Temple Bar Investment Trust PLC Annual Report 2018

FY2018 Annual Report · Temple Bar Investment Trust PLC
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8

ANNUAL REPORT & FINANCIAL STATEMENTS  
FOR THE YEAR ENDED 31 DECEMBER 2018

 
 
 
 
 
 
 
 
 
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 Listed 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

17   Board of Directors

36   Statement of 

SHAREHOLDER 
INFORMATION

2  Chairman’s statement

18   Report of Directors

4   Manager’s review

21   Report on directors’ 

7   Ten year record

8   Attribution analysis

9   Overview of strategy

15   Portfolio of investments

remuneration

23   Corporate governance

26   Report of the audit 

committee

28   Statement of directors’ 

responsibilities

29   Independent auditor’s 

report

Comprehensive Income

52   Notice of meeting

37   Statement of Changes 

in Equity

38   Statement of Financial 

Position

39   Statement of  
Cash Flows

56   Useful information  
for shareholders

57   Alternative Investment 
Fund Managers (AIFM) 
Directive

58  Corporate information

40   Notes to the Financial 

58  Glossary of terms

Statements

TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 2018

Perivan Financial Print   252470

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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 with debt at book value*

Discount 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 ﬁ nal

Capital for the year ended 31 December

Capital return attributable to ordinary shareholders

Capital return attributable per ordinary share

 Gearing/(net cash) *†

Ongoing charges* ††

Total Returns for the year to 31 December 2018

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 2018

Yield (historic) on ordinary share price (1,146p)* ††† 

Yield on FTSE All-Share Index

2018
£000

2017
£000

%
change

 802,182

936,366

(14.3)%

1,199.56p

1,190.37p

1,146.00p

4.5%

3.7%

33,099

49.50p

46.72p

(138,091)

(206.50p)

 9.1%

0.47%

1,400.22p

1,386.92p

1,314.00p

6.2%

5.3%

28,958

43.30p

42.47p

54,989

82.23p

(3.0)%

0.49%

(14.3)%

(14.2)%

(12.8)%

1   4.3%

1   4.3%

10.0%

(9.7)%

(11.2 )%

(9. 5)%

(9.5)%

2.7%

 3.8%

4.5%

*   Alternative Performance Measures – See glossary of terms on page 5   8 for deﬁ nition and more information.
†  
 Deﬁ ned as shareholders’ funds divided by total assets less current liabilities and cash or cash equivalents (including gilt holdings)  expressed as a percentage.
††   Deﬁ ned 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 ﬁ nal dividend for 2017.

BENCHMARK
Performance is measured 
against the FTSE All-Share Index.

CAPITAL STRUCTURE

Ordinary Shares  

5.5% Debenture Stock 2021  

66,872,765

£38,000,000

4.05% Private Placement Loan 2028  

£50,000,000

2.99% Private Placement Loan 2047 

£25,000,000

VOTING STRUCTURE

Ordinary shares 100%

TOTAL ASSETS LESS 

CURRENT LIABILITIES

£916,153,000

TOTAL EQUITY*

£802,182,000

MARKET CAPITALISATION

£766,362,000 

* With debenture and loan stocks at book value

TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 201 8

1

 
 
 
 
CHAIRMAN’S STATEMENT

The 35th consecutive year in which the Company has raised its annual dividend 
payment. 

PERFORMANCE

I am delighted to present my ﬁ rst annual statement as 
Chairman of the Company. Firstly, I must reiterate my thanks 
to my predecessor, John Reeve, for his diligent stewardship 
over the 26 year period that he served on the Board. In 
his last report to shareholders John commented on the 
protracted timescale in which the Value investing style had 
been out of favour relative to other styles, suggesting that 
while there had been brief periods during which the tide 
appeared to be turning in favour of Value those rallies had 
generally been fairly short lived. This theme continued into 
2018, causing a negative impact on the short to near term 
performance of Temple Bar compared with its nominated 
benchmark index. During the year the total return on the 
net assets of Temple Bar was -11.2 %, underperforming the 
total return of the FTSE All Share Index of -9.5%. The Board 
continues to attach greater signiﬁ cance to the longer term 
performance and in this context I am pleased to report that 
on the same basis Temple Bar continues to outperform its 
benchmark over  ten year s, as demonstrated by the chart on 
page 11.

The Manager’s Review on pages 4 to 7 sets out some of the 
main themes which drove both portfolio construction and 
performance during the year, including comments on some of 
the positive and negative contributors to performance at an 
individual stock level.

DIVIDEND

There have been three interim dividend payments during 
the year each of 8.75p per share and the directors are now 
recommending a ﬁ nal dividend payment for the year ended 
31 December 2018 of 20.47p per share to be paid on 29 March 
2019 to those shareholders on the register as at 8 March 
2019. The ex-dividend date for this payment is 7 March 2019. 
If approved this would give an increase in the total dividend 
payment for the year of 10.0%. This signiﬁ cant increase in 
the dividend is possible due to the accretion to revenue 
reserves in recent years and the availability of income in the 
current year. This will be the 35th consecutive year in which 
the Company has raised its annual dividend payment. The 
Board is proud of the Company’s record of generating long 
term dividend growth, such consistency being reﬂ ected in 
Temple Bar’s status as one of The Association of Investment 
Companies’ ‘Dividend Heroes’. 

GEARING

In recent years the Company’s ﬁ xed long term borrowings have 
largely been offset by a fairly high cash or near cash position 
on the portfolio pending the emergence of attractively priced 
investment opportunities. However, in the year under review 
our investment manager identiﬁ ed an increasing number of 
such opportunities into which he has invested a signiﬁ cant 
proportion of that cash/near cash position. As a consequence, 
at the year end , gearing (calculated net of cash and related 
liquid assets, including our investment in a UK short dated gilt) 
increased to  9.1%.

The higher investment level at the year-end supports the 
Board’s decision in 2017 to replace the expensive £25m 9.875% 
debenture with an additional private placement loan in the 
same amount but with a much more attractive coupon of 2.99%. 
An important factor in taking out this replacement loan was to 
secure attractive ﬁ xed rate funding for the purposes of pursuing 
the Company’s investment objectives over a 30 year period.

THE BOARD

As stated above, John Reeve retired as Chairman in May 2018 
and I am honoured  to have been chosen as his successor. We 
were very sorry to lose the services of Nick Lyons as a director 
in August, due to time pressures from his new commitments 
elsewhere. As part of the orderly transition and refreshment of 
the Board to which John referred in his last statement, June de 
Moller will be retiring at the AGM and will not, therefore, be 
seeking re-election. We are extremely grateful to June for the 
valuable insights that she has provided during her 12 years on 
the Board and wish her well for the future. In order to maintain 
continuity through this refreshment process, Richard Jewson 
has kindly agreed to remain on the Board, but will stand down 
at some point during the current year. It is expected that there 
will be two new appointments to the Board in the coming 
months, at least one of whom will be female.

2

TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 2018

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Our preference  is to focus on individual company’s ﬁ nancial strength and 
performance rather than seek to predict the direction of markets.

Every year the Board undertakes a thorough evaluation of 
each director, including myself as Chairman. In line with best 
practice in this regard, all directors are subject to annual re-
election by shareholders. 

PORTFOLIO MANAGEMENT RESPONSIBILITIES

Shareholders will of course be aware that Alastair Mundy 
has managed the Temple Bar portfolio for many years. 
What might not be apparent, though, is that Alastair has 
behind him a large group of analysts in Investec Asset 
Management’s UK Value team working hard in evaluating 
numerous investment opportunities. The Board believes that 
it is now appropriate more overtly to recognise this situation 
and to put it on a more formal footing, so it has been agreed 
that Peter Lowery will be appointed as the Company’s 
deputy portfolio manager with immediate effect. Peter 
joined IAM in 2003 and has worked closely with Alastair on 
matters related to Temple Bar ever since.

SHARE CAPITAL MANAGEMENT

Temple Bar’s shares traded at a small discount throughout 
most of the year and at the year end the discount stood at 
3.7%. The Board is prepared to undertake share buy backs 
if the discount widens both in absolute terms and relative to 
the Company’s peer group. While no share repurchases took 
place during the year, the Board nonetheless 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.

PROPOSED CHANGE TO INVESTMENT OBJECTIVES 
AND POLICY

 At its strategy session in September 2018 the Board 
conducted a thorough review of the Company’s investment 
objectives and policy. As a consequence of this review a few 
changes to this policy are being proposed. These are set out 
on page  9 together with an explanation of the reasons why 
the changes are believed to be beneﬁ cial.

The Board is therefore seeking shareholder approval at the 
AGM to amend the Company’s investment objectives and 
policy to incorporate these changes which, if approved, will 
take effect immediately following the AGM. 

The Board takes a long term, stewardship approach to the 
management of its assets and this is also the approach of its 
fund manager, Investec Asset Management. In general, this 
means that where an investee company poses challenging 
issues on an ethical or governance front, the manager will 
engage with company management over the long haul to 
improve the situation.

In addition, the Board is actively considering whether there 
are some stocks whose very business model is arguably 
inherently unethical, even when legal, and whether the 
Trust should seek to proﬁ t from opportunities offered 
in such areas. These are stocks whose product is both 

harmful to humans and addictive in nature, undermining 
the autonomous choice of the consumer to decide if he/she 
wishes to harm him/herself in this manner, and the product 
offers no signiﬁ cant beneﬁ t to consumer welfare to justify 
the harm. Clearly, which stocks fall foul of these criteria can 
change over time. At present this approach would lead to 
the exclusion of tobacco stocks from portfolio construction.

During the coming months the Board will be canvassing 
shareholder opinion on this matter and would welcome 
feedback from all shareholders.

ANNUAL GENERAL MEETING

The AGM this year will be held at 30 Gresham Street, 
London EC2V 7QP on Thursday 28 March 2019 at 11am. 
Please note that this is a different building in Gresham Street 
and not where the AGM was held last year.

In addition to the formal business of the meeting the 
portfolio manager will, as usual, make a presentation 
reviewing the past year and commenting on the outlook. 
He will also be available to answer questions , as will the 
directors. Shareholders who are unable to attend are 
encouraged to use their proxy votes.

 OUTLOOK

So far this year there have been encouraging signs that 
the anti-Value stance of the market might be beginning to 
reverse and performance in January was impressive as a 
result. It is still, however, very early days.

We continue to face several political and economic risks 
over the short to medium term, not least the ramiﬁ cations 
of Brexit negotiations. But haven’t there always been 
uncertainties of some description? Temple Bar has faced 
many of these over its long life and successfully negotiated 
them to provide good long term returns to its shareholders 
by exploiting value opportunities arising from the resultant 
dislocations. A return to more volatile market conditions, 
while undoubtedly offering a bumpy ride, is likely to play to 
Temple Bar’s strengths.

Our preference – stated on many occasions – is to focus on 
an individual company’s ﬁ nancial strength and performance 
rather than seek to predict the direction of markets. Through 
maintaining our approach of investing in a diversiﬁ ed 
portfolio of mainly UK domiciled companies and with strict 
adherence to a Value based approach we believe that 
Temple Bar can continue to prosper, notwithstanding future 
uncertainties. Furthermore, Temple Bar is well positioned to 
maintain its policy of paying a high and growing dividend for 
the foreseeable future.

Arthur Copple
Chairman

2 1 February 2019

TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 201 8

3

 
 
 
 
MANAGER’S REVIEW

2018 was the ﬁ rst year post the Global Financial Crisis (GFC) 
   in which investors started fretting.  So inclined they found 
plenty to concern them:

i) 

ii) 

 A Federal Reserve apparently happy to raise rates  in the 
face of falling markets

 The beginning of the end of Quantitative Easing (QE) with 
the consequent risk of upward pressure on bond yields

iii)  Increasing trade wars between the US and China 

iv)  A slowdown in Chinese economic growth

v) 

 Increasing worldwide corporate and government debt 
burden – as interest rates started to rise

vi)   The risk  that after a very long period of economic 
recovery, the US economy was on borrowed time

vii)   Indications that labour costs were increasing and eating 

into corporate proﬁ tability

viii)  And all this against a backdrop of the world’s biggest 
equity market, the US,  at historically high valuations

And for UK centric investors: 

ix)   A concern that Brexit could cause a recession in the UK 

economy

Whereas a year ago we  thought markets were pricing in a 
perfect scenario, that is clearly no longer the case. Stocks 
worldwide  ended the year far more rationally priced.

Equity market weakness provided opportunities to invest
the cash that has long been burning a hole in our pocket
(a subject to which we will return later). As often happens,
we would have been better waiting a little longer. However, 
bells are not rung at the bottom. 

For some time w e have expressed frustration over the 
difﬁ culties facing value investors . This remained the case 
in 2018 with  continued investor preference for stocks 
exhibiting excellent ﬁ nancial characteristics (thus earning 
themselves the moniker ‘quality’)  . Whilst we understand 
investors’ appetite for companies  promising durable long-
term cashﬂ ows, we have two long-held concerns. Firstly, we 
believe that much ‘quality’ fails to deliver over the long-term 
– as competitive advantages are eroded – and secondly that 
low bond yields are encouraging investors to overpay for 
these stocks.

Perhaps we should refrain from throwing stones from our 
glasshouse. There are, after all, many commentators who 
believe the merits of value investing have been over-stated 
and that cheap stocks are usually cheap for a reason. And, 
they add, with so much technology driven change in the 
world, these stocks are particularly vulnerable as their 
business models become increasingly challenged. 

We remain believers. Value investing has worked over the 
long-term – perhaps primarily for psychological reasons. 
Investors typically extrapolate  recent experience and this 
often drives share prices to unjustiﬁ ed extremes . Currently 
we believe we are witnessing the consequences of this 
dynamic in very low bond yields, very low valuations of value 
stocks and very high valuations for ‘quality’ stocks.  

ALASTAIR MUNDY 

Alastair, who has been the portfolio manager of Temple 
Bar since 2002, 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 PLC
Annual Report & Financial Statements for the year ended 31 December 2018

 
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There have been few times in the last four decades when UK equity 
portfolios have been as divergently positioned as they are currently.

THE UK EQUITY MARKET AND THE BREXIT 
ELEPHANT IN THE ROOM

There have been few times in the last four decades when 
UK equity portfolios have been as divergently positioned 
as they are currently. The two deep UK recessions of the 
1980s and 1990s split investors into two camps and this was 
repeated in the late 1990s as technology shares became 
‘must have’ holdings in many investors’ eyes, leaving ‘old 
economy’ investors (rightly) claiming  their companies had 
a far rosier future than their extraordinarily low valuations 
suggested. This difference of opinion was repeated in 
the mid 2000s when many investors i) purchased   stocks 
most exposed to emerging economies and ii) generally 
embraced high levels of debt in companies. Contrarians 
found value in the less exciting, more defensive and 
cheaper parts of the market.

In this cycle the camps are divided between quality stocks 
and cheap stocks, a lot of which are exposed to the 
vagaries of the UK economy. With Brexit looming, many 
investors are simply reluctant to risk stepping into the 
unknown. 

It would be wrong however to blame all the ills of UK 
domestic stocks on Brexit. A second important factor 
has been concern  over industry disruption – particularly 
affecting retailers as they commit more capital to their 
on-line businesses whilst continuing to support their 
landed businesses. Increasingly onerous regulation has 
also  hampered several UK companies over the last few 
years with speciﬁ c focus on vulnerable and loyal customers 
(who  are often  the most proﬁ table). This has particularly hit 
some companies within the banking, insurance, utility and 
gambling industries.

Our view on Brexit has not changed:

1. 

 It is impossible to add anything of analytical value on the 
subject, especially given the uncertainty (at the time of 
writing) surrounding what type of Brexit (if any) occurs…

2.   …but investors have probably, to some extent, allowed 
their political beliefs to affect their investment decisions.

3.   If Brexit is ‘bad’, the worst economic effects will 

probably be earlier rather than later. But unlike the GFC, 
at least the authorities should be prepared and, one 
assumes, have a plan.

4.   The UK economy will keep spinning but probably a bit 

slower than if Brexit had not occurred.

5.   A negative outcome, i.e. a UK recession, seems priced 

into a number of stocks already.

6.   A more signiﬁ cant worry for UK centric stocks is the 

prospect of a left-wing Labour government. It seems 
rather too early in the electoral cycle to be considering 
this outcome unless there is a surprise early election.

WHAT WORKED DURING 2018?

Although the portfolio had a relatively low number 
of holdings it is somewhat anomalous that few stocks 
contributed signiﬁ cantly either positively or negatively to 
performance.

The stock which contributed most to performance after a 
weak 2017 was GlaxoSmithKline. This was more due to its 
merits as a cheap defensive stock than good operational 
performance. Towards the end of the year the company was 
busy restructuring its portfolio – selling its Horlicks brand 
and reinvesting the proceeds and more to fund what the 
market felt was an expensive oncology acquisition. This was 
swiftly followed by an announcement that it was placing 
its Consumer Healthcare business into a joint venture with 

PORTFOLIO DISTRIBUTION %

Temple Bar

portfolio 

FTSE 

All-Share Index 

1

2

3

4

5

6

7

8

9

10

11

12

13

Financials

Consumer Services

Industrials

Oil & Gas

Health Care

Basic Materials

Utilities

Physical Gold and Silver

Consumer Goods

Telecommunications

Technology

Total Equities

Fixed Interest

Cash

%

24.4

13.8

24.0

11.9

6.8

2.7

1.5

3.1

5.6

2.1

–

95.9

2.8

1.3

100.00

%

26.2

11.5

10.9

14.3

8.5

7.8

2.8

–

13.9

3.1

1.0

100.00

9

8

7

5

6

4

13

11

10

12

1

2

3

TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 201 8

5

 
 
 
 
MANAGER’S REVIEW CONTINUED

Rather than cursing our inability to time the bottom we prefer to take 
advantage of what we see as irrational selling to increase our holdings 
and thus reduce our average cost price.

Pﬁ zer’s similar business with an  intention to spin-off the joint 
venture into a separate entity in 2022. 

WHAT DIDN’T WORK DURING 2018?

SIG had been a strong performer in 2017 which encouraged 
us to reduce our holding. However, we didn’t foresee quite 
how weak it would be in 2018. We believe new management 
has delivered on its promise to simplify the business and 
although debt reduction has been slower than expected, the 
company is far healthier than a few years ago. Although the 
insulation materials market has been challenging in both the 
UK and mainland Europe, operational improvements have 
kept earnings estimates stable. We believe the company 
is modestly valued on current earnings and very cheap if 
margins return to historic levels and consequently added to 
the position throughout the year.

THE OUT OF FAVOUR UNIVERSE

Within the UK market our universe of out-of-favour stocks 
increased quite signiﬁ cantly during the year. This resulted in a 
greater number of new holdings than in a typical year. 

If a stock is both out of favour and cheap on our assessment 
of normalised earnings then we look for good reasons not to 
own it. These often fall into one or more of four buckets – if 
the company has an inappropriate level of debt; if corporate 
governance (including capital allocation) is poor; if the 
business is overly complex or excessively dependent on 
a variable which is both out of the company’s control and 
appears highly priced; and if the business is under extreme 
pressure from structural changes in the industry.

Admittedly, these decisions are highly subjective. For 
example, many investors would argue that Marks & Spencer’s 
issues are largely structural as consumers move away from 
the high street and to on-line. There is clearly some truth 
in this, but sometimes the narrative around a company is 
too simple. Even the Marks & Spencer management admits 
many of  its problems have been self-inﬂ icted and we believe 
self-help operational improvements are just as, if not more, 
important for the equity story as the structural issues 
affecting the industry.

PORTFOLIO ACTIVITY

During the last year our strategy has been (ﬁ nally) to spend 
some of the cash we have been holding and, as usual, to 
switch some winners into underperformers. We disposed 
of two very long-term winners, Games Workshop and 
Computacenter. Direct Line was sold following strong 
performance since its IPO and we were very lucky in selling 
Royal Mail Group part way through the year as ﬁ rst signs 
that the operation recovery was slowing became apparent. 
We also capitulated on Centrica (believing we had more 
straightforward and cheaper opportunities elsewhere) and 
Signet Jewelers (new management having made some 
puzzling capital allocation decisions ).

The sales proceeds were partially re-invested in existing 
holdings at depressed prices (although unfortunately they 
were in a number of cases even more depressed by year-end). 
This covered acquisitions such as Travis Perkins, Forterra, 
easyJet, SIG, Kingﬁ sher, Marks & Spencer, BT, Aggreko, Land 
Securities, Countrywide, Dixons Carphone and Tesco.

We also purchased new  positions in  eight stocks: Crest 
Nicholson, McCarthy & Stone, Headlam, TP Icap,  Delphi 
Technologies, Superdry, Hipgnosis Song Funds, and Capita. 

We accept that each of these companies has some challenges 
be it on-line competition, increasing industry capacity, 
industry disruption, weak demand or exposure to prices 
beyond their control. However, these issues are common 
to most companies. We make our purchases after these 
challenges become apparent - and valuations have fallen – 
and we hold them as management attempts to work through 
them. To us, that remains a superior bet to paying a high 
valuation for a seemingly perfect company. 

A common theme in our investee companies is previous 
management which has made sub-optimal decisions and 
consequently added to the company’s difﬁ culties. For 
example, retirement home builder McCarthy & Stone’s 
management was too focussed on meeting the high-growth 
expectations promised to investors at IPO at the cost of 
ensuring its developments were well located, efﬁ ciently 
constructed and properly marketed; Countrywide’s 
management   removed a lot of entrepreneurial decision 
making from estate agency branches which impacted on 
market share in a falling market and Capita’s management 
was  obsessed on growth in new sectors in preference to 
optimising performance in the core business.  

New management is more willing to embrace the difﬁ cult 
issues, streamline the business and, perhaps most positively, 
offer a new perspective. Expectations are so low for these 
companies that it would take little in the way of good news to 
impress the market. In other words, these stocks seem to be 
priced for a far from certain failure. 

Even when we ﬁ nd sympathy for our approach we are 
 questioned whether we really need to buy these stocks so 
early (i.e. on the way down) rather than awaiting validation 
of the recovery. We have asked ourselves this  a lot, but our 
conclusion has not really changed. Often the shares can 
bounce signiﬁ cantly before any such validation and one is left 
paying a higher price for the same facts. Rather than cursing 
our inability to time the bottom we prefer to take advantage 
of what we see as irrational selling to increase our holdings 
and thus reduce our average cost price. 

6

TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 2018

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E
R
N
A
N
C
E
R
E
P
O
R
T

I

I

F
N
A
N
C
A
L
R
E
P
O
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T

S
H
A
R
E
H
O
L
D
E
R

I

N
F
O
R
M
A
T
I
O
N

Following activity over the year, the portfolio is more fully invested than it 
has been for some time.

PORTFOLIO POSITIONING

Following activity over the year, the portfolio is more fully 
invested than it has been for some time. It is also heavily 
weighted towards ﬁ nancials (particularly banks) , consumer 
stocks (particularly those in food and clothing retailing) 
and   industrials   (through large holdings in companies 
exposed to  repair, maintenance and housing improvement) . 
The portfolio stands at a signiﬁ cant discount to our 
assessment of its true worth  – driven by investor dislike of 
both UK centric stocks  and value stocks in general.  6% of 
the portfolio is allocated to precious metal investments 
(see  below).

OUTLOOK

Investors are very skittish currently and as we outlined at 
the start of this review have much to be skittish about. With 
global economic growth having probably peaked, Central 
Banks have apparently missed the small opportunity 
they had to return rates closer to historical levels. The 
importance of this will become apparent the next time they 
wish to relax monetary policy. 

Come the next slowdown we may learn whether 
conventional interest rates will make a meaningful 
economic impact and, if not, whether Central Banks will 
impose negative interest rates or instead return to QE. 
Whilst more QE may be implemented, it would probably be 
considered by many as excessively risky or likely to beneﬁ t 
ﬁ nancial markets more than the real economy. 

Our central thesis is that despite (or perhaps because of) 
its intuitive attractions it is dangerous to build a portfolio 
structured for a recessionary outcome. This is partially 
because the valuations of stocks deemed attractive in those 
conditions are already quite high but also as we believe 
authorities would use ‘shock and awe’ tactics in such a 
scenario, preferring to risk inﬂ ation ahead of negative 
economic growth. 

 We believe policymakers have made life very difﬁ cult for 
themselves and that markets could react quite violently 
if there are perceived policy mistakes. This informs our 
decision to allocate 6% of the portfolio to precious metals. 
This represents a bet against the chances of central bankers 
(and politicians) pleasing everyone.

We think an upward sloping yield curve – a situation in 
which investors demand higher yields on long-dated bonds 
than short-dated bonds – is a likely conclusion to this cycle 
with short-term rates being kept low to allow debt to be 
ﬁ nanced and rates rising at the longer end on the back of 
increased bond issuance and inﬂ ationary concerns.

If investors start adjusting to a rising bond yield backdrop 
(after more than three decades of falling yields) this could 
catalyse signiﬁ cant market activity. Low bond yields have 
been used to justify higher equity valuations so it seems 
only right to assume higher bond yields could bring about 
lower valuations for many stocks.

Consequently, expansionary ﬁ scal policy could become 
increasingly relevant – even though government debt is 
quite high already – especially as the trend to populism 
grows worldwide.

Alastair Mundy
For Investec Fund Managers Limited

2 1 February 2019

TEN YEAR RECORD

Total assets less 
current liabilities (£000)

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

553,392

603,444

585,480

664,648

905,775

913,198

869,535

968,790 1,050,285

916,153

Net assets (£000)

489,988

540,022

522,040

601,191

792,070

799,444

755,755

879,940

936,366

802,182

Net assets per 
ordinary share (pence)

Revenue return to ordinary 
shareholders (£000)

Revenue return 
per share (pence)

Dividends per share* (pence)

831.03

915.89

874.42

992.86 1,250.84 1,195.47 1,130.14 1,315.84 1,400.22

1,199.56

20,017

18,915

22,552

24,873

22,274

25,782

26,663

29,253

28,958

33,099

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

43.74

40.45

43.30

42.47

49.50

46.72

* Interim(s) and proposed ﬁ nal for the year

TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 201 8

7

 
 
 
 
 
ATTRIBUTION ANALYSIS

By stocks held in the portfolio
Source: Factset

TOP TEN CONTRIBUTORS

BOTTOM TEN CONTRIBUTORS

%
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9
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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

%
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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.

* indicates company was not held

8

TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 2018

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
I

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G
O
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O
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D
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I

N
F
O
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M
A
T
I
O
N

OVERVIEW OF STRATEGY

The directors present the strategic report for the Company 
for the year ended 31 December 2018.

sector of 35% be applied irrespective of the benchmark 
weighting. 

The strategic report is designed to help shareholders assess 
how the directors have performed their duty to promote the 
success of the Company during the year under review.

BUSINESS OF THE COMPANY

Temple Bar Investment Trust PLC was incorporated 
in England and Wales in 1926 with the registered 
number 214601.

The Company carries on business as an investment company 
under Section 833 of the Companies Act 2006 and has been 
approved by HM Revenue & Customs as an investment trust in 
accordance with Section 1158 of the Corporation Tax Act 2010.

The Company’s principal business activity of investment 
management is sub-contracted to Investec Fund Managers 
Limited (‘IFM’), 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 3  6.

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 Listed 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.

As a result of a thorough review of the Company’s current 
investment policies conducted by the Board during the year, 
the following changes are being proposed, subject to the 
passing of an ordinary resolution at the AGM:

(cid:129)  The Board believes that the present limit of 20% of the 

portfolio that may be held in listed equities in developed 
economies is unduly restrictive. The growing globalisation 
of economies and markets means that in certain cases 
the most attractive investment opportunities can be 
found outside the UK. Furthermore, some overseas 
listed securities may have a higher level of economic 
exposure to the UK economy than companies that 
are listed in London but in practice have little or no 
UK exposure. Accordingly, the Board is proposing to 
increase the maximum permissible investment in non-UK 
securities from 20% to 30% and to remove the ‘developed 
economies’ limitation, but to retain a maximum of 10% 
in emerging markets. The new policy will therefore 
specify that ‘up to 30% of the portfolio may be held in 
listed international securities , subject to a maximum 10% 
exposure to emerging markets’. For the sake of clarity, it 
should be stressed that there is no current intention to 
increase the portfolio’s overseas exposure to this level. 

(cid:129) 

It is proposed that the requirement for a maximum 
exposure to a speciﬁ c industrial or commercial sector of 
25% should be amended . The Board believes that    this 
rule is unduly restrictive, particularly as certain industrial 
or commercial sectors have in the recent past exceeded 
25% of the benchmark index from time to time. Therefore 
it is proposed that a maximum exposure to any one 

(cid:129) 

In keeping with the Board’s preference for the portfolio to 
be managed in a less constrained manner it is proposed 
that the reference to the Company maintaining a 
diversiﬁ ed portfolio, typically comprising 70-80 holdings, 
be amended to 30-50 holdings. Over the past decade the 
portfolio has consistently held fewer holdings than the 
‘typical’ range and therefore the Board feels that it would 
be appropriate for the stated investment objective more 
accurately to reﬂ ect the likelihood of a more concentrated 
portfolio for the foreseeable future. 

(cid:129)  The portfolio is not managed with respect to the 

speciﬁ ed target portfolio yield of between 120-140% of 
that of the benchmark index and hence this objective is 
 no longer relevant. Accordingly, it is proposed that this 
target be removed. The Board will, however, continue to 
propose a progressive dividend policy.

The full text of the Company’s current and proposed 
investment policies are set out below.

The proposed amendments, which constitute a material 
change of the Company’s investment policy, require the 
approval of the holders of the ordinary shares at the 
forthcoming annual general meeting under the Listing Rules.

The ordinary resolution numbered 9 to be proposed at the 
forthcoming annual general meeting will, if passed, approve 
the adoption of the new investment policy set out below.

The Board considers it to be in the best interests of the 
Company and the Company’s shareholders as a whole 
that the resolution numbered 9 to amend the Company’s 
investment policy be passed.

Existing investment policy
The Company’s current investment policy is as follows:

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 speciﬁ c 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 diversiﬁ ed 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:

(cid:129)  Achieving a portfolio yield of between 120-140% 

of that of the FTSE All-Share Index.

TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 201 8

9

 
 
 
 
OVERVIEW OF STRATEGY CONTINUED

(cid:129)  Stocks of companies that are out of favour and whose 

share prices do not match the Manager’s assessment of 
their longer term value.

From time to time ﬁ xed 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 take advantage of 
speciﬁ c investment opportunities.

Liquidity and borrowings are managed with the aim of 
increasing returns to shareholders. The Company’s net gearing 
range may ﬂ uctuate 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 diversiﬁ cation of holdings, 
investment limits set by the Board and appropriate ﬁ nancial 
and other controls relating to the administration of assets.

Proposed amendments to the investment policy
The Company’s proposed amended investment policy 
would be as follows: 

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 
30% of the portfolio may be held in listed international 
equities, subject to a maximum 10% exposure to 
emerging markets. 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 speciﬁ c sector of 35%, 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 diversiﬁ ed portfolio of 
investments, typically comprising 30-50 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 
stocks of companies that are out of favour and whose 
share prices do not match the Manager’s assessment of 
their longer term value.

From time to time ﬁ xed 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 take advantage of speciﬁ c 
investment opportunities.

Liquidity and borrowings are managed with the aim of 
increasing returns to shareholders. The Company’s net 
gearing range may ﬂ uctuate 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 diversiﬁ cation of holdings, 
investment limits set by the Board and appropriate ﬁ nancial 
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 proﬁ t 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 signiﬁ cant 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 sufﬁ cient 
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 15% of the portfolio value.

The approach to stock selection and portfolio construction is 
driven by four core beliefs:

1. 

 Markets overreact to news on the upside and the 
downside. The Manager aims to be sceptical of the crowd 
and aware of investor psychology, which often causes 
overvaluation of those stocks that are deemed to have 
good prospects and an undervaluation of those which are 
out of favour.

10

TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 2018

 
 
 
2.   There are few companies which sustain below normal 

KEY PERFORMANCE INDICATORS

proﬁ ts 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 proﬁ ts over the longer term. Such proﬁ ts 
tend to be competed or regulated away.

3.   Fundamental valuation is the key determinant of share 
price performance over the long term. In other words 
‘cheap’ stocks will outperform ‘expensive’ stocks.

4.   Diversiﬁ cation is an important control. Particular 
companies or sectors can be out of favour for a 
considerable time.

PERFORMANCE

In the year to 31 December 2018 the net asset value total 
return of the Company was -11.2 % compared with a total 
return of the Company’s benchmark index of -9.5%. The 
effect of removing gearing from the performance calculation 
is shown in the following graph of investment performance 
over a  ten year period compared with the FTSE All-Share 
Index. The Chairman’s Statement on pages 2 to  3 and 
the Manager’s Review on pages  4 to  7 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  10 year performance

320

300

280

260

240

220

200

180

160

140

120

100

80

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Temple Bar – gross assets, excluding effects of gearing and associated costs
FTSE All-Share Index – total return

Sources: Thomson Reuters Datastream and IAM

I

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The 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:

(cid:129)  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;

(cid:129)  Discount/premium on net asset value;

(cid:129)  Earnings and dividends per share; and

(cid:129)  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 -11.2 % compared with a 
total return of -9.5% by the FTSE All-Share Index. The  ten 
year net asset value total return performance is shown below.

Net asset value total return

340

320

300

280

260

240

220

200

180

160

140

120

100

80

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Source: Thomson Reuters Datastream

Temple Bar share price – total return
Temple Bar NAV – total return
FTSE All-Share Index – total return

The Board also monitors Temple Bar’s performance relative 
to its peer group over various time periods and believes that 
this is satisfactory.

TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 201 8

11

 
 
 
 
OVERVIEW OF STRATEGY CONTINUED

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 5.7%. This compares with an average discount of 4.7% in 
the previous year. The Board and Manager closely monitor 
both movements in the Company’s share price and signiﬁ cant 
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 both the 
buy back of shares and their issuance which can assist in the 
management of the discount or premium.

(Discount)/premium to net asset value 
(excluding current year revenue)

8%

7%

6%

5%

4%

3%

2%

1%

0%

-1%

-2%

-3%

-4%

-5%

-6%

-7%

-8%

-9%

-10%

-11%

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Cum income NAV, debt at market value

Source: Morningstar

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. The Manager 
aims to maximise total returns from the portfolio.

The ﬁ nal dividend recommended for the year is 20.47p per 
ordinary share which brings the total for the year to 46.72p 
per ordinary share, an increase of 10.0% from the prior year. 
This will be the 35th consecutive year in which the Company 
has increased the overall level of its dividend payment.

150

140

130

120

110

100

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Temple Bar dividend

Retail Prices Index

Source: Bloomberg

10 Year Comparative Dividend Growth

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 2018 were 
0.47% (2017: 0.49%). 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.

12

TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 2018

 
 
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PRINCIPAL RISKS AND UNCERTAINTIES

With the assistance of the Manager the Board has drawn up 
a risk matrix which identiﬁ es the key risks to the Company. 
The Board has carried out a robust assessment of these risks 
which includes those that would threaten the Company’s 
business model, future performance, solvency or liquidity. 
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 .   The Board manages such risks 
by diversiﬁ cation 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 proﬁ le 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 September 2018.

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 
2018 the Company had distributable revenue reserves of 
£37.3 million before declaration of the ﬁ nal dividend 
for 2018 of £13.7 million. Furthermore, income risk is 
mitigated by the Company’s ability to distribute realised 
capital gains if required to meet any revenue shortfall.

Share price risk
The Company’s share price and premium or discount to 
NAV are monitored by the Manager and considered by the 
Board on a regular basis. 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.  

 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 qualiﬁ cation 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 ﬁ ned 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 satisﬁ ed that 
they are able to provide an appropriate service in this regard.

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 ﬁ nancial 
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 2 3.

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 ﬁ nancial 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 ﬁ ve 
years is appropriate given the nature of the Company and the 
inherent uncertainties of looking beyond a longer time period. 
The directors believe that a ﬁ ve year period appropriately 
reﬂ ects 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 
signiﬁ cant change to the current principal risks and to the 
adequacy of the mitigating controls in place.

 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  above. Particular 
scrutiny was given to the impact of a signiﬁ cant fall in 
 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 long dated ﬁ xed 
rate borrowings, 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. 

TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 201 8

13

 
 
 
 
OVERVIEW OF STRATEGY CONTINUED

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 ﬁ ve years 
from the date of this Report. 

MODERN SLAVERY ACT

Due to the nature of the Company’s business, being a 
company that does not offer goods and services to customers, 
the Board considers that it is not within the scope of the 
Modern Slavery Act 2015 because it has no turnover. The 
Company is therefore not required to make a slavery and 
human trafﬁ cking statement. In any event, the Board considers 
the Company’s supply chains, dealing predominantly with 
professional advisers and service providers in the ﬁ nancial 
services industry, to be low risk in relation to this matter.

GENDER DIVERSITY

At the year end there were three 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 2 3.

GREENHOUSE GAS EMISSIONS

The Manager signed the Principles for Responsible 
Investment in 2008 and the UK Stewardship Code in 2010. 
It has carefully considered all global principles and focuses 
on ﬁ ve core principles to guide its stewardship role in 
representing its clients’ ownership rights. The Manager will:

(cid:129)  Disclose how it discharges its stewardship duties through 

publicly available policies and reporting.

(cid:129)  Address internal governance of effective stewardship 
including conﬂ icts of interest and potential obstacles.

(cid:129)  Support a long-term investment perspective by 

integrating, engaging, escalating and monitoring material 
Environmental, Social and Governance (ESG) issues.

(cid:129)  Exercise its ownership rights responsibly including 

engagement and voting rights.

(cid:129)  Act alongside other investors, where appropriate.

The Manager believes that the consideration of material 
ESG risks and opportunities allows it to better understand 
risks and identify companies that are better placed to create 
long-term shareholder value. It is an inherent characteristic 
of value investing to look at any upside, including ESG 
considerations, which could enable a company to improve its 
current low valuation. This would often involve issues related 
to governance or management. Any ESG issues identiﬁ ed 
will be incorporated into the investment team’s ﬁ nal analysis, 
and any impact that these issues may have on valuation will 
be considered. The Manager has a dedicated ESG team 
that works very closely with the investment team to provide 
support, guidance, training and in depth research across ESG 
integration and active ownership.

All the Company’s activities are outsourced to third parties. 
The Company therefore has no greenhouse gas emissions to 
report from its operations.

  The Manager’s Stewardship Policy and Ownership Policy & 
Proxy Guidelines are available on request from the Company 
Secretary or can be downloaded from its website.

BRIBERY ACT

The Company has a zero tolerance policy towards bribery 
and is committed to carrying out business fairly, honestly and 
openly. The Manager  also adopts a zero tolerance approach 
and ha s policies and procedures in place to prevent bribery.

CRIMINAL FINANCES ACT 2017

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 and the Manager’s 
Review on page  4.

The Company has a commitment to zero tolerance towards 
the criminal facilitation of tax evasion.

By order of the Board of Directors

Arthur Copple
Chairman
2 1 February 2019

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 embraces the concept of active stewardship 
and aims to preserve and grow the real purchasing power 
of the assets entrusted to them by clients over the long 
term. In fulﬁ lling this purpose, it assumes a stewardship role, 
including the effective exercising of clients’ ownership rights. 
It monitors, evaluates and if necessary, actively engages or 
withdraws investments with the aim of preserving or adding 
value to client portfolios.

14

TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 2018

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PORTFOLIO OF INVESTMENTS

INDUSTRY

PLACE OF 
PRIMARY LISTING

VALUATION OF 
HOLDING £000

% OF PORTFOLIO

1

2

GLAXOSMITHKLINE
GlaxoSmithKline is a global health care company focussing 
on pharmaceuticals, vaccines and consumer healthcare. 
 The company plans to separate into two companies: 
p harmaceuticals/vaccines and OTC by the end of 2022.

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 oil and gas exploration and production, 
reﬁ ning, distribution and marketing, petrochemicals, power 
generation and trading. 

3

CAPITA
Capita offers outsourcing services to both the private and 
public sector, mainly in the UK. After a few turbulent years it 
has strong turnaround potential.

4

5

6

7

8

9

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 oil and gas exploration and production, 
reﬁ ning, distribution and marketing, petrochemicals, power 
generation and trading. 

TRAVIS PERKINS
Travis Perkins is the UK’s largest product supplier to the 
building, construction and home improvement markets. 
Management plans to move away from plumbing and 
heating and consumer markets.

HSBC HOLDINGS
HSBC Holdings is one of the world’s largest banks. It 
operates four global businesses; retail banking and wealth 
management, commercial banking, global banking and 
markets and private banking. The company has been 
reducing exposure to peripheral areas and refocussing on 
under-managed core assets. Approximately 2/3 of pre-tax 
proﬁ ts are from Asia .

LLOYDS BANKING GROUP
Lloyds Banking Group operates across a wide range of UK 
centric banking activities including retail and commercial 
banking and insurance. We believe the UK banking sector 
is through the worst on regulation and that consequently 
investors should expect continued attractive dividend 
payments.

ROYAL BANK OF SCOTLAND
RBS operates across a wide range of banking activities 
including personal and corporate lending, capital markets, 
leasing, personal ﬁ nancial services and private banking. 
The majority of the bank’s assets are located in the UK. The 
company’s balance sheet is strong and  dividends have now 
been resumed.

BARCLAYS
Barclays has signiﬁ cant consumer, corporate and investment 
banking positions, particularly focussed on the UK and the 
US. Management has reduced the non-core part of the 
business and re-built capital strength. Signiﬁ cant efforts are 
being made to improve the proﬁ tability of the investment 
banking division.

10

GRAFTON GROUP
Grafton is a distributor of building products that operates 
across the UK and Ireland and also has a small Benelux 
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. UK proﬁ tability has been held 
back by disappointing spend on improvement of the UK 
housing stock but this spending should bounce back.

UK

 62,523 

6.9%

UK

 58,789 

6.5%

UK

 53,696 

5.9%

UK

 49,909 

5.5%

UK

 47,429 

5.2%

UK

 42,339 

4.7%

UK

 37,027 

4.1%

UK

 35,677 

3.9%

UK

 34,545 

3.8%

IRELAND

 34,467 

3.8%

Healthcare

Oil & Gas

Industrials

Oil & Gas

Industrials

Financials

Financials

Financials

Financials

Industrials

Top Ten Investments

  456,401  

 50.3%

TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 201 8

15

 
 
 
 
 PORTFOLIO OF INVESTMENTS CONTINUED

PLACE OF 
PRIMARY LISTING

VALUATION OF 
HOLDING £000

% OF 
PORTFOLIO

COMPANY
SIG

Tesco

UK Treasury 2% 2020

11

12

13

14 Marks & Spencer

15

16

17

18

19

20

BT Group

Forterra

Land Securities  Group

TP ICAP

 easy Jet

Citi group

Top Twenty Investments

21

22

Aggreko

Drax

23 McCarthy & Stone

24

CRH

25 Global X Silver Miners ETF

26

Kingﬁ sher

27 WM Morrison Supermarkets

28 Next

INDUSTRY

Industrials

Consumer Services

Fixed Interest

Consumer Services

Telecommunications

Industrials

Financials

Financials

Consumer Services

UK

UK

UK

UK

UK

UK

UK

UK

UK

Financials

USA

Industrials

Utilities

Consumer Goods

Industrials

Basic Materials

Consumer Services

Consumer Services

Consumer Services

UK

UK

UK

Ireland

USA

UK

UK

UK

29

30

ETFS Physical Silver

Physical Gold and Silver UK

VanEck Vectors Gold Miners ETF

Basic Materials

USA

Top Thirty Investments

31

Green REIT

32 Go Ahead

33

34

Headlam Group

Delphi Technologies

Financials

Ireland

Consumer Services

Consumer Goods

Consumer Goods

UK

UK

UK

35 Gold Bullion Securities ETF

Physical Gold and Silver UK

Sprott Physical Silver Trust

Physical Gold and Silver Canada

Crest Nicholson

Hipgnosis Songs Fund

Superdry

Dixons Carphone

Top Forty Investments

Chemring

Countrywide

Brown (N) Group

Avon Products

Bovis Homes

36

37

38

39

40

41

42

43

44

45

46

47

48

49

Aviva 2020 5.9021% FRN Perpetual

Fixed Interest

Lloyds Banking Group - preference 
shares

 Kin & Carta

Hochschild Mining

Financials

Industrials

Basic Materials

UK

UK

UK

UK

UK

Consumer Goods

Financials

Consumer Goods

Consumer Services

Industrials

Financials

Consumer Services

UK

UK

UK

UK

UK

UK

UK

Consumer Goods

USA

Consumer Goods

31,575 

31,194 

24,516 

20,930 

19,123 

18,499 

17,451 

17,396 

16,516 

15,863 

3. 6%

3. 5%

2.7%

2.3%

2.1%

2.0%

1.9%

1.9%

1.8%

1.8%

 669,464 

73.9%

15,302

14,107 

13,871 

13,243 

13,078 

12,918 

12,410 

12,001 

11,712 

11,225 

1.7%

1.6%

1.5%

1.5%

1.5%

1.4%

1.4%

1.3%

1.3%

1.2%

799,331 

88.3%

10,452 

10,452 

9,541 

9,401 

9,282 

7,583 

6,711 

6,627 

5,803 

5,751 

1.2%

1.2%

1.1%

1.0%

1.0%

0.9%

0.7%

0.7%

0.6%

0.6%

880,934 

97.3%

5,533 

5,456 

4,601 

3,050 

2,602 

954 

809 

624 

562 

0.6%

0.6%

0.5%

0.3%

0.3%

0.1%

0.1%

0.1%

0.1%

Total Valuation of Portfolio

905,125 

100.00%

16

TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 2018

BOARD OF DIRECTORS

ARTHUR COPPLE

SIR RICHARD JEWSON*

JUNE DE MOLLER

Arthur Copple, Chairman, 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. He 
is currently a director of Montanaro UK 
Smaller Companies Investment Trust 
PLC and The University of Brighton 
Academies Trust.

Sir Richard Jewson, senior independent 
director, was appointed a director in 
2001. He ﬁ rst 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 
Property  Limited and Tritax Big Box 
REIT PLC and a non-executive director 
of other private companies.

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.

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LESLEY SHERRATT

RICHARD WYATT

Richard Wyatt was appointed a director 
in 2017. He is a former Group Managing 
Director at Schroders, Lazard and a 
Vice Chairman at Rothschild. He was 
Chairman of the media agency Engine 
Group and served on the Regulatory 
Decisions Committee of the FSA. He 
is currently Chairman of Loudwater 
Partners Limited and a director of a 
number of other companies.

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 
ﬁ nancial 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, 
a trustee of the Medical Research 
Foundation and the Global Alliance for 
Chronic Diseases, lectures in global 
business ethics at King‘s College 
London and is the author of ‘Can 
Microﬁ nance Work? How to Improve its 
Ethical Balance and Effectiveness‘.

All the directors are independent and 
members of the audit and nomination 
committees.
* Chairman of the audit committee and 
Senior Independent Director.

TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 201 8

17

 
 
 
 
REPORT OF DIRECTORS

The directors present their report and accounts for the
year ended 31 December 2018.

THE ALTERNATIVE INVESTMENT FUND MANAGERS 
DIRECTIVE (‘AIFMD’)

Investec Fund Managers Limited (‘IFM’), an afﬁ liate of 
Investec Asset Management Limited (‘IAM’), is the Company’s 
Alternative Investment Fund Manager (‘AIFM’ or ‘Manager’). 
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 ﬂ ows.

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, conﬂ icts 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 £4 6,845 pa excluding VAT  in respect of the 
provision of secretarial and administrative services, adjusted 
annually  in line with the Retail Price Index.

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 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 signiﬁ cant 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 8.75p per ordinary share were paid on 
30 June 2018, 29 September 2018 and 27 December 
2018 (2017 : 8.33 p in each case) and the directors are 
recommending a ﬁ nal dividend of 20.47p per ordinary share 
(2017: 17.48p), a total for the year of 46.72p (2017: 42.47p). 
Subject to shareholders’ approval, the ﬁ nal dividend will be 
paid on 29 March 2019 to shareholders on the register on 
8 March 2019.

ISAs

The Company has conducted its investment policy so as to 
remain a qualifying investment trust under the Individual 
Savings Account (ISA) regulations. It is the intention of the 
Board to continue to satisfy these regulations.

18

TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 201 8

 
SHARE CAPITAL

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 pages 4 7 
and 4 8.

Voting Rights in the Company’s Shares 
The voting rights at 31 December 2018 were:

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 signiﬁ cant in relation to the Company’s 
business. No director has a service contract with the Company.

The Company maintains insurance cover for its directors 
under a Directors’ & Ofﬁ cers’ Liability policy, as permitted by 
the Companies Act 2006. Directors are also covered by the 
indemnity provisions in the Company‘s Articles of Association.

SUBSTANTIAL SHAREHOLDERS

As at 31 December 2018 and 2 1 February 2019 the following 
were registered or had indicated an interest in 3% or more of 
the issued ordinary shares of the Company.

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Share class

Ordinary shares 
of 25p each

Number of 
shares issued

Voting rights 
per share

Total 
voting rights

66,872,765

1

66,872,765

Alliance Trust Savings Ltd

Brewin Dolphin Ltd

As at 2 1 February 2019, the share capital of the Company and 
total voting rights were 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  5  4. The Company’s ordinary shares have 
a Premium listing on the London Stock Exchange.

To the extent that they exist, the revenue proﬁ ts and capital 
of the Company (including accumulated revenue and realised 
capital reserves) are available for distribution by way of 
dividends to the holders of the ordinary shares. Upon a 
winding-up, after meeting the liabilities of the Company, the 
surplus assets would be distributed to the shareholders pro 
rata to their holding of ordinary shares.

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 ofﬁ ce at the end of 
the year are detailed on page 1 7. John Reeve retired as a 
director and chairman on 24 May 2018 and Nicholas Lyons 
resigned as a director on 7 August 2018. No other person 
was a director  for part of the year. Details of directors’ 
beneﬁ cial shareholdings may be found in the Report on 
Directors‘ Remuneration on page 2 1.

With the exception of June de Moller, who will be standing 
down as a director at the AGM, 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 conﬁ rmed that, following formal evaluation, 
the performance of each director continues to be effective 
and each continues to demonstrate commitment to the role. 

%

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7.7 

7.3 

5.0

3.9 

3.1

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Investec Wealth & Investment Ltd

Speirs & Jeffrey Ltd 

Equiniti Financial Services

AXA SA

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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 28 March 2019.

ANNUAL GENERAL MEETING

The notice of the Annual General Meeting of the Company 
to be held on 28 March 2019 is on page  5  2. In addition to 
the ordinary business the following matters are proposed 
as special business.

Investment objective and policy
As a result of a thorough review of the Company’s current 
investment policies conducted by the Board during the year, 
the following changes are being proposed to the Company’s 
Investment Objective and Policy:

(cid:129)  The Board believes that the present limit of 20% of the 

portfolio that may be held in listed equities in developed 
economies is unduly restrictive. The growing globalisation 
of economies and markets means that in certain cases 
the most attractive investment opportunities can be 
found outside the UK. Furthermore, some overseas listed 
securities may have a higher level of economic exposure to 
the UK economy than companies that are listed in London 
but in practice have little or no UK exposure. Accordingly, 
the Board is proposing to increase the maximum permissible 
investment in non-UK securities from 20% to 30% and to 
remove the ‘developed economies’ limitation while retaining 
a maximum 10% exposure to emerging markets. The new 
policy will therefore specify that ‘up to 30% of the portfolio 
may be held in listed international  equities , subject to a 
maximum 10% exposure to emerging markets’. For the 

TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 201 8

19

 
 
 
 
REPORT OF DIRECTORS CONTINUED

sake of clarity, it should be stressed that there is no current 
intention to increase the portfolio’s overseas exposure to 
this level. 

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, as previously deﬁ ned. 
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, as well as being accretive to NAV. 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 ﬁ ve 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 beneﬁ cial holdings, amounting to 
 104,968 ordinary shares.

By order of the Board of Directors

Arthur Copple 
Chairman
2 1 February 2019

(cid:129) 

(cid:129) 

It is proposed that the requirement for a maximum 
exposure to a speciﬁ c industrial or commercial sector of 
25% should be  amended. The Board believes that  this rule 
is unduly restrictive, particularly as certain industrial or 
commercial sectors have in the recent past exceeded 25% 
of the benchmark index from time to time. Therefore, it is 
proposed that a maximum exposure to any one sector of 
35% be applied irrespective of the benchmark weighting.

In keeping with the Board’s preference for the portfolio to 
be managed in a less constrained manner it is proposed 
that the reference to the Company maintaining a 
diversiﬁ ed portfolio, typically comprising 70-80 holdings, 
be amended to 30-50 holdings. Over the past decade the 
portfolio has consistently held fewer holdings than the 
‘typical’ range and therefore the Board feels that it would 
be appropriate for the stated investment objective more 
accurately to reﬂ ect the likelihood of a more concentrated 
portfolio for the foreseeable future. 

(cid:129)  The portfolio is not managed with respect to the 

speciﬁ ed target portfolio yield of between 120-140% of 
that of the benchmark index and hence this objective is 
 no longer relevant. Accordingly, it is proposed that this 
target be removed. The Board will, however, continue to 
propose a progressive dividend policy.

The proposed amendments, which constitute a material 
change of the Company’s investment policy, require the 
approval of the holders of the ordinary shares at the 
forthcoming annual general meeting under the Listing Rules.

The ordinary resolution numbered 9 to be proposed at the 
forthcoming annual general meeting will, if passed, approve 
the adoption of the new investment policy set out in full on 
page   10.

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 2 1 February 2019).

When shares are to be allotted for cash, the Companies 
Act 2006 requires such new shares to be offered ﬁ rst to 
existing shareholders in proportion to their existing holdings 
of ordinary shares. However, in certain circumstances, it is 
beneﬁ cial to allot shares for cash otherwise than pro rata to 
existing shareholders and the ordinary shareholders can by 
special resolution waive their pre-emption rights. Therefore, 
a special resolution will be proposed at the AGM which, if 
passed, will give the directors the power to allot for cash 
equity securities up to an aggregate nominal amount of 
£1,671,819 (equivalent to 6,687,276 ordinary shares of 25p 
each or 10.0% of the Company’s existing issued ordinary 
share capital).

The directors intend to use this authority to issue new shares 
to 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, including current year income, 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.

20

TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 201 8

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REPORT ON DIRECTORS’ REMUNERATION

The Board presents the report on directors’ remuneration for 
the year ended 31 December 2018 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  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  29.

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 inﬂ ation. The Manager of the Company compiles such 
analysis as part of the management and secretarial services 
provided to the Company. To support such analysis in 2017 
the Board commissioned Trust Associates to carry out an 
independent assessment of the remuneration paid to Temple 
Bar’s Board relative to its peer group. The Company has 
no other relationship with Trust Associates. These data, 
together with consideration of any alteration in non-executive 
directors’ responsibilities, are used to review whether any 
change in remuneration is necessary. Based on these inputs 
it has been agreed that the Chairman's fee for the year 
commencing 1 January 2019 will be £37,500 pa. The chairman 
of the audit committee will receive a fee of £30,000 pa and 
the directors will receive a fee of £25,000 pa.

It is the Company’s policy that no director shall be entitled to 
any performance related remuneration, beneﬁ ts in kind, long 
term incentive schemes, share options, pensions or other 
retirement beneﬁ ts or compensation for loss of ofﬁ ce. 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.

FUTURE POLICY TABLE

Purpose and link to strategy

Fees payable to directors should be sufﬁ cient 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 reﬂ ect 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 ﬁ xed 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 ﬁ nancial year.

The Board reviews the quantum of directors’  fees 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  fees, the 
Board  considers wider factors such as the average rate of 
inﬂ ation 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 ofﬁ ce.

REMUNERATION  POLICY REPORT (AUDITED)

A single ﬁ gure for the total remuneration of each 
director is set out in the table below for the year ended 
31 December 2018. These fees exclude employers’ national 
insurance contributions and VAT where applicable:

John Reeve2

Arthur Copple3

June de Moller

Richard Jewson

Nicholas Lyons4

Lesley Sherratt

David Webster

Richard Wyatt5

Total

Total amount 
of fees1

2018

 14,794

 32,054

24,500

29,400

 14,763

24,500

Nil

24,500

 164,511

2017

33,400

22,600

22,600

25,500

21,325

22,600

22,600

2,231

172,856

1  Other columns have been omitted as no payments of any other type were made.
2  Retired 24 May 2018.
3  Appointed Chairman 24 May 2018.
4  Appointed 23 January 2017 and resigned 7 August 2018.
5  Appointed 27 November 2017.

The amounts paid by the Company to the directors were for 
services as non-executive directors.

TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 201 8

21

 
 
 
 
 REPORT ON DIRECTORS’ REMUNERATION CONTINUED

Expenditure by the Company on remuneration 
and distributions to shareholders
As the Company has no employees, the directors cannot 
show a table comparing remuneration paid to employees 
with distributions to shareholders. The total fees paid to 
directors are shown on page 2 1.

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 ten year 
period is shown below.

Directors’ shareholdings (audited)
The directors’ shareholdings are detailed below:

Share price total return

31 December 2018

1 January 2018

N/A

42,643

10,474

10,851

N/A

31,000

10,000

63,833

32,643

10,474

10,660

–

7,500

10,000

John Reeve1

Arthur Copple

June de Moller

Richard Jewson

Nicholas Lyons2

Lesley Sherratt

Richard Wyatt

1  Retired 24 May 2018. 
2  Resigned 7 August 2018.

All the above interests are beneﬁ cial. None of the directors 
had at any date any interest in the Company’s debenture 
stock.

No other changes in the interests shown above occurred 
between 31 December 2018 and 2 1 February 2019.

The portfolio manager also holds 61,936  ordinary shares in 
the Company.

Statement of Voting at General Meeting
At the Company‘s last AGM held on 26 March 2018 
shareholders approved the Directors‘ Remuneration Report 
in respect of the year ended 31 December 2017. 99.5% of 
proxy votes were in favour of the resolution, 0.5% were 
against and 31,980 votes were withheld.

At the AGM held on 27 March 2017, a resolution for the 
approval of the Remuneration Policy, as set out in the future 
policy table above, was approved by 99.8% of proxy votes, 
0.2% were against and 12,540 votes were withheld.

340

320

300

280

260

240

220

200

180

160

140

120

100

80
2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Temple Bar share price (total return)

FTSE All-Share Index (total return)

Source: Thomson Reuters Datastream

Annual statement
The Board conﬁ rms that the above Remuneration  Policy 
Report in respect of the year ended 31 December 2018 
summarises:

(cid:129) 

the major decisions on directors’ remuneration;

(cid:129)  any signiﬁ cant changes relating to directors’ 
remuneration made during the year; and

(cid:129) 

the context in which the changes occurred 
and decisions have been taken. 

By order of the Board of Directors 

Arthur Copple
Chairman
2 1 February 2019

22

TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 201 8

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CORPORATE GOVERNANCE

THE AIC CODE OF CORPORATE GOVERNANCE

Corporate Governance is the process by which the board of 
directors of a company protects 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 ﬁ nancial 
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’). 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  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 2016, 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 conﬁ rmed that companies which report against the AIC 
Code will be meeting their obligations in relation to the 
UK 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 Code), except 
as set out below. The UK Code includes provisions relating 
to:

(cid:129) 

the role of the chief executive

(cid:129)  executive directors’ remuneration

(cid:129) 

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 such 
as an internal audit function. The Company has therefore not 
reported further in respect of these provisions.

The Board notes that a new version of the AIC Code was 
published in January 2019. Temple Bar will report against the 
new Code for the 2019 ﬁ nancial year.

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 speciﬁ cally approved by the Board. It has delegated 
investment management, within clearly deﬁ ned 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 Board believes that the content and presentation 
of Board papers circulated before each meeting contain 
sufﬁ cient information concerning the ﬁ nancial condition of 
the Company. Key representatives of IFM attend each Board 
meeting enabling directors to probe on matters of concern or 
seek clariﬁ cation on certain issues. 

Biographies of those directors in ofﬁ ce at the date of signing 
of the ﬁ nancial statements are set out on page 1 7. There were 
seven Board meetings, two audit committee meetings and 
three 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

4

7

3

6

7

7

7

1

2

0

2

2

2

2

2

3

1

3

3

3

3

John Reeve1

Arthur Copple

Nicholas Lyons2

June de Moller

Richard Jewson

Lesley Sherratt

Richard Wyatt

1  retired 24 May 2018
2  resigned 7 August 2018

TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 201 8

23

 
 
 
 
 CORPORATE GOVERNANCE CONTINUED

Audit committee
The audit committee is a formally constituted committee 
of the Board with deﬁ ned terms of reference. Its role 
and responsibilities are set out in the Report of the Audit 
Committee on page 2 6. The Board is satisﬁ ed that members 
of the audit committee have relevant and recent ﬁ nancial 
experience, with at least one member having audit or 
accounting experience, to fulﬁ l their role effectively and also 
have sufﬁ cient experience relevant to the sector. The auditor, 
who the Board has identiﬁ ed 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 
Sir Richard  Jewson, the Senior Independent Director.

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 Copple.

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 ofﬁ ce.

Management engagement committee
As all the directors are fully independent of the management 
company, the Board as a whole fulﬁ ls 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. Two of the ﬁ ve directors 
(Sir Richard  Jewson and Mrs de Moller) have served on 
the Board for more than nine years from the date of their 
ﬁ rst election, but given the nature of the Company as an 
investment trust and the strongly independent mindset of 
the individuals involved, the Board is ﬁ rmly 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 most signiﬁ cant 
relationship being with the Manager. In overseeing this 
relationship it is the view of the Board that long service 
aids the understanding and judgement of the directors. 
The directors have a range of business and ﬁ nancial skills 
and experience relevant to the direction of the Company. 
Sir Richard  Jewson is the Senior Independent Director.

Re-election of directors
Directors are subject to re-election by shareholders at the 
ﬁ rst 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 speciﬁ ed 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.

The Board has carefully considered the position of each of 
the directors seeking re-election 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.  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 brieﬁ ngs 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 2016 the Board also employed the services of Board 
Evaluation, an external evaluation agency, to carry out an 
independent triennial 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. The 
next external evaluation will take place in 2019.

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 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 shareholders’ views. The Board receives a quarterly 
report from the Manager summarising any shareholder 
correspondence together with any comments about Temple 
Bar on social media. Members of the Board are  always happy 
to meet with shareholders for the purpose of discussing 
matters in relation to the operation and prospects of 
the  Company.

24

TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 201 8

 
The Board encourages investors to attend the AGM and 
welcomes questions and discussion on issues of concern or 
areas of uncertainty. 

Following the formal AGM proceedings the portfolio manager 
makes a presentation to the meeting outlining the key 
investment issues that face the Company.

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.

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 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 conﬁ rms 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 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.

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 conﬁ rm 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 met on 
seven scheduled occasions during the year At each meeting 
it received sufﬁ cient ﬁ nancial and statistical information to 
enable it to monitor adequately the investment performance 
and status of the business.

By order of the Board of Directors

Arthur Copple  
Chairman
2 1 February 2019

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Annual Report & Financial Statements for the year ended 31 December 201 8

25

 
 
 
 
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 2018.

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 ﬁ nancial 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

SIGNIFICANT ISSUES CONSIDERED REGARDING THE 
ANNUAL REPORT AND FINANCIAL STATEMENTS

The Committee also considered signiﬁ cant issues and areas 
of  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 identiﬁ ed and that suitable audit procedures had been 
put in place to obtain reasonable assurance that the ﬁ nancial 
statements as a whole would be free of material misstatements. 
The table below sets out the key areas of risk identiﬁ ed by the 
Committee and also explains how these were addressed by it.

Signiﬁ cant Issue

How the issue was addressed

Veriﬁ cation of the 
existence of the 
assets in the portfolio

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.

The valuation of the 
investment portfolio

The Committee reviews reports from its 
service providers on key controls over 
the assets of the Company. Monthly 
reconciliations are performed by the 
independent Depositary together with 
an annual veriﬁ cation of the existence 
of all portfolio holdings carried out 
by the auditor. Any signiﬁ cant issues 
are reported by the Manager to the 
Committee.

The Committee reviews detailed portfolio 
valuations on a regular basis throughout 
the year and receives conﬁ rmation from 
the Manager that the pricing basis is 
appropriate. The audit includes a check 
of pricing back to source data to conﬁ rm 
that the correct valuation basis has been 
applied in accordance with the accounting 
policies adopted, as disclosed in note 1 to 
the Financial Statements. All investments 
are in quoted securities in active markets, 
are considered to be liquid and have been 
categorised as level 1 within the IFRS 13 
hierarchy.

Having considered the Company’s 
investment objective, risk management 
policies and cash ﬂ ow projections 
the Committee is satisﬁ ed that the 
Company has adequate resources and 
an appropriate ﬁ nancial structure to 
continue in operational existence for the 
foreseeable future.

The Committee reviews income
forecasts and receives explanations 
from the Manager for any variations or 
signiﬁ cant movements from previous 
forecasts and prior year numbers.

Going concern

The veriﬁ cation of 
investment income

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. The provision of custody services is 
contracted to HSBC.

COMPOSITION

All the directors are members of the Committee, which is 
chaired by  Sir Richard Jewson. The Board considers that 
the members of the Committee have sufﬁ cient recent 
and relevant ﬁ nancial experience for the Committee to 
discharge its function effectively. At least one member of 
the Committee has audit or accounting experience and the 
Committee has members with sufﬁ cient experience relevant 
to the sector. 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:

(cid:129)  considering and recommending to the Board for 

approval the contents of the half yearly and annual 
ﬁ nancial statements and reviewing the external 
auditor’s report thereon;

(cid:129) 

(cid:129) 

(cid:129) 

(cid:129) 

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 ﬁ nancial year, with a focus on the identiﬁ cation 
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;

(cid:129) 

reviewing the appropriateness of the Company’s 
accounting policies; and

(cid:129)  ensuring the adequacy of the internal control 

systems and standards.

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TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 201 8

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The Company conﬁ rms that it has complied with the 
September 2014 Competition and Markets Authority Order.

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 ﬁ nancial 
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 fulﬁ ls these requirements.

As a result of the work performed, the Committee has 
concluded that the Annual Report for the year ended 
31 December 2018, 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 ﬁ ndings to the Board. The Board’s conclusions 
in this respect are set out in the Statement of Directors’ 
Responsibilities on page 2 8.

Sir Richard Jewson 
Chairman
Audit Committee 
2 1 February 2019

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 ﬁ ve 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 ﬁ ve yearly partner rotation took place in 2017 when 
Caroline Mercer was appointed. The Committee is aware 
that EU legislation requires listed companies to rotate their 
auditor every 10 years. Under the transitional arrangements 
for ﬁ rms where the tenure was between 11 and 20 years on 
the effective date under the new EU rules, there is a grace 
period of nine years after the enactment of the EU legislation. 
Accordingly, Ernst & Young will not be able to act as auditor 
to the Company for accounting periods starting on or after 
17 June 2023 so the last ﬁ nancial year that they could serve 
as auditor would end on 31 December 2023. The Committee 
intends  to put the audit out to tender  in 2020. Ernst & Young 
will not participate in that review but in the meantime the 
Committee is satisﬁ ed that they remain independent and 
effective. There are no contractual obligations that restrict 
the Company’s choice of auditor. Other non-audit fees of 
£ 2,300 (excluding VAT) paid to Ernst & Young LLP relate to 
their services in the electronic ﬁ ling of tax returns; due to this 
amount being negligible, the Committee does not consider 
this a threat to the auditor's independence.

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 efﬁ ciency 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 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.

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 ﬁ rm and its staff and the Company, as well 
as an overall conﬁ rmation from the auditor of its 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.

TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 201 8

27

 
 
 
 
STATEMENT OF DIRECTORS’ RESPONSIBILITIES

The directors conﬁ rm that to the best of their knowledge:

(cid:129) 

(cid:129) 

the ﬁ nancial statements, prepared in accordance with 
the applicable accounting standards, give a true and fair 
view of the assets, liabilities, ﬁ nancial position and proﬁ t 
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 fulﬁ ls these requirements. The process 
by which the Committee has reached these conclusions is 
set out in the Audit Committee’s report on pages 2  6 and 2  7. 
As a result, the Board has concluded that the Annual Report 
and Financial Statements for the year ended 31 December 
2018, 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

Arthur Copple 
Chairman
2 1 February 2019

The directors are responsible for preparing the Annual 
Report and the ﬁ nancial statements in accordance with 
applicable law and regulations.

Company law requires the directors to prepare ﬁ nancial 
statements for each ﬁ nancial year. Under that law the 
directors have chosen to prepare the ﬁ nancial statements in 
accordance with International Financial Reporting Standards 
as adopted by the European Union. Under company law the 
directors must not approve the ﬁ nancial statements unless 
they are satisﬁ ed that they give a true and fair view of the 
state of affairs of the Company and of the proﬁ t or loss of 
the Company for that period. In preparing these ﬁ nancial 
statements, the directors are required to:

(cid:129) 

select suitable accounting policies in accordance 
with IAS8: ‘Accounting Policies, Changes in 
Accounting Estimates and Errors’, and then apply
these consistently;

(cid:129)  present information, including accounting policies, 

in a manner that provides relevant, reliable, 
comparable and understandable information;

(cid:129)  provide additional disclosures when compliance with the 

speciﬁ c requirements in IFRS is insufﬁ cient to enable users 
to understand the impact of particular transactions, other 
events and conditions on the entity’s ﬁ nancial position and 
ﬁ nancial performance; and

(cid:129) 

state that the Company has complied with IFRS, subject 
to any material departures disclosed and explained in the 
ﬁ nancial statements.

The directors are responsible for keeping adequate 
accounting records which are sufﬁ cient to show and explain 
the Company’s transactions and disclose with reasonable 
accuracy at any time the ﬁ nancial position of the Company and 
enable them to ensure that the ﬁ nancial statements comply 
with the Companies Act 2006. 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.

28

TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 201 8

INDEPENDENT AUDITOR’S REPORT 
TO THE MEMBERS OF TEMPLE BAR INVESTMENT TRUST PLC

Opinion
       We have audited the ﬁ nancial statements of Temple Bar Investment Trust plc (the ‘Company’) for the year ended 
31 December 2018 which comprise the Statement of Comprehensive Income, Statement of Changes in Equity, Statement 
of Financial Position, Statement of Cash Flows and the related notes 1 to 22, including a summary of signiﬁ cant accounting 
policies. The ﬁ nancial reporting framework that has been applied in their preparation is applicable law and International 
Financial Reporting Standards (IFRS) as adopted by the European Union.

In our opinion, the ﬁ nancial statements: 

(cid:129)  give a true and fair view of the Company’s affairs as at 31 December 2018 and of its proﬁ t for the year then ended; 

(cid:129)  have been properly prepared in accordance with IFRS as adopted by the European Union; and 

(cid:129)  have been prepared in accordance with the requirements of the Companies Act 2006. 

Basis for opinion 
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our 
responsibilities under those standards are further described in the ‘Auditor’s responsibilities for the audit of the ﬁ nancial 
statements’ section of our report below. We are independent of the Company in accordance with the ethical requirements that 
are relevant to our audit of the ﬁ nancial statements in the UK, including the FRC’s Ethical Standard as applied to public interest 
entities, and we have fulﬁ lled our other ethical responsibilities in accordance with these requirements. 

We believe that the audit evidence we have obtained is sufﬁ cient and appropriate to provide a basis for our opinion. 

Conclusions relating to principal risks, going concern and viability statement
We have nothing to report in respect of the following information in the annual report, in relation to which the ISAs (UK) 
require us to report to you whether we have anything material to add or draw attention to: 

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(cid:129) 

(cid:129) 

(cid:129) 

the disclosures in the annual report set out on page  13 that describe the principal risks and explain how they are being 
managed or mitigated;

the directors’ conﬁ rmation set out on page  28 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 directors’ statement set out on page  18 in the annual report about whether they considered it appropriate to adopt the 
going concern basis of accounting in preparing them, and their identiﬁ cation 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 ﬁ nancial statements;

(cid:129)  whether the directors’ statement in relation to going concern required under the Listing Rules in accordance with Listing 

Rule 9.8.6R(3) is materially inconsistent with our knowledge obtained in the audit; or 

(cid:129) 

the directors’ explanation set out on page  13 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 
qualiﬁ cations or assumptions.               

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Overview of our audit approach

Key audit matters

(cid:129)  Risk of incomplete or inaccurate revenue recognition, including classiﬁ cation of special dividends 

as revenue or capital items in the Statement of Comprehensive Income .

(cid:129) Risk of incorrect valuation and defective title to the investment portfolio. 

Materiality

(cid:129)  Overall materiality of £8.02m which represents 1% of equity shareholders’ funds.     

Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most signiﬁ cance in our audit of the ﬁ nancial 
statements of the current period and include the most signiﬁ cant assessed risks of material misstatement (whether or not 
due to fraud) that we identiﬁ ed. These matters included those which had the greatest effect on: the overall audit strategy, 
the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in 
the context of our audit of the ﬁ nancial statements as a whole, and in our opinion thereon, and we do not provide a separate 
opinion on these matters. 

TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 201 8

29

 
 
 
 
INDEPENDENT AUDITOR’S REPORT CONTINUED
TO THE MEMBERS OF TEMPLE BAR INVESTMENT TRUST PLC

Key observations communicated to the 
Audit Committee 

The results of our procedures are:

We have no issues to communicate with 
respect to our procedures performed 
over the risk of incomplete or inaccurate 
revenue recognition, including classiﬁ cation 
of special dividends as revenue or capital 
items in the Statement of Comprehensive 
Income. 

Risk

Incomplete or inaccurate revenue 
recognition, including classiﬁ cation 
of special dividends as revenue or 
capital items in the Statement of 
Comprehensive Income (per the Audit 
Committee report set out on page  26 and 
the accounting policy set out on page  40). 

The income received for the year to 
31 December 2018 was £37.2 6m (2017: 
£34.0m), consisting primarily of dividend 
income from listed investments.

The income receivable by the Company 
during the year directly affects the 
Company’s revenue return. There is a risk 
of incomplete or inaccurate recognition of 
income through the failure to recognise 
proper income entitlements or applying 
appropriate accounting treatment.

In addition to the above, the Directors 
are required to exercise judgment in 
determining whether income receivable 
in the form of special dividends should be 
classiﬁ ed as ‘revenue’ or ‘capital’. 

Our response to the risk

We have performed the following 
procedures:

We obtained an understanding of the 
Manager’s and Administrator’s processes 
and controls surrounding revenue 
recognition and allocation of special 
dividends by reviewing their internal 
controls report and performing our 
walkthrough procedures to evaluate the 
design and implementation of controls.

We agreed a sample of dividends 
received from the income report to the 
corresponding announcement made by 
the investee company. We recalculated 
the dividend amount receivable using 
exchange rates obtained from an 
independent data vendor and conﬁ rmed 
that the cash received as shown on bank 
statements was consistent with the 
recalculated amount.

We agreed a sample of investee 
company dividend announcements 
from an independent data vendor to the 
income recorded by the Company to test 
completeness of the income recorded.

For all dividends accrued at the year 
end, we reviewed the investee company 
announcements to assess whether the 
obligation arose prior to 31 December 
2018.  We agreed the dividend rate to 
corresponding announcements made by 
the investee company. We recalculated the 
dividend amount receivable and conﬁ rmed 
this was consistent with cash received as 
shown on post year end bank statements, 
where paid.

We reviewed the income report and the 
acquisition and disposal report produced 
by the Administrator to identify special 
dividends received or accrued in excess 
of our revenue testing threshold. The 
Company received two special dividends 
above our revenue testing threshold, 
amounting to £993k.We reviewed the 
underlying circumstances and motives for 
the payments to verify the classiﬁ cation of 
both special dividends as revenue.   

30

TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 201 8

       
Risk

Our response to the risk

Key observations communicated to the 
Audit Committee 

We performed the following procedures:

The results of our procedures are:

For all listed investments in the portfolio, 
we compared the market values and 
exchange rates applied to an independent 
pricing vendor. 

We have no issues to communicate with 
respect to our procedures performed over 
the risk of incorrect valuation and defective 
title to the investment portfolio.  

We reviewed the price exception and 
stale pricing reports produced by the 
Administrator to highlight and investigate 
any unexpected price movements in 
investments held as at the year-end.

We agreed the Company’s investments 
to the independent conﬁ rmation received 
from the Company’s Custodian and 
Depositary as at 31 December 2018.

Incorrect valuation and defective title 
to the investment portfolio (as described 
on page  26 in the Report of the Audit 
Committee and as per the accounting 
policy set out on page  41).

The valuation of the investment portfolio 
at 31 December 2018 was £905.13m 
(2017: £1,035.7m) consisting entirely of listed 
investments.

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 investment pricing, or a 
failure to maintain proper legal title of the 
investments held by the Company could 
have a signiﬁ cant impact on the portfolio 
valuation and the return generated for 
shareholders.

The fair value of listed investments is 
determined by reference to stock exchange 
quoted market bid prices at the close of 
business on the year-end date.        

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There have been no changes to the areas of key focus raised in the above risk table from the prior year. 

An overview of the scope of our audit 
Tailoring the scope
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 ﬁ nancial statements. We take into account size, risk proﬁ le, 
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. 

Our application of materiality 
We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identiﬁ ed misstatements 
on the audit and in forming our audit opinion.  

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Materiality
The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to inﬂ uence 
the economic decisions of the users of the ﬁ nancial statements. Materiality provides a basis for determining the nature and extent 
of our audit procedures. 

We determined materiality for the Company to be £8.02m (2017: £9.36m) which is 1% of equity shareholders’ funds. We believe 
that equity shareholders’ funds provides us with materiality aligned to the key measurement of the Company’s performance.     

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 
judgement was that performance materiality was 75% of our planning materiality, namely £6.02m (2017: £7.02m). 

Given the importance of the distinction between revenue and capital for the Company, we have also applied a separate testing 
threshold for the revenue column of the Statement of Comprehensive Income of £1.66m (2017: £1.46m) being 5% of proﬁ t 
before tax.       

Reporting threshold
An amount below which identiﬁ ed misstatements are considered as being clearly trivial. 

We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of £0.40m 
(2017: £0.47m) which is set at 5% of planning materiality, 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 light 
of other relevant qualitative considerations in forming our opinion. 

TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 201 8

31

 
 
 
 
  
INDEPENDENT AUDITOR’S REPORT CONTINUED
TO THE MEMBERS OF TEMPLE BAR INVESTMENT TRUST PLC

Other information 
The other information comprises the information included in the annual report, other than the ﬁ nancial statements and our 
auditor’s report thereon. The directors are responsible for the other information. 

Our opinion on the ﬁ nancial statements does not cover the other information and, except to the extent otherwise explicitly 
stated in this report, we do not express any form of assurance conclusion thereon. 

In connection with our audit of the ﬁ nancial statements, our responsibility is to read the other information and, in doing so, 
consider whether the other information is materially inconsistent with the ﬁ nancial statements or our knowledge obtained in 
the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material 
misstatements, we are required to determine whether there is a material misstatement in the ﬁ nancial statements or a 
material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material 
misstatement of the other information, we are required to report that fact.

We have nothing to report in this regard.

In this context, we also have nothing to report in regard to our responsibility to speciﬁ cally address the following items in the 
other information and to report as uncorrected material misstatements of the other information where we conclude that those 
items meet the following conditions: 

(cid:129)  Fair, balanced and understandable set out on page  28 – the statement given by the directors that they consider the 

annual report and ﬁ nancial statements 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, is materially inconsistent 
with our knowledge obtained in the audit; or 

(cid:129)  Audit committee reporting set out on pages  26 to  27 – the section describing the work of the audit committee does not 

appropriately address matters communicated by us to the audit committee; or

(cid:129)  Directors’ statement of compliance with the UK Corporate Governance Code set out on page  23 – the parts of 

the directors’ statement required under the Listing Rules relating to the Company’s compliance with the UK Corporate 
Governance Code containing provisions speciﬁ ed for review by the auditor in accordance with Listing Rule 9.8.10R(2) do not 
properly disclose a departure from a relevant provision of the UK Corporate Governance Code.             

Opinions 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.

In our opinion, based on the work undertaken in the course of the audit: 

(cid:129) 

the information given in the strategic report and the directors’ report for the ﬁ nancial year for which the ﬁ nancial 
statements are prepared is consistent with the ﬁ nancial statements; and  

(cid:129) 

the strategic report and directors’ report have been prepared in accordance with applicable legal requirements. 

Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we 
have not identiﬁ ed material misstatements in the strategic report or directors’ report.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to 
report to you if, in our opinion: 

(cid:129)  adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches 

not visited by us; or

(cid:129) 

the ﬁ nancial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the 
accounting records and returns; or

(cid:129)  certain disclosures of directors’ remuneration speciﬁ ed by law are not made; or

(cid:129)  we have not received all the information and explanations we require for our audit. 

Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page  28, the directors are responsible for 
the preparation of the ﬁ nancial statements and for being satisﬁ ed that they give a true and fair view, and for such internal 
control as the directors determine is necessary to enable the preparation of ﬁ nancial statements that are free from material 
misstatement, whether due to fraud or error. 

In preparing the ﬁ nancial statements, the directors are responsible for assessing the Company’s ability to continue as a going 
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless 
the directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.    

32

TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 201 8

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Auditor’s responsibilities for the audit of the ﬁ nancial statements 
Our objectives are to obtain reasonable assurance about whether the ﬁ nancial statements as a whole are free from material 
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance 
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a 
material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or 
in the aggregate, they could reasonably be expected to inﬂ uence the economic decisions of users taken on the basis of these 
ﬁ nancial statements.   

Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud 
The objectives of our audit, in respect to fraud, are; to identify and assess the risks of material misstatement of the ﬁ nancial 
statements due to fraud; to obtain sufﬁ cient appropriate audit evidence regarding the assessed risks of material misstatement 
due to fraud, through designing and implementing appropriate responses; and to respond appropriately to fraud or suspected 
fraud identiﬁ ed during the audit.  However, the primary responsibility for the prevention and detection of fraud rests with both 
those charged with governance of the entity and management.  

Our approach was as follows:  

(cid:129)  We obtained an understanding of the legal and regulatory frameworks that are applicable to the Company and determined 
that the most signiﬁ cant are IFRS, the Companies Act 2006, AIC SORP, the Listing Rules, the UK Corporate Governance 
Code and Section 1158 of the Corporation Tax Act 2010.

(cid:129)  We understood how the Company is complying with those frameworks through discussions with the Audit Committee and 

Company Secretary and review of the Company’s documented policies and procedures.

(cid:129)  We assessed the susceptibility of the Company’s ﬁ nancial statements to material misstatement, including how fraud 

might occur by considering the key risks impacting the ﬁ nancial statements. We identiﬁ ed a fraud risk with respect to the 
incomplete or inaccurate income recognition through incorrect classiﬁ cation of special dividends. Further discussion of our 
approach is set out in the section on key audit matters above.

(cid:129)  Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations. 

Our procedures involved review of the reporting to the directors with respect to the application of the documented 
policies and procedures and review of the ﬁ nancial statements to ensure compliance with the reporting requirements of the 
Company. 

A further description of our responsibilities for the audit of the ﬁ nancial statements is located on the Financial Reporting 
Council’s website at https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. 

Other matters we are required to address 
(cid:129)  Following the recommendation of the Audit Committee, we were appointed by the Company with effect from 

1 January 2003 to audit the ﬁ nancial statements of the Company for the year ending 31 December 2003 and subsequent 
ﬁ nancial periods, and signed an engagement letter on 12 November 2003. 

 The period of total uninterrupted engagement is 16 years, covering periods from our appointment through to the period 
ending 31 December 2018.

(cid:129)  Non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Company and we remain 

independent of the Company in conducting the audit. 

(cid:129)  The audit opinion is consistent with the additional report to the Audit Committee. 

Use of our report
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. 

Caroline Mercer (Senior statutory auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
Edinburgh

   2 1 February 2019

Notes:
1. 

 The maintenance and integrity of the Temple Bar Investment Trust plc web site is the responsibility of the directors; the 
work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no 
responsibility for any changes that may have occurred to the ﬁ nancial statements since they were initially presented on the 
web site. 

2.   Legislation in the United Kingdom governing the preparation and dissemination of ﬁ nancial statements may differ from 

legislation in other jurisdictions. 

TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 201 8

33

 
 
 
 
 
NOTES TO THE FINANCIAL STATEMENTS CONTINUED

34
34

TEMPLE BAR INVESTMENT TRUST PLC
TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 201 8
Annual Report & Financial Statements for the year ended 31 December 201 8

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G
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N

FINANCIAL REPORT

3 6    Statement of Comprehensive Income

3 7    Statement of Changes in Equity

  38   Statement of Financial Position

   39   Statement of Cash Flows

   40   Notes to the Financial Statements

TEMPLE BAR INVESTMENT TRUST PLC
TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 2018
Annual Report & Financial Statements for the year ended 31 December 201 8

35
35

 
 
 
 
 
 
 
 
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2018

Investment Income

Other operating income

Proﬁ t/(losses) on investments

Proﬁ t/(losses) on investments held at fair 
value through proﬁ t or loss

Total income/(loss)

Expenses

Management fees

Other expenses

Proﬁ t/(loss) before ﬁ nance costs and tax

Finance costs

Proﬁ t/(loss) before tax

Tax

Proﬁ t/(loss) for the year

Notes

4

4

Revenue
£000

 37,258 

 26 

 37,284 

2018

Capital
£000

–

–

–

Total
£000

Revenue
£000

 37,258 

33,990

 26 

8

 37,284 

33,998

2017

Capital
£000

–

–

–

Total
£000

33,990

8

33,998

12(b)

–

(131,528)

(131,528)

–

 37,284 

(131,528)

(94,244)

33,998

62,251

62,251

62,251

96,249

6

7

8

9

(1,503)

(559)

(2,168 )

(1,427)

 35,222 

(135,123)

(1,962)

(2,968)

(3,671)

(1,986)

(99,901)

(4,930)

 33,260 

(138,091)

(104,831)

(161)

–

(161)

 33,099 

(138,091)

(104,992)

(1,532)

(600)

31,866

(2,701)

29,165

(207)

28,958

(2,215)

(969)

59,067

(4,078)

54,989

–

54,989

(3,747)

(1,569)

90,933

(6,779)

84,154

(207)

83,947

Earnings per share (basic and diluted)

11

49.50p

(206.50p)

(157.00p)

43.30p

82.23p

125.53p

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 proﬁ t for the year. Accordingly, the 
proﬁ t for the year is also the Total Comprehensive Income for the Year, as deﬁ ned in IAS1 (revised).

The notes on pages 4  0 to 5   1 form an integral part of the ﬁ nancial statements.

36

TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 2018

STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2018

Balance at 1 January 2017

Unclaimed dividends

Proﬁ t for the year

Notes

Ordinary 
share capital
£000

16,719

Share 
premium 
account
£000

96,040

–

–

–

Capital 
reserves
£000

735,178

–

54,989

–

–

–

–

 Dividends paid to equity shareholders

10

Balance at 31 December 2017

16,719

96,040

790,167

Unclaimed dividends

Proﬁ t/(loss) for the year

 Dividends paid to equity shareholders

10

–

–

–

–

–

–

–

(138,091)

–

Balance at 31 December 2018

 16,719 

 96,040 

 652,076  

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Retained 
revenue 
earnings
£000

Total 
equity
£000

32,003

879,940

11

28,958

(27,532)

33,440

 51 

 33,099 

(29,243)

 37,347 

11

83,947

(27,532)

936,366

 51 

(104,992)

(29,243)

 802,182 

As at 31 December 2018 the Company had distributable revenue reserves of £ 37,347,000  (2017: £33,440,000) and distributable 
realised capital reserves of £ 672,212,000  (2017: £642,323,000) for the payment of future dividends. The only distributable 
reserves are the retained earnings and realised capital reserves. Please refer to note 18 for the breakdown of capital reserves.

The notes on pages 4  0 to 5   1 form an integral part of the ﬁ nancial statements.

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TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 2018

37

 
 
 
 
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2018

31 December 2018

31 December 2017

Notes

£000

£000

£000

£000

Non-current assets

Investments held at fair value through proﬁ t 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 revenue earnings

Total equity

Net asset value per share

12

13

14

15

(113,971)

 16,719 

 96,040 

652,076

 37,347 

16

17

18 

20

 905,125 

1,035,670

 3,231 

 9,005  

3,613

12,161

 12,236 

 917,361 

(1,208)

 916,153 

 802,182 

15,774

1,051,444

(1,159)

1,050,285

(113,919)

936,366

16,719

96,040

790,167

33,440

 802,182 

1,199.56p

936,366

1,400.22p

The notes on pages 4  0 to 5   1 form an integral part of the ﬁ nancial statements.

The ﬁ nancial statements on pages 3  6 to 5   1 were approved by the board of directors and authorised for issue on 
2 1 February 2019. They were signed on its behalf by:

A Copple
Chairman

38
38

TEMPLE BAR INVESTMENT TRUST PLC
TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 2018
Annual Report & Financial Statements for the year ended 31 December 201 8

 
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2018

Cash ﬂ ows from operating activities

Proﬁ t/(loss) before tax

Adjustments for:

(Gains)/losses on investments 

Finance costs 

Purchases of investments1 

Sales of investments1 

Dividend income

Interest income

Dividend received

Interest received

Decrease in receivables

Decrease in payables

Overseas withholding tax suffered

Net cash ﬂ ows from operating activities

Cash ﬂ ows from ﬁ nancing activities 

Repayment of 9.875% 2017 debenture

Proceeds from issue of 2.99% Private Placement Loan

 Issue costs relating to 2.99% Private Placement Loan

Unclaimed dividends

Equity dividends paid

Interest paid on borrowings

Net cash ﬂ ows from ﬁ nancing activities

Net 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

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2018

2017

Notes

£000

£000

£000

£000

(104,831)

84,154

(62,251)

6,779

(437,327)

437,261

(32,410)

(1,588)

32,189

1,248

1,212

(10)

(207)

135,744

30,913

(55,104)

29,050

12(b)

8

4

4

9

131,528

4,930

(513,298)

512,712

(36,7 28 )

(545 )

36,115 

1,365 

25

(199)

(161)

–

–

–

51

(25,000)

25,000

(121)

11

(27,532)

(6,587)

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(34,229)

(5,179)

17,340

12,161

10

(29,243)

(4,877)

(34,069)

(3,156)

12,161

9,005

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 4  0 to 5   1 form an integral part of the ﬁ nancial statements.

TEMPLE BAR INVESTMENT TRUST PLC
TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 2018
Annual Report & Financial Statements for the year ended 31 December 201 8

39
39

 
 
 
 
 
 
NOTES TO THE FINANCIAL STATEMENTS

1  PRINCIPAL ACCOUNTING POLICIES

Basis of accounting
The ﬁ nancial 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, as amended in February 2018, is consistent with the requirements of IFRS, the directors have sought to 
prepare the ﬁ nancial 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 reﬂ ect 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 capital gain in the Statement of Comprehensive Income.

Interest income is recognised in line with coupon terms  on a time apportioned basis .

Special dividends are credited to capital or revenue according to their circumstances.

Foreign Currency
The ﬁ nancial 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 as well as instruments carried at fair value 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 

proﬁ t 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 ﬁ nance costs 
have been allocated 40% to revenue and 60% to capital, in order to reﬂ ect 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 proﬁ t for the year. The taxable proﬁ t differs from proﬁ t 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 column.

40
40

TEMPLE BAR INVESTMENT TRUST PLC
TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 2018
Annual Report & Financial Statements for the year ended 31 December 201 8

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Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets 
and liabilities in the ﬁ nancial statements and the corresponding tax bases used in the computation of taxable proﬁ t 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 proﬁ ts 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 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 ﬁ nancial liabilities are recognised in the Statement of Financial Position when the Company becomes 
party to the contractual provisions of the instrument. The Company  will offset ﬁ nancial assets and ﬁ nancial liabilities if it has a 
legally enforceable right to set off the recognised amounts and interest  and intends to settle on a net basis. A ﬁ nancial asset 
is derecognised when the right  to receive cash ﬂ ows from the asset expires or the rights to receive cash ﬂ ows from the asset 
have been transferred and a ﬁ nancial liability is derecognised when the obligation under the liability is discharged, cancelled 
or expired. The Company classiﬁ es its ﬁ nancial assets as subsequently measured at amortised cost or measured at fair value 
through proﬁ t or loss on the basis of its business model for managing the ﬁ nancial assets and the contractual cash ﬂ ow 
characteristics of the ﬁ nancial asset. Financial assets are measured at fair value through proﬁ t or loss if its contractual terms do 
not give rise to cash ﬂ ows on speciﬁ ed dates that are solely payments of principal and interest and at amortised cost if they do.   

Receivables
 Receivables are held to collect contractual cash ﬂ ows, 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. The Company 
has chosen to apply an approach similar to the simpliﬁ ed approach for expected credit losses (ECL) under IFRS 9 to all its 
receivables. Therefore the Company does not track changes in credit risk, but instead recognises a loss allowance based on 
lifetime ECLs at each reporting date. The Company's approach to ECLs reﬂ ects a probability-weighted outcome, based on 
reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, 
current conditions and forecasts of future economic conditions.

Investments
Investments held at fair value through proﬁ t 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 proﬁ t or loss. Gains or losses on investments measured 
at fair value through proﬁ t or loss are included in net proﬁ t 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 ﬁ nancial 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.

 Investments held at fair value through proﬁ t or loss are initially recognised at fair value, being the consideration given and excluding 
transaction or other dealing costs associated with the investment. Investments are held at fair value through proﬁ t or loss as they fail 
the contractual cash ﬂ ows test under IFRS 9 so there is no change to comparative ﬁ gures as investments were historically held at fair 
value through proﬁ t or loss under IAS 39.

Financial liabilities and equity instruments
    Financial liabilities and equity instruments are classiﬁ ed 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 stock and loans 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 of 
the debenture stock is determined by reference to quoted market mid prices at close of business on the year-end date, while 
the fair value of private placement loans is determined using discounted cash ﬂ ow techniques which utilise inputs including 
interest rates obtained from comparable loans in the market.

Payables
Payables are non interest bearing and are stated at their nominal value.

TEMPLE BAR INVESTMENT TRUST PLC
TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 2018
Annual Report & Financial Statements for the year ended 31 December 201 8

41
41

 
 
 
 
NOTES TO THE FINANCIAL STATEMENTS CONTINUED

 Equity dividends payable
Equity dividends payable are recognised when the shareholders’ right to receive payment is established. For interim dividends 
this is when they are paid and for ﬁ nal dividends this is when they are approved by shareholders.

Finance costs
Interest payable on the debenture stock and loans 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.

Cash and cash equivalents
Cash and cash equivalents (which are presented as a single class of asset on the Statement of Financial Position) comprise cash 
at bank and in hand and deposits with an original maturity of three months or less.

The carrying value of these assets approximates their fair value.

2  SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS

The preparation of the Company’s ﬁ nancial statements requires the directors to make judgements, estimates and assumptions 
that affect the reported amounts recognised in the ﬁ nancial 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 judgements, estimates or assumptions 
which have had a signiﬁ cant impact on the ﬁ nancial statements for the current or preceding ﬁ nancial year.

3  ADOPTION OF NEW AND REVISED STANDARDS 

IFRS 9 Financial Instruments
In the current period the Company has adopted IFRS 9 Financial Instruments on its effective date of 1 January 2018. IFRS 9 
replaces IAS 39 Financial Instruments: Recognition and Measurement and introduces new requirements for classiﬁ cation and 
measurement, impairment and hedge accounting. IFRS 9 is not applicable to items that have already been derecognised at 
1 January 2018, the date of initial application.

Receivables that were previously measured at amortised cost under IAS 39 are held to collect contractual cash ﬂ ows and give 
rise to cash ﬂ ows representing solely payments of principal and interest. Therefore, such instruments continue to be measured 
at amortised cost under IFRS 9.

The classiﬁ cation of ﬁ nancial liabilities under IFRS 9 remains broadly the same as under IAS 39. The main impact on measurement 
from the classiﬁ cation of liabilities under IFRS 9 relates to the element of gains or losses for ﬁ nancial liabilities designated at fair 
value through proﬁ t or loss attributable to changes in credit risk. The Company has not designated any ﬁ nancial liabilities at fair 
value through proﬁ t or loss therefore this requirement has not had an impact on the Company.

IFRS 9 requires the Company to record expected credit losses on all of its receivables, either on a 12 month o r lifetime basis. As 
the Company has limited exposure to credit risk, this amendment has not had a material impact on the ﬁ nancial statements as the 
Company only holds receivables with no ﬁ nancing component that have maturities of 12 months or less. This requirement has not 
signiﬁ cantly changed the carrying amounts of the Company’s  ﬁ nancial assets under IFRS 9.

Comparative ﬁ gures for the year ended 31 December 2017 have not been restated and are still accounted for in accordance with 
IAS 39 Financial Instruments: Recognition and Measurement.

IFRS 15 Revenue from  Contracts with  Customers
The Company adopted IFRS 15 Revenue from  Contracts with  Customers on its effective date of 1 January 2018. IFRS 15 
replaces IAS 18 Revenue and establishes a ﬁ ve-step model to account for revenue arising from contracts with customers. In 
addition, guidance on interest and dividend income have been moved from IAS 18 to IFRS 9 without signiﬁ cant changes to the 
requirements. Therefore, there was no impact of adopting IFRS 15 for the Company.

Standards issued but not yet effective
There are no standards or amendments to standards not yet effective that are relevant to the Company and should be disclosed.

42
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TEMPLE BAR INVESTMENT TRUST PLC
TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 2018
Annual Report & Financial Statements for the year ended 31 December 201 8

 4 

INCOME

Income from investments

UK dividends

Overseas dividends

Interest from ﬁ xed interest securities

Other income

Deposit interest

Underwriting commission

Total income

Investment income comprises:

Listed investments

2018
£000

 3 5,276 

 1,452  

 530  

 37,258 

2017
£000

30,717

1,693

1,580

33,990

 15 

11

8

–

 37,284 

33,998

 37,258 

 37,258 

33,990

33,990

During the year ended 31 December 2018, the Company received special dividends totalling £ 1,556,991 (2017: £1,448,779). 
Of  this, £ 1,556,991 (2017: £583,324) is recognised as revenue and is included within investment income and £ Nil (2017: £865,475) 
is  recognised as capital and is included in proﬁ t on investments held at fair value through proﬁ t or loss (see note 12(b)).

5  SEGMENTAL REPORTING

The directors are of the opinion that the Company is engaged in a single segment of business being investment business.

6 

INVESTMENT MANAGEMENT FEE

Investment management fee

Secretarial fee

2018

Capital
£000

 2,168 

–

 2,168 

Revenue
£000

1,446 

 57 

 1,503 

Total
£000

3,614 

 57 

 3,671 

Revenue
£000

1,477

55

1,532

2017

Capital
£000

2,215

–

2,215

Total
£000

3,692

55

3,747

As at 31 December 2018 an amount of £ 833,397        (2017: £95 2,319 ) was payable to the Manager in relation to management fees 
for the quarter ended 31 December 2018.

Details of the terms of the investment management agreement are provided on page 1 8.

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TEMPLE BAR INVESTMENT TRUST PLC
TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 2018
Annual Report & Financial Statements for the year ended 31 December 201 8

43
43

 
 
 
 
NOTES TO THE FINANCIAL STATEMENTS CONTINUED

7  OTHER EXPENSES

Transaction costs on fair value 
through proﬁ t or loss assets1

Directors’ fees (see Report on 
Directors Remuneration on page 2 1)

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

2018

Capital
£000

Total
£000

Revenue
£000

 –   

 1,427 

 1,427 

 176 

 63 

 18 

 36 

 14 

 21 

 30 

 3 

 23 

 18 

 99 

 11 

 47 

 –   

 –   

 –   

 –   

 –   

 –   

 –   

 –   

 –   

 –   

 –   

 –   

 –   

 176 

 63 

 18 

 36 

 14 

 21 

 30 

 3 

 23 

 18 

 99 

 11 

 47 

 559 

 1,427 

 1,986 

–

185

85

21

45

30

14

30

3

26

20

101

10

30

600

1 

 Transaction costs on fair value through proﬁ t or loss assets represent such costs incurred on both the purchase and sale of those assets.
Transaction costs on purchases amounted to £ 1,340,962  (2017: £755,713) and on sales amounted to £ 85,959  (2017: £213,276).

2   During the year there were audit fees of £ 25, 500  (2017: £25, 0 00) (excluding VAT) paid to the Auditor. 

All expenses are inclusive of VAT where applicable.

8  FINANCE COSTS

Interest on borrowings

9.875% debenture stock 2017

5.5% debenture stock 2021

4.05% Private placement loan 20281

2.99% Private placement loan 20471

Revenue
£000

–

 847 

 810 

 301 

 1,958 

2018

Capital
£000

–

 1,291 

 1,226 

 451 

 2,968 

Bank interest payable

Total ﬁ nance costs

 4 

–  

 4 

 1,962 

 2,968 

 4,930 

Total
£000

Revenue
£000

–

 2,138 

 2,036 

 752 

 4,926 

988

839

815

56

2,698

3

2,701

2017

Capital
£000

969

–

–

–

–

–

–

–

–

–

–

–

–

–

Total
£000

969

185

85

21

45

30

14

30

3

26

20

101

10

30

969

1,569

2017

Capital
£000

1,481

1,269

1,242

86

4,078

–

4,078

Total
£000

2,469

2,108

2,057

142

6,776

3

6,779

The amortisation of the debenture and loan issue costs is calculated using the effective interest method.

1  The 4.05% and 2.99% Private Placement Loans contain the following principal ﬁ nancial 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 ﬁ nancial 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

44
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TEMPLE BAR INVESTMENT TRUST PLC
TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 2018
Annual Report & Financial Statements for the year ended 31 December 201 8

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9  TAXATION

(a)  There is no corporation tax payable (2017: nil).

(b)  The charge for the year can be reconciled to the proﬁ t per the Statement of Comprehensive Income as follows:

Proﬁ t/(loss) before tax per accounts

 33,260 

 (138,091)

 (104,831)

29,165

Revenue
£000

2018

Capital
£000

Total
£000

Revenue
£000

2017

Capital
£000

54,989

Total
£000

84,154

UK corporation tax rate at 19. 00 %
(2017 :  19.25%)

Effects of:

Non-taxable gains on investments1

Disallowed expenses

Non-taxable UK dividends1

Non-taxable overseas dividends1

Increase in excess management expenses 
in the year2

Overseas withholding tax suffered

Total tax charge for the year

 6,319 

 (26,237)

 (19,918)

5,615

10,585

16,200

 –   

 –   

 (6,518)

 (197)

 396 

 161 

 161 

 24,990 

 24,990 

 271 

 –   

 –   

 271 

 (6,518)

 (197)

 976 

 1,372 

 –   

–

 161 

 161 

–

–

(5,814)

(319)

518

207

207

(11,984)

(11,984)

187

–

–

1,212

–

–

187

(5,814)

(319)

1,730

207

207

1 Investment trusts are not subject to corporation tax on these items.

2  The Company has not recognised a deferred tax asset of £ 16,779,272  (2017: £15,541,058) based on a future effective tax rate of  17.0 % (2017: 17.0%) arising as a result of having 

unutilised management expenses since, under current tax legislation, it is unlikely that the Company will obtain any beneﬁ t from the asset.

10  DIVIDENDS

Amounts recognised as distributions to equity holders in the year

Final dividend for the year ended 31 December 2017 of 17.48p (2016: 16.18p) per share 

Interim dividends (three) for the year ended 31 December 2018 of 8.75p (2017: three payments of 8.33p) per share

2018
£000

 11,689 

 17,554 

 29,243 

2017
£000

10,820

16,712

27,532

Proposed ﬁ nal dividend for the year ended 31 December 2018 of  20.47 p (2017: 17.48p) per share

 13,689 

11,689

The proposed ﬁ nal dividend is subject to approval by shareholders at the Annual General Meeting and has not 
been included as a liability in these ﬁ nancial statements. Therefore, also set out below is the total dividend payable in respect 
of these ﬁ nancial 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 2018 of 8.75p (2017: three payments of 8.33p) per share

Proposed ﬁ nal dividend for the year ended 31 December 2018 of  20.47 p (2017: 17.48p) per share

11  EARNINGS PER SHARE

Earnings per ordinary share

 49.50p 

 (206.50p)

 (157.00p)

43.30p

Revenue
pence

2018

Capital
pence

Total
pence

Revenue
pence

2018
£000

 17,554 

 13,689 

 31,243 

2017

Capital
pence

82.23p

2017
£000

16,712

11,689

28,401

Total
pence

125.53p

The calculation of the above is based on revenue returns of £ 33,099,000  (2017: £28,958,000), capital returns of £ (138,091,000)  
(2017: £54,989,000) and total returns of £ (104,992,000)  (2017: £83,947,000) and a weighted average number of ordinary shares of 
66,872,765 (2017: 66,872,765).

TEMPLE BAR INVESTMENT TRUST PLC
TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 2018
Annual Report & Financial Statements for the year ended 31 December 201 8

45
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED

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

(De crease)/in crease  in investment holding gains

Closing fair value at 31 December

Closing cost at 31 December

Investment holding (losses)/gains at 31 December

(b) Gains/(losses) on investments

Gains on sales of investments based on historical book cost

Revaluation losses  recognised in previous years

 (Losses)/g ains  on investments sold in the year based on carrying value at previous statement of ﬁ nancial 
position date

(De crease)/in crease  in investment holding gains

2018
£000

2017
£000

 887,825 

834,390

 147,845 

138,963

 1,035,670 

973,353

 513,428 

437,327

 (512,445)

(437,261)

 36,453 

53,370

 (167,981)

8,881

 905,125 

1,035,670

 925,261 

887,825

 (20,136)

147,845

 905,125 

1,035,670

 36,453 

53,370

 (64,550)

(49,079)

 (28,09 7)

 (103,431)

 (131,528)

4,291

57,960

62,251

All investments are listed.

(c) Fair value of ﬁ nancial instruments
IFRS 13 requires an entity to classify fair value measurements using a fair value hierarchy that reﬂ ects the signiﬁ cance of the 
inputs used in making the measurements. The fair value hierarchy has the following classiﬁ cations:

•  Level 1 – valued using quoted prices in active markets for identical investments.

•  Level 2 – valued using other signiﬁ cant observable inputs (including quoted prices for similar investments, interest rates, 

prepayments, credit risk, etc). There are no level 2 ﬁ nancial assets (2017: £nil).

•  Level 3 – valued using signiﬁ cant unobservable inputs (including the Company’s own assumptions in determining the fair 

value of investments). There are no level 3 ﬁ nancial assets (2017: £nil).

All of the Company’s investments are in quoted securities actively traded on recognised stock exchanges, with their fair 
value being determined by reference to their quoted bid prices at the reporting date. The total value of the investments of 
£ 905,125,000  (2017: £1,035,670,000) has therefore been determined as Level 1.

Please refer to Note 22 on page     50 for the disclosure and fair value categorisation of the ﬁ nancial liabilities.

13  RECEIVABLES

Accrued income

Other receivables

2018
£000

 3,113 

 118 

 3,231 

2017
£000

3,320

293

3,613

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.

46
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TEMPLE BAR INVESTMENT TRUST PLC
TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 2018
Annual Report & Financial Statements for the year ended 31 December 201 8

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14  CURRENT LIABILITIES

Payables

Purchases for further settlement

Accruals and deferred income

2018
£000

248

 960 

 1,208 

2017
£000

–

1,159

1,159

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:

5.5% Debenture stock 2021

4.05% Private placement loan 2028

2.99% Private placement loan 2047

Opening balance as per the Statement of ﬁ nancial position

Loans drawn in the year

Loans repaid in the year

Interest paid in the year

Finance costs for the year as per the Statement of comprehensive income

Closing balance as per the Statement of ﬁ nancial position

2018
£000

 38,572 

 50,386 

 25,013 

2017
£000

38,550

50,349

25,020

 113,971 

113,919

2018
£000

2017
£000

 (113,919)

(113,850)

–

–

 4,8 74

 (4,926)

(25,000)

25,000

6,707

(6,776)

( 113,971)

(113,919)

The 5.5% Debenture stock 2021 is secured by a ﬂ oating 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 ﬂ oating charge over the assets of the Company. The loan is repayable at 
par on 3 September 2028.

The 2.99% Private Placement Loan is secured by a ﬂ oating charge over the assets of the Company. The loan is repayable at 
par on 24 October 2047.

16  ORDINARY SHARE CAPITAL

Issued, allotted and fully paid

Ordinary shares of 25p each

There were no shares issued during 2018 (2017: Nil) 

17  SHARE PREMIUM

Balance at 1 January 2018

Premium arising on issue of new shares

Balance at 31 December 2018

2018
Number

2017
Number

2018
£000

2017
£000

66,872,765

66,872,765

16,718,191

16,718,191

2018
£000

96,040

–

96,040

2017
£000

96,040

–

96,040

TEMPLE BAR INVESTMENT TRUST PLC
TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 2018
Annual Report & Financial Statements for the year ended 31 December 201 8

47
47

 
 
 
 
NOTES TO THE FINANCIAL STATEMENTS CONTINUED

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

2018
£000

 672,212 

 (20,136)

 652,076 

2017
£000

642,323

147,844

790,167

19  CONTINGENT LIABILITIES AND CAPITAL COMMITMENTS

As at 31 December 2018 there were no contingent liabilities or capital commitments for the Company (2017: £nil).

20   NET ASSET VALUES

Ordinary shares of 25p each

Net asset 
value per 
ordinary share 
Pence

Net assets 
attributable 
£000

 1,199.56p 

 802,182 

The net asset value per ordinary share is based on net assets at the year-end of £ 802,182,000  (2017: £936,366,000) and on 
66,872,765 (2017: 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 2 1. 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 signiﬁ cant 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 2018 there was £ 38,277 (2017: £48,910) 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. Details of the services provided by the Manager and the fees 
paid are given on page 1 8 and also set out in note 6 on page 4   3.

22   RISK MANAGEMENT AND FINANCIAL INSTRUMENTS

The Company’s investing activities undertaken in pursuit of its investment objective, as set out on page 10, involve certain 
inherent risks. The main ﬁ nancial risks arising from the Company’s ﬁ nancial 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. 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. These policies have remained substantially unchanged during the 
current and preceding periods. The Board meets on seven scheduled occasions in each year and at each meeting it receives 
sufﬁ cient ﬁ nancial and statistical information to enable it to monitor adequately the investment performance and status of the 
business. In addition, ﬁ nancial information is circulated to the directors on a monthly basis.   

Market price risk
Market price risk arises mainly from uncertainty about future prices of ﬁ nancial 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 
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 11.1%.

Interest rate risk
Interest rate risk is the risk of movements in the value of ﬁ nancial instruments or interest income cash ﬂ ows that arise as a 
result of ﬂ uctuations in interest rates. The Company ﬁ nances its operations through retained proﬁ ts including capital proﬁ ts, 
and additional ﬁ nancing is obtained through the debenture stock in issue and the two Private Placement Loans, on all of 
which interest is paid at a ﬁ xed rate.

Liquidity risk
The Company’s assets comprise mainly readily realisable securities, which can be sold to meet funding commitments if 
necessary. Short term ﬂ exibility is achieved through the use of cash balances and short term bank deposits.

48
48

TEMPLE BAR INVESTMENT TRUST PLC
TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 2018
Annual Report & Financial Statements for the year ended 31 December 201 8

22  RISK MANAGEMENT AND FINANCIAL INSTRUMENTS CONTINUED

Credit risk
Credit risk is the risk that one party to a ﬁ nancial instrument will fail to discharge an obligation and cause the other party to 
incur a ﬁ nancial loss. This is mitigated by the Manager reviewing the credit ratings of broker counterparties. The risk attached 
to dividend ﬂ ows 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 carrying amounts of ﬁ nancial assets represent their maximum exposure to credit risk. The full portfolio can 
be found on pages 1 5  to 1 6 .

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  based on 
the exchange rates ruling at the respective year-ends. Exposures vary throughout the year as a consequence of changes in the 
composition of the net assets of the Company arising out of the investment and risk management processes.

Euro

US Dollar

Norwegian Krone

Pounds Sterling

Euro

US Dollar

Norwegian Krone

Pounds Sterling

Investments
£000

 10,452 

 81,193 

 –   

 813,480 

 905,125 

31 December 2018

Receivables
£000

Payables
£000

 57 

 25 3 

 –   

 2,921 

 3,231 

 –   

(117)

 –   

(1,091)

 (1,208)

Non-current
liabilities
£000

 –   

 –   

 –   

(113,971)

 (113,971)

Cash
£000

 366 

 5 

 1 

 8,633 

 9,005 

31 December 2017

Investments
£000

Cash
£000

Receivables
£000

Payables
£000

19,046

93,858

18,938

903,828

1,035,670

–

272

1

11,888

12,161

361

3

1

3,248

3,613

Non-current
liabilities
£000

–

–

–

–

–

–

(1,159)

(1,159)

(113,919)

(113,919)

Total
£000

 10,875 

 81,334  

 1 

 709,972  

 802,182 

Total
£000

19,407

94,133

18,940

803,886

936,366

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Foreign currency sensitivity
The following table illustrates the sensitivity of the proﬁ t after tax for the year and the net assets for the year in relation to 
foreign exchange movements on Euro, Norwegian Krone and US Dollar denominated investments. The analysis below assumes 
that the Euro, Norwegian Krone and US Dollar exchange rates may move +/-2% against Pounds Sterling.

Projected movement

Effect on net assets for the year

Effect on capital return

£000

+2%

 1,844 

 1,833 

£000

-2%

 (1,844)

 (1,833)

Financial assets – Interest rate risk
The majority of the Company’s ﬁ nancial assets are equity shares and other investments which neither pay interest nor have a 
maturity date. The Company’s ﬁ xed interest holdings have a market value of £ 25,470,000 , representing     3.2 % of net assets of 
£ 802,182,000  (2017: £137,047,000; 14.6%). The weighted average running yield as at 31 December 2018 was 2.0 % (2017: 1.5%) 
and the weighted average remaining life was  2.7  years (2017: 0.9 years). The Company’s cash balance of £ 9,005,000  (2017: 
£12,161,000) 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 proﬁ t or loss and net assets would have been a positive 
£ 45,025  (2017: £60,805). If the bank base rate had decreased by 0.5%, the impact on the proﬁ t or loss and net assets would 
have been a negative £ 45,025  (2017: negative £60,805). The calculations are based on the cash balances at the respective 
balance sheet dates and are not representative of the year as a whole.

TEMPLE BAR INVESTMENT TRUST PLC
TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 2018
Annual Report & Financial Statements for the year ended 31 December 201 8

49
49

 
 
 
 
NOTES TO THE FINANCIAL STATEMENTS CONTINUED

Financial liabilities – Interest rate risk
 All current liabilities have no interest rate and are repayable within one year. The 5.5% debenture stock, the 4.05% Private Placement 
Loan and the 2.99% Private Placement Loan, which are repayable in 2021, 2028 and 2047 respectively, pay interest at ﬁ xed rates. The 
weighted average period until maturity of the loans is  11  years (2017: 12 years) and the weighted average interest rate payable is 4.0% 
(2017: 4.0%) p.a.

Other price risk exposure
If the investment valuation fell by 10% at 31 December 2018, the impact on proﬁ t or loss and net assets would have been 
negative £90.5 million (2017: negative £103.6 million). If the investment portfolio valuation rose by 10% at 31 December 2018, 
the impact on proﬁ t or loss and net assets would have been positive £ 90.5  million (2017: positive £103.6 million). Exposures 
vary throughout the year as a consequence of changes in the net assets of the Company arising out of the investment and risk 
management processes.

The Company held the following categories of ﬁ nancial 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 2018. The valuation techniques are explained in the Principal Accounting Policies note.

Assets at fair value through proﬁ t or loss

Cash

Loans and receivables

Investment income receivable

Other receivables

Payables

Interest bearing borrowings:

5.5% Debenture Stock1

4.05% Private Placement Loan2

2.99% Private Placement Loan3

1 Effective interest rate is 5.583%
2 Effective interest rate is 4.133%
3 Effective interest rate is 3.015%

2018

2017

Book value
£000

Fair value
£000

Book value
£000

 905,125 

 905,125 

1,035,670

 9,005 

 9,005 

12,161

Fair value
£000

1,035,670

12,161

 3,113 

 118 

 (1,208)

 (38,572)

 (50,386)

 (25,013)

 3,113 

 118 

 (1,208)

 (41,114)

 (54,107)

 (24,902)

3,320

293

(1,159)

(38,550)

(50,349)

(25,020)

3,320

293

(1,159)

(42,510)

(54,846)

(25,456)

 802,182 

 796,030 

936,366

927,473

The 5.5% Debenture Stock 2021 is classiﬁ ed as a Level 1 instrument (2017: Level 1).

The 4.05% Private Placement Loan 2028 and the 2.99% Private Placement Loan 2047 do not have prices quoted on an active 
market but their fair values are based on observable inputs. As such they have been classiﬁ ed as Level 2 instruments (2017: 
Level 2).

Liquidity risk exposure
This is the risk that the Company will encounter difﬁ culty in meeting obligations associated with ﬁ nancial liabilities.

Contractual maturities of the ﬁ nancial liabilities at the year end, based on the earliest date on which payment can be 
required, are as follows:

2018

2017

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 stock and Loans

 2,058 

 2,805 

 155,290 

 160,153 

2,058

2,805

160,153

165,016

Creditors: amounts falling due 
within one year

Accruals and deferred income

 1,048 

 3, 106 

 160 

–

 1,208 

 2,965 

 155,290 

 161, 361 

917

2,975

242

–

1,159

3,047

160,153

166,175

50

TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 201 8

22  RISK MANAGEMENT AND FINANCIAL INSTRUMENTS CONTINUED

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 its 
debenture and ﬁ xed term loans (see note 15) at a total of £ 916,153,000  (2017: £1,050,285,000).

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 proﬁ ts 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 deed have various covenants that prescribe that moneys borrowed should not exceed the 
adjusted total capital and reserves as deﬁ ned in the debenture trust deed. The Note Purchase Agreements governing the 
terms of the Private Placement Loans also contain certain ﬁ nancial covenants. These are measured in accordance with the 
policies used in the annual ﬁ nancial statements.

The Company has complied with all of the above requirements.

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TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 201 8

51

 
 
 
 
    
 
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 ﬁ nancial 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 93rd Annual General Meeting of Temple Bar Investment Trust PLC will be held 
at 11.00am on Thursday 28 March 2019 at 30 Gresham Street, London EC2V 7QP for the following purposes:

ORDINARY BUSINESS:

1. 

 To approve the Company’s Annual Report and Financial Statements for the year ended 31 December 2018 (together with 
the reports of the directors and auditor thereon).

2.  To approve the report on directors’ remuneration for the year ended 31 December 2018.

3.  To declare a ﬁ nal dividend of  20.47 p per ordinary share.

4.  To re-elect Mr A T Copple as a director of the Company.

5.  To re-elect Sir Richard  Jewson KCVO as a director of the Company.

6.  To re-elect Dr L R Sherratt as a director of the Company.

7.  To re-elect Mr R E J Wyatt as a director of the Company.

8.   To re-appoint Ernst & Young LLP as the auditor to the Company and to authorise the audit committee to determine their 

remuneration.

SPECIAL BUSINESS:

To consider and, if thought ﬁ t, pass the following resolutions:

ORDINARY RESOLUTION:

9. 

 That the investment policy of the Company be amended as described in the Overview of Strategy Section of the Annual 
Financial Statements of the Company for the year ended 31 December 2018.

10.  That in substitution of all existing authorities 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 10% of the issued share capital of the Company as at 2 1 February 2019 and representing 6,687,276 ordinary shares 
of 25p each in the capital of the Company (or if changed the number representing 10% of the issued share capital of the 
Company at the date at which this resolution is passed), provided that:

(i) 

(ii) 

 the authority granted shall expire at the conclusion of the Annual General Meeting of the Company in 2020 or 
15 months from the date of the passing of this resolution, whichever is the earlier, 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.

52

TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 201 8

 
 
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SPECIAL RESOLUTIONS:

11.  That, in substitution of all existing powers but, subject to the passing of resolution 10 set out above, the directors be and 
they are hereby generally empowered pursuant to Section 570-573 of the Companies Act 2006 (the ‘Act’) to allot equity 
securities (as deﬁ ned 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) 

(ii) 

 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 to 
deal with equity securities in relation to fractional entitlements or legal or practical problems under the law of or the 
requirements of any regulatory body or any stock exchange in any territory or any other matter whatsoever); and

 the allotment (otherwise than pursuant to sub paragraph (i) above) of equity securities up to an aggregate nominal 
value not exceeding £1,671,819, being 10% of the issued share capital of the Company as at 2 1 February 2019 and 
representing 6,687,276 shares of 25p each in the capital of the Company (‘Shares’) (or, if changed, the number 
representing 10% of the issued share capital of the Company at the date at which this resolution is passed), and 
provided further that (i) the number of equity securities to which this power applies shall be reduced from time 
to time by the number of treasury shares which are sold pursuant to any power conferred on the directors by 
resolution 1 0 set out above and (ii) no allotment of equity securities shall be made under this power which would 
result in Shares being issued at a price which is less than the higher of the Company’s estimated cum or ex income net 
asset value per Share as at the latest practicable time before such allotment of equity securities as determined by the 
directors in their reasonable discretion; and

 such power shall expire at the conclusion of the next Annual General Meeting of the Company after the passing of this 
resolution or 15 months from the date of passing this resolution, whichever is earlier, unless previously revoked, varied 
or renewed by the Company in general meeting and 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.

12.  That the Company generally be and is hereby authorised for the purpose of Section 701 of the Companies Act 2006 

(the ‘Act’) to make one or more market purchases (as deﬁ ned 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 (exclusive of expenses payable by the Company) which may be paid for such ordinary shares is 
25p per share;

 the maximum price (exclusive of expenses payable by the Company) which may be paid for such ordinary shares shall 
be 5% above the average of the market value of the share quotations taken from the London Stock Exchange Daily 
Ofﬁ cial List for the ﬁ ve business days immediately 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 to be held in 2020, or, if earlier, the date falling ﬁ fteen months from the date of this 
resolution;

 the Company may make a contract to purchase its own ordinary 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 

2 1 February 2019

Woolgate Exchange
25 Basinghall Street
 London EC2V 5HA

TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 2018

53

 
 
 
 
 
 
 
 
 
 
 
 
NOTICE OF MEETING CONTINUED

SHOWN IS A PLAN OF THE 
LOCATION OF INVESTEC'S 
 OFFICES AT, 30 GRESHAM 
STREET, LONDON EC2V 
7QP WHERE THE ANNUAL 
GENERAL MEETING WILL 
BE HELD ON THURSDAY 
28 MARCH 2019 AT 11.00AM.

NOTES

1.   Entitlement to attend and vote 

 Members who hold ordinary shares in the Company in uncertiﬁ cated form must have been entered on the Company’s 
register of members by 6.30pm on 26 March 2019 in order to be able to attend and vote at the meeting, or if the meeting 
is adjourned, 6.30pm on the day two business days before the time ﬁ xed 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 speciﬁ ed 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 26 March 2019. 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 11.00am on 26 March 2019.

 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 speciﬁ cations 
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. 

54

TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 201 8

 
 
 
 
 
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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 Uncertiﬁ cated 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.

5.   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 ﬁ nancial year beginning 1 January 2018; or (ii) any circumstance connected with an auditor of the 
Company appointed for the ﬁ nancial year 1 January 2018 ceasing to hold ofﬁ ce 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 ﬁ nancial year includes any 
statement that the Company has been required under Section 527 of the Companies Act 2006 to publish on a website.

6.   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 conﬁ dential 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.

7.   Inspection of documents
  None of the directors has a service contract with the Company.

8.   Total number of shares and voting rights 

 As at 2 1 February 2019, 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.

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.

TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 2018

55

 
 
 
 
 
 
 
 
 
 
 
USEFUL INFORMATION FOR SHAREHOLDERS

ANNUAL GENERAL MEETING

The Annual General Meeting will be held at 30 Gresham Street, London EC2V 7QP (see map on page 5   4), on 28 March 2019 at 
11.00am.

FINANCIAL CALENDAR

The ﬁ nancial calendar for 2019 is set out below:

Ordinary shares
Final dividend, 2018  – payable 

– ex-dividend 
– record date 

First interim dividend, 2019 
Second interim dividend, 2019 
Third interim dividend, 2019 
Final dividend, 2019   

5.5% Debenture Stock 2021
Interest payments 

PAYMENT OF DIVIDENDS

29 March 2019
7 March 2019
8 March 2019
28 June 2019
30 September 2019
30 December 2019
End of March 2020

8 March and 8 September

Cash dividends will be sent by cheque to the ﬁ rst-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 stock 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 notiﬁ ed in writing to the Registrar.

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.

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.

WHERE TO BUY TEMPLE BAR SHARES

1. Via a third party provider
Third party providers include:

AJ Bell 
 Barclays Stockbrokers 
Bestinvest  
 Charles Stanley Direct 
FundsNetwork  
Hargreaves Lansdown  

Interactive Investor 
James Brearley
James Hay
Selftrade
TD Direct
The Share Centre
Trustnet Direct

Please note this list is not exhaustive and the availability of Temple Bar may vary depending on the provider. These websites 
are third party sites and Temple Bar does not endorse or recommend any. Please observe each site's privacy and cookie 
policies as well as their platform charges structure.

56

TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 201 8

 
 
 
  
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2. Through a professional adviser
Professional advisers are usually able to access the products of all the companies in the market and can help you ﬁ nd an 
investment that suits your individual circumstances. An adviser will let you know the fee for their service before you go ahead. 
You can ﬁ nd an adviser at www.unbiased.co.uk

You may also buy investment trusts through stockbrokers, wealth managers and banks.

To familiarise yourself with the Financial Conduct Authority (FCA) adviser charging and commission rules, visit fca.org.uk

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 (‘IFM’), is required to be made available to investors. In accordance with the 
Directive, the AIFM remuneration policy is available at www.investecassetmanagement.com or from the Company Secretary 
on request (see contact details on page 5  8 ) and the numerical remuneration disclosures in respect of the AIFM’s relevant 
reporting period (year ended 31 March 2018) are also available at www.investecassetmanagement.com.

Leverage
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 2018 are shown below:

Leverage Exposure

Maximum limit

Actual

Gross 
method

Commitment 
method

250%

 122%

200%

 127%

Remuneration
The table below, as provided by the AIFM, shows the total amount of remuneration paid by the AIFM to its staff for the 
ﬁ nancial year ending 31 March 2018, split into ﬁ xed and variable remuneration, and showing the number of beneﬁ ciaries. No 
performance fees or any other type of remuneration was paid directly by the Fund.

IFM does not directly employ staff.

The table below shows, for the same period, the aggregate amount of remuneration paid to Identiﬁ ed/Code Staff in respect of 
activities related to the AIFM and the Fund. Identiﬁ ed/Code Staff are staff and other individuals identiﬁ ed by the AIFM whose 
activities have a material impact on the risk proﬁ le of the AIFM or the Fund. This table excludes Identiﬁ ed/Code Staff activities 
subject to a delegation agreement.

Aggregate Remuneration

Senior Management

Other individuals with material impact

Number of Staff

£ 163,276

£ 159,940

£ 3,336

9 

TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 2018

57

 
 
 
 
Independent auditor 
Ernst & Young LLP
Atria One
144 Morrison Street
Edinburgh EH3 8EX

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

CORPORATE INFORMATION

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

Registered ofﬁ ce 
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

Temple Bar Identiﬁ ers
Company registration number – 214601
Ordinary Shares ISIN – GB0008825324
Ordinary Shares Sedol – 0882532
Legal Entity Identiﬁ er – 213800O8EAP4SG5JD323

Registrar
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.

GLOSSARY OF TERMS

ABSOLUTE PERFORMANCE

The return that an asset achieves over a period of time, relative to the investment itself.

AIC

The Association of Investment Companies.

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.

58

TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 201 8

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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 deﬁ ned 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 ﬁ xed 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.

DISCOUNT*

The amount by which the market price per share of an investment trust is lower than the net asset value per share. The 
discount is normally expressed as a percentage of the net asset value per share.

DIVERSIFICATION

Holding a range of assets to reduce risk.

DIVIDEND 

The portion of company net proﬁ ts 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 ﬁ xed 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 
proﬁ ts. Also known as leverage.

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 speciﬁ c 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.

TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 2018

59

 
 
 
 
 GLOSSARY OF TERMS CONTINUED

ONGOING CHARGE*

 Deﬁ ned as the total of the investment management fee of £3,6  71,000 and administrative expenses of £559,000 divided by 
the average cum income net asset value throughout the year of £896,186,480. This ﬁ gure excludes any performance fee or 
portfolio transaction costs and may vary from year to year.

PEER COMPANIES

Companies that operate in the same industry sector and are of similar size.

PREMIUM*

The amount by which the market price per share of an investment trust exceeds the net asset value per share. The premium is 
normally expressed as a percentage of the net asset value per share.

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-efﬁ cient 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 ﬁ rm. 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 dividends generated over a holding 
period.

Return on Gross Assets
As at 31 December 2018, the difference between the Trust's opening and closing total assets less current liabilities stood at 
£ (134,132,   000 ) (2018: £ 916,  153,000; 2017: £1,050,285,000); adding the dividend and debenture interest paid in the current 
year of £ 29,243,000    and £4,926,000 respectively results in a  total return of £ (99,962,000) for the purposes of this calculation. 
Dividing this return by the opening total assets less current liabilities of the Trust  results in the return of (9.5)      %  (please see the 
Statement of Financial position as well as notes 8 and 10 of the ﬁ nancial statements on pages  38, 4 4 and  4 5 respectively  for the 
audited inputs to the calculation).

Return on Net Asset Value 
As at 31 December 2018, the difference between the Trust's opening and closing NAV stood at £ (134,184,000 ) (2018: 
£ 802,182,000 ; 2017: £936,366,000); adding the dividend paid in the current year of £ 2     9,243,000    results in a total return of 
£ (104 , 940,000) for the purposes of this calculation. Dividing this return by the opening NAV of the Trust results in the return of 
 (11.2 )%  (please see the Statement of Financial position and note 10 of the ﬁ nancial statements on pages   38 and 4   5 respectively, 
for the audited inputs to the calculation).

Return on Share price 
As at 31 December 2018, the difference between the Trust's opening and closing market price per share stood at ( 168.00 )p 
(2018:  1,146.00 p; 2017: 1,314.00p); adding the dividend accrued in the current year of 43.73 p results in a total return per share 
of (124.27 )p for the purposes of this calculation. Dividing this return on a daily basis by the opening market value per share 
results in an annual cumulative  return of (9.7) % (please see the Summary of Results on page 1 for the  inputs to the calculation).

 VALUATION 

Determination of the value of a company’s stock based on earnings and the market value of assets.

VALUE INVESTING

An investment strategy where stocks are selected that trade for less than their intrinsic values because it is believed that the 
market has undervalued them based on certain forms of fundamental analysis.

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 ﬂ at 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.

* Alternative Performance Measure.

60

TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 201 8

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 Listed 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

17   Board of Directors

36   Statement of 

SHAREHOLDER 
INFORMATION

2  Chairman’s statement

18   Report of Directors

4   Manager’s review

21   Report on directors’ 

7   Ten year record

8   Attribution analysis

9   Overview of strategy

15   Portfolio of investments

remuneration

23   Corporate governance

26   Report of the audit 

committee

28   Statement of directors’ 

responsibilities

29   Independent auditor’s 

report

Comprehensive Income

52   Notice of meeting

37   Statement of Changes 

in Equity

38   Statement of Financial 

Position

39   Statement of  
Cash Flows

56   Useful information  
for shareholders

57   Alternative Investment 
Fund Managers (AIFM) 
Directive

58  Corporate information

40   Notes to the Financial 

58  Glossary of terms

Statements

TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 2018

Perivan Financial Print   252470

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ANNUAL REPORT & FINANCIAL STATEMENTS  
FOR THE YEAR ENDED 31 DECEMBER 2018