Final Results
FIDELITY EUROPEAN VALUES PLC
Preliminary Announcement of Results
For the year ended 31 December 2009
CHAIRMAN'S STATEMENT
I have pleasure in presenting the annual report of Fidelity European Values PLC
for the year ended 31 December 2009.
Performance
At the start of 2009, markets were still very weak following the bankruptcy of
Lehmans. Bank shares were particularly weak and there was some uncertainty
whether government action worldwide would be sufficient to improve sentiment
and permit banks and money markets to operate in a more normal fashion. In the
event, good US bank results were announced in March and, with equity being
oversold, markets began a rally which continued almost to year end.
Against this background, the net asset value per share of Fidelity European
Values PLC increased by 11.3% on a total return basis. This was less than its
benchmark, the FTSE World Europe (ex UK) Index, which rose by 19.1%. The share
price rose by 21.3% on a total return basis resulting in a narrowing of the
discount. The major factor behind this weak relative performance was the
portfolio's commitment to stocks with strong balance sheets and resilient
profits. The best performing stocks were, however, more volatile companies
with rather weaker fundamentals.
Nevertheless, absolute returns were helped by the euro's appreciation against
sterling. Throughout the trust's existence it has been our strategy never to
hedge any of the trust's currency exposure. This remains the Board's policy
and the Board would inform shareholders before any change was made.
Another factor in 2009 was our approach to gearing. While the Board was right
to remove all gearing back in September 2007, it would (with the benefit of
hindsight) have been more profitable to have reinstated the gearing last March.
Discount management
The Board remains active in issuing shares at a premium and buying back shares
at a discount; a continuation of practice since launch. The purpose of this is
to reduce share price volatility and it also results in an enhancement to the
net asset value per share. Over the last year, share buybacks have been made,
further details of which may be found in the Directors' Report in the annual
report.
Dividends
As I do every year, I wish to reiterate that the Board will not influence the
Manager in any way to determine the level of income of your Company's
portfolio; it will remain the Board's policy to pay out earnings in full.
This year the Board decided to pay an interim rather than a final dividend.
This involved our estimating the level of earnings for the year. In the event
our actual earnings were slightly less than this figure as a result of which we
have had to make a small transfer from reserves. The interim dividend of 22.50
pence per share for the year ended 31 December 2009compares with the previous
year's final dividend of 23.26 pence per share and special dividend of 13.24
pence per share. This dividend will be paid on 31 March 2010 to shareholders
on the register at close of business on 5 March 2010 (ex dividend date 3 March
2010).
Directorate
As detailed in my statement in last year's report, Mr Simpson retired from the
Board after the Annual General Meeting and Mr van der Klugt assumed the role of
Chairman of the Audit Committee and Senior Independent Director.
I will retire as Director and Chairman after the 2010 Annual General Meeting.
Mr van der Klugt will be appointed Chairman with effect from that date and Mr
Robinson will be appointed Chairman of the Audit Committee and Senior
Independent Director.
I am delighted to confirm that Dr Niblett was appointed a Director on 14
January 2010 following a search using an external agency. Dr Niblett is
Director and Chief Executive of Chatham House (the Royal Institute of
International Affairs). Prior to this he worked for the Center for Strategic
and International Studies, becoming Executive Vice President in 2001. Dr
Niblett has already contributed greatly during his short tenure and he will be
standing for election at the Annual General Meeting.
Mr Fraser is subject to annual re-election under the Listing Rules due to his
recent employment relationship with the Manager and his directorship of another
investment trust managed by Fidelity, namely Fidelity Japanese Values PLC. The
Board is convinced that Mr Fraser's experience serves the Company well, and
Directors voted unanimously that he should remain a Director when he left the
employment of Fidelity.
As detailed in the biographies in the annual report the Directors have a wide
range of appropriate skills and experience to make up a balanced Board for your
Company. With the exception of Mr Fraser, all other Directors are totally
independent. The Board has considered the proposal for the election and
re-election of the Directors and recommends to shareholders that they vote in
favour of the proposals.
Continuation vote
In accordance with the Articles of Association of the Company, an ordinary
resolution that the Company continue as an investment trust for a further two
years was passed at the 2009 Annual General Meeting. A further continuation
vote will take place at the 2011 Annual General Meeting.
Annual General Meeting
The Annual General Meeting of the Company is due to take place on 18 May 2010
at midday at Fidelity's offices at 25 Cannon Street. Full details of the
meeting are given in the annual report and I look forward to meeting you then.
Amendments to the Company's Articles of Association to finalise the
implementation of the Companies Act 2006 requirements are the subject of a
special resolution.
Conclusion
I have been a Director of Fidelity European Values PLC since its inception in
1991; clearly I am proud to have been involved with a trust whose net asset
value since launch has increased by 1,344.7% when the corresponding Index has
increased by 446.9%. I believe passionately that investment decisions and fund
managers should be judged on their long term performance. While I am sorry
that a cautious approach by the Manager, supported by the Board, led to a year
of relative underperformance, I believe that this approach and our
concentration on stocks with stronger balance sheets will bear fruit and will
in turn contribute to further outstanding longer term performance.
Fidelity European Values PLC has only had three fund managers since it started
- Anthony Bolton, Tim McCarron and Sudipto Banerji. While each has had a
slightly different approach to investment, they were united in their belief in
the value of detailed high quality research and regular and frequent meetings
with company management. I am sure that this is the underlying reason for the
trust's excellent long term record and I would be the first to pay tribute to
each of our fund managers.
Provided Fidelity remains committed to this discipline (and I am sure that it
will), then I remain absolutely confident that your Company will show the same
sort of performance over the next twenty years that it has shown to date.
You have a strong united Board and I wish Humphrey van der Klugt as Chairman,
the Board and all shareholders every success in the future.
Robert Walther
Chairman
5 March 2010
Enquiries:
Chris Davies, FIL Investments International - 01737 837 723
Rebecca Burtonwood, For and on behalf of FIL Investments International, Company
Secretary - 01737 836 869
FIDELITY EUROPEAN VALUES PLC
Income Statement
- for the year ended 31 December 2009
2009 2008
revenue capital total revenue capital total
£'000 £'000 £'000 £'000 £'000 £'000
Gains/(losses) on investments - 46,288 46,288 - (158,681) (158,681)
designated at fair value through
profit or loss
Income
- Dividends 22,684 - 22,684 23,757 - 23,757
- Interest income - - - 42 - 42
- Deposit interest 165 - 165 1,888 - 1,888
- Interest on VAT recovered on - - - 1,429 - 1,429
investment management fee
- Fidelity Institutional Cash Fund 412 - 412 2,534 - 2,534
plc
Investment management and (4,582) - (4,582) (5,491) (7,458) (12,949)
performance fee
VAT recovered on investment 37 - 37 5,995 - 5,995
management fee
Other expenses (793) - (793) (875) - (875)
Exchange gains/(losses) on other net 161 (8,056) (7,895) (107) 25,141 25,034
assets
Exchange gains/(losses) on loans - 6,867 6,867 - (26,695) (26,695)
Net return/(loss) before finance 18,084 45,099 63,183 29,172 (167,693) (138,521)
costs and taxation
Interest payable (3,768) - (3,768) (4,427) - (4,427)
Net return/(loss) on ordinary 14,316 45,099 59,415 24,745 (167,693) (142,948)
activities before taxation
Taxation on return/(loss) on (3,434) 506 (2,928) (4,128) 1,509 (2,619)
ordinary activities*
Net return/(loss) on ordinary 10,882 45,605 56,487 20,617 (166,184) (145,567)
activities after taxation for the
year
Return/(loss) per ordinary share (1) 20.59p 86.27p 106.86p 36.77p (296.35p) (259.58p)
A Statement of Total Recognised Gains and Losses has not been prepared as there
are no gains and losses other than those reported in this Income Statement.
The total column of the Income Statement is the profit and loss account of the
Company. All revenue and capital items in the above statement derive from
continuing operations. No operations were acquired or discontinued in the year.
* This relates to overseas taxation only
FIDELITY EUROPEAN VALUES PLC
Reconciliation of Movements in Shareholders' Funds
- for the year ended 31 December 2009
called up share capital capital revenue total
share premium redemption reserve reserve equity
capital account reserve
£'000 £'000 £'000 £'000 £'000 £'000
Opening 14,737 58,615 1,088 767,645 12,560 854,645
shareholders'
funds: 1 January
2008
Net recognised - - - (160,235) - (160,235)
capital losses for
the year
Repurchase of (1,009) - 1,009 (51,106) - (51,106)
ordinary shares
Performance fee - - - (7,458) - (7,458)
charged to capital
Taxation credited - - - 1,509 - 1,509
to capital
Net revenue after - - - - 20,617 20,617
taxation for the
year
Dividend paid to - - - - (7,991) (7,991)
shareholders
Closing 13,728 58,615 2,097 550,355 25,186 649,981
shareholders'
funds: 31 December
2008
Net recognised - - - 45,099 - 45,099
capital gains for
the year
Repurchase of (949) - 949 (37,913) - (37,913)
ordinary shares
Taxation credited - - - 506 - 506
to capital
Net revenue after - - - - 10,882 10,882
taxation for the
year
Dividend paid to - - - - (19,620) (19,620)
shareholders
Closing 12,779 58,615 3,046 558,047 16,448 648,935
shareholders'
funds:
31 December 2009
FIDELITY EUROPEAN VALUES PLC
Balance Sheet
- as at 31 December 2009
2009 2008
£'000 £'000
Fixed assets
Investments designated at fair value through profit or 658,771 657,544
loss
Current assets
Debtors 7,760 1,890
Fidelity Institutional Cash Fund plc 45,823 48,764
Cash at bank 40,973 50,907
94,556 101,561
Creditors - amounts falling due within one year
Fixed rate unsecured loan (35,471) -
Other creditors (11,280) (9,145)
(46,751) (9,145)
Net current assets 47,805 92,416
Total assets less current liabilities 706,576 749,960
Creditors - amounts falling due after more than one
year
Fixed rate unsecured loans (57,641) (99,979)
Total net assets 648,935 649,981
Capital and reserves
Called up share capital 12,779 13,728
Share premium account 58,615 58,615
Capital redemption reserve 3,046 2,097
Capital reserve 558,047 550,355
Revenue reserve 16,448 25,186
Total equity shareholders' funds 648,935 649,981
Net asset value per ordinary share 1,269.52p 1,183.61p
FIDELITY EUROPEAN VALUES PLC
Cash Flow Statement - for the year ended 31 December 2009
2009 2008
£ £
'000 '000
Operating activities
Investment income received 17,088 18,280
Deposit interest received 657 6,162
Investment management fee paid (4,602) (6,011)
Performance fee paid for prior year (7,458) -
VAT recovered on investment management fee paid 37 6,043
Directors' fees paid (113) (104)
Other cash payments (659) (762)
Net cash inflow from operating activities 4,950 23,608
Returns on investments and servicing of finance
Interest paid (3,794) (4,505)
Net cash outflow from returns on investments and (3,794) (4,505)
servicing of finance
Taxation
Overseas taxation recovered 1,218 740
Taxation recovered 1,218 740
Financial investment
Purchase of investments (834,557) (937,042)
Disposal of investments 882,130 982,820
Net cash inflow from financial investment 47,573 45,778
Dividend paid to shareholders (19,620) (7,991)
Net cash inflow before use of liquid resources and 30,327 57,630
financing
Cash flow from management of liquid resources
Fidelity Institutional Cash Fund plc 2,941 (48,764)
Net cash inflow/(outflow) from management of liquid 2,941 (48,764)
resources
Net cash inflow before financing 33,268 8,866
Financing
Repurchase of ordinary shares (36,004) (51,906)
3.54% fixed rate unsecured loan repaid - (29,736)
Net cash outflow from financing (36,004) (81,642)
Decrease in cash (2,736) (72,776)
1. Returns/(losses) per ordinary share are based on the net revenue return on
ordinary activities after taxation in the year of £10,882,000 (2008: £
20,617,000), the capital return in the year of £45,605,000 (2008: loss £
166,184,000) and the total return in the year of £56,487,000 (2008: loss £
145,567,000) and on 52,862,338 ordinary shares (2008: 56,077,724) being the
weighted average number of ordinary shares in issue during the year.
The above statements have been prepared on the basis of the accounting policies
as set out in the financial statements in the annual report to 31 December
2009. This preliminary statement, which has been agreed with the Auditor, was
approved by the Board on 5 March 2010. It is not the Company's statutory
financial statements. The statutory financial statements for the financial
year ended 31 December 2008 have been delivered to the Registrar of Companies.
The statutory financial statements for the financial year ended 31 December
2009 have been approved and audited but have not yet been filed. The statutory
financial statements for the financial years ended 31 December 2008 and 31
December 2009 received unqualified audit reports, did not include a reference
to any matters to which the Auditor drew attention by way of emphasis without
qualifying the report and did not contain statements under section 498(2) and
(3) of the Companies Act 2006.
The annual report and financial statements will be posted to shareholders as
soon as is practicable and in any event no later than 15 April 2010.
Friday, 22nd November 2024
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