Temple Bar Investment Trust PLC
Final Results Announcement for the year ended 31 December 2015
Chairman's Statement
Performance
The year under review has seen a continuation of volatile markets together with conditions generally unfavourable for Temple Bar's value oriented investment approach. The total return on net assets of Temple Bar in 2015 was -1.0% which compares with a total return for the FTSE All Share Index of 1.0%. It is always disappointing when the Trust endures periods of underperformance but this is a natural consequence of our chosen investment style which very much favours a longer term standpoint. Temple Bar continues to outperform its benchmark over both five and ten year periods.
The Company's portfolio is constructed to deliver both capital and income growth. The portfolio manager remains fully focussed on identifying good quality companies with attractive yields and run by strong management teams. Sometimes such companies are under-appreciated by the market for various reasons and accordingly offer value to a long term, patient investor. The benefits of this approach are reflected in Temple Bar's returns over longer time periods.
Dividend
This is the first year in which the Company has paid dividends on a quarterly basis, a change implemented on our understanding of shareholder preference. There have already been three interim dividend payments of 7.93p per share and the directors are now recommending a final dividend of 15.87p per share to be paid on 31 March 2016 to those shareholders on the register as at 11 March 2016. The ex-dividend date for this payment is 10 March 2016. If approved, this would give a total dividend of 39.66p, an increase for the year as a whole of 2% and the 32nd consecutive year in which the Company has increased its annual dividend payment.
Gearing
The Company was only moderately geared at the year end, its long term borrowings largely matched by the relatively high cash and near cash position on the portfolio. At the year end, gearing (calculated net of cash and related liquid assets including our investment in a UK short dated gilt) was 3.8%. The Manager is only prepared to invest the available funds when he considers that suitable opportunities are available. This has generally not been the case in the recent past.
Share Capital Management
For large parts of 2013-14 the Company's shares were trading at a premium to net asset value and it was therefore able to issue new shares to market participants. Throughout the majority of 2015 the Company's shares have traded at a modest discount to their net asset value; consequently it has not been possible to issue new shares. While there were also no share repurchases during the year, the Board is prepared to undertake such action, subject to market conditions, if the discount widens both in absolute terms and relative to the Company's peer group, as part of a proactive approach to discount/premium management. The Board 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.
The Board
As mentioned in the half year report, we were pleased to welcome to the Board during the year Lesley Sherratt, who is already making a positive contribution to Board discussion. We were also sorry to lose the services of Martin Riley, for health reasons, after 10 years of excellent service on the Board. In common with best practice, all directors are subject to annual re-election by shareholders. Every year the Board undertakes a formal and rigorous evaluation of each director including myself as Chairman.
Annual General Meeting
The AGM will be held at Woolgate Exchange, 25 Basinghall Street, London EC2V 5HA on 30 March 2016 at 11am. In addition to the formal business of the meeting the portfolio manager, Alastair Mundy, will, as usual, make a presentation reviewing the past year and commenting on the outlook. He will also be available to answer questions alongside the directors. Shareholders who are unable to attend the meeting are encouraged to use their proxy votes.
Outlook
There is no getting away from the fact that the last few years have been an uncomfortable time for committed adherents of the value investing approach. While in relative terms our portfolio has suffered as a consequence, investment is a long term matter and I am reassured that many of our shareholders appear to understand this. They appreciate that the value investment style is inherently cyclical but that, if one is patient and adheres to this approach, eventually some great opportunities will arise. Clearly we hope that this occurs sooner rather than later but if needs be we will remain patient before investing any of the surplus cash currently held on the portfolio.
John Reeve
Chairman
23 February 2016
Twenty Largest Investments
as at 31 December 2015
| Company | Industry | Place of listing | Valuation £'m | % of portfolio |
| UK Treasury 4.00% 2016 | Fixed Interest | UK | 73.171 | 8.6 |
| HSBC Holdings | Financials | UK | 71.808 | 8.4 |
| GlaxoSmithKline | Health Care | UK | 57.567 | 6.7 |
| BP | Oil & Gas | UK | 55.995 | 6.5 |
| Royal Dutch Shell | Oil & Gas | UK | 42.842 | 5.0 |
| Grafton Group | Industrials | UK | 40.995 | 4.8 |
| Lloyds Banking Group | Financials | UK | 40.665 | 4.8 |
| British American Tobacco | Consumer Goods | UK | 33.011 | 3.9 |
| Royal Bank of Scotland | Financials | UK | 32.467 | 3.8 |
| Direct Line Insurance | Financials | UK | 28.597 | 3.3 |
| BT Group | Telecommunications | UK | 24.903 | 2.9 |
| Gold Bullion Securities ETF | Financials | UK | 19.297 | 2.3 |
| Wm Morrison Supermarkets | Consumer Services | UK | 18.294 | 2.1 |
| Centrica | Utilities | UK | 18.235 | 2.1 |
| Tesco | Consumer Services | UK | 17.995 | 2.1 |
| SIG | Industrials | UK | 17.603 | 2.1 |
| CitiGroup | Financials | USA | 16.938 | 2.0 |
| Drax | Utilities | UK | 16.404 | 1.9 |
| CRH | Industrials | UK | 16.033 | 1.9 |
| Imperial Brands | Consumer Goods | UK | 15.362 | 1.8 |
| 658.182 | 77.0 |
Statement of Comprehensive Income
for the year ended 31 December 2015
| 2015 | 2014 | ||||||
| Revenue | Capital | Total | Revenue | Capital | Total | ||
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||
| Investment income | 31,243 | - | 31,243 | 30,262 | - | 30,262 | |
| Other operating income | 10 | - | 10 | 12 | - | 12 | |
| 31,253 | - | 31,253 | 30,724 | - | 30,274 | ||
| Losses on investments | |||||||
| Losses on investments held at fair value through profit or loss | - | (31,615) | (31,615) | - | (29,867) | (29,867) | |
| Total income | 31,253 | (31,615) | (362) | 30,274 | (29,867) | 407 | |
| Expenses | |||||||
| Management fees | (1,374) | (1,980) | (3,354) | (1,315) | (1,938) | (3,253) | |
| Other expenses | (581) | (1,282) | (1,863) | (538) | (1,009) | (1,547) | |
| Profit/(loss) before finance costs and tax | 29,298 | (34,877) | (5,579) | 28,421 | (32,814) | (4,393) | |
| Finance costs | (2,635) | (4,000) | (6,635) | (2,639) | (3,999) | (6,638) | |
| Profit/(loss) before tax | 26,663 | (38,877) | (12,214) | 25,782 | (36,813) | (11,031) | |
| Tax | - | - | - | - | - | - | |
| Profit/(loss) for the year | 26,663 | (38,877) | (12,214) | 25,782 | (36,813) | (11,031) | |
Earnings per share (basic & diluted) | 39.87p | (58.14p) | (18.27p) | 39.82p | (56.86p) | (17.04p) | |
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 net profit for the year. Accordingly, the net 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 2015
| Ordinary | Share | ||||
| share | premium | Capital | Retained | Total | |
| capital | account | reserves | earnings | equity | |
| £'000 | £'000 | £'000 | £'000 | £'000 | |
| Balance at 1 January 2014 | 15,831 | 54,002 | 689,117 | 33,120 | 792,070 |
| Unclaimed dividends | - | - | - | 17 | 17 |
| (Loss)/Profit for the year | - | - | (36,813) | 25,782 | (11,031) |
| Issue of share capital | 888 | 42,038 | - | - | 42,926 |
| Dividends paid to equity shareholders | - | - | - | (24,538) | (24,538) |
| Balance at 31 December 2014 | 16,719 | 96,040 | 652,304 | 34,381 | 799,444 |
| Unclaimed dividends | - | - | - | 35 | 35 |
| (Loss)/Profit for the year | - | - | (38,877) | 26,663 | (12,214) |
| Issue of share capital | - | - | - | - | - |
| Dividends paid to equity shareholders | - | - | - | (31,510) | (31,510) |
Balance at 31 December 2015 | 16,719 | 96,040 | 613,427 | 29,569 | 755,755 |
Statement of Financial Position
as at 31 December 2015
| 31 December 2015 | 31 December 2014 | |||
| £'000 | £'000 | £'000 | £'000 | |
| Non-current assets Investments held at fair value through profit or loss | 855,625 | 873,781 | ||
| Current assets | ||||
| Receivables | 2,722 | 3,256 | ||
| Cash and cash equivalents | 12,262 | 37,225 | ||
| 14,984 | 40,481 | |||
| Total assets | 870,609 | 914,262 | ||
| Current liabilities | ||||
| Payables | (1,074) | (1,064) | ||
| Total assets less current liabilities | 869,535 | 913,198 | ||
| Non-current liabilities | ||||
| Interest bearing borrowings | (113,780) | (113,754) | ||
| Net assets | 755,755 | 799,444 | ||
| Equity attributable to equity holders | ||||
| Ordinary share capital | 16,719 | 16,719 | ||
| Share premium | 96,040 | 96,040 | ||
| Capital reserves | 613,427 | 652,304 | ||
| Retained earnings | 29,569 | 34,381 | ||
| 755,755 | 799,444 | |||
| Total equity | 755,755 | 799,444 | ||
| Net asset value per share | 1,130.14p | 1,195.47p | ||
Statement of Cash Flows
for the year ended 31 December 2015
| 2015 | 2014 | |||
| £'000 | £'000 | £000 | £'000 | |
| Cash flows from operating activities | ||||
| Loss before tax | (12,214) | (11,031) | ||
| Adjustments for: | ||||
| Purchases of investments | (360,358) | (305,944) | ||
| Sales of investments | 346,899 | 291,681 | ||
| (13,459) | (14,263) | |||
| Losses on investments | 31,615 | 29,867 | ||
| Financing costs | 6,635 | 6,638 | ||
Operating cash flows before movements in working capital | 12,577 | 11,211 | ||
| Increase/(decrease) in accrued interest | 743 | (835) | ||
| Increase in accrued dividend income | 10 | 757 | ||
| (Decrease)/increase in receivables | (219) | 909 | ||
| Increase/(decrease) in payables | 10 | (460) | ||
| Net cash flows from operating activities before and after income tax | 13,121 | 11,582 | ||
| Cash flows from financing activities | ||||
| Proceeds from issue of new shares Issue costs relating to 4.05% Private Placement Loan Unclaimed dividends Interest paid on borrowings | - (24) 35 (6,585) | 42,926 (313) 17 (6,588) | ||
| Equity dividends paid | (31,510) | (24,538) | ||
| Net cash used in financing activities | (38,084) | 11,504 | ||
| Net (decrease)/increase in cash and cash equivalents | (24,963) | 23,086 | ||
| Cash and cash equivalents at the start of the year | 37,225 | 14,139 | ||
| Cash and cash equivalents at the end of the year | 12,262 | 37,225 | ||
Purchases and sales of investments are considered to be operating activities of the Company, given its purpose, rather than investing activities.
Notes
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 years ended 31 December 2014 and 31 December 2015.The 2015 accounts will be sent to shareholders shortly.
The financial information contained in this announcement does not constitute full accounts within the meaning of Section 434 of the Companies Act 2006.The 2015 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 2014 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.
23 February 2016
Contact: Alastair Mundy
Telephone 020 7597 2000
Investec Fund Managers Limited
