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Temple Bar Investment Trust Plc - Half-year Report

Temple Bar Investment Trust PLC

Half-year Report

Chairman’s Statement

Dear Shareholder,

The period under review, as can be seen in the accompanying tables, has been hugely disappointing. The net asset value of your shares, and their price, have suffered very significant falls. In addition, the Trust has seen a near 70% fall in its earnings per share. It is in this context that the Board has decided to replace the current investment managers, Ninety One, with RWC Asset Management LLP.

Please see below the Stock Exchange announcement detailing the above, which was issued on 23rd September:

“Change of investment manager

Further to the announcement made on , the Board is pleased to announce the proposed change of the Trust’s investment manager to RWC Asset Management LLP (“RWC”). Temple Bar has today entered into heads of terms with RWC (the “Heads of Terms”) under which, subject to the satisfaction of conditions detailed below, RWC will become the Trust’s investment manager. It is currently anticipated that the appointment of RWC will become effective on or around the end of at which time a further announcement will be made.2 September 2020October 2020


Following the disappointing performance of the Trust in 2020 and the departure due to ill health of the named fund manager, the Board announced that it would conduct a review of its management arrangements. The Board chose the services of Stanhope Consulting (“Stanhope”), initially to conduct an independent analysis of the performance of the value style both internationally and in the context of the equity market. It is apparent that this style can be characterised by quite long periods of relative weakness followed by sharp periods of strong outperformance. The Board concluded that this is not a time in the cycle of returns to abandon this value style bias. The Board, advised by Stanhope, then invited investment management proposals from providers internationally. These were all examined in great detail and after an exhaustive, multi-stage process, the Board concluded that the investment proposition from RWC, offering a sustainable value investment style, was in the current circumstances by far the strongest that they had received.UK

Investment objective, investment policy, strategy and style

The Trust’s investment objective will remain unchanged; to provide growth in income and capital to achieve a long-term return greater than the benchmark FTSE All-Share Index, through investment primarily in securities. Likewise, the investment policy (including investment restrictions) will remain unchanged.UK

Temple Bar has for many years had a value investment approach and the Board has selected RWC for its proven expertise and excellent long-term track record in this investment discipline, thereby ensuring continuity in the investment approach for Shareholders.

About the new investment management team

The Trust’s portfolio will be managed by the long-term partnership of and , each of whom has around 30 years investment experience. They employ a long-term, value-oriented approach, which takes advantage of stock market over-reaction to enable them to purchase shares in sound businesses at a significant discount to their intrinsic value. They have applied this tried and tested approach in a disciplined manner over many years, and this has resulted in creating significant added value for their clients.Nick PurvesIan Lance

Benefits of the proposals

The Board believes that the change in investment manager will provide the following benefits to Shareholders:

Added value of two highly experienced fund managers, backed by a proven long term track record: 20 year fund total return of 234 per cent. vs. 122 per cent. for FTSE All-Share.

Exposure to equities which are trading at their greatest discount to World equities for fifty years and in particular to value stocks which are trading at their greatest ever discount to growth stocks.UKUK

Future capital appreciation alongside attractive dividends and steady income growth, to be delivered by investing in a focused list of sustainable companies which can grow profits over time, whose finances are strong and which the new managers believe are significantly under-valued.

Maintained management fee of 0.35 per cent of total assets and competitive fixed costs mean that the total expense ratio will continue to be one of the lowest in the sector.

Material contribution, by fee waiver to , by the incoming investment manager to offset transition costs.30 June 2021

About RWC

RWC is a specialist, independent investment manager established in 2000 with circa £13.4 billion (as at ) under management.31 August 2020

The organisation focuses on building strong teams of people who have clear and disciplined investment processes. RWC further believes in ensuring that its investment teams have the resources and autonomy that enable them to focus on the long-term returns for its clients. This is underpinned by the majority of the organisation being owned by the people who work at RWC.

The RWC income and value team have been at RWC for over a decade having over 60 years experience between the two lead managers. They are market leading value investors and are responsible for over £3 billion of client assets. UKUK

The Heads of Terms

Under the Heads of Terms the formal appointment of RWC as the Trust’s investment manager is conditional upon the satisfaction of a number of conditions, including: (i) the negotiation and entering into a form of Alternative Investment Fund Manager’s Agreement (the “AIFM Agreement”) with an independent Alternative Investment Fund Manager (“AIFM”) under the terms of which (and pursuant to a portfolio management agreement to which Temple Bar will also be a party (the “Portfolio Management Agreement”) the AIFM will delegate portfolio management to RWC; (ii) all necessary regulatory approvals; and (iii) the Trust concluding arrangements with Ninety One Fund Managers UK Limited (“Ninety One”) for the termination of the existing investment management arrangements.

Under the terms of the proposed Portfolio Management Agreement RWC will be paid a management fee equal to 0.35 per cent. per annum of the Trust’s total assets. Furthermore, as Ninety One is contractually entitled to receive the management fee for the remainder of the notice period which it is currently serving, RWC has agreed that it will forgo the management fee to which it would otherwise be entitled to in order largely to defray the fixed costs and expenses incurred by Temple Bar in connection with the appointment of RWC. It is proposed that RWC’s appointment will be for an initial term of 18 months and may thereafter be terminated by either party giving 6 months’ notice. It is proposed that the Portfolio Management Agreement is capable of summary termination in certain usual circumstances including in the event that both and cease to be responsible for the management of the Trust’s assets or otherwise become incapacitated. 30 June 2021Nick PurvesIan Lance

Dividend outlook

Having reviewed the Trust’s income position with RWC, the Board intends to recommend a total dividend for the current year of per ordinary share, with both the third interim dividend and the final dividend recommended to be 8.25p. This new total dividend, unfortunately, represents a cut of 25 per cent. from the previous level. From this base level, however, the Board believes that it will be possible to renew dividend growth going forward. Current projections suggest that there will have to be transfers from reserves to enable the 2020 and the 2021 dividend to be paid, but thereafter the dividend should be covered by earnings.38.5 pence

Comments from the Chairman and named fund managers

, Chairman of Temple Bar, commented “Up until recently Temple Bar had a long history of providing attractive investment returns. In selecting RWC as investment manager we aim to reinvigorate the Trust and return it to its former position as one of the market leaders in the sector.Arthur Copple

It is obviously very disappointing for us to announce a fall in the dividend for the first time in many years, but this has been an especially challenging year for many dividend paying companies and unfortunately the portfolio of the Trust has been particularly adversely impacted. We understand how important dividends are to our Shareholders and this played a large part in our rationale in selecting RWC as manager. We strongly believe they are well placed to put Temple Bar back on the path to provide not only a high but growing dividend over the medium to longer term”.

and , proposed fund managers of Temple Bar, commented “In our long investing career, we have seen three occasions when dislocation in the stock market has created the most exceptional opportunities for long term, value investors; post the technology bubble of the late nineties, coming out of the global financial crisis and today. We very much look forward to harnessing these opportunities for the benefit of the Temple Bar Shareholders.”Nick PurvesIan Lance

, CEO of RWC Partners, commented “It’s a real privilege to have been appointed as only the third portfolio manager of Temple Bar in its 94 year history. Our appointment comes at an interesting moment as investors consider whether there will be a change of leadership in equity markets, and where to allocate capital in a world of low interest rates and high valuations. Nick and Ian’s track record of over twenty years is steeped in sustainable value; they are arguably one of the most experienced portfolio management partnerships in the industry and have always run money consistently to this ethos, regardless of wider market sentiment. We are honoured to now have the opportunity to start building a track record with Temple Bar, at what feels like a very exciting juncture in the world of true value investing.”Dan Mannix


Further details of the key individuals

and joined RWC in and together manage over £3 billion of client assets, including the TM RWC Equity Income Fund. After qualifying as a Chartered Accountant, Nick worked at Schroders for over 16 years. Ian has been working with Nick since 2007, initially at Schroders and then at RWC. Prior to joining Schroders, Ian was Head of European Equities and Director of Research at Citigroup and Head of Global Research at Gartmore.Nick PurvesIan LanceAugust 2010

Appointment of AIFM

The Board is also announcing that Link Fund Solutions Limited is expected to be appointed as the AIFM. They believe that this enhances the trust’s long-term governance structure and independence.”

Arthur Copple


24 September 2020



A first interim dividend of per share in respect of the quarter ended was paid on .11.0 pence31 March 202030 June 2020

A second interim dividend of per share in respect of the quarter ended was declared on and is payable on . 11.0 pence30 June 20203 September 202030 September 2020

The total column of this statement represents the Statement of Comprehensive Income, prepared in accordance with IFRS. The supplementary revenue and capital columns are both prepared under guidance published by the Association of Investment Companies.

All items in the above statement derive from continuing operations.





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


The Directors confirm to the best of their knowledge that:

The half-yearly financial report was approved by the Board on and the above responsibility statement was signed on its behalf by:24 September 2020

Arthur Copple



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 and has not been audited.30 June 202030 June 2019

            The information for the year ended 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 2006.31 December 2019

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:

Virginia Duncan

Ninety One Limited              020 3938 2000UK

Company              Industry          Place of Primary Valuation % of Portfolio
                                       Listing              £’000

Travis Perkins       Industrials       UK                  34,569           5.0%

UK Treasury 2% 2020  Fixed Interest    UK                  32,556           4.7%

UK Treasury 3.75%    Fixed Interest    UK                  31,581           4.5%

Bayer                Healthcare        Germany             31,576           4.4%

Grafton Group        Industrials       UK                  28,836           4.1%

IWG                  Industrials       UK                  26,238           3.8%

easyJet              Consumer Services UK                  23,321           3.3%

Rolls-Royce Holdings Industrials       UK                  23,096           3.3%

American Express     Financials        USA                 22,708           3.3%

Capita               Industrials       UK                  22,312           3.2%

Top Ten Investments                                       276,793          39.6%
30 June 2020              30 June 2019          31 December 2019
                         (unaudited)               (unaudited)              (audited)

                 Revenue   Capital     Total Revenue Capital   Total Revenue Capital   Total
                   £’000     £’000     £’000   £’000   £’000   £’000   £’000   £’000   £’000

Investment         8,142         -     8,142  22,387       -  22,387  39,750       -  39,750

Other operating        5         -         5      12       -      12      51       -      51

                   8,147         -     8,147  22,399       -  22,399
Total Income                                                          39,801       -  39,801

on investments

(Losses)/profit        - (381,924) (381,924)       -  79,446  79,446
on investments                                                             - 188,920 188,920
held at
fair value
through profit
or loss

                   8,147 (381,924) (373,777)  22,399  79,446 101,845  39,801 188,920 228,721


Management fees    (514)     (727)   (1,241)   (755) (1,089) (1,844) (1,555) (2,244) (3,799)

Other expenses     (297)   (1,519)   (1,816)   (285)   (260)   (545)   (585)   (533) (1,118)
dealing costs

before finance     7,336 (384,170) (376,834)  21,359  78,097  99,456  37,661 186,143 223,804
costs and tax

Finance costs      (983)   (1,488)   (2,471)   (983) (1,488) (2,471) (1,966) (2,976) (4,942)

(Loss)/profit      6,353 (385,658) (379,305)  20,376  76,609  96,985  35,695 183,167 218,862
before tax

Tax                (165)         -     (165)    (96)       -    (96)   (172)       -   (172)

(Loss)/profit      6,188 (385,658) (379,470)  20,280  76,609  96,889  35,523 183,167 218,690
for the period

Earnings per       9.25p (576.70p) (567.45p)  30.33p 114.56p 144.89p  53.12p 273.90p 327.02p
share (basic
and diluted)
Ordinary Share premium
                             share                 Capital Retained     Total

                           capital       account  reserves earnings    equity

                             £’000         £’000     £’000    £’000     £’000

BALANCE AT 1 JANUARY 2020   16,719        96,040   835,243   37,121   985,123

Unclaimed dividends              -             -         -        -         -

Loss for the period              -             - (385,658)    6,188 (379,470)

Dividends paid to equity                       -           (19,654)  (19,654)
shareholders                     -                       -

BALANCE AT 30 JUNE 2020     16,719        96,040   449,585   23,655   585,999
Ordinary Share premium
                             share                Capital Retained    Total

                           capital       account reserves earnings   equity

                             £’000         £’000    £’000    £’000    £’000

BALANCE AT 1 JANUARY 2019   16,719        96,040  652,076   37,347  802,182

Profit for the period            -             -   76,609   20,280   96,889

Unclaimed dividends              -             -        -        9        9

Dividends paid to equity                       -          (21,045) (21,045)
shareholders                     -                      -

BALANCE AT 30 JUNE 2019     16,719        96,040  728,685   36,591  878,035
30 June 2020 30 June 2019 31 December 2019
                               (unaudited) £’000  (unaudited)        (audited)
                                                        £’000            £’000


Investments held at fair value           698,050      966,271        1,085,844
through profit or loss


Cash and cash equivalents                  1,412       21,204           11,149

Receivables                                2,643        5,584            3,245

TOTAL ASSETS                             702,105      993,059        1,100,238


Payables                                 (2,017)      (1,014)          (1,066)

TOTAL ASSETS LESS CURRENT                700,088      992,045        1,099,172


Interest bearing borrowings            (114,089)    (114,010)        (114,049)

NET ASSETS                               585,999      878,035          985,123


Ordinary share capital                    16,719       16,719           16,719

Share premium                             96,040       96,040           96,040

Capital reserves                         449,585      728,685          835,243

Retained earnings                         23,655       36,591           37,121

TOTAL EQUITY                             585,999      878,035          985,123

NET ASSET VALUE PER SHARE                876.29p    1,312.99p        1,473.13p
30 June 2020  30 June 2019  31 December 2019

                                     (unaudited)   (unaudited)         (audited)

                                            £000          £000              £000

Cash flows from operating

(Loss)/profit before tax               (379,305)        96,985           218,862

Adjustments for:

Losses/(gains) on investments            381,924      (79,446)         (188,920)

Finance costs                              2,471         2,471             4,942

Purchases of investments 1             (467,223)      (56,898)         (152,237)

Sales of investments 1                   472,631        75,046           160,040

Dividend income                          (8,074)      (22,224)          (39,465)

Interest income                             (64)         (175)             (313)

Dividends received                        10,259        19,591            39,578

Interest (receivable)/received             (377)           359               336

Increase/(decrease) in payables              271            54               106

Overseas withholding tax suffered          (165)          (96)             (172)

                                         391,653      (61,318)         (176,105)

Net cash flows from operating             12,348        35,667            42,757

Cash flows from financing

Unclaimed dividends                            -             9                 8

Equity dividends paid                   (19,654)       (2,432)          (35,757)

Interest paid on borrowings              (2,431)      (21,045)           (4,864)

Net cash used in financing              (22,085)      (23,468)          (40,613)

Net (decrease)/increase in cash          (9,737)        12,199             2,144
and cash equivalents

Cash and cash equivalents at the          11,149         9,005             9,005
start of the period

Cash and cash equivalents at the           1,412                          11,149
end of the period                                       21,204
--  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 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  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.30 June

Quick facts: Temple Bar Investment Trust

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