Annual Financial Report
FIDELITY SPECIAL VALUES PLC
ANNUAL FINANCIAL REPORT, PROXY FORM AND ADDITIONAL DISCLOSURES
TO THE PRELIMINARY RESULTS FOR THE YEAR TO 31 AUGUST 2011
Further to the voluntary disclosure of the Company's annual results for the
year ended 31 August 2011 by way of a preliminary announcement dated 7 November
2011, in accordance with the Disclosure and Transparency Rules ("the Rules")
4.1.3 and 6.3.5(2) this announcement contains the text of the preliminary
announcement dated 7 November 2011 together with the additional text in
compliance with the Rules.
The Company's annual report and financial statements for the year ended 31
August 2011 together with the accompanying proxy form have been submitted to
the UK Listing Authority, and will shortly be available for inspection on the
National Storage Mechanism (NSM):
www.hemscott.com/nsm.do
(Documents will usually be available for inspection within two business days of
this notice being given)
The annual report and financial statements will shortly be available on the
Company's website at
www.fidelity.co.uk/static/pdf/common/investment-trusts/special/
specialannual-2011.pdf
Rebecca Burtonwood, FIL Investments International, Company Secretary - 01737
836 869
12 November 2011
FIDELITY SPECIAL VALUES PLC
Preliminary Announcement of Audited Results
For the year ended 31 August 2011
Chairman's Statement
RESULTS FOR THE YEAR ENDED
31 AUGUST 2011
NAV: -4.1%
SHARE PRICE: -5.0%
BENCHMARK: +7.3%
DIVIDEND: 11.25p
I have pleasure in presenting the Annual Report for Fidelity Special Values
PLC.
PERFORMANCE
This has been a difficult and disappointing year for Fidelity Special Values
PLC ("FSV") with a Net Asset Value total return of -4.1% (compared to a total
return of +7.3% from the FTSE All-Share Index). The poor performance has
dragged the two year return into negative territory with a total return of
-2.8%. The five year total return remains positive at 10.9%, 0.3% behind that
of the FTSE All-Share Index total return of +11.2% for the same period.
The behaviour of the UK equity market during the year ended 31 August 2011 was
in many respects a repeat of last year's. The year started with markets still
concerned that the initial 'V' shaped recovery following the crisis of 2008 was
about to revert to a further period of recession - the much feared 'double
dip'. In fact, prompted by a further round of quantitative easing in the US
starting in November 2010, together with improving economic indicators, equity
markets recovered sharply during the first half of the year, with the UK market
16.5% ahead by the time of the Company's Half-Yearly report at the end of
February 2011. However, the second half of the year again saw much less benign
market conditions, with a broadly sideways market during spring and early
summer correcting sharply downwards in August, leaving the whole year ahead by
7.3%.
Two significant contributors to FSV's underperformance in this period were that
the portfolio was substantially underweight mining and commodity-related
stocks, while retaining an overweight to UK retail banks, and in particular
Lloyds and RBS. Sanjeev Shah, the Portfolio Manager, has addressed his
reasoning behind these and other positive and negative contributors to
performance in his Manager's Review.
Given the poor recent returns the Board has reviewed whether FSV's investment
philosophy and strategy is right in the current market environment. The
underlying philosophy of the Board is that over time the return from equities
will be better than that achieved from cash and that a well managed and active
approach to investment will produce better returns than an investment in an
index tracker fund.
The strategy of FSV is to deliver enhanced or "special" value in two main ways.
First, the investment strategy is not unduly influenced by the benchmark, and
the objective is to only invest in companies that Sanjeev, with the benefit of
the Fidelity research team, believes represent good value, ie a bottom up
approach to investment. Second, to invest in sectors which are
under-represented in the portfolios of other institutional investors and are at
low relative historic valuations. This is both a contrarian and a value
approach to fund management and requires an active and knowledgeable portfolio
manager who makes investments by not following the crowd.
We have always made clear that we will judge success over the long term and
that Sanjeev should not feel obligated to try to participate in shorter term
trends which may be driven by fear or unrealistic optimism rather than by
fundamental value. We believe that over time this will produce better returns
than both cash and our benchmark index. Since the inception of FSV the NAV has
increased by 593.2% on a total return basis compared to the benchmark of
207.0%.
However, this approach means that in any single year performance can - and does
- vary significantly from that of the market as a whole and we have seen this,
both positively and negatively, over the last five individual years and,
indeed, since the inception of FSV in 1994. The last five years' performance is
set out in the table below.
As a Board we review at each Board meeting the performance, particularly over
rolling five year periods. We challenge Sanjeev and probe his positions and
underlying thinking. What we are looking for is depth of knowledge, clarity of
thinking, consistency of application, conviction, fearlessness in taking strong
views and honesty in admitting misjudgements.
Looking at the performance over the last two years, a large element of the
negative contribution has been due to conviction that mining and
commodity-related stocks are overvalued and that some banks are undervalued.
Sanjeev has been consistent in these and other convictions and has explained
his views on these areas in his Review. We continue to believe that this
contrarian strategy will produce better returns in the longer term and that the
strategy of FSV is valid in these markets.
Year to 31 August
NAV and Index total 2011 2010 2009 2008 2007 5
return % years
Fidelity Special -4.1 +1.3 +9.0 -9.8 +15.9 +10.9
Values PLC
FTSE All-Share Index +7.3 +10.6 -8.2 -8.7 +11.8 +11.2
Difference -11.4 -9.3 +17.2 -1.1 +4.1 -0.3
OUTLOOK
Stock markets around the world remain uncertain and highly volatile and this is
likely to continue whilst the US runs high public and trade deficits and Europe
enters the throes of a political and banking crisis. As a counter to the bad
news, despite weakness in the US and Europe, the world economy as a whole
continues to show reasonable growth. In addition, major central banks are
starting to ease policy and many UK companies have strong balance sheets and
healthy cash flows to cover dividends.
The volatility of stock markets over the last year has produced significant
opportunities to invest in sectors that should suit contrarian investment. Both
the Investment Manager and the Board acknowledge that this is a pivotal year in
working to rebuild the good returns expected by our shareholders. There is much
to be done but we have every confidence that the Investment Manager has the
skills and commitment to achieve this.
OTHER MATTERS
Performance has clearly been the critical issue for our shareholders over the
last year but there are some other matters which I need to touch on in this
Annual Report.
Discount
The Board is very mindful of the importance of the level of discount to our
shareholders and we have conducted a number of share repurchases during the
year to help prevent the discount from widening further.
Gearing
The Board believes that using Contracts For Difference for gearing purposes
continues to provide more flexibility for the Company's needs at a much lower
cost than traditional bank debt. At the time of writing the gross level of
gearing is somewhat below the 115% to 120% range we would consider "normal"
owing to the uncertain outlook, discussed above.
Dividend
The Board has decided to recommend a final dividend of 11.25 pence per share
for the year ended 31 August 2011, an increase of more than 7% over the 10.50
pence paid in 2010. This dividend will be payable on 19 December 2011 to
shareholders on the register at close of business on 18 November 2011
(ex-dividend date 16 November 2011).
Board of Directors
It is my belief that the Board has the relevant skills and experience to serve
the Company well in to the future. In common with our practice since 2004, all
Directors are subject to annual re-election and their biographical details are
included in the Annual Report to assist shareholders when considering their
votes.
Retail Distribution Review ("RDR")With effect from 31 December 2012,
independent financial advisers will be required to offer advice to investors
after considering a full range of investment options. Commission for advice
will not be payable and fees will have to be agreed with the client rather than
commission based payments being used.
RDR should open up the opportunity to a greater number of private investors to
invest in investment trusts when these have not been considered previously due
in part to lack of commission, limited platform availability and less
understanding within the IFA industry.
The Annual General Meeting: Thursday 15 December 2011 at 11.00am
The Annual General Meeting will be held at Fidelity's offices at 25 Cannon
Street, London EC4M 5TA (St Paul's or Mansion House tube stations) on Thursday
15 December 2011 at 11.00am.
It is the most important meeting that we, the Directors of your Company, have
each year. Sanjeev will be making his annual presentation to shareholders,
highlighting the achievements and challenges of the year past and the prospects
for the year to come. We do urge as many of you as possible to come and join us
for the occasion.
Lynn Ruddick
Chairman
4 November 2011
MANAGER'S REVIEW
UK MARKET REVIEW
* GDP growth was very weak over the period; during the 12 months to August
2011 the UK economy only expanded by 0.5%, and at the end of August 2011
was still 3.9% behind its peak level of February 2008.
* Inflation again rose as a result of higher oil prices and the increase of
VAT from 17.5% to 20% in January 2011; the annual CPI figure at the end of
September 2011 stood at 5.2%.
* Unlike the European Central Bank, the Bank of England again kept interest
rates unchanged throughout the year at a level of 0.5%.
* The UK market rose during the 12 month period, but investor optimism had
turned to fear by the end of the Company's financial year with a
significant market correction taking place in August 2011.
The Company's previous financial year ending on 31 August 2010 saw a game of
two halves, with a strong recovery phase in the first half of the year, but
with investor confidence dipping in the summer so that the year ended with
concerns over a 'double dip' recession uppermost in investors' minds. 2011 saw
the same cycle repeated; significantly improved economic indicators from both
the UK and also the rest of the world economy during the final quarter of 2010
saw an initial strong period of stock market recovery, with the FTSE All-Share
Index up by 16.5% at the time of the Company's Half-Yearly report at the end of
February 2011. This performance was led by the cyclical areas of the market,
where concerns over oil supply in the light of the 'Arab Spring' saw oil prices
in March move above the US$120 per barrel level for the first time since 2008,
a new all-time high in sterling terms.
However, during the second half of the year, investor confidence was hit hard
by a succession of negative events. First, the world economy was buffeted by
the knock-on effects to global supply chains of the catastrophic earthquake and
tsunami in Japan; then market concern turned to peripheral Europe's sovereign
debt issues, where the true cost of governments' attempts to 'bail out' their
domestic banking systems was brought into sharp focus by a round of
refinancings in the early summer. Finally, these concerns reached the US, where
Standard & Poor's downgraded US Treasury debt in August as the Republicans
stalled the Democrats' reflationary plans.
Against this backdrop, in the UK, the grind to recover to pre-crash levels of
economic activity looked increasingly difficult as GDP only grew by the
slimmest of margins (0.5%) during the year to August 2011. This hit investor
confidence hard, with the market in August falling by 6.9% - nearly 50% of the
returns experienced during the previous 11 months. At a sector level,
Technology and Consumer Goods led the way with the market buoyed by the
performance of companies with significant global revenue earning capabilities
such as ARM, Autonomy, and Burberry. In what could be the start of a round of
global M&A (merger and acquisition), where companies with strong cash balance
sheets but low internal revenue growth prospects attempt to 'buy' growth, the
end of the year saw Autonomy bid for by Hewlett Packard of the US. Elsewhere,
Financials, and in particular the retail banks, continued to lag the market,
being the only sector to post a negative absolute return over the year as the
shadow of potential regulation dented investor confidence that a return to more
'normal' returns from banks would be possible in anything other than the long
term. Here, Lloyds and RBS, the banks where the Government still owns
significant stakes, were the worst hit, along with Barclays, where investors
were concerned that it might be forced to split off its investment banking
activities.
During the year, sterling reversed the trend of the previous 12 months and
strengthened against the dollar, up from $1.54 to $1.63.
PORTFOLIO REVIEW
As noted earlier, performance this year has been very disappointing. Banks have
been the biggest detractor to performance, costing the portfolio 3.4% in
relative performance. The macroeconomic uncertainty, regulatory risk and recent
concerns over the Eurozone sovereign crisis have impacted the stock prices of
the banks very negatively. I continue to have conviction that strong value has
emerged in good retail and commercial banking franchises. Banks continue to be
the most underweighted sector amongst institutional investors, are disliked by
sell side analysts and valuations are at multi year lows on several metrics.
Stocks like Lloyds that provide a very real opportunity for potentially
doubling their current valuation are rare, and do indeed represent a 'special
situation'. It is noticeable that the absence of concrete moves on regulation
by the Government caused investor sentiment towards the stock to change in the
few weeks, prior to our year end. We remain committed to the long term
potential that it affords. I used that recent weakness in the Lloyds share
price to add to my position and maintain my exposure to HSBC and Citigroup.
The overweight in financials was not all bad news. My strong exposure to
Diversified (ie non-bank) Financial Services and Commercial Real Estate stocks
resulted in them being the two best performing sectors in the portfolio. London
Stock Exchange was the highest contributing holding over the year, driven by
recovering transaction volumes and increasing global consolidation of the
exchange sector. I have used its strength to halve my holding. Both British
Land and Land Securities contributed strongly driven by a better understanding
of the yield credentials of property and a recovery in the City and West End
rental outlook. I have sold out of both names recently.
The cyclical sectors that drove the strong performance of the market during the
first half of the year, in particular sectors in Oil and Gas and Materials
(which impacted the portfolio by -1.7% and 0.9% respectively) in relative
performance, are usually sectors that perform in the last cycle of a recovery.
As such it was surprising and disappointing for shareholders to see these
sectors outperform to such an extent in what are still the earlier phases of a
slow and multi year recovery from the 2008 'lows'. As a contrarian investor, my
view was that at the start of the year the world economy had not worked through
all the issues that caused the crisis in 2008, and this view has, to some
extent, been confirmed by the sharp corrections experienced by these sectors in
August.
Media stocks overall detracted 1% from relative performance. However, there
were some notable positive and negative contributors within the sector. The
investment in Yell has been costly and I clearly underestimated the cyclical
downturn in SME advertising, balance sheet risk and structural challenges the
business model faces. Today the position in Yell is less than 0.3% of the
portfolio. Elsewhere, News Corporation's announcement that it was dropping its
bid for BSkyB given the 'hacking scandal' hurt the stock's valuation in the
second half of the year. I have held the stock since I first took over the
portfolio, based on its pipeline of superior revenue-enhancing domestic product
offerings from HD through 3D and 'Triple Play', and hence my thesis is not
dependent on the realisation of the bid premium arising from News Corporation's
interest in the company. I have recently added to the position given the
company's unique market position and growth potential. Importantly ITV and
Moneysupermarket were notable top 10 contributors to performance driven by the
recovery strategies adopted by new management. I continue to maintain the
overweight in media names. This includes growth ideas such as Pearson, but more
recently, given the market correction, cyclically exposed names such as ITV are
looking more interesting.
Turnaround situations continue to feature in the portfolio. Unfortunately there
have been some notable detractors to performance from the likes of bwin.Party,
an on-line gambling and sports betting company, and Logica, a technology and IT
outsourcing provider. bwin.Party has been impacted by poor operational
performance of its bwin sports betting division following the merger of bwin
with PartyGaming in March 2011 and negative surprises around regulation in
Germany. I have taken the decision to reduce my holding as my conviction on the
thesis has reduced. Logica, having been a top contributor to performance in the
previous year, has been impacted by poor operational performance in the Benelux
region. I have maintained my position given the turnaround instituted by new
management. Conversely, the turnaround of QinetiQ in the Aerospace and Defence
space has been a top contributor to performance and I maintained the top 10
position during the year.
Finally a theme that still attracts me is the rise in the consumer class in the
Emerging Markets, which I see as a multi year phenomenon. There are relatively
few stocks in the UK that allow me to play this theme. However, one of them,
Burberry, was a top 10 contributor to the portfolio over the year and I am
happy to retain this holding going forward.
Again, during the year I made use of three main derivative strategies but these
remain a small part of the portfolio. Firstly, I bought long Contracts For
Difference ("CFDs") to achieve additional gearing within the fund as a cheaper
alternative to borrowing additional funds. These operate in the same way as
regular borrowing and serve to increase or 'gear' the performance of the
underlying share prices in both directions. Secondly, I bought short CFDs to
take advantage of certain stocks where I believed that they were overvalued and
were likely to fall. Industrial Cyclicals continue to be the main 'short'
exposure in the portfolio. Finally, I bought a number of Index put and call
options in the FTSE 100 Index to take advantage of periods where I considered
the whole market to be over or undervalued. The first two CFD strategies
performed broadly in line with the physical equities within the portfolio. My
put and call options added a very small amount of positive return to the
Company.
OUTLOOK
Market volatility and concern over the UK economy sliding back into recession
has once again very much clouded the end of the Company's financial year. I
have positioned the portfolio for a long road to economic recovery, but not a
'double dip' recession or a Japan like scenario (many years of very sluggish
growth) in the West.
In this low-growth environment, I believe that companies which are able to
demonstrate sustainable sales and earnings growth should be priced at a
significant premium, which currently is not the case. These growth names such
as BSkyB, many of which are also unloved and unfashionable, make up a
significant part of the portfolio today. I am also finding more opportunities
in early cycle names geared to the US housing market such as Wolseley.
Turnaround situations under new management continue to feature in the portfolio
such as Ladbrokes and QinetiQ. Finally, the portfolio has benefited from M&A
activity, especially in small and mid capitalisation companies, and I believe
this trend will continue. Holidaybreak and Avis are two recent examples of
companies which have attracted corporate interest.
I acknowledge that I have much work to do this year to deliver a better return
for shareholders. I believe we are probably a large way through the correction
in terms of the size of the decline from peak to trough; for an investor who
likes to go against the flow, this represents the best chance in more than two
years to find new opportunities or to add to my positions. The recent
volatility in stock markets has, in my opinion, provided the best opportunity
to invest in equities since March 2009.
Sanjeev Shah
FIL Investments International
4 November 2011
PRINCIPAL RISKS AND UNCERTAINTIES AND RISK MANAGEMENT
The Board confirms that there is an ongoing process for identifying, evaluating
and managing the principal risks faced by the Company. The Board, with the
assistance of the Manager, has developed a risk matrix which, as part of the
internal controls process, identifies the key risks that the Company faces. The
matrix has identified strategic, marketing, investment management, company
secretarial and other support function risks. The Board reviews and agrees
policies for managing these risks. The process is regularly reviewed by the
Board in accordance with the FRC's "Internal Control: Revised Guidance for
Directors". Risks are identified, introduced and graded. This process, together
with the policies and procedures for the mitigation of risks, is updated and
reviewed regularly in the form of comprehensive internal controls reports
considered by the Audit Committee. The Board also determines the nature and
extent of any risks it is willing to take in order to achieve its strategic
objectives. The Board's approach to risks is embedded in the Company's
investment objectives and investment policy on pages 19 and 20.
External risks
Market risk
The Company's assets consist mainly of listed securities and the principal
risks are therefore market related such as market recessions, interest rate
movements, deflation/inflation, terrorism and protectionism.
Risks to which the Company is exposed and which form part of the market risks
category are included in Note 17 to the financial statements on pages 48 to 52
together with summaries of the policies for managing these risks. These are:
market price risk (which comprise other price risk, interest rate risk and
foreign currency risk); liquidity risk; counterparty risk and credit risk.
Long CFDs are currently used for gearing purposes. In addition a day to day
overdraft facility can be used if required. The impact of limited finance from
counterparties has not impacted the Company to date, however there are
alternative suppliers available in the market place should the need arise.
The Company relies on a number of main service providers, namely the Manager,
Registrar and Custodian. The Manager is the member of a privately owned group
of companies on which a regular report is provided to the Board. The Manager,
Registrar and Custodian are subject to regular audits by Fidelity's internal
audit team and the counterparties' own internal controls reports are received
by the Board and any concerns investigated.
Share price risk
Although it is usually the case that the longer a share is owned the less the
risk of losing money, share prices are volatile and for the short term
shareholder, likely to want to sell in the near future, volatility is a risk.
The Board does not regard volatility as a significant risk for the long term
shareholder.
Discount risk
The Board cannot control the discount at which the Company's share price trades
to net asset value. However, it can influence this through its share repurchase
policy and through creating demand for shares through good performance and an
active investor relations programme.
Internal risks
Investment management
The Board relies on the Manager's skills and judgement to make investment
decisions based on research and analysis of individual stocks and sectors. The
Board reviews the performance of the asset value of the portfolio against the
Company's benchmark and competitors and the outlook for the market with the
Manager at each Board meeting. The emphasis is on long term investment
performance and the Board accepts that by targeting long term results the
Company risks volatility in the shorter term.
Governance, operational, financial, compliance, administration etc
While it is believed that the likelihood of poor governance, compliance and
operational administration by other third party service providers is low, the
financial consequences could be serious, including the associated reputational
damage to the Company. Your Board is responsible for the Company's system of
internal control and for reviewing its effectiveness. Details of this process
are provided in the Corporate Governance Statement within this Annual Report.
Related Parties
Nicky McCabe is Chief Operating Officer of Moonray Investors, a division of FIL
Limited Group. Nicky McCabe has waived her entitlement to Director's fees.
No Director has a contract of service with the Company and no contracts existed
during or at the end of the financial period in which any Director was
materially interested and which were significant in relation to the Company's
business, except as disclosed in relation to Nicky McCabe's interests in the
Management Agreement. There have been no other related party transactions
requiring disclosure under Financial Reporting Standard ("FRS") 8.
The interests of the Directors and FIL Limited in the ordinary shares of the
Company as at 31 August 2011 and 31 August 2010 are shown in the Annual Report.
Statement of Directors' Responsibilities
The Directors are responsible for preparing the annual report and the financial
statements in accordance with applicable law and regulations. Company law
requires the Directors to prepare financial statements for each financial year.
Under that law they have elected to prepare the financial statements in
accordance with UK Generally Accepted Accounting Practice.
The financial statements are required by law to give a true and fair view of
the state of affairs of the Company and of the profit or loss for the period.
In preparing these financial statements, the Directors are required to:
* select suitable accounting policies and then apply them nconsistently;
* make judgements and estimates that are reasonable and prudent;
* state whether applicable UK Accounting Standards have been followed,
subject to any material departures disclosed and explained in the financial
statements; and
* prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Company will continue in business.
The Directors are responsible for ensuring that adequate accounting records are
kept which disclose with reasonable accuracy at any time the financial position
of the Company and to enable them to ensure that its financial statements
comply with the Companies Act 2006. They are also responsible for safeguarding
the assets of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
Under applicable law and regulations the Directors are also responsible for
preparing a Directors' Report, including a Business Review, a Directors'
Remuneration Report and a Corporate Governance Statement that comply with that
law and those regulations.
The Directors have delegated the responsibility for the maintenance and
integrity of the corporate and financial information included on the Company's
pages of the Manager's website www.fidelity.co.uk/its to the Manager.
Legislation in the UK governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
We confirm that to the best of our knowledge: the financial statements,
prepared in accordance with the applicable set of accounting standards, give a
true and fair view of the assets, liabilities, financial position and profit or
loss of the Company; and the Directors' Report includes a fair review of the
development and performance of the business and the position of the Company
together with a description of the principal risks and uncertainties it faces.
Approved by the Board on 4 November 2011 and signed on its behalf by
Lynn Ruddick
Chairman
4 November 2011
Enquiries:
Chris Davies - Head of Investment Trusts, FIL Investments International - 01737
837 723
Anne Read - Corporate Communications, FIL Investments International - 0207 961
4409
Rebecca Burtonwood - Company Secretary, FIL Investment International, - 01737
836 869
FIDELITY SPECIAL VALUES PLC
Income Statement for the
year ended31 August 2011
2011 2010
revenue capital total revenue capital total
£'000 £'000 £'000 £'000 £'000 £'000
(Losses)/gains on - (17,846) (17,846) - 3,613 3,613
investments designated at
fair value through profit
or loss
Losses on investments via - (6,642) (6,642) - (5,046) (5,046)
long CFDs held at fair
value through profit or
loss
Gains/(losses) on options - 5,147 5,147 - (173) (173)
and short CFDs held at fair
value through profit or
loss
Franked investment income 4,413 - 4,413 3,671 - 3,671
UK scrip dividends 5,499 - 5,499 5,531 - 5,531
Overseas dividends 178 - 178 764 - 764
Overseas scrip dividends - - - 320 - 320
Income from REIT 481 - 481 273 - 273
investments
Interest received on short 41 - 41 11 - 11
CFDs
Dividends received on long 727 - 727 680 - 680
CFDs
Deposit interest 57 - 57 18 - 18
Underwriting commission - - - 28 - 28
Interest paid on long CFDs (452) - (452) (329) - (329)
Dividends paid on short (427) - (427) (92) - (92)
CFDs
Expenses on futures and - - - (9) - (9)
equity forwards
Investment management fee (3,711) - (3,711) (3,515) - (3,515)
Other expenses (562) - (562) (587) - (587)
Exchange gains/(losses) on 1 (67) (66) (4) (117) (121)
other net assets
Net return/(loss) before 6,245 (19,408) (13,163) 6,760 (1,723) 5,037
finance costs and taxation
Finance costs - - - (591) - (591)
Net return/(loss) on 6,245 (19,408) (13,163) 6,169 (1,723) 4,446
ordinary activities before
taxation
Taxation on return on 250 - 250 (56) - (56)
ordinary activities(¹)
Net return/(loss) on 6,495 (19,408) (12,913) 6,113 (1,723) 4,390
ordinary activities after
taxation for the year
Return/(loss) per ordinary 11.43p (34.17p) (22.74p) 10.74p (3.03p) 7.71p
share
(¹) This relates to overseas taxation only.
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
continued operations. No operations were acquired or discontinued during the
year.
FIDELITY SPECIAL VALUES PLC
Balance Sheet as at 31 August 2011
2011 2010
£'000 £'000
Fixed assets
Investments designated at fair value through 301,931 323,663
profit or loss
Current assets
Derivative assets held at fair value through 1,553 1,995
profit or loss
Debtors 3,077 2,451
Amounts held at futures clearing houses and 5,359 2,470
brokers
Cash at bank 7,716 11,165
17,705 18,081
Creditors - amounts falling due within one
year
Derivative liabilities held at fair value (4,881) (4,180)
through profit or loss
Other creditors (2,234) (3,781)
(7,115) (7,961)
Net current assets 10,590 10,120
Total net assets 312,521 333,783
Capital and reserves
Share capital 14,131 14,234
Share premium account 95,767 95,767
Capital redemption reserve 2,657 2,554
Other non-distributable reserve 5,152 5,152
Capital reserve 186,987 208,765
Revenue reserve 7,827 7,311
Total equity shareholders' funds 312,521 333,783
Net asset value per ordinary share 552.85p 586.21p
FIDELITY SPECIAL VALUES PLC
Reconciliation of Movements in Shareholders' Funds for the year ended 31 August
2011
share share capital other capital revenue total
capital premium redemption non-distributable reserve reserve equity
account reserve reserve
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Opening 14,234 95,767 2,554 5,152 210,488 6,323 334,518
shareholders'
funds: 1 S
eptember 2010
Net (loss)/ - - - - (1,723) 6,113 4,390
return on
ordinary
activities after
taxation for the
year
Dividend paid to - - - - - (5,125) (5,125)
shareholders
Closing sha 14,234 95,767 2,554 5,152 208,765 7,311 333,783
reholders'
funds: 31 August
2010
Repurchase of (103) - 103 - (2,370) - (2,370)
ordinary shares
Net (loss)/ - - - - (19,408) 6,495 (12,913)
return on
ordinary
activities after
taxation for the
year
Dividend paid to - - - - - (5,979) (5,979)
shareholders
Closing shar 14,131 95,767 2,657 5,152 186,987 7,827 312,521
eholders' funds:
31 August 2011
FIDELITY SPECIAL VALUES PLC
Cash Flow Statement for the year ended 31 August 2011
2011 2010
£'000 £'000
Operating activities
Investment income received 4,093 4,823
Net derivative (expenses)/income (54) 236
Underwriting commission received - 28
Deposit interest received 57 17
Investment management fee paid (2,790) (3,518)
Directors' fees paid (121) (122)
Other cash (payments)/receipts (367) 52
Net cash inflow from operating activities 818 1,516
Servicing of finance
Interest paid - (736)
Net cash outflow servicing of finance - (736)
Taxation
Overseas taxation recovered 290 25
Taxation recovered 290 25
Financial investment
Purchase of investments (197,893) (187,551)
Disposal of investments 204,937 223,444
Net cash inflowfrom financial investment 7,044 35,893
Derivative activities
Premium paid on options (810) (1,390)
Premium received on options 2,134 1,111
(Payments)/proceeds of derivative instruments (1,676) 406
Movements on amounts held at futures clearing houses (2,889) (1,627)
and brokers
Net cash outflowfrom derivative activities (3,241) (1,500)
Dividend paid to shareholders (5,979) (5,125)
Net cash (outflow)/inflow before financing (1,068) 30,073
Financing
Repurchase of ordinary shares (2,370) -
Fixed rate unsecured loan repaid - (27,000)
Net cash outflow from financing (2,370) (27,000)
(Decrease)/increasein cash (3,438) 3,073
The above statements have been prepared on the basis of the accounting policies
as set out in the annual financial statements to 31 August 2011. This
preliminary statement, which has been agreed with the Auditor, was approved by
the Board on 4 November 2011. It is not the Company's statutory financial
statements. The statutory financial statements for the financial year ended 31
August 2010 have been delivered to the Registrar of Companies. The statutory
financial statements for the financial year ended 31 August 2011 have been
approved and audited but have not yet been filed. The statutory financial
statements for the financial years ended 31 August 2010 and 31 August 2011
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
November 2011.
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