Annual Financial Report
Temple Bar Investment Trust plc
Final Results Announcement for the year ended 31 December 2012
Chairman's Statement
The total return on the net assets of Temple Bar during 2012 was 18.0%, which
compares with a total return on the FTSE All-Share Index of 12.3%. The share
price total return was 21.6% reflecting an increase over the year in the
premium at which the shares trade. Temple Bar continues significantly to
outperform its benchmark over both five and ten year periods.
Revenue on the portfolio rose by 9.5%; however, virtually all of this increase
was due to how the revenue on some bonds held on the portfolio has been
recognized. The actual and anticipated early repayment of certain bonds
necessitates the profit between the buy price and maturity price to be
amortised over a significantly shorter period than previously forecast.
Excluding this one-off effect, revenue was in line with the manager's forecasts
a year earlier. Although most dividends across the portfolio rose, overall
income was affected by Avon Products cutting its dividend, lower revenue
generated from the fixed interest portfolio as some of the bonds reached
maturity and a greater amount of cash being held on the portfolio. Post-tax
earnings rose by 10.3%. Excluding the bond revenue recognition treatment
previously referred to, post-tax earnings rose by 0.6%.
The Board is recommending a final dividend of 22.0p, to produce a total
increase of 4.0% for the year. The dividend will be payable on 28 March 2013 to
shareholders on the register at 15 March 2013. The shares become ex-dividend on
13 March 2013. This is the 29th consecutive year in which the dividend has been
increased.
At the year-end, gearing (calculated net of cash and related liquid assets) was
2.0 %.
Equity markets performed well in 2012 and investors seemed reluctant to fight
the Federal Reserve and other central banks. Time will tell how deep is this
commitment to equities.
Investment Trust Tax Rules
New legislation was introduced last year which has resulted in the removal of
the prohibition on the distribution of capital profits by way of dividend.
The board is therefore seeking shareholder approval at the Annual General
Meeting to amend the Company's Articles of Association to permit the
distribution of realised capital gains by way of dividend. I would emphasise
that this does not in any way indicate that there will be a change in dividend
policy. There is, at present, no intention to utilise the ability to make
distributions from capital profits, but the directors believe that it is
prudent to provide the flexibility to do so in the event of unforeseen changes,
such as those to future taxation policies.
Investment Policies
The portfolio manager currently has the authority to invest up to 10% of the
Company's investment portfolio in listed international equities in developed
economies. The Board is requesting shareholder approval to increase this limit
to 20%, principally to reflect the increasingly international nature of
investment markets where the place of a company's listing often bears little
resemblance to the countries in which it is active and where its profits are
generated.
The Board is also seeking approval for a minor change to the Company's
principal investment objective of providing growth in income and capital to
achieve a long term total return greater than the benchmark FTSE All Share
Index, through investment in a broad spread of (primarily UK) securities with
typically the majority of the portfolio selected from the constituents of the
FTSE 100 index. It is proposed that the majority of the portfolio be selected
from the FTSE 350 index rather than just the FTSE 100 index, in order to
provide greater flexibility in portfolio construction. The ability for the
portfolio manager to select investments broadly from the companies within the
FTSE 350 Index will bring the portfolio more in line with the benchmark FTSE
All Share Index.
Resolutions will be proposed at the AGM to put the above changes into effect.
Industry Developments
There are a number of forthcoming changes which will impact the Company,
including two of particular significance. The first relates to the
implementation in the UK of the European Union's Alternative Investment Fund
Managers Directive which will result in the introduction of further regulatory
oversight for investment trusts, such as the requirement to appoint a
Depositary that is, in turn, required to accept fairly onerous
responsibilities. The changes are due to come into effect in 2014 and the Board
is already considering the full implications of this legislation.
The second event of significance is the introduction in January this year of
the Retail Distribution Review (`RDR') which, amongst other things, prevents
commission payments to advisers. In general RDR is viewed as a positive
development in the longer term for the investment trust industry, which has
historically not paid commissions, through the creation of a level playing
field in the provision of investment advice. The Board believes that the
Company is relatively well placed to benefit from this development given its
scale, performance, the liquidity of its shares and other attributes.
Annual General Meeting
Our AGM this year will be held at Woolgate Exchange, 25 Basinghall Street,
London EC2V 5HA on 25 March 2013 at 11.00am. The Board encourages as many
shareholders as possible to attend this meeting. In addition to the formal
business of the meeting the portfolio manager, Alastair Mundy, will make a
presentation reviewing the past year and commenting on the outlook. He will
also be available to answer any questions alongside the directors.
Outlook
This is an environment where new investment opportunities are few and far
between. The portfolio manager prefers to wait for better times before acting.
John Reeve
Chairman
19 February 2013
Twenty Largest Investments
as at 31 December 2012
Company Super Sector Place of Valuation % of
listing portfolio
31 December
2012
£'000
HSBC Financials UK 51,242 8.08
Royal Dutch Shell Oil & Gas UK 48,563 7.65
Signet Jewelers Consumer Services UK/USA 48,438 7.63
Unilever Consumer Goods UK 41,491 6.54
GlaxoSmithKline Health Care UK 38,462 6.06
Travis Perkins Industrials UK 27,119 4.27
Vodafone Telecommunications UK 26,687 4.21
UK Treasury 4.5% 2013 Fixed Interest UK 25,892 4.08
BT Telecommunications UK 25,776 4.06
Grafton Group Industrials UK/ 24,922 3.93
Ireland
AstraZeneca Health Care UK 23,626 3.72
QinetiQ Industrials UK 19,888 3.13
Royal Bank of Scotland Financials UK 19,211 3.03
SIG Industrials UK 16,166 2.55
BP Oil & Gas UK 15,392 2.43
Centrica Utilities UK 14,636 2.31
British American Tobacco Consumer Goods UK 14,368 2.26
Avon Products Consumer Goods USA 12,651 1.99
Games Workshop Consumer Goods UK 10,483 1.65
CRH Industrials UK/ 9,744 1.54
Ireland
514,757 81.12
Statement of Comprehensive Income
for the year ended 31 December 2012
2012 2011
Revenue Capital Revenue Capital
return return Total Return return Total
£'000 £'000 £'000 £'000 £'000 £'000
Investment 28,164 - 28,164 25,640 - 25,640
income
Other operating 3 - 3 79 - 79
income
28,167 - 28,167 25,719 - 25,719
Gains/(losses)
on investments
Gains/(losses) - 72,438 72,438 - (19,776) (19,776)
on investments
held at fair
value through
profit or loss
Total income/ 28,167 72,438 100,605 25,719 (19,776) 5,943
(loss)
Expenses
Management fees (890) (1,334) (2,224) (816) (1,224) (2,040)
Other expenses (580) (448) (1,028) (527) (569) (1,096)
Profit before 26,697 70,656 97,353 24,376 (21,569) 2,807
finance costs
and tax
Finance costs (1,824) (2,753) (4,577) (1,824) (2,753) (4,577)
Profit/(loss) 24,873 67,903 92,776 22,552 (24,322) (1,770)
before tax
Tax - - - - - -
Profit/(loss) 24,873 67,903 92,776 22,552 (24,322) (1,770)
for the year
Earnings/(loss) 41.39p 113.00p 154.39p 38.08p (41.07)p (2.99)p
per share
(basic &
diluted)
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.
There are no minority interests.
Statement of Changes in Equity
for the year ended 31 December 2012
Ordinary Share
share premium Capital Retained Total
capital account reserves earnings equity
£'000 £'000 £'000 £'000 £'000
Balance at 1 14,740 8,507 486,832 29,943 540,022
January 2011
Loss for the year - - (24,322) 22,552 (1,770)
Issue of share 185 5,935 - - 6,120
capital
Dividends paid to - - - (22,332) (22,332)
equity
shareholders
Balance at 31 14,925 14,442 462,510 30,163 522,040
December 2011
Profit for the - - 67,903 24,873 92,776
year
Issue of share 213 7,663 - - 7,876
capital
Dividends paid to - - - (21,501) (21,501)
equity
shareholders
Balance at 31 15,138 22,105 530,413 33,535 601,191
December 2012
Statement of Financial Position
as at 31 December 2012
31 December 2012 31 December 2011
£'000 £'000 £'000 £'000
Non-current assets 634,503 578,048
Investments held at fair value
through profit or loss
634,503 578,048
Current assets
Other receivables 2,826 4,634
Cash and cash equivalents 28,063 3,883
30,889 8,517
Total assets 665,392 586,565
Current liabilities
Other payables (744) (1,085)
Total assets less current 664,648 585,480
liabilities
Non-current liabilities
Interest bearing borrowings (63,457) (63,440)
Net assets 601,191 522,040
Equity attributable to equity
holders
Ordinary share capital 15,138 14,925
Share premium 22,105 14,442
Capital reserves 530,413 462,510
Retained earnings 33,535 30,163
601,191 522,040
Total equity 601,191 522,040
Net asset value per share 992.86p 874.42p
Statement of Cash Flows
for the year ended 31 December 2012
2012 2011
£'000 £'000 £000 £'000
Cash flows from operating
activities
Profit/(Loss) before tax 92,776 (1,770)
Adjustments for:
Purchases of investments¹ (120,275) (162,877)
Sales of investments¹ 136,258 163,921
15,983 1,044
(Gains)/Loss on investments (72,438) 19,776
Financing costs 4,577 4,577
Operating cash flows before 40,898 23,627
movements in working capital
Increase in accrued income (1) (4)
Decrease/(increase) in 1,327 (1,428)
receivables
Increase in payables 140 485
Net cash flows from operating 42,364 22,680
activities before and after
income tax
Cash flows from financing
activities
Proceeds from issue of new 7,876 6,120
shares
(4,559) (4,559)
Interest paid on borrowings
Equity dividends paid (21,501) (22,332)
Net cash used in financing (18,184) (20,771)
activities
Net increase in cash and cash 24,180 1,909
equivalents
Cash and cash equivalents at 3,883 1,974
the start of the year
Cash and cash equivalents at 28,063 3,883
the end of the year
¹ Purchases and sales of investments are considered to be operating activities
of the Company, given its purpose, rather than investing activities.
Notes
i. 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 2011 and
31 December 2012. The 2012 accounts will be sent to shareholders shortly.
ii. The financial information contained in this announcement does not
constitute full accounts within the meaning of Section 434 of the Companies
Act 2006. The 2012 accounts, on which the report of the auditors is
unqualified, will be filed with the Registrar of Companies in due course.
The audited accounts for the year ended 31 December 2011 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 2013
Contact: Alastair Mundy
Telephone 020 7597 2000
Investec Asset Management Limited
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