U
O
Y
R
O
F
I
G
N
K
R
O
W
T
N
E
M
T
S
E
V
N
I
I
E
V
T
C
A
•
4
1
0
2
S
T
N
U
O
C
C
A
&
T
R
O
P
E
R
L
A
U
N
N
A
•
C
L
P
T
S
U
R
T
T
N
E
M
T
S
E
V
N
I
R
A
B
E
L
P
M
E
T
Temple Bar Investment Trust PLC
Registered office
Woolgate Exchange
25 Basinghall Street
London EC2V 5HA
www.templebarinvestments.co.uk
Investment Manager
Investec Fund Managers Limited
Woolgate Exchange
25 Basinghall Street
London EC2V 5HA
Telephone 020 7597 2000
234791 Temple Bar Inner Cover Spine 4mm 26/02/2015 10:50 Page 1
Active investment working for you
Strategic report – Company summary
Temple Bar Investment Trust’s investment objective is to provide
growth in income and capital to achieve a long-term total return
greater than the benchmark FTSE All-Share Index, through
investment primarily in UK securities. The Company’s policy is to
invest in a broad spread of securities with typically the majority of the
portfolio selected from the constituents of the FTSE 350 Index.
The Company’s full objective and policy is set out on page 9.
Benchmark
Performance is measured against the FTSE All-Share Index.
ISA status
The Company’s shares qualify to be held in an ISA.
Total assets less current liabilities
£913,198,000
Total equity*
£799,444,000
Market capitalisation
£796,455,000
Capital structure
Ordinary shares 66,872,765 shares
9.875% Debenture Stock 2017 £25,000,000
5.5% Debenture Stock 2021 £38,000,000
4.05% Private Placement Loan 2028 £50,000,000
Voting structure
Ordinary shares 100%.
Manager’s fee
0.35% per annum based on the value of the investments
(including cash) of the Company. There is no performance
fee. References to “Manager” in this document mean
Investec Fund Managers Limited and references to “Portfolio
Manager” mean Alastair Mundy.
Investor Information Document
The Alternative Investment Fund Managers Directive
requires the Alternative Investment Fund Manager to make
certain information available to investors prior to their
investment in the Company. The Company’s Investor
Information Document is available at
www.templebarinvestment.co.uk.
*with debenture and loan stocks at book value.
Typical investor
The portfolio is designed to be of interest to private
investors in the UK, including retail investors, professionally
advised private clients and institutional investors who seek
income and the potential for capital growth from
investment primarily in UK markets and who understand
and are willing to accept the risks of exposure to equities.
Private investors should consider consulting an independent
financial adviser who specialises in advising on the
acquisition of shares before acquiring them. Investors
should be capable of evaluating the risks and merits of such
an investment and should have sufficient resources to bear
any loss that may result.
FCA regulation of ‘non-mainstream pooled investments’
The Company currently conducts its affairs so that the
shares issued by the Company can be recommended by
Independent Financial Advisers to ordinary retail investors,
in accordance with the rules of the Financial Conduct
Authority (‘FCA’) in relation to non-mainstream investment
products, and intends to continue to do so for the
foreseeable future.
The shares are excluded from the FCA’s restrictions that
apply to non-mainstream investment products because
they are shares in an investment trust.
Association of Investment Companies (AIC): Member
www.templebarinvestments.co.uk
Contents
Strategic report
ifc Company summary
1 Summary of results
1 Ten year record
2 Chairman’s statement
4 Attribution analysis
5 Manager’s review
9 Overview of strategy
13 Portfolio of investments
Governance report
16 Directors
17 Report of the directors
20 Report on directors’ remuneration
22 Corporate governance
25 Report of the audit committee
27 Statement of directors’ responsibilities
Financial report
28 Independent auditor’s report
30 Statement of Comprehensive Income
31 Statement of Changes in Equity
32 Statement of Financial Position
33 Statement of Cash Flows
34 Notes to the Financial Statements
Shareholder information
45 Notice of meeting
49 Useful information for shareholders
50 Management and administration
51 Temple Bar Investment Trust Savings
Scheme
Photograph courtesy of the Frederick W. Branch collection on RichRockwell.com
The photograph (¢1880) shows Temple Bar in its original location at the gateway to The Strand in London
Temple Bar Investment Trust PLC Annual Report & Accounts 2014
234791 Temple Bar pp01 25/02/2015 07:08 Page 1
Strategic report – Summary of results
Active investment working for you
2014 2013
Assets as at 31 December £000 £000 % change
Net assets 799,444 792,070 0.9
Ordinary shares
Net asset value per share with debt at book value 1,195.47p 1,250.84p (4.4)
Net asset value per share with debt at market value 1,174.37p 1,242.97p (5.5)
Market price 1,191.00p 1,246.00p (4.4)
(Discount)/premium with debt at book value (0.4)% (0.4)%
Premium with debt at market value 1.4% 0.2%
Revenue for the year ended 31 December £000 £000
Revenue return attributable to ordinary shareholders 25,782 22,274
Revenue return per ordinary share 39.82p 36.17p
Dividends per ordinary share – interim and proposed final 38.88p 37.75p 3.0
Capital for the year ended 31 December
Capital return attributable to ordinary shareholders (36,813) 158,704
Capital return attributable per ordinary share (56.86p) 257.72p
Net gearing* 0.0% 2.0%
Ongoing charges** 0.48% 0.48%
Total returns for the year to 31 December 2014 %
Return on net assets (1.7)
Return on gross assets (0.5)
Return on share price (1.4)
Return on FTSE All-Share Index 1.2
Change in Retail Prices Index over year 1.6
Dividend yields (net) as at 31 December 2014 %
Yield on ordinary share price (1,191p) 3.2
Yield on FTSE All-Share Index 3.4
* defined as total assets less cash or cash equivalents (including gilt holdings) by shareholders’ funds expressed as a percentage.
** defined as the total of the investment management fee and administrative expenses divided by the average cum income net asset value throughout the year.
Ten year record
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Total assets less
current liabilities (£000) 532,965 598,485 557,712 422,408 553,392 603,444 585,480 664,648 905,775 913,198
Net assets (£000) 469,621 535,128 494,340 359,020 489,988 540,022 522,040 601,191 792,070 799,444
Net assets per ordinary
share (pence) 804.96 917.25 847.33 612.76 831.03 915.89 874.42 992.86 1,250.84 1,195.47
Revenue return to
ordinary shareholders
(£000) 17,076 17,620 19,361 20,614 20,017 18,915 22,552 24,873 22,274 25,782
Revenue return per
share (pence) 29.35 30.20 33.19 35.33 33.98 32.08 38.08 41.39 36.17 39.82
Net dividends per share*
(pence) 27.83 29.23 30.98 32.84 33.50 34.20 35.23 36.65 37.75 38.88
* Interim and proposed final for the year.
Temple Bar Investment Trust PLC Annual Report & Accounts 2014
1
234791 Temple Bar pp02-pp08 25/02/2015 07:09 Page 2
Active investment working for you
Strategic report – Chairman’s statement
Following a strong performance in the
previous year, 2014 was much more
difficult for our shareholders in terms
both of absolute and relative returns.
The total return on the net assets of
Temple Bar in 2014 was -1.7%, which
compares with a total return for the
FTSE-All Share Index of 1.2%.
However, Temple Bar continues
significantly to outperform its
benchmark over both 5 and 10 year
periods.
The Manager’s Review highlights
the positive and negative constituents
of performance during the year and
concludes that the performance lag
was due mainly to individual stock
selections that were unsuccessful over
the period, in contrast to the influence
of larger themes. As I have highlighted
previously, the contrarian value
approach adopted by the Manager
and his team focuses on the purchase
of out of favour stocks; these stocks
can often move more out of favour
after purchase, for both good and bad
reasons, in the near term. This
highlights that this style of investing
requires participation over longer time
periods for the proven benefits to
emerge.
As in 2013, the Manager was
reluctant to chase yield at a time
when it appeared to be unattractively
priced. Additionally, the large number
of new shares issued towards the end
of the year, and thus qualifying for the
final dividend, while being accretive to
net asset value, further impacted
negatively the revenue earned per
share. Offsetting these factors was
the receipt of a substantial special
dividend from Direct Line which
ultimately led to the proposed
dividend for the current year being
fully covered by revenue generated
from portfolio investments. It remains
a significant benefit of investment
trusts that revenue reserves can be
used to smooth dividend payments if
there is a revenue shortfall in a
particular year.
The Board is, therefore,
recommending a final dividend of
23.33p, to produce a total dividend
for the year of 38.88p, an increase of
3.0%. The dividend will be payable on
31 March 2015 to shareholders on the
register at 13 March 2015. This is the
31st consecutive year in which the
dividend has been increased.
Quarterly Dividends
In accordance with previous
notifications to shareholders, with
effect from the financial year which
started on 1 January 2015 the
Company will pay dividends on a
quarterly basis. A final dividend for
the 2014 financial year will be paid on
31 March 2015, following which there
will be three interim dividends
Temple Bar continues significantly to
outperform its benchmark over both 5 and 10
year periods. The total dividend has been
increased by 3% and the share price reached a
record high during the year.
payable in respect of the current year
on 30 June, 30 September and
30 December before a final dividend is
paid in late March 2016. The Board is
conscious of the income requirements
of many of its shareholders and
intends, on current expectations, that
shareholders will receive payments
amounting to at least those received
under the previous arrangements and
that the progressive annual dividend
growth of the last 31 years will be
maintained.
Gearing
I mentioned in my Statement last
year that the Company had taken out
in 2013 an additional £50 million
private placement loan, repayable in
2028, in order to secure attractive
long term fixed rate funding at an
opportune time. This loan forms part
of the Board’s overall approach to
debt management, mindful that one
of the Company’s two debentures
matures in 2017. Given the long term
nature of the loan, the Board does not
2 Temple Bar Investment Trust PLC Annual Report & Accounts 2014
234791 Temple Bar pp02-pp08 25/02/2015 07:09 Page 3
Strategic report – Chairman’s statement continued
feel an immediate necessity to invest
the proceeds, but will seek to deploy
these funds as appropriate
opportunities arise. At the year end,
the Company’s gearing was
immunised by its holdings of cash and
related liquid assets.
New Share Issues
The Company’s shares have generally
been trading at a premium to net
asset value for a substantial period.
The Board believes that it is important
to manage proactively any premium
or discount and, accordingly, it favours
regular small issues of shares to
maintain any premium at a
reasonable level. During the year a
total of 3,549,517 ordinary shares
were issued raising proceeds of £42.9
million. There were no share
repurchases during the year. The Board
considers that its policy towards share
issuance and its preparedness to carry
out share repurchases, if required, has
helped to constrain premium/discount
volatility in the past and therefore
recommends that the existing
authorities to issue new ordinary
shares for cash 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.
Alternative Investment Fund
Manager Directive (‘AIFMD’)
In accordance with AIFMD the
Company appointed Investec Fund
Managers Limited (‘IFM’) as its
Alternative Investment Fund Manager
on 21 July 2014 under a new
investment management agreement.
Portfolio management has been
delegated by IFM to Investec Asset
Management Limited (‘IAM’), thus
retaining previous portfolio
management arrangements. In
addition, as required under the AIFMD,
the Company appointed HSBC Bank
to act as its depositary and custodian.
IAM continues to act as Company
Secretary to the Company.
Annual General Meeting
The AGM will be held at Woolgate
Exchange, 25 Basinghall Street,
London EC2V 5HA on 30 March 2015
at 11.00 a.m. and I would encourage
shareholders to attend. In addition to
the formal business of the meeting
Active investment working for you
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. Shareholders who are
unable to attend the AGM in person
are encouraged to use their proxy
vote.
Outlook
The Manager has been concerned for
some time that the regime of low
interest rates prevalent both in the UK
and internationally has encouraged
investors to seek higher returns in
alternative instruments and has
pushed many asset prices to levels
beyond their fair value. There is
potential for this ‘search for yield’ to
end badly, exacerbated by the lack of
liquidity in many markets and the
realisation by these investors that
they have bought assets far more
volatile than the cash they switched
from. While central bankers continue
to adopt aggressive policies, with debt
worldwide having grown significantly
since the financial crisis and
valuations far from cheap, the
Manager expects the turbulence of
recent months to continue. It is
anticipated that this will produce
some attractive investment
opportunities.
John Reeve
Chairman
24 February 2015
Temple Bar Investment Trust PLC Annual Report & Accounts 2014
3
234791 Temple Bar pp02-pp08 25/02/2015 07:09 Page 4
Active investment working for you
Strategic report – Attribution analysis
Attribution analysis by stocks held in the portfolio
Source: Factset
Top 10 Contributors
Bottom 10 Contributors
Signet Jewelers
Limited
Direct Line Insurance
Group PLC
Go-Ahead Group PLC
Royal Bank of Scotland
Group PLC
British American
Tobacco PLC
Imperial Tobacco
Group PLC
Carnival PLC
Citigroup Inc.
Unilever PLC
British Land Company PLC
Tesco PLC
GlaxoSmithKline PLC
Avon Products, Inc.
BP PLC
BG Group PLC
SIG PLC
QinetiQ Group PLC
Vodafone Group PLC
HSBC Holdings PLC
Serco Group PLC
0.00
0.25
0.50
0.75
1.00
1.25
1.50
-1.50
-1.25
-1.00
-0.75
-0.50
-0.25
0.00
Contribution to performance %
Contribution to performance %
The bar charts above show the top and bottom contributors to total performance during the year from those stocks held in the
portfolio.
Attribution analysis relative to the benchmark index
Source: Factset
Top 10 Contributors
Bottom 10 Contributors
Signet Jewelers
Limited
Direct Line Insurance
Group PLC
Go-Ahead Group PLC
BHP Billiton PLC*
Rolls-Royce Holdings PLC*
Standard Chartered PLC*
Royal Bank of Scotland
Group PLC
Carnival PLC
Citigroup Inc.
UK Commercial Property
Trust Ltd
Avon Products, Inc.
AstraZeneca PLC*
Tesco PLC
Shire PLC*
GlaxoSmithKline PLC
SIG PLC
QinetiQ Group PLC
National Grid PLC*
Carrefour SA
Prudential PLC*
0.00
0.25
0.50
0.75
1.00
1.25
1.50
-1.50
-1.25
-1.00
-0.75
-0.50
-0.25
0.00
Contribution to performance %
Contribution to performance %
The bar charts above show the top and bottom contributors relative to the performance of the FTSE All Share Index during the
year and include the impact of stocks not held in the portfolio. Both positive and negative relative performance can be derived
from stocks that are not owned by Temple Bar.
* Not held in portfolio
4 Temple Bar Investment Trust PLC Annual Report & Accounts 2014
234791 Temple Bar pp02-pp08 25/02/2015 07:09 Page 5
Strategic report – Manager’s review
Active investment working for you
investors were income and quality.
Consequently, in general, utility,
tobacco and real estate stocks
performed well, as did companies
where investors were most confident
of continued earnings growth,
typically in consumer facing sectors. A
number of the weakest performers
during the year were resource related
stocks.
As with any year, there were a
number of winners and losers on the
portfolio. Unfortunately the latter
predominated in 2014 thus
generating a year of
underperformance for the trust
against the market.
The underperformance of the
Temple Bar portfolio, in terms of sins
of commission, was due in the main
to three investments: Tesco, Avon
Products and the pharmaceutical
sector.
We have certainly not covered
ourselves in glory in assessing the
future of the food retailing sector. We
had avoided Tesco for many years,
concerned about both its
management culture and its
accounting policies, but as trading
deteriorated and the share price fell
we believed that investors were
ignoring the long-term prospects of a
recovery in the UK’s largest retailer
and initiated a holding. However, as
new management articulated the
details of the operational difficulties
and aggressive accounting policies,
the indebtedness of the company
created a large shadow over the
business and the share price. As it was
unclear whether disposals could be
executed at sufficiently attractive
The FTSE100 Index traded in a range
of less than 500 points for most of
the year although volatility picked up
in the autumn with improved
economic news in the US counter-
balanced by increasing concerns over
deflation in Europe, a slowdown in
emerging market economies and the
unclear consequences of a
significantly lower oil price. As is not
unusual, earnings forecasts proved too
high and there was a steady trickle of
downgrades as company management
scaled back their early year
enthusiasm.
Over the year the FTSE All-Share
Index, the index most relevant to the
Temple Bar portfolio, returned 1.2%
while the FTSE250 index returned
3.7% and the FTSE Smaller
Companies Index delivered a total
return of 0.9%. This compares with a
total return for Temple Bar of -1.7%.
In the UK equity market, the
themes which resonated with
Debt remains a problem. In fact, looked at in
some ways it is a bigger problem than it was at
the peak of the financial crisis.
prices to avoid a rights issue and as
any share issuance would dilute the
upside for shareholders, we reduced
our position during the year.
Avon Products has been a
particular bete noire of the portfolio
in recent years. It would be difficult to
imagine that a company could be hit
by any more unfortunate events.
Corruption charges in China,
hyperinflation in Venezuela, a currency
crisis in Russia and a significant
economic slowdown in Brazil would
be enough to damage a strong
company but for Avon, still struggling
to get back on to the front foot after
many years of under management,
these issues have proved highly
debilitating.
Being incorrectly positioned in the
largest pharma stocks was particularly
expensive. GlaxoSmithKline continued
to lower profit forecasts on the back
of disappointing new drug
development and a fall-off in
revenues of existing drugs. In contrast
AstraZeneca recovered strongly due
both to improved news on drug
development and a failed bid from
Pfizer and Shire Pharmaceutical
received a bid from AbbVie which,
although not consummated,
supported the share price.
On the positive side, Direct Line
performed well following the sale of
the majority of its stake by the Royal
Bank of Scotland. This illustrates the
latent potential often present in
companies previously hidden within
larger organisations and consequently
starved of capital and attention. As
outsiders, it is often very difficult to
assess the opportunities for
operational improvement in such a
company, but experience suggests
that with newly incentivised
management, investors’ expectations
can often be comfortably surpassed.
The management have also proved
shareholder friendly by implementing
a high dividend pay-out policy, paying
special dividends and disposing of
underperforming international
businesses.
Temple Bar Investment Trust PLC Annual Report & Accounts 2014
5
234791 Temple Bar pp02-pp08 25/02/2015 07:09 Page 6
Active investment working for you
Strategic report – Manager’s review continued
After further strong performance,
we finally bid farewell to our long-
term holding in Signet Jewelers. We
sold at a time when the company’s
position in the US jewellery market
was more dominant than ever and its
earnings prospects were buoyed by
the recent acquisition of its largest
competitor. However, we believed the
shares discounted all this good news,
and more, and therefore felt we had
lost our margin of safety. This might
appear to be a classic recovery story
with the transformation from ugly
duckling into a beautiful swan playing
out in a straightforward manner.
However, from our initial purchase
price, the shares fell 79.2% in
absolute terms and 68.2% when
compared with the FTSE All-Share
Index, amidst concerns over the short
and long-term demand for jewellery
and the quality of the company’s
balance sheet. Very few of our
purchases follow a smooth glide path
and many run into difficulties not
long after the initial purchase.
However, time erases much of the
pain and embarrassment of these
early losses and disguises the
discomfort that often comes with
value investing.
It seems relevant as well to discuss
our sins of omission. During the year,
the portfolio had a relatively small
exposure to both utilities and growth
stocks, or to use a more recent term,
‘quality stocks’.
We believe investors have been
attracted to the high dividend yields
of utilities. However, these dividends
are typically financed partially out of
debt rather than cashflow and,
therefore, in our view, are not as
attractive as they initially appear.
Utilities remain highly capital
intensive companies continually at
risk of political intervention and these
dividends may prove less secure than
investors believe.
Quality stocks are typically those
companies which generate high and
enduring levels of return on
shareholders’ equity and which rarely
call on investors to finance their
growth. Many of these companies are
found in consumer facing sectors such
as food, drink, tobacco, personal care
and household products. After many
years of strong performance, this
group of companies is priced as highly
as it has been for decades, yet it is
questionable whether its future is as
bright as its past. They have benefited
historically from healthy levels of
price inflation, trading up (selling a
slightly higher quality product for a
higher price) and globalisation, but
these factors are now quite mature.
Low inflation worldwide and the
growth of good quality own label
products reduces opportunities for
price increases; trading up is perhaps
more in tune with more upbeat
economic times and, geographically,
there are few new markets for these
companies to explore (whilst some
areas are clearly currently under
extreme pressure). We sold some
Unilever during the year and may be
encouraged to further reduce
exposure to this part of the market.
As usual the acquisitions made on
the portfolio during the year were of
out of favour stocks trading at a
discount to their assumed fair value
based on our assessment of
normalised operating profits.
Lloyds Banking Group has slowly
rebuilt its balance sheet since the
financial crisis and consequently
moves ever closer to paying a
dividend. Once reinstated, this could
grow quickly and it is conceivable that
the company will have a 5% yield (the
estimated dividend divided by the
current share price) within two years.
This would prove highly attractive to
investors particularly relative to the
alternatives on offer. While Lloyds
remains a mature bank with large
market shares in both savings and
mortgages, it has clear potential to
cut costs from its business, in
particular the large number of
branches in its network. With the
more time consuming balance sheet
matters behind it, Lloyds is now in a
better position to regain market share
Comparing an equity dividend with
the low rate of interest on a bank
deposit or of a government bond is
appealing to many, but is racked with
risk.
Portfolio distribution %
Temple Bar FTSE All-Share
portfolio Index
% %
Industrials 15.57 9.83
Financials 24.30 25.63
Health Care 6.34 8.53
Oil & Gas 14.33 12.72
Telecommunications 2.88 4.86
Consumer Services 7.67 11.27
Consumer Goods 8.22 14.49
Utilities 1.40 3.96
Technology 1.38 1.52
Basic Materials 1.55 7.19
Total Equities 83.64 100.00
Fixed Interest 12.31 0.00
Cash 4.05 0.00
100.00 100.00
6 Temple Bar Investment Trust PLC Annual Report & Accounts 2014
234791 Temple Bar pp02-pp08 25/02/2015 07:09 Page 7
Strategic report – Manager’s review continued
Active investment working for you
lost in some core products over the
last few years.
Citigroup is now a very well
capitalised bank and trades below its
book value despite having some
excellent franchises in credit cards
and Asian lending. Investors have
grown tired at the stream of
restructuring costs and fines,
increasing compliance burden and
heightened capital requirements,
leaving the shares trading at a
significant discount to net asset value.
The Marks & Spencer recovery has
had a number of false dawns over the
years and modernising the business
has proved very difficult for previous
management teams. There are some
undeniable headwinds such as the
location of the company’s oldest
properties and the difficulty of
attracting younger customers, but
behind the scenes significant changes
in logistics, design and buying are
being made and some of the positive
financial effects are already emerging.
The sale of Signet Jewelers was the
largest disposal on the portfolio over
the year closely followed by Vodafone,
the sale of which was detailed in the
interim report.
The primary business of TNT
Express, acquired during the year, is
fast delivery of products by truck and
air across Europe. The company has
struggled in the last few years as it
became clear that previous
management had under-invested
when it was part of the Post NL, the
Dutch mail business. After a number
of profit warnings, investors fear that
operational recovery may be difficult
to engineer despite the proven
success of competitors. However, the
stock’s rating discounts permanently
lower margins than those of its
competitors and if the company was
to stage a full recovery, the shares
could prove very cheap.
The unconventional monetary
policy conducted by central banks
over recent years shows no sign of
ending. While the Bank of England in
the UK and the US Federal Reserve
have finished, or perhaps just paused,
their bond buying programmes, the
Japanese have re-entered the fray
with great enthusiasm and, in the
absence of improving economic news,
the European Central Bank has
recently initiated its own programme.
The great financial experiment is
therefore likely to run for some time
and the risk remains of unintended
consequences.
The worriers are not restricted to a
bunch of mavericks and permabears.
Richard Fisher, President of the Dallas
Federal Reserve, has also voiced his
concerns: ‘Nobody really knows what
will work to get the economy back on
course. And nobody – in fact, no
central bank anywhere on the planet –
has the experience of successfully
navigating a return home from the
place in which we find ourselves. No
central bank – not, at least, the
Federal Reserve – has ever been on
this cruise before’.
Debt remains a problem. In fact,
looked at in some ways it is a bigger
problem than it was at the peak of the
financial crisis. In ‘Deleveraging? What
Deleveraging?’, a recent joint
publication by the International
Center for Monetary and Banking
Studies and the Centre for Economic
Policy Research, the authors
emphasized that global debt to GDP is
still growing and breaking new highs.
They highlighted that historically, high
levels of debt at best have constrained
economic growth. At worst, they have
led to financial crises, be they
banking, sovereign or currency
related.
Equity investors in developed
markets, and particularly the USA,
keep the faith, trusting that
everything will work out fine. Thus,
most news is framed positively: low
interest rates are supportive to equity
valuations, whilst potentially higher
rates are equally good news as they
signal that growth prospects are good.
If the oil price is high, it encourages
capital expenditure and job creation
whilst if it falls, it boosts consumer
spending. Bad news has apparently
been abolished and any market sell-
offs are an opportunity to ‘buy the
dip’.
The bulls add that the bears should
remember that equities always rise in
the long term and consequently it is
crazy to be out of the market. Gold,
they add, is a barbarous relic,
governments can print money to pay
off any debts they incur and neither
deflation nor inflation is particularly
likely or worrisome. Perhaps most
intriguingly, this relaxed attitude has
become entrenched so soon after a
financial crisis. At least our financial
predecessors were good enough to
have a decent mourning period before
partying again.
Or perhaps investors really do
accept that high and growing
government debts genuinely are a
problem, that the Euro is looking ever
more fragile, that Chinese economic
growth may yet disappoint, that the
US may be forced to return to bond
buying policies and that the Japanese
are playing with fire, but that as the
music is playing it would be rude to
leave the dance floor. If so, surely we
have seen this movie before. Not
everyone will leave without paying a
heavy price.
As we have detailed in previous
years we have far more sympathy
with the bears in these arguments. Of
course our fears may be overdone, or
even if we are correct, our timing may
be badly out. In a world which
increasingly demands near perfect
timing, we are constantly asked to
identify the catalyst for such market
weakness; without a catalyst most
investors are highly reluctant to sell.
Our concern is that with a catalyst
they may find themselves unable to
sell.
Those who focus on timing often
highlight John Maynard Keynes’
alleged aphorism that markets can
remain irrational for longer than one
can remain solvent. If Keynes did in
fact say this, his problem was that he
had borrowed money to invest in the
Temple Bar Investment Trust PLC Annual Report & Accounts 2014
7
234791 Temple Bar pp02-pp08 25/02/2015 07:09 Page 8
Active investment working for you
Strategic report – Manager’s review continued
stockmarket and thus feared
insolvency as and when the bank
requested the return of its money. In
contrast, an investor holding cash can
outlast an irrational market although
sometimes great patience and
tolerance is required.
While we watch how events
develop, we were recently provided
with some encouragement from
veteran American high yield investor
Howard Marks quoting economist
Rudiger Dornbusch, “In economics
things take longer to happen than you
think they will, and then they happen
faster than you thought they could’,
to which Marks added, ‘…and they go
much further than you thought they
could’.
If equities were extraordinarily out
of favour and cheap our concerns
would be much diminished. A
significant amount of bad news would
be discounted in prices and therefore
the expected long-term returns from
holding equities would be greater.
However, this is not what we see. We
think valuations are pretty stretched,
particularly so across a broad swathe
of medium-sized companies. The
search for yield has forced dividend
yields down and we must be very
sensitive to the risk of
disappointment. Comparing an equity
dividend with the low rate of interest
on a bank deposit or of a government
bond is appealing to many, but is
racked with risk. A superior equity
yield can appear attractive, but is
obviously neither guaranteed to
increase each year or even remain
constant and is attached to an asset
far more volatile than the one with
which it is being compared . It is
highly likely that in the very long run
a high yielding equity portfolio will
comfortably outperform both bonds
and cash, but the very long-term is
often too long an investment horizon
for many investors and the interim
volatility can test the mettle of the
average investor; particularly if he has
historically preferred the more serene
areas of bonds and cash.
There also seem to be
contradictions at work in equity
markets. Equity bulls highlight the
attraction of equities compared with
low interest rates. However, the story
implicit in bond yields (low growth
and very low inflation) hardly tallies
with growing corporate profitability
and high dividend growth. On the
other hand, if bonds are mispriced and
yields are too low, then the yield
advantage of equities is temporary.
Against the challenging
background that we describe, how are
we positioning the portfolio of the
Trust? And, perhaps of primary
importance, how relevant is this
backdrop to a strategy which we have
always described as bottom-up and
stock specific?
However bottom-up we like to be,
we will always be buffeted by macro-
economic factors such as inflation,
deflation or recessions. We would
hope to look through these more
extreme outcomes, but that assumes
that these turbulent periods are
neither too long nor too destructive.
Not everything mean reverts and
some themes can last a very long
time. Diversification remains our main
method of dealing with this problem,
providing shareholders with a mix of
out of favour companies exposed to a
number of different themes and
purchased at different times.
Rather perversely, given the
negative tone of much of this report,
the portfolio remains relatively highly
exposed to some economically
cyclical sectors such as banking and
construction. Valuations always
remain critical to the generation of
long-term returns and we continue to
believe that companies in these
sectors better reflect in their
valuations some of the concerns we
have discussed. Whilst it perhaps looks
a touch contradictory we believe that
a barbell type approach to accepting
risk through these stocks and anti-risk
through our cash and short-dated
bond holdings plus gold and silver
related exposures provides the most
promising source of potential returns.
The oil price fell heavily towards
the end of the year to finish far below
any forecasts of twelve months
earlier. Of course, the commentary
that accompanied this fall rationally
explained the events away and
provided more forecasts, but it is
difficult to believe that forecasting
such a volatile commodity has
become any easier twelve months on.
The episode has probably just proved
as screenwriter William Goldman
once said that ‘Nobody knows
nothing’. We retain our exposure to
Royal Dutch Shell, BP and BG,
believing that each is undergoing
significant change from within.
However, we must obviously accept
that the dividend outlook for these
companies deteriorates if the oil price
fall is long term. If it is more reflective
of an imbalance between supply and
demand given a step down in global
growth then there is a good chance
that oil bounces back. If the
conspiracy stories (take your pick)are
correct, then the Saudis are aiming to
make life painful for the high cost
producers for a few months and
encourage some of them to leave the
market. If that is true, once again we
will probably see a bounce back. To
believe that the fall is permanent one
may need to believe the more
extreme argument that the Saudis are
concerned that they have too much of
a rapidly depreciating asset in the
ground and therefore need to pump at
any price. We added to our oil and gas
exposure during the year.
We continue to search for cheap
out of favour stocks and our
opportunity set has certainly become
more attractive during the year.
However, relative to history, we still
find fairly slim pickings in terms of
outstanding value. Geo-political
problems, central bank policy,
emerging market problem areas and
the growing levels of government
debt around the world all suggest the
potential for higher volatility and
reasons to believe that there will be
better times to take on more risk.
Alastair Mundy
For Investec Fund Managers Limited
24 February 2015
8 Temple Bar Investment Trust PLC Annual Report & Accounts 2014
234791 Temple Bar pp09-pp12 25/02/2015 07:20 Page 9
Strategic report – overview of strategy
Active investment working for you
The directors present the strategic report for the Company
for the year ended 31 December 2014.
The strategic report is designed to help shareholders assess
how the directors have performed their duty to promote the
success of the Company during the year under review.
Business of the Company
Temple Bar Investment Trust PLC was incorporated in England
and Wales in 1926 with the registered number 214601.
The Company carries on business as an investment
company under Section 833 of the Companies Act 2006
and has been approved by HM Revenue & Customs as an
investment trust in accordance with Section 1158 of the
Corporation Tax Act 2010.
The Company’s principal business activity of investment
management is sub-contracted to Investec Fund Managers
Limited (‘IFM’). IFM delegates the management of the
Company’s portfolio to Investec Asset Management Limited
(‘IAM’).
A review of the business is given in the Chairman’s
Statement and the Manager’s Review. The results of the
Company are shown on page 30.
Investment objective and policy
The Company’s investment objective is to provide growth in
income and capital to achieve a long-term total return
greater than the benchmark FTSE All-Share Index, through
investment primarily in UK securities. The Company’s policy
is to invest in a broad spread of securities with typically the
majority of the portfolio selected from the constituents of
the FTSE 350 Index.
The UK equity element of the portfolio will be mostly
invested in the FTSE All-Share Index; however, exceptional
positions may be sanctioned by the Board and up to 20% of
the portfolio may be held in listed international equities in
developed economies. The Company may continue to hold
securities that cease to be quoted or listed if the Manager
considers this to be appropriate. There is an absolute limit of
10% of the portfolio in individual stocks with a maximum
exposure to a specific industrial or commercial sector of
25%, in each case irrespective of their weightings in the
benchmark index.
It is the Company’s policy to invest no more than 15% of
its gross assets in other listed investment companies
(including listed investment trusts).
The Company maintains a diversified portfolio of
investments, typically comprising 70-80 holdings, but
without restricting the Company from holding a more or
less concentrated portfolio from time to time as
circumstances require.
The Company’s long-term investment strategy
emphasises:
• Achieving a portfolio yield of between 120-140% of that
of the FTSE All-Share Index.
• Stocks of companies that are out of favour and whose
share prices do not match the Manager’s assessment of
their longer term value.
During the year the portfolio yield was lower than the
above target for the reasons set out in the Chairman’s
Statement on page 2.
From time to time fixed interest holdings or non equity
interests may be held for yield enhancement and other
purposes. Derivative instruments are used in certain
circumstances, and with the prior approval of the Board, for
hedging purposes or to exploit specific investment
opportunities.
Liquidity and borrowings are managed with the aim of
increasing returns to shareholders. The Company’s net
gearing range may fluctuate between 0% and 30%, based
on the current balance sheet structure, with an absolute
limit of 50%.
As a general rule it is the Board’s intention that the
portfolio should be reasonably fully invested. An investment
level of 90% of shareholder funds is regarded as a guideline
minimum investment level dependent on market
conditions.
Risk is managed through diversification of holdings,
investment limits set by the Board and appropriate financial
and other controls relating to the administration of assets.
Investment approach
The investment approach of the Manager is premised on a
contrarian view on the timing of buy and sell decisions,
buying the shares of companies when sentiment towards
them is thought to be near its worst and selling them as
fundamental profit improvement and/or re-evaluation of
their long-term prospects takes place.
The belief is that repeated investor behaviour in driving
down the prices of ‘out of favour’ companies to below their
fair value will offer investment opportunities. This will allow
the Company to purchase shares at significant discounts to
their fair value and to sell them as they become more fully
valued, principally as a result of predictable patterns in
human psychology.
The Manager’s process is designed to produce ‘best ideas’
to drive active fund management within a rigorous control
framework. The framework begins through narrowing down
the universe of stocks by passing those companies with a
market capitalisation above £200 million through a
screening process which highlights the weakest performing
stocks. This isolates opportunities with the most negative
sentiment characteristics which are then in turn scrutinised
in greater detail to identify investment opportunities.
The process is very much bottom up and can result in large
sector positions being taken if enough stocks of sufficient
interest are found within a single sector. However, top down
risk analysis is undertaken to identify potential concentration
of risk and to factor this awareness into portfolio
construction. The portfolio comprises stocks which have been
purchased for different reasons and at different times. In
general, because of the bottom up approach to stockpicking,
each of these reasons is independent of the other and the
portfolio, therefore, is not excessively vulnerable to longer
term macro trends. Cash is a residual of the process and
normally will not exceed 5% of the portfolio value.
Temple Bar Investment Trust PLC Annual Report & Accounts 2014
9
234791 Temple Bar pp09-pp12 25/02/2015 07:20 Page 10
Active investment working for you
Strategic report – overview of strategy continued
The approach to stock selection and portfolio
construction is driven by four core beliefs:
1. Markets overreact to news on the upside and the
downside. The Manager aims to be sceptical of the crowd
and aware of investor psychology, which often causes
overvaluation of those stocks that are deemed to have
good prospects and an undervaluation of those which
are out of favour.
2. There are few companies which sustain below normal
profits over the longer term. Weaker companies tend to
leave an industry, thus improving the balance of supply
and demand, are bid for or management is changed.
Similarly, there are few companies which can sustain
supernormal profits over the longer term. Such profits
tend to be competed or regulated away.
3. Fundamental valuation is the key determinant of share
price performance over the long term. In other words
‘cheap’ stocks will outperform ‘expensive’ stocks.
4. Diversification is an important control. Particular
companies or sectors can be out of favour for a
considerable time.
Performance
In the year to 31 December 2014 the net asset value total
return of the Company was -1.7% compared with a total
return of the Company’s benchmark index of 1.2%. The
effect of removing gearing from the performance
calculation is shown in the following graph of investment
performance over a five year period compared with the
FTSE All-Share Index. The Chairman’s Statement on pages 2
to 3 and the Manager’s Review on pages 5 to 8 include a
review of developments during the year together with
information on investment activity within the Company’s
portfolio and an assessment of future developments.
Ungeared 5 year performance
180
160
140
120
100
80
2009
Temple Bar - gross assets, excluding effects of gearing and
associated costs
FTSE All-Share Index – total return
2010
2011
2012
2013
2014
Key performance indicators
The principal key performance indicators (‘KPIs’) used to
determine the progress and performance of the Company
over time, and which are comparable to those reported by
other investment trusts, are:
• Net asset value total return relative to the
FTSE All-Share Index and to competitors within the UK
Equity Income sector of investment trust companies.
• Discount/premium on net asset value
• Earnings and dividends per share
• Ongoing charges
While some elements of performance against KPIs are
beyond management control they provide measures of the
Company’s absolute and relative performance and are,
therefore, monitored by the Board on a regular basis.
Net asset value (‘NAV’) total return
In reviewing the performance of the assets of the
Company’s portfolio the Board monitors the NAV in
relation to the FTSE All-Share Index. This is the most
important KPI by which performance is judged. During the
year the net asset value total return of the Company
was -1.7% compared with a total return of 1.2% by the
FTSE All-Share Index. The five year net asset value total
return performance is shown below.
Net asset value total return
Source: Datastream/Morningstar
Temple Bar share price (total return)
Temple Bar NAV (total return)
FTSE All-Share (total return)
210
200
190
180
170
160
150
140
130
120
110
100
90
2009
2010
2011
2012
2013
2014
Discount on net asset value
The Board monitors the premium/discount at which the
Company’s shares trade in relation to the net assets.
During the year the shares traded at an average premium
to NAV of 1.0%. This compares with an average premium
of 3.5% in the previous year. The Board and Manager
closely monitor both movements in the Company’s share
price and significant dealings in the shares. In order to
avoid substantial overhangs or shortages of shares in the
market the Board asks shareholders to approve
resolutions which allow for the buy back of shares and
their issuance which can assist in the management of the
discount or premium. Regular demand generated by
monthly investment in the Savings Scheme and the use
of marketing and promotional activity also assist in
keeping the discount to an acceptable level.
10 Temple Bar Investment Trust PLC Annual Report & Accounts 2014
234791 Temple Bar pp09-pp12 25/02/2015 07:20 Page 11
Strategic report – overview of strategy continued
Active investment working for you
(Discount)/premium to net asset value
(excluding current year revenue)
Source: Morningstar
8%
6%
4%
2%
0%
-2%
-4%
-6%
-8%
-10%
2009
2010
2011
2012
2013
2014
Cum income NAV, debt at market value
Earnings and dividend per share
It remains the directors’ intention to distribute, over time, by
way of dividends substantially all of the Company’s net
revenue income after expenses and taxation, subject to
preserving a prudent balance in revenue reserves to
facilitate a smooth dividend progression. The Manager aims
to maximise total returns from the portfolio and attaches
great importance to dividends in achieving total return.
The portfolio will typically provide a yield premium to
the market. The final dividend recommended for the year is
23.33p per ordinary share which brings the total for the
year to 38.88p per ordinary share, an increase of 3.0%. This
will be the 31st consecutive year in which the Company has
increased the overall level of its dividend payment.
10 year comparative dividend growth
Source: Datastream
Temple Bar
RPI
150
140
130
120
110
100
90
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Ongoing charges
Ongoing charges is an expression of the Company’s
management fees and other operating expenses as a
percentage of average daily net assets over the year. The
ongoing charges for the year ended 31 December 2014 were
0.48% (2013: 0.48%). The Board compares the Company’s
ongoing charges with those of its peers on a regular basis. At
the present time the Company has one of the lowest
ongoing charges in the UK Equity Income sector of
investment trust companies.
Principal risks and uncertainties
With the assistance of the Manager the Board has drawn up
a risk matrix which identifies the key risks to the Company.
The Board reviews and agrees policies, which have remained
unchanged since the beginning of the accounting period, for
managing these risks, as summarised below.
Investment strategy risk
An inappropriate investment strategy on matters such as
asset allocation or the level of gearing may lead to
underperformance against the Company’s benchmark index
or peer companies, resulting in the Company’s shares
trading on a wider discount. The Board manages such risks
by diversification of investments through its investment
restrictions and guidelines, which are monitored and
reported on by the Manager. The Manager provides the
directors with regular management information including
absolute and relative performance data, attribution analysis,
revenue estimates, liquidity reports, risk profile and
shareholder analysis. The Board monitors the
implementation and results of the investment process with
the portfolio manager, who attends Board meetings.
Periodically the Board holds a separate meeting devoted to
strategy, the most recent being in March 2013.
Income risk – dividends
Generating the necessary level of income from portfolio
investments to meet the Company’s expenses and to
provide adequate reserves from which to base a sustainable
programme of increasing dividend payments to
shareholders is subject to the risk that income generation
from investments fails to meet the level required. The Board
monitors this risk through the receipt of detailed income
reports and forecasts which are considered at each meeting.
As at 31 December 2014 the Company had distributable
revenue reserves of £34.4 million before declaration of the
final dividend for 2014 of £15.6 million.
Share price risk
The Company’s share price and premium or discount to
NAV are monitored by the Manager and considered by the
Board at each meeting. The directors attach considerable
importance to any premium or discount to Net Asset Value
(NAV) at which the shares trade, both in absolute terms and
relative to the average rating at which the UK Equity
Income sector of investment trusts as a whole is trading.
Premiums judged to be excessive will be addressed by
repeated share issues, either new or from Treasury.
Discounts judged to be excessive will be addressed by
repeated share buybacks, for Treasury or cancellation. The
directors are prepared to be proactive in premium/discount
management to minimise potential disadvantages to
Temple Bar Investment Trust PLC Annual Report & Accounts 2014
11
234791 Temple Bar pp09-pp12 25/02/2015 07:20 Page 12
Active investment working for you
Strategic report – overview of strategy continued
shareholders. However, market sentiment is beyond the
absolute control of the Manager and the Board.
Accounting, legal & regulatory
In order to qualify as an investment trust the Company must
comply with Section 1158 of the Corporation Tax Act 2010.
Were the Company to breach Section 1158 it might lose
investment trust status and, as a consequence, gains within
the Company’s portfolio would be subject to capital gains
tax. The Section 1158 qualification criteria are, therefore,
monitored by the Board at each meeting.
The Company must also comply with the provisions of the
Companies Act and, since its shares are listed on the London
Stock Exchange, the UKLA Listing Rules. A breach of the
Companies Act could result in the Company being fined or
subject to criminal proceedings. Breach of the UKLA Listing
Rules could result in the Company’s shares being suspended
from Listing which in turn would breach Section 1158. The
Board relies on the services of its Company Secretary, IAM, and
its professional advisers to ensure compliance with the
Companies Act and the UKLA Listing Rules and is satisfied that
they are able to provide an appropriate service in this regard.
Corporate governance and shareholder relations
Details of the Company’s compliance with corporate governance
best practice including information on relations with
shareholders, are set out in the corporate governance report on
pages 22 to 24 which forms part of this strategic report.
Control systems risk
Disruption to, or failure of, IFM’s accounting, dealing or
payments systems or the custodian’s records could prevent
accurate reporting and monitoring of the Company’s financial
position or adversely impact the ability to trade. Details of
how the Board monitors the services provided by IFM and its
associates and the key elements designed to provide effective
internal control are included within the internal control
section of the corporate governance report on pages 22 to 24.
Other risks
Other risks to which the Company is exposed and which
form part of the market risks referred to above are included
in note 22 to the financial statements together with
summaries of the policies for managing these risks. These
comprise; market price risk, interest rate risk, liquidity risk,
credit risk and currency risk.
The Board confirms that there is an ongoing process for
identifying, evaluating and managing strategic and operational
risks. This process is regularly reviewed by the Board in
accordance with the Turnbull guidance on internal controls.
Gender Diversity
At the year end there were five male directors and one
female director on the Board. The Company has no
employees and therefore there is nothing further to report in
respect of gender representation within the Company.
The Company’s policy on diversity is detailed in the
corporate governance report on pages 22 to 24.
Greenhouse Gas Emissions
All the Company’s activities are outsourced to third parties.
The Company therefore has no greenhouse gas emissions to
report from its operations.
Employee, Social, Environmental, Ethical and Human
Rights Policy
The Company is managed by IFM, has no employees and all
its directors are non-executive. There are, therefore, no
disclosures to be made in respect of employees. The Board
notes the Manager’s policy statement in respect of Social,
Environmental and Governance issues, as outlined below.
Stewardship/engagement
The Manager recognises its wider stewardship
responsibilities to its clients as a major asset owner. To this
end, it supports the FRC Stewardship Code, which sets out
the responsibilities of institutional shareholders in respect of
investee companies. Under the Code, managers should:
• publicly disclose their policy on how they will discharge
their stewardship responsibilities to their clients;
• disclose their policy on managing conflicts of interest;
• monitor their investee companies;
• establish clear guidelines on how they escalate engagement;
• be willing to act collectively with other investors where
appropriate;
• have a clear policy on proxy voting and disclose their
voting record; and
• report to clients.
The Manager endorses the Stewardship Code for its UK
investments and supports the principles as best practice
elsewhere. The Manager believes that regular contact with
the companies in which it invests is central to its investment
process and it also recognises the importance of being an
‘active’ owner on behalf of its clients.
The Manager believes that companies should act in a socially
responsible manner. Although its priority at all times is the best
economic interests of its clients, it recognises that, increasingly,
non-financial issues such as social and environmental factors
have the potential to impact the share price, as well as the
reputation of companies. Specialists within the Manager’s
environmental, social and governance team are tasked with
assessing how companies deal with and report on social and
environmental risks and issues specific to their industry.
The Manager’s Voting Policy and Corporate Governance
Guidelines are available on request from the Company
Secretary or can be downloaded from its website.
Future developments
The future development of the Company is dependent on
the success of its investment strategy in the light of
economic and equity market developments. The outlook is
discussed in the Chairman’s Statement on page 2.
By order of the Board of Directors
John Reeve
Chairman
24 February 2015
12 Temple Bar Investment Trust PLC Annual Report & Accounts 2014
234791 Temple Bar pp13-pp16 25/02/2015 07:10 Page 13
Portfolio of investments
Active investment working for you
Place of Valuation % of
Company Supersector primary listing £000 portfolio
UK Treasury 4.75% 2015 Fixed Interest UK 100,401 11.49%
Held in the portfolio in lieu of cash
HSBC Financials UK 76,443 8.75%
HSBC Holdings is one of the world’s largest banks. It is
the leading international banking group in Asia (ex Japan)
with a strong presence in the Middle East, North and
South America and the UK. Approximately 2/3 of pre-tax
profits are from Asia and emerging markets.
Royal Dutch Shell Oil & Gas UK 72,071 8.25%
Royal Dutch Shell is a global oil and gas company. It is
one of the six oil and gas “supermajors”. It is vertically-
integrated and is active in every area of the oil and gas
industry, including exploration and production, refining,
distribution and marketing, petrochemicals, power
generation and trading.
GlaxoSmithKline Health Care UK 57,693 6.60%
GlaxoSmithKline is a global health care company with
leading positions in large therapeutic areas such as
respiratory, anti-infectives, diabetes and central nervous
system disorders. The company has a consumer health
division that markets a number of over-the-counter oral
health and other health care products.
BP Oil & Gas UK 48,744 5.58%
BP is a global oil and gas company and is one of the six
oil and gas “supermajors”. It is vertically-integrated and is
active in every area of the oil and gas industry, including
exploration and production, refining, distribution and
marketing, petrochemicals, power generation and trading.
Grafton Group Industrials UK 38,933 4.46%
Grafton is a distributor of building products that operates
across the British Isles and also has a small Belgian and a
very small Polish business. The group operates from about
500 sites in the UK, and this is by far its most important
market, accounting for approximately 75% of sales. The
group’s origins lie in Ireland, where it is very clearly the
largest builder’s merchant, with a 30% market share.
Grafton also has a significant presence in the Irish DIY
market, where it is even more dominant, accounting for
over 60% of big box DIY space. Builder’s merchants
operate in a structurally attractive market, with deep
economic “moats” existing and there are no obvious
threats to the business model..
British American Tobacco Consumer Goods UK 30,638 3.51%
BAT is one of the world’s largest tobacco groups with
over 200 brands and leadership in more than 60 markets.
The company’s leading brands are Dunhill, Kent, Lucky
Strike and Pall Mall. BAT derives over half of its net
turnover from developing markets.
Temple Bar Investment Trust PLC Annual Report & Accounts 2014
13
234791 Temple Bar pp13-pp16 25/02/2015 07:10 Page 14
Active investment working for you
Portfolio of investments continued
Place of Valuation % of
Company Supersector primary listing £000 portfolio
BT Group Telecommunications UK 25,696 2.94%
BT is one of the largest telecommunications services
companies in the world and is the UK incumbent
operator for fixed line telecom services.Through its BT
Global Services division it is a leading supplier of
telecommunications services to corporate and
government customers worldwide and its BT Retail
division is a leading supplier of telephony, broadband and
subscription television services in the UK, with over 18
million customers.
Royal Bank of Scotland Financials UK 24,202 2.77%
RBS operates across a wide range of banking activities
including personal and corporate lending, capital markets,
leasing, insurance, personal financial services and private
banking. Geographically, some 50% of the bank’s
assets are located in the UK. RBS is concentrating on
building capital, completing planned business sales
(US retail and commercial and part of UK retail),
cutting costs, and refreshing bank infrastructure.
The bank targets a return on equity above 12%
in 2018-2020.
Direct Line Insurance Financials UK 22,326 2.56%
Direct Line group is the largest UK personal lines
insurer, accounting for 90% of premiums. It has
the leading market share in motor and home
insurance and top five positions in travel, pet,
rescue and commercial lines. In 2014 the
company sold its international business.
Top Ten Investments 497,147 56.91%
Lloyds Banking Group Financials UK 22,031 2.52%
TNT Express Industrials Netherlands 20,031 2.29%
SIG Industrials UK 19,773 2.26%
Qinetiq Industrials UK 19,521 2.23%
Gold Bullion Securities ETF Financials UK 18,330 2.10%
Carnival Consumer Services UK 17,601 2.01%
Unilever Consumer Goods UK 17,001 1.95%
CitiGroup Financials USA 16,744 1.92%
Imperial Tobacco Consumer Goods UK 16,200 1.85%
Go-Ahead Consumer Services UK 13,747 1.57%
Top Twenty Investments 678,126 77.61%
14 Temple Bar Investment Trust PLC Annual Report & Accounts 2014
234791 Temple Bar pp13-pp16 25/02/2015 07:10 Page 15
Portfolio of investments continued
Active investment working for you
Place of Valuation % of
Company Supersector primary listing £000 portfolio
Centrica Utilities UK 12,698 1.45%
CRH Industrials UK 12,638 1.45%
Computacenter Technology UK 12,511 1.43%
Kingspan Industrials UK 12,461 1.43%
UK Commercial Property Trust Financials UK 11,871 1.36%
Chemring Industrials UK 10,871 1.24%
Wm Morrison Supermarkets Consumer Services UK 10,505 1.20%
Marks & Spencer Consumer Services UK 10,451 1.20%
Land Securities REIT Financials UK 10,035 1.15%
British Land REIT Financials UK 9,995 1.14%
Top Thirty Investments 792,162 90.66%
BG Oil & Gas UK 9,685 1.11%
Carrefour Consumer Services France 9,547 1.09%
Market Vectors Gold Miners ETF Basic Materials USA 8,763 1.00%
Avon Products Consumer Goods USA 8,609 0.99%
Green REIT Financials Ireland 8,495 0.97%
Tesco Consumer Services UK 6,643 0.76%
Royal Mail Industrials UK 6,069 0.69%
Nationwide 7.971% 2015 Variable Perpetual Fixed Interest UK 5,558 0.64%
Fresnillo Basic Materials UK 4,833 0.55%
Hammerson 6.875% 2020 Fixed Interest UK 3,039 0.35%
Top Forty Investments 863,403 98.81%
Games Workshop Consumer Goods UK 2,448 0.28%
Future Consumer Services UK 1,301 0.15%
St. Ives Industrials UK 1,195 0.14%
RSA Insurance 6.701% 2017 Variable Perpetual Fixed Interest UK 1,074 0.13%
HSBC 8.208% 2015 Variable Fixed Interest UK 1,030 0.12%
Aviva 2020 5.9021% FRN Perpetual Fixed Interest UK 995 0.11%
Lloyds Banking Group - preference shares Financials UK 825 0.09%
Alent Basic Materials UK 557 0.06%
Colt Group Telecommunications UK 540 0.06%
Serco Industrials UK 319 0.04%
Top Fifty Investments 873,687 99.99%
Johnston Press Consumer Services UK 94 0.01%
Total Valuation of Portfolio 873,781 100.00%
Temple Bar Investment Trust PLC Annual Report & Accounts 2014
15
234791 Temple Bar pp13-pp16 25/02/2015 07:10 Page 16
Active investment working for you
Directors
John Reeve
John Reeve, Chairman, was appointed a director in 1992. He was formerly executive chairman
of the Willis Group, group managing director of Sun Life Assurance Society and a member of
the boards of the Association of British Insurers and the International Insurance Society. He is
a director of a number of other companies.
Arthur Copple
Arthur Copple was appointed a director in 2011. He has specialised in the investment
company sector for over 30 years. He was a partner at Kitcat & Aitken, an executive director
of Smith New Court PLC and a managing director of Merrill Lynch.
Richard Jewson*
Richard Jewson was appointed a director in 2001. He first worked in the timber and building
material supply industry, becoming managing director of Jewson, the builders’ merchants, for
twelve years from 1974, and then managing director and chairman of its parent company
Meyer International PLC from which he retired in 1993. He is currently chairman of Raven
Russia Limited and Tritax Big Box REIT PLC and a non-executive director of other private
companies.
June de Moller
June de Moller was appointed a director in 2005. She is a non-executive director of Derwent
London PLC and a former managing director of Carlton Communications PLC. She was
previously a non-executive director of J Sainsbury PLC, Cookson Group PLC and BT PLC.
Martin Riley
Martin Riley was appointed a director in 2004. He had 30 years’ experience in stockbroking
and fund management in the City and is a former director of Henderson Crosthwaite Ltd,
Guinness Mahon & Co Ltd and Barlows PLC. He is a director of various private investment
companies.
David Webster
David Webster was appointed a director in 2009. His career started in corporate finance at
Samuel Montagu before becoming a founder and subsequently chairman of Safeway PLC from
which he retired in 2004. He is currently a non-executive director of Amadeus IT Holdings SA.
He has a wide range of other business interests including membership of the Appeals
Committee of the Panel on Takeovers and Mergers. He was previously chairman of
InterContinental Hotels Group PLC and a non-executive director of Reed Elsevier PLC.
All the directors are independent and members of the audit and nomination committees.
* Chairman of the audit committee and Senior Independent Director.
16 Temple Bar Investment Trust PLC Annual Report & Accounts 2014
234791 Temple Bar pp17-pp29 25/02/2015 07:11 Page 17
Active investment working for you
Manager, recognising that while the contrarian style can
sometimes lead to short-term periods of underperformance
it usually delivers superior investment returns over the
longer term. In addition, the portfolio has produced high
and growing dividend income to shareholders. In the
opinion of the directors the continued appointment of the
Manager on the terms set out above is, therefore, in the
best interests of shareholders.
GOING CONCERN
The directors have reviewed the going concern basis of
accounting for the Company. The Company’s assets consist
substantially of equity shares in listed companies and in
most circumstances are realisable within a short timescale.
The use of the going concern basis of accounting is
appropriate because there are no material uncertainties
related to events or conditions that may cast significant
doubt about the ability of the Company to continue as a
going concern. After making enquiries, the directors have a
reasonable expectation that the Company has adequate
resources to continue in operational existence for the
foreseeable future. Accordingly, the directors continue to
adopt the going concern basis in preparing the accounts.
ORDINARY DIVIDENDS
An interim dividend of 15.55p per ordinary share was paid
on 30 September 2014 (2013: 15.10p) and the directors are
recommending a final dividend of 23.33p per ordinary share
(2013: 22.65p), a total for the year of 38.88p (2013:
37.75p). Subject to shareholders’ approval, the final
dividend will be paid on 31 March 2015 to shareholders on
the register on 13 March 2015.
ISAs
The Company has conducted its investment policy so as to
remain a qualifying investment trust under the ISA
regulations. It is the intention of the Board to continue to
satisfy these regulations.
SHARE CAPITAL
During the year 3,549,517 ordinary shares of 25p were
allotted fully paid for a total consideration of £42,926,070
at prices representing a premium to the prevailing net asset
value.
Section 992 of the Companies Act 2006
The following information is disclosed in accordance with
Section 992 of the Companies Act 2006.
Capital Structure
The Company’s capital structure is summarised on page 40.
Report of the directors
The directors present their report and accounts for the year
ended 31 December 2014.
THE ALTERNATIVE INVESTMENT FUND MANAGERS
DIRECTIVE (‘AIFMD’)
Investec Fund Managers Limited (‘IFM’), an affiliate of
Investec Asset Management Limited (‘IAM’), was appointed
as the Company’s alternative investment fund manager
(‘AIFM’ or ‘Manager’) on 21 July 2014. For the purposes of
the AIFMD the Company is an alternative investment fund
(‘AIF’). IFM has delegated responsibility for the day to day
management of the Company’s portfolio to IAM.
IFM is required to ensure that a depositary is appointed
and accordingly IFM and the Company have appointed
HSBC as the depositary and custodian. HSBC is responsible
for the custody of the Company’s assets and for monitoring
its cash flows.
The AIFMD requires certain information to be made
available to investors in AIFs before they invest and requires
that material changes to this information be disclosed in
the annual report of each AIF. An Investor Information
Document, which sets out information on the Company’s
investment strategy and policies, leverage, risk, liquidity,
administration, management, fees, conflicts of interest and
other shareholder information is available on the
Company’s website at www.templebarinvestments.co.uk.
There have been no material changes to this information
requiring disclosure. Any information requiring immediate
disclosure pursuant to the AIFMD will be disclosed to the
London Stock Exchange through a primary information
provider. As an authorised AIFM, IFM will make the requisite
disclosures on remuneration levels and policies to the
Financial Conduct Authority (‘FCA’) at the appropriate time.
MANAGEMENT FEES
The Company has a management agreement with Investec
Fund Managers Limited (‘IFM’) for the provision of
investment management services. The agreement is subject
to one year’s notice of termination by either party.
IFM receives an investment management fee of 0.35%
per annum, payable quarterly, based on the value of the
investments (including cash) of the Company together with
an additional fee of £125,000 pa, plus or minus 0.005% of
the value of the investments (including cash) of the
Company above or below £750 million, calculated and
payable quarterly. Investments in funds managed by IFM are
wholly excluded from this charge.
There is also a fee payable to Investec Asset
Management Limited of £40,000 pa in respect of the
provision of secretarial and administrative services, adjusted
annually in line with the Retail Price Index.
IFM’s performance under the contract and the contract
terms are reviewed at least annually. This covers, inter alia,
the performance of the Manager, its management
processes, investment style, resources and risk controls. The
Board endorses the investment approach adopted by the
Temple Bar Investment Trust PLC Annual Report & Accounts 2014
17
234791 Temple Bar pp17-pp29 25/02/2015 07:11 Page 18
Active investment working for you
Report of the directors continued
Voting Rights in the Company’s Shares
The voting rights at 31 December 2014 were:
Number of Voting rights Total
Share class shares issued per share voting rights
Ordinary shares
of 25p each 66,872,765 1 66,872,765
As at 24 February 2015, the share capital of the Company
and total voting rights was 66,872,765. Deadlines for the
exercise of voting rights and details of arrangements by
which someone other than the registered shareholder can
exercise voting rights are detailed in the Notes to the Notice
of Meeting on page 47. The Company’s ordinary shares have
a Premium listing on the London Stock Exchange.
DIRECTORS
The directors of the Company who held office at the end of
the year are detailed on page 16. No other person was a
director during any part of the year. Details of directors’
beneficial shareholdings may be found in the Report on
directors remuneration on page 20.
All the directors will be retiring in compliance with the
provisions of the AIC Code and, each being eligible, the
Board recommends their re-election. In making these
recommendations the Board has carefully reviewed the
composition of the Board as a whole and borne in mind the
need for a proper balance of skills and experience. The Board
does not believe that length of service of itself detracts
from the independence of a director, particularly in relation
to an investment trust, and on that basis considers that all
directors standing for re-election are independent. It is
confirmed that, following formal evaluation, the
performance of each director continues to be effective and
each continues to demonstrate commitment to the role.
There were no contracts subsisting during or at the end
of the year in which a director of the Company is or was
interested and which are or were significant in relation to
the Company’s business. No director has a service contract
with the Company.
SUBSTANTIAL SHAREHOLDERS
As at 31 December 2014 and 24 February 2015 the
following were registered or had indicated an interest in 3%
or more of the issued ordinary shares of the Company.
%
Brewin Dolphin Ltd 8.7
Alliance Trust Savings Ltd 7.9
Speirs & Jeffrey Ltd 6.5
Investec Wealth & Investment Ltd 6.1
Temple Bar Savings Scheme 5.5
AXA SA 3.1
DISCLOSURE OF INFORMATION TO AUDITOR
The directors are not aware of any relevant information of
which the auditor is unaware and have taken all the steps
that they ought to have taken as directors in order to make
themselves aware of any relevant audit information and to
establish that the Company’s auditor is aware of that
information.
AUDITOR
A resolution to re-appoint Ernst & Young LLP as auditor to
the Company will be proposed at the Annual General
Meeting on 30 March 2015.
ANNUAL GENERAL MEETING
The notice of the Annual General Meeting of the Company
to be held on 30 March 2015 is on page 45. In addition to
the ordinary business the following matters are proposed as
special business.
Authority to allot shares and disapplication of
pre-emption rights
It is proposed that the directors be authorised to allot up to
£1,671,819 of relevant securities in the Company
(equivalent to 6,687,276 ordinary shares of 25p each,
representing 10.0% of its ordinary shares in issue as at
24 February 2015).
When shares are to be allotted for cash, the Companies
Act 2006 requires such new shares to be offered first to
existing shareholders in proportion to their existing
holdings of ordinary shares. However, in certain
circumstances, it is beneficial to allot shares for cash
otherwise than pro rata to existing shareholders and the
ordinary shareholders can by special resolution waive their
pre-emption rights. Therefore, a special resolution will be
proposed at the AGM which, if passed, will give the directors
the power to allot for cash equity securities up to an
aggregate nominal amount of £1,671,819 (equivalent to
6,687,276 ordinary shares of 25p each or 10.0% of the
Company’s existing issued ordinary share capital).
The directors intend to use this authority to issue new
shares to participants in the Temple Bar Investment Trust
Savings Scheme or to other prospective purchasers
whenever they believe it may be advantageous to
shareholders to do so. Any such issues would only be made
at prices greater than net asset value, as adjusted for the
market value of the Company’s debt, and would, therefore,
increase the assets underlying each share. The issue
proceeds would be available for investment in line with the
Company’s investment policy.
No issues of shares will be made which would alter the
control of the Company without the prior approval of
shareholders in general meeting.
18 Temple Bar Investment Trust PLC Annual Report & Accounts 2014
234791 Temple Bar pp17-pp29 25/02/2015 07:11 Page 19
Active investment working for you
Report of the directors continued
Directors’ authority to purchase the Company’s own
shares
The directors consider it desirable to give the Company the
opportunity to buy back shares in circumstances where the
shares may be bought for a price which is below the net
asset value per share of the Company. The purchase of
ordinary shares is intended to reduce the discount at which
ordinary shares trade in the market through the Company
becoming a new source of demand for such shares. The
rules of the UK Listing Authority provide that the maximum
price which can be paid by the Company is 5% above the
average of the market value of the ordinary shares for the
five business days before the purchase is made.
Recommendation
The Board considers the resolutions to be proposed at the
AGM to be in the best interests of the Company and its
members as a whole. Accordingly, the directors unanimously
recommend that shareholders should vote in favour of the
resolutions to be proposed at the AGM, as they intend to do
so in respect of their own beneficial holdings, amounting to
114,655 ordinary shares.
By order of the Board of Directors
John Reeve
Chairman
24 February 2015
Temple Bar Investment Trust PLC Annual Report & Accounts 2014
19
234791 Temple Bar pp17-pp29 25/02/2015 07:11 Page 20
Active investment working for you
Report on directors’ remuneration
At the AGM held on 24 March 2014 an ordinary
resolution for the approval of the remuneration policy, as
set out above and in the future policy table below, was
approved by 99.1% of proxy votes, 0.4% were against and
0.5% of votes were withheld. It is the intention of the Board
that the policy on remuneration will continue to apply for
the next two financial years to 31 December 2016.
Future policy table
Fees payable to directors should be
Purpose
and link to sufficient to attract and retain individuals
strategy
of high calibre with suitable knowledge and
experience. Those chairing the Board and key
committees should be paid higher fees than
other directors in recognition of their more
demanding roles. Fees should reflect the time
spent by directors on the Company’s affairs
and the responsibilities borne by the directors.
Maximum Remuneration consists of a fixed fee each
and
minimum policies and any increase granted must be in
levels
year, set in accordance with the stated
line with the stated policies.
The Company’s Articles of Association set a
limit of £250,000 in respect of the total
remuneration that may be paid to directors in
any financial year.
The Board reviews the quantum of directors’
pay each year to ensure this is in line with the
level of remuneration for other investment
trusts of a similar size.
When making recommendations for any
changes in pay, the Board will consider wider
factors such as the average rate of inflation
over the period since the previous review, and
the level and any change in complexity of the
directors’ responsibilities (including additional
time commitments as a result of increased
regulatory or corporate governance
requirements).
There is no compensation for loss of office.
The Board presents the report on directors’ remuneration
for the year ended 31 December 2014 which has been
prepared in accordance with Section 421 of the Companies
Act 2006. The report comprises a policy report, which is
subject to a triennial binding shareholder vote, or sooner if
an alteration to the policy is proposed, and a remuneration
policy implementation report, which is subject to an annual
advisory vote. The remuneration policy, which is subject to a
binding vote, is set out in the future policy table on this
page.
The law requires the Company’s auditor to audit certain
parts of the disclosures provided. Where disclosures have
been audited, they are indicated as such. The auditor’s
opinion is included in their report on page 28.
The principles remain the same as for previous years.
There have been no changes to remuneration policy during
the period of this Report nor are there any proposals for
change in the foreseeable future.
DIRECTORS’ REMUNERATION POLICY REPORT
The Company does not have any executive directors and, as
permitted under the Listing Rules, has not, therefore,
established a remuneration committee. Remuneration of
non-executive directors is viewed as a decision of the Board,
subject to any shareholder approvals which may be
necessary.
The level of directors’ fees is determined with reference
to a range of factors including the remuneration paid to the
directors of other investment trusts, comparable in terms of
both size and investment characteristics, and the rate of
inflation. The Manager of the Company compiles such
analysis as part of the management and secretarial services
provided to the Company. These data, together with
consideration of any alteration in non-executive directors’
responsibilities, are used to review whether any change in
remuneration is necessary. No other external advice is taken
in considering such fees.
It is the Company’s policy that no director shall be
entitled to any performance related remuneration, benefits
in kind, long-term incentive schemes, share options,
pensions or other retirement benefits or compensation for
loss of office. None of the Directors has a service contract
with the Company.
The Company has no employees and consequently no
consideration is required to be given to employment
conditions elsewhere in setting directors’ pay.
Consideration of Shareholders’ Views
An ordinary resolution to approve the remuneration report
is put to shareholders at each AGM, and shareholders have
the opportunity to express their views and raise any queries
in respect of remuneration policy at this meeting. To date,
no shareholders have commented in respect of
remuneration policy.
20 Temple Bar Investment Trust PLC Annual Report & Accounts 2014
234791 Temple Bar pp17-pp29 25/02/2015 07:11 Page 21
Report on directors’ remuneration continued
Active investment working for you
Performance graph
The directors consider that the most appropriate measure
of the Company’s performance is its share price total return
compared with the total return on the FTSE All-Share Index.
A graph illustrating this relative performance over a five
year period is shown below.
Share price total return
Source: Datastream
200
180
160
140
120
100
80
2009
Temple Bar - share price (total return)
FTSE All-Share (total return)
2010
2011
2012
2013
2014
Annual statement
The Board confirms that the above Remuneration
Implementation Report in respect of the year ended
31 December 2014 summarises:
• the major decisions on Directors’ remuneration;
• any significant changes relating to Directors’
remuneration made during the year; and
• the context in which the changes occurred and decisions
have been taken.
By order of the Board of Directors
John Reeve
Chairman
24 February 2015
REMUNERATION IMPLEMENTATION REPORT
A single figure for the total remuneration of each Director is
set out in the table below for the year ended 31 December
2014. These fees exclude employers’ national insurance
contributions and VAT where applicable:
Total amount of
salary and fees1
2014 2013
John Reeve
Arthur Copple
June de Moller
Richard Jewson
Martin Riley
David Webster
32,750 31,800
22,150 21,500
22,150 21,500
25,000 24,200
22,150 21,500
22,150 21,500
Total 146,350 142,000
1Other columns have been omitted as no payments of any other type were made.
The information in the above table has been audited. The
amounts paid by the Company to the directors were for
services as non-executive directors.
Expenditure by the Company on remuneration and
distributions to shareholders
As the Company has no employees, the directors do not
consider it appropriate to present a table comparing
remuneration paid to employees with distributions to
shareholders.
Directors’ shareholdings
The directors’ shareholdings are detailed below:
31 December 1 January
2014 2014
Arthur Copple 22,661 17,796
June de Moller 8,415 7,679
Richard Jewson 9,168 8,694
John Reeve 54,784 52,204
Martin Riley 15,000 15,000
David Webster 3,983 3,861
All the above interests are beneficial. None of the directors
had at any date any interest in either of the Company’s
debenture stocks.
On 12 January 2015 Mr Reeve acquired a further
83 ordinary shares in the Company through his regular
monthly saving in an ISA and on 11 February 2015 he
acquired a further 81 ordinary shares. On 22 January 2015
Mr Copple, Mr Jewson and Mrs de Moller acquired a further
418, 21 and 41 ordinary shares respectively in the Company
through their regular monthly savings in the Temple Bar
Investment Trust Savings Scheme. No other changes in the
interests shown above occurred between 31 December
2014 and 24 February 2015.
Temple Bar Investment Trust PLC Annual Report & Accounts 2014
21
234791 Temple Bar pp17-pp29 25/02/2015 07:11 Page 22
Active investment working for you
Corporate governance
APPLICATION OF AIC CODE PRINCIPLES
Corporate Governance is the process by which the board of
directors of a company looks after shareholders’ interests
and by which it seeks to enhance shareholder value.
Shareholders hold the directors responsible for the
stewardship of a company’s affairs, delegating authority and
responsibility to the directors to manage the company on
their behalf and holding them accountable for its
performance.
The Board is ultimately responsible for framing and
executing the Company’s strategy and for closely
monitoring risks. It considers the practice of good
governance to be an integral part of the way it manages the
Company and is committed to maintaining high standards
of financial reporting, transparency and business integrity.
As a UK-listed investment trust company the Board’s
principal reporting obligation is driven by the UK Corporate
Governance Code (the “UK Code”) issued by the Financial
Reporting Council in September 2012. However, as listed
investment trust companies differ in many ways from other
listed companies, the Association of Investment Companies
has drawn up its own set of guidelines, the AIC Code of
Corporate Governance (the “AIC Code”) issued in February
2013, which addresses the governance issues relevant to
investment companies and meets the approval of the
Financial Reporting Council. The Board believes that
reporting against the principles and recommendations of
the AIC Code will provide better information to
shareholders.
The Company has complied with the recommendations
of the AIC Code and the relevant provisions of the UK
Corporate Governance Code, except as set out below. The
UK Corporate Governance Code includes provisions relating
to:
• the role of the chief executive
• executive directors’ remuneration
• the need for an internal audit function
The Board considers these provisions are not relevant to
the position of Temple Bar, being an externally managed
investment company. In particular, all of the Company’s
day-to-day management and administrative functions are
outsourced to third parties. As a result, the Company has no
executive directors, employees or internal operations. The
Company has therefore not reported further in respect of
these provisions.
COMPLIANCE WITH THE PRINCIPLES OF THE AIC CODE
OF CORPORATE GOVERNANCE
Operation of the Board
There is a formal schedule of matters to be specifically
approved by the Board and individual directors may seek
independent advice at the expense of the Company within
certain limits. The Board has delegated the investment
management, within clearly defined parameters and dealing
limits, to Investec Fund Managers Limited (‘IFM’) and the
administration of the business to Investec Asset
Management Limited (‘IAM’). The Board makes all strategic
decisions, reviews the performance of the Company at
Board meetings and sets the objectives for the Manager. The
directors have a range of business and financial skills and
experience relevant to the direction of the Company.
Mr R W Jewson is the Senior Independent Director.
The Corporate Company Secretary (‘the Company
Secretary’) is responsible to the Board, inter alia, for
ensuring that Board procedures are followed and for
compliance with applicable rules and regulations including
the AIC Code. Appointment or removal of the nominated
representative of the Company Secretary is a matter for the
Board as a whole.
The content and presentation of Board papers circulated
before each meeting contain sufficient information on the
financial condition of the Company. Key representatives of
IFM attend each Board meeting enabling directors to probe
on matters of concern or seek clarification on certain issues.
There were seven Board meetings, two audit committee
meetings and four nomination committee meetings held
during the year and the attendance by the directors was as
follows:
Nomination
Board Audit Committee Committee
Number of meetings attended
John Reeve 7 2 4
Arthur Copple 7 2 4
June de Moller 7 2 4
Richard Jewson 7 2 4
Martin Riley 7 2 4
David Webster 7 2 4
Diversity
The Board’s policy on diversity, including gender, is to take
this into consideration during the recruitment and
appointment process. Typically, the Board seeks to ensure
that there is a suitable balance between directors with
industrial/commercial and traditional ‘City’ backgrounds.
However, the Board is committed to appointing the most
appropriate candidate, regardless of gender or other forms
of diversity, and therefore no targets have been set against
which to report.
Independence of the directors
Each of the directors is independent of any association with
the Manager and has no other relationships or
circumstances which might be perceived to interfere with
the exercise of independent judgement. Four of the six
directors (Mr Reeve, Mr Jewson, Mr Riley and Mrs de Moller)
have served on the Board for more than nine years from the
date of their first election, but given the nature of the
Company as an investment trust and the strongly
independent mindset of the individuals involved, the Board
22 Temple Bar Investment Trust PLC Annual Report & Accounts 2014
234791 Temple Bar pp17-pp29 25/02/2015 07:11 Page 23
Corporate governance continued
Active investment working for you
is firmly of the view that all of the directors can be
considered to be independent. In arriving at this conclusion
the Board makes a clear distinction between the activities
of an investment trust and a conventional trading company.
An investment trust has no employees or executive
directors, the only significant relationship being with the
Manager. In overseeing this relationship it is the view of the
Board that long service aids the understanding, judgement,
objectivity and independence of the directors and in no way
detracts from any of these qualities.
Induction and training
New directors appointed to the Board are provided with an
induction programme which is tailored to the particular
circumstances of the appointee. Regular briefings are
provided during the year on industry and regulatory
matters and the directors receive other relevant training as
required.
Re-election of directors
Directors are subject to re-election by shareholders at the
first AGM following their appointment and, thereafter, are
subject to retirement on an annual basis. In addition, the
appointment of each director is reviewed by other members
of the Board every year. Directors are not, therefore, subject
to automatic re-appointment. Non-executive directors are
not appointed for specified terms. Because of the nature of
an investment trust the Board believes that the
contribution and independence of a director is not
diminished by long service and, conversely, that a more
detailed knowledge of the Company and its business has a
beneficial impact.
The Board has carefully considered the position of each
of the directors and believes it would be appropriate for
them to be proposed for re-election. Each of the directors
continues to be effective and to display an undiminished
enthusiasm and commitment to the role.
Audit committee
The audit committee is a formally constituted committee
of the Board with defined terms of reference. Its role and
responsibilities are set out in the Report of the Audit
Committee on page 25. The Board is satisfied that members
of the audit committee have relevant and recent financial
experience to fulfil their role effectively. The auditor, who
the Board has identified as being independent, is invited to
attend the audit committee meeting at which the annual
accounts are considered and any other meetings that the
committee deems necessary.
time, taking into account the existing balance of skills and
knowledge. This committee is chaired by Mr Reeve.
The committee is also responsible for assessing on an
annual basis the individual performance of directors and for
making recommendations as to whether they should
remain in office.
Management engagement committee
As all the directors are fully independent of the
management company, the Board as a whole fulfils the
function of a management engagement committee.
Board/audit committee/nomination
committee/director ongoing evaluation
On an annual basis the Board formally reviews its
performance, together with that of the audit and
nomination committees and the effectiveness and
contribution of the individual directors, including the
Chairman, within the context of service on those bodies.
The review encompasses an assessment of how cohesively
these bodies work as a whole as well as the performance of
the individuals within them. In 2013 the Board also
employed the services of the Institute of Directors to carry
out an external evaluation of its performance. On the basis
of these reviews the Board has concluded that it has an
appropriate balance of skills and is operating effectively.
Relations with shareholders
Shareholder relations are given high priority by both the
Board and the Manager. The principal medium by which the
Company communicates with shareholders is through half
yearly reports and annual reports. The information
contained therein is supplemented by daily NAV
announcements and by a monthly fact sheet available on
the Company’s website.
The Board largely delegates responsibility for
communication with shareholders to the management
company and, through feedback, expects to be able to
develop an understanding of their views. Members of the
Board are willing to meet with shareholders for the purpose
of discussing matters in relation to the operation and
prospects of the Company.
The Board encourages investors to attend the AGM and
welcomes questions and discussion on issues of concern or
areas of uncertainty. In addition, special arrangements have
been established to allow Temple Bar Savings Scheme investors
to participate fully at AGMs. Following the formal AGM
proceedings the Manager makes a presentation to the meeting
outlining the key investment issues that face the Company.
Nomination committee
A nomination committee comprising all the directors has
been established to oversee a formal review procedure
governing the appointment of new directors and to
evaluate the overall composition of the Board from time to
Accountability, internal controls and audit
The Board pays careful attention to ensuring that all
documents released by the Company, including the Annual
Report, present a fair and accurate assessment of the
Company’s position and prospects.
Temple Bar Investment Trust PLC Annual Report & Accounts 2014
23
234791 Temple Bar pp17-pp29 25/02/2015 07:11 Page 24
Active investment working for you
Corporate governance continued
The directors are responsible for the Company’s system
of internal control and for reviewing its effectiveness. In
order to facilitate the control process the Board has
requested the Manager to confirm annually that it has
conducted the Company’s affairs in compliance with the
legal and regulatory obligations which apply to the
Company and to report on the systems and procedures
within IFM which are applicable to the management of
Temple Bar’s affairs. The Board meets on seven scheduled
occasions in each year and at each meeting receives
sufficient financial and statistical information to enable it
to monitor adequately the investment performance and
status of the business.
The Board has also established a series of investment
parameters, which are reviewed annually, designed to limit
the risk inherent in managing a portfolio of investments.
The safeguarding of assets is entrusted to an independent
reputable custodian with whom the holdings are regularly
reconciled.
The effectiveness of the overall system of internal
control is reviewed on an annual basis by the Board. Such a
system can provide only reasonable and not absolute
assurance against material misstatement or loss. The Board
believes that there is a robust framework of internal
controls in place to meet the requirements of the AIC Code.
The Board receives reports from its advisers on internal
control matters. Based on the foregoing the Company has a
continuing process for identifying, evaluating and managing
the risks it faces. This process has been in place for the
reporting period and to the date of this report.
24 Temple Bar Investment Trust PLC Annual Report & Accounts 2014
234791 Temple Bar pp17-pp29 25/02/2015 07:11 Page 25
Report of the Audit Committee
Active investment working for you
I am pleased to present the Committee's report to
shareholders on the effectiveness of the external audit
process and how this has been assessed for the year ended
31 December 2014.
• reviewing the appropriateness of the Company's
accounting policies; and
• ensuring the adequacy of the internal control systems
and standards.
Role and responsibilities
The Company has established a separately chaired Audit
Committee (“the Committee”) whose duties include
considering and recommending to the Board for approval
the contents of the half yearly and annual financial
statements, and providing an opinion as to whether the
Annual Report, taken as a whole, is fair, balanced,
understandable and provides the information necessary for
shareholders to assess the Company's performance,
business model and strategy. The Committee also reviews
the external auditor's report thereon and is responsible for
reviewing and forming an opinion on the effectiveness of
the external audit process and audit quality. Other duties
include reviewing the appropriateness of the Company's
accounting policies and ensuring the adequacy of the
internal control systems and standards, as set out in more
detail below. The Terms of Reference of the Committee are
available on the Company's website at
www.templebarinvestments.co.uk
The Committee meets at least twice a year. The two
planned meetings are held prior to the Board meetings to
approve the half yearly and annual results.
Composition
All the Directors are members of the Committee, which is
chaired by Mr Jewson. The Board considers that the
members of the Committee have sufficient recent and
relevant financial experience for the Committee to
discharge its function effectively. The Chairman of the
Company is a member of the Committee to enable him to
be kept fully informed of any issues which may arise.
Responsibilities and review of the external audit
During the year the principal activities of the Committee
included:
• considering and recommending to the Board for approval
the contents of the half yearly and annual financial
statements and reviewing the external auditor's report
thereon;
• reviewing the scope, execution, results, cost
effectiveness, independence and objectivity of the
external auditor;
• reviewing and recommending to the Board for approval
the audit and non-audit fees payable to the external
auditor and the terms of their engagement;
• reviewing and approving the external auditor’s plan for
the financial year, with a focus on the identification of
areas of audit risk, and consideration of the
appropriateness of the level of audit materiality adopted;
• reviewing the quality of the audit engagement partner
and the audit team, and making a recommendation to the
Board with respect to the re-appointment of the auditor;
Significant issues considered regarding the Annual
Report and Financial Statements
During the year, the Committee considered a number of
significant issues and areas of key audit risk in respect of
the Annual Report and Financial Statements, as outlined
below. The Committee reviewed the external audit plan at
an early stage and concluded that the appropriate areas of
audit risk relevant to the Company had been identified and
that suitable audit procedures had been put in place to
obtain reasonable assurance that the financial statements
as a whole would be free of material misstatements. The
table below sets out the key areas of risk identified and also
explains how these were addressed by the Committee.
Significant issue
How the issue was addressed
Verification of the
existence of the
assets in the portfolio controls over the assets of the
The Committee reviews reports
from its service providers on key
Company. Any significant issues
are reported by the Manager to
the Committee. The audit also
includes checks on the existence
and ownership of investments.
The Committee reviews detailed
portfolio valuations on a regular
basis throughout the year and
receives confirmation from the
Manager that the pricing basis is
appropriate. The audit includes a
check of pricing back to source
data to confirm that the correct
valuation basis has been applied in
accordance with the accounting
policies adopted, as disclosed in
note 1 to the Financial Statements.
Having considered the Company’s
investment objective, risk
management policies and cash
flow projections the Committee is
satisfied that the Company has
adequate resources and an
appropriate financial structure to
continue in operational existence
for the foreseeable future.
Ongoing compliance with the
eligibility criteria is monitored
on a regular basis.
The valuation of the
investment portfolio
Going concern
Compliance with
Sections 1158 and
1159 of the
Corporation Tax
Act 2010
Temple Bar Investment Trust PLC Annual Report & Accounts 2014
25
234791 Temple Bar pp17-pp29 25/02/2015 07:11 Page 26
Active investment working for you
Report of the Audit Committee continued
The verification of
investment income
The accuracy of the
calculation of
management
fees
The Committee reviews income
forecasts and receives explanations
from the Manager for any
variations or significant
movements from previous
forecasts and prior year numbers.
The audit includes checks on the
calculation of the management
fees to ensure these are
correct and in accordance with
contractual arrangements.
As the provision of portfolio valuation, accounting and
administration services is delegated to the Company's
Manager, who sub-delegates fund accounting to a third
party service provider, and the provision of custody services
is contracted to HSBC, the Committee has also reviewed
the Service Organisation Control Reports (SOC) and Audit
and Assurance Faculty (AAF) reports prepared by the
Manager, custodian and fund accountants to ensure that
the relevant control procedures are in place to cover these
areas of risk as identified above and are adequate,
appropriate and have been designated as operating
effectively by the reporting accountant.
Auditors and audit tenure
The Company's current auditors, Ernst & Young LLP, have
acted in this role since 2003. The appointment of the auditor
is reviewed each year and the audit partner changes at least
every five years in accordance with professional and
regulatory standards in order to protect independence and
objectivity and to provide fresh challenge to the business.
The last five yearly audit rotation took place in 2012. The
Committee is aware that the European Parliament has
adopted a directive which will introduce reforms to the
statutory audit of listed companies, including the mandatory
rotation of audit firms. The Committee will consider the
impact of the reforms once they are introduced into UK law.
There are no contractual obligations that restrict the
Company's choice of auditors. Other audit service fees of
£1,595 (excluding VAT) paid to Ernst & Young LLP relate to
their services in the electronic filing of tax returns.
Assessment of the efficiency of the external audit
process
To assess the effectiveness of the external audit, members of
the Committee work closely with the Manager to obtain a
good understanding of the progress and efficiency of the audit.
Feedback in relation to the audit process, and also of the
effectiveness of the Manager in performing its role, is also
sought from relevant involved parties, notably the audit
partner and team. The external auditor is invited to attend
the Committee meeting at which the annual accounts are
considered, where they have the opportunity to meet with
the Committee without representatives of the Manager being
present.
The effectiveness of the Board and the Manager in the
external audit process is assessed principally in relation to
the timely identification and resolution of any process
errors or control breaches that might impact the Company's
NAVs and accounting records. It is also assessed by
reference to how successfully any issues in respect of areas
of accounting judgement are identified and resolved, the
quality and timeliness of papers analysing these
judgements, the Board and the Manager's approach to the
value of independent audit, the booking of any audit
adjustments arising and the timely provision of draft public
documents, for review by the auditor and the Committee.
To form a conclusion with regard to the independence of
the external auditor, the Committee considers whether the
skills and experience of the auditor make them a suitable
supplier of the non-audit service and whether there is any
threat to their objectivity and independence in the conduct of
the audit resulting from the provision of such services. On an
annual basis, Ernst & Young LLP review the independence of
their relationship with the Company and report to the Board,
providing details of any other relationships with the Manager.
As part of this review, the Committee also receives
information about policies and processes for maintaining
independence and monitoring compliance with relevant
requirements from the Company's auditor, including
information on the rotation of audit partners and staff, and
details of any relationships between the audit firm and its
staff and the Company, as well as an overall confirmation
from the auditor of their independence and objectivity. As a
result of their review, the Committee has concluded that Ernst
& Young LLP is independent of the Company and the Manager.
Conclusions in respect of the Annual Report and
Financial Statements
The production and audit of the Company's Annual Report
and Financial Statements is a comprehensive process
requiring input from a number of different contributors. One
of the key governance requirements of a Company's financial
statements is for the Report and Financial Statements to be
fair, balanced and understandable. In order to reach a
conclusion on this matter, the Board has requested that the
Committee advise on whether it considers that the Annual
Report and Financial Statements fulfils these requirements.
As a result of the work performed, the Committee has
concluded that the Annual Report for the year ended
31 December 2014, taken as a whole, is fair, balanced and
understandable and provides the information necessary for
shareholders to assess the Company's performance,
business model and strategy. The Committee has reported
on these findings to the Board. The Board's conclusions in
this respect are set out in the Statement of Directors'
Responsibilities on page 27.
Richard Jewson
Chairman
Audit Committee
24 February 2015
26 Temple Bar Investment Trust PLC Annual Report & Accounts 2014
234791 Temple Bar pp17-pp29 25/02/2015 07:11 Page 27
Statement of directors’ responsibilities
in respect of the financial statements
Active investment working for you
The directors are responsible for preparing the Annual
Report, the Report on Directors’ Remuneration and the
financial statements in accordance with applicable law and
regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the
directors are required to prepare the financial statements in
accordance with International Financial Reporting Standards
as adopted by the European Union. Under company law the
directors must not approve the financial statements unless
they are satisfied that they give a true and fair view of the
state of affairs of the Company and of the profit or loss of
the Company for that period. In preparing these financial
statements, the directors are required to:
• select suitable accounting policies in accordance with
IAS8: Accounting Policies, Changes in Accounting
Estimates and Errors, and then apply these consistently;
• present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information;
• provide additional disclosures when compliance with the
specific requirements in IFRS is insufficient to enable
users to understand the impact of particular
transactions, other events and conditions on the entity’s
financial position and financial performance; and
• state that the Company has complied with IFRS, subject
to any material departures disclosed and explained in
the financial statements.
The directors are responsible for keeping adequate
accounting records which are sufficient to show and explain
the Company’s transactions and disclose with reasonable
accuracy at any time the financial position of the Company
and enable them to ensure that the financial statements
comply with the Companies Act 2006 and Article 4 of the
IAS Regulation. They are also responsible for safeguarding
the assets of the Company and hence for taking reasonable
steps for the prevention and detection of fraud and other
irregularities.
The directors are responsible for ensuring that the
Annual Report includes a fair review of the development
and performance of the business and the position of the
Company, together with a description of the principal risks
and uncertainties it faces.
The directors confirm that to the best of their
knowledge:
• the financial statements, prepared in accordance with
the applicable accounting standards, give a true and fair
view of the assets, liabilities, financial position and profit
or loss of the Company; and
• the Annual Report includes a fair review of the
development and performance of the business and the
position of the Company, together with a description of
the principal risks and uncertainties that the Company
faces.
The 2012 UK Corporate Governance Code also requires
Directors to ensure that the Annual Report and Accounts are
fair, balanced and understandable. In order to reach a
conclusion on this matter, the Board has requested that the
Audit Committee advise on whether it considers that the
Annual Report and Accounts fulfils these requirements. The
process by which the Committee has reached these
conclusions is set out in the Audit Committee’s report on
pages 25 to 26. As a result, the Board has concluded that
the Annual Report for the year ended 31 December 2014,
taken as a whole, is fair, balanced and understandable and
provides the information necessary for shareholders to
assess the Company’s performance, business model and
strategy.
On behalf of the Board
John Reeve
Chairman
24 February 2015
Temple Bar Investment Trust PLC Annual Report & Accounts 2014
27
234791 Temple Bar pp17-pp29 25/02/2015 07:11 Page 28
Active investment working for you
Independent auditor’s report
to the members of Temple Bar Investment Trust PLC
Opinion on financial statements
In our opinion the financial statements:
• give a true and fair view of the state of the Company’s
affairs as at 31 December 2014 and of its loss for the
year then ended;
• have been properly prepared in accordance with IFRS as
adopted by the European Union; and
• have been prepared in accordance with the requirements
of the Companies Act 2006.
What we have audited
We have audited the financial statements of Temple Bar
Investment Trust PLC (“the Company”) for the year ended
31 December 2014 which comprise the Statement of
Comprehensive Income, the Statement of Financial Position,
the Statement of Cash Flows, the Statement of Changes in
Equity and the related notes 1 to 23. The financial reporting
framework that has been applied in their preparation is
applicable law and International Financial Reporting
Standards (IFRS) as adopted by the European Union.
This report is made solely to the Company’s members, as
a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken
so that we might state to the Company’s members those
matters we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility
to anyone other than the Company and the Company’s
members as a body, for our audit work, for this report, or for
the opinions we have formed.
Respective responsibilities of directors and auditor
As explained more fully in the Directors’ Responsibilities
Statement set out on page 27 the directors are responsible
for the preparation of the financial statements and for
being satisfied that they give a true and fair view. Our
responsibility is to audit and express an opinion on the
financial statements in accordance with applicable law and
International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Auditing Practices
Board’s Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts
and disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free
from material misstatement, whether caused by fraud or
error. This includes an assessment of: whether the
accounting policies are appropriate to the Company’s
circumstances and have been consistently applied and
adequately disclosed; the reasonableness of significant
accounting estimates made by the directors; and the overall
presentation of the financial statements. In addition, we
read all the financial and non-financial information in the
Annual Report & Accounts to identify material
inconsistencies with the audited financial statements and
to identify any information that is apparently materially
incorrect based on, or materially inconsistent with, the
knowledge acquired by us in the course of performing the
audit. If we become aware of any apparent material
misstatements or inconsistencies we consider the
implications for our report.
Our assessment of risks of material misstatement
We identified the following risks of material misstatement
which had the greatest effect on the overall audit strategy;
the allocation of resources in the audit; and directing the
efforts of the engagement team. The table also contains our
response to the risks:
Risks Identified
Our Response
• We agreed the year end
prices of the investments
to an independent source.
• We agreed the number of
shares held in each security
to a confirmation of legal
title received from the
Company’s custodian.
The valuation of the
assets held in the
investment portfolio is
the key driver of the
Company’s net asset
value and total return.
Incorrect asset pricing
or a failure to maintain
proper legal title of the
assets held by the
Company could have a
significant impact on
portfolio valuation and,
therefore, the return
generated for
shareholders.
Our application of materiality
We determined planning materiality for the Company to be
£7.99 million (2013: £7.92 million) which is 1% of total
equity. This provided a basis for determining the nature,
timing and extent of our risk assessment procedures,
identifying and assessing the risk of material misstatement
and determining the nature, timing and extent of further
audit procedures. We have derived our materiality calculation
based on a proportion of total equity as we consider it to be
the most important financial metric on which shareholders
would judge the performance of the Company.
On the basis of our risk assessments, together with our
assessment of the Company’s overall control environment,
our judgment was that overall performance materiality (i.e.
our tolerance for misstatement in an individual account or
balance) for the Company should be 75% of planning
materiality, namely £5.99 million (2013: £5.94 million). Our
objective in adopting this approach was to ensure that total
detected and undetected audit differences in all accounts
did not exceed our planning materiality level.
We have reported to the Committee all audit differences
in excess of £0.39 million (2013: £0.39 million) as well as
differences below that threshold that, in our view,
warranted reporting on qualitative grounds.
28 Temple Bar Investment Trust PLC Annual Report & Accounts 2014
Active investment working for you
Under the Listing Rules we are required to review:
• the directors’ statement, set out on page 17 in relation
to going concern; and
• the part of the Corporate Governance Statement relating
to the Company’s compliance with the nine provisions of
the UK Corporate Governance Code specified for our
review.
Ashley Coups (Senior statutory auditor)
for and on behalf of
Ernst & Young LLP, Statutory Auditor
London
24 February 2015
234791 Temple Bar pp17-pp29 25/02/2015 07:11 Page 29
Independent auditor’s report continued
Opinion on other matters prescribed by the Companies
Act 2006
In our opinion:
• the part of the Directors’ Remuneration Report to be
audited has been properly prepared in accordance with
the Companies Act 2006; and
• the information given in the Strategic Report and the
Directors’ Report for the financial year for which the
financial statements are prepared is consistent with the
financial statements.
Matters on which we are required to report by
exception
We have nothing to report in respect of the following:
Under the ISAs (UK and Ireland), we are required to
report to you if, in our opinion, information in the annual
report is:
• materially inconsistent with the information in the
audited financial statements; or
• apparently materially incorrect based on, or materially
inconsistent with, our knowledge of the Company
acquired in the course of performing our audit; or
• is otherwise misleading.
In particular, we are required to consider whether we have
identified any inconsistencies between our knowledge
acquired during the audit and the directors’ statement that
they consider the annual report is fair, balanced and
understandable and whether the annual report
appropriately discloses those matters that we
communicated to the audit committee which we consider
should have been disclosed.
Under the Companies Act 2006 we are required to report
to you if, in our opinion:
• adequate accounting records have not been kept, or
returns adequate for our audit have not been received
from branches not visited by us; or
• the financial statements and the part of the Directors’
Remuneration Report to be audited are not in agreement
with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified
by law are not made; or
• we have not received all the information and
explanations we require for our audit.
Temple Bar Investment Trust PLC Annual Report & Accounts 2014
29
234791 Temple Bar pp30-pp51 25/02/2015 09:46 Page 30
Active investment working for you
Statement of Comprehensive Income
for the year ended 31 December 2014
2014 2013
Revenue Capital Total Revenue Capital Total
Notes £000 £000 £000 £000 £000 £000
Investment income 4 30,262 – 30,262 26,064 – 26,064
Other operating income 4 12 – 12 10 – 10
30,274 – 30,274 26,074 – 26,074
(Losses)/gains on investments
(Losses)/gains on investments held at fair
value through profit or loss 12(b) – (29,867) (29,867) – 164,732 164,732
Total income 30,274 (29,867) 407 26,074 164,732 190,806
Expenses
Management fees 6 (1,315) (1,938) (3,253) (1,141) (1,711) (2,852)
Other expenses 7 (538) (1,009) (1,547) (569) (1,154) (1,723)
Profit/(loss) before finance costs and tax 28,421 (32,814) (4,393) 24,364 161,867 186,231
Finance costs 8 (2,639) (3,999) (6,638) (2,090) (3,163) (5,253)
Profit/(loss) before tax 25,782 (36,813) (11,031) 22,274 158,704 180,978
Tax 9 – – – – – –
Profit/(loss) for the year 25,782 (36,813) (11,031) 22,274 158,704 180,978
Earnings per share (basic and diluted) 11 39.82p (56.86p) (17.04p) 36.17p 257.72p 293.89p
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).
There are no minority interests.
The notes on pages 34-44 form an integral part of the financial statements.
30 Temple Bar Investment Trust PLC Annual Report & Accounts 2014
234791 Temple Bar pp30-pp51 25/02/2015 09:46 Page 31
Statement of Changes in Equity
for the year ended 31 December 2014
Active investment working for you
Ordinary Share premium
share capital account Capital reserves Retained earnings Total equity
£000 £000 £000 £000 £000
Balance at 1 January 2013 15,138 22,105 530,413 33,535 601,191
Unclaimed dividends – 12 years – – – 29 29
Profit for the year – – 158,704 22,274 180,978
Issue of share capital 693 31,897 – – 32,590
Dividends paid to equity shareholders – – – (22,718) (22,718)
Balance at 31 December 2013 15,831 54,002 689,117 33,120 792,070
Unclaimed dividends – – – 17 17
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
The notes on pages 34-44 form an integral part of the financial statements.
Temple Bar Investment Trust PLC Annual Report & Accounts 2014 31
234791 Temple Bar pp30-pp51 25/02/2015 09:46 Page 32
Active investment working for you
Statement of Financial Position
as at 31 December 2014
31 December 2014 31 December 2013
Notes £000 £000 £000 £000
Non-current assets
Investments held at fair value through profit or loss 12(a) 873,781 889,385
889,385
Current assets
Receivables 13 3,256 4,087
Cash and cash equivalents 37,225 14,139
40,481 18,226
Total assets 914,262 907,611
Current liabilities
Payables 14 (1,064) (1,836)
Total assets less current liabilities 913,198 905,775
Non-current liabilities
Interest bearing borrowings 15 (113,754) (113,705)
Net assets 799,444 792,070
Equity attributable to equity holders
Ordinary share capital 16 16,719 15,831
Share premium 17 96,040 54,002
Capital reserves 18 652,304 689,117
Retained earnings 18 34,381 33,120
799,444 792,070
Total equity 799,444 792,070
Net asset value per share 20 1,195.47p 1,250.84p
The notes on pages 34-44 form an integral part of the financial statements.
The financial statements on pages 30 to 44 were approved by the board of directors and authorised for issue on
24 February 2015. They were signed on its behalf by:
J Reeve
Chairman
32 Temple Bar Investment Trust PLC Annual Report & Accounts 2014
234791 Temple Bar pp30-pp51 25/02/2015 09:46 Page 33
Statement of Cash Flows
for the year ended 31 December 2014
Active investment working for you
2014 2013
Notes £000 £000 £000 £000
Cash flows from operating activities
(Loss)/profit before tax (11,031) 180,978
Adjustments for:
Purchases of investments1 (305,944) (351,220)
Sales of investments1 291,681 261,070
(14,263) (90,150)
Gains/(losses) on investments 29,867 (164,732)
Financing costs 8 6,638 5,253
Operating cash flows before movements in working capital 11,211 (68,651)
Increase in accrued income (78) (332)
Decrease/(increase) in receivables 909 (929)
(Decrease)/increase in payables (460) 779
Net cash flows from operating activities before and
after income tax 11,582 (69,133)
Cash flows from financing activities
Proceeds from issue of new shares 42,926 32,590
Proceeds from the issue of 4.05% Private Placement Loan – 50,000
Issue costs relating to 4.05% Private Placement Loan (313) (133)
Unclaimed dividends 17 29
Interest paid on borrowings (6,588) (4,559)
Equity dividends paid 10 (24,538) (22,718)
Net cash used in financing activities 11,504 55,209
Net increase/(decrease) in cash and cash equivalents 23,086 (13,924)
Cash and cash equivalents at the start of the year 14,139 28,063
Cash and cash equivalents at the end of the year 37,225 14,139
1 Purchases and sales of investments are considered to be operating activities of the Company, given its purpose, rather
than investing activities.
The notes on pages 34-44 form an integral part of the financial statements.
Temple Bar Investment Trust PLC Annual Report & Accounts 2014 33
234791 Temple Bar pp30-pp51 25/02/2015 09:46 Page 34
Active investment working for you
Notes to the Financial Statements
1 PRINCIPAL ACCOUNTING POLICIES
Basis of accounting
The financial statements have been prepared in accordance
with International Financial Reporting Standards (‘IFRS’),
which comprise standards and interpretations approved by
the International Accounting Standards Board (‘IASB’), and
International Accounting Standards and Standing
Interpretations Committee interpretations approved by the
International Accounting Standards Committee (‘IASC’) that
remain in effect, and to the extent that they have been
adopted by the European Union.
The principal accounting policies adopted by the
Company are set out below. Where presentational guidance
set out in the Statement of Recommended Practice (‘SORP’)
for investment trusts issued by the Association of
Investment Companies (‘AIC’) in January 2009 is consistent
with the requirements of IFRS, the directors have sought to
prepare the financial statements on a basis compliant with
the recommendations of the SORP.
All values are rounded to the nearest thousand pounds
unless otherwise indicated.
Presentation of Statement of Comprehensive Income
In order better to reflect the activities of an investment
trust company and in accordance with guidance issued by
the AIC, supplementary information which analyses the
Statement of Comprehensive Income between items of a
revenue and capital nature has been presented alongside
the Statement of Comprehensive Income.
Income
Dividend income from investments is recognised when the
Company’s right to receive payment has been established,
normally the ex-dividend date.
Where the Company has elected to receive its dividends
in the form of additional shares rather than cash, the
amount of cash dividend foregone is recognised as income.
Any excess in the value of shares received over the amount
of cash dividend foregone is recognised as a gain in the
Statement of Comprehensive Income.
Interest income is accrued on a time basis, by reference
to the principal outstanding and at the effective interest
rate applicable, which is the rate that exactly discounts
estimated future cash receipts through the expected life of
the financial asset to that asset’s net carrying amount.
Special dividends are credited to capital or revenue
according to their circumstances.
Foreign Currency
The financial statements are prepared in Pounds Sterling
because that is the currency of the primary economic
environment in which the Company operates.
The primary objective of the Company is to generate
returns in Pounds Sterling, its capital-raising currency. The
liquidity of the Company is managed on a day-to-day basis
in Sterling as the Company’s performance is evaluated in
that currency. Therefore, the directors consider Pounds
Sterling as the currency that most faithfully represents the
economic effects of the underlying transactions, events and
conditions.
Transactions involving foreign currencies are converted
at the exchange rate ruling at the date of the transaction.
Foreign currency monetary assets and liabilities are
translated into Pounds Sterling at the exchange rate ruling
on the year-end date. Foreign exchange differences arising
on translation are recognised in the Statement of
Comprehensive Income.
Expenses
All expenses are accounted for on the accruals basis. In
respect of the analysis between revenue and capital items
presented within the Statement of Comprehensive Income,
all expenses have been presented as revenue items except
as follows:
• Transaction costs which are incurred on the purchases or
sales of investments designated as fair value through
profit or loss are expensed to capital in the Statement of
Comprehensive Income.
• Expenses are split and presented partly as capital items
where a connection with the maintenance or
enhancement of the value of the investments held can
be demonstrated and, accordingly, the investment
management fee and finance costs have been allocated
40% to revenue and 60% to capital, in order to reflect
the directors’ long-term view of the nature of the
expected investment returns of the Company.
34 Temple Bar Investment Trust PLC Annual Report & Accounts 2014
234791 Temple Bar pp30-pp51 25/02/2015 09:46 Page 35
Notes to the Financial Statements continued
Active investment working for you
1 PRINCIPAL ACCOUNTING POLICIES CONTINUED
Taxation
The tax expense represents the sum of the tax currently
payable and deferred tax. The tax currently payable is based
on the taxable profit for the year. The taxable profit differs
from profit before tax as reported in the Statement of
Comprehensive Income because it excludes items of income
or expense that are taxable or deductible in other years and
it further excludes items that are never taxable or
deductible. The Company’s liability for current tax is
calculated using a blended rate as applicable throughout
the year.
In line with the recommendations of the SORP, the
allocation method used to calculate tax relief on expenses
presented against capital returns in the supplementary
information in the Statement of Comprehensive Income is
the ‘marginal basis’. Under this basis, if taxable income is
capable of being entirely offset by expenses in the revenue
column of the income statement, then no tax relief is
transferred to the capital return column.
Deferred tax is the tax expected to be payable or
recoverable on differences between the carrying amounts of
assets and liabilities in the financial statements and the
corresponding tax bases used in the computation of taxable
profit and is accounted for using the balance sheet liability
method. Deferred tax liabilities are recognised for all
taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable
profits will be available against which deductible temporary
differences can be utilised.
Deferred tax is calculated at the tax rates that are
expected to apply in the period when the liability is settled
or the asset is realised. Deferred tax is charged or credited
in the revenue return column of the Statement of
Comprehensive Income, except when it relates to items
charged or credited directly to equity, in which case the
deferred tax is also dealt with in equity.
Investment trusts which have approval under Section
1158 of the Corporation Tax Act 2010 are not liable for
taxation on capital gains.
Irrecoverable withholding tax is recognised on any
overseas dividends on an accruals basis using the applicable
rate for the country of origin.
Financial instruments
Financial assets and financial liabilities are recognised in the
Statement of Financial Position when the Company
becomes a party to the contractual provisions of the
instrument. The Company shall offset financial assets and
financial liabilities if it has a legally enforceable right to set
off the recognised amounts and interests and intends to
settle on a net basis. Financial assets and liabilities are
derecognised when the Company settles its obligations
relating to the instrument.
Receivables
Receivables do not carry any interest, are short-term in
nature and are accordingly stated at their nominal value as
reduced by appropriate allowances for estimated
irrecoverable amounts.
Investments
Investments held at fair value through profit or loss are
initially recognised at fair value, being the consideration
given and excluding transaction or other dealing costs
associated with the investment.
After initial recognition, investments are measured at fair
value through profit or loss. Gains or losses on investments
measured at fair value through profit or loss are included in
net profit or loss as a capital item and transaction costs on
acquisition or disposal of investments are expensed. For
investments that are actively traded in organised financial
markets, fair value is determined by reference to stock
exchange quoted market bid prices at the close of business
on the year-end date.
All purchases and sales of investments are recognised on
the trade date i.e. the date that the Company commits to
purchase or sell an asset.
Financial liabilities and equity instruments
Financial liabilities and equity instruments are classified
according to the substance of the contractual arrangements
entered into. An equity instrument is any contract that
evidences a residual interest in the assets of the Company
after deducting all of its liabilities.
Interest bearing borrowings
Interest bearing borrowings, being the debenture stocks and
loan issued by the Company, are initially recognised at a
carrying value equivalent to the proceeds received net of
issue costs associated with the borrowings. After initial
recognition, interest bearing borrowings are subsequently
measured at amortised cost using the effective interest rate
method.
Payables
Payables are non interest bearing and are stated at their
nominal value.
Equity dividends payable
Equity dividends payable are recognised when the
shareholders’ right to receive payment is established.
Finance costs
Interest payable on the debenture stocks and loan in issue is
accrued on the effective interest rate basis. In accordance
with the expected long-term division of returns, 40% of the
interest for the year is charged to revenue, and the other
60% is charged to capital, net of any incremental
corporation tax relief.
Temple Bar Investment Trust PLC Annual Report & Accounts 2014 35
234791 Temple Bar pp30-pp51 25/02/2015 09:46 Page 36
Active investment working for you
Notes to the Financial Statements continued
1 PRINCIPAL ACCOUNTING POLICIES CONTINUED
Cash and cash equivalents
Cash and cash equivalents (which are presented as a single
class of asset on the Statement of Financial Position)
comprise cash at bank and in hand and deposits with an
original maturity of three months or less.
The carrying value of these assets approximates their fair
value.
2 SIGNIFICANT ACCOUNTING JUDGEMENTS,
ESTIMATES AND ASSUMPTIONS
The preparation of the Company’s financial statements
requires the directors to make judgements, estimates and
assumptions that affect the reported amounts recognised in
the financial statements and disclosure of contingent
liabilities. However, uncertainty about these assumptions
and estimates could result in outcomes that could require a
material adjustment to the carrying amount of the asset or
liability affected in future periods. There have been no
significant judgements, estimates or assumptions for the
current or preceding financial year.
3 ADOPTION OF NEW AND REVISED STANDARDS
At the date of authorisation of these financial statements,
the following Standards and Interpretations, which have not
been applied in these financial statements, were in issue but
were not yet effective (and in some cases had not yet been
adopted by the European Union):
IAS 32 (amended) Offsetting Financial Assets and Financial
Liabilities
IFRS 9 Financial Instruments
IFRS10, IFRS 12 and IAS 27 (amended) Investment Entities
IFRS 15 Revenue from Contracts with Customers
IAS 36 (amended) Recoverable Amount Disclosures for
Non-Financial Assets
IAS 39 (amended) Novation of Derivatives and Continuation
of Hedge Accounting
The Company does not believe that there will be a material
impact on the financial statements from the adoption of
these standards/interpretations.
4 INCOME
2014 2013
£000 £000
Income from investments
UK dividends 25,542 20,324
UK REITs 601 500
Overseas dividends 1,282 2,185
Interest from fixed interest securities 2,837 3,055
30,262 26,064
Other income
Deposit interest 12 10
Total income 30,274 26,074
Investment income comprises:
Listed investments 30,262 26,064
Unlisted investments – –
30,262 26,064
5 SEGMENTAL REPORTING
The directors are of the opinion that the Company is engaged in a single segment of business being investment business.
6 INVESTMENT MANAGEMENT FEE
2014 2013
Revenue Capital Total Revenue Capital Total
£000 £000 £000 £000 £000 £000
Investment management fee 1,268 1,902 3,170 1,141 1,711 2,852
AIFM fee 23 36 59 – – –
Secretarial fee 24 – 24 – – –
1,315 1,938 3,253 1,141 1,711 2,852
As at 31 December 2014 an amount of £799,930 (2013: £792,553) was payable to the Manager in relation to the
management fees for the quarter ended 31 December 2014.
Details of the terms of the investment management agreement are provided on page 17.
36 Temple Bar Investment Trust PLC Annual Report & Accounts 2014
234791 Temple Bar pp30-pp51 25/02/2015 09:46 Page 37
Notes to the Financial Statements continued
Active investment working for you
7 OTHER EXPENSES
2014 2013
Revenue Capital Total Revenue Capital Total
£000 £000 £000 £000 £000 £000
Transaction costs on fair value
through profit or loss assets1 – 1,009 1,009 – 1,154 1,154
Directors’ fees (see Report on
Directors’ Remuneration on page 20) 154 – 154 155 – 155
Registrar’s fees 104 – 104 109 – 109
AIC membership costs 21 – 21 25 – 25
Marketing costs 25 – 25 31 – 31
Printing & postage 52 – 52 77 – 77
Directors’ liability insurance 15 – 15 15 – 15
Auditor’s remuneration – annual audit2 28 – 28 28 – 28
Stock exchange fees 23 – 23 16 – 16
FCA fee 20 – 20 16 – 16
Depositary fee 42 – 42 – – –
Safe custody fees 18 – 18 17 – 17
Other expenses 36 – 36 80 – 80
538 1,009 1,547 569 1,154 1,723
All expenses are inclusive of VAT where applicable.
1 Transaction costs on fair value through profit or loss assets represent such costs incurred on both the purchase and sale of
those assets. Transaction costs on purchases amounted to £880,741 (2013: £999,832) and on sales amounted to £128,156
(2013: £153,772).
2 During the year there were also non-audit fees of £1,595 (2013: £2,300) (excluding VAT) paid to the Auditor.
8 FINANCE COSTS
2014 2013
Revenue Capital Total Revenue Capital Total
£000 £000 £000 £000 £000 £000
Interest on borrowings
9.875% debenture stock 2017 988 1,481 2,469 988 1,481 2,469
5.5% debenture stock 2021 836 1,272 2,108 836 1,272 2,108
4.05% Private placement loan 20281 810 1,246 2,056 266 410 676
2,634 3,999 6,633 2,090 3,163 5,253
Bank interest payable 5 – 5 – – –
Total finance costs 2,639 3,999 6,638 2,090 3,163 5,253
The amortisation of the debenture and loan issue costs is calculated using the effective interest method.
1 The 4.05% Private Placement Loan contains the following principal financial or other covenants, with which failure to
comply could necessitate the early repayment of the loan:
• net tangible assets of at least £275 million.
• aggregate principal amount of financial indebtedness not to exceed 50% of net tangible assets.
• prior approval by the note holder of any change of Manager.
• prior approval by the note holder of any change in the Company’s investment objectives and policies.
Temple Bar Investment Trust PLC Annual Report & Accounts 2014 37
234791 Temple Bar pp30-pp51 25/02/2015 09:46 Page 38
Active investment working for you
Notes to the Financial Statements continued
9 TAXATION
(a) There is no corporation tax payable (2013: nil).
(b) The charge for the year can be reconciled to the profit per the Statement of Comprehensive Income as follows:
2014 2013
Revenue Capital Total Revenue Capital Total
£000 £000 £000 £000 £000 £000
Profit/(loss) before taxation 25,782 (36,813) (11,031) 22,274 158,704 180,978
Tax at UK corporation tax rate
of 21.50% (2013: 23.25%) 5,543 (7,914) (2,371) 5,178 36,893 42,071
Tax effects of:
Non-taxable gains on investments – 6,421 6,421 – (38,310) (38,310)
Disallowed expenses – 217 217 – 284 284
Non-taxable UK dividends (5,491) – (5,491) (4,725) – (4,725)
Income taxable in later periods (16) – (16) – – –
Non-taxable overseas dividends (276) – (276) (508) – (508)
Increase in excess expenses in
the year 240 1,276 1,516 55 1,133 1,188
Total tax charge for the year – – – – – –
1 Investment trusts are not subject to corporation tax on these items.
2 The Company has not recognised a deferred tax asset of £12,960,000 (2013: £12,428,009) based on an effective tax rate of
20.0% (2013: 21.50%) arising as a result of having unutilised management expenses since, under current tax legislation, it
is unlikely that the Company will obtain any benefit for the asset.
10 DIVIDENDS
2014 2013
£000 £000
Amounts recognised as distributions to equity holders in the year
Final dividend for the year ended 31 December 2013 of 22.65p (2012: 22.0p) per share 14,395 13,366
Interim dividend for the year ended 31 December 2014 of 15.55p (2013: 15.1p) per share 10,143 9,352
24,538 22,718
Proposed final dividend for the year ended 31 December 2014 of 23.33p (2013: 22.65p) per share 15,601 14,343
The proposed final dividend is subject to approval by shareholders at the Annual General Meeting and has not been included
as a liability in these financial statements.
Also set out below is the total dividend payable in respect of these financial years, which is the basis on which the requirements
of Section 1158 of the Corporation Tax Act 2010 are considered.
2014 2013
£000 £000
Interim dividend for the year ended 31 December 2014 of 15.55p (2013: 15.1p) per share 10,143 9,352
Proposed final dividend for the year ended 31 December 2014 of 23.33p (2013: 22.65p) per share 15,601 14,343
25,744 23,695
11 EARNINGS PER SHARE
2014 2013
Revenue Capital Total Revenue Capital Total
Pence Pence Pence Pence Pence Pence
Earnings per ordinary share 39.82 (56.86) (17.04) 36.17 257.72 293.89
The calculation of the above is based on revenue returns of £25,782,000 (2013: £22,274,000), capital returns of
£(36,813,000) (2013: £158,704,000) and total returns of £(11,031,000) (2013: £180,978,000) and a weighted average
number of ordinary shares of 64,742,831 (2013: 61,579,755).
38 Temple Bar Investment Trust PLC Annual Report & Accounts 2014
234791 Temple Bar pp30-pp51 25/02/2015 09:46 Page 39
Notes to the Financial Statements continued
Active investment working for you
12 INVESTMENTS HELD AT FAIR VALUE THROUGH PROFIT OR LOSS
2014 2013
£000 £000
(a) Movements in the year
Opening cost at 1 January 651,383 483,941
Investment holding gains at 1 January 238,002 150,562
Opening fair value 889,385 634,503
Purchases at cost 305,944 351,220
Sales – proceeds (291,681) (261,070)
– realised gains on sales 77,846 77,292
(Decrease)/increase in investment holding gains (107,713) 87,440
Closing fair value at 31 December 873,781 889,385
Closing cost at 31 December 743,492 651,383
Investment holding gains at 31 December 130,289 238,002
873,781 889,385
(b) Gains on investments
Gains on sales of investments on book cost 77,846 77,292
(Decrease)/increase in investment holding gains (107,713) 87,440
(29,867) 164,732
All investments are listed.
(c) Fair value of financial instruments
The following table shows financial assets recognised at fair value, analysed between those whose fair value is based on:
• Level 1 – quoted prices in active markets for identical investments.
• Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayments,
credit risk, etc). There are no level 2 investments (2013: £nil).
• Level 3 – significant unobservable inputs (including the Company’s own assumptions in determining the fair value of
investments). There are no level 3 investments (2013: £nil).
The following is a summary of the classifications used as at 31 December 2014 in valuing the Company’s financial instruments:
2014 2013
Level 1 Total Level 1 Total
£000 £000 £000 £000
Financial assets
Other financial assets held for trading:
Quoted equities 761,684 761,684 787,545 787,545
Debt securities 112,097 112,097 101,840 101,840
873,781 873,781 889,385 889,385
13 RECEIVABLES
2014 2013
£000 £000
Accrued income 3,190 3,112
Other receivables 66 975
3,256 4,087
The above receivables do not carry any interest and are short-term in nature. The directors consider that the carrying values
of these receivables approximate their fair value.
Temple Bar Investment Trust PLC Annual Report & Accounts 2014 39
234791 Temple Bar pp30-pp51 25/02/2015 09:46 Page 40
Active investment working for you
Notes to the Financial Statements continued
14 PAYABLES
2014 2013
£000 £000
Purchases for future settlement – 538
Accruals and deferred income 1,064 1,298
1,064 1,836
The above payables do not carry any interest and are short-term in nature. The directors consider that the carrying values of
these payables approximate their fair value.
15 NON-CURRENT LIABILITIES
2014 2013
Interest bearing borrowings £000 £000
Amounts payable after more than one year:
9.875% Debenture stock 2017 25,000 25,000
5.5% Debenture stock 2021 38,506 38,488
4.05% Private placement loan 2028 50,248 50,217
113,754 113,705
The 9.875% Debenture stock 2017 is secured by a floating charge over the assets of the Company. The stock is repayable at
par on 31 December 2017. No issue costs were capitalised on the issue of this debenture.
The 5.5% Debenture stock 2021 is secured by a floating charge over the assets of the Company. The stock is repayable at par
on 8 March 2021.
The 4.05% Private Placement Loan is secured by a floating charge over the assets of the Company. The loan is repayable at
par on 3 September 2028.
16 ORDINARY SHARE CAPITAL
Shares
2014 2013 2014 2013
Number Number £ £
Issued, allotted and fully paid
Ordinary shares of 25p each 66,872,765 63,323,248 16,718,191 15,830,812
3,549,517 shares were issued during the year for a total consideration of £42,926,070 at a premium to the prevailing net asset
value due to investor demand (2013: 2,771,881 shares, £32,590,335).
17 SHARE PREMIUM
2014 2013
£000 £000
Balance at 1 January 2014 54,002 22,105
Premium arising on issue of new shares 42,038 31,897
Balance at 31 December 2014 96,040 54,002
18 RETAINED EARNINGS AND CAPITAL RESERVES
2014 2013
Retained earnings Capital reserves Retained earnings Capital reserves
£000 £000 £000 £000
Balance at 1 January 2014 33,120 689,117 33,535 530,413
Dividends paid (24,538) – (22,718) –
Net (loss)/gain for the year (11,031) – 180,978 –
(2,449) 689,117 191,795 530,413
Transfer from retained earnings to capital reserves 36,813 (36,813) (158,704) 158,704
Unclaimed dividends 17 – 29 –
Balance at 31 December 2014 34,381 652,304 33,120 689,117
40 Temple Bar Investment Trust PLC Annual Report & Accounts 2014
234791 Temple Bar pp30-pp51 25/02/2015 09:46 Page 41
Notes to the Financial Statements continued
Active investment working for you
18 RETAINED EARNINGS AND CAPITAL RESERVES CONTINUED
The capital reserves shown above comprise both realised and unrealised gains. A summary of the split is shown below:
2014 2013
£000 £000
Capital reserves – realised 522,015 451,115
Capital reserves – unrealised 130,289 238,002
652,304 689,117
19 CONTINGENT LIABILITIES AND CAPITAL COMMITMENTS
As at 31 December 2014 there were no contingent liabilities or capital commitments for the Company (2013: £nil).
20 NET ASSET VALUES
Net asset value Net assets
per ordinary share attributable
Pence £000
Ordinary shares of 25p each 1,195.47p 799,444
The net asset value per ordinary share is based on net assets at the year-end of £799,444,000 (2013: £792,070,000) and on
66,872,765 (2013: 63,323,248) ordinary shares in issue at the year-end.
21 RELATED PARTY TRANSACTIONS AND TRANSACTIONS WITH THE MANAGER
IAS 24 ‘Related party disclosures’ requires the disclosure of the details of material transactions between the Company and
any related parties. Accordingly, the disclosures required are set out below:
Directors – The remuneration of the directors is set out in the Report on Directors’ Remuneration on page 20. There were no
contracts subsisting during or at the end of the year in which a director of the Company is or was interested and which are or
were significant in relation to the Company’s business. There were no other material transactions during the year with the
directors of the Company.
Manager – Investec Fund Managers Limited is the Alternative Investment Fund Manager of the Company and has delegated
portfolio management to Investec Asset Management Limited, the previous Manager. Details of the services provided by the
Manager and the fees paid are given on pages 17 and 36.
22 RISK MANAGEMENT AND FINANCIAL INSTRUMENTS
The Company’s investing activities undertaken in pursuit of its investment objective, as set out on page 9, involve certain
inherent risks. The main financial risks arising from the Company’s financial instruments are market price risk, interest rate
risk, liquidity risk, credit risk and currency risk. The Board reviews and agrees policies for managing each of these risks as
summarised below. These policies have remained substantially unchanged during the current and preceding periods.
Market price risk
Market price risk arises mainly from uncertainty about future prices of financial instruments used in the Company’s business.
It represents the potential loss the Company might suffer through holding market positions in the face of price movements.
The Board meets on seven scheduled occasions in each year and at each meeting it receives sufficient financial and statistical
information to enable it to monitor adequately the investment performance and status of the business. In addition, financial
information is circulated to the directors on a monthly basis. The Board has also established a series of investment
parameters, which are reviewed annually, designed to limit the risk inherent in managing a portfolio of investments. The
Company’s borrowings have the effect of increasing the market risk faced by shareholders. This gearing effect is such that, for
example, for a 10% movement in the valuation of the Company’s investments, the net assets attributable to shareholders
would move by approximately 10.9%.
Interest rate risk
Interest rate risk is the risk of movements in the value of financial instruments or interest income cash flows that arise as a
result of fluctuations in interest rates. The Company finances its operations through retained profits including capital profits,
and additional financing is obtained through the two debenture stocks in issue and the Private Placement Loan, on all of
which interest is paid at a fixed rate.
Temple Bar Investment Trust PLC Annual Report & Accounts 2014 41
234791 Temple Bar pp30-pp51 25/02/2015 09:46 Page 42
Active investment working for you
Notes to the Financial Statements continued
22 RISK MANAGEMENT AND FINANCIAL INSTRUMENTS CONTINUED
Liquidity risk
The Company’s assets comprise mainly readily realisable securities, which can be sold to meet funding commitments if
necessary. Short-term flexibility is achieved through the use of cash balances and short-term bank deposits.
Credit risk
Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to
incur a financial loss. This is mitigated by the Manager reviewing the credit ratings of broker counterparties. The risk attached
to dividend flows is mitigated by the Manager’s research of potential investee companies. The Company’s custodian bank is
responsible for the collection of income on behalf of the Company. Cash is held either with reputable banks with high quality
external credit enhancements or in liquidity/cash funds providing a spread of exposures to various underlying banks in order
to diversify risk. The full portfolio can be found on pages 13 to 15.
Currency risk
The income and capital value of the Company’s investments and liabilities can be affected by exchange rate movements as
some of the Company’s assets and income are denominated in currencies other than Pounds Sterling which is the Company’s
reporting currency. The key areas where foreign currency risk could have an impact on the Company are:
• movements in rates that would affect the value of investments and liabilities; and
• movements in rates that would affect the income received.
The Company had the following currency exposures, all of which are included in the Statement of Financial Position at fair
value based on the exchange rates ruling at the respective year-ends. They are not representative of the currency exposures
during the year as a whole.
31 December 2014
Non-current
Investments Cash Receivables Payables liabilities Total
£000 £000 £000 £000 £000 £000
Euro 63,171 – – – – 63,171
US Dollar 52,445 2 – – – 52,447
Pounds Sterling 758,165 37,223 3,256 (1,064) (113,754) 683,826
873,781 37,225 3,256 (1,064) (113,754) 799,444
31 December 2013
Non-current
Investments Cash Receivables Payables liabilities Total
£000 £000 £000 £000 £000 £000
Euro 48,441 859 47 – – 49,347
US Dollar 82,340 4 – – – 82,344
Pounds Sterling 758,604 13,276 4,040 (1,836) (113,705) 660,379
889,385 14,139 4,087 (1,836) (113,705) 792,070
Foreign currency sensitivity
The following table illustrates the sensitivity of the profit after tax for the year and the net assets for the year in relation to foreign
exchange movements in Euro and US Dollar. The Company mitigates some of the currency risk through the use of forward currency
contracts. The analysis below assumes that the Euro and US Dollar exchange rates may move +/-2% against Pounds Sterling.
£000 £000
Projected movement +2% -2%
Effect on net assets for the year 2,312 (2,312)
Effect on capital return 2,312 (2,312)
42 Temple Bar Investment Trust PLC Annual Report & Accounts 2014
234791 Temple Bar pp30-pp51 25/02/2015 09:46 Page 43
Notes to the Financial Statements continued
Active investment working for you
22 RISK MANAGEMENT AND FINANCIAL INSTRUMENTS CONTINUED
Financial assets – Interest rate risk
The majority of the Company’s financial assets are equity shares and other investments which neither pay interest nor have a
maturity date. The Company’s fixed interest holdings have a market value of £112,097,000, representing 14.0% of net assets
of £799,444,000 (2013: £101,840,000; 12.9%). The weighted average running yield as at 31 December 2014 was 5.0% (2013:
3.1%) and the weighted average remaining life was 3.4 years (2013: 4.5 years). The Company’s cash balance of £37,225,000
(2013: £14,139,000) earns interest, calculated on a tiered basis, depending on the balance held, by reference to the base rate.
If the bank base rate had increased by 0.5%, the impact on the profit or loss and net assets would have been a positive
£186,124 (2013: £70,695). If the bank base rate had decreased by 0.5%, the impact on the profit or loss and net assets would
have been a negative £186,124 (2013: negative £70,695). The calculations are based on the cash balances at the respective
balance sheet dates and are not representative of the year as a whole.
Financial liabilities – Interest rate risk
All of the Company’s financial liabilities of £114,818,000 (2013: £115,541,000) are denominated in Pounds Sterling. All
current liabilities have no interest rate and are repayable within one year. The 9.875% debenture stock, the 5.5% debenture
stock and the 4.05% Private Placement Loan, which are repayable in 2017, 2021 and 2028 respectively, pay interest at fixed
rates. The weighted average period until maturity of the loans is 9 years (2013: 9 years) and the weighted average interest
rate payable is 6.0% (2013: 6.0%) p.a.
Other price risk exposure
If the investment valuation fell by 10% at 31 December 2014, the impact on profit or loss and net assets would have been
negative £87.4 million (2013: negative £88.9 million). If the investment portfolio valuation rose by 10% at 31 December 2014,
the impact on profit or loss and net assets would have been positive £87.4 million (2013: positive £88.9 million). The calculations
are based on the portfolio valuations as at the respective year-end dates and are not representative of the year as a whole.
The Company held the following categories of financial instruments, all of which are included in the Statement of Financial
Position at fair value, with the exception of interest bearing borrowings which are shown at book value at 31 December 2014.
2014 2013
Book value Fair value Book value Fair value
£000 £000 £000 £000
Assets at fair value through profit or loss 873,781 873,781 889,385 889,385
Cash 37,225 37,225 14,139 14,139
Loans and receivables
Investment income receivable 3,190 3,190 3,112 3,112
Other receivables 66 66 975 975
Payables (1,064) (1,064) (1,836) (1,836)
Interest bearing borrowings
9.875% Debenture Stock1 (25,000) (30,638) (25,000) (30,596)
5.5% Debenture Stock2 (38,506) (44,339) (38,488) (42,011)
4.05% Private Placement Loan3 (50,248) (52,765) (50,217) (46,080)
799,444 785,456 792,070 787,088
1 Effective interest rate is 9.875%
2 Effective interest rate is 5.583%
3 Effective interest rate is 4.133%
Temple Bar Investment Trust PLC Annual Report & Accounts 2014 43
234791 Temple Bar pp30-pp51 25/02/2015 09:47 Page 44
Active investment working for you
Notes to the Financial Statements continued
22 RISK MANAGEMENT AND FINANCIAL INSTRUMENTS CONTINUED
Liquidity risk exposure
This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities.
Contractual maturities of the financial liabilities at the year end, based on the earliest date on which payment can be
required, are as follows:
2014 2013
Three months Not more More than Three months Not more More than
or less than one year one year Total or less than one year one year Total
£000 £000 £000 £000 £000 £000 £000 £000
Creditors: amounts falling
due after more than
one year
Debenture stocks and Loan 2,058 6,584 155,758 164,400 2,058 6,584 162,341 170,983
Creditors: amounts falling
due within one year
Purchases for future
settlement – – – – 538 – – 538
Accruals and deferred
income 812 252 – 1,064 796 189 – 985
2,870 6,836 155,758 165,464 3,392 6,773 162,341 172,506
Capital management policies and procedures
The Company’s capital management objectives are to ensure that it will be able to continue as a going concern, and to
provide long-term growth in revenue and capital, principally by investment in UK securities.
The Company’s capital is its equity share capital and reserves that are shown in the Statement of Financial Position and
debentures and fixed term loan (see note 15) at a total of £913,198,000 (2013: £905,775,000).
The Company is subject to several externally imposed capital requirements:
– as a public company, the Company has a minimum share capital of £50,000.
– in order to be able to pay dividends out of profits available for distribution by way of dividends, the Company has to be
able to meet one of the two capital restriction tests imposed on investment companies by company law.
– the terms of the debenture trust deeds have various covenants that prescribe that moneys borrowed should not exceed
the adjusted total capital and reserves as defined in the debenture trust deeds. The Note Purchase Agreement governing
the terms of the Private Placement Loan also contains certain financial covenants. These are measured in accordance with
the policies used in the annual financial statements.
The Company has complied with all of the above requirements.
23 ALTERNATIVE INVESTMENT FUND MANAGERS (AIFM) DIRECTIVE
In accordance with the AIFM Directive, information in relation to the Company’s leverage and the remuneration of the
Company’s AIFM, Investec Fund Managers Limited, is required to be made available to investors. In accordance with the
Directive, the AIFM remuneration policy is available from the Company Secretary on request (see contact details on page 50)
and the numerical remuneration disclosures in respect of the AIFM’s first relevant reporting period (year ended 31 March 2016)
will be made available in due course.
For the purposes of the AIFM Directive, leverage is any method which increases the Company’s exposure, including the
borrowing of cash and the use of derivatives. It is expressed as a ratio between the Company’s exposure and its net asset value
and can be calculated on a gross and a commitment method. Under the gross method, exposure represents the sum of the
Company’s positions after the deduction of sterling cash balances, without taking into account any hedging and netting
arrangements. Under the commitment method, exposure is calculated without the deduction of sterling cash balances and
after certain hedging and netting positions are offset against each other. The Company’s maximum and actual leverage levels at
31 December 2014 are shown below:
Leverage Exposure Gross method Commitment method
Maximum limit 250% 200%
Actual 112% 114%
44 Temple Bar Investment Trust PLC Annual Report & Accounts 2014
234791 Temple Bar pp30-pp51 25/02/2015 09:47 Page 45
Notice of meeting
Active investment working for you
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt as to the action you
should take you should consult your stockbroker, bank manager, solicitor, accountant or other independent financial adviser
authorised under the Financial Services and Markets Act 2000 immediately.
If you have sold or otherwise transferred all of your ordinary shares in Temple Bar Investment Trust PLC, please forward
this document and the accompanying form of proxy as soon as possible to the purchaser or transferee or to the stockbroker,
bank or other agent through whom the sale or transfer was or is being effected for delivery to the purchaser or transferee.
NOTICE IS HEREBY GIVEN that the eighty-ninth Annual General Meeting of Temple Bar Investment Trust PLC will be held at
11.00am on Monday 30 March 2015 at Woolgate Exchange, 25 Basinghall Street, London EC2V 5HA for the following
purposes:
ORDINARY BUSINESS:
1. To approve the Company’s accounts for the year ended 31 December 2014 together with the reports of the directors
and auditor thereon.
2. To approve the report on directors’ remuneration for the year ended 31 December 2014.
3. To declare a final dividend of 23.33p per ordinary share.
4. To re-elect Mr A T Copple as a director.
5. To re-elect Mrs J F de Moller as a director.
6. To re-elect Mr R W Jewson as a director.
7. To re-elect Mr J Reeve as a director.
8. To re-elect Mr M R Riley as a director.
9. To re-elect Mr D G C Webster as a director.
10. To re-appoint the auditor and to authorise the directors to determine their remuneration.
SPECIAL BUSINESS:
To consider and, if thought fit, pass the following resolutions:
ORDINARY RESOLUTION:
11. That the directors be and are hereby generally and unconditionally authorised in accordance with Section 551 of the
Companies Act 2006 to allot shares in the Company or grant rights to subscribe for or to convert any security into shares
in the Company (‘Rights’) up to an aggregate maximum nominal amount of £1,671,819, being approximately 10% of the
issued share capital of the Company as at 24 February 2015, provided that:
(i) the authority granted shall expire at the conclusion of the Annual General Meeting of the Company in 2016 but may
be revoked or varied by the Company in general meeting and may be renewed by the Company in general meeting;
and
(ii) the said authority shall allow and enable the directors to make an offer or agreement before the expiry of that
authority which would or might require shares to be allotted or Rights to be granted after such expiry and the
directors may allot shares and grant Rights in pursuance of any such offer or agreement as if that authority had not
expired.
Temple Bar Investment Trust PLC Annual Report & Accounts 2014 45
234791 Temple Bar pp30-pp51 25/02/2015 09:47 Page 46
Active investment working for you
Notice of meeting continued
SPECIAL RESOLUTIONS:
12. That, subject to the passing of resolution 11 set out above, the directors be and they are hereby empowered pursuant to
Section 570-573 of the Companies Act 2006 to allot equity securities (as defined in Section 560 of that Act) for cash,
including, for the avoidance of doubt, the sale of shares held by the Company as treasury shares, in accordance with the
authority conferred on them by this meeting to allot shares, as if Section 561(i) of that Act did not apply to the
allotment, provided that the power conferred by this resolution shall be limited to:
(i) the allotment of equity securities in connection with a rights issue, open offer or the pre-emptive offer in favour of
ordinary shareholders where the equity securities respectively attributable to the interests of all ordinary
shareholders are proportionate to the respective numbers of ordinary shares held by them on the record date of
such allotment (but subject to such exclusions or other arrangements as the directors may deem necessary or
expedient in relation to fractional entitlements or legal problems under the law of or the requirements of any
recognised regulatory body or any stock exchange in any territory); and
(ii) the allotment (otherwise than pursuant to sub paragraph (i) above) of equity securities up to an aggregate nominal
value not exceeding £1,671,819; and
shall expire at the conclusion of the Annual General Meeting of the Company in 2016 save that the Company may make
an offer or agreement before this power has expired, which would or might require equity securities to be allotted after
such expiry and the directors may allot equity securities in pursuance of such offer or agreement as if the authority
conferred hereby had not expired.
13. That the Company generally be and is hereby authorised for the purpose of Section 701 of the Companies Act 2006 to
make market purchases (as defined in Section 693 of the Act) of ordinary shares of 25p each in the capital of the
Company (‘ordinary shares’) either for retention as treasury shares for future reissue, resale, transfer or cancellation
provided that:
(i) the maximum number of ordinary shares hereby authorised to be purchased is 14.99% of the issued share capital of
the Company as at the date of the passing of this resolution;
(ii) the minimum price which may be paid for such shares is 25p per share;
(iii) the maximum price (exclusive of expenses payable by the Company) which may be paid for such shares shall be 5%
above the average of the market value of the share quotations taken from the London Stock Exchange Daily Official
List for the five business days before the purchase is made;
(iv) the authority hereby conferred shall (unless previously renewed or revoked) expire at the end of the Annual General
Meeting of the Company in 2016, or, if earlier, the date falling fifteen months from the date of this resolution;
(v) the Company may make a contract to purchase its own shares under the authority hereby conferred prior to the
expiry of such authority which will or may be executed wholly or partly after the expiry of such authority, and may
make a purchase of its own shares in pursuance of any such contract.
By order of the Board of Directors Woolgate Exchange
M K Slade 25 Basinghall Street
For Investec Asset Management Limited London EC2V 5HA
Secretary
24 February 2015
46 Temple Bar Investment Trust PLC Annual Report & Accounts 2014
Active investment working for you
Shown is a plan of the location of
Investec Asset Management Limited,
Woolgate Exchange, 25 Basinghall
Street, London EC2V 5HA where the
Annual General Meeting will be held
on Monday 30 March 2015 at
11.00am.
234791 Temple Bar pp30-pp51 25/02/2015 09:47 Page 47
Notice of meeting continued
BARBICAN
U E ST
G
NT A
O
M
T
S
D
R
A
W
D
E
A
L
D
E
R
S
G
A
T
E
S
T
D
N
A
R
G
E
L
S
N
I
T
R
A
M
T
S
NEW
GATE ST
ST PAULS
E
N
A
L
R
E
T
S
O
F
LONDON WALL
MOORGATE
E
T
A
G
R
O
O
M
CIR C US
Y
R
U
B
FINS
LONDON WALL
RY
U
B
M AN
R
E
D
L
A
BASINGHALL AVE
T
S
L
L
A
H
G
I
N
S
A
B
T
S
N
A
M
E
L
O
C
E
T
A
G
R
O
O
M
T
E S
L
B
O
N
T
D S
O
O
W
GRESHAM ST
E
N
A
L
R
E
T
T
U
G
T
S
D
O
O
W
T
K S
MIL
CHEAPSIDE
T
S
G
N
K
I
POULTRY
Y
R
W
E
D J
L
O
Investec Asset
Management
Q U E
E N V I C T O R I A S
LOTHBURY
P
R
I
N
C
E
’
S
S
T
T
BANK
E S T
E D L
T H R E A D N E
NOTES
1. A member entitled to attend and vote at the above
meeting is entitled to appoint a proxy to attend the
meeting to speak and vote on a show of hands and, on a
poll, to vote instead of him. A proxy need not be a
member of the Company. A member wishing to appoint
more than one proxy must appoint each proxy in respect
of a specified number of shares within his holding. For this
purpose, a member may photocopy the enclosed Form of
Proxy before completion and must indicate the number of
shares in respect of which each proxy is appointed.
2. Instruments of proxy should be sent to Equiniti Limited,
Aspect House, Spencer Road, Lancing, West Sussex BN99
6DA so as to arrive no later than 11.00am on 26 March
2015. Completion and return of the form of proxy will not
preclude shareholders from attending and voting at the
meeting in person should they wish to do so.
3. Members who hold ordinary shares in the Company in
uncertificated form must have been entered on the
Company’s register of members by 6.00pm on 26 March
2015 in order to be able to attend and vote at the
meeting, or if the meeting is adjourned, 6.00pm on the
day two business days before the time fixed for the
adjourned meeting. Such members may only vote at the
meeting in respect of ordinary shares held at the time.
4. In accordance with Section 325 of the Companies Act
2006, the right to appoint proxies does not apply to
persons nominated to receive information rights under
Section 146 of the Act. Persons nominated to receive
information rights under Section 146 of the Act who have
been sent a copy of this notice of meeting are hereby
informed, in accordance with Section 149 (2) of the Act,
that they may have a right under an agreement with the
registered member by whom they were nominated to be
appointed, or to have someone else appointed, as a proxy
for this meeting. If they have no such right, or do not wish
to exercise it, they may have a right under such an
agreement to give instructions to the member as to the
exercise of voting rights. Nominated persons should
contact the registered member by whom they were
nominated in respect of these arrangements.
5. CREST members who wish to appoint a proxy or proxies
by utilising the CREST electronic proxy appointment
service may do so for the meeting and any
adjournment(s) thereof by using the procedures described
in the CREST Manual. CREST personal members or other
CREST sponsored members and those CREST members
who have appointed a voting service provider(s) should
refer to their CREST sponsor or voting service provider(s)
who will be able to take the appropriate action on their
behalf.
In order for a proxy appointment made using the CREST
service to be valid, the appropriate CREST message (a “CREST
Proxy Instruction”) must be properly authenticated in
accordance with Euroclear’s specifications and must
Temple Bar Investment Trust PLC Annual Report & Accounts 2014 47
234791 Temple Bar pp30-pp51 25/02/2015 09:47 Page 48
Active investment working for you
Notice of meeting continued
NOTES CONTINUED
contain the information required for such instructions, as
described in the CREST Manual (available via
www.euroclear.com). The CREST message must be
transmitted so as to be received by the issuer’s agent (ID
RA19) by not later than 48 hours (excluding non-working
days) before the time appointed for the holding of the
meeting or the adjourned meeting. For this purpose, the
time of receipt will be taken to be the time (as determined
by the timestamp applied to the CREST message by the
CREST Applications Host) from which the issuer’s agent is
able to retrieve the CREST message by enquiry to CREST
in the manner prescribed by CREST. After this time any
change of instructions to proxies appointed through
CREST should be communicated to the appointee through
other means.
CREST members and, where applicable, their CREST
sponsors or voting service provider(s), should note that
Euroclear does not make available special procedures in
CREST for any particular messages. Normal system timings
and limitations will therefore apply in relation to the input
of CREST Proxy Instructions. It is the responsibility of the
CREST member concerned to take (or, if the CREST
member(s) is/are a CREST personal member or sponsored
member or has appointed a voting service provider(s), to
procure that the CREST sponsor or voting service provider
takes) such action as shall be necessary to ensure that a
CREST message is transmitted by means of the CREST
system by any particular time. In this connection, CREST
members and, where applicable, their CREST sponsors or
voting service provider(s) is/are referred, in particular, to
those sections of the CREST Manual concerning practical
limitations of the CREST system and timings.
The Company may treat as invalid a CREST Proxy
instruction in the circumstances set out in Regulation
35(5)(a) of the Uncertificated Securities Regulations 2001.
6. As an alternative to completing a hard copy Form of Proxy,
you can appoint a proxy or proxies electronically by
visiting www.sharevote.co.uk.
You will need your Voting ID, Task ID and Shareholder
Reference Number (this is the series of numbers printed at
the top right-hand side of the Form of Proxy).
Alternatively, if you have already registered with Equiniti
Limited’s online portfolio service, Shareview, you can
submit your Form of Proxy at www.shareview.co.uk. Full
instructions are given on both websites. To be valid, your
proxy appointment(s) and instructions should reach
Equiniti Limited no later than 11am on Thursday 26 March
2015.
7. Shareholders should note that, under Section 527 of the
Companies Act 2006 members meeting the threshold
requirements set out in that section have the right to
require the Company to publish on a website a statement
setting out any matter relating to:
(i) the audit of the Company’s accounts (including the
auditor’s report and the conduct of the audit) that are to
be laid before the Annual General Meeting for the
financial year beginning 1 January 2014; or
(ii) any circumstance connected with an auditor of the
Company appointed for the financial year 1 January
2014 ceasing to hold office since the previous meeting
at which annual accounts and reports were laid. The
Company may not require the shareholders requesting
any such website publication to pay its expenses in
complying with Sections 527 or 528 (requirements as to
website availability) of the Companies Act 2006. Where
the Company is required to place a statement on a
website under Section 527 of the Companies Act 2006,
it must forward the statement to the Company’s auditor
not later than the time when it makes the statement
available on the website. The business which may be
dealt with at the Annual General Meeting for the
relevant financial year includes any statement that the
Company has been required under Section 527 of the
Companies Act 2006 to publish on a website.
8. A member of the Company which is a corporation may
authorise a person or persons to act as its representative(s)
at the AGM. In accordance with the provisions of the
Companies Act 2006, each such representative may exercise
(on behalf of the corporation) the same powers as the
corporation could exercise if it were an individual member
of the Company, provided that they do not do so in relation
to the same shares. It is no longer necessary to nominate a
designated corporate representative.
9. You may not use any electronic address provided in this
notice of meeting to communicate with the Company for
any purposes other than those expressly stated.
10. Any member attending the meeting has the right to ask
questions. The Company must cause to be answered any
such question relating to the business being dealt with at
the meeting but no such answer need be given if (a) to do
so would interfere unduly with the preparation for the
meeting or involve the disclosure of confidential
information, (b) the answer has already been given on a
website in the form of an answer to a question, or (c) it is
undesirable in the interests of the Company or the good
order of the meeting that the question be answered.
11. None of the directors has a service contract with the
Company.
12. As at 24 February 2015, the latest practicable date prior to
publication of this document, the Company had
66,872,765 ordinary shares in issue with a total of
66,872,765 voting rights.
13. In accordance with Section 311A of the Companies Act
2006, the contents of this notice of meeting, details of the
total number of shares in respect of which members are
entitled to exercise voting rights at the AGM and, if
applicable, any members’ statements, members’
resolutions or members’ matters of business received by
the Company after the date of this notice will be available
on the Company’s website:
www.templebarinvestments.co.uk.
48 Temple Bar Investment Trust PLC Annual Report & Accounts 2014
234791 Temple Bar pp30-pp51 25/02/2015 09:47 Page 49
Useful information for shareholders
Active investment working for you
ANNUAL GENERAL MEETING
The Annual General Meeting will be held at Woolgate Exchange, 25 Basinghall Street, London EC2V 5HA (see map on
page 47), on 30 March 2015 at 11.00am.
FINANCIAL CALENDAR
The financial calendar for 2015 is set out below:
Ordinary shares
Final dividend, 2014 – payable 31 March 2015
– ex-dividend 12 March 2015
– record date 13 March 2015
First interim dividend, 2015 30 June 2015
Second interim dividend, 2015 30 September 2015
Third interim dividend, 2015 30 December 2015
Final dividend, 2015 End of March 2016
9.875% Debenture Stock 2017
Interest payments 30 June and 31 December
5.5% Debenture Stock 2021
Interest payments 8 March and 8 September
PAYMENT OF DIVIDENDS
Cash dividends will be sent by cheque to the first-named shareholder on the Register at his or her registered address
together with a tax voucher. At shareholders’ request, dividends may instead be paid direct into the shareholder’s bank
account through the Bankers’ Automated Clearing System (‘BACS’). This may be arranged by contacting the Company’s
Registrar on 0871 384 2432 (calls to this number cost 8p per minute plus network extras).
PRICE AND PERFORMANCE INFORMATION
The Company’s ordinary shares and debenture stocks are traded on the London Stock Exchange. The market price of the
ordinary shares is shown daily in the Financial Times, other leading newspapers and on the Company’s website.
SHARE REGISTER ENQUIRIES
The Company’s Registrar, Equiniti, maintains the share register. In the event of queries regarding your holding, please contact
the Registrar on 0871 384 2432 (overseas +44 (0)121 415 7047). Lines are open from 8.30am to 5.30pm Monday to Friday.
Calls to this number cost 8p per minute plus network extras. Changes of name or address must be notified in writing to the
Registrar.
SEDOL CODES FOR ORDINARY SHARES AND DEBENTURE STOCKS
Ordinary shares – 0882532
9.875% Debenture Stock 2017 – 0882640
5.5% Debenture Stock 2021 – 0530529
TEMPLE BAR INVESTMENT TRUST SAVINGS SCHEME
Details of the Temple Bar Savings Scheme are set out on page 51 of this report. This enables individuals to buy shares in the
Company in a straightforward and accessible way.
ASSOCIATION OF INVESTMENT COMPANIES
The Company is a member of the Association of Investment Companies, which produces monthly publications of detailed
information on the majority of investment trusts. The Association of Investment Companies can be contacted by telephone
on 020 7282 5555.
TEMPLE BAR WEBSITE
The Company’s own website can be found at www.templebarinvestments.co.uk and includes useful background information
on the Company together with helpful downloads of published documentation such as previous Annual Reports and Savings
Scheme application forms.
Temple Bar Investment Trust PLC Annual Report & Accounts 2014 49
234791 Temple Bar pp30-pp51 25/02/2015 09:47 Page 50
Active investment working for you
Management and administration
Alternative Investment Fund Manager (AIFM)
Investec Fund Managers Limited
Authorised and Regulated by the Financial Conduct Authority
Portfolio Manager, Alastair Mundy
Woolgate Exchange
25 Basinghall Street
London EC2V 5HA
Telephone No. 020 7597 2000
Independent auditor
Ernst & Young LLP
1 More London Place
London SE1 2AF
Depositary, bankers and custodian
HSBC Bank plc
Poultry
London EC2P 2BX
Stockbrokers
JPMorgan Cazenove
25 Bank Street
Canary Wharf
London E14 5JP
Solicitors
Eversheds LLP
1 Wood Street
London EC2V 7WS
Registered office
Woolgate Exchange
25 Basinghall Street
London EC2V 5HA
Company Secretary
Investec Asset Management Limited, represented by
Martin Slade
Registered number
Registered in England No. 214601
Registrar and Savings Scheme administrator
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
Telephone No:
+44 121 415 7047 (overseas shareholder helpline)
0871 384 2432 (shareholder helpline)*
0906 559 6025 (broker helpline)
*Calls cost 8p per minute plus network extras.
Lines open 8.30 a.m. to 5.30 p.m., Monday to Friday.
50 Temple Bar Investment Trust PLC Annual Report & Accounts 2014
234791 Temple Bar pp30-pp51 25/02/2015 09:47 Page 51
Temple Bar Investment Trust Savings Scheme
Active investment working for you
Temple Bar offers an inexpensive way of investing in the Company.
The Temple Bar Investment Trust Savings Scheme offers:
• monthly savings from as little as £50 a month
• a daily dealing facility for lump sum investments or sales
• income reinvestment
If you would like to receive information about the Savings Scheme, call the Investor Services Department on 020 7597 1800 or
visit our website www.templebarinvestments.co.uk. Alternatively please write to:
Investor Services Department
Investec Asset Management Limited
Woolgate Exchange
25 Basinghall Street
London EC2V 5HA
Past performance will not necessarily be repeated. You are not certain to make a profit; you may lose money and any income is
not fixed – it can go up or down. Tax benefits detailed are those currently applicable and will vary from one investor to another
and may change in the future. The government’s 0.5% stamp duty is payable on all share purchases. Shares will be purchased at
Temple Bar’s buying price and will be sold at Temple Bar’s selling price. Phone calls may be recorded to confirm your
instructions.
The above information has been issued by Investec Fund Managers Limited, authorised and regulated by the Financial
Conduct Authority, the AIFM of Temple Bar Investment Trust PLC.
A member of the Association of Investment Companies
Temple Bar Investment Trust PLC Annual Report & Accounts 2014 51
Perivan Financial Print 234791
U
O
Y
R
O
F
I
G
N
K
R
O
W
T
N
E
M
T
S
E
V
N
I
I
E
V
T
C
A
•
4
1
0
2
S
T
N
U
O
C
C
A
&
T
R
O
P
E
R
L
A
U
N
N
A
•
C
L
P
T
S
U
R
T
T
N
E
M
T
S
E
V
N
I
R
A
B
E
L
P
M
E
T
Temple Bar Investment Trust PLC
Registered office
Woolgate Exchange
25 Basinghall Street
London EC2V 5HA
www.templebarinvestments.co.uk
Investment Manager
Investec Fund Managers Limited
Woolgate Exchange
25 Basinghall Street
London EC2V 5HA
Telephone 020 7597 2000