remained about BP's future, the shares' valuation was
sufficiently attractive for us to rebuild a position.

Sales made on the portfolio were a mix of the good, the bad and the
ugly. The Colfax shares received as part of the bid for Charter were sold, as
were Wolseley and Compass after very strong share price recoveries. Home
Retail was sold having performed strongly early in the year; we had
under-estimated the competitive intensity in non-food retailing in the UK and
could envision only many years of struggle for many of the largest
participants. We also sold Independent News and Media as the balance sheet had
deteriorated further since the original purchase. A crumb of comfort was that
the buyer of our shares paid a significantly higher than market price for our
stock.

In April, Cable & Wireless Worldwide received a bid, which we
accepted, from Vodafone. We were frustrated that Cable & Wireless's
operational performance had deteriorated so rapidly and it is likely that
Vodafone has purchased a company ripe for a turnaround. Our acceptance of the
bid reflected our doubts that the company's balance sheet could withstand
further operational deterioration.

Cable & Wireless Worldwide was the most significant contributor to
relative performance over the period. Travis Perkins also performed well as
investors appreciated the company's strong operational performance in an
unhelpful environment. Games Workshop and Qinetiq also performed well;
investors reacted to improving profitability and balance sheet strength.

Performance was also assisted by having no exposure to the UK
mining sector, the weakest sector in the UK equity market in the first half of
the year. In general, we were also fortunate to avoid the worst performing
stocks in other sectors.

While other investors moan about high volatility, we are more
positive. Fund management is a very competitive activity and success demands
that our competitors sometimes act irrationally thus providing us with
opportunities if we can remain objective. Such actions are far more likely in
periods of great uncertainty.

Alastair Mundy

Investec Asset Management Limited

24 July 2012

Twenty largest holdings
as at 30 June 2012

Company                           Sector       Place of Valuation      % of
                                                Listing     £'000 Portfolio
 
GlaxoSmithKline              Health Care             UK    50,351      8.35
 
Royal Dutch Shell              Oil & Gas             UK    49,713      8.25
HSBC                               Banks             UK    44,453      7.38
Signet Jewelers                   Retail         UK/USA    41,386      6.87
Unilever                 Food & Beverage             UK    37,614      6.24
Vodafone              Telecommunications             UK    30,982      5.14
Travis Perkins        Industrial Goods &             UK    24,213      4.02
                                Services
BT                    Telecommunications             UK    23,567      3.91
AstraZeneca                  Health Care             UK    23,155      3.84
British American    Personal & Household             UK    21,638      3.59
Tobacco                            Goods
QinetiQ Group         Industrial Goods &             UK    17,027      2.83
                                Services
Grafton Group         Industrial Goods &     UK/Ireland    16,391      2.72
                                Services
BP                             Oil & Gas             UK    15,288      2.54
Avon Products       Personal & Household            USA    14,791      2.45
                                   Goods
Centrica                       Utilities             UK    13,939      2.31
SIG                   Industrial Goods &             UK    12,955      2.15
                                Services
Pfizer                        Heath Care            USA    11,964      1.99
UK Treasury 4.5%          Fixed Interest             UK    10,594      1.76
Stock 2013
CRH                   Industrial Goods &     UK/Ireland     9,631      1.60
                                Services
Market Vectors -         Basic Resources            USA     9,510      1.58
ETF Gold Miners
                                                          479,162     79.52
 
                Consolidated statement of comprehensive income

                    for the six months ended 30 June 2012

                                    30 June 2012             30 June 2011           31 December 2011
                                    (unaudited)               (unaudited)               (audited)
 
                                Revenue Capital         Revenue Capital         Revenue  Capital
                                 return  return   Total  return  return   Total  return   return    Total
                                  £'000   £'000   £'000   £'000   £'000   £'000   £'000    £'000    £'000
 
Investment income                14,159       -  14,159  13,132       -  13,132  25,640        -   25,640
Other operating income                1       -       1      72       -      72      79        -       79
Total income                     14,160       -  14,160  13,204       -  13,204  25,719        -   25,719
 
Gains/(losses) on
investments
Gains/(losses) on fair value
through profit or loss                -  23,871  23,871       -  13,317  13,317       - (19,776) (19,776)
assets
                                 14,160  23,871  38,031  13,204  13,317  26,521  25,719 (19,776)    5,943
 
Expenses
Management fees                   (427)   (640) (1,067)   (421)   (632) (1,053)   (816)  (1,224)  (2,040)
Other expenses including          (223)    (95)   (318)   (346)   (455)   (801)   (527)    (569)  (1,096)
dealing costs
 
Profit/(loss) before finance
costs and tax                    13,510  23,136  36,646  12,437  12,230  24,667  24,376 (21,569)    2,807
Finance costs                     (911) (1,362) (2,273)   (908) (1,362) (2,270) (1,824)  (2,753)  (4,577)
Profit/(loss) before tax         12,599  21,774  34,373  11,529  10,868  22,397  22,552 (24,322)  (1,770)
Tax                                   -       -       -       -       -       -       -        -        -
Profit/(loss) for the period     12,599  21,774  34,373  11,529  10,868  22,397  22,552 (24,322)  (1,770)
 
Earnings per share (basic        21.04p  36.36p  57.40p  19.55p  18.43p  37.98p  38.08p (41.07)p  (2.99)p
and diluted)
 
An interim dividend of 14.65 pence per share (£8,827,000) in
respect of the six months ended 30 June 2012 was declared on 24 July 2012 and
is payable on 28 September 2012. An interim dividend of 14.0 pence per share
(£8,255,000) in respect of the six months ended 30 June 2011 was declared on
26 July 2011 and was paid on 30 September 2011. A final dividend of 21.23
pence per share (£12,675,000) in respect of the year ended 31 December 2011
was declared on 23 February 2012 and was paid on 30 March 2012. The total
column of this statement represents the Group's Income Statement, prepared in
accordance with IFRS. The supplementary revenue return and capital return
columns are both prepared under guidance published by the Association of
Investment Companies. All items in the above statement derive from continuing
operations. All income is attributable to the equity holders of the parent
company. There are no minority interests.

Consolidated statement of changes in equity

for the six months ended 30 June 2012

                        Ordinary   Share
                           share premium  Capital Retained    Total
                         capital account reserves earnings   equity
                           £'000   £'000    £'000    £'000    £'000
 
                          14,925  14,442  462,510   30,163  522,040
BALANCE AT 1 JANUARY
2012
 
Profit for the period          -       -   21,774   12,599   34,373
                          14,925  14,442  484,284   42,762  556,413
 
Issue of share capital*      138   4,784        -        -    4,922
 
Dividends paid to
equity shareholders            -       -        - (12,675) (12,675)
BALANCE AT 30 JUNE 2012   15,063  19,226  484,284   30,087  548,660


Consolidated statement of changes in equity

for the six months ended 30 June 2011

                        Ordinary   Share
                           share premium  Capital Retained    Total
                         capital account reserves earnings   equity
                           £'000   £'000    £'000    £'000    £'000
 
                          14,740   8,507  486,832   29,943  540,022
BALANCE AT 1 JANUARY
2011
 
Profit for the period          -       -   10,868   11,529   22,397
                          14,740   8,507  497,700   41,472  562,419
Dividends paid to
equity shareholders            -       -        - (13,974) (13,974)
BALANCE AT 30 JUNE 2011   14,740   8,507  497,700   27,498  548,445

* 550,000 shares were issued during the period for a total consideration of
£4,921,500 at a premium to the prevailing net asset value due to investor
demand.

Consolidated statement of financial position

as at 30 June 2012

                               30 June     30 June 31 December
                                  2012        2011        2011
                           (unaudited) (unaudited)   (audited)
                                 £'000       £'000       £'000
NON-CURRENT ASSETS
Investments held at fair
value through                  602,679     607,639     578,048
profit or loss
 
CURRENT ASSETS
Cash and cash equivalents        6,441       1,978       3,883
Other receivables                4,487       5,989       4,634
                                10,928       7,967       8,517
 
TOTAL ASSETS                   613,607     615,606     586,565
 
CURRENT LIABILITIES
Other payables                 (1,516)     (3,749)     (1,085)
 
TOTAL ASSETS LESS CURRENT      612,091     611,857     585,480
LIABILITIES
 
NON-CURRENT LIABILITIES
Interest bearing              (63,431)    (63,412)    (63,440)
borrowings
 
NET ASSETS                     548,660     548,445     522,040
 
EQUITY ATTRIBUTABLE TO
EQUITY HOLDERS
Ordinary share capital          15,063      14,740      14,925
Share premium                   19,226       8,507      14,442
Capital reserves               484,284     497,700     462,510
Retained earnings               30,087      27,498      30,163
 
TOTAL EQUITY                   548,660     548,445     522,040
 
NET ASSET VALUE PER SHARE      910.62p     930.18p     874.42p


Consolidated statement of cash flows

for the six months ended 30 June 2012

                                    30 June      30 June 31 December
                                       2012         2011        2011
                                (unaudited)  (unaudited)   (audited)
                                      £'000        £'000       £'000
CASH FLOWS FROM OPERATING
ACTIVITIES
Profit/(loss) before tax             34,373       22,397     (1,770)
 
Adjustments for:
Purchases of investments ¹         (85,862)     (97,511)   (162,877)
Sales of investments ¹               85,110      103,066     163,921
                                      (752)        5,555       1,044
 
Gains/(losses) on investments      (23,871)     (13,317)      19,776
Financing costs                       2,273        2,270       4,577
 
Operating cash flows before
movements in working capital         12,023       16,905      23,627
Decrease/(increase) in
accrued income and                        6        (824)         (4)
prepayments
Decrease/(increase) in                  141      (1,963)     (1,428)
receivables
Increase in payables                    422        2,139         485
 
NET CASH FLOW FROM OPERATING
ACTIVITIES BEFORE AND AFTER
INCOME TAX                           12,592       16,257      22,680
 
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from issue of new            4,921            -       6,120
shares
Interest paid on borrowings         (2,280)      (2,279)     (4,559)
Equity dividends paid              (12,675)     (13,974)    (22,332)
NET CASH USED IN FINANCING
ACTIVITIES                         (10,034)     (16,253)    (20,771)
 
NET INCREASE IN CASH AND CASH
EQUIVALENTS                           2,558            4        1909
Cash and cash equivalents at
the start of the period               3,883        1,974       1,974
Cash and cash equivalents at
the end of the period                 6,441        1,978       3,883

¹ Purchases and sales of investments are considered to be operating activities
of the Company, given its purpose, rather than investing activities.

Responsibility Statement

The Directors confirm to the best of their knowledge that:

- the condensed set of financial statements contained within the
half-year report has been prepared in accordance with the Accounting Standards
Board's Statement `Half-Yearly Financial Reports';

- the half yearly financial report, which incorporates the interim
management report, includes a fair review of the information required by
Disclosure and Transparency Rule 4.2.7R 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

- in accordance with Disclosure and Transparency Rule 4.2.8R there
have been no related parties transactions during the six months to 30 June
2012 and therefore nothing to report on any material effect by such a
transaction on the financial position or performance of the Company during
that period.

The half-yearly financial report was approved by the Board on 24
July 2012 and the above responsibility statement was signed on its behalf by:

John Reeve

Chairman

Notes

1. Comparative figures

 The financial information contained in this half-year report does
not constitute statutory accounts as defined in section 434-436 of the
Companies Act 2006. The financial information for the six months ended 30 June
2012 and 30 June 2011 has not been audited.

 The information for the year ended 31 December 2011 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 498(2) or (3) of the Companies Act
2006.

2. Publication

 This half-year report is being sent to shareholders and copies
will be made available to the public at the Company's registered office and on
its website.

For further information please contact:

Alastair Mundy

Investec Asset Management Limited 020 7597 2000