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
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.