REG-Fidelity Special Values Plc: Half-year Report
Mon 07:02
Fidelity Special Values PLC
Half-Yearly Results for the six months ended 28 February 2025 (unaudited)
Financial Highlights:
* The Board of Fidelity Special Values PLC (the “Company”) declares an
interim dividend of 3.36 pence per share, an increase of 3.7% from the prior
year interim dividend.
* During the six months ended 28 February 2025, the Company reported a Net
Asset Value (NAV) of +1.8%.
* Over the same period, the ordinary share price total return of the Company
was +5.2% and the Benchmark, the FTSE All-Share Index, also returned +5.2%.
* The Portfolio Manager, Alex Wright, believes the UK market is
well-positioned to withstand recent volatility due to minimal direct tariff
exposure and defensively skewed sector composition.
Contacts
For further information, please contact:
Smita Amin
Company Secretary
01737 836347
FIL Investments International
Portfolio Manager’s Half-Yearly Review
Performance
Over the six months ended 28 February 2025, the Company recorded a net asset
value (“NAV”) per ordinary share return of +1.8% and a share price return
of +5.2%, compared to a +5.2% return for the FTSE All-Share Index (“the
Benchmark”), all on a total return basis. This report seeks to summarise the
period, highlight the key drivers of performance and set out the Portfolio
Manager’s forward-looking views.
The Company’s NAV underperformance against the Benchmark was primarily due
to the significant performance divergence between large and mid-cap stocks in
the UK market. This was reflected in the FTSE 100’s 6.5% gain, compared to
the FTSE 250’s 2.5% decline. Given the Company’s substantial exposure to
mid-cap stocks, this market bifurcation weighed on relative returns.
Stock market and portfolio review
UK equities advanced, driven primarily by gains since the start of the
calendar year. Global markets grappled with significant news flow as political
developments, economic uncertainty and the outlook for interest rate cuts
tempered investor sentiment.
The period began with UK equities posting losses in September and October amid
moderating economic activity and uncertainty surrounding the implications of
the UK Autumn Budget. Although a relief rally occurred in November, following
President Trump’s election in the US and China’s new stimulus measures, UK
equities remained broadly flat in the final quarter of the year. Global
central banks continued to ease their restrictive policy stance, with the US
Federal Reserve (“Fed”) cutting interest rates again in November. The Bank
of England (“BoE”) followed suit, reducing its base rate to 4.75%. While
the BoE downplayed the immediate impact of the new UK Government’s
expansionary fiscal policies, it cautioned that measures from the Budget could
drive higher inflation, potentially prolonging a higher interest rate
environment. Investor optimism moderated in December after the Fed signalled
fewer rate cuts for 2025. The BoE Governor Andrew Bailey also maintained a
cautious stance on future interest rate decisions, refraining from providing
specific guidance on the timing or extent of cuts in 2025. Meanwhile, domestic
economic data continued to highlight challenges, with manufacturing and
consumer confidence indicators remaining subdued.
2025 started on a positive note with UK equities delivering strong returns
despite an initial bout of volatility in early January. Equities continued to
advance in February, demonstrating resilience despite several geopolitical and
trade policy developments emanating from the US. Performance across
international markets diverged, as investors sought diversification
opportunities away from US equities following their relative weakness.
Meanwhile, growing investor confidence in the prospect of a ceasefire in
Ukraine provided particular support to European equity markets. Investors also
welcomed a further interest rate cut, the third since August 2024, bringing
the BoE’s base rate to 4.50%.
From a sector perspective, market gains were primarily led by financials, with
industrials and technology also delivering notable returns. Conversely, real
estate and health care were the weakest performing sectors. While both value
and growth segments advanced, value outperformed by a considerable margin.
Large-cap stocks were the strongest performers, whereas small and mid-cap
stocks underperformed over the period.
Engineering consultancy group John Wood was among the key detractors, as the
market reacted negatively to its recent quarterly results. The company
announced an independent audit review of its accounts and weaker free cash
flow forecast for the next financial year, citing multiple headwinds.
Encouragingly, its operational results were robust, and it remains in the
early stages of its turnaround, continuing to benefit from an attractive
franchise in oil services, energy and consulting. Additionally, at the time of
writing, the company has re-engaged with its previous bidder, who had walked
away in February 2024.
Geotechnical engineering company Keller underperformed, following a strong run
over the past few years. Investors took profits as concerns grew that its US
earnings may have peaked after two consecutive years of strong growth.
Nevertheless, the company has benefited positively from large US projects
despite mixed market conditions. The group’s geographically diverse
portfolio and attractive valuation relative to peers should provide support as
it navigates a potential slowdown in the US.
The position in IG Design, a manufacturer of celebrations products and gifts,
also weighed on performance, as challenging retail conditions in the US and
the bankruptcy of a large customer negatively impacted sales. Despite this
near-term cyclical weakness, the company is trading at a highly attractive
valuation and is supported by a robust balance sheet. The company’s
management is actively working to improve the business’s margin profile.
Within the banking sector, several of our holdings, including Standard
Chartered, NatWest and AIB Group, benefited from strong results, share buyback
announcements and rising interest rate expectations. In February 2025,
Standard Chartered announced a new $1.5 billion share buyback program after
reporting an 18% increase in annual pre-tax profit. This growth was driven by
strong performance in its wealth business and global markets division, pushing
shares to a near-decade high. The diversified bank, which has an emerging
market focus, is continuing to make strides in its turnaround journey.
NatWest’s annual results also exceeded consensus estimates, supported by
substantial share buybacks, lower impairments and rebounding margins, which
contributed to share price gains in 2024. Conversely, not owning HSBC
detracted from relative performance.
The position in tobacco group Imperial Brands supported performance. The
company’s annual results highlighted further progress in stabilising its
core tobacco business across key markets. It continues to provide an
attractive distribution to shareholders. Meanwhile, the underweight position
in health care group AstraZeneca was a key contributor to performance, as its
shares declined following allegations of corruption in its China business.
Merger and acquisition (“M&A”) activity continued to be a driver for
performance. Notably, the holding in Direct Line Insurance added value after
Aviva agreed to acquire the company for £3.7 billion, a deal that would
create the UK’s largest motor insurer.
We have been finding new investment opportunities in cyclical areas such as
industrials, advertising and staffing, while also selectively adding back
exposure to selected real estate stocks and housing related names, where
demand appears to be stabilising and valuations remain attractive. We recently
increased exposure to retailers specialising in big-ticket items such as
kitchens and sofas, where sales are 10-25% below historical volumes. We
anticipate an improving outlook as housing market volumes strengthen and
interest rates decline, coinciding with a reduction in industry competition.
We have also found opportunities in defensive sectors, adding to positions in
Reckitt Benckiser, British American Tobacco and National Grid following recent
weakness. Within the resources sector, we continue to maintain an underweight
position in large-cap mining companies, reflecting our cautious view on iron
ore. We also do not hold the two large-cap UK oil companies, Shell and BP.
Smaller-cap equities are a particularly attractive hunting ground today, as
they trade at an aggregate price to earnings ratio of below 10x. The
Company’s portfolio maintains a strategic bias toward small and mid-cap
companies, comprising approximately 50% of the portfolio. We remain well
diversified, with 105 holdings as at the end of February.
Use of gearing
We have continued to use contracts for difference to gear the portfolio’s
long exposure and eliminate some of the currency exposure for those holdings
listed outside of the UK. Overall, the Company’s net gearing increased from
7.9% at the beginning of the period to 10.9% at the end of February 2025.
Gross gearing increased from 8.3% at the start of the period to 10.9% at the
end of the period.
Outlook
Despite their improved performance over recent years, UK equities remain
relatively cheap compared to other markets. Historically, the UK market traded
at around 85-90% of global markets, but this has dropped to around 75% in
recent years1. While other markets face excessive valuations and the risk of a
de-rating, the UK market benefits from a meaningful margin of safety, offering
protection if exogenous events impact markets. The market’s consensus last
year was that US dominance would persist; however, trends have moved in the
opposite direction so far this year.
While we are undoubtedly entering a turbulent period in global politics and
economic uncertainty, as tariffs will likely impede global economic growth,
the UK market is well-positioned to withstand this US-centric storm. Direct
tariff exposure is minimal given the UK’s small export base and
service-oriented economy. Moreover, the UK’s sector composition is skewed
toward defensive areas such as consumer staples and utilities, which could
provide resilience against global growth weakness and trade downturns. This is
strikingly different to other regions with high export dependencies to the US
and significant sector weightings in affected areas, such as technology,
aerospace and manufacturing which are heavily reliant on dispersed globalised
supply chains.
The UK market’s international nature means that it will feel some effects
from the tariffs, but mostly from the broader implications of a likely
deceleration in US and global economic growth, rather than direct
tariff-related hits. Recession risks have clearly escalated, and the lingering
uncertainty is what the market is currently pricing in. The Company’s
diversified portfolio and its underweight positions to the most exposed areas,
such as oil and pharmaceuticals, should prove relatively supportive, but its
cyclical holdings will feel the effects of this. We have been strategically
adding to attractively valued domestic-facing businesses that are relatively
insulated from these events, supporting a meaningful overweight to UK revenues
compared to the Benchmark. We believe there are numerous attractive
opportunities prevailing in the current market, available at low valuations,
and we continue to uncover compelling investment ideas, particularly in
periods of high market volatility.
The unpopularity of the UK market has made it an attractive hunting ground for
contrarian value investors. We believe that the combination of favourable
valuations and the large divergence in performance between different markets
provides a strong opportunity for attractive returns on a three-to-five-year
view. Their unloved status means we are finding overlooked companies with good
upside potential across industries and the market cap spectrum.
While domestic investors have yet to fully recognise this value, it is being
acknowledged by other market participants. Overseas corporates and private
equity firms are actively capitalising on these attractive valuations, as
evidenced by the strong historical M&A activity in the UK market. We have
experienced considerable success with M&A activity across the portfolio in the
last year. The low valuations are also reflected in the substantial buyback
activity among UK corporates.
We believe current market conditions continue to favour our value-contrarian
investment style. The vulnerability of growth companies is that they tend to
be priced for optimism, with share prices declining significantly if good news
does not materialise. The opposite is true for value companies: If the
consensus view is negative, an investor does not lose much if it turns out to
be correct; in contrast, if it is wrong, the share price can move
significantly higher.
Overall, we believe the UK market has an underappreciated richness of
opportunity, combining strong earnings growth, high dividend yields and low
valuations. The portfolio benefits from a favourable upside/downside profile
and our holdings trade at a meaningful discount to the broader UK market,
despite exhibiting resilient earnings, superior returns on capital and
relatively low levels of debt. This quality profile reinforces our confidence
in delivering attractive long-term returns for investors.
1 JP Morgan Equity Strategy, DataStream, February 2025. Valuations adjusted
for sectoral differences between markets and is based on 12m forward P/E of
the MSCI UK Index vs MSCI World Index (both are sector neutral indices).
ALEX WRIGHT
Portfolio Manager
25 April 2025
Twenty Largest Investments
as at 28 February 2025
The Asset Exposures shown below measure exposure to market price movements as
a result of owning shares, corporate bonds and derivative instruments. The
Fair Value is the realisable value of the portfolio as reported in the Balance
Sheet. Where the Company holds shares and corporate bonds, the Asset Exposure
and Fair Value will be the same. For derivative instruments, Asset Exposure is
the market value of the underlying asset to which the Company is exposed,
while the Fair Value reflects the profit or loss on the contract since it was
opened, and is based on how much the share price of the underlying asset has
moved.
Asset Exposure Fair Value
£’000 % 1 £’000
Long Exposures – shares unless otherwise stated
AIB Group (corporate bond and long CFD)
Banks 49,664 4.4 18,017
Standard Chartered
Banks 48,077 4.2 48,077
Imperial Brands
Tobacco 45,869 4.0 45,869
DCC
Industrial Support Services 40,660 3.6 40,660
Reckitt Benckiser Group
Personal Care, Drug and Grocery Stores 39,428 3.5 39,428
NatWest Group
Banks 39,226 3.4 39,226
Direct Line Insurance Group
Non-Life Insurance 34,186 3.0 34,186
Just Group
Life Insurance 31,978 2.8 31,978
British American Tobacco
Tobacco 31,899 2.8 31,899
National Grid
Gas, Water and Multi-Utilities 31,401 2.8 31,401
Keller Group (shares and long CFD)
Construction and Materials 30,854 2.7 18,994
Coats Group
General Industrials 29,298 2.6 29,298
Barclays
Banks 27,351 2.4 27,351
Mitie Group
Industrial Support Services 25,081 2.2 25,081
Glenveagh Properties
Household Goods and Home Construction 24,786 2.2 24,786
Cairn Homes (long CFDs)
Household Goods and Home Construction 24,585 2.2 (769)
Aviva
Life Insurance 24,320 2.1 24,320
TotalEnergies (long CFD)
Oil, Gas and Coal 24,242 2.1 (117)
Roche Holding
Pharmaceuticals and Biotechnology 23,661 2.1 23,661
Serco Group (shares and long CFD)
Industrial Support Services 22,414 1.9 17,549
--------------- --------------- ---------------
Twenty largest long exposures 648,980 57.0 550,895
Other long exposures 614,977 53.9 541,947
--------------- --------------- ---------------
Gross Asset Exposure (107 holdings) 1,263,957 110.9
========= =========
Portfolio Fair Value 1,092,842
=========
1 Asset Exposure is expressed as a percentage of Shareholders’ Funds.
Fair Value and Asset Exposure of Investments
as at 28 February 2025
Fair Value Asset Exposure
£’000 £’000 % 1
Investments 1,094,910 1,094,910 96.1
Long CFDs (2,068) 169,047 14.8
--------------- --------------- ---------------
1,092,842 1,263,957 110.9
========= ========= =========
Cash at bank 2 2,408 (168,707) (14.8)
Fidelity Institutional Liquidity Fund 39,268 39,268 3.4
Other net current assets (excluding derivative assets and liabilities) 5,459 5,459 0.5
--------------- --------------- ---------------
Shareholders’ Funds 1,139,977 1,139,977 100.0
========= ========= =========
The Company uses gearing through the use of CFD positions. Gross gearing as at
28 February 2025 was 10.9% (31 August 2024: 8.3% and 29 February 2024: 5.9%).
1 Asset Exposure is expressed as a percentage of Shareholders’ Funds.
2 The Asset Exposure column for cash at bank has been adjusted to assume the
Company traded direct holdings rather than exposure being gained through long
CFD positions. The amount is derived by taking the cost of the shares
underlying the long CFDs when the contracts were opened less the cash at bank
balance at the period end.
Interim Management Report and Directors’ Responsibility Statement
Board Changes
Nigel Foster, having served as a non-executive Director and Senior Independent
Director, completed his nine year tenure on the Board and stepped down at the
conclusion of the Annual General Meeting on 12 December 2024. Following a
recruitment process for his replacement as non-executive Director, Christopher
Casey was appointed to the Board on 1 January 2025. Claire Boyle replaced Mr
Foster as Senior Independent Director on 12 December 2024, whilst also
continuing to serve as Audit Committee Chair.
Interim Dividend
The Company’s investment approach is focused on long-term capital growth
rather than income generation, however the Board recognises that dividends are
an important part of total shareholder returns. The Board’s policy is to pay
dividends twice a year in order to smooth the dividend payments for the
Company’s financial year.
The Company’s revenue return for the six months to 28 February 2025 was 3.51
pence per share.
The Board has declared an interim dividend of 3.36 pence per share which is
3.7% higher than the 3.24 pence per share paid as the interim dividend in
2024. This will be paid on 19 June 2025 to shareholders on the register on 9
May 2025 (ex-dividend date 8 May 2025). Shareholders should note that the
Board will review the final dividend payment later in the year based on
dividend receipts from the companies held in the portfolio in the second half
of the reporting year. However, based on current forecasts, the Board would
hope to maintain at least the same level of dividend as paid in the prior year
and would intend to pay it entirely from the revenue earned in the reporting
period.
Discount Management and Share Repurchases
Investment trust discounts continue to generally remain wide across the
investment companies’ market and compared to long-term averages, and the
Company at times has not been immune to this trend. As at 28 February 2025,
the average discount for the companies in the UK All Companies peer group was
8.1% compared to the Company’s discount of 6.0%. Under the Company’s
discount management policy, the Board seeks to maintain the discount in single
digits in normal market conditions and will repurchase shares to help
stabilise the share price discount. During the reporting period, the Company
repurchased 800,000 ordinary shares into Treasury. Since then and at the
latest practicable date of this report, a further 250,000 ordinary shares have
been repurchased into Treasury.
The Board continues to monitor the level of the Company’s discount closely
and takes action when it believes to do so will be effective and to the
benefit of shareholders.
Principal and Emerging Risks
The Board, with the assistance of the Manager (FIL Investment Services (UK)
Limited), has developed a risk matrix which, as part of the risk management
and internal controls process, identifies the key existing and emerging risks
and uncertainties faced by the Company.
The Board considers that the principal risks and uncertainties faced by the
Company continue to fall into the following categories: market, economic and
political; investment performance (including the use of derivatives and
gearing); regulatory; cybercrime and information security; business
continuity; key person and operational support; discount control; and
environmental, social and governance (“ESG”) risks. Information on each of
these risks is given on pages 26 to 28 in the Strategic Report section of the
Annual Report for the year ended 31 August 2024, a copy of which can be found
on the Company’s pages of the Manager’s website at
www.fidelity.co.uk/specialvalues.
There continues to be increased geopolitical risks facing the company,
including political and trade tensions globally, trade sanctions and a
challenging regulatory environment hindering investment. Global economic
uncertainty is raised by the ongoing war in Ukraine, the potential for further
conflict in the Middle East, trade tensions between the US and China, ongoing
tensions between South Korea and North Korea, the South China Sea dispute and
implications of China and Taiwan relations. The Board and the Manager remain
vigilant in monitoring such risks.
In recent months, there have been increased concerns around investment cost
disclosure and its impact on the industry. There is a risk that the FCA’s
proposed Consumer Composite Investment (CCI) regime may make investment
companies more complex for investors to understand and increase the regulatory
burden imposed on the sector if it proceeds with some of the proposals as
drafted.
Climate change continues to be a key principal risk confronting asset managers
and their investors. Globally, climate change effects are already being
experienced in the form of a changing pattern of weather events. Climate
change can potentially impact the operations of investee companies, their
supply chains and their customers. Additional risks may also arise from
increased regulations, costs and net-zero programmes which can all impact
investment returns. The Board notes that the Manager has integrated ESG
considerations into the Company’s investment process. The Board will
continue to monitor how this may impact the Company as a risk on investment
valuations and potentially affect shareholder returns.
The Board and the Manager are also monitoring the emerging risks and rewards
posed by the rapid advancement of artificial intelligence (AI) and technology
and how this may threaten the Company’s activities and its potential impact
on the portfolio and investee companies. AI can provide asset managers with
powerful tools, such as enhancing data analysis risk management, trading
strategies, operational efficiency and client servicing, all of which can lead
to better investment outcomes and more efficient operations. However, with
these advances in computer power that will impact society, there are risks
from its increasing use and manipulation with the potential to harm, including
a heightened threat to cybersecurity.
Other emerging risks may continue to evolve from future geopolitical and
economic events.
Investors should be prepared for market fluctuations and remember that holding
shares in the Company should be considered to be a long-term investment. Risks
are mitigated by the investment trust structure of the Company which means
that the Portfolio Manager is not required to trade to meet investor
redemptions. Therefore, investments in the Company’s portfolio can be held
over a longer-time horizon.
The Manager has appropriate business continuity and operational resilience
plans in place to ensure the continued provision of services. This includes
investment team key activities, including those of portfolio managers,
analysts and trading/support functions. The Manager reviews its operational
resilience strategies on an ongoing basis and continues to take all reasonable
steps in meeting its regulatory obligations, assess its ability to continue
operating and the steps it needs to take to serve and support its clients,
including the Board.
The Company’s other third-party service providers also have similar measures
in place to ensure that business disruption is kept to a minimum.
Transactions with the Manager and Related Parties
The Manager has delegated the Company’s portfolio management and company
secretariat services to FIL Investments International. Transactions with the
Manager and related party transactions with the Directors are disclosed in
Note 13 to the Financial Statements below.
Going Concern Statement
The Directors have considered the Company’s investment objective, risk
management policies, liquidity risk, credit risk, capital management policies
and procedures, the nature of its portfolio, its expenditure and cash flow
projections. The Directors, having considered the liquidity of the Company’s
portfolio of investments (being mainly securities which are readily
realisable) and the projected income and expenditure, are satisfied that the
Company is financially sound and has adequate resources to meet all of its
liabilities and ongoing expenses and can continue in operational existence for
a period of at least twelve months from the date of this Half-Yearly Report.
This conclusion also takes into account the Board’s assessment of the
ongoing risks as outlined above.
Accordingly, the Financial Statements of the Company have been prepared on a
going concern basis.
Continuation votes are held every three years and the next continuation vote
will be put to shareholders at the AGM in December 2025.
By Order of the Board
FIL Investments International
25 April 2025
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:
a) 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
b) the Portfolio Manager’s Half-Yearly Review and the Interim Management
Report above, include a fair review of the information required by DTR 4.2.7R
and 4.2.8R.
In line with previous years, the Half-Yearly Report has not been audited by
the Company’s Independent Auditor.
The Half-Yearly Report was approved by the Board on 25 April 2025 and the
above responsibility statement was signed on its behalf by Dean Buckley,
Chairman.
FINANCIAL STATEMENTS
Income Statement
for the six months ended 28 February 2025
Six months ended 28 February 2025 Year ended 31 August 2024 Six months ended 29 February 2024
Unaudited audited audited
Notes Revenue Capital Total Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Gains on investments – 9,427 9,427 – 166,057 166,057 – 20,869 20,869
(Losses)/gains on derivative instruments – (1,264) (1,264) – 19,524 19,524 – 5,742 5,742
Investment and derivative income 4 17,399 – 17,399 48,413 – 48,413 15,462 – 15,462
Other interest 4 845 – 845 2,751 – 2,751 1,861 – 1,861
Investment management fees 5 (3,315) – (3,315) (6,095) – (6,095) (2,863) – (2,863)
Other expenses (470) – (470) (898) – (898) (468) – (468)
Foreign exchange (losses)/gains – (66) (66) – 204 204 – 220 220
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Net return on ordinary activities before finance costs and taxation 14,459 8,097 22,556 44,171 185,785 229,956 13,992 26,831 40,823
Finance costs 6 (2,956) – (2,956) (5,794) – (5,794) (2,994) – (2,994)
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Net return on ordinary activities before taxation 11,503 8,097 19,600 38,377 185,785 224,162 10,998 26,831 37,829
Taxation on return on ordinary activities 7 (118) – (118) (848) – (848) (154) – (154)
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Net return on ordinary activities after taxation for the period 11,385 8,097 19,482 37,529 185,785 223,314 10,844 26,831 37,675
========= ========= ========= ========= ========= ========= ========= ========= =========
Return per ordinary share 8 3.51p 2.50p 6.01p 11.58p 57.32p 68.90p 3.34p 8.28p 11.62p
========= ========= ========= ========= ========= ========= ========= ========= =========
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 period and all items in the
above statement derive from continuing operations.
Statement of Changes in Equity
for the six months ended 28 February 2025
Six months ended 28 February 2025 (unaudited) Notes Share Share Capital Other non- Capital Revenue Total
capital premium redemption distributable reserve reserve shareholders’
£’000 account reserve reserve £’000 £’000 funds
£’000 £’000 £’000 £’000
Total shareholders’ funds at 31 August 2024 16,205 238,442 3,256 5,152 834,580 45,906 1,143,541
Repurchase of ordinary shares into Treasury 11 – – – – (2,628) – (2,628)
Net return on ordinary activities after taxation for the period – – – – 8,097 11,385 19,482
Dividend paid to shareholders 9 – – – – – (20,418) (20,418)
--------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total shareholders’ funds at 28 February 2025 16,205 238,442 3,256 5,152 840,049 36,873 1,139,977
========= ========= ========= ========= ========= ========= =========
Year ended 31 August 2024 (audited)
Total shareholders’ funds at 31 August 2023 16,205 238,442 3,256 5,152 648,795 39,199 951,049
Net return on ordinary activities after taxation for the year – – – – 185,785 37,529 223,314
Dividends paid to shareholders 9 – – – – – (30,822) (30,822)
--------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total shareholders’ funds at 31 August 2024 16,205 238,442 3,256 5,152 834,580 45,906 1,143,541
========= ========= ========= ========= ========= ========= =========
Six months ended 29 February 2024 (unaudited)
Total shareholders’ funds at 31 August 2023 16,205 238,442 3,256 5,152 648,795 39,199 951,049
Net return on ordinary activities after taxation for the period – – – – 26,831 10,844 37,675
Dividend paid to shareholders 9 – – – – – (20,321) (20,321)
--------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total shareholders’ funds at 29 February 2024 16,205 238,442 3,256 5,152 675,626 29,722 968,403
========= ========= ========= ========= ========= ========= =========
Balance Sheet
as at 28 February 2025
Company number 2972628
Notes 28.02.25 31.08.24 29.02.24
unaudited audited unaudited
£’000 £’000 £’000
Fixed assets
Investments 10 1,094,910 1,120,686 912,136
--------------- --------------- ---------------
Current assets
Derivative instruments 10 4,028 4,318 2,675
Debtors 12,374 8,200 5,908
Amounts held at futures clearing houses and brokers 795 – 775
Cash and cash equivalents 41,676 11,749 55,180
--------------- --------------- ---------------
58,873 24,267 64,538
========= ========= =========
Current liabilities
Derivative instruments 10 (6,096) (200) (1,580)
Bank overdraft – – (5,260)
Other creditors (7,710) (1,212) (1,431)
(13,806) (1,412) (8,271)
--------------- --------------- ---------------
Net current assets 45,067 22,855 56,267
========= ========= =========
Net assets 1,139,977 1,143,541 968,403
========= ========= =========
Capital and reserves
Share capital 11 16,205 16,205 16,205
Share premium account 238,442 238,442 238,442
Capital redemption reserve 3,256 3,256 3,256
Other non-distributable reserve 5,152 5,152 5,152
Capital reserve 840,049 834,580 675,626
Revenue reserve 36,873 45,906 29,722
--------------- --------------- ---------------
Total shareholders’ funds 1,139,977 1,143,541 968,403
========= ========= =========
Net asset value per ordinary share 12 352.61p 352.84p 298.80p
========= ========= =========
Cash Flow Statement
for the six months ended 28 February 2025
28.02.25 31.08.24 29.02.24
unaudited audited unaudited
£’000 £’000 £’000
Operating activities
Investment income received 18,750 42,980 18,069
Net derivative income 1,796 4,454 859
Interest received 822 2,723 1,861
Investment management fee paid (3,361) (6,008) (2,887)
Directors’ fees paid (93) (170) (85)
Other cash payments (141) (696) (332)
--------------- --------------- ---------------
Net cash inflow from operating activities before finance costs and taxation 17,773 43,283 17,485
========= ========= =========
Finance costs paid (2,974) (5,853) (3,040)
Overseas taxation recovered/(suffered) 251 (536) 216
--------------- --------------- ---------------
Net cash inflow from operating activities 15,050 36,894 14,661
========= ========= =========
Investing activities
Purchases of investments (162,160) (353,057) (133,738)
Sales of investments 194,529 282,830 124,932
Receipts on long CFDs 27,326 51,625 23,200
Payments on long CFDs (21,241) (35,747) (17,719)
Receipts on short CFDs 460 950 –
Payments on short CFDs (1,621) (588) –
Movement on amounts held at futures clearing houses and brokers (795) – (775)
--------------- --------------- ---------------
Net cash inflow/(outflow) from investing activities 36,498 (53,987) (4,100)
========= ========= =========
Net cash inflow/(outflow) before financing activities 51,548 (17,093) 10,561
========= ========= =========
Financing activities
Dividends paid (20,418) (30,822) (20,321)
Repurchase of ordinary shares (1,137) – –
Net cash outflow from financing activities (21,555) (30,822) (20,321)
Net increase/(decrease) in cash and cash equivalents 29,993 (47,915) (9,760)
Cash and cash equivalents at the beginning of the period 11,749 59,460 59,460
Effect of movement in foreign exchange (66) 204 220
--------------- --------------- ---------------
Cash and cash equivalents at the end of the period 41,676 11,749 49,920
========= ========= =========
Represented by:
Cash at bank 2,408 2,072 66
Bank overdraft – – (5,260)
Amount held in Fidelity Institutional Liquidity Fund 39,268 9,677 55,114
--------------- --------------- ---------------
41,676 11,749 49,920
========= ========= =========
Notes to the Financial Statements
1 Principal Activity
Fidelity Special Values PLC is an Investment Company incorporated in England
and Wales that is listed 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 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 2024 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 Accounting Policies
(i) 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
July 2022. 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 2024.
(ii) Going Concern
The Directors have a reasonable expectation that the Company has adequate
resources to continue in operational existence for a period of at least twelve
months from the date of approval of these Financial Statements. Accordingly,
the Directors consider it appropriate to adopt the going concern basis of
accounting in preparing these Financial Statements. This conclusion also takes
into account the Directors’ assessment of the risks faced by the Company as
detailed in the Interim Management Report above.
4 Income
Six months Year Six months
ended ended ended
28.02.25 31.08.24 29.02.24
unaudited audited unaudited
£’000 £’000 £’000
Investment income
UK dividends 11,409 30,235 10,044
UK property income distributions 788 135 –
UK scrip dividends 512 1,310 526
UK property income scrip dividends – 157 –
Interest on securities 964 1,528 785
Overseas dividends 2,283 10,395 3,096
--------------- --------------- ---------------
15,956 43,760 14,451
========= ========= =========
Derivative income
Dividends received on long CFDs 1,443 4,653 1,011
--------------- --------------- ---------------
Investment and derivative income 17,399 48,413 15,462
========= ========= =========
Other interest
Interest received on bank deposits, collateral and money market funds 823 2,723 1,861
Interest received on short CFDs 22 28 –
--------------- --------------- ---------------
845 2,751 1,861
========= ========= =========
Total income 18,244 51,164 17,323
========= ========= =========
Special dividends of £2,947,000 have been recognised in capital during the
period (year ended 31 August 2024: £5,206,000 and six months ended 29
February 2024: £nil).
5 Investment Management Fees
Six months Year Six months
ended ended ended
28.02.25 31.08.24 29.02.24
unaudited audited unaudited
£’000 £’000 £’000
Investment management fees 3,315 6,095 2,863
========= ========= =========
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 investment management fees at an annual rate of 0.60% of net
assets. Fees are accrued on a daily basis and payable monthly.
6 Finance Costs
Six months Year Six months
ended ended ended
28.02.25 31.08.24 29.02.24
unaudited audited unaudited
£’000 £’000 £’000
Interest paid on long CFDs 2,938 5,765 2,992
Interest paid on bank overdrafts and collateral balances 18 29 2
--------------- --------------- ---------------
2,956 5,794 2,994
========= ========= =========
7 TAXATION ON RETURN ON ORDINARY ACTIVITIES
Six months Year Six months
ended ended ended
28.02.25 31.08.24 29.02.24
unaudited audited unaudited
£’000 £’000 £’000
Overseas taxation 118 848 154
--------------- --------------- ---------------
Total taxation charge for the period 118 848 154
========= ========= =========
8 Return per Ordinary Share
Six months Year Six months
ended ended ended
29.02.25 31.08.24 29.02.24
unaudited audited unaudited
Revenue return per ordinary share 3.51p 11.58p 3.34p
Capital return per ordinary share 2.50p 57.32p 8.28p
--------------- --------------- ---------------
Total return per ordinary share 6.01p 68.90p 11.62p
========= ========= =========
The return per ordinary share is based on the net return on ordinary
activities after taxation for the period divided by the weighted average
number of ordinary shares held outside of Treasury during the period, as shown
below:
£’000 £’000 £’000
Net revenue return on ordinary activities after taxation 11,385 37,529 10,844
Net capital return on ordinary activities after taxation 8,097 185,785 26,831
--------------- --------------- ---------------
Net total return on ordinary activities after taxation 19,482 223,314 37,675
========= ========= =========
Number Number Number
Weighted average number of ordinary shares held outside of Treasury 324,066,047 324,098,920 324,098,920
========= ========= =========
9 Dividends Paid to Shareholders
Six months Year Six months
ended ended ended
28.02.25 31.08.24 29.02.24
unaudited audited unaudited
£’000 £’000 £’000
Final dividend of 6.30 pence per ordinary share paid for the year ended 31 August 2024 20,418 – –
Interim dividend of 3.24 pence per ordinary share paid for the year ended 31 August 2024 – 10,501 –
Final dividend of 6.27 pence per ordinary share paid for the year ended 31 August 2023 – 20,321 20,321
--------------- --------------- ---------------
20,418 30,822 20,321
========= ========= =========
The Company has declared an interim dividend for the six month period to 28
February 2025 of 3.36 pence per ordinary share (2024: 3.24 pence). The interim
dividend will be paid on 19 June 2025 to shareholders on the register at the
close of business on 9 May 2025 (ex-dividend date 8 May 2025). The total cost
of this interim dividend, which has not been included as a liability in these
Financial Statements, is £10,854,000 (2024: £10,501,000). This amount is
based on the number of ordinary shares in issue held at the date of this
report.
10 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 Input
Level 1 Valued using quoted prices in active markets for identical assets
Level 2 Valued by reference to inputs other than quoted prices included in level 1 that are observable (i.e. developed using market data) for the asset or liability, either directly or indirectly
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 valuation techniques used by the Company are as disclosed
in the Company’s Annual Report for the year ended 31 August 2024 (Accounting
Policies Notes 2 (k) and 2 (l) on pages 59 and 60). The table below sets out
the Company’s fair value hierarchy:
28 February 2025 (unaudited) Level 1 Level 2 Level 3 Total
£’000 £’000 £’000 £’000
Financial assets at fair value through profit or loss
Investments 1,070,007 24,358 545 1,094,910
Derivative instrument assets – 4,028 – 4,028
--------------- --------------- --------------- ---------------
1,070,007 28,386 545 1,098,938
========= ========= ========= =========
Financial liabilities at fair value through profit or loss
Derivative instrument liabilities – (6,096) – (6,096)
========= ========= ========= =========
31 August 2024 (audited) Level 1 Level 2 Level 3 Total
£’000 £’000 £’000 £’000
Financial assets at fair value through profit or loss
Investments 1,096,402 23,413 871 1,120,686
Derivative instrument assets – 4,318 – 4,318
--------------- --------------- --------------- ---------------
1,096,402 27,731 871 1,125,004
========= ========= ========= =========
Financial liabilities at fair value through profit or loss
Derivative instrument liabilities – (200) – (200)
========= ========= ========= =========
29 February 2024 (unaudited) Level 1 Level 2 Level 3 Total
£’000 £’000 £’000 £’000
Financial assets at fair value through profit or loss
Investments 884,245 23,919 3,972 912,136
Derivative instrument assets – 2,675 – 2,675
--------------- --------------- --------------- ---------------
884,245 26,594 3,972 914,811
========= ========= ========= =========
Financial liabilities at fair value through profit or loss
Derivative instrument liabilities – (1,559) (21) (1,580)
========= ========= ========= =========
11 Share Capital
28 February 2025 31 August 2024 29 February 2024
unaudited audited unaudited
Number of Nominal Number of Nominal Number of Nominal
shares value shares value shares value
£’000 £’000 £’000
Issued, allotted and fully paid Ordinary shares of 5 pence each held outside of Treasury
Beginning of the period 324,098,920 16,205 324,098,920 16,205 324,098,920 16,205
Ordinary shares repurchased into Treasury (800,000) (40) – – – –
--------------- --------------- --------------- --------------- --------------- ---------------
End of the period 323,298,920 16,165 324,098,920 16,205 324,098,920 16,205
========= ========= ========= ========= ========= =========
Issued, allotted and fully paid Ordinary shares of 5 pence each held in Treasury 1
Beginning of the period – – – – – –
Ordinary shares repurchased into Treasury 800,000 40 – – – –
--------------- --------------- --------------- --------------- --------------- ---------------
End of the period 800,000 40 – – – –
========= ========= ========= ========= ========= =========
Total share capital 16,205 16,205 16,205
========= ========= =========
1 Ordinary shares held in Treasury carry no rights to vote, to receive a
dividend or to participate in a winding up of the Company.
During the period, the Company repurchased 800,000 ordinary shares (year ended
31 August 2024: nil shares and six months to 29 February 2024: nil shares) and
held them in Treasury. The £2,628,000 cost of repurchase was charged to the
capital reserve (31 August 2024 and 29 February 2024 £nil).
12 Net Asset Value per Ordinary Share
The calculation of the net asset value per ordinary share is based on the
total shareholders’ funds divided by the number of ordinary shares held
outside of Treasury.
28.02.25 31.08.24 29.02.24
unaudited audited unaudited
Total shareholders’ funds £1,139,977,000 £1,143,541,000 £968,403,000
Ordinary shares held outside of Treasury at the period end 323,298,920 324,098,920 324,098,920
Net asset value per ordinary share 352.61p 352.84p 298.80p
========= ========= =========
It is the Company’s policy that shares held in Treasury will only be
reissued at net asset value per ordinary share or at a premium to net asset
value per ordinary share and, therefore, shares held in Treasury have no
dilutive effect.
13 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 above. During the period,
fees payable to FII for portfolio management services of £3,315,000 (year
ended 31 August 2024: £6,095,000 and six months ended 29 February 2024:
£2,863,000). At the Balance Sheet date, fees for portfolio management
services of £525,000 (year ended 31 August 2024: £570,000 and six months
ended 29 February 2024: £459,000).
FII also provides the Company with marketing services. The total amount
payable for these services during the period was £123,000 (year ended 31
August 2024: £229,000 and six months ended 29 February 2024: £132,000). At
the Balance Sheet date, marketing services of £87,000 (year ended 31 August
2024: £52,000 and six months ended 29 February 2024: £98,000) were accrued
and included in other creditors.
As at 28 February 2025, the Board consisted of five Non-Executive Directors
(as shown in the Directory in the Half-Yearly Report), all of whom are
considered to be independent. None of the Directors have a service contract
with the Company. The Chairman receives an annual fee of £47,000, the Audit
Committee Chair an annual fee of £37,500, plus an additional £1,500 for
acting as the Senior Independent Director and each other Director an annual
fee of £31,000.
As at the date of this report, the following members of the Board held
ordinary shares in the Company: Claire Boyle 7,466 shares, Dean Buckley 50,000
shares, Christopher Casey nil shares, Ominder Dhillon 7,750 shares and Alison
McGregor 20,000 shares.
The financial information contained in this Half-Yearly Results Announcement
does not constitute statutory accounts as defined in section 435 of the
Companies Act 2006. The financial information for the six months ended 28
February 2025 and 29 February 2024 has not been audited or reviewed by the
Company’s Independent Auditor.
The information for the year ended 31 August 2024 has been extracted from the
latest published audited financial statements, which have been filed with the
Registrar of Companies, unless otherwise stated. The report of the Auditor on
those financial statements contained no qualification or statement under
sections 498(2) or (3) of the Companies Act 2006.
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.
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.fidelity.co.uk/specialvalues where up to date information on the Company,
including daily NAV and share prices, factsheets and other information can
also be found.
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