Temple Bar Investment Trust PLC Annual Report 2019

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FY2019 Annual Report · Temple Bar Investment Trust PLC

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ANNUAL REPORT & FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019

OBJECTIVE
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.

PURPOSE
The purpose of the Company is to deliver long term returns
for shareholders from a diversified portfolio of investments.

CONTENTS

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL REPORT

1 Summary of results

17 Board of Directors

35 Statement of

SHAREHOLDER
INFORMATION

2 Chairman’s statement

18 Report of Directors

4 Manager’s review

21 Report on directors’

6 Ten year record

7 Attribution analysis

8 Overview of strategy

15 Portfolio of investments

remuneration

23 Corporate governance

26 Report of the audit and

risk committee

28 Statement of directors’

responsibilities

29 Independent auditor’s

report

Comprehensive Income

49 Notice of meeting

36 Statement of Changes

in Equity

37 Statement of Financial

Position

38 Statement of
Cash Flows

53 Useful information
for shareholders

54 Alternative Investment
Fund Managers (AIFM)
Directive

55 Corporate information

39 Notes to the Financial

55 Glossary of terms

Statements

TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 2019

Perivan 257618

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

Premium/(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 final

Capital for the year ended 31 December

Capital return attributable to ordinary shareholders

Capital return attributable per ordinary share

Net gearing*†

Ongoing charges*††

Total Returns for the year to 31 December 2019

Return on net assets*

Return on gross assets*

Return on share price*

FTSE All-Share Index

Change in Retail Prices Index over year

Dividend Yields (Net) as at 31 December 2019

Yield (historic) on ordinary share price (1,476p) *†††

Yield on FTSE All-Share Index

2019
£000

2018
£000

% change

985,123

802,182

1,473.13p

1,462.46p

1,476.00p

0.9%

35,523

53.12p

51.39p

183,167

273.90p

8.0%

0.49%

1,199.56p

1,190.37p

1,146.00p

(3.7%)

33,099

49.50p

46.72p

(138,091)

(206.50p)

9.1%

0.47%

22.8

22.9

28.8

27.9

24.2

34.3

19.2

2.2

3.6

4.1

* Alternative Performance Measures – See glossary of terms on page 55 for definition and more information.
†
Defined as shareholders’ funds divided by total assets less current liabilities and cash or cash equivalents (including gilt holdings) expressed as a percentage.
†† Defined as the total of the investment management fee and administrative expenses divided by the average cum income net asset value throughout the year.
††† Based on the three interim dividends paid during the year together with the final dividend for 2018.

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

£1,099,172,000

TOTAL EQUITY*

£985,123,000

MARKET CAPITALISATION

£987,042,000

* With debenture and loan stocks at book value

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTSHAREHOLDER INFORMATIONTEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2019
CHAIRMAN’S STATEMENT

The 36th consecutive year in which the Company has raised its annual dividend
payment.

PERFORMANCE

DIVIDEND

During the year the total return on the net assets of Temple
Bar was 27.9%, outperforming the total return of the FTSE All
Share Index of 19.2%. While it is always welcome to report on
good performance over the year the Board attaches greater
significance 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 years, as
demonstrated by the chart on page 10.

The Manager’s Review on pages 4 to 6 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.

There have been three interim dividend payments during
the year each of 11.0p per share and the directors are now
recommending a final dividend payment for the year ended
31 December 2019 of 18.39p per share to be paid on 31 March
2020 to those shareholders on the register as at 13 March
2020. The ex-dividend date for this payment is 12 March 2020.
If approved this would give an increase in the total dividend
payment for the year of 10.0%. In spite of this significant
increase the dividend is fully covered by this year’s earnings
and has not required recourse to the Company’s significant
revenue reserves. Shareholders will note that the final dividend
is lower than that paid in the previous year, reflecting the
rebalancing exercise between the size of the final and interim
dividends that was highlighted during the year. This will be
the 36th consecutive year in which the Company has raised its
annual dividend payment, such consistency being reflected in
Temple Bar’s status as one of The Association of Investment
Companies’ ‘Dividend Heroes’.

GEARING

At the year end, gearing (calculated net of cash and related
liquid assets) was 8.0%. The Company’s £38m 5.5% debenture
stock matures in April 2021. During the year the Board will
carefully consider all the available options for managing the
Company’s borrowings going forward.

CULTURE AND PURPOSE

It is a new requirement for all companies to set out their
culture and purpose. It is perhaps more difficult for a
conventional investment trust such as Temple Bar to articulate
these matters given certain unique factors, such as an absence
of any employees. Our defined purpose is relatively simple;
it is to deliver attractive long term returns from a diversified
portfolio of predominantly UK listed investments. Board
culture promotes a desire for strong governance and long
term investment, mindful of the interests of all stakeholders.

THE BOARD

As highlighted in my Statement last year, Sir Richard Jewson
will be retiring from the Board at the AGM and will not,
therefore, be seeking re-election. Sir Richard has provided
outstanding service to the Board over the 19 years that he
has served, particularly in his capacity as Senior Independent
Director and Chairman of the Audit and Risk Committee. We
will greatly miss his wise counsel and wish him the very best
for the future. Lesley Sherratt will succeed Sir Richard as Senior
Independent Director and Chairman of the Audit and Risk
Committee.

In October 2019 we appointed Sonita Alleyne and Shefaly
Yogendra to the Board pursuant to the refreshment process to
which I referred last year and both have already made strong
contributions to Board discussion. It was very unfortunate
that in January this year Sonita felt compelled to resign from
the Board due to a conflict of interest in allowable investment
categories between Temple Bar and one of her other portfolio
positions.

TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2019ANNUAL GENERAL MEETING

The AGM this year will be held at the offices of our Manager
at Woolgate Exchange, 25 Basinghall Street, London
EC2V 5HA on Monday 30 March 2020 at 11am. Please note
that this is a different building to that 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.

AUDITOR

Regulations on compulsory auditor rotation mean that
Ernst & Young LLP, the Company’s auditor, is stepping down
to be replaced, following an audit tender, by BDO LLP.
Ernst & Young LLP has audited the Company since 2003
and I should like to record our thanks for its service to the
Company over this period.

OUTLOOK

The current year has not started well for value investors,
with January seeing a return of investors’ appetite for
momentum stocks. Time will tell whether this situation will
continue for an extended period. Nonetheless, with our
experienced, well-resourced management team we believe
that Temple Bar is well placed to generate significant returns
for shareholders over the longer term.

Arthur Copple
Chairman

19 February 2020

The Board does not believe that long service should
automatically render a director to be considered as non-
independent. However, in recognition of the importance
attached to tenure in the various corporate governance
codes it has been agreed that a director will ordinarily serve
on the Board for a maximum of nine years. This month I
will have been on the Board for nine years and accordingly
under normal circumstances I would be looking to stand
down. However, a significant percentage of the Board has
only recently been appointed, and indeed following Sonita’s
resignation we will have to appoint another new director.
Therefore, in the interests of optimising Board balance in
terms of experience it has been proposed that I should
continue to serve for a further three years.

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

SECRETARY

Our company secretary, Martin Slade, will be retiring
from this position after the AGM. Martin has provided
the Company with exemplary secretarial services for over
26 years. He has kindly agreed to act as a consultant
for the next 12 months to provide an orderly transfer of
responsibilities. The Board would like to express its sincere
thanks for everything Martin has done for the Company over
this period and to wish him a long and happy retirement.

SHARE CAPITAL MANAGEMENT

Temple Bar’s shares traded at a modest discount throughout
most of the year but at the year end they stood at a small
premium of 0.9%. The Board is prepared to undertake
share buy backs if the discount widens excessively, either
in absolute terms or 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.

INVESTMENT POLICY

As signaled in my statement last year, the Board consulted
with shareholders as to whether they would support the
Trust declining to invest in companies whose very business
model was arguably unethical. Feedback suggested there
was little support for this measure among shareholders, so
at the present time the Board is not proposing to change
policy in this regard. Shareholders should note, however, that
the Manager does not invest in certain categories of stock,
such as companies involved in cluster munitions, as set out
on page 13.

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTSHAREHOLDER INFORMATIONTEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2019MANAGER’S REVIEW

Equity markets worldwide were strong in 2019. As is often
the case over the short-term (and yes, one year is short-term!)
it is rather hard to explain this strength. There remained
plenty of political, geo-political and economic factors about
which one could worry and company earnings growth was
unexciting, but price momentum can be a tough beast to
tame. Investors seemed to gain confidence that Central
Banks had their backs (despite that not ending well in the last
two bear markets) notwithstanding valuations in a number of
markets moving above where they were ahead of the Global
Financial Crisis.

Investors in the UK equity market also had to consider the
continuing saga of Brexit and over the course of the year
sentiment over the outcome swung significantly. It remains
impossible to speak with any certainty in this area, but at
least a clear result in December’s General Election made
it more likely that something could now happen. And that
‘something’ is probably much better than some of the worst
outcomes that were being discounted over the last few years.

Fortunately we were on the correct side of the trade and the
portfolio benefited from its significant weighting towards
companies exposed to the UK economy.

Many shareholders have asked whether following this bounce
in ‘domestics’ we are tempted to reduce this exposure,
particularly as Brexit is far from resolved.

Whilst we understand this sentiment, we believe such a move
could be premature. The Conservatives seem at least mildly
keen to reverse some of their more austere policies and
with an increasingly populist electorate expecting various
promises on infrastructure spend to be delivered conditions
seem ripe for fiscal expansion. In apparent preparation for
this, in his short time as Chancellor Sajid Javid had already
made it clear that the Government’s old fiscal rules had been
relaxed. He has left the building already, but it is unlikely his
successor will be allowed to keep the purse strings too tight.

It is also likely that significant amounts of corporate
investment plans have been suspended in the last few years
and that the (slightly) clearer outlook will encourage these to
be made.

Finally, the Monetary Policy Committee of the Bank of
England appears ready to reduce interest rates at the
slightest hint of economic trouble. All this suggests that the
UK economy – and the earnings of UK focused companies –
could be more robust than expected in the next few years.

If this backdrop is correct (or even perceived to be correct)
we would not be surprised to see private equity buyers
reduce their very large cash piles by taking advantage of
some cheap sterling assets.

We have written a great deal about value investing and its
woes in recent years. The long-awaited comeback (by us
anyway) of value investing did still not arrive in 2019. Most
investors remain focused on purchasing what they regard as
high quality companies with the price paid seeming to be of
little consequence.

As we have commented before, we believe the big driver
of the performance of ‘quality’ has been lower bond yields
and therefore higher bond yields could provide a headwind
for these stocks. While the consensus is convinced that
inflation will be lower for longer (and that ‘Japanification’

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.

TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2019
The portfolio benefited from its significant weighting towards
companies exposed to the UK economy.

remains a real risk) we believe a combination of overly
complacent Central Bankers, free-spending politicians and
an increasingly populist electorate (making their views on
issues such as immigration and globalisation very clear)
could prove to be the inflationary spur.

WHAT WORKED DURING 2019?

We have already mentioned the strength of many UK
focused stocks during the year. Consequently, the portfolio
benefited from holdings in Forterra (bricks), Grafton
(builder’s merchants) , Next (retailing) and Tesco (food
retailing). The two stocks which contributed the most by
far to performance were Travis Perkins (another builder’s
merchants) and Capita, the outsourcing company, whose
share price had previously struggled to make progress
while a significant shareholder reduced its holding.

The portfolio also benefited from avoiding a large number
of reasonably high-profile poorly performing mid and large
cap stocks. We will not always be this lucky.

WHAT DIDN’T WORK DURING 2019?

Of stocks held, one of the largest detractors was Marks &
Spencer. Recovery is proving elongated and much change
is needed, but we believe the nettle has been grasped by
management. The food division seems to have turned a
corner, but clothing still remains a concern. There is much
for management to do here and we are aware of the many
structural issues the company faces. We keep the faith but
will monitor events closely.

THE OUT OF FAVOUR UNIVERSE

We commented last year that our universe of out of favour
stocks was particularly large and consequently it was
no surprise that a number of new stocks came onto the
portfolio in 2018. The universe became a lot smaller in 2019
so pickings are currently much slimmer. The good news is
that we believe there remains good upside from the 2018
vintage and from last year’s purchases.

PORTFOLIO ACTIVITY

After a rather frenetic 2018 (by our standards) activity on
the portfolio in 2019 was relatively low.

Following poor trading statements we added to our
holdings in retailers Marks & Spencer and Kingfisher (we
think activists might encourage new management to
demerge the successful Screwfix business). Some Brexit
related angst allowed us to increase our holdings in
McCarthy & Stone and easyJet.

We introduced new holdings in J Sainsbury (a low valuation,
possible corporate interest and upside from potentially
closing the bank) and Vodafone which, after a number of
years of disappointing trading, appears to have stabilised.
Rolls-Royce was also purchased. We believe the company
will ultimately benefit from long-term service agreements
for the engines it has sold. However, in the short-term the
market has a number of (sensible) concerns surrounding
quality issues with new engines, accounting quality, balance
sheet strength and management focus on generating
the promised cashflow in 2020. We think most of these

PORTFOLIO DISTRIBUTION %

Industrials

Financials

Consumer Services

4 Oil & Gas

Consumer Goods

Healthcare

Basic Materials

Physical Gold and Silver

Telecommunications

10 Technology

11 Utilities

Total Equities

Fixed Interest

13 Cash

Temple Bar
%

FTSE
All-Share
%

29.5

19.5

16.4

9.5

7.0

6.8

2.9

–

11.6

27.1

12.0

11.8

14.0

9.3

7.6

–

2.5

1.1

3.0

97.4

100.0

1.6

1.0

100.0

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TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2019

MANAGER’S REVIEW CONTINUED

The UK economy – and the earnings of UK focused companies – could
be more robust than expected in the next few years.

negative issues are well discounted in the price but we would
not be surprised if, as often happens, we are able to add to
our position at lower prices.

We sold our holdings and booked modest profits in Drax and
Go-Ahead Group. Avon Products received a bid thus putting
to an end a painfully bad investment. We also significantly
reduced our holding in Lloyds Banking Group – the UK
mortgage market remains highly competitive and continues
to put pressure on the Group’s profitability especially as its
own customers move on to lower rate (and consequently less
profitable) mortgages.

Central Banks are clear that interest rates are a fairly blunt
(and overused) tool and that governments must do more to
increase long term economic growth. Governments appear
only too happy to oblige, but we fear the ultimate price of
expansionary fiscal policy, central banking complacency and
increased populism could be inflation.

As we concluded last year, an upwardly sloping yield curve is
a likely conclusion to this cycle as Central Banks keep short-
term rates low (to avoid recession) and investors, illustrating
their anxiety about inflation rates, push long-term rates
higher.

PORTFOLIO POSITIONING

The portfolio remains near to being fully invested with
longstanding overweights in banks, consumer stocks
(particularly food and clothing retailers) and industrials
(through large holdings in companies exposed to repair,
maintenance and home improvement).

As highlighted earlier the portfolio still holds a large position
in UK centric stocks and, as always, has a significant skew to
value stocks. Approximately 6% of the portfolio is allocated
to precious metal investments.

OUTLOOK

Last year I described investors as ‘skittish’. Equity markets
have since moved significantly higher and investors appear to
have had their skittishness knocked out of them. That often
seems to happen in bull markets particularly near their end.

Low short-term rates (below the level of inflation), higher
long-term rates, Central Banks’ desire for slightly higher
inflation, increased government spending and a changing
political wind all suggest that precious metals could prove a
good insurance policy against sub-optimal outcomes.

If this outlook is correct, those highly rated stocks which have
been purchased for their safety and dependability could be
very vulnerable if there is a rotation into more economically
cyclical stocks.

Alastair Mundy
For Investec Fund Managers Limited

19 February 2020

TEN YEAR RECORD

Total assets less
current liabilities (£000)

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

603,444

585,480

664,648

905,775

913,198

869,535

968,790 1,050,285 916,153 1,099,172

Net assets (£000)

540,022

522,040

601,191

792,070

799,444

755,755

879,940

936,366

802,182

985,123

Net assets per
ordinary share (pence)

Revenue return to ordinary
shareholders (£000)

Revenue return
per share (pence)

Dividends per share* (pence)

915.89

874.42

992.86 1,250.84 1,195.47 1,130.14 1,315.84 1,400.22 1,199.56

1,473.13

18,915

22,552

24,873

22,274

25,782

26,663

29,253

28,958

33,099

35,523

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

53.12

51.39

* Interim(s) and proposed final for the year

6
6

TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 2019

TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2019ATTRIBUTION ANALYSIS

By stocks held in the portfolio
Source: Factset

TOP TEN CONTRIBUTORS

BOTTOM TEN CONTRIBUTORS

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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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%
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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

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTSHAREHOLDER INFORMATIONTEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2019

OVERVIEW OF STRATEGY

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 35.

PROMOTING THE SUCCESS OF TEMPLE BAR

The directors have a statutory duty under Section 172 of the
Companies Act 2006 to promote the success of the Company
for the benefit of shareholders and other stakeholders and
to explain how they have discharged their duties, including
the likely consequences of their decisions in the longer term
and how they have taken wider stakeholders’ interests into
account.

A company’s stakeholders are usually considered to be its
shareholders, employees, customers, suppliers and the wider
community which the company operates in and affects. An
investment trust is different in having no employees and its
customers are also its shareholders. By far its major supplier
is its investment manager, to whom the Board relates as
principal to agent rather than conceiving of this relationship
as a stakeholder one. The Board believes the wider
community in which an investment trust operates is the wider
community in which all of its investee companies operate.
Thus the Board sees its duty to promote the success of the
company as being primarily owed to its shareholders and the
wider community which its investee companies serve.

The primary purpose of the Company is to deliver long
term returns for shareholders from a diversified portfolio
of investments. The Board believes that, as an investment
company with no employees, this is best achieved by working
in partnership with our appointed Manager. Within broad
policies set and overseen by the Board, the Manager has
been given responsibility for the management of Temple
Bar’s assets. The Board remains responsible for decisions
over corporate strategy, corporate governance, risk and
control assessment, establishing investment policies on
matters such as diversification and gearing, monitoring
investment performance and setting and monitoring
marketing strategies.

Temple Bar is a closed ended listed investment company with
a simple share structure comprising only ordinary shares.
This allows the Company to take long term positions without

being constrained by the need to make asset sales to meet
redemptions. In addition, we believe the Company’s ability
to borrow confers an advantage over a number of other
investment fund structures.

In recognition of the need to achieve long term success,
the Temple Bar Board works closely with its Manager in
developing its investment strategy and underlying policies.
This is not simply for the purpose of achieving its investment
objective but also to do so in an effective and responsible
way in the interests of shareholders, future investors and
society at large.

The Board recognises that ethical and Environmental,
Social and Governance (ESG) issues cannot be ignored by
asset managers and investment companies alike. We have,
therefore, included on pages 13 to 14 additional information
on our approach towards responsible investment and
illustrative examples of engagement in practice are set out
on page 14. The Board is supportive of IAM’s approach,
which focuses on engagement with investee companies on
ESG issues.

Some of the key decisions taken by the Board during the year
were:

•

to change the Company’s investment policy (as approved
by shareholders) with the broad objective of enabling the
portfolio to be managed in a less constrained manner.
The Board believes that this will be to the long term
benefit of shareholders.

the appointment of two additional directors so as to
enable long term succession planning and an optimal
balance of skillsets on the Board.

to determine whether to refinance the £38m 5.5%
debenture stock ahead of its maturity in April 2021. A
decision was taken to defer this until the current financial
year given the numerous uncertainties prevailing for most
of 2019, not least connected to Brexit.

Brexit related issues were discussed on many occasions
but it was decided that there were no directly related
changes required to portfolio construction.

During the year the Board carried out an extensive
consultation and feedback exercise on investment in tobacco
stocks to establish whether shareholders were supportive of
a prohibition of investment in such stocks as part of a broader
investment principle not to profit from companies whose
business model entails addicting their customers to harmful
products. The majority of shareholders did not support the
introduction of such a policy at this stage.

The Chairman also held a series of meetings with major
shareholders to solicit broader feedback on a variety of
issues. Pursuant to this process a view emerged that the
independent board evaluation process carried out in 2019
was not sufficiently rigorous. As a result of these concerns
the Board has decided to conduct a more comprehensive
evaluation process in the second half of this year. The same
shareholder discussions also revealed a preference for
greater clarity on the Board’s policy on director tenure. This
has resulted in more specific policies being introduced, as set
out in the Corporate Governance report on page 23.

TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2019The portfolio activities undertaken by our Manager can be
found in the Manager’s Review on page 4.

One of our long-term strategic aspirations has been that the
Company’s shares should trade consistently at a price close
to the NAV per share. For much of the year the shares traded
at a relatively modest discount to NAV, this rating being
aided by the marketing and promotional activities that we
have asked the Manager to put into effect.

An important role of the Board is to ensure that Temple Bar’s
ongoing charges are competitive both in terms of its peer
group and other comparable investment products. Costs
can eat away at investment returns. We recognise that the
financial services industry needs to provide simple to use,
transparent investment products that allow investors to
invest for the longer term and secure their financial future.
In that context we believe that Temple Bar provides an
attractive investment opportunity, particularly for UK based
investors. We therefore took the opportunity during the
year to promote the Company through marketing and public
relations initiatives. We plan to continue to develop these
initiatives and will strive to work towards the optimal delivery
of the Company’s investment proposition and to promote
the success of Temple Bar for the benefit of all shareholders,
stakeholders and the community at large.

CULTURE

A company’s culture would conventionally be defined as a
blend of attributes and behaviours people experience while
at work and which inform actions and decision making. While
Temple Bar has no employees it recognises the importance
of culture in terms of its alignment with purpose, values
and strategy. The Board’s own culture promotes a desire
for strong governance and openness of debate. The Board
attaches great importance to long term investment, mindful
of the interests of all stakeholders.

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.

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 specific
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 diversified 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 fixed interest holdings or non equity
interests may be held for yield enhancement and other
purposes. Derivative instruments are used in certain
circumstances, and with the prior approval of the Board,
for hedging purposes or to take advantage of specific
investment opportunities.

Liquidity and borrowings are managed with the aim of
increasing returns to shareholders. The Company’s gross
gearing range may fluctuate between 0% and 30%, based on
the current balance sheet structure, with an absolute limit of
50%.

As a general rule it is the Board’s intention that the portfolio
should be reasonably fully invested. An investment level of
90% of shareholder funds is regarded as a guideline minimum
investment level dependent on market conditions.

Risk is managed through diversification of holdings,
investment limits set by the Board and appropriate financial
and other controls relating to the administration of assets.

INVESTMENT APPROACH

The investment approach of the Manager is premised on
a contrarian view on the timing of buy and sell decisions,
buying the shares of companies when sentiment towards
them is thought to be near its worst and selling them as
fundamental profit improvement and/or re-evaluation of
their long term prospects takes place.

The belief is that repeated investor behaviour in driving
down the prices of ‘out of favour’ companies to below their
fair value will offer investment opportunities. This will allow
the Company to purchase shares at significant discounts to
their fair value and to sell them as they become more fully
valued, principally as a result of predictable patterns in
human psychology.

The Manager’s process is designed to produce ‘best ideas’
to drive active fund management within a rigorous control
framework. The framework begins through narrowing down
the universe of stocks by passing those companies with a
market capitalisation above £200 million through a screening
process which highlights the weakest performing stocks.
This isolates opportunities with the most negative sentiment
characteristics which are then in turn scrutinised in greater
detail to identify investment opportunities.

The process is very much bottom up and can result in large
sector positions being taken if enough stocks of sufficient
interest are found within a single sector. However, top down
risk analysis is undertaken to identify potential concentration
of risk and to factor this awareness into portfolio construction.
The portfolio comprises stocks which have been purchased
for different reasons and at different times. In general,
because of the bottom up approach to stockpicking, each of
these reasons is independent of the other and the portfolio,
therefore, is not excessively vulnerable to longer term macro
trends. Cash is a residual of the process and normally will not
exceed 15% of the portfolio value.

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTSHAREHOLDER INFORMATIONTEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2019

OVERVIEW OF STRATEGY CONTINUED

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

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.

KEY PERFORMANCE INDICATORS

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:

• 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;

2. There are few companies which sustain below normal

profits over the longer term. Weaker companies tend to
leave an industry, thus improving the balance of supply
and demand, are bid for or management is changed.
Similarly, there are few companies which can sustain
supernormal profits over the longer term. Such profits
tend to be competed or regulated away.

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

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

PERFORMANCE

In the year to 31 December 2019 the net asset value total
return of the Company was 27.9% compared with a total
return of the Company’s benchmark index of 19.2%. 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 6 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

260

240

220

200

180

160

140

120

100

• Discount/premium on net asset value;

• Earnings and dividends per share; and

• Ongoing charges.

While some elements of performance against KPIs are
beyond management control they provide measures of
the Company’s absolute and relative performance and are,
therefore, monitored by the Board on a regular basis.

Net asset value (‘NAV’) total return
In reviewing the performance of the assets of the Company’s
portfolio the Board monitors the NAV in relation to the FTSE
All-Share Index. This is the most important KPI by which
performance is judged. During the year the net asset value
total return of the Company was 27.9% compared with a total
return of 19.2% by the FTSE All-Share Index. The ten year net
asset value total return performance is shown below.

Net asset value total return

300

280

260

240

220

200

180

160

140

120

100

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

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 is 7th out of the 15 companies
featuring in its designated peer group within the AIC Equity
Income sector over a 10 year period (Source: Morningstar).

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

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

Sources: Thomson Reuters Datastream and IAM

TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2019Discount on net asset value
The Board monitors the premium/discount at which the
Company’s shares trade in relation to their net asset value.
During the year the shares traded at an average discount
to NAV of 3.9%. This compares with an average discount of
5.7% in the previous year. The Board and Manager closely
monitor both movements in the Company’s share price and
significant dealings in the shares. In order to avoid substantial
overhangs or shortages of shares in the market the Board
asks shareholders to approve resolutions which allow for 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)

-1%

-2%

-3%

-4%

-5%

-6%

-7%

-8%

-9%

-10%

-11%

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

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.

PRINCIPAL RISKS

The final dividend recommended for the year is 18.39p per
ordinary share which brings the total for the year to 51.39p
per ordinary share, an increase of 10.0% from the prior year.
This will be the 36th consecutive year in which the Company
has increased the overall level of its dividend payment.

10 Year Comparative Dividend Growth

160

150

140

130

120

110

100

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Temple Bar dividend

Retail Prices Index

Source: Bloomberg

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 2019 were
0.49% (2018: 0.47%). 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.

With the assistance of the Manager the Board has drawn up a risk matrix which identifies 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.

RISK

MITIGATION AND MANAGEMENT

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 diversification of investments through its
investment restrictions and guidelines, which are monitored and reported
on by the Manager. The Manager provides the directors with regular
management information including absolute and relative performance
data, attribution analysis, revenue estimates, liquidity reports, risk profile
and shareholder analysis. The Board monitors the implementation and
results of the investment process with the portfolio manager, who attends
Board meetings. Periodically the Board holds a separate meeting devoted
to strategy, the most recent being in December 2019.

LOSS OF INVESTMENT TEAM OR PORTFOLIO MANAGER
A sudden departure of the investment manager or several members
of the investment management team could result in a short term
deterioration in investment performance.

The Manager takes steps to reduce the likelihood of such an event by
ensuring appropriate succession planning and the adoption of a team
based approach, as well as special efforts to retain key personnel.

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTSHAREHOLDER INFORMATIONTEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2019

OVERVIEW OF STRATEGY CONTINUED

RISK

MITIGATION AND MANAGEMENT

INCOME RISK – DIVIDEND
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.

SHARE PRICE RISK
Should the market price of the Company’s ordinary shares trade at
a significant discount to the underlying net asset value per share
shareholders might not be able to realise the full value of their investment
and the Company might itself be vulnerable to some form of corporate
activity.

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, inter alia, realised gains within the Company’s portfolio
would be subject to capital gains tax. The Company must also comply
with the provisions of the Companies Act and, since its shares are listed
on the London Stock Exchange, the UKLA Listing Rules. A breach of the
Companies Act could result in the Company being fined or subject to
criminal proceedings. Breach of the UKLA Listing Rules could result in
the Company’s shares being suspended from listing which in turn would
breach Section 1158.

This risk would be exacerbated by inadequate resources or insufficient
training within the Company’s third party providers to properly manage
compliance with current and future requirements.

The Company’s business model could become non-viable as a result
of new or revised rules or regulations arising from, for example, policy
change or financial monitoring pressure.

CONTROL SYSTEMS RISK
Disruption to, or failure of, IFM’s accounting, dealing or payments
systems or the custodian’s records could prevent accurate reporting and
monitoring of the Company’s financial position or adversely impact the
ability to trade.

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 of the financial statements together with summaries
of the policies for managing these risks. These comprise:
market price risk, interest rate risk, liquidity risk, credit risk
and currency risk.

EMERGING RISKS

The Board has in place a robust process to identify, assess
and monitor the principal risks and uncertainties and
also to identify and evaluate newly emerging risks. The
Board regularly reviews all risks to the Company, including
emerging risks, which are identified by a variety of means,
including advice from the Company’s professional advisors,
the AIC, and directors’ knowledge of markets, changes and
events. The following new or emerging risks were identified
and reviewed during the year.

Brexit
The Board considered the market uncertainty arising from the
impact of the UK leaving the EU in both orderly or ‘no deal’
scenarios. At the time of writing the Board does not expect
the Company’s business model, over the longer term, to be
materially affected by Brexit.

The Board monitors this risk through the receipt of detailed income
reports and forecasts which are considered at each meeting. As at
31 December 2019 the Company had distributable revenue reserves of
£37.1 million before declaration of the final dividend for 2019 of £12.3
million. Furthermore, income risk is mitigated by the Company’s ability to
distribute realised capital gains if required to meet any revenue shortfall.

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 the level of premium or
discount to NAV at which the shares trade, both in absolute terms and
relative to the rating at which the UK Equity Income sector of investment
trusts 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.

The Manager provides investment, company secretarial, administration
and accounting services through qualified third party professional
providers. The Board receives regular reports from them in respect of
their compliance with all applicable rules and regulations.

The Board receives regular reports from its broker, depositary, registrars
and Manager as well as the industry trade body (the Association of
Investment Companies) on changes to regulations which could impact the
Company and its industry. The Company monitors events and relies on
the Manager and its other key third party providers to manage this risk by
preparing for any changes, adverse or otherwise.

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 23.

Cyber crime
The threat of cyber attack, in all its guises, is at least as
important as more traditional physical threats to business
continuity and security.

The Board has received the cyber security policies for its key
third party service providers and IFM has assured directors
that the Company benefits directly or indirectly from all
elements of IFM’s cyber security programme.

The Manager’s IT team has developed a number of initiatives
and controls in order to provide enhanced mitigating protection
to this ever increasing threat and the Board is updated on these
as part of the reporting it receives from the Manager.

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 31 of the UK Corporate
Governance Code, the Board considers that assessing the
Company’s prospects over a period of five years is appropriate
given the nature of the Company and the inherent uncertainties

TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2019of looking over a longer time period. The directors believe that
a five year period appropriately reflects the long term strategy
of the Company and over which, in the absence of any adverse
change to the regulatory environment and the favourable tax
treatment afforded to UK investment trusts, they do not expect
there to be any significant change to the current principal risks
and to the adequacy of the mitigating controls in place.

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 significant 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 fixed
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. The Company’s
£38 million 5.5% debenture stock matures in April 2021.
During the year the Company will assess various options for
its possible replacement but, irrespective of whether it is
replaced, the directors do not believe that there will be any
impact on the Company’s long term viability.

All the key operations required by the Company are
outsourced to third party providers and alternative providers
could be secured at relatively short notice if necessary.

Having taken into account the Company’s current
position and the potential impact of its principal risks and
uncertainties, the directors have a reasonable expectation
that the Company will be able to continue in operation and
meet its liabilities as they fall due for a period of five years
from the date of this Report.

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 trafficking statement. In any event, the Board considers
the Company’s supply chains, dealing predominantly with
professional advisers and service providers in the financial
services industry, to be low risk in relation to this matter.

GENDER DIVERSITY

At the year end there were three male directors and three
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 23.

GREENHOUSE GAS EMISSIONS

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

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 has policies and procedures in place to prevent bribery.

CRIMINAL FINANCES ACT 2017

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

STEWARDSHIP/ENGAGEMENT

The Board embraces the concept of active stewardship; this
is central to the achievement of its aim to preserve and grow
the long term real purchasing power of the assets entrusted
to it by shareholders. In doing so, the Board asks the Manager
to adopt a stewardship role, including the effective exercising
of shareholders’ ownership rights. The Manager monitors,
evaluates and if necessary, actively engages or withdraws from
investments with the aim of preserving or adding value to
the portfolio.

The Manager signed the Principles for Responsible Investment
in 2008 and the UK Stewardship Code in 2012. It has carefully
considered all global principles and focuses on five core
principles to guide its stewardship role in representing its
shareholders’ ownership rights. The Manager will:

• Disclose how it discharges its stewardship duties through

publicly available policies and reporting.

• Address internal governance of effective stewardship
including conflicts of interest and potential obstacles.

• Support a long-term investment perspective by

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

• Exercise its ownership rights responsibly including

engagement and voting rights.

• Act alongside other investors, where appropriate.

The Manager believes that the consideration of material ESG
risks and opportunities, be those material environmental,
human rights, social or governance considerations, allows it to
better understand risks and identify companies that are well
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 will often involve issues related
to governance or management. Any ESG issues identified
will be incorporated into the investment team’s final 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. Examples of engagement
that took place during the year are set out on the following
page.

The Manager, across all the funds under its management,
does not invest in the cluster munitions industry. In addition
to cluster munitions, the Manager’s ‘controversial weapons
exclusion policy’ excludes companies directly involved in the
manufacture and production of antipersonnel landmines,
biological weapons and chemical weapons. The Board
endorses the Manager’s controversial weapons policy.

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.
Notwithstanding the above, the Board is aware that there
is currently no industry consensus on the substance of ESG
requirements, with a great deal of variance on what is meant
by the ‘social’ issues particularly. The Board expects this
debate to continue to evolve.

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTSHAREHOLDER INFORMATIONTEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2019OVERVIEW OF STRATEGY CONTINUED

ENGAGEMENT IN PRACTICE

INVESTEE COMPANY AND NATURE OF ENGAGEMENT

OUTCOME

CAPITA PLC
We sought more clarity on payments made to the departing CFO and the
structure of the annual bonus and LTIP together with the pay outcomes.

We also requested information about Capita’s involvement in the
Personal Independence Payments (‘PIP’) scheme which was introduced
by the Government in 2013. There had been some negative press and we
sought to establish how Capita was managing potential reputational risk.

BARCLAYS PLC
Further to meeting the new Chairman and conversations with the CFO,
we supported the board and voted against the resolution to vote Edward
Bramson of Sherborne Investors to the board.

SUPERDRY PLC
We met the group’s Chairman and Interim CEO to discuss, amongst
other things, progress on reconstituting the board. This was a matter
of some urgency given that all previous board members had handed in
their resignation notices at the EGM that confirmed Julian Dunkerton, the
co-founder of the company, had won the vote he had called and would be
returning as Interim CEO.

COUNTRYWIDE PLC
We met with the head of the Remuneration Committee to discuss the
remuneration and incentive scheme. We also discussed succession
planning for senior management given the unusual, but understandable,
situation of the company being led by an executive chairman.

HIPGNOSIS PLC
We engaged with the company on several concerns:

Proposed increase in borrowing powers

2. The need to improve disclosure to shareholders

New music catalogue purchases not being ‘evergreens’, as stated in
the Prospectus

HEADLAM GROUP PLC
We engaged with the Chairman of the company with regard to its capital
allocation policy. We encouraged a more structured approach, perhaps
returning any surplus cash to shareholders in a disciplined manner.

The company explained the reasoning behind the non-financial element
of the CEO’s pay and explained that the 2019 bonus will place a higher
emphasis on financial performance which mitigated our concerns.

A follow up call with the Head of the PIP division gave us comfort that the
company was managing this risk appropriately.

The Chairman is aware of shareholders’ views and this provides us with
confidence that the company is moving in the right direction.

It is likely to take at least a year to find a suitable, long-term CEO. We will
remain in close contact with the Chairman and board on this and other
corporate governance issues.

The company accepted our comments. We will monitor the situation.

The proposed increase in borrowing powers was withdrawn and the
company instead raised equity via a placing.

After meeting the Chairman and sending a letter to the company, we
received responses acknowledging our concerns. We will continue to
monitor.

We were happy with the company’s proposals for a new policy in future.

EXTERNALITIES

EMPLOYEE POLICY

The Board notes the Manager’s policy statement in respect of
Environmental, Social and Governance issues, as outlined on
page 13.

The Company is managed by IFM, has no employees and
all of its directors are non-executive. Therefore there are no
disclosures to be made in respect of employees.

In addition to this, the Board has asked the Manager to include
externalities when assessing a stock’s suitability for investment.

Externalities are costs, usually to society or the environment,
which are not captured by market pricing. As a part of
its assessment of the long-term value of a stock and the
sustainability of its franchise, the Manager takes these non-
financial factors in to account. In particular, there are some areas
where companies operating legally and ethically may, through
their joint (unco-ordinated) action, create a globally catastrophic
result. These are specifically in the areas of climate change,
global financial fragility and antimicrobial resistance. These are
areas where the Board believes that engagement with investee
companies, in conjunction with other asset owners, is essential
to prevent disastrous unintended consequences. The Board
therefore asks its Manager to report to it regularly with regard
to its engagement in these specific areas.

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.

By order of the Board of Directors

Arthur Copple
Chairman
19 February 2020

TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2019PORTFOLIO OF INVESTMENTS

COMPANY

INDUSTRY

PLACE OF
PRIMARY LISTING

VALUATION
£000

% OF PORTFOLIO

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.

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

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.

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,
refining, distribution and marketing, petrochemicals, power
generation and trading.

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,
refining, distribution and marketing, petrochemicals, power
generation and trading.

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

TESCO
Tesco is the market leading groceries retailer in the UK,
and also has operations in Ireland, Europe and Asia.
Management has significantly improved the balance sheet
and operations in the last few years and now has the chance
to build a large market position.

BARCLAYS
Barclays has significant consumer, corporate and investment
banking positions, particularly focused on the UK and the US.
Management has reduced the non-core part of the business
and re-built capital strength. Significant efforts are being
made to improve the profitability of the investment banking
division.

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

SIG
SIG is the largest supplier of insulation products in Europe,
with around 50% of sales being generated in the UK. A recent
trading update highlighted a significant deterioration in
trading in the UK and Germany but a healthy balance sheet
post recent disposals gives the group time to achieve a more
normalised performance.

85,282

7.8%

74,573

6.9%

71,010

6.5%

56,336

5.2%

47,458

4.4%

46,474

4.3%

Industrials

Healthcare

Industrials

Oil & Gas

Industrials

41,843

3.9%

Consumer Services

41,234

3.8%

39,654

3.6%

35,371

3.3%

Financials

Industrials

Top Ten Investments

539,235

49.7%

STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTSHAREHOLDER INFORMATIONTEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2019

PORTFOLIO OF INVESTMENTS CONTINUED

COMPANY
HSBC Holdings

Kingfisher

Forterra

easyJet

15 Marks & Spencer

TP ICAP

Citigroup

Lloyds Banking Group

Land Securities Group REIT

20 McCarthy & Stone

Top Twenty Investments

CRH

Aggreko

UK Treasury 3.75% 2021

Superdry

25 Global X Silver Miners ETF

Vodafone

27 Next

BT Group

Rolls-Royce Holdings

Crest Nicholson

Chemring

Brown (N) Group

Hipgnosis Songs Fund

Top Forty Investments

Dixons Carphone

ETFS Physical Silver

Countrywide

Bovis Homes

INDUSTRY

Financials

Consumer Services

Industrials

Consumer Services

Financials

Consumer Goods

PLACE OF
PRIMARY LISTING

VALUATION OF
HOLDING £000

% OF
PORTFOLIO

USA

29,698

29,150

29,005

28,486

27,561

24,236

23,411

21,680

21,473

20,027

2.7%

2.6%

2.5%

2.2%

2.0%

1.8%

793,962

73.1%

Industrials

Fixed Interest

Consumer Goods

Basic Materials

Telecommunications

Consumer Services

Telecommunications

Ireland

USA

Industrials

Consumer Goods

Industrials

Consumer Services

Financials

Consumer Services

Physical Gold and Silver UK

Financials

Consumer Goods

19,455

17,405

16,780

16,683

16,647

16,199

15,585

15,459

15,043

14,965

958,183

14,233

12,336

11,628

11,254

10,544

10,316

8,821

8,265

8,087

6,962

1.8%

1.6%

1.5%

1.4%

88.2%

1.3%

1.1%

1.0%

0.8%

0.7%

0.6%

1,060,629

97.6%

6,911

6,542

4,417

4,116

972

927

685

645

0.6%

0.4%

0.1%

Sprott Physical Silver Trust

Physical Gold and Silver Canada

VanEck Vectors Gold Miners ETF

Basic Materials

USA

Top Thirty Investments

Delphi Technologies

Headlam Group

33 Wm Morrison Supermarkets

J Sainsbury

Consumer Goods

USA

Consumer Goods

Consumer Services

35 Gold Bullion Securities ETF

Physical Gold and Silver UK

Aviva 2020 5.9021% FRN Perpetual

Fixed Interest

Lloyds Banking Group – 9.25%
preference shares

Hochschild Mining

Kin & Carta

Financials

Basic Materials

Industrials

Total Valuation of Portfolio

1,085,844

100.0%

TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2019BOARD OF DIRECTORS

ARTHUR COPPLE

SIR RICHARD JEWSON*

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 Chairman of Montanaro
UK Smaller Companies Investment
Trust PLC and Vice Chairman of The
University of Brighton Academies Trust.

Sir Richard Jewson, senior independent
director, was appointed a director in
2001. He first worked in the timber
and building material supply industry,
becoming managing director of
Jewson, the builders’ merchants, for
twelve years from 1974, and then
managing director and chairman of its
parent company Meyer International
PLC from which he retired in 1993.
He is currently chairman of Raven
Property Limited and Tritax Big Box
REIT PLC and a non-executive director
of other private companies.

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LESLEY SHERRATT

RICHARD WYATT

SHEFALY YOGENDRA

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 a global partner of Rothschild
& Co, 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
financial sector, including investment
trusts, and served as a director
and Chair of US Small Companies
Investment Trust. She is currently
a director of a private foundation,
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
Microfinance Work? How to Improve its
Ethical Balance and Effectiveness‘.

Shefaly Yogendra, PhD was appointed a
director in 2019. She was most recently
the COO of Ditto AI, a symbolic
AI startup. She built her career in
corporate venturing in the technology
industry, followed by strategy advisory
to investors, regulators and leaders
of operating companies on strategic
investment in emergent and regulated
technologies. She focuses on digital
and tech leadership and governance,
organisational growth, risk, and
decision making. She is an independent
governor of London Metropolitan
University and a non executive director
of JP Morgan US Smaller Companies
Investment Trust. She was listed among
the “100 Women To Watch” in the
2016 edition of the Female FTSE Board
Report.

All the directors are independent and members
of the audit and nomination committees.

* Chairman of the audit committee and
Senior Independent Director.

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TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2019

REPORT OF DIRECTORS

The directors present their report and accounts for the
year ended 31 December 2019.

THE ALTERNATIVE INVESTMENT FUND MANAGERS
DIRECTIVE (‘AIFMD’)

Investec Fund Managers Limited (‘IFM’), an affiliate 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 flows.

The AIFMD requires certain information to be made available
to investors in AIFs before they invest and requires that
material changes to this information be disclosed in the
annual report of each AIF. An Investor Information Document,
which sets out information on the Company’s investment
strategy and policies, leverage, risk, liquidity, administration,
management, fees, conflicts of interest and other shareholder
information is available on the Company’s website at
www.templebarinvestments.co.uk.

There have been no material changes to this information
requiring disclosure. Any information requiring immediate
disclosure pursuant to the AIFMD will be disclosed to the
London Stock Exchange through a primary information
provider. As an authorised AIFM, IFM will make the requisite
disclosures on remuneration levels and policies to the
Financial Conduct Authority (‘FCA’) at the appropriate time.

MANAGEMENT FEES

The Company has a management agreement with 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 £47,313 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 has in the past usually delivered
superior investment returns over the longer term. In
addition, the portfolio has produced high and growing
dividend income to shareholders. In the opinion of the
directors the continued appointment of the Manager on the
terms set out above is, therefore, in the best interests of
shareholders.

GOING CONCERN

The directors have reviewed the going concern basis of
accounting for the Company. The Company’s assets consist
substantially of equity shares in listed companies and in most
circumstances are realisable within a short timescale. The
use of the going concern basis of accounting is appropriate
because there are no material uncertainties related to events
or conditions that may cast significant doubt about the ability
of the Company to continue as a going concern. After making
enquiries, the directors have a reasonable expectation
that the Company has adequate resources to continue in
operational existence for the foreseeable future, including
recourse to a £7.5 million overdraft facility with HSBC Bank.
Accordingly, the directors continue to adopt the going
concern basis in preparing the accounts.

ORDINARY DIVIDENDS

Interim dividends of 11.0p per ordinary share were paid on
28 June 2019, 30 September 2019 and 30 December
2019 (2018: 8.75p in each case) and the directors are
recommending a final dividend of 18.39p per ordinary share
(2018: 20.47p), a total for the year of 51.39p (2018: 46.72p).
Subject to shareholders’ approval, the final dividend will be
paid on 31 March 2020 to shareholders on the register on
13 March 2020.

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.

TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2019
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 page 45.

Voting Rights in the Company’s Shares
The voting rights at 31 December 2019 were:

basis considers that all directors standing for re-election are
independent. It is confirmed that, following formal evaluation,
the performance of each director continues to be effective
and each continues to demonstrate commitment to the role.

There were no contracts subsisting during or at the end of the
year in which a director of the Company is or was interested
and which are or were significant in relation to the Company’s
business. No director has a service contract with the Company.

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

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Number of
shares issued

Voting rights
per share

Total

voting rights

SUBSTANTIAL SHAREHOLDERS

Share class

Ordinary shares
of 25p each

66,872,765

As at 19 February 2020, 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 51. The Company’s ordinary shares have
a Premium listing on the London Stock Exchange.

To the extent that they exist, the revenue profits 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 office at the end of
the year and up to the date of the signing of the Financial
Statements are detailed on page 17. June de Moller retired
as a director on 28 March 2019. Sonita Alleyne and Shefaly
Yogendra were both appointed as directors on 1 October
2019. Sonita Alleyne resigned as a director on 28 January
2020. No other person was a director for part of the year.
Details of directors’ beneficial shareholdings may be found in
the Report on Directors‘ Remuneration on page 21.

With the exception of Sir Richard Jewson, 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. Although some directors have served
over nine years 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

As at 31 December 2019 and 19 February 2020 the following
were registered or had indicated an interest in 3% or more of
the issued ordinary shares of the Company.

Brewin Dolphin Ltd

Alliance Trust Savings Ltd

Investec Wealth & Investment Ltd

Rathbones

Equiniti Financial Services

AXA SA

10.5

7.7

7.3

6.2

3.9

3.1

DISCLOSURE OF INFORMATION TO AUDITOR

The directors are not aware of any relevant information of which
the auditor is unaware and have taken all the steps that they
ought to have taken as directors in order to make themselves
aware of any relevant audit information and to establish that
the Company’s auditor is aware of that information.

AUDITOR

Ernst & Young LLP have been auditor to the Company
since 2003. In accordance with the Audit Regulations and
Guidance the Company is required to change its auditor no
later than 2023. Therefore, during the year the Audit and Risk
Committee undertook an auditor review, pursuant to which
it has been agreed to appoint BDO LLP to succeed Ernst &
Young. Accordingly, a resolution to appoint BDO as auditor
to the Company will be proposed at the forthcoming AGM.

ANNUAL GENERAL MEETING

The notice of the Annual General Meeting of the Company
to be held on 30 March 2020 is on page 49. In addition to
the ordinary business the following matters are proposed
as special business.

Authority to allot shares and disapplication
of pre-emption rights
It is proposed that the directors be authorised to allot up to
£1,671,819 of relevant securities in the Company (equivalent
to 6,687,276 ordinary shares of 25p each, representing 10.0%
of its ordinary shares in issue as at 19 February 2020).

When shares are to be allotted for cash, the Companies
Act 2006 requires such new shares to be offered first to

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TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2019

REPORT OF DIRECTORS CONTINUED

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

The directors intend to use this authority to issue new shares
to 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.

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 defined.
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 five business days
before the purchase is made.

Recommendation
The Board considers the resolutions to be proposed at the
AGM to be in the best interests of the Company and its
members as a whole. Accordingly, the directors unanimously
recommend that shareholders should vote in favour of the
resolutions to be proposed at the AGM, as they intend to do
so in respect of their own beneficial holdings, amounting to
158,470 ordinary shares.

By order of the Board of Directors

Arthur Copple
Chairman
19 February 2020

TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2019REPORT ON DIRECTORS’ REMUNERATION

The Board presents the report on directors’ remuneration for
the year ended 31 December 2019 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 was last approved at the AGM held on 27 March 2017
and is, therefore, required to be re-submitted to shareholders
for approval. 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 inflation. 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 2020 will be £38,750 pa. The
chairman of the audit and risk committee will receive a fee of
£30,750 pa and the directors will receive a fee of £25,750 pa.

It is the Company’s policy that no director shall be entitled to
any performance related remuneration, benefits in kind, long
term incentive schemes, share options, pensions or other
retirement benefits or compensation for loss of office. None
of the directors has a service contract with the Company.

The Company has no employees and consequently no
consideration is required to be given to employment
conditions elsewhere in setting directors’ pay.

Consideration of Shareholders’ Views
An ordinary resolution to approve the remuneration report
is put to shareholders at each AGM, and shareholders
have the opportunity to express their views and raise any
queries in respect of remuneration policy at this meeting.
To date, no shareholders have commented in respect of
remuneration policy.

FUTURE POLICY TABLE

Purpose and link to strategy

Fees payable to directors should be sufficient to attract and
retain individuals of high calibre with suitable knowledge and
experience. Those chairing the Board and key committees
should be paid higher fees than other directors in recognition of
their more demanding roles. Fees should reflect the time spent
by directors on the Company’s affairs and the responsibilities
borne by the directors.

Maximum and minimum levels

Remuneration consists of a fixed fee each year, set in accordance
with the stated policies, and any increase granted must be in line
with the stated policies.

The Company’s Articles of Association set a limit of £250,000 in
respect of the total remuneration that may be paid to directors
in any financial year.

The Board reviews the quantum of directors’ 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
inflation over the period since the previous review, and the level
and any change in complexity of the directors’ responsibilities
(including additional time commitments as a result of increased
regulatory or corporate governance requirements).

There is no compensation for loss of office.

REMUNERATION POLICY REPORT (AUDITED)

A single figure for the total remuneration of each
director is set out in the table below for the year ended
31 December 2019. These fees exclude employers’ national
insurance contributions and VAT where applicable:

Total amount
of fees1

2019
£

37,500

6,250

30,000

Nil

25,000

6,250

2018
£

32,054

Nil

24,500

29,400

14,763

14,794

24,500

Nil

136,250

164,511

Arthur Copple2

Sonita Alleyne4

June de Moller5

Richard Jewson

Nicholas Lyons6

John Reeve3

Lesley Sherratt

Richard Wyatt

Shefaly Yogendra4

Total

1 Other columns have been omitted as no payments of any other type were made.
2 Appointed Chairman 24 May 2018.
3 Retired 24 May 2018.
4 Appointed 1 October 2019.
5 Retired 28 March 2019.
6 Resigned 7 August 2018.

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

There were also no taxable benefits received by any directors
during the year.

TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2019STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTSHAREHOLDER INFORMATION

REPORT ON DIRECTORS’ REMUNERATION CONTINUED

Expenditure by the Company on remuneration
and distributions to shareholders
The table below compares the remuneration paid to directors
with distributions made to shareholders during the year
under review and the prior financial year. The total fees paid
to directors are shown on page 21.

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.

2019
£000

2018
£000

%
change

Share price total return

Remuneration paid to directors

136

165

(18)

Distributions to shareholders –
dividends*

35,757

29,243

Based on the three interim dividends paid during the year together with the final
dividend for 2018.

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

31 December 2019

1 January 2019

72,309

Nil

N/A

10,851

65,000

10,000

310

42,643

N/A

10,474

10,851

31,000

10,000

N/A

Arthur Copple

Sonita Alleyne1

June de Moller2

Richard Jewson

Lesley Sherratt

Richard Wyatt

Shefaly Yogendra1

1 Appointed 1 October 2019.
2 Retired 28 March 2019.

All the above interests are beneficial. 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 2019 and 19 February 2020.

300

280

260

240

220

200

180

160

140

120

100

80
2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Temple Bar share price (total return)

FTSE All-Share Index (total return)

Source: Thomson Reuters Datastream

Annual statement
The Board confirms that the above Remuneration Policy
Report in respect of the year ended 31 December 2019
summarises:

•

the major decisions on directors’ remuneration;

• any significant changes relating to directors’
remuneration made during the year; and

•

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

The portfolio manager also holds 68,130 ordinary shares in
the Company.

By order of the Board of Directors

Statement of Voting at General Meeting
At the Company‘s last AGM held on 28 March 2019
shareholders approved the Directors‘ Remuneration Report
in respect of the year ended 31 December 2018. 99.8% of
proxy votes were in favour of the resolution, 0.2% were
against and 22,887 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.

Arthur Copple
Chairman
19 February 2020

TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2019CORPORATE 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 financial
reporting, transparency and business integrity.

As Temple Bar is a UK-listed company the Board’s principal
governance reporting obligation is in relation to the UK
Corporate Governance Code (the “UK Code”) issued by the
Financial Reporting Council (‘FRC’). 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”), last
updated in February 2019, which recognises the nature of
investment companies by focusing on matters such as board
independence and the review of management and other
third party contracts. The FRC has endorsed the AIC Code
and confirmed that companies which report against the AIC
Code will be meeting their obligations in relation to the
UK 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.

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
sufficient information concerning the financial condition of
the Company. Key representatives of IFM attend each Board
meeting enabling directors to probe on matters of concern or
seek clarification on certain issues.

Biographies of those directors in office at the date of signing
of the financial statements are set out on page 17. There were
four Board meetings, two audit committee meetings and two
nomination committee meetings held during the year and the
attendance by the directors was as follows:

Arthur Copple

Sonita Alleyne1

June de Moller2

Richard Jewson

Lesley Sherratt

Richard Wyatt

Number of meetings attended

Board

Committee

Audit

Nomination
Committee

The Company has complied with the provisions of the AIC
Code (which incorporates the UK Code), except as set out
below. The UK Code includes provisions relating to:

Shefaly Yogendra1

1 Appointed 1 October 2019.
2 Retired 28 March 2019.

•

the role of the chief executive

• executive directors’ remuneration

•

the need for an internal audit function

The Board considers these provisions are not relevant to
the position of Temple Bar, being an externally managed
investment company. In particular, all of the Company’s
day-to-day management and administrative functions are
outsourced to third parties. As a result, the Company has no
executive directors, employees or internal operations such
as an internal audit function. The Company has therefore not
reported further in respect of these provisions.

COMPLIANCE WITH THE PRINCIPLES OF THE AIC
CODE OF CORPORATE GOVERNANCE

Operation of the Board
The Board is ultimately responsible for framing and
executing the Company’s strategy and for closely
monitoring risks. There is a formal schedule of matters to
be specifically approved by the Board. It has delegated
investment management, within clearly defined parameters
and dealing limits, to Investec Fund Managers Limited
(‘IFM’) and the administration of the business to Investec

Audit and risk committee
The audit and risk committee is a formally constituted
committee of the Board with defined terms of reference. Its
role and responsibilities are set out in the Report of the Audit
and Risk Committee on page 26. The Board is satisfied that
members of the audit and risk committee have relevant and
recent financial experience to fulfil their role effectively and
also have sufficient experience relevant to the sector. The
auditor, who the Board has identified as being independent,
is invited to attend the audit and risk 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.

TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2019STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTSHAREHOLDER INFORMATIONCORPORATE GOVERNANCE CONTINUED

During the year the Board appointed Sonita Alleyne and
Shefaly Yogendra as additional directors. The process leading
up to these appointments involved the identification and
interview of potential candidates put forward by an external
agency, Cornforth, alongside the evaluation of various other
candidates either known personally to or recommended by
individual board members. Cornforth, who have no other
connection with the Company, were given a brief to identify
a diverse range of candidates. Following an extensive review
process it was decided to proceed with the appointments of
Ms Alleyne and Dr Yogendra as the candidates best qualified
to complement the existing balance of skills and experience
of the Board. Dr Yogendra will stand for election at the AGM
alongside all other Board members proposed for election in
accordance with our policy. Ms Alleyne resigned as a director
on 28 January 2020.

The committee is also responsible for assessing on an annual
basis the individual performance of directors and for making
recommendations as to whether they should remain in office.

Management engagement committee
As all the directors are fully independent of the management
company, the Board as a whole fulfils the function of a
management engagement committee.

Independence of the directors
Each of the directors is independent of any association with
the Manager and has no other relationships or circumstances
which might be perceived to interfere with the exercise of
independent judgement. Two of the five directors (Arthur
Copple and Sir Richard Jewson) have served on the Board for
more than nine years from the date of their first election, but
given the nature of the Company as an investment trust and
the strongly independent mindset of the individuals involved,
the Board is firmly of the view that all of the directors can be
considered to be independent. In arriving at this conclusion
the Board makes a clear distinction between the activities of
an investment trust and a conventional trading company. An
investment trust has no employees or executive directors,
the most significant relationship being with the Manager. In
overseeing this relationship it is the view of the Board that
long service can aid the understanding and judgement of
the directors. The directors have a range of business and
financial skills and experience relevant to the direction of
the Company. Sir Richard Jewson is currently the Senior
Independent Director. Lesley Sherratt will replace him after
he stands down at the AGM.

Director tenure
Directors are subject to re-election by shareholders at the
first AGM following their appointment and, thereafter, are
subject to retirement on an annual basis. In addition, the
appointment of each director is reviewed by other members
of the Board every year. Directors are not, therefore, subject
to automatic re-appointment. Directors are not appointed
for specified terms but the Board would not normally expect
directors to serve for more than nine years. However, in
exceptional circumstances, mindful of the prevailing balance
of skills and experience on the Board, it may be considered
appropriate for one or more directors to extend their tenure
by a further three year period. Due to the recent Board

refreshment exercise the average length of service for
those directors seeking re-election at the AGM is relatively
low. The Board, therefore, feels that it is appropriate for
Mr Copple, who has served as a director for nine years, to
be re-appointed in order to provide an appropriate level
of continuity. Unlike the UK Code, the AIC Code does not
contain a specific nine year limit on the appointment of the
Chair. The Board would, however, expect the Chair ordinarily
to adhere to the nine year limit unless there are exceptional
circumstances that would render a further three year
extension advisable, such as the need for a sufficient degree
of Board experience and balance, as outlined above. Because
of the nature of an investment trust the Board believes
that the contribution and independence of a director is not
necessarily 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 and
ethnicity, is to take this into consideration during the
recruitment and appointment process. However, the Board is
committed to appointing and retaining the most appropriate,
well qualified candidates, and therefore no specific targets
have been set against which to report.

Induction and training
New directors appointed to the Board are provided with
an induction programme which is tailored to the particular
circumstances of the appointee. Regular briefings are
provided during the year on industry and regulatory matters
and the directors receive other relevant training as required.
Individual directors may seek independent advice at the
expense of the Company within certain limits.

Ongoing evaluation
On an annual basis the Board formally reviews its
performance, together with that of the audit and risk
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 2019 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 Board Evaluation review largely
comprised a web based questionnaire aimed at drawing
out potential areas for improvement in the operation of
the Board. Two such areas related to succession planning
arrangements and shareholder communications respectively.
The former was addressed by the appointments of Sonita
Alleyne and Shefaly Yogendra in October 2019 and the latter
was satisfied by a shareholder engagement programme
carried out by the Chairman in December 2019. The Board
is aware that the direction of travel for external evaluation

TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2019four scheduled occasions during the year. At each meeting
it received sufficient financial and statistical information to
enable it to monitor adequately the investment performance
and status of the business.

The Board has also established a series of investment
parameters, which are reviewed annually, designed to
limit the risk inherent in managing a portfolio of
investments. The safeguarding of assets is entrusted
to an independent reputable custodian with whom the
holdings are regularly reconciled.

The effectiveness of the overall system of internal control is
reviewed on an annual basis by the Board. Such a system can
provide only reasonable and not absolute assurance against
material misstatement or loss. The Board believes that there
is a robust framework of internal controls in place to meet
the requirements of the AIC Code.

The Board receives reports from its advisers on internal
control matters. Based on the foregoing the Company has a
continuing process for identifying, evaluating and managing
the risks it faces. This process has been in place for the
reporting period and to the date of this report.

By order of the Board of Directors

Arthur Copple
Chairman
19 February 2020

exercises is for a more interactive process. Accordingly, a
more comprehensive external evaluation exercise will be
carried out during this year and reported on in the next
Annual Report. The purpose of an independent review is to
provide a robust and objective assessment of the Board’s
effectiveness to help the Board continually improve its own
performance. It also demonstrates to shareholders and other
stakeholders that the Board is committed to performing to a
high standard and that it understands and is addressing any
ares of weakness.

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. During the year the Chairman engaged in a
proactive series of discussions with major shareholders to
consider various aspects of the Company’s management
and procedures including its ESG policy. The views of
all shareholders were solicited on the specific subject of
investment in tobacco stocks, as detailed on page 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.

Accountability, internal controls and audit
The Board pays careful attention to ensuring that all
documents released by the Company, including the Annual
Report, present a fair and accurate assessment of the
Company’s position and prospects.

The Board confirms that there is an ongoing process for
identifying, evaluating and managing the risks faced by the
Company in accordance with the FRC’s document ‘Guidance
on Risk Management, Internal Controls and Related Financial
and Business Reporting’.

The directors are responsible for the Company’s system of
internal control and for reviewing its effectiveness. In order
to facilitate the control process the Board has requested
the Manager to confirm annually that it has conducted the
Company’s affairs in compliance with the legal and regulatory
obligations which apply to the Company and to report on the
systems and procedures within IFM which are applicable to
the management of Temple Bar’s affairs. The Board met on

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 2019.

ROLE AND RESPONSIBILITIES

The Company has established a separately chaired
Audit and Risk Committee (“the Committee”) whose duties
include considering and recommending to the Board for
approval the contents of the half yearly and annual financial
statements, and providing an opinion as to whether
the Annual Report, taken as a whole, is fair, balanced,
understandable and provides the information necessary for
shareholders to assess the Company’s performance, business
model and strategy. The Committee also reviews the external
auditor’s report thereon and is responsible for reviewing and
forming an opinion on the effectiveness of the external audit
process and audit quality. Other duties include reviewing
the appropriateness of the Company’s accounting policies
and ensuring the adequacy of the internal control systems
and standards, as set out in more detail below. The Terms of
Reference of the Committee are available on the Company’s
website at www.templebarinvestments.co.uk

The Committee meets at least twice a year. The two
planned meetings are held prior to the Board meetings
to approve the half yearly and annual results.

COMPOSITION

All the directors are members of the Committee, which is
chaired by Sir Richard Jewson until his retirement at the
forthcoming AGM, following which he will be succeeded by
Lesley Sherratt. The Board considers that the members of
the Committee have sufficient recent and relevant financial
experience for the Committee to discharge its function
effectively. The Committee has members with sufficient
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:

• considering and recommending to the Board for

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

•

reviewing the scope, execution, results, cost
effectiveness, independence and objectivity of the
external auditor;

reviewing and recommending to the Board for approval
the audit and non-audit fees payable to the external
auditor and the terms of their engagement;

reviewing and approving the external auditor’s plan
for the financial year, with a focus on the identification
of areas of audit risk, and consideration of the
appropriateness of the level of audit materiality adopted;

reviewing the quality of the audit engagement
partner and the audit team, and making a
recommendation to the Board with respect to
the re-appointment of the auditor or the selection of a
new audit firm;

•

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

• ensuring the adequacy of the internal control

systems and standards.

SIGNIFICANT ISSUES CONSIDERED REGARDING THE
ANNUAL REPORT AND FINANCIAL STATEMENTS

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

Significant Issue

How the issue was addressed

Verification of the
existence of the
assets in the portfolio

The valuation of the
investment portfolio

Going concern

The verification of
investment income

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 verification of the existence
of all portfolio holdings carried out
by the auditor. Any significant issues
are reported by the Manager to the
Committee.

The Committee reviews detailed portfolio
valuations on a regular basis throughout
the year and receives confirmation from
the Manager that the pricing basis is
appropriate. The audit includes a check
of pricing back to source data to confirm
that the correct valuation basis has been
applied in accordance with the accounting
policies adopted, as disclosed in note 1 to
the Financial Statements. 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 flow projections,
the Committee is satisfied that the
Company has adequate resources and
an appropriate financial structure to
continue in operational existence for the
foreseeable future.

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

The provision of portfolio valuation, accounting and
administration services is delegated to the Company’s
Manager, who sub-delegates fund accounting to a third
party service provider. The provision of custody services is
contracted to HSBC.

TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2019CONCLUSIONS IN RESPECT OF THE ANNUAL
REPORT AND FINANCIAL STATEMENTS

The production and audit of the Company’s Annual Report
and Financial Statements is a comprehensive process
requiring input from a number of different contributors. One
of the key governance requirements of a Company’s financial
statements is for the Report and Financial Statements to
be fair, balanced and understandable. In order to reach a
conclusion on this matter, the Board has requested that the
Committee advise on whether it considers that the Annual
Report and Financial Statements fulfils these requirements.

As a result of the work performed, the Committee has
concluded that the Annual Report for the year ended
31 December 2019, taken as a whole, is fair, balanced
and understandable and provides the information necessary
for shareholders to assess the Company’s performance,
business model and strategy. The Committee has reported
on these findings to the Board. The Board’s conclusions
in this respect are set out in the Statement of Directors’
Responsibilities on page 28.

Sir Richard Jewson
Chairman
Audit and Risk Committee
19 February 2020

AUDITOR AND AUDIT TENURE

The Company’s current auditor, Ernst & Young LLP, have
acted in this role since 2003 pursuant to a competitive tender
process which took place at that time. The appointment of the
auditor is reviewed each year and the audit partner changes
at least every five years in accordance with professional and
regulatory standards in order to protect independence and
objectivity and to provide fresh challenge to the business.
The last five yearly partner rotation took place in 2017 when
Caroline Mercer was appointed. The Committee is aware that
legislation requires listed companies to rotate their auditor
every 10 years. Under the transitional arrangements for
firms where the tenure was between 11 and 20 years on the
effective date under the new rules, there is a grace period of
nine years after the enactment of the legislation. Accordingly,
Ernst & Young could not act as auditor to the Company for
accounting periods starting on or after 17 June 2023. During
the year the Committee undertook a tender process and
the Board has agreed to appoint BDO LLP to succeed Ernst
& Young as auditor of the Company at the forthcoming
AGM. Shareholders will have the opportunity to vote on the
appointment of BDO at the AGM.

Other non-audit fees of £2,300 (excluding VAT) paid to Ernst &
Young LLP relate to their services in the electronic filing of tax
returns; due to the nature of this service, 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 efficiency of the audit.

Feedback in relation to the audit process, and also of the
effectiveness of the Manager in performing its role, is also
sought from relevant 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 firm and its staff and the Company, as well
as an overall confirmation 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.

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

The directors confirm that to the best of their knowledge:

•

the financial statements, prepared in accordance with
the applicable accounting standards, give a true and fair
view of the assets, liabilities, financial position and profit
or loss of the Company; and

the Annual Report includes a fair review of the development
and performance of the business and the position of the
Company, together with a description of the principal
risks and uncertainties that the Company faces.

The UK Corporate Governance Code also requires directors
to ensure that the Annual Report and Financial Statements
are fair, balanced and understandable. In order to reach a
conclusion on this matter, the Board has requested that the
Audit and Risk Committee advise on whether it considers
that the Annual Report and Financial Statements fulfils these
requirements. The process by which the Committee has
reached these conclusions is set out in the Audit and Risk
Committee’s report on pages 26 and 27. As a result, the
Board has concluded that the Annual Report and Financial
Statements for the year ended 31 December 2019, 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
19 February 2020

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

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

•

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

• present information, including accounting policies,

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

• provide additional disclosures when compliance with the

specific requirements in IFRS is insufficient to enable users
to understand the impact of particular transactions, other
events and conditions on the entity’s financial position and
financial performance; and

•

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

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

TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2019INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF TEMPLE BAR INVESTMENT TRUST PLC

Opinion
We have audited the financial statements of Temple Bar Investment Trust plc (the ‘Company’) for the year ended 31 December
2019 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 significant accounting policies. The
financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting
Standards (IFRS) as adopted by the European Union.

In our opinion, the financial statements:

• give a true and fair view of the Company’s affairs as at 31 December 2019 and of its profit for the year then ended;

• have been properly prepared in accordance with IFRS as adopted by the European Union; and

• have been prepared in accordance with the requirements of the Companies Act 2006.

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 financial
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 financial statements in the UK, including the FRC’s Ethical Standard as applied to public interest
entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient 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:

•

the disclosures in the annual report set out on page 11 that describe the principal risks and explain how they are being
managed or mitigated;

the directors’ confirmation 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 identification of any material uncertainties to the entity’s
ability to continue to do so over a period of at least twelve months from the date of approval of the financial statements

• 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

•

the directors’ explanation set out on page 12 in the annual report as to how they have assessed the prospects of the
entity, over what period they have done so and why they consider that period to be appropriate, and their statement as
to whether they have a reasonable expectation that the entity will be able to continue in operation and meet its liabilities
as they fall due over the period of their assessment, including any related disclosures drawing attention to any necessary
qualifications or assumptions.

Overview of our audit approach

Key audit matters

• Risk of incomplete and/or inaccurate revenue recognition, including classification of special

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

• Risk of incorrect valuation and/or defective title to the investment portfolio

Materiality

• Overall materiality of £9.85m which represents 1% of equity shareholders’ funds

Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not
due to fraud) that we identified. 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 financial statements as a whole, and in our opinion thereon, and we do not provide a separate
opinion on these matters.

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 and/or inaccurate
revenue recognition, including classification
of special dividends as revenue or capital
items in the Statement of Comprehensive
Income.

Risk

Incomplete and/or inaccurate revenue
recognition, including classification
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 39).

The income received for the year to
31 December 2019 was £39.75m (2018:
£37.26m), consisting primarily of dividend
income from the investment portfolio.

Special dividends for the year totalled
£3.33m of which £2.30m was classified as
revenue and £1.03m as capital.

The income receivable by the Company
during the year directly affects the
Company’s revenue return and in turn,
the dividend that must be paid by the
Company. 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
classified 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 the classification of special
dividends by reviewing their internal
controls reports and performing our
walkthrough procedures to evaluate the
design and implementation of controls.

We agreed a sample of dividends
recognised in 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 confirmed
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
2019. We agreed the dividend rate to
corresponding announcements made by
the investee company, recalculated the
dividend amount receivable and confirmed
this was consistent with cash received as
shown on post year end bank statements,
where paid.

We performed a review of the income and
capital reports to identify all dividends
received and accrued during the period
that were above our testing threshold.

We identified which of the dividends
above our testing threshold were special
dividends with reference to an external
source. There were two special dividends
above our testing threshold which had
a combined total of £3.21m. £2.18m
was classified as revenue and £1.03m as
capital. We recalculated and assessed
the appropriateness of management’s
classification between revenue and capital
for both of the special dividends identified
with reference to information available from
the underlying company which set out the
rationale for paying the special dividend.

TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2019
Risk

Our response to the risk

Key observations communicated to the
Audit Committee

Incorrect valuation and/or 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 40).

The valuation of the investment portfolio
at 31 December 2019 was £1,086m (2018:
£905m) 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
defective title to the assets held by the
Company could have a significant 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.

We performed the following procedures:

The results of our procedures are:

We obtained an understanding of the
Administrator’s processes and controls
surrounding investment pricing, legal title
and portfolio liquidity.

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

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

We performed an independent evaluation
of the portfolio’s liquidity using trading
volumes obtained from an external data
vendor, where available.

We agreed the Company’s investments
to the independent confirmation received
from the Company’s Custodian and
Depositary as at 31 December 2019.

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 financial statements. We take into account size, risk profile,
the organisation of the Company and effectiveness of controls, including controls and changes in the business environment
when assessing the level of work to be performed.

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

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

We determined materiality for the Company to be £9.85m (2018: £8.02m) 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% (2018: 75%) of our planning materiality, namely £7.39m (2018: £6.02m).
We have set performance materiality at this percentage due to our experience of auditing the Company.

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 £1.78m (2018: £1.66m) being 5% of profit
before tax.

Reporting threshold
An amount below which identified 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 £0.49m
(2018: £0.40m) 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.

Other information
The other information comprises the information included in the annual report, including the Strategic Report, Governance
Report and Shareholder information, other than the financial statements and our auditor’s report thereon. The directors are
responsible for the other information.

Our opinion on the financial 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 financial statements, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial 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 financial 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 specifically 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:

• Fair, balanced and understandable set out on page 28 – the statement given by the directors that they consider the

annual report and financial 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

• 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

• 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 specified 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:

•

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

•

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 identified 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:

• adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches

not visited by us; or

•

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

• certain disclosures of directors’ remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit.

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 financial statements and for being satisfied that they give a true and fair view, and for such internal
control as the directors determine is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.

In preparing the financial 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.

TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2019Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial 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 influence the economic decisions of users taken on the basis of these
financial 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 financial
statements due to fraud; to obtain sufficient 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 identified 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:

• We obtained an understanding of the legal and regulatory frameworks that are applicable to the Company and determined
that the most significant 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.

• 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

• We assessed the susceptibility of the Company’s financial statements to material misstatement, including how fraud

might occur by considering the key risks impacting the financial statements. We identified a fraud risk with respect to the
incomplete and/or inaccurate income recognition through incorrect classification of special dividends. Further discussion of
our approach is set out in the section on key audit matters above.

• 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 financial statements to ensure compliance with the reporting requirements of the
Company.

A further description of our responsibilities for the audit of the financial 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
• Following the recommendation of the Audit Committee, we were appointed by the Company with effect from 1 January

2003 to audit the financial statements of the Company for the year ending 31 December 2003 and subsequent financial
periods and signed an engagement letter on 12 November 2003.

The period of total uninterrupted engagement is 17 years, covering periods from our appointment through to the period
ending 31 December 2019.

• 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.

• 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

19 February 2020

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 financial statements since they were initially presented on the
web site.

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

legislation in other jurisdictions.

TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2019STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTSHAREHOLDER INFORMATION
FINANCIAL REPORT

35 Statement of Comprehensive Income

36 Statement of Changes in Equity

37 Statement of Financial Position

38 Statement of Cash Flows

39 Notes to the Financial Statements

34
34

TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 2019

NOTES TO THE FINANCIAL STATEMENTS CONTINUEDTEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2019STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2019

Investment Income

Other operating income

Profit/(losses) on investments

Profit/(losses) on investments held at fair
value through profit or loss

Total Income/(loss)

Expenses

Management fees

Other expenses

Profit/(loss) before finance costs and tax

Finance costs

Profit/(loss) before tax

Tax

Notes

Revenue
£000

39,750

39,801

2019

Capital
£000

–

Total
£000

Revenue
£000

39,750

37,258

39,801

37,284

2018

Capital
£000

–

Total
£000

37,258

37,284

12(a)

–

188,920

–

(131,528)

39,801

188,920

228,721

37,284

(131,528)

(94,244)

(1,555)

(585)

(2,244)

(533)

(3,799)

(1,118)

(1,503)

(559)

(2,168)

(1,427)

37,661

186,143

223,804

35,222

(135,123)

(1,966)

(2,976)

(4,942)

(1,962)

(2,968)

(3,671)

(1,986)

(99,901)

(4,930)

35,695

183,167

218,862

33,260

(138,091)

(104,831)

(172)

–

(172)

(161)

–

(161)

Profit/(loss) for the year

35,523

183,167

218,690

33,099

(138,091)

(104,992)

Earnings per share (basic and diluted)

53.12p

273.90p

327.02p

49.50p

(206.50p)

(157.00p)

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 profit for the year. Accordingly, the
profit for the year is also the Total Comprehensive Income for the Year, as defined in IAS1 (revised).

The notes on pages 39 to 48 form an integral part of the financial statements.

TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 2019

35
35

Ordinary
share capital
£000

Notes

Share
premium
account
£000

Capital
reserves
realised
£000

Capital
reserves
unrealised
£000

Retained
earnings
£000

Total
equity
£000

Balance at 1 January 2018

16,719

96,040

642,322

147,845

33,440

936,366

Unclaimed dividends

Profit/(loss) for the year

Dividends paid to equity
shareholders

Balance at 31 December 2018

Unclaimed dividends

Profit for the year

Dividends paid to equity
shareholders

–

29,890

(167,981)

33,099

(104,992)

16,719

96,040

672,212

(20,136)

–

(29,243)

37,347

(29,243)

802,182

–

(4,912)

188,079

35,523

218,690

–

(35,757)

37,121

(35,757)

985,123

Balance at 31 December 2019

16,719

96,040

667,300

167,943

As at 31 December 2019 the Company had distributable revenue reserves of £37,121,000 (2018: £37,347,000) and distributable
realised capital reserves of £667,300,000 (2018: £672,212,000) 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 39 to 48 form an integral part of the financial statements.

TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2019STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2019

Non-current assets

Investments held at fair value through profit or loss

Current assets

Cash and cash equivalents

Receivables

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 attributable to equity holders

Net asset value per share

31 December 2019

31 December 2018

Notes

£000

1,085,844

905,125

11,149

3,245

9,005

3,231

14,394

1,100,238

(1,066)

1,099,172

12,236

917,361

(1,208)

916,153

(114,049)

(113,971)

985,123

802,182

16,719

96,040

835,243

37,121

16,719

96,040

652,076

37,347

985,123

1,473.13p

802,182

1,199.56p

The notes on pages 39 to 48 form an integral part of the financial statements.

The financial statements on pages 35 to 48 were approved by the board of directors and authorised for issue on
19 February 2020. They were signed on its behalf by:

A Copple
Chairman

GOVERNANCE REPORTFINANCIAL REPORTSHAREHOLDER INFORMATIONSTRATEGIC REPORTTEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2019

STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2019

Cash flows from operating activities

Profit/(loss) before tax

Adjustments for:

(Gains)/losses on investments

Finance costs

Purchases of investments

Sales of investments

Dividend income

Interest income

Dividends received

Interest received

Decrease in receivables

Increase/(decrease) in payables

Overseas withholding tax suffered

Net cash flows from operating activities

Cash flows from financing activities

Unclaimed dividends

Equity dividends paid

Interest paid on borrowings

Net cash flows from financing activities

Net decrease/(increase) in cash and cash equivalents

Cash and cash equivalents at the start of the year

Cash and cash equivalents at the end of the year

2019

2018

Notes

£000

218,862

(104,831)

12(a)

(188,920)

12(a)

4,942

(152,237)

160,040

(39,465)

(313)

39,578

336

–

106

(172)

(35,757)

(4,864)

131,528

4,930

(513,298)

512,712

(36,728)

(545)

36,115

1,365

(199)

(161)

(176,105)

42,757

135,744

30,913

(29,243)

(4,877)

(40,613)

2,144

9,005

11,149

(34,069)

(3,156)

12,161

9,005

The notes on pages 39 to 48 form an integral part of the financial statements.

TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2019NOTES TO THE FINANCIAL STATEMENTS

1 PRINCIPAL ACCOUNTING POLICIES

Basis of accounting
The financial statements have been prepared in accordance with International Financial Reporting Standards (‘IFRS’), which
comprise standards and interpretations approved by the International Accounting Standards Board (‘IASB’), and International
Accounting Standards and Standing Interpretations Committee interpretations approved by the International Accounting
Standards Committee (‘IASC’) that remain in effect, and to the extent that they have been adopted by the European Union.

The principal accounting policies adopted by the Company are set out below. Where presentational guidance set out in the
Statement of Recommended Practice (‘SORP’) for investment trusts issued by the Association of Investment Companies (‘AIC’)
in October 2019, is consistent with the requirements of IFRS, the directors have sought to prepare the financial statements on a
basis compliant with the recommendations of the SORP.

All values are rounded to the nearest thousand pounds unless otherwise indicated.

Presentation of Statement of Comprehensive Income
In order better to reflect the activities of an investment trust company and in accordance with guidance issued by the AIC,
supplementary information which analyses the Statement of Comprehensive Income between items of a revenue and capital
nature has been presented alongside the Statement of Comprehensive Income.

Income
Dividend income from investments is recognised when the Company’s right to receive payment has been established,
normally the ex-dividend date.

Where the Company has elected to receive its dividends in the form of additional shares rather than cash, the amount of
cash dividend foregone is recognised as income. Any excess in the value of shares received over the amount of cash dividend
foregone is recognised as a 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 financial statements are prepared in Pounds Sterling because that is the currency of the primary economic environment in
which the Company operates.

The primary objective of the Company is to generate returns in Pounds Sterling, its capital-raising currency. The liquidity of the
Company is managed on a day-to-day basis in Sterling as the Company’s performance is evaluated in that currency. Therefore,
the directors consider Pounds Sterling as the currency that most faithfully represents the economic effects of the underlying
transactions, events and conditions.

Transactions involving foreign currencies are converted at the exchange rate ruling at the date of the transaction. Foreign
currency monetary assets and liabilities 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

profit or loss are expensed to capital in the Statement of Comprehensive Income.

• Expenses are split and presented partly as capital items where a connection with the maintenance or enhancement of the

value of the investments held can be demonstrated and, accordingly, the investment management fee and finance costs
have been allocated 40% to revenue and 60% to capital, in order to reflect the directors’ long term view of the nature of
the expected investment returns of the Company.

Taxation
The tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on the
taxable profit for the year. The taxable profit differs from profit before tax as reported in the Statement of Comprehensive
Income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes
items that are never taxable or deductible. The Company’s liability for current tax is calculated using a blended rate as
applicable throughout the year.

In line with the recommendations of the SORP, the allocation method used to calculate tax relief on expenses presented
against capital returns in the supplementary information in the Statement of Comprehensive Income is the ‘marginal basis’.
Under this basis, if taxable income is capable of being entirely offset by expenses in the revenue column of the income
statement, then no tax relief is transferred to the capital column.

GOVERNANCE REPORTFINANCIAL REPORTSHAREHOLDER INFORMATIONSTRATEGIC REPORTTEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2019Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets
and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and
is accounted for using the balance sheet liability method. Deferred tax liabilities are recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against
which deductible temporary differences can be utilised.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is
realised. Deferred tax is charged or credited in the revenue return of the Statement of Comprehensive Income, except when it
relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

Investment trusts which have approval under Section 1158 of the Corporation Tax Act 2010 are not liable for taxation on
capital gains.

Irrecoverable withholding tax is recognised on any overseas dividends on an accruals basis using the applicable rate for the
country of origin.

Financial instruments
Financial assets and financial liabilities are recognised in the Statement of Financial Position when the Company becomes
party to the contractual provisions of the instrument. The Company will offset financial assets and financial 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 financial asset
is derecognised when the right to receive cash flows from the asset expires or the rights to receive cash flows from the asset
have been transferred and a financial liability is derecognised when the obligation under the liability is discharged, cancelled
or expired. The Company classifies its financial assets as subsequently measured at amortised cost or measured at fair value
through profit or loss on the basis of its business model for managing the financial assets and the contractual cash flow
characteristics of the financial asset. Financial assets are measured at fair value through profit or loss if its contractual terms do
not give rise to cash flows on specified dates that are solely payments of principal and interest and at amortised cost if they do.

Receivables
Receivables are held to collect contractual cash flows, 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 simplified 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 reflects 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
After initial recognition, investments are measured at fair value through profit or loss. Gains or losses on investments measured
at fair value through profit or loss are included in net profit or loss as a capital item and transaction costs on acquisition or
disposal of investments are expensed. For investments that are actively traded in organised financial markets, fair value is
determined by reference to stock exchange quoted market bid prices at the close of business on the year-end date.

All purchases and sales of investments are recognised on the trade date, i.e. the date that the Company commits to purchase
or sell an asset.

Equity investments are held at fair value through profit or loss as they fail the contractual cash flows test under IFRS 9. Debt
instruments that pass the contractual cash flow test are held under a business model to manage them on a fair value basis for
investment income and fair value gains and are therefore classified as fair value through profit or loss.

Financial liabilities and equity instruments
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An
equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities.

Interest bearing borrowings
Interest bearing borrowings, being the debenture 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 flow 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.

NOTES TO THE FINANCIAL STATEMENTS CONTINUEDTEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2019Equity 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 final dividends this is when they are approved by shareholders.

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

The carrying value of these assets approximates their fair value.

2 SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS

The preparation of the Company’s financial statements requires the directors to make judgements, estimates and assumptions
that affect the reported amounts recognised in the financial statements and disclosure of contingent liabilities. However,
uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the
carrying amount of the asset or liability affected in future periods. There have been no judgements, estimates or assumptions
which have had a significant impact on the financial statements for the current or preceding financial year.

3 ADOPTION OF NEW AND REVISED STANDARDS

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.

INCOME

Income from investments

UK dividends

Overseas dividends

UK REITs

Interest from fixed interest securities

Other income

Deposit interest

Underwriting commission

Other income

Total income

Investment income comprises:

Listed investments

2019
£000

35,456

3,008

1,001

285

2018
£000

34,308

1,452

968

530

39,750

37,258

–

39,801

37,284

39,750

37,258

During the year ended 31 December 2019, the Company received special dividends totalling £3,450,614 (2018: £1,556,991). Of
this £2,416,156 (2018: £1,556,991) is recognised as revenue and is included within investment income and £1,034,458 (2018: £Nil) is
recognised as capital and is included in profit on investments held at fair value through profit or loss (see note 12(a)).

5 SEGMENTAL REPORTING

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

GOVERNANCE REPORTFINANCIAL REPORTSHAREHOLDER INFORMATIONSTRATEGIC REPORTTEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 20196

INVESTMENT MANAGEMENT FEE

Investment management fee

Secretarial fee

2019

Capital
£000

2,244

–

2,244

Revenue
£000

1,497

1,555

Total
£000

3,741

3,799

Revenue
£000

1,446

1,503

2018

Capital
£000

2,168

–

2,168

Total
£000

3,614

3,671

As at 31 December 2019 an amount of £1,017,070 (2018: £833,397) was payable to the Manager in relation to the management
fees for the quarter ended 31 December 2019.

Details of the terms of the investment management agreement are provided on page 18.

7 OTHER EXPENSES

Transaction costs on fair value
through profit or loss assets1

Director’s fees (see report on
Directors Remuneration on page 21)

Registrar’s fees

Marketing costs

Auditors remuneration – annual audit2

– non audit fee

Depositary fee

Other expenses

Revenue
£000

2019

Capital
£000

–

533

Total
£000

Revenue
£000

2018

Capital
£000

Total
£000

533

146

174

–

533

1,118

–

1,427

176

152

559

–

176

152

1,427

1,986

146

174

585

Transaction costs on fair value through profit or loss assets represent such costs incurred on both the purchase and sale of those assets. Transaction costs on purchases
amounted to £478,389 (2018: £1,340,962) and on sales amounted to £54,784 (2018: £85,959).

2 During the year there were audit fees of £26,010 (2018: £25,500) (excluding VAT) paid to the Auditor.

All expenses are inclusive of VAT where applicable.

8 FINANCE COSTS

Interest on borrowings

5.5% debenture stock 2021

4.05% Private placement loan 20281

2.99% Private placement loan 20471

Revenue
£000

852

811

301

1,964

2019

Capital
£000

1,277

1,247

452

2,976

Total
£000

Revenue
£000

2,129

2,058

753

4,940

847

810

301

1,958

2018

Capital
£000

1,291

1,226

451

2,968

Total
£000

2,138

2,036

752

4,926

Bank interest payable

Total finance costs

–

1,966

2,976

4,942

1,962

2,968

4,930

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

The 4.05% and 2.99% Private Placement Loans contain the following principal financial or other covenants, with which failure to comply could necessitate the early repayment
of the loan:

• net tangible assets of at least £275 million
• aggregate principal amount of financial indebtedness not to exceed 50% of net tangible assets
• prior approval by the note holder of any change of Manager
• prior approval by the note holder of any change in the Company’s investment objectives and policies

NOTES TO THE FINANCIAL STATEMENTS CONTINUEDTEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2019

9 TAXATION

(a) There is no corporation tax payable (2018: nil).

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

Profit/(loss) before taxation

35,695

183,167

218,862

33,260

(138,091)

(104,831)

Revenue
£000

2019

Capital
£000

Total
£000

Revenue
£000

2018

Capital
£000

Total
£000

Tax at UK corporation tax rate of 19.00%
(2018: 19.00%)

Tax effects of:

Non–taxable (gains) / losses on investments

Disallowed expenses

Non–taxable UK dividends¹

Overseas withholding tax suffered

Non–taxable overseas dividends

Movement in excess management expenses2

Total tax charge for the year

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

6,782

34,802

41,584

6,319

(26,237)

(19,918)

–

(6,736)

172

(571)

525

172

(35,895)

101

–

992

–

101

(6,736)

172

(571)

1,517

172

–

(6,518)

161

(197)

396

161

24,990

271

–

976

–

271

(6,518)

161

(197)

1,372

161

2 The Company has not recognised a deferred tax asset of £18,194,222 (2018: £16,779,272) based on an effective tax rate of 17.0% (2018: 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 benefit for the asset.

10 DIVIDENDS

Amounts recognised as distributions to equity holders in the year

Final dividend for year ended 31 December 2018 of 20.47p (2017: 17.48p) per share

Interim dividends (three) for year ended 31 December 2019 of 11.0p (2018: three payments of 8.75p) per share

2019
£000

2018
£000

13,689

22,068

35,757

11,689

17,554

29,243

Proposed final dividend for the year ended 31 December 2019 of 18.39p (2018: 20.47p) per share

12,298

13,689

The proposed final dividend is subject to approval by shareholders at the Annual General Meeting and has not been included
as a liability in these financial statements. Therefore, also set out below is the total dividend payable in respect of these
financial years, which is the basis on which the requirements of Section 1158 of the Corporation Tax Act 2010 are considered.

2019
£000

2018
£000

Interim dividends (three) for year ended 31 December 2019 of 11.0p (2018: three payments of 8.75p) per share

22,068

17,554

Proposed final dividend for the year ended 31 December 2019 of 18.39p (2018: 20.47p) per share

12,298

13,689

34,366

31,243

11 EARNINGS PER SHARE

Revenue
pence

2019

Capital
pence

Total
pence

Revenue
pence

2018

Capital
pence

Total
pence

Earning per ordinary share

53.12p

273.90p

327.02p

49.50p

(206.50p)

(157.00p)

The calculation of the above is based on revenue returns of £35,523,000 (2018: £33,099,000), and capital returns of £183,167,000
(2018: £(138,091,000)) , and total returns of £218,690,000 (2018: £(104,992,000)) and a weighted average number of ordinary
shares of 66,872,765 (2018: 66,872,765).

(a) Movements in the year

Opening cost at 1 January

Investment holding (losses)/gains at 1 January

Opening fair value

Purchases at cost

Sales – proceeds

Increase/(decrease) in investment holding gains

Closing fair value at 31 December

Closing cost at 31 December

Investment holding gains/(losses) at 31 December

2019
£000

2018
£000

925,261

887,825

(20,136)

147,845

905,125

1,035,670

152,107

513,428

(160,308)

(512,445)

188,920

(131,528)

1,085,844

905,125

917,901

925,261

167,943

(20,136)

1,085,844

905,125

The Company received £160,308,000 (2018 £512,445,000) from investments sold in the year. The book cost of these
investments when they were purchased was £158,397,000 (2018: £400,487,000). These investments have been revalued over
time and until they were sold any unrealised gains/losses were included in the fair value of the investments.

(b) Fair value of financial instruments
IFRS 13 requires an entity to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used
in making the measurements. The fair value hierarchy has the following classifications:

•
•

•

Level 1 – valued using quoted prices in active markets for identical investments.
Level 2 – valued using other significant observable inputs (including quoted prices for similar investments, interest rates,
prepayments, credit risk, etc). There are no level 2 financial assets (2018: £nil).
Level 3 – valued using significant unobservable inputs (including the Company’s own assumptions in determining the fair value of
investments). There are no level 3 financial assets (2018: £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 £1,085,844,000 (2018:
£905,125,000) has therefore been determined as Level 1.

Financial Assets

Quoted equities

Debt securities

13 RECEIVABLES

Due from brokers

Accrued income

Other receivables

2019

2018

Level 1
£000

1,068,093

879,654

17,751

25,471

1,085,844

905,125

2019
£000

268

2,977

–

3,245

2018
£000

–

3,113

118

3,231

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.

NOTES TO THE FINANCIAL STATEMENTS CONTINUEDTEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 201914 CURRENT LIABILITIES

Payables

Purchases for future settlement

Accruals and deferred income

2019
£000

–

1,066

2018
£000

248

960

1,208

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 financial position

Interest paid in the year

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

Closing balance as per the Statement of financial position

2019
£000

2018
£000

38,614

50,418

25,017

38,572

50,386

25,013

114,049

113,971

2019
£000

2018
£000

(113,971)

(113,919)

4,864

(4,942)

4,874

(4,926)

(114,049)

(113,971)

The 5.5% Debenture stock is secured by a floating charge over the assets of the Company. The stock is repayable at par
(£38,000,000) on 8 March 2021.

The 4.05% Private Placement Loan is secured by a floating charge over the assets of the Company. The loan is repayable at par
(£50,000,000) on 3 September 2028.

The 2.99% Private Placement Loan is secured by a floating charge over the assets of the Company. The loan is repayable at par
(£25,000,000) on 24 October 2047.

Please refer to Note 22 on page 47 for the disclosure and fair value categorisation of the financial liabilities.

16 ORDINARY SHARE CAPITAL

Issued, allotted and fully paid

Ordinary shares of 25p each

There were no shares issued during 2019 (2018: nil.)

17 SHARE PREMIUM

Balance at 1 January 2019

Premium arising on issue of new shares

Balance at 31 December 2019

18 CAPITAL RESERVES

2019
Number

2018
Number

2019
£000

2018
£000

66,872,765

16,718,191

2019
£000

2018
£000

96,040

–

96,040

The capital reserves comprise both realised and unrealised amounts. A summary of the split is shown below:

Capital reserves realised

Capital reserves unrealised

2019
£000

667,300

167,943

2018
£000

672,212

(20,136)

835,243

652,076

As at 31 December 2019 there were no contingent liabilities or capital commitments for the Company (2018: £nil).

20 NET ASSET VALUES

Ordinary shares of 25p each

2019

2018

Net asset
value per
ordinary share
Pence

Net assets
attributable
£000

Net asset
value per
ordinary share
Pence

Net assets
attributable
£000

1,473.13p

985,123

1,199.56p

802,182

The net asset value per ordinary share is based on net assets at the year-end of £985,123,000 (2018: £802,182,000) and on
66,872,765 (2018: 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 pages 21 to 22. There
were no contracts subsisting during or at the end of the year in which a director of the Company is or was interested and which
are or were significant in relation to the Company's business. There were no other material transactions during the year with
the directors of the Company.

At 31 December 2019 there was £Nil (2018: £38,277) 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 18 and also set out in note 6 on page 42.

22 RISK MANAGEMENT AND FINANCIAL INSTRUMENTS

The Company’s investing activities undertaken in pursuit of its investment objective, as set out on page 9, involve certain inherent
risks. The main financial risks arising from the Company’s financial instruments are market price risk, interest rate risk, liquidity
risk, credit risk and currency risk. The Board reviews and agrees policies for managing each of these risks as summarised below.
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 four scheduled occasions in each year and at each meeting it receives sufficient financial and
statistical information to enable it to monitor adequately the investment performance and status of the business.

Market price risk
Market price risk arises mainly from uncertainty about future prices of financial instruments used in the Company’s business. It
represents the potential loss the Company might suffer through holding market positions in the face of price movements. The
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 financial instruments or interest income cash flows that arise as a
result of fluctuations in interest rates. The Company finances its operations through retained profits including capital profits,
and additional financing is obtained through the debenture stock in issue and the two Private Placement Loans, on all of
which interest is paid at a fixed rate.

Assuming that all other variables remain constant, the effect on the net revenue of the Company of a 1% increase or decrease
in interest rates at 31 December 2019 is 0.52% and -0.52% respectively (2018: 0.27% and -0.27%).

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

Credit risk
Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to
incur a financial loss. This is mitigated by the Manager reviewing the credit ratings of broker counterparties. The 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 financial assets represent their maximum exposure to credit risk. The full
portfolio can be found on pages 15 to 16. The issuers’ debt held at year end have credit ratings ranging from AA to BB+.

NOTES TO THE FINANCIAL STATEMENTS CONTINUEDTEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2019Currency 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

• 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

Foreign currency sensitivity

Projected movement

Effect on net assets for the year

Effect on capital return

31 December 2019

Investments
£000

Cash
£000

Receivables
£000

Payables
£000

Non-current
liabilities
£000

–

101,386

–

984,458

1,085,844

Investments
£000

10,452

81,193

–

813,480

905,125

–

11,140

11,149

Cash
£000

366

8,633

9,005

175

–

3,005

3,245

–

(1,066)

(114,049)

31 December 2018

Receivables
£000

Payables
£000

253

–

2,921

3,231

–

(117)

–

(1,091)

(1,208)

Non-current
liabilities
£000

–

(113,971)

Total
£000

101,569

883,488

985,123

Total
£000

10,875

81,334

709,972

802,182

2019

2018

£000

+2%

2,033

2,028

£000

-2%

(2,033)

(2,028)

£000

+2%

1,844

1,833

£000

-2%

(1,844)

(1,833)

Financial assets – Interest rate risk
The majority of the Company’s financial assets are equity shares and other investments which neither pay interest nor have a
maturity date. The Company’s fixed interest holdings have a market value of £17,751,449, representing 1.8% of net assets of
£985,123,000 (2018: £25,470,000; 3.2%). The weighted average running yield as at 31 December 2019 was 4.0% (2018: 2.0%)
and the weighted average remaining life was 3.2 years (2018: 2.7 years). The Company's cash balance of £11,149,000 (2018:
£9,005,000) earns interest, calculated on a tiered basis, depending on the balance held, by reference to the base rate.

If the bank base rate had increased by 0.5%, the impact on the profit or loss and net assets would have been a positive £55,745
(2018: £45,025). If the bank base rate had decreased by 0.5%, the impact on the profit or loss and net assets would have been
a negative £55,745 (2018: £45,025). The calculations are based on the cash balances at the respective statement of financial
position dates.

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 fixed rates. The weighted average period until maturity of the loans is 10 years (2018: 11 years) and the weighted average
interest rate payable is 4.0% (2018: 4.0%) p.a.

Other price risk exposure
If the investment valuation fell by 10% at 31 December 2019, the impact on the profit or loss and net assets would have been
negative £108.6 million (2018: negative £90.5 million). If the investment portfolio valuation rose by 10% at 31 December 2019, the
impact on the profit or loss and net assets would have been positive £108.6 million (2018: positive £90.5 million). The calculations
are based on the portfolio valuation as at the respective year-end dates.

GOVERNANCE REPORTFINANCIAL REPORTSHAREHOLDER INFORMATIONSTRATEGIC REPORTTEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2019

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

The Company held the following categories of financial instruments, all of which are included in the Statement of Financial Position
at fair value or an approximation to fair value, with the exception of interest bearing borrowings which are shown at book value at
31 December 2019.

Assets at fair value through profit or loss

1,085,844

905,125

2019

2018

Book value
£000

Fair value
£000

Book value
£000

Fair value
£000

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

11,149

9,005

2,977

268

(1,066)

(38,614)

(50,418)

(25,017)

2,977

268

(1,066)

(40,019)

(56,107)

(25,058)

3,113

118

(1,208)

(38,572)

(50,386)

(25,013)

3,113

118

(1,208)

(41,114)

(54,107)

(24,902)

985,123

977,988

802,182

796,030

1 Effective interest rate is 5.583%
2 Effective interest rate is 4.133%
3 Effective interest rate is 3.015%
The 5.5% Debenture Stock 2021 is classified as a Level 1 instrument (2018: 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 classified as Level 2 instruments (2018: Level 2).

Liquidity risk exposure
This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities.

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

2019

2018

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

Creditors: amounts falling due after more
than one year

Debenture stocks and Loans

–

150,428

–

155,290

Creditors: amounts falling due within
one year

Accruals and deferred income

Debenture stocks and Loan

967

2,058

3,025

2,805

2,904

–

1,066

4,863

150,428

156,357

1,048

2,058

3,106

160

2,805

2,965

–

1,208

4,863

155,290

161,361

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 fixed term loans (see note 15) at a total of £1,099,172,000 (2018: £916,153,000).

The Company is subject to several externally imposed capital requirements:

• as a public company, the Company has a minimum share capital of £50,000.

•

in order to be able to pay dividends out of profits available for distribution by way of dividends, the Company has
to be able to meet one of the two capital restriction tests imposed on investment companies by company law.

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

The Company has complied with all of the above requirements.

TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2019NOTICE OF MEETING

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt as to the action you
should take you should consult your stockbroker, bank manager, solicitor, accountant or other independent financial adviser
authorised under the Financial Services and Markets Act 2000 immediately.

If you have sold or otherwise transferred all of your ordinary shares in Temple Bar Investment Trust PLC, please forward this
document and the accompanying form of proxy as soon as possible to the purchaser or transferee or to the stockbroker, bank
or other agent through whom the sale or transfer was or is being effected for delivery to the purchaser or transferee.

NOTICE IS HEREBY GIVEN that the 94th Annual General Meeting of Temple Bar Investment Trust PLC will be held
at 11.00am on Monday 30 March 2020 at Woolgate Exchange, 25 Basinghall Street, London EC2V 5HA for the following
purposes:

ORDINARY BUSINESS:

To approve the Company’s Annual Report and Financial Statements for the year ended 31 December 2019 (together with
the reports of the directors and auditor thereon).

2. To approve the report on directors’ remuneration for the year ended 31 December 2019.

3. To approve the Company's remuneration policy.

4. To declare a final dividend of 18.39p per ordinary share.

5. To re-elect Mr A T Copple 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 elect Dr S M Yogendra as a director of the Company.

To appoint BDO LLP as the auditor to the Company in place of the retiring auditor and to authorise the audit and risk
committee to determine their remuneration.

SPECIAL BUSINESS:

To consider and, if thought fit, pass the following resolutions:

ORDINARY RESOLUTION:

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 19 February 2020 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 2021 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.

GOVERNANCE REPORTFINANCIAL REPORTSHAREHOLDER INFORMATIONSTRATEGIC REPORTTEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2019

NOTICE OF MEETING CONTINUED

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 defined in Section 560 of that Act) for cash, including for the avoidance of doubt, the sale of shares held by
the Company as treasury shares, in accordance with the authority conferred on them by this meeting to allot shares as
if Section 561(i) of that Act did not apply to the allotment, provided that the power conferred by this resolution shall be
limited to:

(i)

(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 19 February 2020 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 10 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 defined in Section 693 of the Act) of ordinary shares of 25p each in
the capital of the Company (‘ordinary shares’) either for retention as treasury shares for future reissue, resale, transfer or
cancellation provided that:

(i)

(ii)

(iii)

(iv)

(v)

the maximum number of ordinary shares hereby authorised to be purchased is 14.99% of the issued share capital of
the Company as at the date of the passing of this resolution;

the minimum price (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
Official List for the five 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 2021, or, if earlier, the date falling fifteen 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

19 February 2020

Woolgate Exchange
25 Basinghall Street
London EC2V 5HA

TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2019

NOTES

1. Entitlement to attend and vote

Members who hold ordinary shares in the Company in uncertificated form must have been entered on the Company’s
register of members by 6.30pm on 26 March 2020 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 fixed for the adjourned meeting. Such members may
only vote at the meeting in respect of ordinary shares held at the time.

2. Proxies

A member entitled to attend and vote at the above meeting is entitled to appoint a proxy to attend the meeting to speak
and vote on a show of hands and, on a poll, to vote instead of him. A proxy need not be a member of the Company. A
member wishing to appoint more than one proxy must appoint each proxy in respect of a specified number of shares within
his holding. For this purpose, a member may photocopy the enclosed Form of Proxy before completion and must indicate
the number of shares in respect of which each proxy is appointed.

Instruments of proxy should be sent to Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA
so as to arrive no later than 11.00am on 26 March 2020. 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 2020.

CREST members who wish to appoint a proxy or proxies by utilising the CREST electronic proxy appointment service may
do so for the meeting and any adjournment(s) thereof by using the procedures described in the CREST Manual. CREST
personal members or other CREST sponsored members and those CREST members who have appointed a voting service
provider(s) should refer to their CREST sponsor or voting service provider(s) who will be able to take the appropriate
action on their behalf. In order for a proxy appointment made using the CREST service to be valid, the appropriate CREST
message (a “CREST Proxy Instruction”) must be properly authenticated in accordance with Euroclear’s specifications
and must contain the information required for such instructions, as described in the CREST Manual (available via
www.euroclear.com). The CREST message must be transmitted so as to be received by the issuer’s agent (ID RA19) by
not later than 48 hours (excluding non-working days) before the time appointed for the holding of the meeting or the
adjourned meeting. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp
applied to the CREST message by the CREST Applications Host) from which the issuer’s agent is able to retrieve the CREST
message by enquiry to CREST in the manner prescribed by CREST.

After this time any change of instructions to proxies appointed through CREST should be communicated to the appointee
through other means. CREST members and, where applicable, their CREST sponsors or voting service provider(s), should
note that Euroclear does not make available special procedures in CREST for any particular messages. Normal system
timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the
CREST member concerned to take (or, if the CREST member(s) is/are a CREST personal member or sponsored member or
has appointed a voting service provider(s), to procure that the CREST sponsor or voting service provider takes) such action
as shall be necessary to ensure that a CREST message is transmitted by means of the CREST system by any particular
time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service provider(s) is/are
referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and
timings. The Company may treat as invalid a CREST Proxy instruction in the circumstances set out in Regulation 35(5)(a) of
the Uncertificated Securities Regulations 2001.

3. Corporate representatives

A member of the Company which is a corporation may authorise a person or persons to act as its representative(s) at the
AGM. In accordance with the provisions of the Companies Act 2006, each such representative may exercise (on behalf
of the corporation) the same powers as the corporation could exercise if it were an individual member of the Company,
provided that they do not do so in relation to the same shares. It is no longer necessary to nominate a designated
corporate representative.

4. Nominated persons

In accordance with Section 325 of the Companies Act 2006, the right to appoint proxies does not apply to persons
nominated to receive information rights under Section 146 of the Act. Persons nominated to receive information rights
under Section 146 of the Act who have been sent a copy of this notice of meeting are hereby informed, in accordance with
Section 149 (2) of the Act, that they may have a right under an agreement with the registered member by whom they were

GOVERNANCE REPORTFINANCIAL REPORTSHAREHOLDER INFORMATIONSTRATEGIC REPORTTEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2019

NOTICE OF MEETING CONTINUED

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. Directors

The AIC Code of Corporate Governance requires the documentation accompanying the resolutions to elect or re-elect
each director to set out specific reasons why their contribution is, and continues to be, important for the Company's long
term sustainable success. Accordingly, the reasons for the continued appointment of those directors seeking re-election
are set out below:

•

Arthur Copple: Mr Copple possesses extensive knowledge of the investment trust industry based on a long career
working in various executive roles. He continues to be heavily involved in the industry and is therefore able to provide
valuable and up to date insight, particularly in advising on how Temple Bar's actions might be perceived externally.
Mr Copple is an effective chair and leads the decision making process in an inclusive manner.

Lesley Sherratt: Dr Sherratt has detailed knowledge of the funds sector stemming from a long career in the
sector. She provides incisive contributions to Board discussions, aided by a clear thinking and analytical approach.
Dr Sherratt's principled stance on ESG and ethical matters has been instrumental in driving Board discussion and
subsequent engagement with stakeholders.

Richard Wyatt: Mr Wyatt typically adopts a 'big picture' approach to Board discussion and decision making. He is well
reasoned, knowledgeable and possesses a good understanding of the impact of current events. In certain contexts,
Mr Wyatt's ability to approach issues from a unique perspective provides important balance to Board discussion.

Shefaly Yogendra: Dr Yogendra joined the Board in October 2019 so had attended only one Board meeting before
the Company's year end. She has huge experience of governance and risk, an increasingly important attribute in the
Board's risk management and decision making process. This particular skillset is expected to contribute significantly
to Board balance and discussion in the coming years.

6. Members’ requests under Section 527 of the 2006 Act

Under Section 527 of the Companies Act 2006 members meeting the threshold requirements set out in that section have
the right to require the Company to publish on a website a statement setting out any matter relating to (i) the audit of the
Company’s accounts (including the auditor’s report and the conduct of the audit) that are to be laid before the Annual
General Meeting for the financial year beginning 1 January 2019; or (ii) any circumstance connected with an auditor of
the Company appointed for the financial year beginning 1 January 2019 ceasing to hold office since the previous meeting
at which annual accounts and reports were laid. The Company may not require the shareholders requesting any such
website publication to pay its expenses in complying with Sections 527 or 528 (requirements as to website availability)
of the Companies Act 2006. Where the Company is required to place a statement on a website under Section 527 of the
Companies Act 2006, it must forward the statement to the Company’s auditor not later than the time when it makes the
statement available on the website. The business which may be dealt with at the Annual General Meeting for the relevant
financial year includes any statement that the Company has been required under Section 527 of the Companies Act 2006 to
publish on a website.

7. Members’ rights to ask questions

Any member attending the meeting has the right to ask questions. The Company must cause to be answered any such
question relating to the business being dealt with at the meeting but no such answer need be given if (a) to do so would
interfere unduly with the preparation for the meeting or involve the disclosure of confidential information, (b) the answer
has already been given on a website in the form of an answer to a question, or (c) it is undesirable in the interests of the
Company or the good order of the meeting that the question be answered.

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

9. Total number of shares and voting rights

As at 19 February 2020, 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.

10. 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 PLCAnnual Report & Financial Statements for the year ended 31 December 2019

USEFUL INFORMATION FOR SHAREHOLDERS

ANNUAL GENERAL MEETING

The Annual General Meeting will be held at Woolgate Exchange, 25 Basinghall Street, London EC2V 5HA on 30 March 2020 at
11.00am.

FINANCIAL CALENDAR

The financial calendar for 2020 is set out below:

Ordinary shares
Final dividend, 2019 – payable

– ex-dividend
– record date

First interim dividend, 2020
Second interim dividend, 2020
Third interim dividend, 2020
Final dividend, 2020

5.5% Debenture Stock 2021
Interest payments

PAYMENT OF DIVIDENDS

31 March 2020
12 March 2020
13 March 2020
30 June 2020
30 September 2020
31 December 2020
End of March 2021

8 March and 8 September

Cash dividends will be sent by cheque to the first-named shareholder on the Register at his or her registered address together
with a tax voucher. At shareholders’ request, dividends may instead be paid direct into the shareholder’s bank account through
the Bankers’ Automated Clearing System (‘BACS’). This may be arranged by contacting the Company’s Registrar
on 0371 384 2432.

PRICE AND PERFORMANCE INFORMATION

The Company’s ordinary shares and debenture 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 notified 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
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 consult each site's privacy and cookie policies
as well as their platform charges structure.

The Board encourages all of its shareholders to exercise their rights and notes that many specialist platforms provide
shareholders with the ability to continue to receive Company documentation, to vote their shares and to attend general
meetings, at no cost. Please refer to your investment platform for more details, or visit the AIC's website at
www.theaic.co.uk/aic/shareholder-voting-consumer-platforms for information on which platforms support these services and
how to utilise them.

GOVERNANCE REPORTFINANCIAL REPORTSHAREHOLDER INFORMATIONSTRATEGIC REPORTTEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2019

USEFUL INFORMATION FOR SHAREHOLDERS CONTINUED

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 find an
investment that suits your individual circumstances. An adviser will let you know the fee for their service before you go ahead.
You can find 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 www.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’s remuneration policy is available at www.investecassetmanagement.com or from the Company Secretary
on request (see contact details on page 55) and the numerical remuneration disclosures in respect of the AIFM’s relevant
reporting period (year ended 31 March 2019) 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 2019 are shown below:

Leverage Exposure

Maximum limit

Actual

Gross

Commitment

method

250%

118%

200%

122%

Remuneration
The table below, as provided by the AIFM, shows the total amount of remuneration paid by the AIFM to its staff for the
financial year ending 31 March 2019, split into fixed and variable remuneration, and showing the number of beneficiaries.
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 Identified/Code Staff in respect of
activities related to the AIFM and the Fund. Identified/Code Staff are staff and other individuals identified by the AIFM whose
activities have a material impact on the risk profile of the AIFM or the Fund. This table excludes Identified/Code Staff activities
subject to a delegation agreement.

Aggregate Remuneration

Senior Management

Other individuals with material impact

Number of Staff

£188,917

£184,157

£4,760

TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2019Independent 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
Gowling WLG (UK) LLP
4 More London Riverside
London SE1 2AU

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 office
Woolgate Exchange
25 Basinghall Street
London EC2V 5HA

Company Secretary
Investec Asset Management Limited,
represented by Martin Slade

Registered number
Registered in England No. 214601

Temple Bar Identifiers
Company registration number – 214601
Ordinary Shares ISIN – GB0008825324
Ordinary Shares Sedol – 0882532
Legal Entity Identifier – 213800O8EAP4SG5JD323

Registrar
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA

Telephone Nos:
+44 121 415 7047 (overseas shareholder helpline)
0371 384 2432 (shareholder helpline)*
0906 559 6025 (broker helpline)
0345 603 0561 (Equiniti Investment Account holders)
+44 121 415 0223 (overseas Equiniti Investment Account holders)

*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 net gearing.

BOTTOM-UP STOCK SELECTION
An investment approach that concentrates on the analysis of individual companies and considers the company’s history,
management and potential as more important than macroeconomic trends.

CASH ALTERNATIVES/EQUIVALENT
Also known as cash equivalents. A class of investments considered relatively low-risk because of their high liquidity,
meaning they can be quickly converted into cash.

CONTRARIAN APPROACH
An investment style that goes against prevailing market trends. In very simple terms the approach is defined by buying
assets that are performing poorly and then selling when they perform well.

DEBENTURE STOCKS

A type of stock entitling the bearer to a certain fixed income 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 profits paid out to shareholders.

FIXED INTEREST
Fixed interest securities, also known as bonds, are loans usually taken out by a government or company which normally
pay a fixed rate of interest over a given time period, at the end of which the loan is repaid.

FTSE ALL-SHARE INDEX
A comparative index that tracks the market price of the UK’s leading companies listed on the London Stock Exchange.
Covering around 600 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.

GILTS

A bond that is issued by the British government which is generally considered low risk.

HEDGING

A technique seeking to offset or minimise the exposure to a specific risk by entering an opposing position.

LIQUIDITY

The ease with which an asset can be sold at a reasonable price for cash.

MARKET CAPITALISATION

The total value of a company’s equity, calculated by the number of shares multiplied by their market price.

NET ASSET VALUE

In a company context, the net asset value describes total assets minus total liabilities.

NET GEARING*
In accounting terms, gearing is the amount of a company’s total borrowings divided by its share capital. Net gearing adjusts
this amount by any cash and cash equivalents. High gearing means a proportionately large amount of debt, which may be
considered more risky for equity holders. However, gearing also entails tax advantages. In investment analysis, a highly geared
company is one where small changes in sales produce big swings in profits. Also known as leverage.

The gearing ratio as at 31 December 2019 is calculated as the ratio of the Trust’s net assets of £985,123,000 (2018:
£801,182,000), divided by a sum of the total assets of £1,100,238,000 (2018: £917,361,000) less current liabilities of £1,066,000
(2018: £1,208,000), less cash and cash equivalents (including gilts) of £27,927,000 (2018: £33,521,000). The resultant ratio of
8.0% can be seen in the summary of results on page 1.

TEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2019ONGOING CHARGE*
Defined as the total of the investment management fee of £3,799,000 and administrative expenses of £585,000 divided by
the average cum income net asset value throughout the year of £891,276,390. This figure 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-efficient alternative to paying out dividends.

STOCK LENDING
Also known as securities lending. The act of loaning a stock, derivative, or other security to an investor or firm. It requires the
borrower to put up collateral, whether cash, security or a letter of credit. When a security is loaned, the title and the ownership
is also transferred to the borrower.

TOTAL RETURN*

Captures both the capital appreciation/depreciation of an investment as well as the dividends generated over a holding
period.

Return on Gross Assets
As at 31 December 2019, the difference between the Trust's opening and closing total assets less current liabilities stood
at £183,019,000 (2019: £1,099,172,000; 2018: £916,153,000); adding the dividend and debenture interest paid in the current
year of £35,757,000 and £4,940,000 respectively results in a total return of £223,716,000 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 24.2% (please see the
Statement of Financial position as well as notes 8 and 10 of the financial statements on pages 37, 42 and 43 respectively for the
audited inputs to the calculation).

Return on Net Asset Value
As at 31 December 2019, the difference between the Trust's opening and closing NAV stood at £182,941,000 (2019:
£985,123,000; 2018: £802,182,000); adding the dividend paid in the current year of £35,757,000 results in a total return of
£218,698,000 for the purposes of this calculation. Dividing this return by the opening NAV of the Trust results in the return of
27.9% (please see the Statement of Financial position and note 10 of the financial statements on pages 37 and 43 respectively,
for the audited inputs to the calculation).

Return on Share price
As at 31 December 2019, the difference between the Trust's opening and closing market price per share stood at 330p
(2019: 1,476p; 2018: 1,146.00p); adding the dividend accrued in the current year of 53.47p results in a total return per share of
383.47p 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 34.3% (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 flat or current yield) is
the annual interest payable as a percentage of the current market price. The redemption yield (or yield to maturity) allows for
any gain or loss of capital which will be realised at the maturity date.

* Alternative Performance Measure.

GOVERNANCE REPORTFINANCIAL REPORTSHAREHOLDER INFORMATIONSTRATEGIC REPORTTEMPLE BAR INVESTMENT TRUST PLCAnnual Report & Financial Statements for the year ended 31 December 2019OBJECTIVE
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.

PURPOSE
The purpose of the Company is to deliver long term returns
for shareholders from a diversified portfolio of investments.

CONTENTS

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL REPORT

1 Summary of results

17 Board of Directors

35 Statement of

SHAREHOLDER
INFORMATION

2 Chairman’s statement

18 Report of Directors

4 Manager’s review

21 Report on directors’

6 Ten year record

7 Attribution analysis

8 Overview of strategy

15 Portfolio of investments

remuneration

23 Corporate governance

26 Report of the audit and

risk committee

28 Statement of directors’

responsibilities

29 Independent auditor’s

report

Comprehensive Income

49 Notice of meeting

36 Statement of Changes

in Equity

37 Statement of Financial

Position

38 Statement of
Cash Flows

53 Useful information
for shareholders

54 Alternative Investment
Fund Managers (AIFM)
Directive

55 Corporate information

39 Notes to the Financial

56 Glossary of terms

Statements

TEMPLE BAR INVESTMENT TRUST PLC
Annual Report & Financial Statements for the year ended 31 December 2019

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ANNUAL REPORT & FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019