REG - TempletonEmerg.Mkt. - Key initiatives to heighten demand for shares

Templeton Emerging Markets Investment TrustAnnouncement

04/06/2024 11:15

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240604:nRSD0602Ra&default-theme=true

RNS Number : 0602R  Templeton Emerging Markets IT PLC  04 June 2024

 

Stock Exchange Announcement

Templeton Emerging Markets Investment Trust PLC

("TEMIT" or "the Company")

Legal Entity Identifier 5493002NMTB70RZBXO96

 

TEMIT ANNOUNCES KEY INITIATIVES TO HEIGHTEN DEMAND FOR SHARES

 

After careful consideration and ahead of its annual results announcement, the
TEMIT Board is pleased to announce four key initiatives which aim to increase
demand for the Company's shares.

 

These initiatives are:

 

·    Enhanced share buybacks: a share buyback programme for up to £200
million of shares over the next 12 to 24 months, representing up to 10% of
current net assets;

·    Dividends: a commitment to distribute £278 million (based on the
number of shares in issue as at the 31 March 2024 year-end) over the next five
years, by at least maintaining the dividend at 5 pence per share for five
years;

·    Conditional tender offer: A new performance-related conditional
tender offer measured over the next five years for 25% of the company's
shares, equivalent to £498 million of the Net Asset Value ('NAV') as at 31
March 2024; and

·    Management fees: A phased reduction in management fees over the next
two years.

 

Angus Macpherson, Chairman of TEMIT, said: 'The Board does not believe that
the discount at which the Company's shares trade relative to their underlying
NAV adequately reflects the Company's strong investment performance. In a
determined effort to improve the rating of our shares we are today announcing
measures which can significantly increase the scale of future distributions to
shareholders through a combination of buybacks, dividends, and a new
conditional tender offer alongside reduced management fees.

 

Taken together these measures represent an appreciable proportion of the
Company's value and our objective is to provide investors with a greater
degree of confidence that they will be able to realise value from their
investment whether from strong performance, increased cash distributions,
reduced costs, increased liquidity or through a share tender at close to NAV
per share depending on investment performance.'

 

Enhanced share buyback programme

 

Over the past five years, the Company has repurchased 142.3 million shares for
£218.2 million. In aggregate these share buybacks resulted in a meaningful
uplift in NAV per share for continuing shareholders.

 

The Board is determined to substantially increase the rate of share buybacks
and, if the discount persists, intends that the Company will repurchase up to
£200 million of shares over the next 12 to 24 months, and continue at a
suitable rate as required thereafter.

 

Dividend commitment

 

An interim dividend of 2 pence per share was paid at the half-year stage and
the Board is proposing an unchanged final dividend of 3 pence per share,
taking the total dividend for the year to 31 March 2024 to 5 pence per share.

 

The Board intends to at least maintain the dividend at 5 pence per share for
the next five years and will, if necessary, use its substantial reserves to do
so.  This equates to a total minimum distribution over the next five years of
£278 million on the basis of the number of shares in issue, and equivalent to
16.2% of the Company's market capitalisation, both as at 31 March 2024.

 

Conditional tender offer

 

Over the five years to 31 March 2024 the NAV total return for the Company was
+23.4%, which was 8.3 percentage points higher than that of the benchmark
index. As a result of this strong performance, the conditions for triggering
the Company's performance related tender offer at that time were not met.

 

The Board has confidence that NAV returns in excess of the benchmark index can
continue but has resolved to offer a new performance-related conditional
tender. Therefore, if, over the five-year period to 31 March 2029, the
Company's NAV total return fails to exceed the benchmark total return then the
Board will put forward proposals to shareholders to undertake a tender offer
for up to 25 per cent. of issued share capital at a price equal to the then
prevailing net asset value less two per cent (less costs), at the discretion
of the Board.

 

Reduced management fees

 

The Board recognises the commitment of its Manager to provide on-the-ground
presence across global emerging markets. It also recognises the industry-wide
pressure on management fees. The Board's measured response is a phased change
in fees between now and mid-2026.

 

Current fee rates:

• 1% of the first £1 billion of net assets;

• 0.75% of net assets between £1 billion and £2 billion; and

• 0.5% of net assets over £2 billion.

 

With effect from 1 July 2024 and 1 July 2025, the middle rate band for net
assets between £1 billion and £2 billion will reduce to 0.7% and then 0.6%
respectively.

 

With effect from 1 July 2026

• 1% of the first £1 billion of net assets;

• 0.5% of net assets over £1 billion.

 

Based on the current net asset value of approximately £2 billion, this will
result in the blended fee rate reducing from approximately 0.875% today to
0.75% in 2026.

 

Our focus on shareholder returns

 

Over the last five years, in aggregate £467.2 million has been returned to
shareholders through dividends and share buybacks, which represents 22.1% of
net assets at the start of the five-year period.  If the first tender offer
had been triggered and taken up in full, this would have risen to £966
million or the equivalent of some 45.6% of net assets at the start of the
period.

 

The Board believes that the measures announced above represent a robust
undertaking over the next five years to amplify the returns to shareholders
through a more aggressive buyback programme, lower management fees, a dividend
commitment and a new conditional tender offer.

 

The Company intends to announce its annual results for the year to 31 March
2024 on 7 June 2024.

 

TEMIT is an award-winning investment trust with over £2 billion in assets
under management, which has helped investors access the dynamic growth of
emerging markets economies around the world since 1989.  The Company is
managed by Franklin Templeton's specialist Emerging Markets Equity team,
consisting of 70 analysts spread across 14 countries.  The team has
unparalleled access to identify investment opportunities beyond the
mainstream, often before they are recognised by the broader market.

 

This announcement contains information that is inside information for the
purposes of the Market Abuse Regulation (EU) No 596/2014 as implemented in the
UK. The person responsible for arranging for the release of this announcement
on behalf of the Company is Franklin Templeton Investment Trust Management
Limited.

 

Enquiries: for further information please e-mail
temitcosec@franklintempleton.com (mailto:temitcosec@franklintempleton.com)

 

Notes:

Data based where appropriate on TEMIT's net asset value of £2.035 billion as
at 31 March 2024 and on 1.114 billion shares in issue as at 31 March 2024.

Amount returned to shareholders over the last five years includes a proposed
final dividend of 3.0p per share for the year to 31 March 2024, includes
special dividends and excludes the final dividend for the year to 31 March
2019.

 

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  MSCFLFIIRSISIIS