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5
ANNUAL REPORT & FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
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.
CONTENTS
STRATEGIC REPORT
GOVERNANCE REPORT
FINANCIAL REPORT
1 Summary of results
18 Directors
36 Statement of
SHAREHOLDER
INFORMATION
2 Chairman’s statement
19 Report of Directors
3 Ten year record
22 Report on directors’
4 Manager’s review
10 Attribution analysis
11 Overview of strategy
16 Portfolio of investments
remuneration
24 Corporate governance
27 Report of the audit
committee
29 Statement of directors’
responsibilities
30 Independent auditor’s
report
Comprehensive Income
51 Notice of meeting
37 Statement of Changes
in Equity
38 Statement of Financial
Position
39 Statement of
Cash Flows
40 Notes to the Financial
Statements
55 Useful information
for shareholders
56 Management and
administration
57 Glossary of terms
59 Temple Bar Investment
Trust Savings Scheme
TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 2015
SUMMARY OF RESULTS
Assets as at 31 December
Net assets
Ordinary Shares
Net asset value per share with debt at book value
Net asset value per share with debt at market value
Market price
(Discount)/premium with debt at book value
(Discount)/premium with debt at market value
Revenue for the year ended 31 December
Revenue return attributable to ordinary shareholders
Revenue return per ordinary share
Dividends per ordinary share – interim and proposed final
Capital for the year ended 31 December
Capital return attributable to ordinary shareholders
Capital return attributable per ordinary share
Net gearing*
Ongoing charges**
Total Returns for the year to 31 December 2015
Return on share price
Return on net assets
Return on gross assets
Return on FTSE All-share Index
Change in Retail Prices Index over year
Dividend Yields (Net) as at 31 December 2015
Yield on ordinary share price (1,052p)***
Yield on FTSE All-Share Index
2015
£000
2014
£000
%
change
755,755
799,444
1,130.14p
1,115.46p
1,052.00p
(6.9%)
(5.6%)
26,663
39.87p
39.66p
(38,877)
(58.14p)
3.8%
0.49%
1,195.47p
1,174.37p
1,191.00p
(0.4%)
1.4%
25,782
39.82p
38.88p
(36,813)
(56.86p)
0.0%
0.48%
(5.5)
(5.5)
(5.0)
(11.7)
2.0
(7.9%)
(1.0%)
(0.7%)
1.0%
1.2%
3.8%
3.7%
* 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.
*** Based on the three interim dividends paid during the year together with the recommended final dividend for the year.
CAPITAL STRUCTURE
Ordinary Shares
9.875% Debenture Stock 2017
5.5% Debenture Stock 2021
66,872,765
£25,000,000
£38,000,000
4.05% Private Placement Loan 2028
£50,000,000
VOTING STRUCTURE
Ordinary shares 100%
BENCHMARK
Performance is measured
against the FTSE All-Share Index.
TOTAL ASSETS LESS
CURRENT LIABILITIES
£869,535,000
TOTAL EQUITY*
£755,755,000
MARKET CAPITALISATION
£703,501,000
* With debenture and loan stocks at book value
1
TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTSHAREHOLDER INFORMATION CHAIRMAN’S STATEMENT
The Company’s portfolio is constructed to deliver both capital and income
growth. The portfolio manager remains fully focussed on identifying good
quality companies with attractive yields and run by strong management teams.
PERFORMANCE
The year under review has seen a continuation of volatile
markets together with conditions generally unfavourable
for Temple Bar’s value oriented investment approach. The
total return on net assets of Temple Bar in 2015 was -1.0%
which compares with a total return for the FTSE All Share
Index of 1.0%. It is always disappointing when the Trust
endures periods of underperformance but this is a natural
consequence of our chosen investment style which very
much favours a longer term standpoint. Temple Bar
continues to outperform its benchmark over both five
and ten year periods.
The Company’s portfolio is constructed to deliver both capital
and income growth. The portfolio manager remains fully
focussed on identifying good quality companies with attractive
yields and run by strong management teams. Sometimes such
companies are under-appreciated by the market for various
reasons and accordingly offer value to a long term, patient
investor. The benefits of this approach are reflected in
Temple Bar’s returns over longer time periods.
The main themes leading to the recent underperformance
of the NAV relative to the benchmark index are set out in
the Manager’s Review together with some of the positive
and negative contributors to performance at an individual
investment level during the year.
DIVIDEND
This is the first year in which the Company has paid
dividends on a quarterly basis, a change implemented on
our understanding of shareholder preference. There have
already been three interim dividend payments of 7.93p
per share and the directors are now recommending a final
dividend of 15.87p per share to be paid on 31 March 2016
to those shareholders on the register as at 11 March 2016.
The ex-dividend date for this payment is 10 March 2016.
If approved, this would give a total dividend of 39.66p,
an increase for the year as a whole of 2% and the 32nd
consecutive year in which the Company has increased
its annual dividend payment.
GEARING
The Company was only moderately geared at the year end,
its long term borrowings largely matched by the relatively
high cash and near cash position on the portfolio. At the year
end, gearing (calculated net of cash and related liquid assets,
including our investment in a UK short dated gilt) was 3.8%.
The Manager is only prepared to invest the available funds
when he considers that suitable opportunities are available.
This has generally not been the case in the recent past.
SHARE CAPITAL MANAGEMENT
For large parts of 2013–14 the Company’s shares were
trading at a premium to net asset value and it was therefore
able to issue new shares to market participants. Throughout
the majority of 2015 the Company’s shares have traded at a
modest discount to their net asset value; consequently it has
not been possible to issue new shares. While there were also
no share repurchases during the year, the Board is prepared
to undertake such action, subject to market conditions, if
the discount widens both in absolute terms and relative to
the Company’s peer group, as part of a proactive approach
to discount/premium management. The Board recommends
that the existing authorities to issue new ordinary shares and
to repurchase shares in the market for cancellation or to hold
in Treasury be continued. Accordingly it is seeking approval
from shareholders to renew the share issue and repurchase
authorities at the forthcoming annual general meeting.
2
TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015 32nd consecutive year in which the Company has
increased its annual dividend payment.
THE BOARD
OUTLOOK
As mentioned in the half year report, we were pleased
to welcome to the Board during the year Lesley Sherratt,
who is already making a positive contribution to Board
discussion. We were also sorry to lose the services of
Martin Riley, for health reasons, after 10 years of
excellent service on the Board.
In common with best practice, all directors are subject
to annual re-election by shareholders. I refer you to the
directors’ biographies on page 18 for further details.
Every year the Board undertakes a formal and rigorous
evaluation of each director including myself as Chairman.
There is no getting away from the fact that the last few
years have been an uncomfortable time for committed
adherents of the value investing approach. While in
relative terms our portfolio has suffered as a consequence,
investment is a long term matter and I am reassured that
many of our shareholders appear to understand this. They
appreciate that the value investment style is inherently
cyclical but that, if one is patient and adheres to this
approach, eventually some great opportunities will arise.
Clearly we hope that this occurs sooner rather than later
but if needs be we will remain patient before investing
any of the surplus cash currently held on the portfolio.
ANNUAL GENERAL MEETING
The AGM will be held at Woolgate Exchange, 25 Basinghall
Street, London EC2V 5HA on 30 March 2016 at 11am. In
addition to the formal business of the meeting the portfolio
manager, Alastair Mundy, will, as usual, make a presentation
reviewing the past year and commenting on the outlook.
He will also be available to answer questions alongside
the directors. Shareholders who are unable to attend
the meeting are encouraged to use their proxy votes.
John Reeve
Chairman
23 February 2016
TEN YEAR RECORD
Total assets less
current liabilities (£000)
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
598,485
557,712
422,408
553,392
603,444
585,480
664,648
905,775
913,198
869,535
Net assets (£000)
535,128
494,340
359,020
489,988
540,022
522,040
601,191
792,070
799,444
755,755
Net assets per
ordinary share (pence)
Revenue return to ordinary
shareholders (£000)
Revenue return
per share (pence)
Dividends per share* (pence)
917.25
847.33
612.76
831.03
915.89
874.42
992.86 1,250.84 1,195.47 1,130.14
17,620
19,361
20,614
20,017
18,915
22,552
24,873
22,274
25,782
26,663
30.20
29.23
33.19
30.98
35.33
32.84
33.98
33.50
32.08
34.20
38.08
35.23
41.39
36.65
36.17
37.75
39.82
38.88
39.87
39.66
* Interim(s) and proposed final for the year
3
TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTSHAREHOLDER INFORMATION MANAGER’S REVIEW
Over the year, the FTSE All-Share Index, the index most
relevant to the Temple Bar portfolio, generated a total
return of 1.0% while the FTSE 250 Index returned 11.2%
and the FTSE Smaller Companies Index delivered 9.2%.
This compares with a total return for Temple Bar of -1.0%.
The FTSE 250 has now outperformed the FTSE 100 for the
fourth year in a row and for six of the last seven years. Over
the longer term the performance differential is extraordinary,
as evidenced by the adjacent graph, and there are very
few conventional broadly spread investments that a
sterling-based UK investor could have made 10 years
ago that would have performed as well.
It is sometimes painful being a value investor. We buy stocks
that are out of favour. If they fall further, we risk excoriation
for ignoring the ‘obvious’ negative factors. Fortunately,
history informs us that the valuation discount received
from buying into such negativity typically rewards a patient
investor. The current stage of the market cycle is one of
those demanding such patience.
Total Return of FTSE 250 relative to FTSE 100
160
140
120
100
80
2005
2007
2009
2011
2013
2015
Source: Thomson Reuters Datastream
The most sought after stocks in the UK market last year were
‘quality compounders’; companies operating in areas with
high barriers to entry (‘a moat’), generating high returns
on equity and using some of these returns to drive future
profits growth. In short, those companies most attractive
to investors employing an investment style akin to that
of Warren Buffett. Although Mr Buffett has generated
astonishing long term returns using this approach, he has
made it look rather easier than is the case. Many stocks
once regarded as high quality tend to disappoint ultimately,
through a process of mean reversion, thus making it risky
to pay a high price for them. And even Mr Buffett has
sometimes experienced periods of great discomfort; the
Berkshire Hathaway price has fallen more than 40% on two
occasions while under his stewardship. The most intuitively
appealing investment processes can also have their times in
the shade.
Many of the weakest stocks and sectors in 2015 were those
that had been poor in 2014. Resource related stocks, banks,
and food retailers took the brunt of the pain. In summary,
2015 was a year to stick with one’s winners.
ALASTAIR MUNDY
Alastair is head of the Value Team at Investec Asset
Management having joined in 2000 from Morley
Fund Management.
In addition to Temple Bar Investment Trust, Alastair
manages a number of funds including the Investec
Cautious Managed Fund and the Investec UK Special
Situations Fund.
Alastair graduated from City University in 1988 with a
Bachelor of Science degree in Actuarial Science.
4
TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015 Many of the weakest stocks and sectors in 2015 were those
that had been poor in 2014. Resource-related stocks, banks,
and food retailers took the brunt of the pain.
With these themes in mind, many of the most significant
positive contributors on the portfolio in 2015 had also
performed well in 2014: Direct Line, Carnival, CRH
and Kingspan all progressed well. Being significantly
underweight to the mining sector also assisted
performance relative to our benchmark index.
At the other end of the scale, the most expensive
detractors from performance were Drax, Royal Bank of
Scotland, Avon Products, Joy Global and Vallourec, all
affected by weak trading and, in the case of the latter
three, by deteriorating balance sheets.
We were attracted to Joy Global, a manufacturer of
mining equipment, and Vallourec, a manufacturer of
steel pipes, primarily for the oil industry, by their strong
market positions and impressive long term returns. Having
analysed a number of UK listed alternatives we selected
these overseas listed companies as a way of building our
exposure to the resources industry believing that, in the
long term, suppliers to these industries are placed to
make superior returns to those of the resource producers.
However, both companies have encountered extraordinarily
tough operating conditions and investor sentiment has
been badly damaged. Drax owns the most efficient coal-
fired electricity generators in the UK and is also the biggest
generator of electricity from biomass. It has been badly
affected by the fall in oil price, making electricity generated
from gas cheaper, as well as by a reduction in government
sponsored renewables subsidies and an aggressive UK
government policy towards coal. Avon Products continued
to be hurt by its large exposure to weakening emerging
markets whilst sentiment towards the Royal Bank of
Scotland was affected by continued fines and no clear
news as to when dividends would be reinstated.
PORTFOLIO ACTIVITY
A number of the disposals on the portfolio in the last year
have been of stocks that have performed well, but whose
valuations now look full: BT, Carnival, Kingspan and Unilever,
the latter disposed of in its entirety. Our sales are typically
made when shares stand at, or slightly above, our estimate
of their fair value; thus we often find ourselves selling into
the positive newsflow that attracts the attention of investors
more eager to extrapolate this information.
At certain times, 1999 and 2007 come to mind, it would have
been better to leave the portfolio untouched during the
course of the year and 2015 was another of those occasions.
Purchases of stocks such as Vallourec, Joy Global, Standard
Chartered, Drax and Centrica proved to be far too early in a
deteriorating environment.
We cannot say that the bad news is over for our recent
purchases, but they are already discounting a fair degree
of negative news. On the other hand, we believe a lot of
companies in the market are trading at prices which leave
little in their valuations for disappointment. Rather like the
two previous periods highlighted, we think we have taken
the majority of our medicine, particularly relative to the rest
of the market.
THE OUT OF FAVOUR SECTORS
In terms of sector positioning, the three largest positions
on the portfolio in both absolute terms and relative to the
FTSE All-Share are Banks, Oil & Gas, and Industrial Goods
& Services.
As we highlighted in the interim report, many investors remain
wary of banks, voicing concerns such as a never-ending list of
fines, onerous regulation, balance sheet opacity and vulnerability
to future recessions. While these issues are certainly genuine, it is
worth considering how conventional wisdom can be opposed.
PORTFOLIO DISTRIBUTION %
Temple Bar
FTSE
portfolio
All-Share Index
1
2
3
4
5
6
7
8
9
Financials
Oil & Gas
Consumer Services
Consumer Goods
Health Care
Industrials
Telecommunications
Utilities
Basic Materials
10
Technology
Total Equities
11
12
Fixed Interest
Cash
%
26.5
10.2
12.6
16.5
8.8
10.4
5.3
3.8
4.2
1.7
100.00
%
25.1
12.7
9.4
6.4
6.6
14.9
2.9
4.0
6.8
0.8
89.6
9.0
1.4
100.00
12
10
11
9
8
7
6
1
2
5
4
3
5
TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTSHAREHOLDER INFORMATION MANAGER’S REVIEW CONTINUED
At certain times, 1999 and 2007 come to mind, it would have
been better to leave the portfolio untouched during the
course of the year and 2015 was another of those occasions.
Balance sheets of banks were inarguably weak and opaque
a decade ago, but much has changed for the better as
a consequence of rights issues, retained profits, cut or
suspended dividends and disposals of non-core businesses.
Clearly regulation has increased, but this is both positive
and negative. Banks have been stress-tested against – and
passed - a variety of nasty outcomes, providing investors
with confidence that future cyclicality may be shallower
than experienced previously. It is interesting to ponder
the necessary actions for listed companies in other
industries if they were to pass similar stress tests.
While the financial crisis remains fresh in the memory,
senior bank management will surely remain focused on
their core business areas in preference to finding novel
ways of eroding shareholder returns.
As with any industry, there are many moving parts to
the investment argument, but perhaps the major factor
supporting the retention of bank shares is fairly simple. A
number of constituents of the FTSE 100 Index cut dividends
in 2015 and, given that a number of dividends remain poorly
covered, there are likely to be further cuts and omissions
in the next few years. The UK listed banks we hold, Royal
Bank of Scotland, Lloyds Banking Group and HSBC have
modest capital requirements to finance their relatively low
growth in the future and regulation seems to be easing.
Therefore, it appears likely that, post regulatory approval, the
companies will pay out a higher percentage of their earnings
as dividends.
Over the last two years, the oil price has fallen further than
virtually all commentators predicted. OPEC has failed, so
far, to drive sufficient production out of the market at a time
of relatively weak demand. Perhaps, with the consensus
believing that the oil price fall was temporary, producers
were unwilling to leave the market; commentary has now
turned decidedly negative and consequently may lead to
the necessary supply actions.
Royal Dutch Shell and BP’s high dividend yields suggest
investors are highly sceptical about their sustainability.
We have no great insight regarding these dividends, but
would argue the low oil price is a once in a generation
opportunity for these companies properly to consider their
cost bases and to lock into attractive prices on contracts
for new developments. As we have commented previously,
the Armageddon scenario of countries such as Saudi Arabia
deciding to pump oil as quickly as possible to minimise the
threat from technological developments is genuine but,
we think, too early to be concerned with, particularly after
these exceptionally negative share price movements.
Food retailers were under continued pressure in 2015 as the
discounters continued to win market share. Most independent
forecasts assume that Aldi and Lidl will increase their market
share from around 10% to 15% over the next five years. This
is a meaningful amount of market share for other participants
to relinquish, particularly for an industry in which volumes are
quite stable and price increases are very reliant on food price
inflation. However, not all of the constituents of the other 85%
of market share are necessarily losers. We believe that Tesco,
with its huge market position and relatively new management,
can be run more efficiently, focus on areas that the
discounters do not and cannot, and win back lost customers
to drive profitability. Meanwhile, Wm Morrison, under new
management as well, is reversing its confused strategy of
recent years and has brought a more entrepreneurial approach
to the business. Its significant freehold property backing, thus
avoiding rent, also offers a significant competitive advantage.
The very poor performance of the mining sector (the FTSE
All-Share Mining Index fell 69% over five years relative to a
36% gain in the FTSE All-Share Index) has obviously attracted
our attention. The mining bubble inflated enormously almost
a decade ago and its deflation, although temporarily halted
by a splurge in government sponsored capital expenditure
in China, has been equally shocking. A common theory in
commodity investing is that the commodity price must be
sufficiently high to incentivise production. If the cost of
production was stable this would be straightforward but, when
conditions are most testing, the empirical evidence is that
producers find ways of reducing costs. Furthermore, demand
is highly variable, particularly as in the last 15 years a significant
amount of the growth has come from China. Even if one can
be comfortable with all these moving parts, to find a sensible
equilibrium commodity price it is important to consider that
the fixed costs of production will already have been borne and,
therefore, it is the marginal costs of production which often
determine whether the producer keeps mining. And finally for
investors in mining shares, it is important that the miner has a
sufficiently strong balance sheet to ensure its survival during
any particularly elongated periods of low commodity pricing.
Given that a bubble is normally followed by a bust of roughly
equal proportions that lasts longer than most would expect,
we have patiently been watching the underperformance of
the mining sector. As the end of the year approached we
purchased some Rio Tinto. The company’s low production
cost status, together with its best in class transport links
to customers and relatively strong balance sheet provides
us with some confidence that the company is a long term
survivor. It is very possible that the mining cycle may
deteriorate further in the short term and that this could
impact Rio’s share price and dividend payment; at the end
of the year Rio had a dividend yield of 7.4%. We would
envisage building the stock’s position in the portfolio on
such weakness.
6
TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015 Given that a bubble is normally followed by a bust of roughly equal
proportions that lasts longer than most would expect, we have patiently
been watching the underperformance of the mining sector.
LESSONS LEARNT
We like, to quote Charlie Munger, to ‘rub our noses in our
mistakes’ with the objective of becoming better investors.
However, we know that sometimes our investment style
does move out of favour and accordingly we should not
necessarily be hardest on ourselves in our poorest years.
It is, after all, not unusual for us to hold, and to keep buying,
shares which fall far beyond their fair value; being early still
seems a minor guilt. But simply believing one is early can
blind an investor from the risk or fact that he may be wrong.
Having watched Avon Products unwind over a number of
years it is hard to believe there are not lessons to take. As
a company with a significant amount of turnover in Latin
America one must accept it has had a tough hand to play.
Nonetheless, with challenges in many of its operations,
management should probably have selected their preferred
operations early and decided to focus. Fighting so many
fires has proved extremely difficult and could have been
an indicator to sell earlier.
The acquisitions of Vallourec and Joy Global were clearly
made too early and we paid insufficient attention to the
likely size of the bust of the oil and mining bubbles we
outlined earlier. Sometimes when judging companies, a
view looking back seven or ten years is most relevant, but
in these cases we would have minimised the effect of the
bubble years had we looked over 20 years. Often, this may
prove impossible given the changes, via acquisitions and
disposals, companies frequently make. If that is the case,
sitting on one’s hands may be the preferable option.
Our investments in gold miners have proved particularly
expensive. The lesson here may be that these companies
were simply too complex a proposition. The marginal
cost of production argument mentioned earlier for other
commodities as a method of price determination is not
necessarily useful here. Most other commodities are
consumed after being mined and consequently there is
limited stock to call on when demand picks up. In contrast,
gold is not consumed and the stock that exists comprises
virtually everything that has been mined. Therefore,
the amount of new production does not really have a
meaningful effect on price because this flow is so small
relative to the stock that has been accumulated. The
operational and balance sheet idiosyncrasies of mining
companies further increases the challenge. With the gold
price having fallen significantly in the last few years and,
having a number of attractions as highlighted later, and with
gold miners massively out of favour, it seems the wrong time
to capitulate. We are particularly encouraged that, post a
number of management changes at these companies, there
is a far greater focus on efficiency rather than growth.
In terms of portfolio construction, we have historically taken
the view that if our portfolio outperforms the index over
the long term, then outperformance against the average of
our peers is quite likely and this has proved to be the case.
However, the last ten years have been very different as many
of the very largest stocks in the market (banks, miners and
oils in particular) have performed very poorly indeed and the
majority of our competitors have been underweight the sum
of these sectors, to the benefit of their performance. There is
an argument we should pay less attention to our benchmark
index and build the portfolio with far more reference to
our favourite stocks in absolute terms. While this may be
intuitively superior it does increase the portfolio’s volatility
against the index so ultimately comes down to how risk and
performance are best assessed.
VALUE V GROWTH
The following chart uses Investec Asset Management's
proprietary system which tracks the success of buying shares
showing positive momentum versus buying those shares
which are cheap versus the market on various measures. It
assesses the factors which drive investment returns in the UK
stockmarket, illustrating the travails of a value investor. Those
companies with strong earnings and share price momentum
have consistently provided the best returns, with other
valuation factors such as dividend yield or price to book
value of little attraction. This is not an unusual phenomenon,
but that does not make it any more comfortable to
experience. These periods test the mettle of value investors.
150
140
130
120
110
100
90
80
70
2010
2011
2012
2013
2014
2015
Momentum factor / Valuation factor
Source: Investec Asset Management Limited
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7
TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTSHAREHOLDER INFORMATION
MANAGER’S REVIEW CONTINUED
This trend has been accompanied by, and probably caused
by, a long term downward trend in bond yields. Some
commentators argue that bond yields must reverse for value
stocks to outperform growth stocks. While higher interest
rates would probably affect the valuation of growth stocks,
we believe that lower bond yields could also prove unhelpful.
After all, these bond yields imply lower economic growth in
the future, a burden for all companies.
Of course, when growth investing is in vogue, value
characteristics lose their potency with investors. Earnings
downgrades place dividends under pressure and lead to
queries over the correctness of asset values on balance
sheets. However, this has always been the case for value
investors and particularly so near the bottom of the cycle.
DIVIDEND YIELD AND PORTFOLIO CONCENTRATION
The portfolio remains relatively concentrated by number of
holdings. The mean dividend yield of the UK equity market
is greater than the median and the number of stocks yielding
more than the market is the lowest it has been for many years.
Percentage of UK stocks with a dividend yield above
the market yield is near all time lows
80
70
60
50
40
30
20
%
6.0
5.0
4.0
3.0
2.0
1.0
1990
1995
2000
2005
2010
2015
% of stocks yielding more than the market (l.h.scale)
FTSE All-Share dividend yield
Source: Société Générale Research
In addition, many of the highest yielding stocks are now
paying their dividends out of debt and consequently
these payments are vulnerable. Of course, one should be
supportive of companies paying their dividends with an
eye to their long term earnings, provided that these are not
paid out in preference to essential expenditure in the core
business. The high dividend yields of a number of stocks
suggest that shareholders now believe this is the case.
FTSE All-Share dividend cover
MACRO/GOLD
Despite some aggressive monetary policy by the world’s
largest central banks and a prolonged period of very low
interest rates, it is striking how deflation and debt, the major
anxieties of the global financial crisis, remain as significant
problems as ever. Notwithstanding the increase in short
term interest rates by the US Federal Reserve at the end
of the year and the accompanying positive commentary on
improving economic conditions, markets are not pricing in
many more increases. Relative to previous economic cycles
the first rise in interest rates seems to have been left very
late, leaving in doubt how high they can go.
A growing risk for a number of economies is that, come the
next recession, central banks and politicians may be forced
to find even more experimental ways to kick-start growth.
Our fear remains that investors may be less than enthusiastic
about these policies. Consequently, we continue to regard
gold and gold shares as a bet against the credibility of
central bankers.
THE FUTURE – A HIGHER EQUITY
RISK PREMIUM/LOWER P/E?
One of the striking aspects of many companies and industries
in the stockmarket is the significant change that is occurring
in their business models and which consequently dissuades
us from blind faith in a mean reversion cycle. For example,
banks are unlikely ever to generate the return on equity they
made in the ten years prior to the global financial crisis due to
the heightened levels of regulation. Food retailers are dealing
with the advance of the discounters plus the increased costs of
on-line delivery and oil companies face an uncertain future as
renewable technology becomes ever cheaper. Of course, we
own companies in all these sectors, but at least the issues are
well aired and, surely to some extent, discounted in share prices.
What’s more we do not require these companies to return to
previous levels of profitability to generate capital gains.
We would argue that other sectors, such as media,
telecommunications and car manufacturers, are also under
pressure from technological change and/or regulation. Even
those companies considered beyond criticism, in areas such as
food manufacturing or beverages, are vulnerable to an increase
in local competition, such as craft brewers, the expansion in
discounters selling non-branded items and the potential for
regulation as, for example, the anti-sugar lobby grows. These
companies are definitely not priced for any trips or stumbles.
3.5
3.0
2.5
2.0
1.5
1.0
1970
1980
1990
2000
2010 2015
Source: Société Générale Research
8
TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015 The final quarter of the year was, therefore, interesting as
profit downgrades started to stretch across a broader number
of sectors, with companies in the UK market warning in areas
as diverse as the aviation market, the US education market,
Chinese and US manufacturing and the Polish spirits market.
It is perhaps interesting to draw parallels between 2015 and
2008. In 2008, the developed market was beginning to struggle
as the effects of the financial crisis became more widespread.
Despite this, many commentators discussed global decoupling,
claiming that emerging markets were invulnerable to the woes
of the developed world. This assertion had little substance
and ultimately emerging markets contained some of the worst
performing stocks in the bear market. In this cycle, it has been
the resource stocks and banks which have suffered most, with
stocks in other industries allegedly protected by their exposure
to improving economic growth in developed markets and a
boost generally from a lower oil price. The swathe of fourth
quarter profit warnings suggests that the pain is spreading
rather than being contained.
PORTFOLIO CONSTRUCTION
One is therefore left with a fairly stark choice. Ugly stocks,
with well aired problems, but fairly forgiving valuations, and
glamour stocks priced for perfection. We think the ugly/
glamour elastic has been stretched too far by investors and
will snap back at some stage.
Markets continue to be highly valued and there remain a host
of uncertainties: the Eurozone continues to wobble, the UK
referendum vote on EU membership is fairly evenly poised,
government debt worldwide remains uncomfortably high,
share buy-backs in the US have been financed in aggregate
through increases in debt, company profitability remains high
relative to GDP and valuations of many stocks and sectors
remain expensive relative to history, the slowdown in the
Chinese economy continues, the unintended consequences
of almost a decade of quantitative easing remain unknown
and new central bank policies might be on the verge of
introduction. We recognise our disappointing performance
in recent times and apologise for it, but continue to believe
that certain parts of the market are significantly overvalued
and dangerous to investors. We look forward to investing our
liquid assets when opportunities arise.
Alastair Mundy
For Investec Fund Managers Limited
23 February 2016
9
TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTSHAREHOLDER INFORMATION ATTRIBUTION ANALYSIS
By stocks held in the portfolio
Source: Factset
TOP TEN CONTRIBUTORS
%
1
6
.
0
%
5
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.
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BOTTOM TEN CONTRIBUTORS
%
3
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.
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7
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.
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The bar charts above show the top and bottom contributors to total performance during the year from those stocks
held in the portfolio.
Relative to the benchmark index
Source: Factset
TOP TEN CONTRIBUTORS
BOTTOM TEN CONTRIBUTORS
%
2
0
.
1
%
2
9
.
0
l
*
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m
W
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
10
TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015
OVERVIEW OF STRATEGY
The directors present the strategic report for the Company
for the year ended 31 December 2015.
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.
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.
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’), the Alternative Investment Fund Manager
of the Company. 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 36.
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 any individual stock 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.
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.
11
TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTSHAREHOLDER INFORMATION OVERVIEW OF STRATEGY CONTINUED
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; and
• 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 -1.0% compared with a total
return of 1.0% by the FTSE All-Share Index. The five year net
asset value total return performance is shown below.
Net asset value total return
180
170
160
150
140
130
120
110
100
90
80
2010
2011
2012
2013
2014
2015
Source: Thomson Reuters Datastream
Temple Bar share price – total return
Temple Bar NAV – total return
FTSE All-Share Index – total return
The approach to stock selection and portfolio construction is
driven by four core beliefs:
1.
2.
3.
4.
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.
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.
Fundamental valuation is the key determinant of share
price performance over the long term. In other words
‘cheap’ stocks will outperform ‘expensive’ stocks.
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 2015 the net asset value total
return of the Company was -1.0% compared with a total
return of the Company’s benchmark index of 1.0%. 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 and 3 and
the Manager’s Review on pages 4 to 9 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
2010
2011
2012
2013
2014
2015
Source: Thomson Reuters Datastream
Temple Bar – gross assets, excluding effects of gearing and associated costs
FTSE All-Share Index - total return
160
140
120
100
80
12
TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015
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 discount
to NAV of 3.7%. This compares with an average premium of
1.0% 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.
(Discount)/premium to net asset value
(excluding current year revenue)
8%
6%
4%
2%
0%
-2%
-4%
-6%
-8%
2010
2011
2012
2013
2014
2015
Cum income NAV, debt at market value
Source: Thomson Reuters Datastream
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
15.87p per ordinary share which brings the total for the year
to 39.66p per ordinary share, an increase of 2%. This will
be the 32nd consecutive year in which the Company has
increased the overall level of its dividend payment.
10 Year Comparative Dividend Growth
150
140
130
120
110
100
90
80
2005
2007
2009
2011
2013
2015
Temple Bar
Retail Prices Index
Source: Thomson Reuters Datastream
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 2015 were
0.49% (2014: 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.
13
TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTSHAREHOLDER INFORMATION OVERVIEW OF STRATEGY CONTINUED
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 January 2016.
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
2015 the Company had distributable revenue reserves of
£29.6 million before declaration of the final dividend
for 2015 of £10.6 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 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 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 24 to 26 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
page 26.
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.
VIABILITY STATEMENT
The Board makes an assessment of the longer term prospects
of the Company beyond the timeframe envisaged under
the going concern basis of accounting having regard to the
Company’s current position and the principal risks it faces.
The Company is a long term investment vehicle and the
directors, therefore, believe that it is appropriate to assess
its viability over a long term horizon. For the purposes of
assessing the Company’s prospects in accordance with Code
Provision C.2.2 of the UK Corporate Governance Code, the
Board considers that assessing the Company’s prospects
over a period of five years is appropriate given the nature of
the Company and the inherent uncertainties of looking out
over a longer time period. The directors believe that a five
year period appropriately reflects the long term strategy of
the Company and over which, in the absence of any adverse
change to the regulatory environment and the favourable
tax treatment afforded to UK investment trusts, they do
not expect there to be any significant change to the current
principal risks and to the adequacy of the mitigating controls
in place.
14
TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015 In assessing the viability of the Company the directors have
conducted a thorough assessment of each of the Company’s
principal risks and uncertainties as set out on page 14.
Particular scrutiny was given to the impact of a significant
fall in global equity markets on the value of the Company’s
investment portfolio. The directors have also considered
the Company’s leverage and liquidity in the context of its
fixed rate borrowings, notably the £25 million debenture
due to expire in December 2017, its income and expenditure
projections and the fact the Company’s investments comprise
mainly readily realisable quoted securities which can be sold
to meet funding requirements if necessary.
All the key operations required by the Company are
outsourced to third party providers and alternative providers
could be secured at relatively short notice if necessary.
Having taken into account the Company’s current
position and the potential impact of its principal risks and
uncertainties, the directors have a reasonable expectation
that the Company will be able to continue in operation and
meet its liabilities as they fall due for a period of five years
from the date of this Report.
GENDER DIVERSITY
At the year end there were four male directors and two
female directors 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 page 25.
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
23 February 2016
15
TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTSHAREHOLDER INFORMATION PORTFOLIO OF INVESTMENTS
INDUSTRY
PLACE OF
PRIMARY LISTING
VALUATION OF
HOLDING £M
% OF PORTFOLIO
1
UK TREASURY 4.00% 2016
Held in the portfolio in lieu of cash.
2
3
4
5
6
7
8
9
HSBC HOLDINGS
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.
GLAXOSMITHKLINE
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
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.
ROYAL DUTCH SHELL
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.
GRAFTON GROUP
Grafton is a distributor of building products that
operates across the UK and Ireland and also has
a small Belgian 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.
LLOYDS BANKING GROUP
Lloyds Banking Group operates across a wide
range of banking activities including retail and
commercial banking and insurance.
BRITISH AMERICAN TOBACCO
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.
ROYAL BANK OF SCOTLAND
RBS operates across a wide range of banking
activities including personal and corporate
lending, capital markets, leasing, personal
financial services and private banking. The
majority of the bank's assets are located in
the UK.
10
DIRECT LINE INSURANCE
Direct Line group is the largest UK personal
insurer. It has the leading market share in motor
and home insurance and top five positions in
travel, pet, rescue and commercial lines.
UK
73.171
8.6%
UK
71.808
8.4%
UK
57.567
6.7%
UK
55.995
6.5%
UK
42.842
5.0%
UK
40.995
4.8%
UK
40.665
4.8%
Fixed
Interest
Financials
Healthcare
Oil & Gas
Oil & Gas
Industrials
Financials
UK
33.011
3.9%
Consumer Goods
UK
32.467
3.8%
UK
28.597
3.3%
Financials
Financials
Top Ten Investments
£477.118m
55.8%
16
TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015 PORTFOLIO OF INVESTMENTS CONTINUED
PLACE OF
PRIMARY LISTING
VALUATION OF
HOLDING £M
% OF
PORTFOLIO
BT Group
INDUSTRY
Telecommunications
Gold Bullion Securities ETF
Financials
11
12
13 Wm Morrison Supermarkets
Consumer Services
14
15
16
17
18
19
20
Centrica
Tesco
SIG
CitiGroup
Drax
CRH
Utilities
Consumer Services
Industrials
Financials
Utilities
Industrials
Imperial Brands
Consumer Goods
Top Twenty Investments
21
22
23
24
25
26
27
Go-Ahead
Rio Tinto
Qinetiq
BG
Carnival
Vallourec
Green REIT
28 Marks & Spencer
29
30
Fresnillo
TNT Express
Top Thirty Investments
Consumer Services
Basic Materials
Industrials
Oil & Gas
Consumer Services
Industrials
Financials
Consumer Services
Basic Materials
Industrials
31
Standard Chartered
Financials
32 Market Vectors Gold Miners ETF
Basic Materials
33
34
35
36
37
38
39
40
Ladbrokes
Land Securities REIT
British Land REIT
Computacenter
Royal Mail
Joy Global
Chemring
Kingspan
Top Forty Investments
Consumer Services
Financials
Financials
Technology
Industrials
Industrials
Industrials
Industrials
41
42
43
44
45
46
47
48
49
50
Avon Products
Hammerson 6.875% 2020
Games Workshop
St Ives
Future
RSA Insurance 6.701% 2017 Variable
Perpetual
Consumer Goods
USA
Fixed Interest
Consumer Goods
Industrials
Consumer Services
Fixed Interest
Aviva 2020 5.9021% FRN Perpetual
Fixed Interest
Lloyds Banking Group – preference shares
Financials
Hochschild Mining
Home Retail Group
Basic Materials
Consumer Services
Top Fifty Investments
51
52
Johnston Press
Lonmin
Total Valuation of Portfolio
Consumer Services
Basic Materials
UK
UK
UK
UK
UK
UK
USA
UK
UK
UK
UK
UK
UK
UK
UK
France
Ireland
UK
UK
Netherlands
UK
USA
UK
UK
UK
UK
UK
USA
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
24.903
19.297
18.294
18.235
17.995
17.603
16.938
16.404
16.033
15.362
2.9%
2.3%
2.1%
2.1%
2.1%
2.1%
2.0%
1.9%
1.9%
1.8%
658.182
77.0%
14.876
13.191
12.860
11.027
10.994
10.158
10.045
9.875
9.486
9.143
1.7%
1.5%
1.5%
1.3%
1.3%
1.2%
1.2%
1.2%
1.1%
1.1%
769.837
90.1%
8.883
8.621
8.336
8.225
8.103
7.049
6.268
6.224
4.342
4.252
1.0%
1.0%
1.0%
1.0%
1.0%
0.8%
0.7%
0.7%
0.5%
0.5%
840.140
98.3%
3.923
2.920
2.837
1.449
1.213
1.055
0.971
0.805
0.173
0.095
0.5%
0.3%
0.3%
0.2%
0.1%
0.1%
0.1%
0.1%
0.0%
0.0%
855.581
100.0%
0.029
0.015
0.0%
0.0%
£855.625m
100.0%
I
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P
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E
R
E
P
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M
A
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17
TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTSHAREHOLDER INFORMATION
BOARD OF DIRECTORS
JOHN REEVE
ARTHUR COPPLE
RICHARD JEWSON*
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 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 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
LESLEY SHERRATT
DAVID WEBSTER
June de Moller was appointed a
director in 2005. She is a former
managing director of Carlton
Communications PLC and was
previously a non-executive
director of J Sainsbury PLC,
Cookson Group PLC, BT PLC
and Derwent London PLC.
Lesley Sherratt was appointed
a director in 2015. She was
formerly Investment Director
for the Save & Prosper and
Fleming Flagship range of
funds, and CEO & CIO of Ark
Asset Management Ltd. She has
over twenty years experience
investing in the financial sector,
including investment trusts, and
served as a director and Chair of
US Small Companies Investment
Trust. She is currently a director
of a private foundation, lectures
in global business ethics at King's
College London and is the author
of 'Can Microfinance Work? How
to Improve its Ethical Balance
and Effectiveness'.
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.
18
TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015 REPORT OF DIRECTORS
The directors present their report and accounts for the
year ended 31 December 2015.
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 £45,000 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 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, including
recourse to a £7.5 million overdraft facility with HSBC Bank.
Accordingly, the directors continue to adopt the going
concern basis in preparing the accounts.
ORDINARY DIVIDENDS
Interim dividends of 7.93p per ordinary share were paid on
30 June 2015, 30 September 2015 and 30 December 2015
(2014: a single interim dividend payment of 15.55p) and the
directors are recommending a final dividend of 15.87p per
ordinary share (2014: 23.33p), a total for the year of 39.66p
(2014: 38.88p). Subject to shareholders’ approval, the final
dividend will be paid on 31 March 2016 to shareholders on
the register on 11 March 2016.
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.
19
TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTSHAREHOLDER INFORMATION REPORT OF DIRECTORS CONTINUED
SHARE CAPITAL
SUBSTANTIAL SHAREHOLDERS
As at 31 December 2015 and 23 February 2016 the following
were registered or had indicated an interest in 3% or more of
the issued ordinary shares of the Company.
Brewin Dolphin Ltd
Alliance Trust Savings Ltd
Speirs & Jeffrey Ltd
Temple Bar Savings Scheme
Investec Wealth & Investment Ltd
%
8.7
7.8
6.5
5.3
5.1
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 2016.
ANNUAL GENERAL MEETING
The notice of the Annual General Meeting of the Company
to be held on 30 March 2016 is on page 51. 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 23 February 2016).
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).
Number of
shares issued
Voting rights
per share
Total
voting rights
AXA SA
No new ordinary shares were issued during the year.
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 46.
Voting Rights in the Company’s Shares
The voting rights at 31 December 2015 were:
Share class
Ordinary shares
of 25p each
66,872,765
1
66,872,765
As at 23 February 2016, the share capital of the Company and
total voting rights was 66,872,765. There are no restrictions
on the transfer of securities in the Company and there are
no special rights attached to any of the shares. Deadlines for
the exercise of voting rights and details of arrangements by
which someone other than the registered shareholder can
exercise voting rights are provided in the Notes to the Notice
of Meeting on page 53. The Company’s ordinary shares have
a Premium listing on the London Stock Exchange.
Change of control
There are no agreements that may be altered or terminated
on change of control of the Company.
DIRECTORS
The directors of the Company who held office at the end of
the year are detailed on page 18. Martin Riley retired as a
director on 30 March 2015. 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 22.
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.
20
TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015 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 per share, 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.
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
110,010 ordinary shares.
By order of the Board of Directors
John Reeve
Chairman
23 February 2016
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21
TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTSHAREHOLDER INFORMATION
REPORT ON DIRECTORS’ REMUNERATION
The Board presents the report on directors’ remuneration for
the year ended 31 December 2015 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 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 30.
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.
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. It is
the intention of the Board that the policy on remuneration
will continue to apply for the next financial year to
31 December 2016.
FUTURE POLICY TABLE
Purpose and link to strategy
Fees payable to directors should be sufficient to attract and
retain individuals 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 and minimum levels
Remuneration consists of a fixed fee each year, set in accordance
with the stated policies, and any increase granted must be in 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.
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 2015. These fees exclude employers’ national
insurance contributions and VAT where applicable:
John Reeve
Arthur Copple
June de Moller
Richard Jewson
Martin Riley
Lesley Sherratt
David Webster
Total
Total amount
of salary and fees1
2015
33,400
22,600
22,600
25,500
5,650
16,950
22,600
149,300
2014
32,750
22,150
22,150
25,000
22,150
–
22,150
146,350
1 Other 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.
22
TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015 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.
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 seven
year period is shown below.
Directors’ shareholdings
The directors’ shareholdings are detailed below:
31 December 2015
1 January 2015
57,613
27,924
9,305
9,760
N/A
–
4,151
54,784
22,661
8,415
9,168
15,000
N/A
3,983
John Reeve
Arthur Copple
June de Moller
Richard Jewson
Martin Riley*
Lesley Sherratt**
David Webster
* Retired 30 March 2015.
** Appointed 1 April 2015.
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 4 January 2016 Mr Reeve acquired an additional 428
ordinary shares as a result of a dividend reinvestment. On
12 January 2016 Mr Reeve acquired a further 147 ordinary
shares in the Company through his regular monthly saving
in an ISA and on 10 February 2016 he acquired a further 104
ordinary shares. On 22 January 2016 Mr Copple, Mr Jewson
and Mrs de Moller acquired a further 502, 25 and 51 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 2015 and 23 February 2016.
Statement of Voting at General Meeting
At the Company's last AGM held on 30 March 2015
shareholders approved the Directors' Remuneration Report
in respect of the year ended 31 December 2014. 99.6% of
proxy votes were in favour of the resolution, 0.4% were
against and 63,659 votes were withheld.
Share price total return
280
260
240
220
200
180
160
140
120
100
80
60
2008
2009
2010
2011
2012
2013
2014
2015
Temple Bar share price (total return)
FTSE All-Share Index (total return)
Source: Thomson Reuters Datastream
Annual statement
The Board confirms that the above Remuneration
Implementation Report in respect of the year ended
31 December 2015 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
23 February 2016
23
TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTSHAREHOLDER INFORMATION CORPORATE GOVERNANCE
THE AIC CODE OF CORPORATE GOVERNANCE
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 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 Temple Bar is a UK-listed company the Board’s principal
governance reporting obligation is in relation to the UK
Corporate Governance Code (the “UK Code”) issued
by the Financial Reporting Council (‘FRC’) in September
2014. However, it is recognised that investment companies
have special circumstances which have an impact on their
governance arrangements. An investment company typically
has no employees and the roles of CEO, portfolio manager,
administration, accounting and company secretarial tend to
be outsourced to a third party. The Association of Investment
Companies has therefore drawn up its own set of guidelines
known as the AIC Code of Corporate Governance (the “AIC
Code”) issued in February 2013 and updated in 2015, which
recognises the nature of investment companies by focusing
on matters such as board independence and the review
of management and other third party contracts. The FRC
has endorsed the AIC Code and confirmed that companies
which report against the AIC Code will be meeting their
obligations in relation to the UK Corporate Governance
Code and paragraph LR9.8.6 of the FCA’s Listing Rules.
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 (which incorporates 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
The Board is ultimately responsible for framing and
executing the Company’s strategy and for closely
monitoring risks. There is a formal schedule of matters to
be specifically approved by the Board and it has delegated
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 reviews the
performance of the Company at Board meetings and sets
the objectives for the Manager.
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.
Biographies of those directors in office at the date of
signing of the financial statements are set out on page 18.
Martin Riley stood down as a director on 30 March 2015
and Lesley Sherratt was appointed as a director with effect
from 1 April 2015. There were seven Board meetings, two
audit committee meetings and two nomination committee
meetings held during the year and the attendance by the
directors was as follows:
Number of meetings attended
Board
Audit
Committee
Nomination
Committee
7
7
7
7
2
4
7
2
2
2
2
–
1
2
2
2
2
2
1
–
2
John Reeve
Arthur Copple
June de Moller
Richard Jewson
Martin Riley*
Lesley Sherratt**
David Webster
*
retired 30 March 2015
** appointed 1 April 2015
24
TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015 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 27. 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. The committee is chaired by
Mr Jewson, the Senior Independent Director.
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.
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
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.
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. Three of the six directors (Mr
Reeve, Mr Jewson 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 mind-set of
the individuals involved, the Board 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. The directors have a range of business and
financial skills and experience relevant to the direction of the
Company. Mr Jewson is the Senior Independent Director.
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.
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.
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.
Individual directors may seek independent advice at the
expense of the Company within certain limits.
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.
25
TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTSHAREHOLDER INFORMATION CORPORATE GOVERNANCE CONTINUED
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.
Shareholder communications
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, both from the Manager and the Company's
stockbroker, 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.
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.
The Board confirms that there is an ongoing process for
identifying, evaluating and managing the risks faced by the
Company in accordance with the FRC's document 'Guidance
on Risk Management, Internal Controls and Related Financial
and Business Reporting'.
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. In addition, financial information is
circulated to the directors on a monthly basis.
26
TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015 REPORT OF THE AUDIT COMMITTEE
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 2015.
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;
reviewing the appropriateness of the Company’s
accounting policies; and
ensuring the adequacy of the internal control
systems and standards.
SIGNIFICANT ISSUES CONSIDERED REGARDING THE
ANNUAL REPORT AND FINANCIAL STATEMENTS
During the year, the Audit Quality Review ('AQR') team within
the Financial Reporting Council ('FRC') reported to the Audit
Committee that it had concluded a review of the audit of the
Company performed by Ernst & Young in respect of the year to
31 December 2014. The FRC's activities include the independent
inspection of the overall quality of the auditing function in the UK,
and the AQR team carries out a number of reviews of company
audits annually. The Audit Committee carefully considered
the AQR's findings and discussed them with Ernst & Young.
The findings were noted for subsequent years but were not
considered significant in the context of the audit as a whole.
The Committee also considered 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
The valuation of the
investment portfolio
Going concern
Compliance with
Sections 1158
and 1159 of the
Corporation Tax
Act 2010
The verification of
investment income
The Committee reviews reports from its
service providers on key controls over the
assets of the Company. Any significant
issues are reported by the Manager to the
Committee.
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 by the board.
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 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.
27
TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTSHAREHOLDER INFORMATION REPORT OF THE AUDIT COMMITTEE CONTINUED
AUDITOR AND AUDIT TENURE
The Company’s current auditor, Ernst & Young LLP, has
acted in this role since 2003 pursuant to a competitive tender
process which took place at that time. There has not been a
subsequent tender process. 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 impending EU legislation will require listed
companies to rotate their auditor every 10 years. Under the
transitional arrangements for firms where the tenure was
between 11 and 20 years on the effective date under the new
EU rules, there will be a grace period of nine years after the
enactment of the EU legislation. Accordingly, based upon the
new legislation, Ernst & Young will not be able to act as auditor
to the Company after June 2023 so the last financial year that
they could serve as auditor would end on 31 December 2022.
The Committee has not decided when to put the audit out to
tender but will keep this matter under review. There are no
contractual obligations that restrict the Company’s choice of
auditor. Other non-audit fees of £1,500 (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 any 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 2015, 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 29.
Richard Jewson
Chairman
Audit Committee
23 February 2016
28
TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015 STATEMENT OF DIRECTORS' RESPONSIBILITIES
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 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 27 and 28. As
a result, the Board has concluded that the Annual Report for
the year ended 31 December 2015, 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
23 February 2016
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.
29
TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTSHAREHOLDER INFORMATION INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF TEMPLE BAR INVESTMENT TRUST PLC
Our opinion on the 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 2015 and
of the Company’s loss for the year then ended;
the financial statements have been properly prepared in accordance with International Financial Reporting Standards
(IFRSs) as adopted by the European Union; and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and Article 4
of the IAS Regulation.
What we have audited
Temple Bar Investment Trust PLC’s financial statements comprise:
Statement of Comprehensive Income for the year ended 31 December 2015
Statement of Changes in Equity for the year ended 31 December 2015
Statement of Financial Position as at 31 December 2015
Statement of Cash Flows for the year ended 31 December 2015
Related notes 1 to 23 to the financial statements
The financial reporting framework that has been applied in their preparation is applicable law and International Financial
Reporting Standards (IFRSs) as adopted by the European Union.
Overview of our audit approach
Risks of material misstatement
• Incorrect valuation and existence of the investment portfolio.
• Incomplete or inaccurate income recognition through failure to recognise proper income
entitlements or apply appropriate accounting treatment (Significant risk and Fraud risk).
Audit scope
Materiality
• We performed an audit of Temple Bar Investment Trust PLC.
• Materiality of £7.6m which represents 1% of total equity (2014: £7.9m).
Our assessment of risk of material misstatement
We identified the risks of material misstatement described below as those that had the greatest effect on our overall audit
strategy, the allocation of resources in the audit and the direction of the efforts of the audit team. In addressing these risks,
we have performed the procedures below which were designed in the context of the financial statements as a whole and,
consequently, we do not express any opinion on these individual areas.
Risk
Our response to the risk
What we concluded to the Audit Committee
Incorrect valuation and existence of the
investment portfolio (as described on page
27 in the Report of the Audit Committee).
The valuation of the portfolio at
31 December 2015 was £856m (2014:
£874m) comprising £778m (2014: £762m)
of listed equities and £78m (2014: £112m)
of corporate bonds.
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.
We performed the following
procedures:
For all investments, we noted no material
differences in market value or exchange rates.
We have independently valued 100%
of the investment prices in the portfolio
using our bespoke asset pricing tool.
We noted no differences between the
custodian and depositary confirmations and
the Company’s underlying financial records.
For those investments priced in
currencies other than sterling we
have agreed the exchange rates to
an independent source.
We independently obtained
confirmations from the Company’s
custodian and depositary to confirm
the existence of the assets held as at
31 December 2015.
30
TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015 Risk
Our response to the risk
What we concluded to the Audit Committee
We noted no issues in agreeing the
sample of dividend and interest receipts
to and from the independent source.
We noted no issues in agreeing the
accrued dividend and interest receipts
to an independent source.
We ensured that the accounting treatment
adopted for the special dividends was
consistent with the evidence provided
and our understanding of the underlying
circumstances giving rise to the related
dividends.
Incomplete or inaccurate income
recognition through failure to recognise
proper income entitlements or
apply appropriate accounting
treatment (Significant and Fraud risk)
(as described on page 27 in the Report
of the Audit Committee).
Most of the Company’s income is received
in the form of dividends and interest from
fixed income investments, being £30m (2014:
£27m) and £1m (2014: £3m) respectively for
the period.
Given the judgemental aspect of allocating
special dividends between revenue and
capital and the risk of management override
from processing of topside journals, we
consider this an area warranting specific
audit focus.
We performed the following
procedures:
We agreed, on a sample basis,
dividend and interest receipts to
an independent source.
We agreed, on a sample basis, investee
company dividend announcements
and fixed interest coupon dates from
an independent source to the income
recorded by the Company.
We agreed all accrued dividends
and fixed interest to an independent
source.
We performed a walkthrough of the
process for the allocation of special
dividends between revenue and capital
and considered the effectiveness of
controls in place.
We reviewed the recognition criteria
applied to the special dividends
received during the year and
assessed the appropriateness of the
conclusion on the relevant treatment
as documented by the Manager.
In the prior year, our auditor’s report included only a risk of material misstatement in relation to the valuation and existence of
the investment portfolio. In the current year, we also recognise a risk of material misstatement in relation to the recognition of
revenue. We have assessed this as a fraud risk and a significant risk this year as investment income receivable by the Company
during the period directly affects the Company’s ability to pay a dividend to shareholders and judgement is used in allocating
special dividends between revenue and capital. Potentially, these factors could give the Manager both the incentive and the
opportunity to misstate the revenue of the Company in order to meet shareholder expectations.
The scope of our audit
Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit
scope for the Company. This enables us to form an opinion on the financial statements. We take into account size, risk profile, the
organisation of the Company and effectiveness of controls, including controls and changes in the business environment when
assessing the level of work to be performed. The Company is a single component and we perform a full audit on this Company.
Our application of materiality
We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements
on the audit and in forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence
the economic decisions of the users of the financial statements. Materiality provides a basis for determining the nature and
extent of our audit procedures.
We determined planning materiality for the Company to be £7.6m (2014: £7.9m), 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 risks
of material misstatement and determining the nature, timing and extent of further audit procedures. We derived our
materiality calculation from a proportion of total equity as we consider that to be the most important financial metric on
which shareholders judge the performance of the Company.
31
TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTSHAREHOLDER INFORMATION INDEPENDENT AUDITOR’S REPORT CONTINUED
TO THE MEMBERS OF TEMPLE BAR INVESTMENT TRUST PLC
Performance materiality
The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately
low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality.
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, being £5.7m (2014: £5.9m). Our objective in adopting this approach was
to ensure that total undetected and uncorrected audit differences in all accounts did not exceed our planning materiality level.
We have set performance materiality at this percentage due to our past experience of the audit that indicates a lower risk of
misstatements, both corrected and uncorrected.
Given the importance of the distinction between revenue and capital for the Company we also applied a separate testing
threshold of £1.3m (2014: £1.2m) for the revenue column of the Income Statement, being 5% of the return on ordinary activities
before taxation.
Reporting threshold
An amount below which identified misstatements are considered as being clearly trivial.
We agreed with the audit committee that we would report all audit differences in excess of £0.4m (2014: £0.4m) as well as
differences below that threshold that, in our view, warranted reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in
the light of other relevant qualitative considerations.
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 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.
Respective responsibilities of directors and auditor
As explained more fully in the Statement of Directors’ Responsibilities set out on page 29, 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.
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.
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.
32
TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015 Matters on which we are required to report by exception
ISAs (UK and
Ireland) reporting
We are required to report to you if, in our opinion, financial and non-financial
information in the annual report is:
We have no
exceptions to report.
• 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
• otherwise misleading.
In particular, we are required to report whether we have identified any inconsistencies
between our knowledge acquired in the course of performing the audit and the
directors’ statement that they consider the annual report and accounts taken as a
whole is fair, balanced and understandable and provides the information necessary
for shareholders to assess the entity’s performance, business model and strategy;
and whether the annual report appropriately addresses those matters that we
communicated to the audit committee that we consider should have been disclosed.
We are required to report to you if, in our opinion:
• adequate accounting records have not been kept by the Company, or returns
adequate for our audit have not been received from branches not visited by us; or
• the Company 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.
We are required to review:
• the directors’ statement in relation to going concern set out on page 19, and
longer term viability, set out on page 14; and
• the part of the Corporate Governance Statement relating to the Company’s
compliance with the provisions of the UK Corporate Governance Code specified
for our review
Companies Act
2006 reporting
Listing Rules review
requirements
Statement on the Directors’ Assessment of the Principal Risks that Would Threaten
the Solvency or Liquidity of the Entity
ISAs (UK and
Ireland) reporting
We are required to give a statement as to whether we have anything material to add or
to draw attention to in relation to:
• the directors’ confirmation in the annual report that they have carried out a robust
assessment of the principal risks facing the entity, including those that would threaten
its business model, future performance, solvency or liquidity;
• the disclosures in the annual report that describe those risks and explain how they are
being managed or mitigated;
• the directors’ statement in the financial statements about whether they considered it
appropriate to adopt the going concern basis of accounting in preparing them, and
their identification of any material uncertainties to the entity’s ability to continue to do
so over a period of at least twelve months from the date of approval of the financial
statements; and
• the directors’ explanation in the annual report as to how they have assessed the
prospects of the entity, over what period they have done so and why they consider that
period to be appropriate, and their statement as to whether they have a reasonable
expectation that the entity will be able to continue in operation and meet its liabilities
as they fall due over the period of their assessment, including any related disclosures
drawing attention to any necessary qualifications or assumptions.
Ashley Coups (Senior statutory auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
London
23 February 2016
We have no
exceptions to report.
We have no
exceptions to report.
We have nothing
material to add or to
draw attention to.
33
TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTSHAREHOLDER INFORMATION 34
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDTEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015 I
S
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A
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35
FINANCIAL REPORT
36 Statement of Comprehensive Income
37 Statement of Changes in Equity
38 Statement of Financial Position
39 Statement of Cash Flows
40 Notes to the Financial Statements
GOVERNANCE REPORTFINANCIAL REPORTSHAREHOLDER INFORMATIONSTRATEGIC REPORTTEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2015
Investment Income
Other operating income
Losses on investments
Notes
4
4
Revenue
£000
31,243
10
31,253
2015
Capital
£000
–
–
–
Total
£000
31,243
10
Revenue
£000
30,262
12
31,253
30,274
2014
Capital
£000
–
–
–
Total
£000
30,262
12
30,274
Losses on investments held at fair value
through profit or loss
12(b)
Total income
Expenses
Management fees
Other expenses
Profit/(loss) before finance costs and tax
Finance costs
Profit/(loss) before tax
Tax
–
31,253
(31,615)
(31,615)
(31,615)
–
(362)
30,274
(29,867)
(29,867)
(29,867)
407
6
7
8
9
(1,374)
(581)
29,298
(2,635)
26,663
–
(1,980)
(1,282)
(34,877)
(4,000)
(38,877)
–
(3,354)
(1,863)
(5,579)
(6,635)
(12,214)
–
(1,315)
(538)
28,421
(2,639)
25,782
–
(1,938)
(1,009)
(32,814)
(3,999)
(36,813)
–
(3,253)
(1,547)
(4,393)
(6,638)
(11,031)
–
Profit/(loss) for the year
26,663
(38,877)
(12,214)
25,782
(36,813)
(11,031)
Earnings per share (basic and diluted)
11
39.87p
(58.14p)
(18.27p)
39.82p
(56.86p)
(17.04p)
The total column of this statement represents the Statement of Comprehensive Income prepared in accordance with IFRS.
The supplementary revenue return and capital return columns are both prepared under guidance issued by the Association
of Investment Companies. All items in the above statement derive from continuing operations.
No operations were acquired or discontinued during the year.
The Company does not have any income or expense that is not included in net profit for the year. Accordingly, the
net profit for the year is also the Total Comprehensive Income for the Year, as defined in IAS1 (revised).
The notes on pages 40 to 50 form an integral part of the financial statements.
36
TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015 STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2015
Balance at 1 January 2014
Unclaimed dividends
(Loss)/profit for the year
Issue of share capital
Notes
Ordinary
share capital
£000
15,831
Share
premium
account
£000
54,002
–
–
42,038
–
Capital
reserves
£000
689,117
–
(36,813)
–
–
–
–
888
–
Dividends paid to equity shareholders
10
Balance at 31 December 2014
16,719
96,040
652,304
Unclaimed dividends
(Loss)/profit for the year
Issue of share capital
Dividends paid to equity shareholders
10
–
–
–
–
–
–
–
–
–
(38,877)
–
–
Balance at 31 December 2015
16,719
96,040
613,427
Retained
earnings
£000
Total
equity
£000
33,120
792,070
17
25,782
–
(24,538)
34,381
35
26,663
–
(31,510)
29,569
17
(11,031)
42,926
(24,538)
799,444
35
(12,214)
–
(31,510)
755,755
As at 31 December 2015 the Company had distributable revenue reserves of £29,569,000 (2014: £34,381,000) for the payment
of future dividends. The only distributable reserves are the retained earnings and realised capital reserves.
The notes on pages 40 to 50 form an integral part of the financial statements.
37
GOVERNANCE REPORTFINANCIAL REPORTSHAREHOLDER INFORMATIONSTRATEGIC REPORTTEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015 STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2015
Non-current assets
Investments held at fair value through profit or loss
Current assets
Receivables
Cash and cash equivalents
Total assets
Current liabilities
Payables
Total assets less current liabilities
Non-current liabilities
Interest bearing borrowings
Net assets
Equity attributable to equity holders
Ordinary share capital
Share premium
Capital reserves
Retained earnings
Total equity
Net asset value per share
31 December 2015
31 December 2014
Notes
£000
£000
£000
£000
12
13
14
15
16
17
18
20
855,625
873,781
2,722
12,262
3,256
37,225
14,984
870,609
(1,074)
869,535
(113,780)
755,755
40,481
914,262
(1,064)
913,198
(113,754)
799,444
16,719
96,040
613,427
29,569
16,719
96,040
652,304
34,381
755,755
755,755
1,130.14p
799,444
799,444
1,195.47p
The notes on pages 40 to 50 form an integral part of the financial statements.
The financial statements on pages 36 to 50 were approved by the board of directors and authorised for issue on
23 February 2016. They were signed on its behalf by:
J Reeve
Chairman
38
TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015 STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2015
Cash flows from operating activities
Loss before tax
Adjustments for:
Purchases of investments1
Sales of investments1
Losses on investments
Financing costs
Operating cash flows before movements in working capital
Increase/(decrease) in accrued interest
Increase in accrued dividend income
(Decrease)/increase in receivables
Increase/(decrease) in payables
Net cash flows from operating activities before
and after income tax
Cash flows from financing activities
Proceeds from issue of new shares
Issue costs relating to 4.05% Private Placement Loan
Unclaimed dividends
Interest paid on borrowings
Equity dividends paid
Net cash used in financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the start of the year
Cash and cash equivalents at the end of the year
2015
2014
Notes
£000
£000
£000
£000
(12,214)
(11,031)
(360,358)
346,899
(305,944)
291,681
12(b)
8
10
(13,459)
31,615
6,635
12,577
743
10
(219)
10
13,121
–
(24)
35
(6,585)
(31,510)
(38,084)
(24,963)
37,225
12,262
(14,263)
29,867
6,638
11,211
(835)
757
909
(460)
11,582
42,926
(313)
17
(6,588)
(24,538)
11,504
23,086
14,139
37,225
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 40 to 50 form an integral part of the financial statements.
Certain comparative figures have been dis-aggregated to provide more detailed information in line with the current
presentation adopted. There was no impact on the comparative net profit or net losses as a result of the new presentation.
39
GOVERNANCE REPORTFINANCIAL REPORTSHAREHOLDER INFORMATIONSTRATEGIC REPORTTEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015 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 November 2014 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.
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.
40
TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015 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. The fair value is
determined by reference to quoted market mid prices at close of business on the year-end date.
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.
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.
41
GOVERNANCE REPORTFINANCIAL REPORTSHAREHOLDER INFORMATIONSTRATEGIC REPORTTEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015 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):
IFRS 9 Financial Instruments
IFRS 10, IFRS 12 and IAS 27 (amended) Investment Entities
IFRS 15 Revenue from Contracts with Customers
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
Income from investments
UK dividends
UK REITs
Overseas dividends
Interest from fixed interest securities
Other income
Deposit interest
Total income
Investment income comprises:
Listed investments
5 SEGMENTAL REPORTING
2015
£000
2014
£000
27,212
749
1,958
1,324
31,243
10
31,253
31,243
31,243
25,542
601
1,282
2,837
30,262
12
30,274
30,262
30,262
The directors are of the opinion that the Company is engaged in a single segment of business being investment business.
6
INVESTMENT MANAGEMENT FEE
Investment management fee
AIFM fee
Secretarial fee
2015
Capital
£000
1,902
78
–
Revenue
£000
1,268
52
54
1,374
1,980
2014
Capital
£000
1,902
36
–
Revenue
£000
1,268
23
24
Total
£000
3,170
59
24
1,315
1,938
3,253
Total
£000
3,170
130
54
3,354
As at 31 December 2015 an amount of £761,789 (2014: £799,930) was payable to the Manager in relation to the management
fees for the quarter ended 31 December 2015.
Details of the terms of the investment management agreement are provided on page 19.
42
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDTEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015 7 OTHER EXPENSES
Transaction costs on fair value
through profit or loss assets1
Directors’ fees (see Report on
Directors Remuneration on page 22)
Registrar’s fees
AIC membership costs
Marketing costs
Printing & postage
Directors’ liability insurance
Auditor’s remuneration – annual audit2
– non audit fee
Stock exchange fees
FCA fee
Depositary fee
Safe custody fees
Other expenses
Revenue
£000
2015
Capital
£000
Total
£000
Revenue
£000
–
160
111
21
29
35
14
30
2
24
22
87
15
31
1,282
1,282
–
–
–
–
–
–
–
–
–
–
–
–
–
160
111
21
29
35
14
30
2
24
22
87
15
31
–
154
104
21
25
52
15
28
2
23
20
42
18
34
2014
Capital
£000
Total
£000
1,009
1,009
–
–
–
–
–
–
–
–
–
–
–
–
–
154
104
21
25
52
15
28
2
23
20
42
18
34
581
1,282
1,863
538
1,009
1,547
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 £1,147,897 (2014: £880,741) and on sales amounted to £134,285 (2014: £128,156).
2 During the year there were audit fees of £25,000 (2014: £23,500) (excluding VAT) paid to the Auditor.
All expenses are inclusive of VAT where applicable. Certain comparative figures have been dis-aggregated to provide more
detailed information in line with the current presentation adopted. There was no impact on the comparative net profit or net
losses as a result of the new presentation.
8 FINANCE COSTS
Interest on borrowings
9.875% debenture stock 2017
5.5% debenture stock 2021
4.05% Private placement loan 20281
Bank interest payable
Total finance costs
Revenue
£000
2015
Capital
£000
Total
£000
Revenue
£000
988
836
810
2,634
1
2,635
1,481
1,272
1,247
4,000
–
4,000
2,469
2,108
2,057
6,634
1
6,635
988
836
810
2,634
5
2,639
2014
Capital
£000
1,481
1,272
1,246
3,999
–
3,999
Total
£000
2,469
2,108
2,056
6,633
5
6,638
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
43
GOVERNANCE REPORTFINANCIAL REPORTSHAREHOLDER INFORMATIONSTRATEGIC REPORTTEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015 9 TAXATION
(a) There is no corporation tax payable (2014:nil).
(b) The charge for the year can be reconciled to the profit per the Statement of Comprehensive Income as follows:
Profit/(loss) before taxation
Tax at UK corporation tax rate of 20.25%
(2014:21.50%)
Tax effects of:
Non-taxable gains on investments
Disallowed expenses
Non-taxable UK dividends1
Income taxable in later periods
Non-taxable overseas dividends1
Increase in excess management expenses
in the year2
Total tax charge for the year
Revenue
£000
26,663
2015
Capital
£000
(38,877)
Total
£000
Revenue
£000
(12,214)
25,782
2014
Capital
£000
(36,813)
Total
£000
(11,031)
5,430
(7,871)
(2,441)
5,543
(7,914)
(2,371)
–
–
(5,521)
–
(454)
545
–
6,401
259
–
–
–
1,211
–
6,401
259
(5,521)
–
(454)
1,756
–
–
–
(5,491)
(16)
(276)
240
–
6,421
217
–
–
–
1,276
–
6,421
217
(5,491)
(16)
(276)
1,516
–
1 Investment trusts are not subject to corporation tax on these items.
2 The Company has not recognised a deferred tax asset of £13,225,300 (2014: £12,960,000) based on an effective tax rate of 20.0% (2014: 20.0%) 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
Amounts recognised as distributions to equity holders in the year
Final dividend for the year ended 31 December 2014 of 23.33p (2013: 22.65p) per share
Interim dividends (three) for the year ended 31 December 2015 of 7.93p (2014: single payment of 15.55p) per share
2015
£000
2014
£000
15,601
15,909
31,510
14,395
10,143
24,538
Proposed final dividend for the year ended 31 December 2015 of 15.87p (2014: 23.33p) per share
10,613
15,601
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. In 2015 the Company adopted a policy of paying dividends on a
quarterly basis. As all three interim dividends paid during the year are reflected in the above 2015 numbers the comparison
with 2014 has been slightly distorted. In 2014 only the single interim dividend payment made during the year was included.
Therefore, 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.
Interim dividends (three) for the year ended 31 December 2015 of 7.93p (2014: single payment of 15.55p) per share
Proposed final dividend for the year ended 31 December 2015 of 15.87p (2014: 23.33p) per share
11 EARNINGS PER SHARE
Earnings per ordinary share
Revenue
pence
39.87p
2015
Capital
pence
(58.14p)
Total
pence
(18.27p)
Revenue
pence
39.82
2015
£000
15,909
10,613
26,522
2014
Capital
pence
(56.86)
2014
£000
10,143
15,601
25,744
Total
pence
(17.04)
The calculation of the above is based on revenue returns of £26,663,000 (2014: £25,782,000), capital returns of (£38,877,000)
(2014: (£36,813,000)) and total returns of (£12,214,000) (2014: (£11,031,000)) and a weighted average number of ordinary shares
of 66,872,765 (2014: 64,742,831).
44
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDTEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015 12 INVESTMENTS HELD AT FAIR VALUE THROUGH PROFIT OR LOSS
(a) Movements in the year
Opening cost at 1 January
Investment holding gains at 1 January
Opening fair value
Purchases at cost
Sales – proceeds
– realised gains on sales
Decrease in investment holding gains
Closing fair value at 31 December
Closing cost at 31 December
Investment holding gains at 31 December
(b) Gains on investments
Gains on sales of investments on book cost
Decrease in investment holding gains
All investments are listed.
2015
£000
2014
£000
743,492
651,383
130,289
238,002
873,781
889,385
360,358
305,944
(346,899)
(291,681)
58,358
77,846
(89,973)
(107,713)
855,625
873,781
815,311
743,492
40,314
130,289
855,625
873,781
58,358
77,846
(89,973)
(107,713)
(31,615)
(29,867)
(c) Fair value of financial instruments
The following table shows financial instruments 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 financial assets (2014: £nil).
Level 3 – significant unobservable inputs (including the Company’s own assumptions in determining the fair
value of investments). There are no level 3 financial assets (2014: £nil).
The following is a summary of the classifications used as at 31 December 2015 in valuing the Company’s financial instruments:
Financial assets
Quoted equities
Debt securities
2015
2014
Level 1
£000
Total
£000
Level 1
£000
Total
£000
777,507
777,507
761,684
761,684
78,118
78,118
112,097
112,097
855,625
855,625
873,781
873,781
Please refer to Note 22 on page 49 for the disclosure and fair value categorisation of the financial liabilities.
45
GOVERNANCE REPORTFINANCIAL REPORTSHAREHOLDER INFORMATIONSTRATEGIC REPORTTEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015 13 RECEIVABLES
Accrued income
Other receivables
2015
£000
2,437
285
2,722
2014
£000
3,190
66
3,256
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.
14 PAYABLES
Accruals and deferred income
2015
£000
1,074
1,074
2014
£000
1,064
1,064
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
Interest bearing borrowings
Amounts payable after more than one year:
9.875% Debenture stock 2017
5.5% Debenture stock 2021
4.05% Private placement loan 2028
2015
£000
2014
£000
25,000
38,491
50,289
25,000
38,506
50,248
113,780
113,754
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
Issued, allotted and fully paid
Ordinary shares of 25p each
There were no shares issued during 2015 (2014: 3,549,517)
17 SHARE PREMIUM
Balance at 1 January 2015
Premium arising on issue of new shares
Balance at 31 December 2015
2015
Number
2014
Number
2015
£000
2014
£000
66,872,765
66,872,765
16,718,191
16,718,191
2015
£000
96,040
–
96,040
2014
£000
54,002
42,038
96,040
46
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDTEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015 18 CAPITAL RESERVES
The capital reserves comprise both realised and unrealised gains. A summary of the split is shown below.
Capital reserves – realised
Capital reserves – unrealised
2015
£000
573,113
40,314
613,427
2014
£000
522,015
130,289
652,304
19 CONTINGENT LIABILITIES AND CAPITAL COMMITMENTS
As at 31 December 2015 there were no contingent liabilities or capital commitments for the Company (2014: £nil).
20 NET ASSET VALUES
Ordinary shares of 25p each
Net asset
value per
ordinary share
Pence
Net assets
attributable
£000
1,130.14p
755,755
The net asset value per ordinary share is based on net assets at the year-end of £755,755,000 (2014: £799,444,000) and on
66,872,765 (2014: 66,872,765) 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 22. 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.
At 31 December 2015 there was £40,797 (2014: £37,989) payable to the directors for fees and expenses.
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 19 and 42.
47
GOVERNANCE REPORTFINANCIAL REPORTSHAREHOLDER INFORMATIONSTRATEGIC REPORTTEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015 22 RISK MANAGEMENT AND FINANCIAL INSTRUMENTS
The Company’s investing activities undertaken in pursuit of its investment objective, as set out on page 11, 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 11.3%.
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.
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 is
responsible for the collection of income on behalf of the Company. Cash is held either with reputable banks with high quality
external credit ratings 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 16 to 17.
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 2015
Investments
£000
Cash
£000
Receivables
£000
Payables
£000
49,631
55,003
750,991
855,625
236
–
12,026
12,262
124
1,102
1,496
2,722
–
–
(1,074)
(1,074)
31 December 2014
Investments
£000
Cash
£000
Receivables
£000
Payables
£000
63,171
52,445
758,165
873,781
–
2
37,223
37,225
–
–
3,256
3,256
–
–
(1,064)
(1,064)
Non-current
liabilities
£000
–
–
(113,780)
(113,780)
Non-current
liabilities
£000
–
–
(113,754)
(113,754)
Total
£000
49,991
56,105
649,659
755,755
Total
£000
63,171
52,447
683,826
799,444
Euro
US Dollar
Pounds Sterling
Euro
US Dollar
Pounds Sterling
48
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDTEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015 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.
There were no forward currency contracts used during 2015.
Projected movement
Effect on net assets for the year
Effect on capital return
£000
+2%
2,122
2,093
£000
-2%
(2,122)
(2,093)
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 £78,118,000, representing 10.34% of net assets of
£755,755,000 (2014: £112,097,000; 14.0%). The weighted average running yield as at 31 December 2015 was 4.9% (2014: 5.0%)
and the weighted average remaining life was 2.0 years (2014: 3.4 years). The Company’s cash balance of £12,262,000 (2014:
£37,225,000) 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 £61,309
(2014: £186,124). 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 £61,309 (2014: negative £186,124). 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 £114,854,000 (2014: £114,818,000) 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 8 years (2014: 9 years) and the weighted average interest rate payable is 6.0% (2014: 6.0%) p.a.
Other price risk exposure
If the investment valuation fell by 10% at 31 December 2015, the impact on profit or loss and net assets would have been
negative £85.6 million (2014: negative £87.4 million). If the investment portfolio valuation rose by 10% at 31 December 2015,
the impact on profit or loss and net assets would have been positive £85.6 million (2014: positive £87.4 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 or an approximation to fair value, with the exception of interest bearing borrowings which are shown at
book value at 31 December 2015.
Assets at fair value through profit or loss
Cash
Loans and receivables
Investment income receivable
Other receivables
Payables
Interest bearing borrowings:
9.875% Debenture Stock1
5.5% Debenture Stock2
4.05% Private Placement Loan3
1 Effective interest rate is 9.875%
2 Effective interest rate is 5.583%
3 Effective interest rate is 4.133%
2015
2014
Book value
£000
Fair value
£000
Book value
£000
855,625
12,262
855,625
12,262
873,781
37,225
Fair value
£000
873,781
37,225
2,437
285
(1,074)
(25,000)
(38,491)
(50,289)
2,437
285
(1,074)
(28,568)
(43,010)
(52,018)
3,190
66
(1,064)
(25,000)
(38,506)
(50,248)
3,190
66
(1,064)
(30,638)
(44,339)
(52,765)
755,755
745,939
799,444
785,456
The 9.875% Debenture Stock 2017 and the 5.5% Debenture Stock 2021 are classified as Level 1 instruments (2014: Level 1).
The 4.05% Private Placement Loan 2028 is classified as a Level 2 instrument (2014: Level 2).
49
GOVERNANCE REPORTFINANCIAL REPORTSHAREHOLDER INFORMATIONSTRATEGIC REPORTTEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015 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:
2015
2014
Three
months
or less
£000
Not more
than one
year
£000
More
than one
year
£000
Three
months
or less
£000
Not more
than one
year
£000
More
than one
year
£000
Total
£000
Total
£000
Creditors: amounts falling due
after more than one year
Debenture stocks and Loan
2,058
6,584
155,759
164,401
2,058
6,584
155,758
164,400
Creditors: amounts falling due
within one year
Accruals and deferred income
766
2,824
308
–
1,074
6,892
155,759
165,475
812
2,870
252
–
1,064
6,836
155,758
165,464
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 £869,535,000 (2014: £913,198,000).
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 59)
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 2015 are shown below:
Leverage Exposure
Maximum limit
Actual
50
Gross
method
Commitment
method
250%
114%
200%
115%
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDTEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015 NOTICE OF MEETING
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 ninetieth Annual General Meeting of Temple Bar Investment Trust PLC will be held
at 11.00am on Wednesday 30 March 2016 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 2015 together with the reports of the
directors and auditor thereon.
2. To approve the report on directors’ remuneration for the year ended 31 December 2015.
3. To declare a final dividend of 15.87p 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 elect Dr L R Sherratt 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 audit committee 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 23 February 2016, provided that:
(i)
(ii)
the authority granted shall expire at the conclusion of the Annual General Meeting of the Company in 2017 but
may be revoked or varied by the Company in general meeting and may be renewed by the Company in general
meeting; and
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.
51
GOVERNANCE REPORTFINANCIAL REPORTSHAREHOLDER INFORMATIONSTRATEGIC REPORTTEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015 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 2017 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)
(ii)
(iii)
(iv)
(v)
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;
the minimum price which may be paid for such shares is 25p per share;
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;
the authority hereby conferred shall (unless previously renewed or revoked) expire at the end of the Annual General
Meeting of the Company in 2017, or, if earlier, the date falling fifteen months from the date of this resolution;
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
M K Slade
For Investec Asset Management Limited
Secretary
23 February 2016
Woolgate Exchange
25 Basinghall Street
London EC2V 5HA
52
TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015 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 WEDNESDAY
30 MARCH 2016 AT 11.00AM.
NOTES
1.
Entitlement to attend and vote
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 24 March 2016 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.
2. Proxies
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.
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 24 March 2016. 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.
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. 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. 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 24 March 2016.
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 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.
53
GOVERNANCE REPORTFINANCIAL REPORTSHAREHOLDER INFORMATIONSTRATEGIC REPORTTEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015 NOTICE OF MEETING CONTINUED
2. Proxies continued
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.
3. Corporate representatives
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.
4. Nominated persons
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.
Members’ requests under Section 527 of the 2006 Act
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 2015; or (ii) any circumstance connected with an auditor of the
Company appointed for the financial year 1 January 2015 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.
Members’ rights to ask questions
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.
Inspection of documents
None of the directors has a service contract with the Company.
Total number of shares and voting rights
As at 23 February 2016, 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.
5.
6.
7.
8.
9. Website
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.
54
TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015 USEFUL INFORMATION FOR SHAREHOLDERS
ANNUAL GENERAL MEETING
The Annual General Meeting will be held at Woolgate Exchange, 25 Basinghall Street, London EC2V 5HA (see map on
page 53), on 30 March 2016 at 11.00am.
FINANCIAL CALENDAR
The financial calendar for 2016 is set out below:
Ordinary shares
Final dividend, 2015 – payable
– ex-dividend
– record date
First interim dividend, 2016
Second interim dividend, 2016
Third interim dividend, 2016
Final dividend, 2016
9.875% Debenture Stock 2017
Interest payments
5.5% Debenture Stock 2021
Interest payments
PAYMENT OF DIVIDENDS
31 March 2016
10 March 2016
11 March 2016
30 June 2016
30 September 2016
30 December 2016
End of March 2017
30 June and 31 December
8 March and 8 September
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 0371 384 2432.
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 0371 384 2432 (overseas +44 (0)121 415 7047). Lines are open from 8.30am to 5.30pm Monday to Friday.
Changes of name or address must be notified in writing to the Registrar.
SEDOL CODES FOR ORDINARY SHARES AND DEBENTURE STOCKS
Ordinary shares
9.875% Debenture Stock 2017
5.5% Debenture Stock 2021
0882532
0882640
0530529
The ISIN Number for the ordinary shares is GB0008825324
TAX INFORMATION EXCHANGE
Local laws may require Temple Bar to disclose investor, holding and income data to UK and other tax authorities. This will only
happen where required by law.
TEMPLE BAR INVESTMENT TRUST SAVINGS SCHEME
Details of the Temple Bar Savings Scheme are set out on page 59 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.
55
GOVERNANCE REPORTFINANCIAL REPORTSHAREHOLDER INFORMATIONSTRATEGIC REPORTTEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015
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)
0371 384 2432 (shareholder helpline)*
0906 559 6025 (broker helpline)
*Lines open 8.30 a.m. to 5.30 p.m., Monday to Friday.
56
TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015 GLOSSARY OF TERMS
ABSOLUTE PERFORMANCE
The return that an asset achieves over a period of time, relative to the investment itself.
ANNUAL MANAGEMENT FEE
The annual consideration paid to an asset management company for managing clients’ investments.
ATTRIBUTION ANALYSIS
A performance-evaluation tool used to analyse the abilities of portfolio or fund managers. Attribution analysis
uncovers the impact of the manager's investment decisions with regard to overall investment policy, asset allocation,
security selection and activity.
BENCHMARK
A comparative performance index.
BORROWING
See gearing.
BOTTOM-UP STOCK SELECTION
An investment approach that concentrates on the analysis of individual companies and considers the company’s history,
management and potential as more important than macroeconomic trends.
CASH ALTERNATIVES/EQUIVALENT
Also known as cash equivalents. A class of investments considered relatively low-risk because of their high liquidity,
meaning they can be quickly converted into cash.
CONTRARIAN APPROACH
An investment style that goes against prevailing market trends. In very simple terms the approach is defined by buying
assets that are performing poorly and then selling when they perform well.
DEBENTURE STOCKS
A type of stock entitling the bearer to a certain fixed dividend at set periods of time.
DERIVATIVE INSTRUMENTS
An instrument whose value depends on the performance of an underlying security or rate which requires no initial
exchange of principal. Options, futures and swaps are all examples of derivatives.
DIVERSIFICATION
Holding a range of assets to reduce risk.
DIVIDEND
The portion of company net profits paid out to shareholders.
FIXED INTEREST
Fixed interest securities, also known as bonds, are loans usually taken out by a government or company which normally
pay a fixed rate of interest over a given time period, at the end of which the loan is repaid.
FTSE ALL-SHARE INDEX
A comparative index that tracks the market price of the UK's leading companies listed on the London Stock Exchange.
Covering around 900 companies, including investment trusts, the name FTSE is taken from the Financial Times (FT) and
the London Stock Exchange (SE), who are its joint owners.
FTSE 350 INDEX
A comparative index that tracks the market price of the UK's 350 largest companies, by market value, listed on the
London Stock Exchange.
GEARING
In accounting terms, gearing is the amount of a company’s total borrowings divided by its share capital. High gearing means
a proportionately large amount of debt, which may be considered more risky for equity holders. However, gearing also entails
tax advantages. In investment analysis, a highly geared company is one where small changes in sales produce big swings in
profits. Also known as leverage.
57
GOVERNANCE REPORTFINANCIAL REPORTSHAREHOLDER INFORMATIONSTRATEGIC REPORTTEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015 GLOSSARY OF TERMS CONTINUED
GILTS
A bond that is issued by the British government which is generally considered low risk.
HEDGING
A technique seeking to offset or minimise the exposure to a specific risk by entering an opposing position.
LIQUIDITY
The ease with which an asset can be sold at a reasonable price for cash.
MARKET CAPITALISATION
The total value of a company’s equity, calculated by the number of shares multiplied by their market price.
NET ASSET VALUE
In a company context, the net asset value describes total assets minus total liabilities.
ONGOING CHARGE
This figure includes the annual management fee and administrative costs but excludes any performance fee or portfolio
transaction costs. Ongoing charges may vary from year to year.
PEER COMPANIES
Companies that operate in the same industry sector and are of similar size.
RELATIVE PERFORMANCE
The return that an asset achieves over a period of time, compared to a benchmark.
SHARE BUYBACK
When a company buys some of its own shares in the market, which leads to a rise in the share price. It changes the company’s
debt-to-equity ratio and is a tax-efficient alternative to paying out dividends.
STOCK LENDING
Also known as securities lending. The act of loaning a stock, derivative, or other security to an investor or firm. It requires the
borrower to put up collateral, whether cash, security or a letter of credit. When a security is loaned, the title and the ownership
is also transferred to the borrower.
TOTAL RETURN
Captures both the capital appreciation/depreciation of an investment as well as the income generated over a holding period.
VALUATION
Determination of the value of a company's stock based on earnings and the market value of assets.
YIELD
A measure of the income return earned on an investment. In the case of a share the yield expresses the annual dividend
payment as the percentage of the market price of the share. In the case of a bond the running yield (or flat or current yield) is
the annual interest payable as a percentage of the current market price. The redemption yield (or yield to maturity) allows for
any gain or loss of capital which will be realised at the maturity date.
58
TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015 TEMPLE BAR INVESTMENT TRUST SAVINGS SCHEME
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
59
GOVERNANCE REPORTFINANCIAL REPORTSHAREHOLDER INFORMATIONSTRATEGIC REPORTTEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2015 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.
CONTENTS
STRATEGIC REPORT
GOVERNANCE REPORT
FINANCIAL REPORT
1 Summary of results
18 Directors
36 Statement of
SHAREHOLDER
INFORMATION
2 Chairman’s statement
19 Report of Directors
3 Ten year record
22 Report on directors’
4 Manager’s review
10 Attribution analysis
11 Overview of strategy
16 Portfolio of investments
remuneration
24 Corporate governance
27 Report of the audit
committee
29 Statement of directors’
responsibilities
30 Independent auditor’s
report
Comprehensive Income
51 Notice of meeting
37 Statement of Changes
in Equity
38 Statement of Financial
Position
39 Statement of
Cash Flows
40 Notes to the Financial
Statements
55 Useful information
for shareholders
56 Management and
administration
57 Glossary of terms
59 Temple Bar Investment
Trust Savings Scheme
TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 2015
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ANNUAL REPORT & FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015