REG-Temple Bar Investment Trust Plc: Half-year Report
18/08/2023 07:15
Temple Bar Investment Trust Plc
Temple Bar Investment Trust Plc (“Temple Bar” or the “Company”) is
pleased to present its Unaudited half-year results for the six months ended 30
June 2023.
This Announcement is not the Company’s Half-Year Report & Accounts. It is an
abridged version of the Company’s full Half-Year Report & Accounts for the
six months ended 30 June 2023. The full Half-Year Report & Accounts, together
with a copy of this announcement, will also shortly be available on the
Company’s website: www.templebarinvestments.co.uk where up to date
information on the Company, including daily NAV, share prices and fact sheets,
can also be found. The Company's Half-Year Report & Accounts is also being
published in hard copy format.
The Company's Half Year Report & Accounts for the six months ended 30 June
2023 has been submitted to the UK Listing Authority, and will shortly be
available for inspection on the National Storage Mechanism (NSM):
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
For further information please contact: Mark Pope, Frostrow Capital LLP 020
3008 4913.
Summary of Results
Six months to Year to Six months to %
30 June 31 December 30 June change
2023 2022 2022 since
£000 £000 £000 year end
Net assets 699,147 726,346 735,286 (3.7)
Ordinary shares
Net asset value per share with debt at book value 231.2p 228.5p 224.3p 1.1
Net asset value per share with debt at fair value(1) 236.8p 233.5p 226.7p 1.5
Share Price 221.5p 220.5p 218.0p 0.5
Premium/(discount) with debt at fair value(1) (6.5%) (5.6%) (3.8%)
Revenue return
Revenue return per ordinary share(1) 5.4p 9.4p 4.0p
Revenue return attributable to ordinary shareholders 16,595 30,550 13,219
Dividends per ordinary share(1,3) 4.60p 9.35p 4.35p
Capital return
Capital return attributable to ordinary shareholders 7,135 (46,519) (57,048)
Capital return attributable per ordinary share 2.3p (14.3p) (17.3p)
Total returns for the half-year ended 30 June 2023 %
NAV total return, with debt at fair value(1,2) 3.4
Share price total return(1,2) 2.5
FTSE All-Share Index(4) 2.6
1 Alternative Performance Measure – See glossary of terms for
definition and more information.
2 Source: Morningstar.
3 Dividends declared relating to the relevant period.
4 Source: Redwheel.
Chairman’s Statement
This is my first report to shareholders having succeeded Arthur Copple as
Chairman of the Company in May 2023. During Arthur’s tenure as Chairman,
your Board had to take a number of strategic decisions including changing our
Portfolio Manager and deciding to retain our value focused investment
strategy. We believe that both decisions were the correct ones for
shareholders and I would like to thank Arthur, both personally and on behalf
of your Board, for his leadership and wise counsel during his tenure.
Performance
The total return of the FTSE All-Share Index was +2.6% in the period. I am
pleased to report that the Company’s Net Asset Value (“NAV”) total
return was +3.4%, outperforming the Index, and that the share price total
return was +2.5%.
Discount
In common with many other trusts, the Company’s discount to NAV during the
period widened slightly to 6.5% from 5.6%. Your Board has continued to be
active in pursuing its buy back policy. During the period 15,364,821 shares
were bought back at a cost of £31.1m. This has the effect of accreting to the
remaining shares’ net asset value and reducing the supply versus demand
imbalance in the market.
Dividend
Your Board declared a first interim dividend of 2.3 pence per share which was
paid on 30 June 2023. Your Board has also agreed that the second interim
dividend will also be 2.3 pence per share. The second interim dividend will be
payable on 29 September 2023 to shareholders on the register of members on 25
August 2023. The associated ex-dividend date is 24 August 2023.
Outlook
It is not my intention in these communications to comment on macro-economic
forecasts, however there are signs that some of the inflationary pressures in
the UK are starting to ease with a concomitant decrease in the pressures for
monetary tightening by the Bank of England.
However, principally your Board continues to believe that our Portfolio
Manager is correct in their conviction that a portfolio of fundamentally sound
businesses, bought at attractive valuations, is the best predictor of
investment return over time and that our value strategy will reward
shareholders accordingly.
Richard Wyatt
Chairman
17 August 2023
Portfolio Manager’s Report
Overview
Stock markets have had to contend with further significant interest rate rises
in the first six months of 2023. In the US, the UK and Continental Europe,
Central Banks have been raising rates to bring inflation back to the target
level of around 2%. At the beginning of the year, there was some optimism that
rates may not have to rise too much further, however those hopes have
subsequently been disappointed by the continued strength of the economy and
some concerning signs that inflationary pressures are becoming embedded in
consumer psychology. This has been particularly the case in the UK, where
inflation readings have surprised to the upside for several months now.
Although there are signs that these pressures are now easing somewhat, it is
hard to know how much further rates will have to rise from today’s levels
and how deep and protracted any resulting recession may be. At the current
time, however, most companies continue to enjoy the benefits of relatively
benign economic conditions and corporate profitability is generally strong. In
contrast, Chinese economic growth had been expected to bounce back strongly in
2023, post the COVID lockdowns in 2022; however this has not been the case
and, here, the authorities have been cutting interest rates to stimulate
growth.
Stock markets have also had to contend with the failure of several regional
banks in the US. These failures were ultimately the result of lax management
controls and poor regulatory oversight but nevertheless they raised fears of a
broader contagion and led to large deposit outflows at Credit Suisse,
culminating in its forced purchase by UBS at a significant discount to an
already depressed share price. Quite quickly, however, relative calm returned
to financial markets as it became clear that Credit Suisse was an outlier
amongst the European banks and thereby not symptomatic of broader weakness in
the banking sector. Our view throughout has been that the banking system is
sound and that we were not about to witness a repeat of the 2008 financial
crisis. This belief was borne of the fact that banks’ asset quality is good,
liquidity is strong, and they hold around three times the amount of capital
that they did then. Banking regulators throughout the world have spent the
last fifteen years ensuring that the Banks are financially strong and that
accordingly they can continue to lend even in a stressed environment. We
don’t believe that this effort has been for nought.
Given the headwinds of rising interest rates and fears over the stability of
the banking system, it is surprising perhaps that most stock markets fared
well in the first half of the year, with many delivering double digit returns.
The exception in this instance was the UK market which delivered just a small
positive total return in the six months.
Portfolio
The Trust outperformed the UK market over the period, helped by strong
performances from Marks & Spencer, Centrica, Easyjet and Standard Chartered.
Anglo American, Pearson and TotalEnergies were detractors from the portfolio
return in the period.
Marks & Spencer continues to execute well in both food and clothing, taking
further market share from its competitors. The company has an excellent brand,
but for many years has failed to realise its true potential. There are clear
signs that this is now changing at a time when the stock market continues to
be sceptical. The company delivered a strong set of results in May and profit
expectations for the current financial year have increased. Nevertheless, the
company is still modestly valued, even though it still has much in the way of
unrealised profit potential.
Centrica continues to perform strongly in several areas. At British Gas, the
company is benefitting from a more favourable competitive environment,
following the demise of several of its competitors in 2021, whilst its trading
business is performing strongly on the back of tight LNG markets. In
combination with high electricity prices and an increase in the capacity of
the company’s Rough gas storage facility, these factors have driven
meaningful upgrades to near-term profit expectations. The company continues to
be valued on a price earnings ratio of less than six times despite having
significant excess cash on its balance sheet. We believe that the company can
play a meaningful role in the upcoming energy transition and that accordingly
its profits can continue to grow over time albeit with some cyclicality along
the way.
Easyjet has been struggling to restore profitability post the pandemic and
remains some way short of its profit potential. Nevertheless, there is little
sign yet that interest rate rises are dampening demand and airline bookings
continue to be strong. As a result, the company has seen some profit upgrades,
prompting a sharp upward move in its share price from depressed levels.
Standard Chartered has been a beneficiary of rising dollar interest rates,
which in turn have led to higher income growth and should thereby help the
bank achieve its profitability targets. Although the large increase in
interest rates could lead to credit stresses and increased loan loss
provisions, the bank has been significantly de-risked over the last few years
and lending standards are now much improved. It is possible and maybe even
likely therefore that credit provisions will not need to be significantly
increased from current levels. The company’s shares are valued at around
seven times this year’s expected earnings and at a meaningful discount to
its asset value. At the start of the year, First Abu Dhabi Bank considered
making a bid for the company and whilst nothing came of it, the episode served
to highlight the strategic value of the company.
In the six months, Anglo American fell on fears that an increasingly hawkish
Federal Reserve would raise interest rates to such a point that demand for
commodities would be adversely affected. The company also announced slightly
disappointing results at which it said that its north of England Woodsmith
project to bring polyhalite fertiliser to the market was running behind
schedule and would be more costly to develop than originally expected. The
company’s shares are currently valued at around eight times this year’s
expected earnings and offer a dividend yield of around 5%.
Pearson continued to trade well and the hoped-for recovery in earnings is very
much on track, however, the company earns most of its profits in dollars and
therefore some weakness in the dollar has led to small downgrades in sterling
profit expectations. Over the last few years, the company has had to navigate
a difficult transition from print to digital publishing in the North American
higher education market although it looks to have reached an inflection point
and profits are now growing once again. In 2021, the company received two
separate bid approaches from the private equity firm, Apollo, and although
both bids were rejected by the management team as undervaluing the company and
therefore came to nothing, the approaches again serve to highlight the likely
undervaluation in the company’s shares.
TotalEnergies underperformed on continued weakness in the oil price, resulting
from fears of recession, coupled with some strengthening in the pound against
the euro. The company is currently valued at less than six times this year’s
expected earnings.
In the six months under review, the Trust purchased shares in Stellantis, a
company formed by the merger of Fiat Chrysler and Peugeot in 2021. The
rationale for the merger was to combine the European strength of the Peugeot
business with the North American strength of Fiat Chrysler. Combining the
entities has allowed for significant cost savings and created a stronger and
more diversified business. The company is priced on a historic price earnings
ratio of less than four times and has a dividend yield of around 8%. In 2022,
the auto industry enjoyed high profitability as strong demand post COVID,
coupled with muted supply drove price increases in most markets. Whilst
profitability is likely to decline in future years as industry conditions
normalise, in our view, the company would nevertheless continue to be very
attractively valued. The company has significant net cash on its balance
sheet, equating to almost half of its market capitalisation.
UK Markets
The relatively muted performance of the UK equity market in the first half of
the year contrasts with strong returns elsewhere. In the US for example, the
Nasdaq index of Technology shares had its best first six months in 40 years.
The UK therefore remains very out of favour with many investors who continue
to sell UK assets to channel money overseas. Here investment prospects are
seen to be more exciting even though a large portion of the profits of
companies listed in the UK are derived from outside the UK.
The result of this negative sentiment towards the UK however is that UK listed
stocks are valued at a significant discount to their overseas listed peers for
no other reason than they happen to be listed in the UK. For example, Shell is
valued at just 6.5x 2023 estimated earnings, whereas the US listed Exxon Mobil
is valued at over 11x. In banking, Barclays is valued at just 0.5x the value
of its shareholder equity, whereas the US investment banks are valued at
around 1x. Whilst many are taking a dim view of UK economic prospects, it is
important to remember that we buy companies and not economies. The companies
in which the Trust is invested are sound, conservatively run businesses with
good balance sheets and capable management teams.
Many of the CEOs that we talk to express frustration with the low multiples
that their businesses attract, and clients often ask what is likely to cause
these shares to re-rate. The answer of course is that we don’t know for
sure, except to say that one doesn’t need the shares to re-rate to get a
very attractive investment return. We should remember that a company on a p/e
of 6x, which turns 90% of its profit into cash (a typical conversion rate),
offers a free cash flow yield of 15% and that all that cash can be used to
drive shareholder returns either in the form of dividends or share buybacks,
whilst holding debt at a constant level.
If said company paid out one third of its free cash as a dividend (dividend
yield 5%) and used the remaining two thirds to buy back shares, the company
would retire 10% of its shares in issue. This in turn would mean that for the
same level of profits, earnings per share (and therefore dividend per share)
would increase by 10% in the following year and the shareholders’ total
return would be 15%. If the shares were to re-rate to 8x, this would drive an
additional return of over 30%! These are perhaps obvious points to make, but
it is nevertheless surprising how many investors seem to forget them.
Outlook
Whilst it is somewhat frustrating that UK listed shares continue to attract
such miserly valuations, the attraction for the long-term investor is
significant as stock market history has shown that the best predictor of
long-term future investment return is starting valuation. Time and time again,
those that have invested in highly valued assets have been rewarded with
suboptimal returns. Conversely, those that have invested in lowly valued, but
fundamentally sound businesses, which did not happen to fit with the
prevailing investment narrative at the time of purchase, have enjoyed outsized
gains. Whilst we cannot know when the improved fundamentals of many of the
Trust’s holdings will be reflected in share prices, the Trust’s
shareholders should take much comfort from the fact that the lessons of stock
market history are very much on their side.
Ian Lance and Nick Purves
RWC Asset Management LLP
17 August 2023
Interim Management Report
The important events that have occurred during the period under review, the
key factors influencing the financial statements and the principal risks and
uncertainties for the remaining six months of the financial year are set out
in the Chairman’s Statement and the Portfolio Manager’s Report.
The principal risks facing the Company are unchanged, and are not expected to
change materially in the remaining six months of the financial year, since
the date of the Annual Report and Financial Statements for the year ended
31 December 2022 and continue to be as set out in that report and in note 22
to the financial statements..
Risks faced by the Company include, but are not limited to: investment
strategy risk, loss of investment team or portfolio manager, income risk –
dividend, share price risk, reliance on the Portfolio Manager and other
service providers, compliance with laws and regulations, cyber security, and
global risks (e.g. climate risk, a pandemic), market price risk, interest rate
risk, liquidity risk, credit risk and currency risk.
The Board, the AIFM and the Portfolio Manager discuss and identify emerging
risks as part of the risk identification process and have considered, amongst
other things, climate issues, the ongoing and tragic events in Ukraine and
also UK political instability.
Related Party Transactions
During the first six months of the current financial year, no transactions
with related parties have taken place which have materially affected the
financial position or the performance of the Company.
Going Concern
The Directors believe, having considered the Company’s investment objective,
risk management policies, capital management policies and procedures, and the
nature of the portfolio and the expenditure projections, that the Company has
adequate resources, an appropriate financial structure and suitable management
arrangements in place to continue in operational existence for the foreseeable
future.
The Directors confirm to the best of their knowledge that:
· the condensed set of financial statements contained within this
Half-Year Report has been prepared in accordance with Accounting Standard IAS
34, ‘Interim Financial Reporting’, as adopted in the UK, and gives a true
and fair view of the assets, liabilities, financial position and return of the
Company; and,
· the Half-Year Report includes a fair review of the information
required by 4.2.7R and 4.2.8R of the UK Listing Authority Disclosure Guidance
and Transparency Rules.
In order to provide these confirmations, and in preparing these financial
statements, the Directors are required to:
· select suitable accounting policies and then apply them consistently;
· make judgements and accounting estimates that are reasonable and
prudent;
· state whether applicable IFRS have been followed, subject to any
material departures disclosed and explained in the financial statements; and
· prepare the financial statements on the going concern basis unless it
is inappropriate to presume that the Company will continue in business; and
the Directors confirm that they have done so.
The Half-Year Report was approved by the Board on 17 August 2023 and the above
responsibility statement was signed on its behalf by:
Richard Wyatt
Chairman
Ten Largest Investments
As at 30 June 2023
Company Industry Primary place Valuation %
of Listing £’000 of portfolio
Centrica Utilities UK 53,281 6.9%
Royal Dutch Shell Oil & Gas UK 52,710 6.9%
Marks & Spencer Group Consumer Services UK 50,943 6.6%
BP Oil & Gas UK 49,968 6.5%
Standard Chartered Financials UK 48,265 6.3%
Pearson Consumer Services UK 41,289 5.4%
NatWest Group Financials UK 40,428 5.3%
TotalEnergies Oil & Gas France 36,393 4.7%
International Distributions Services PLC Industrials UK 35,852 4.7%
ITV Consumer Services UK 33,294 4.3%
442,423 57.7%
Statement of Comprehensive Income
For the six months ended 30 June 2023 (unaudited)
30 June 2023 (unaudited) 30 June 2022 (unaudited) Year ended 31 December 2022 (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
Notes £000 £000 £000 £000 £000 £000 £000 £000 £000
Investment Income 5 18,743 – 18,743 15,336 – 15,336 34,760 – 34,760
Other operating income 5 37 – 37 2 – 2 31 – 31
Profit/(losses) on investments held at fair value 4 – 9,039 9,039 – (54,996) (54,996) – (42,572) (42,572)
Currency exchange losses – (103) (103) – (17) (17) – (13) (13)
Total income/(loss) 18,780 8,936 27,716 15,338 (55,013) (39,675) 34,791 (42,585) (7,794)
Expenses
Management fees (580) (870) (1,450) (606) (909) (1,515) (1,175) (1,762) (2,937)
Other expenses including dealing costs (473) (89) (562) (475) (292) (767) (1,057) (487) (1,544)
Profit/(loss) before finance costs and tax 17,727 7,977 25,704 14,257 (56,214) (41,957) 32,559 (44,834) (12,275)
Finance costs (561) (842) (1,403) (556) (834) (1,390) (1,123) (1,685) (2,808)
Profit/(loss) before tax 17,166 7,135 24,301 13,701 (57,048) (43,347) 31,436 (46,519) (15,083)
Tax (572) – (572) (482) – (482) (886) – (886)
Profit/(loss) for the period 16,594 7,135 23,729 13,219 (57,048) (43,829) 30,550 (46,519) (15,969)
Earnings per share (basic and diluted)* 5.4p 2.3p 7.7p 4.0p (17.3p) (13.3p) 9.4p (14.3p) (4.9p)
The total column of this statement represents the Statement of Comprehensive
Income, prepared in accordance with IFRS. The supplementary revenue and
capital columns are both prepared under guidance published by the AIC.
All items in the above statement derive from continuing operations.
* In accordance with IAS 33 ‘Earnings per Share’, the
comparative return per ordinary share figures have been restated using the new
number of shares in issue following the five for one share split. For weighted
average purposes, the share split has been treated as happening on the first
day of the accounting period. The weighted average number of shares used in
the calculations was 309,052,007 (Six months ended 30 June 2022: 329,216,123;
Year ended 31 December 2022: 325,567,365).
Statement of Changes in Equity
For the six months ended 30 June 2023 (unaudited)
Ordinary Share
share premium Capital Retained Total
capital account reserves earnings equity
Notes £000 £000 £000 £000 £000
Balance at 1 January 2023 16,719 96,040 600,206 13,381 726,346
Total comprehensive profit for the period – – 7,135 16,594 23,729
Cost of Shares bought back for Treasury – – (36,131) – (36,131)
Dividends paid to equity shareholders 7 – – – (14,797) (14,797)
Balance at 30 June 2023 16,719 96,040 571,210 15,178 699,147
Balance at 1 January 2022 16,719 96,040 672,616 11,708 797,083
Total comprehensive (loss)/profit for the period – – (57,048) 13,219 (43,829)
Cost of Shares bought back for Treasury – – (4,483) – (4,483)
Dividends paid to equity shareholders 7 – – – (13,485) (13,485)
Balance at 30 June 2022 16,719 96,040 611,085 11,442 735,286
Statement of Financial Position
As at 30 June 2023 (unaudited)
30 June 31 December 30 June
2023 2022 2022
(unaudited) (audited) (unaudited)
Notes £000 £000 £000
Non-current assets
Investments held at fair value 5 767,285 782,463 763,748
Current assets
Investments held at fair value 5 – 5,170 23,018
Cash and cash equivalents 3,823 13,240 13,204
Receivables 5,340 2,257 27,238
Total assets 776,448 803,130 827,208
Current liabilities
Payables (2,575) (2,077) (17,233)
Total assets less current liabilities 773,872 801,053 809,975
Non-current liabilities
Interest bearing borrowings 8 (74,726) (74,707) (74,689)
Net assets 699,147 726,346 735,286
Equity attributable to equity holders
Ordinary share capital 9 16,719 16,719 16,719
Share premium 96,040 96,040 96,040
Capital reserves 571,210 600,206 611,085
Revenue reserves 15,178 13,381 11,442
Total equity attributable to equity holders 699,147 726,346 735,286
NAV per share* 10 231.2p 228.5p 224.3p
NAV per share with debt at fair value(1) 10 236.8p 233.5p 226.7p
1 Alternative Performance Measure – See glossary of terms for
definition and more information.
Statement of Cash Flows
For the six months ended 30 June 2023 (unaudited)
Year ended
30 June 30 June 31 December
2023 2022 2022
(unaudited) (unaudited) (audited)
£000 £000 £000
Cash flows from operating activities
Profit/(loss) before tax 24,301 (43,347) (15,083)
Adjustments for:
(Losses)/gains on investments (9,039) 54,996 42,572
Finance costs 1,403 1,390 2,808
Dividend income (18,716) (15,180) (34,504)
Interest income (64) (158) (287)
Dividends received 15,814 17,459 37,680
Interest received 37 353 584
Increase in receivables (181) (167) (361)
(Decrease)/increase in payables (101) 15 70
Overseas withholding tax suffered (572) (482) (886)
Net cash flows from operating activities 12,882 14,879 32,593
Cash flows from investing activities
Purchases of investments (24,791) (68,311) (127,456)
Sales of investments 54,206 74,789 154,148
Net cash flows from investing activities 29,415 6,478 26,692
Cash flows from financing activities
Repayment of borrowing – – –
Equity dividends paid (14,797) (13,485) (28,877)
Interest paid on borrowings (1,386) (1,386) (2,772)
Shares bought back for treasury (35,531) (4,908) (26,022)
Net cash flows used in financing activities (51,714) (19,779) (57,671)
Net (decrease)/increase in cash and cash equivalents (9,417) 1,578 1,614
Cash and cash equivalents at the start of the period 13,240 11,626 11,626
Cash and cash equivalents at the end of the period 3,823 13,204 13,240
Notes to the Financial Statements
1. Significant Accounting Policies
1.a General information
Temple Bar Investment Trust Plc is a company limited by shares, incorporated
and domiciled in the UK. Its registered office and principal place of business
is at 25 Southampton Buildings, London WC2A 1AL, UK. Its shares are listed on
the London Stock Exchange.
These condensed interim financial statements were approved for issue on 17
August 2023. These condensed interim financial statements do not comprise
statutory accounts within the meaning of section 434 of the Companies Act
2006. Statutory accounts for the year ended 31 December 2022 were approved by
the board of directors on 22 March 2023 and delivered to the Registrar of
Companies. The report of the auditors on those accounts was unqualified, did
not contain an emphasis of matter paragraph and did not contain any statement
under section 498 of the Companies Act 2006.
These financial statements have not been audited.
1.b Basis of Preparation
This condensed consolidated interim financial report for the half-year
reporting period ended 30 June 2023 has been prepared in accordance with the
Disclosure Guidance and Transparency Rules of the Financial Conduct Authority
and Accounting Standard IAS 34, ‘Interim Financial Reporting’, as adopted
in the UK.
The accounting policies adopted are consistent with those of the previous
financial year and corresponding interim reporting period.
2. Going Concern
The Directors have made an assessment of the Company’s ability to continue
as a going concern and are satisfied that the Company has adequate resources
to continue in operational existence for a period of at least 12 months from
the date when these financial statements were approved.
In making this assessment, the Directors have considered a wide variety of
emerging and current risks to the Company, as well as mitigation strategies
that are in place. The Directors are not aware of any material uncertainties
that may cast significant doubt on the Company’s ability to continue as a
going concern, having taken into account the liquidity of the Company’s
investment portfolio and the Company’s financial position in respect of its
cash flows and borrowing facilities. Therefore, the financial statements have
been prepared on a going concern basis.
3. 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. The area
requiring the most significant judgment is recognition and classification of
unusual or special dividends received as either revenue or capital in nature.
The estimates and underlying assumptions are reviewed on an ongoing basis.
4. Segmental Reporting
The Directors are of the opinion that the Company is engaged in a single
segment of business being investment business.
5. Investments Held at Fair Value Through Profit or Loss
(a) Investment portfolio summary
Six months ended 30 June 2023
Quoted Debt
equities securities Total
£000 £000 £000
Opening cost at the beginning of the period 734,594 5,172 739,766
Opening unrealised appreciation/(depreciation) at the beginning of the period 47,869 (2) 47,867
Opening fair value at the beginning of the period 782,463 5,170 787,633
Movements in the period:
Purchases at cost 24,791 28 24,819
Sales proceeds (49,006) (5,200) (54,206)
Realised gains on the sale of investments 19,893 – 19,893
Change in unrealised appreciation/(depreciation) (10,856) 2 (10,854)
Closing fair value at the end of the period 767,285 – 767,285
Closing cost at the end of the period 730,272 – 730,272
Closing unrealised appreciation at the end of the period 37,013 – 37,013
Closing fair value at the end of the period 767,285 – 767,285
(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.
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.
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 and have therefore
been determined as Level 1.
There were no transfers between levels in the period and as such no
reconciliation between levels has been presented.
30 June 31 December 30 June
2023 2022 2022
Level 1 Level 1 Level 1
As at £000 £000 £000
Financial assets
Quoted equities 767,285 782,463 763,748
Debt securities – 5,170 23,018
767,285 787,633 786,766
6. Income
Six months ended Six months ended Year ended
30 June 2023 (unaudited) 30 June 2022 (unaudited) 31 December 2022 (unaudited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£000 £000 £000 £000 £000 £000 £000 £000 £000
Income from investments
UK dividends 12,989 – 12,989 10,839 – 10,839 26,541 – 26,541
Overseas dividends 5,727 – 5,727 4,341 – 4,341 7,963 – 7,963
Interest on fixed income securities 27 – 27 156 – 156 256 – 256
18,743 – 18,743 15,336 – 15,336 34,760 – 34,760
Other Income
Deposit
interest 37 – 37 2 – 2 31 – 31
18,780 – 18,780 15,338 – 15,338 34,791 – 34,791
7. Dividends
The fourth interim dividend relating to the year ended 31 December 2022 of 2.5
pence per ordinary share was paid during the six months ended 30 June 2023.
A first interim dividend relating to the year ending 31 December 2023 of 2.3
pence per share was paid on 30 June 2023.
A second interim dividend of 2.3 pence per share will be paid on 29 September
2023 to shareholders registered on 25 August 2023. In accordance with IFRS,
this dividend has not been recognised in these financial statements. The
ex-dividend date for this payment is 24 August 2023.
8. Interest-bearing borrowings
The Company’s financial instruments, are included in the Statement of
Financial Position at fair value or amortised cost, which is an approximation
of fair value, with the exception of interest-bearing borrowings which are
shown at book value.
The interest-bearing borrowings do not have prices quoted on an active market
but their fair values, as shown in the below table, are based on observable
inputs. As such they have been classified as Level 2 instruments in line with
prior periods.
30 June 2023 31 December 2022 30 June 2022
Carrying Fair Carrying Fair Carrying Fair
value value value value value value
As at £000 £000 £000 £000 £000 £000
Interest-bearing borrowings:
4.05% 49,833 44,025 49,817 44,872 49,801 48,979
03/09/2028 Private Placement Loan
2.99% 24,893 13,990 24,890 13,987 24,888 17,659
24/10/2047 Private Placement Loan
74,726 58,015 74,707 58,769 74,689 66,638
9. Share Capital
30 June 31 December 30 June
2023 2022 2022
Number Number Number
As at 1 January 317,822,386 65,951,785 65,951,785
Purchase of shares into treasury pre-share split – (260,125) (260,125)
Additional shares in issue following 5 for 1 share split – 262,766,640 262,766,640
Purchase of shares into treasury post-share split (15,364,821) (10,635,914) (655,523)
As at period end:
– In circulation 302,457,565 317,822,386 327,802,777
– In Treasury 31,906,260 16,541,439 6,561,048
– Listed 334,363,825 334,363,825 334,363,825
Nominal Value of 5p ordinary shares (£000) 16,719 16,719 16,719
During the period, the Company bought back ordinary shares at a cost of
£36,131,000 (Year ended 31 December 2022: £25,891,000; Six months ended 30
June 2022: £4,483,000).
At the AGM of the Company held in May 2022, shareholders approved a resolution
for a five for one share split such that each shareholder would receive five
shares with a nominal value of 5 pence each for every one share held.
267,491,060 additional shares (262,766,640 to shareholders and 4,724,420 in
relation to shares held in treasury) were created following this approval.
10. Net asset value (“NAV”) per share
The NAV per share is based on the net assets attributable to the equity
shareholders of £699,147,000 (31 December 2022: £726,346,000; 30 June 2022:
£735,286,000) and 302,457,565 (31 December 2022: 317,822,836; 30 June 2022:
327,802,777) shares being the number of shares in issue at the period end.
The NAV per share with debt at fair value is based on the net assets
attributable to the equity shareholders, adjusted for the difference between
the debt at carrying value and fair value as shown in note 8, and the number
of shares in issue at the period end. Adjusting for debt at fair value
resulted in an increase in net assets of £16,711,000 or 5.6p per share
(31 December 2022: increase of £15,938,000 or 5.0p per share; 30 June 2022:
increase of £8,051,000 or 2.4p per share).
Glossary of Terms
AIC
The Association of Investment Companies.
Benchmark
A comparative performance index.
Discount or Premium of share price to NAV per share*
A description of the difference between the share price and the net asset
value per share. The size of the discount or premium is calculated by
subtracting the share price from the net asset value per share and is usually
expressed as a percentage (%) of the net asset value per share. If the share
price is higher than the net asset value per share the result is a premium. If
the share price is lower than the net asset value per share, the shares are
trading at a discount.
Diversification
Holding a range of assets to reduce risk.
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
and the London Stock Exchange, 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.
Liquidity
The ease with which an asset can be purchased or 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.
NAV (‘Net Asset Value’) per Share
The value of total assets less liabilities, with debenture and loan stocks at
book value. Book value is the amount borrowed less the current loan
arrangement fee debtor. The net asset value per share is calculated by
dividing this amount by the number of ordinary shares outstanding.
NAV per Share with debt at fair value
The value of total assets less liabilities, with debentures and loan stocks at
fair value. The net asset value per share is calculated by dividing this
amount by the number of ordinary shares outstanding.
Ongoing Charge Ratio*
The ongoing charge ratio is calculated on an annualised basis. This figure
excludes any portfolio transaction costs and financing costs. It may vary from
period to period. The calculation below is in line with AIC guidelines.
Six months to
30 June 2023
£000
Investment management fee 1,451
Administrative expenses 533
Total 1,984
Average total net asset value
throughout the period 753,556
Ongoing charges 0.53%
Peer Companies
Companies that operate in the same industry sector and are of similar size.
Net asset value (NAV) per share total return with debt at fair value*
The theoretical total return on shareholders’ funds per share, reflecting
the change in NAV with debt at fair value assuming that dividends paid to
shareholders were reinvested at NAV with debt at fair value at the time the
shares were quoted ex-dividend. A way of measuring investment management
performance of investment trusts which is not affected by movements in
discounts/ premiums.
Six months to
30 June 2023
p
Opening NAV with debt at fair value 233.5
Increase in NAV 7.5
Less dividends paid (4.8)
Adjustment for movement in fair
value of debt 0.6
Closing NAV with debt at fair value 236.8
% increase in NAV with debt at fair value 3.5%
% Impact of reinvesting dividends (0.1%)
NAV per share % total return with debt at fair value 3.4%
Share price total return*
Return to the investor on mid-market prices assuming that all dividends paid
were reinvested at the share price at the time the shares were quoted
ex-dividend.
Six months to
30 June 2023
p
Opening share price 220.5
Increase in share price 5.8
Less: dividends paid (4.8)
Closing share price 221.5
% increase in share price 2.6%
Impact of reinvesting dividends (0.1%)
Share price total return 2.5%
Value Investing
An investment strategy that aims to identify under-valued yet good quality
companies with strong cash flows and robust balance sheets, putting an
emphasis on financial strength.
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.
For and on behalf of
Frostrow Capital LLP, Secretary
17 August 2023
- ENDS -
Neither the contents of the Company’s website nor the contents of any
website accessible from hyperlinks on this announcement (or any other website)
is incorporated into, or forms part of, this announcement.
Copyright (c) 2023 PR Newswire Association,LLC. All Rights ReservedRecent news on Temple Bar Investment Trust
See all newsREG-Temple Bar Investment Trust Plc: Net Asset Value(s)
AnnouncementREG-Temple Bar Investment Trust Plc: Net Asset Value(s)
AnnouncementREG-Temple Bar Investment Trust Plc: Net Asset Value(s)
AnnouncementREG-Temple Bar Investment Trust Plc: Net Asset Value(s)
AnnouncementREG-Temple Bar Investment Trust Plc: Net Asset Value(s)
Announcement