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