Temple Bar Investment Trust Plc (LON:TMPL) has presented its unaudited half-year results for the six months ended 30 June 2025.
Summary of Results
| Six months | Year to | Six months | |
| to 30 June | 31 December | to 30 June | |
| 2025 | 2024 | 2024 | |
| £000 | £000 | £000 | |
| NAV total return, with debt at fair value1,2 | 14.2% | 19.9% | 13.1% |
| Share price total return1,2 | 19.9% | 19.1% | 11.0% |
| FTSE All-Share Index3 | 9.1% | 9.5% | 7.4% |
| Net asset value per share with debt at book value | 320.6p | 286.2p | 275.4p |
| Net asset value per share with debt at fair value1 | 325.4p | 291.1p | 280.1p |
| Share price | 319.0p | 272.0p | 259.0p |
| Discount of share price to NAV per share with debt at fair value1 | 2.0% | 6.6% | 7.5% |
| Dividends per share paid in the period | 6.75p | 10.75p | 5.00p |
| Historical dividend yield1 | 3.9% | 4.1% | 3.8% |
| Net gearing with debt at book value | 6.6% | 8.4% | 8.4% |
| Ongoing charges1 | 0.59% | 0.61% | 0.62% |
1 Alternative Performance Measure. See glossary of terms for definition and more information.
2 Source: Morningstar.
3 Source: Redwheel.
Temple Bar – The investment case
Temple Bar is differentiated by an investment approach that focuses on companies whose stock market value is at a significant discount to the fair or intrinsic value of the business. The portfolio is selected through deep fundamental analysis by an experienced, well-resourced management team.
The Trust offers a competitive income yield and the Board and Portfolio Manager, Redwheel, support a progressive dividend policy.
Recent returns have been strong as the undervaluation of many UK shares has been realised either through corporate takeovers or by companies buying back their own shares.
Despite the strong returns that the Trust has enjoyed over the last eighteen months, Redwheel believes that the portfolio of stocks continues to look very undervalued, and this bodes well for future returns.
Think value investing, think Temple Bar.
Chairman’s Statement
Performance
The total return of the FTSE All-Share Index was +9.1% in the half-year. I am pleased to report that the Trust’s Net Asset Value (“NAV”) per share total return with debt at fair value was +14.2%, and that the share price total return was +19.9%. This reflects strong stock selection by your Portfolio Manager in market conditions that have been supportive of their value investing approach and a material reduction in the discount to NAV at which the Company’s shares trade.
Performance over one and three years has also been strong, both on a relative and absolute basis, with a NAV per share total return with debt at fair value over the periods of +21.5% and +61.7% and a share price total return of +29.1% and +66.1% compared to a total return from the FTSE All-Share Index of +11.6% and +35.5%. It is also pleasing to note that the Trust ranks first in terms of NAV total return performance in its UK Equity Income Trust peer group over these periods. Further details regarding the Trust’s performance can be found in the Portfolio Manager’s Report.
Discount
As at the half-year end the Trust’s share price stood at a 2.0% discount to the NAV per share with debt at fair value compared to a discount of 6.6% at the beginning of the period. We were again active buyers of our own shares early in the period under review, purchasing 2,160,900 shares into Treasury in the period at a cost of £2.2m. These buybacks address the short-term imbalance between supply and demand for the Trust’s shares, reduce the discount and hence share price volatility, and enhance the NAV per share for continuing shareholders.
Since the period end, due in part to the Trust’s strong performance and also its enhanced dividend yield, no shares have been repurchased and the Trust’s share price has moved to a 0.4% premium to its NAV per share with debt at fair value as at 18 August 2025. The Board will consider the issuance of new shares, at a premium to the prevailing cum income NAV per share with debt at fair value, if there is sufficient demand as part of its premium management strategy.
Dividend
The Trust’s strong revenue performance was again in evidence, with an increase in revenue earnings per share of c.12.3% compared to the first half of the previous financial year. This has enabled your Board to declare an increased second interim dividend of 3.75 pence per share (2024: second interim dividend of 2.75 pence per share). The second interim dividend will be payable on 26 September 2025 to shareholders on the register of members on 22 August 2025. The associated ex-dividend date is 21 August 2025. This follows the payment of a first interim dividend of 3.75 pence per share on 27 June 2025.
As explained in the Company’s most recent Annual Report and supported by shareholders at this year’s Annual General Meeting, the Company’s dividend has recently been altered to see the Company’s progressive revenue-covered dividend enhanced by the payment of an additional 0.75 pence per quarter funded from capital. This has raised the prospective dividend yield on the Company’s shares to c. 4.4%, higher than the average dividend yield of the FTSE All Share which at the time of writing is 3.4%.
The Board
I am delighted to report that Nick Bannerman and Wendy Colquhoun joined the Board on 1 July 2025.
Both Nick and Wendy have deep knowledge and understanding of the investment trust sector and have already begun to contribute significantly to the Board’s deliberations.
Outlook
The new government has been in place in the UK for over a year and faces a number of challenges. Domestically it has the difficult task of trying to balance the need for public sector investment and prudent management of the UK’s fiscal position without stifling business and consumer confidence, while internationally it navigates continued geopolitical uncertainty alongside apparently capricious shifts in global tariffs and trade policy.
Despite global macroeconomic uncertainty, including uneven global growth and differing monetary policy paths, the UK market benefits from political stability, attractive valuations, and ongoing corporate activity.
The timing and pace of interest rate cuts also remains unclear, despite continued weakness in the UK economy and a relatively subdued level of inflation. However, the Board believes that any concerns here are reflected in current valuations. The Portfolio Manager continues to focus on long-term value opportunities, and the Board remains confident that the Trust will continue to deliver attractive returns over time.
On behalf of the Board, I thank shareholders for their continued support.
Richard Wyatt
Chairman, Temple Bar Investment Trust Plc
19 August 2025
Ten Largest Investments
As at 30 June 2025
| Primary | ||||
| place of | Valuation | % of | ||
| Company | Industry | Listing | £’000 | portfolio |
| Johnson Matthey | Materials | UK | 50,016 | 5.2% |
| Aviva | Financials | UK | 49,969 | 5.1% |
| Royal Dutch Shell | Energy | UK | 48,286 | 5.0% |
| NN Group | Financials | Netherlands | 46,713 | 4.8% |
| ITV | Communications | UK | 44,728 | 4.6% |
| BT Group | Communications | UK | 43,059 | 4.4% |
| NatWest Group | Financials | UK | 39,379 | 4.1% |
| BP | Energy | UK | 37,927 | 3.9% |
| Smith & Nephew | Healthcare | UK | 34,918 | 3.6% |
| Marks & Spencer Group | Consumer Staples | UK | 33,623 | 3.5% |
| Total Top Ten | 428,618 | 44.2% |
Portfolio Manager’s Report
“In an uncertain world, our approach is and has always been to think long term and invest in what we believe to be fundamentally sound businesses that for one reason or another are valued at a significant discount to their true economic worth. This is on the basis that eventually that true economic worth will be reflected in a higher share price.”
The start of 2025 was tumultuous in many respects, but nevertheless stock markets were able to finish the first half of the year solidly in positive territory. April, in particular, was marked by extreme volatility, as Donald Trump announced his much-anticipated reciprocal tariffs. Although stock markets had been fretting over these since the start of the year, they went well beyond what had been expected and thereby triggered an aggressive sell-off as investors repriced the likelihood of a US recession and the likely knock-on effects on the global economy more generally. In the two days following the so-called ‘Liberation Day’, US equities fell by more than 10%, marking its fifth biggest two-day decline since World War 2. This equity market sell-off followed through into the US bond market where long-term yields briefly surpassed 5%. Driven by fears of a bond market rout, Donald Trump then announced a 90 day pause in the tariffs, triggering a huge rebound in global stock markets. In just one day, the US stocks rose by almost 10%, their best one-day performance since October 2008. The rebound continued into May and June, enabling the US market to fully recover a more than 15% drawdown in a record short period of time and finishing the half year at a record level.
In June, longer-term fears around the US government deficit were further exaggerated as the Trump administration sought to pass its tax bill through Congress. This bill will extend the Trump tax cuts from his first term and according to some estimates will add around US$3 trillion to US debt levels in the coming years.
Despite the earlier fears that tariff induced uncertainty would undermine confidence and result in a deterioration in the global economy, so far there is little evidence that this is the case. Activity and employment indicators in both the US and Europe indicate that the economy is proving to be resilient, and that inflation remains relatively subdued.
In the UK however, the signs are more mixed, and activity seems to be cooling somewhat following a stronger first three months. This is likely due to the tax rises announced in last year’s budget starting to take effect. The weakness in the economy is most obviously visible in weak employment numbers and is likely to pave the way for more interest rate cuts later in the year.
The Trust’s portfolio performed well in the six months, delivering strong absolute and relative returns. Performance was helped by large rises in Johnson Matthey, the banks Barclays, NatWest, Standard Chartered and ABN Amro, insurance companies Aviva and NN Group, electrical retailer Currys, asset manager Aberdeen and BT Group. WPP Group detracted from the Trust’s return in the six months.
At the time of its results in May, Johnson Matthey announced the sale of one of its divisions and an intention to return 90% of the proceeds to shareholders. This division accounts for just one quarter of the company’s profits and yet the sales proceeds accounted for around two thirds of its market value at the time of the announcement. It is perhaps unsurprising therefore that the shares responded very favourably on the day, rising by more than 30%. Despite this strong performance, we continue to believe that the shares are significantly undervalued.
Barclays, Standard Chartered, NatWest Group and the Dutch bank, ABN Amro continued to benefit from strong net interest margins and a benign loan loss cycle. Although the shares have performed well, they continue to trade at or around book value and a price to earnings ratio of around 10 times. Likewise, insurers Aviva and NN Group, continue to benefit from higher interest rates and a relatively stable operating environment. Aviva has now completed the acquisition of fellow insurer Direct Line Group which will lead to significant cost savings and accelerate the company’s move to higher quality more capital light activities.
At its year end trading update, Currys said that trading conditions remained good and that the company continued to surpass prior expectations, prompting further upgrades to profit estimates for its new financial year. Today, the shares are priced at roughly double the level of the bid by Elliott Capital for the company at the beginning of last year, demonstrating that shareholders were correct in turning down the bid as it materially undervalued the business.
Aberdeen Group saw some evidence of a stabilisation in fund outflows from its struggling fund management business and meanwhile its direct-to-consumer business, Interactive Investor (II), continues to take market share in a growing market. Although the company’s shares have performed well, we continue to believe stock market is undervaluing II and the prospects for a likely profit recovery in the fund management unit.
BT Group continues to roll out its fibre to the home network at an aggressive pace, with the intention of maximising take up rates and market share at a time when several of its competitors are struggling financially. The company has a target to generate £3 billion of free cash flow in 2030 and so far, the company is on track to achieve this goal. £3 billion of free cash flow would equate to around a 15% free cash flow yield at today’s share price.
The media group, WPP warned that macroeconomic conditions have weighed on client spending and there had been less new business than expected. Whilst it is usual for a struggling company to place the blame on an economic downturn for downgrades to profit expectations, there is no doubt that secular changes brought about by the increasing use of AI are partly to blame. Given the changing backdrop, the advertising agencies are unlikely to deliver the rates of growth that they have done in the past, but that does not mean that the companies cannot continue to generate a steady stream of profits. Without wishing to downplay the challenges that the industry faces, we therefore believe that a significant portion of WPP’s problems are self-made and therefore can ultimately be resolved. The Trust therefore continues to hold shares in WPP pending the arrival of a new chief executive later in the year.
The Trust established new positions in Smith & Nephew, Carrefour, Hana Financial, Woori and added to its position in Valterra Platinum. These purchases were funded by the sale of shares in Barrick Gold, Newmont Corp, Forterra plc and the proceeds from Direct Line’s takeover by Aviva.
The medical devices business, Smith & Nephew, has struggled for some time, losing market share in its key orthopaedics business and suffering from poor levels of productivity. Consequently, the share price had been weak. The company has recognised its failings and has put in place a plan to drive financial improvement. If successful this will lead to higher sales growth, productivity improvements, margin expansion and higher cash flow and shareholder returns. In the last 18 months, there have been clear signs that the turnaround is working, as the company has delivered strong revenue growth and an expansion in margins. Smith & Nephew is a high-quality business with strong market positions in relatively stable but growing end markets and yet is modestly valued today.
The food retailer, Carrefour, has seen weakness in its share price as profit margins in France have come under some pressure although there are now signs that the competitive environment has now steadied. The company has set itself targets for 2026 which if met would place the company on a price earnings ratio of around seven times.
Hana Financial and Woori are both Korean banks which enjoy steady loan growth in a growing economy, are efficiently run and have strong capital ratios. Both undertake prudent lending policies and offer attractive shareholder returns and yet they also are valued at historical price earnings ratios of around seven times and large discounts to net asset value.
The Trust received shares in Valterra Platinum as a result of the Anglo American spin out of the majority of its shares in Anglo Platinum. The demerger of Anglo Platinum was one of the undertakings given at the time of BHP’s failed bid for Anglo American in the spring of 2024. We subsequently added to the position in the recognition that platinum prices have been weak for some time, new investment in the industry has been low and metal stockpiles have been run down. Although this is a volatile business and it therefore accounts for a small percentage of the Trust’s assets, the platinum demand supply dynamic looks attractive at the current time, and this could lead to stronger platinum prices and improved profits over time. Interestingly, platinum prices have already risen by more than 30% since the time of the demerger at the beginning of June.
As always, the economic outlook is uncertain. We do not know the effect that the Trump tariffs will have on economic growth and corporate profitability. In addition, the recently passed tax bill may or may not result in a significantly higher level of US borrowing and this may or may not, in turn, result in higher interest rates in the coming years. In China meanwhile, growth is weak, and it is difficult to know how successful the authorities will be in their efforts to stimulate the economy. In Europe, Germany has announced a large stimulus plan in the hope of increasing its rate of economic growth, albeit with a higher level of government borrowing. In the UK meanwhile, the newish Government is struggling to balance the books in the way that it had hoped.
In an uncertain world, our approach is and has always been to think long term and invest in what we believe to be fundamentally sound businesses that for one reason or another are valued at a significant discount to their true economic worth. This is on the basis that eventually that true economic worth will be reflected in a higher share price. In essence, this approach attempts to take advantage of the short termism and behavioural inconsistencies of other investors and has successfully resulted in significant excess returns for our clients over a long period of time. One must never forget of course that there is no investment approach that will outperform the stock market in each and every year, and that there will inevitably be bumps in the road. However, with this at the forefront of our minds, we feel confident that through the disciplined application of a proven value investing strategy, Temple Bar Investment Trust can continue to create long-term value for its shareholders.
Ian Lance and Nick Purves
RWC Asset Management LLP
19 August 2025
