Fidelity Special Values PLC
Half-Yearly results for the six months
ended 28 February 2017
(unaudited)
Financial Highlights:
-
Fidelity Special Values PLC will pay an interim dividend of
1.80 pence per share, an increase of
80% to last year’s interim payment
-
The Company delivered positive outperformance in the six month
period to 28 February 2017, resulting
in a net asset value (“NAV”) total return of +10.9%
-
The discount narrowed from 10.0% to 2.1% over the period, as
result of the share price total return of +20.7%, significantly
outperforming the company’s Benchmark Index by +12.1%
Contacts
For further information, please
contact:
Bonita Guntrip
Senior Company Secretary
01737 837320
FIL Investments International
Portfolio Manager’s Half-Yearly
Review
Performance
The performance of the Company over the six-month period to
28 February 2017 was very positive,
resulting in a net asset value (“NAV”) total return of 10.9% and a
share price total return of 20.7%, compared to a total return of
8.6% for the Benchmark Index (the FTSE All-Share Index). This
report seeks to explain the reasons for the performance over the
review period.
Total returns
(%) |
1
year |
3
years |
5
years |
Since
launch* |
NAV per share |
+25.3 |
+26.3 |
+117.6 |
+1,571.9 |
Share price |
+27.1 |
+28.4 |
+144.8 |
+1,586.4 |
FTSE All-Share
Index |
+22.8 |
+20.2 |
+55.3 |
+425.6 |
|
=========== |
=========== |
=========== |
=========== |
*The Company launched on 17 November
1994
The figures in the table above are as at 28 February 2017
The attribution analysis table below shows the factors that
contributed to the Company’s NAV per share total return for the six
months to 28 February 2017.
Analysis of the change in NAV total
return for the period (%)
Impact of:
Index |
+8.6 |
Stock selection |
+2.4 |
Gearing |
+0.5 |
Share repurchases |
+0.1 |
Operational Costs |
-0.7 |
Total return for the
six months to 28 February 2017 |
+10.9 |
|
=========== |
Stock Market and Portfolio Review
The UK stock market performed strongly over the review period
with the FTSE All-Share Index recording gains of 8.6%. Contrary to
expectations, the UK economy remained relatively resilient, which
helped to ease concerns over the economic implications of the
Brexit vote. The continued weakness in sterling also supported
stock prices, though there were signs of stabilisation in the
exchange rate. The strengthening US economy, leading to an increase
in interest rates in December further supported investor sentiment,
while they also reacted positively to Donald Trump’s victory in the
US presidential elections.
The very strong performance of cyclical shares in the second
half of 2016, and so far this year, has left many investors arguing
that their re-rating was unjustified, citing an uncertain political
and macro-economic environment as reasons to avoid them, and thus
preferring to stick to exclusively ‘defensive’ investment
strategies. Indeed, having seen such a significant re-rating of
many lower-quality businesses, one can see the sense in questioning
the attractiveness of these businesses today. Although this view
may appear intuitively sensible, I think it contains a faulty
analysis of today’s market.
The outsize returns in cyclical stocks during the review period
primarily reflect their historically unloved and under-owned status
at the beginning of 2016, rather than rampant optimism at the end.
In other words, it was a big bounce off a low base. It is true that
earnings expectations have recovered but, in selected areas, they
are by no means excessive. So, while the relative performance
potential of cyclical shares remains attractive, a more
discriminating approach will be required to separate the best
opportunities from those that could disappoint.
In terms of performance, the Company’s NAV outperformed the
Benchmark Index over the reporting period. Strong stock selection
among financials was the biggest contributor to returns during the
period, with several of our holdings making significant
contributions. At a stock level, US banking major Citigroup was the
leading contributor to returns as the increase in US interest rates
and expectations that banks could benefit from potentially lower
taxes and a friendlier regulatory environment under President Trump
supported banking shares. Litigation finance company Burford
Capital was another notable contributor; Burford is an early mover
and global leader in a new and fragmented industry. As a fully
integrated company, with legal expertise and due diligence in house
as well as a good brand, Burford is in the best position to benefit
from an increase in penetration of litigation financing. Meanwhile,
the holding in Coats, a maker of threads and zips, rose after it
said it will inject £255 million into its pension schemes to settle
a regulatory dispute. The settlement is expected to allow the
company to lift a suspension on dividend payments. Merger and
acquisition activity remained a key driver of portfolio returns.
For example, the holding in Indonesian palm oil plantation owner
M.P. Evans rose after Kuala Lumpur
Kepong made a takeover offer for the company.
On the downside, the underweight stance in the resources
sectors, particularly mining, proved a drag on overall performance.
The demand improvement in the mining sector is being driven
primarily by Chinese stimulus, the economic value of which is
questionable and it is unlikely to last forever. With no meaningful
supply-side adjustment taking place in key industrial metal
markets, there is a real risk of significant disappointment if a
withdrawal of Chinese stimulus packages causes a fall in spot
prices. As such, I largely continue to avoid the sector for the
time being.
Royal Dutch Shell remains the top
holding in the portfolio. Even after rising 50% last year, its
shares still trade on around a 6% dividend yield, suggesting that
the market does not believe the company will be able to sustainably
cover its dividend with free cash flow, and that it will ultimately
be forced to cut the dividend. However, I believe that improved
capital discipline in the company and rising cash flows following
its merger with BG Group’s assets will allow the dividend to be
covered, and possibly in time, grow once again. Although Royal
Dutch Shell’s valuation did rise last year, it was primarily driven
by the recovery in the oil price rather than the market
fundamentally re-appraising its view of the value of the company –
meaning there is considerable potential for its share price, in
addition to the gains of last year.
One of the consequences of the 2016 rally in cyclical stocks is
that more value has begun appearing in selected defensive stocks
which have less exposure to the performance of the economy.
Although in general, there is still a large gap in valuations
between cyclical and defensive stocks, the picture is more nuanced
than it was 12 months ago, and stockpicking opportunities have
become available in some classically defensive sectors, such as
health care, telecommunications and even tobacco. I welcome this
opportunity to give the Company’s portfolio a more balanced
exposure, and I have recently increased positions in
pharmaceuticals group Shire and telecommunications company BT
Group, which are now both top five holdings for the portfolio.
Scandinavian Tobacco is a non-UK stock which the Company bought in
the second half of last year. Its leading competitive position
gives it good pricing power in the structurally declining cigar
market, which should enable it to hold sales flat while growing
cash profits over the medium term.
Outlook
The unforeseen political changes in 2016, alongside reasonable
global GDP growth, have presented the first serious challenge to
the deeply embedded ‘lower for longer’ interest rates framework. If
interest rates have finally stopped falling, this would remove what
has been a structural headwind, and create a much more supportive
environment for value investing to re-assert itself in the
mainstream market, after a long period in the wilderness. While I
do not expect value investing to outperform in a straight line from
here, nor necessarily to repeat the dramatic short term
outperformance of last year, 2016 should serve as a reminder to
investors that proper diversification means being prepared for
multiple macroeconomic scenarios, including inflation, growth and
rising interest rates.
As ever, I will be spending my time researching and meeting
companies, looking for those that offer some degree of downside
protection but also potential for a positive change to show them in
a new light. In my experience, this is the best way to deliver
capital growth over the long term.
Alex Wright
Portfolio Manager
26 April 2017
Interim Management Report
Discount and Share Repurchases
Under the Company’s discount management policy, the Board seeks
to maintain the discount in single digits in normal market
conditions and will repurchase ordinary shares with the objective
of stabilising the share price discount based on the cum-income NAV
within a single digit range.
The level of discount has narrowed from 10.0% at the start of
the reporting period to 2.1% as at 28
February 2017. This narrowing of discount gave rise to a
share price total return of 20.7% for the six months, well ahead of
the NAV total return of 10.9%. The Board continues to monitor the
discount closely and will take action where it feels it to be
effective.
In the six months to 28 February
2017, the Company’s shares traded within a discount range of
0.4% to 12.7% and the Company repurchased 800,000 ordinary shares
into Treasury.
Interim Dividend
The Board’s dividend policy is to pay dividends twice yearly in
order to smooth the dividend payment throughout the year. As
mentioned in last year’s Annual Report, the Board believe that
Shareholders would prefer a more balanced interim and final
dividend payment than those paid in the last two years. The
Company’s revenue return for the six months to 28 February 2017 was 1.67
pence per share and the Board has declared an interim
dividend of 1.80 pence per share,
thereby increasing last year’s interim dividend by 80%. This will
be paid on 8 June 2017 to
Shareholders on the register on 19 May
2017 (ex-dividend date 18 May
2017).
A high percentage of our Shareholders reinvest their dividends
for additional shares in the Company. Until 2016, the final
dividend payment has been made in December each year and it has
sometimes been difficult to find sufficient shares in the market
place to meet the required demand for the dividend reinvestments.
This is because the market is not as active in the second half of
December leading up to the Christmas period. In order to address
this problem, the Board has decided to change the payment date of
the final dividend from December to January and as a consequence
change the interim payment from May to June so that both payments
are approximately six months apart.
Principal Risks and Uncertainties
The Board, with the assistance of the Manager, has developed a
risk matrix which, as part of the risk management and internal
controls process, identifies the key risks faced by the
Company.
The Board believes that the principal risks and uncertainties
faced by the Company continue to fall into two broad categories.
The first category is external risks which comprises of market
risk, share price risk, discount control risk and regulatory risk.
The second category is internal risks comprising of investment
management risk and governance, operational, financial, compliance,
administration etc risks. Information on each of these risks is
given in the Strategic Report section of the Annual Report for the
year ended 31 August 2016. A copy of
the Annual Report can be found on the Company’s pages of the
Manager’s website at www.fidelityinvestmenttrusts.com.
These risks and uncertainties have not materially changed during
the six months to 28 February 2017
and are equally applicable to the remaining six months of the
Company’s financial year.
Transactions with the Manager and
Related Party
FIL Investment Services (UK) Limited is the Company’s
Alternative Investment Fund Manager (the “Manager”) and has
delegated the Company’s portfolio management to FIL Investments
International. The transactions with the Manager and related party
transactions with the Directors are disclosed in Note 12 to the
Financial Statements below.
Going Concern
The Directors have considered the Company’s investment
objective, policy, strategy and the Company’s projected income and
expenditure and that the portfolio of investments is considered to
be mainly readily realisable securities. Therefore, the Directors
believe that the Company has adequate resources to continue in
operational existence for the foreseeable future. Thus they
continue to adopt the going concern basis of accounting in
preparing these Financial Statements.
Continuation votes are held every three years and the next
continuation vote will be put to Shareholders at the Annual General
Meeting in 2019.
By order of the Board
FIL Investments International
26 April 2017
Directors’ Responsibility
Statement
The Disclosure and Transparency Rules (“DTR”) of the UK Listing
Authority require the Directors to confirm their responsibilities
in relation to the preparation and publication of the Interim
Management Report and Financial Statements.
The Directors confirm to the best of their knowledge that:
-
the condensed set of Financial Statements contained within the
Half-Yearly Report has been prepared in accordance with the
Financial Reporting Council’s Standard: FRS 104: Interim Financial
Reporting; and
-
the Interim Management Report, together with the Portfolio
Manager’s Half-Yearly Review above, includes a fair review of the
information required by DTR 4.2.7R and 4.2.8R.
The Half-Yearly Report has not been audited by the Company’s
Independent Auditor.
The Half-Yearly Report was approved by the Board on 26 April 2017 and the above responsibility
statement was signed on its behalf by Andy
Irvine, Chairman.
Financial Statements
Income Statement
for the six months ended 28 February
2017
|
|
six months ended 28 February 2017
unaudited |
year ended 31 August 2016
audited |
six months ended 29 February 2016 unaudited |
|
|
revenue |
capital |
total |
revenue |
capital |
total |
revenue |
capital |
total |
|
Notes |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
Gains/(losses) on
investments |
|
– |
53,513 |
53,513 |
– |
43,853 |
43,853 |
– |
(16,831) |
(16,831) |
Gains/(losses) on long
CFDs |
|
– |
6,790 |
6,790 |
– |
1,328 |
1,328 |
– |
(3,510) |
(3,510) |
(Losses)/gains on short
CFDs, futures and options |
|
– |
(1,560) |
(1,560) |
– |
(3,840) |
(3,840) |
– |
3,676 |
3,676 |
Investment and net
derivative income |
4 |
7,808 |
– |
7,808 |
18,022 |
– |
18,022 |
5,955 |
– |
5,955 |
Other interest |
4 |
142 |
– |
142 |
127 |
– |
127 |
52 |
– |
52 |
Investment management
fees |
5 |
(2,907) |
– |
(2,907) |
(5,186) |
– |
(5,186) |
(2,561) |
– |
(2,561) |
Other expenses |
|
(321) |
– |
(321) |
(694) |
– |
(694) |
(367) |
– |
(367) |
Foreign exchange
(losses)/gains |
|
– |
(636) |
(636) |
28 |
(285) |
(257) |
11 |
(94) |
(83) |
|
|
========= |
========= |
========= |
========= |
========= |
========= |
========= |
========= |
========= |
Net return/(loss)
before finance costs and taxation |
|
4,722 |
58,107 |
62,829 |
12,297 |
41,056 |
53,353 |
3,090 |
(16,759) |
(13,669) |
Finance costs |
|
(196) |
|
(196) |
(1,085) |
– |
(1,085) |
(470) |
– |
(470) |
|
|
========= |
========= |
========= |
========= |
========= |
========= |
========= |
========= |
========= |
Net return/(loss) on
ordinary activities before taxation |
|
4,526 |
58,107 |
62,633 |
11,212 |
41,056 |
52,268 |
2,620 |
(16,759) |
(14,139) |
Taxation |
6 |
(115) |
– |
(115) |
(175) |
– |
(175) |
(90) |
– |
(90) |
|
|
========= |
========= |
========= |
========= |
========= |
========= |
========= |
========= |
========= |
Net return/(loss) on
ordinary activities after |
|
|
|
|
|
|
|
|
|
|
taxation for the
period |
|
4,411 |
58,107 |
62,518 |
11,037 |
41,056 |
52,093 |
2,530 |
(16,759) |
(14,229) |
|
|
========= |
========= |
========= |
========= |
========= |
========= |
========= |
========= |
========= |
Return/(loss) per
ordinary share |
7 |
1.67p |
21.94p |
23.61p |
4.15p |
15.42p |
19.57p |
0.95p |
(6.29p) |
(5.34p) |
|
|
========= |
========= |
========= |
========= |
========= |
========= |
========= |
========= |
========= |
The Company does not have any other comprehensive income.
Accordingly the net return on ordinary activities after taxation
for the period is also the total comprehensive income for the
period and no separate Statement of Comprehensive Income has been
presented.
The total column of this statement represents the Income
Statement of the Company. The revenue and capital columns are
supplementary and presented for information purposes as recommended
by the Statement of Recommended Practice issued by the AIC.
No operations were acquired or discontinued in the year and all
items in the above statement derive from continuing operations.
Statement of Changes in Equity
for the six months ended 28 February
2017
|
|
|
share |
capital |
other
non- |
|
|
|
|
|
share |
premium |
redemption |
distributable |
capital |
revenue |
total |
|
|
capital |
account |
reserve |
reserve |
reserve |
reserve |
equity |
|
Notes |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
Six months ended 28
February 2017 (unaudited) |
|
|
|
|
|
|
|
|
Total Shareholders’
funds at 31 August 2016 |
|
13,532 |
95,896 |
3,256 |
5,152 |
450,196 |
10,259 |
578,291 |
Ordinary shares
repurchased and held in Treasury |
|
– |
– |
– |
– |
(1,612) |
– |
(1,612) |
Net return on ordinary
activities after taxation for the period |
|
– |
– |
– |
– |
58,107 |
4,411 |
62,518 |
Dividend paid to
Shareholders |
8 |
– |
– |
– |
– |
– |
(7,143) |
(7,143) |
|
|
========== |
========== |
========== |
========== |
========== |
========== |
========== |
Total Shareholders’
funds at 28 February 2017 |
|
13,532 |
95,896 |
3,256 |
5,152 |
506,691 |
7,527 |
632,054 |
|
|
========== |
========== |
========== |
========== |
========== |
========== |
========== |
Year ended 31 August
2016 (audited) |
|
|
|
|
|
|
|
|
Total Shareholders’
funds at 31 August 2015 |
|
13,532 |
95,896 |
3,256 |
5,152 |
411,356 |
8,144 |
537,336 |
Ordinary shares
repurchased and held in Treasury |
|
– |
– |
– |
– |
(2,216) |
– |
(2,216) |
Net return on ordinary
activities after taxation for the year |
|
– |
– |
– |
– |
41,056 |
11,037 |
52,093 |
Dividend paid to
Shareholders |
8 |
– |
– |
– |
– |
– |
(8,922) |
(8,922) |
|
|
========== |
========== |
========== |
========== |
========== |
========== |
========== |
Total Shareholders'
funds at 31 August 2016 |
|
13,532 |
95,896 |
3,256 |
5,152 |
450,196 |
10,259 |
578,291 |
|
|
========== |
========== |
========== |
========== |
========== |
========== |
========== |
Six months ended 29
February 2016 (unaudited) |
|
|
95,896 |
3,256 |
5,152 |
411,356 |
8,144 |
537,336 |
Total Shareholders'
funds at 31 August 2015 |
|
13,532 |
– |
– |
– |
(468) |
– |
(468) |
Ordinary shares
repurchased and held in Treasury |
|
– |
|
|
|
|
|
|
Net (loss)/return on
ordinary activities after taxation for the period |
|
– |
– |
– |
– |
(16,759) |
2,530 |
(14,229) |
Dividend paid to
Shareholders |
8 |
– |
– |
– |
– |
– |
(6,262) |
(6,262) |
|
|
========== |
========== |
========== |
========== |
========== |
========== |
========== |
Total Shareholders'
funds at 29 February 2016 |
|
13,532 |
95,896 |
3,256 |
5,152 |
394,129 |
4,412 |
516,377 |
|
|
========== |
========== |
========== |
========== |
========== |
========== |
========== |
Balance Sheet
at 28 February 2017
Company number 2972628
|
|
28.02.17 |
31.08.16 |
29.02.16 |
|
|
unaudited |
audited |
unaudited |
|
Notes |
£’000 |
£’000 |
£’000 |
Fixed
assets |
|
|
|
|
Investments |
9 |
596,006 |
539,096 |
489,821 |
Current
assets |
|
=========== |
=========== |
=========== |
|
|
|
|
|
Derivative
instruments |
9 |
14,250 |
16,169 |
16,940 |
Debtors |
|
4,070 |
4,995 |
3,336 |
Amounts held at futures
clearing houses and brokers |
|
4,081 |
7,365 |
1,088 |
Fidelity Institutional
Liquidity Fund |
|
23,417 |
24,359 |
14,253 |
Cash at bank |
|
2,673 |
2,469 |
1,689 |
|
|
=========== |
=========== |
=========== |
|
|
48,491 |
55,357 |
37,306 |
|
|
=========== |
=========== |
=========== |
Creditors |
|
|
|
|
Derivative
instruments |
9 |
(7,020) |
(13,783) |
(8,981) |
Other creditors |
|
(5,423) |
(2,379) |
(1,769) |
|
|
=========== |
=========== |
=========== |
|
|
(12,443) |
(16,162) |
(10,750) |
|
|
=========== |
=========== |
=========== |
Net current
assets |
|
36,048 |
39,195 |
26,556 |
|
|
=========== |
=========== |
=========== |
Net assets |
|
632,054 |
578,291 |
516,377 |
|
|
=========== |
=========== |
=========== |
Capital and
reserves |
|
|
|
|
Share capital |
10 |
13,532 |
13,532 |
13,532 |
Share premium
account |
|
95,896 |
95,896 |
95,896 |
Capital redemption
reserve |
|
3,256 |
3,256 |
3,256 |
Other non-distributable
reserve |
|
5,152 |
5,152 |
5,152 |
Capital reserve |
|
506,691 |
450,196 |
394,129 |
Revenue reserve |
|
7,527 |
10,259 |
4,412 |
|
|
=========== |
=========== |
=========== |
Total Shareholders’
funds |
|
632,054 |
578,291 |
516,377 |
|
|
=========== |
=========== |
=========== |
Net asset value per
ordinary share |
11 |
238.92p |
217.94p |
193.93p |
|
|
=========== |
=========== |
=========== |
Notes to the Financial Statements
1 Principal activity
Fidelity Special Values PLC is an Investment Company
incorporated in England and
Wales with a premium listing on
the London Stock Exchange. The Company’s registration number is
2972628, and its registered office is Beech Gate, Millfield Lane, Lower Kingswood, Tadworth,
Surrey, KT20 6RP. The Company has been approved by HM Revenue
& Customs as an Investment Trust under Section 1158 of the
Corporation Tax Act 2010 and intends to conduct its affairs so as
to continue to be approved.
2 Publication of non-statutory
accounts
The Financial Statements in this Half-Yearly Financial Report
have not been audited by the Company’s Independent Auditor and do
not constitute statutory accounts as defined in section 434 of the
Companies Act 2006 (the “Act”). The financial information for the
year ended 31 August 2016 is
extracted from the latest published Financial Statements of the
Company. Those Financial Statements were delivered to the Registrar
of Companies and included the Independent Auditor’s Report which
was unqualified and did not contain a statement under either
section 498(2) or 498(3) of the Act.
3 Basis of preparation
The Company prepares its Financial Statements on a going concern
basis and in accordance with UK Generally Accepted Accounting
Practice (“UK GAAP”) and FRS 102: The Financial Reporting Standard
applicable in the UK and Republic of
Ireland, issued by the Financial Reporting Council. The
Financial Statements are also prepared in accordance with the
Statement of Recommended Practice: Financial Statements of
Investment Trust Companies and Venture Capital Trusts (“SORP”)
issued by the Association of Investment Companies (“AIC”), in
November 2014. FRS 104: Interim
Financial Reporting has also been applied in preparing this
condensed set of Financial Statements. The accounting policies
followed are consistent with those disclosed in the Company’s
Annual Report and Financial Statements for the year ended
31 August 2016.
4 Income
|
|
|
|
|
six
months |
year |
six
months |
|
ended |
ended |
ended |
|
28.02.17 |
31.08.16 |
29.02.16 |
|
unaudited |
audited |
unaudited |
|
£’000 |
£’000 |
£’000 |
Investment
income |
|
|
|
UK dividends |
4,107 |
9,327 |
3,442 |
UK scrip dividends |
– |
95 |
– |
Overseas dividends |
1,603 |
3,546 |
1,184 |
Overseas scrip
dividends |
575 |
862 |
292 |
Debt security
interest |
269 |
384 |
131 |
|
=========== |
=========== |
=========== |
|
6,554 |
14,214 |
5,049 |
|
=========== |
=========== |
=========== |
Derivative
income/(expenses) |
|
|
|
Dividends received on
long CFDs |
1,440 |
4,937 |
1,291 |
Dividends and interest
paid on short CFDs |
(186) |
(1,129) |
(385) |
|
=========== |
=========== |
=========== |
|
1,254 |
3,808 |
906 |
|
=========== |
=========== |
=========== |
Investment and net
derivative income |
7,808 |
18,022 |
5,955 |
Other
interest |
=========== |
=========== |
=========== |
Interest received on
short CFDs |
97 |
56 |
27 |
Interest received on
bank deposits and money market funds |
45 |
71 |
25 |
|
=========== |
=========== |
=========== |
|
142 |
127 |
52 |
|
=========== |
=========== |
=========== |
Total investment and
net derivative income and other interest |
7,950 |
18,149 |
6,007 |
|
=========== |
=========== |
=========== |
5 Investment management fees
|
|
|
|
|
six
months |
year |
six
months |
|
ended |
ended |
ended |
|
28.02.17 |
31.08.16 |
29.02.16 |
|
unaudited |
audited |
unaudited |
|
£’000 |
£’000 |
£’000 |
Portfolio management
services |
2,607 |
4,586 |
2,261 |
Non-portfolio
management services1 |
300 |
600 |
300 |
|
=========== |
=========== |
=========== |
Investment
management fees |
2,907 |
5,186 |
2,561 |
|
=========== |
=========== |
=========== |
-
Includes company secretarial, fund accounting, taxation,
promotional and corporate advisory services.
FIL Investment Services (UK) Limited is the Company’s
Alternative Investment Fund Manager and has delegated portfolio
management to FIL Investments International (“FII”). Both companies
are Fidelity group companies. FII charges portfolio management
services fees at an annual rate of 0.875% of net assets. Fees are
payable quarterly in arrears and are calculated on the last
business day of March, June, September and December.
6 Taxation
|
six
months |
year |
six
months |
|
ended |
ended |
ended |
|
28.02.17 |
31.08.16 |
29.02.16 |
|
unaudited |
audited |
unaudited |
|
£’000 |
£’000 |
£’000 |
Overseas taxation
recovered |
– |
(18) |
(17) |
Overseas taxation
suffered |
115 |
193 |
107 |
|
=========== |
=========== |
=========== |
Total taxation
charge for the period |
115 |
175 |
90 |
|
=========== |
=========== |
=========== |
7 Return/(loss) per ordinary share
|
six
months |
year |
six
months |
|
ended |
ended |
ended |
|
28.02.17 |
31.08.16 |
29.02.16 |
|
unaudited |
audited |
unaudited |
Revenue return per
ordinary share |
1.67p |
4.15p |
0.95p |
Capital return/(loss)
per ordinary share |
21.94p |
15.42p |
(6.29p) |
|
=========== |
=========== |
=========== |
Total return/(loss)
per ordinary share |
23.61p |
19.57p |
(5.34p) |
|
=========== |
=========== |
=========== |
The return/(loss) per ordinary share is based on the net
return/(loss) on ordinary activities after taxation for the period
divided by the weighted average number of ordinary shares in issue
held outside Treasury during the period, as shown below:
|
£’000 |
£’000 |
£’000 |
Net revenue return on
ordinary activities after taxation |
4,411 |
11,037 |
2,530 |
Net capital
return/(loss) on ordinary activities after taxation |
58,107 |
41,056 |
(16,759) |
|
=========== |
=========== |
=========== |
Net return/(loss) on
ordinary activities after taxation |
62,518 |
52,093 |
(14,229) |
|
=========== |
=========== |
=========== |
|
number |
number |
number |
Weighted average
number of ordinary shares in issue held outside Treasury |
264,773,651 |
266,183,770 |
266,463,491 |
|
=========== |
=========== |
=========== |
8 Dividends paid to Shareholders
|
six
months |
year |
six
months |
|
ended |
ended |
ended |
|
28.02.17 |
31.08.16 |
29.02.16 |
|
unaudited |
audited |
unaudited |
|
£’000 |
£’000 |
£’000 |
Final dividend of 2.70
pence per ordinary share paid for the year ended 31 August
2016 |
7,143 |
– |
– |
Interim dividend of
1.00 pence per ordinary share paid for the year ended 31 August
2016 |
– |
2,660 |
– |
Final dividend of 2.35
pence per ordinary share paid for the year ended 31 August
2015 |
– |
6,262 |
6,262 |
|
=========== |
=========== |
=========== |
Total dividends
paid |
7,143 |
8,922 |
6,262 |
|
=========== |
=========== |
=========== |
The Company has declared an interim dividend for the six month
period to 28 February 2017 of
1.80 pence per ordinary share (2016:
1.00 pence). The interim dividend
will be paid on 8 June 2017 to
Shareholders on the register at 19 May
2017 (ex-dividend date 18 May
2017). The total cost of this interim dividend, which has
not been included as a liability in these Financial Statements, is
£4,761,000 (2016: £2,660,000). This amount is based on the number
of ordinary shares in issue held outside Treasury at the date of
this Report.
9 Fair value hierarchy
The Company is required to disclose the fair value hierarchy
that classifies its financial instruments measured at fair value at
one of three levels, according to the relative reliability of the
inputs used to estimate the fair values.
Classification |
Valued by reference
to |
Level 1 |
Valued using quoted
prices in active markets for identical assets |
Level 2 |
Valued by reference to
valuation techniques using observable inputs |
|
other than quoted
prices included within level 1 |
Level 3 |
Valued by reference to
valuation techniques using inputs that are not |
|
based on observable
market data |
Categorisation within the hierarchy has been determined on the
basis of the lowest level input that is significant to the fair
value measurement of the relevant asset. The table below sets out
the Company’s fair value hierarchy:
|
28 February 2017 unaudited |
|
level
1 |
level
2 |
level
3 |
total |
|
£’000 |
£’000 |
£’000 |
£’000 |
Financial assets at
fair value |
|
|
|
|
Investments |
589,570 |
117 |
6,319 |
596,006 |
Derivative
instruments |
– |
14,250 |
– |
14,250 |
|
=========== |
=========== |
=========== |
=========== |
|
589,570 |
14,367 |
6,319 |
610,256 |
Financial
liabilities at fair value |
|
|
|
|
Derivative
instruments |
(2,158) |
(4,862) |
– |
(7,020) |
|
=========== |
=========== |
=========== |
=========== |
|
31 August 2016 audited |
|
level
1 |
level
2 |
level
3 |
total |
|
£’000 |
£’000 |
£’000 |
£’000 |
Financial assets at
fair value |
|
|
|
|
Investments |
527,418 |
5,818 |
5,860 |
539,096 |
Derivative
instruments |
– |
16,169 |
– |
16,169 |
|
=========== |
=========== |
=========== |
=========== |
|
527,418 |
21,987 |
5,860 |
555,265 |
|
=========== |
=========== |
=========== |
=========== |
Financial
liabilities at fair value |
|
|
|
|
Derivative
instruments |
(2,342) |
(11,441) |
– |
(13,783) |
|
=========== |
=========== |
=========== |
=========== |
|
29 February 2016 unaudited |
|
level
1 |
level
2 |
level
3 |
total |
|
£’000 |
£’000 |
£’000 |
£’000 |
Financial assets at
fair value |
|
|
|
|
Investments |
489,561 |
– |
260 |
489,821 |
Derivative
instruments |
– |
16,940 |
– |
16,940 |
|
=========== |
=========== |
=========== |
=========== |
|
489,561 |
16,940 |
260 |
506,761 |
|
=========== |
=========== |
=========== |
=========== |
Financial
liabilities at fair value |
|
|
|
|
Derivative
instruments |
– |
(8,981) |
– |
(8,981) |
|
=========== |
=========== |
=========== |
=========== |
10 Share capital
|
28 February 2017 unaudited |
31 August 2016 audited |
29 February 2016 unaudited |
|
number
of |
|
number
of |
|
number
of |
|
|
shares |
£’000 |
shares |
£’000 |
shares |
£’000 |
Ordinary shares
of |
|
|
|
|
|
|
5 pence each –
issued, |
|
|
|
|
|
|
allotted and fully
paid |
|
|
|
|
|
|
Held outside
Treasury |
|
|
|
|
|
|
Beginning of the
period |
265,349,480 |
13,267 |
266,524,480 |
13,326 |
266,524,480 |
13,326 |
Ordinary shares |
|
|
|
|
|
|
repurchased and |
|
|
|
|
|
|
transferred into
Treasury |
(800,000) |
(40) |
(1,175,000) |
(59) |
(250,000) |
(13) |
|
=========== |
=========== |
=========== |
=========== |
=========== |
=========== |
End of the
period |
264,549,480 |
13,227 |
265,349,480 |
13,267 |
266,274,480 |
13,313 |
|
=========== |
=========== |
=========== |
=========== |
=========== |
=========== |
Held in
Treasury |
|
|
|
|
|
|
Beginning of the
period |
5,295,000 |
265 |
4,120,000 |
206 |
4,120,000 |
206 |
Ordinary shares |
|
|
|
|
|
|
repurchased and held
in |
|
|
|
|
|
|
Treasury |
800,000 |
40 |
1,175,000 |
59 |
250,000 |
13 |
|
=========== |
=========== |
=========== |
=========== |
=========== |
=========== |
End of the
period |
6,095,000 |
305 |
5,295,000 |
265 |
4,370,000 |
219 |
|
=========== |
=========== |
=========== |
=========== |
=========== |
=========== |
Total share
capital |
|
13,532 |
|
13,532 |
|
13,532 |
|
=========== |
=========== |
=========== |
=========== |
=========== |
=========== |
Shares held in Treasury carry no rights to vote, to receive a
dividend or to participate in a winding up of the Company.
11 Net asset value per ordinary
share
The net asset value per ordinary share is based on net assets of
£632,054,000 (31 August 2016:
£578,291,000 and 29 February 2016:
£516,377,000) and on 264,549,480 (31 August
2016: 265,349,480 and 29 February
2016: 266,274,480) ordinary shares, being the number of
ordinary shares in issue held outside Treasury at the period end.
It is the Company’s policy that shares held in Treasury will only
be reissued at a premium to net asset value per ordinary share and,
therefore, shares held in Treasury have no dilutive effect.
12 Transactions with the Manager and
related parties
FIL Investment Services (UK) Limited is the Company’s
Alternative Investment Fund Manager and has delegated portfolio
management and the role of company secretary to FIL Investments
International (“FII”). Both companies are Fidelity group companies.
Details of the fee arrangements are given in Note 5.
During the period management fees of £2,607,000 (year ended
31 August 2016: £4,586,000 and six
months ended 29 February 2016:
£2,261,000) and secretarial and administration fees of £300,000
(year ended 31 August 2016: £600,000
and six months ended 29 February
2016: £300,000) were payable to FII. At the Balance Sheet
date, management fees of £891,000 (31 August
2016: £810,000 and 29 February
2016: £738,000) and secretarial and administration fees of
£100,000 (31 August 2016: £100,000
and 29 February 2016: £250,000) were
accrued and included in other payables. FII also provides the
Company with marketing services. The total amount payable for these
services during the period was £52,000 (year ended 31 August 2016: £155,000 and six months ended
29 February 2016: £80,000). At the
Balance Sheet date, marketing services of £36,000 (31 August 2016: £63,000 and 29 February 2016: £98,000) were accrued and
included in other payables.
As at 28 February 2017, the Board
consisted of five non-executive Directors, all of whom are
considered to be independent by the Board apart from Nicky McCabe, who is employed by FIL Limited as
Head of Investment Trusts. FIL Limited has no beneficial interest
in the shares of the Company. None of the Directors have a service
contract with the Company. The Chairman receives an annual fee of
£38,750, the Audit Committee Chairman an annual fee of £30,000 and
each other Director an annual fee of £25,500, apart from
Nicky McCabe who waives her
Director’s fees. The following members of the Board hold ordinary
shares in the Company: Andy Irvine
75,000 shares, Sharon Brown 15,600
shares, Dean Buckley 12,500 shares,
Nigel Foster 30,000 shares and
Nicky McCabe 13,183 shares.
Neither the contents of the Company's website nor the contents
of any website accessible from hyperlinks on the Company's website
(or any other website) is incorporated into, or forms part of, this
announcement.
ENDS
A copy of the Half Yearly Report will shortly be submitted to
the National Storage Mechanism and will be available for inspection
at www.morningstar.co.uk/uk/NSM
The Half Yearly Report will also be available on the Company's
website at www.fidelityinvestmenttrusts.com where up to date
information on the Company, including daily NAV and share prices,
factsheets and other information can also be found.