FIDELITY SPECIAL VALUES PLC
ANNUAL FINANCIAL REPORT, PROXY FORM AND ADDITIONAL DISCLOSURES
TO THE PRELIMINARY RESULTS FOR THE YEAR TO 31 AUGUST 2012
Further to the voluntary disclosure of the Company's annual results for the
year ended 31 August 2012 by way of a preliminary announcement dated 7 November
2012, 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 2012 together with the additional text in
compliance with the Rules.
The Company's annual report and financial statements for the year ended 31
August 2012 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):
(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
Christopher Pirnie, FIL Investments International, Company Secretary - 01737 837 929
13 November 2012
FIDELITY SPECIAL VALUES PLC
Preliminary Announcement of Audited Results
For the year ended 31 August 2012
RESULTS FOR THE YEAR ENDED
31 AUGUST 2012
SHARE PRICE: +9.2%
I have pleasure in presenting the Annual Report for Fidelity Special Values
CHANGE OF PORTFOLIO MANAGER
On 9 July 2012, the Board announced that Alex Wright had been appointed as
Portfolio Manager of the Company, with effect from 1 September 2012. This
reflected the Board's desire to take greater advantage of opportunities for
capital growth available from dynamic smaller and mid-cap companies, as well as
large companies. This is not a change of policy; it is a broadening of the
opportunity set in which to find special value investments. The Company's
performance will continue to be measured against both cash (over the long term)
and the FTSE All-Share Index. Alex has demonstrated considerable success in
smaller companies and across the broader market.
Alex has managed the Fidelity UK Smaller Companies Fund since its inception in
February 2008, and since its launch, Alex has been the number one performing
fund manager in his IMA peer group. Alex has also managed a pilot All Cap fund
since May 2010, investing in large, medium and small cap companies. Since
inception and to 31 August 2012 this fund had returned 40.9% versus a return of
23.7% for the FTSE All-Share Index (net).
Alex has a contrarian investment style, buying out-of-favour stocks with
downside protection and unrecognised growth potential. This, combined with a
search for value across the market capitalisation spectrum, makes his
investment approach an ideal fit for the Company.
This change allows Sanjeev Shah to focus exclusively on his open-ended fund and
the Board would like to thank him for his diligent management of the portfolio
in what has been a particularly challenging period in equity markets. Over his
tenure from 1 January 2008 to 31 August 2012, Sanjeev delivered a return of
13.0% for the NAV of the Company versus 7.9% for the FTSE All-Share Index (both
on a total return basis).
Throughout the Company's financial year, the Company's investments were managed
by Sanjeev Shah.
The reporting year to 31 August 2012 has seen a marked improvement in the
performance of Fidelity Special Values PLC with a Net Asset Value total return
of +15.0% (compared to a total return of +10.2% from the FTSE All-Share Index).
The five year total return is +9.9%, broadly matching the FTSE All-Share Index
total return of +9.5% for the same period. Discounts widened over the period,
so the share price return was +9.2% and -0.1% over one and five years
Sentiment and market direction during the year to end of August 2012 was driven
by the ongoing sovereign debt crisis in Europe and macroeconomic data in China
and the US. UK equities corrected sharply at the beginning of the Company's
financial year as investors became increasingly concerned over a possible
break-up of the Eurozone.
We saw a significant improvement in sentiment at the end of 2011 thanks to
improving US economic data and the European Central Bank's long term
refinancing operation ("LTRO") announcement. Equities continued to rally well
into March before correcting sharply on renewed fears of a Greek exit from the
Eurozone and a slowdown in global growth.
More recently, we witnessed a significant increase in policymaker commitment to
do `whatever it takes' to keep the Eurozone together, to which markets reacted
positively thinking that the risk of a Eurozone break-up had abated, at least
in the medium term. However, sentiment continues to ebb and flow, so the
outcome remains uncertain.
While the UK equity market continues to be overshadowed by macroeconomic and
political news, we have begun to see a renewed focus on company fundamentals
during the Company's year which was reflected in the Company's improved
Throughout the year, Sanjeev took advantage of market volatility to increase
exposure to unloved areas of the market which he felt were undervalued. This
included banks, housebuilders and retailers. The Company benefited from a
significant pick-up in merger and acquisition activity over the period, with
corporate buyers recognising the value Sanjeev identified in Logica and Aegis
amongst others. In addition the turnaround opportunities that Sanjeev
identified across a variety of different sectors have started to deliver.
Year to 31 August 2012 2011 2010 2009 2008 5 years
NAV and Index total return
Fidelity Special Values PLC +15.0 -4.1 +1.3 +9.0 -9.8 +9.9
FTSE All-Share Index +10.2 +7.3 +10.6 -8.2 -8.7 +9.5
Difference +4.8 -11.4 -9.3 +17.2 -1.1 +0.4
Recent actions by central banks across the globe initially contributed to a
more positive outlook for equity markets generally and the future of the
Eurozone more specifically. That said, the Eurozone crisis is clearly far from
being solved, concerns remain over growth in China and the US fiscal cliff (as
a result of the introduction of the terms of the Budget Control Act 2011 coming
into effect at the end of 2012) is approaching. Markets are likely to remain
volatile in the near term as a result, but such volatility will continue to
present opportunities to identify companies whose value is not fully
appreciated by the market.
Other relevant matters are detailed below.
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. The Board will
continue to monitor this closely and will consider taking further action where
we feel it to be effective.
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.
The Board has decided to recommend a final dividend of 13.00 pence per share
for the year ended 31 August 2012, an increase of 15.6% over the 11.25 pence
paid for the year ended 31 August 2011. This dividend will be payable on 17
December 2012 to Shareholders on the register at close of business on 16
November 2012 (ex-dividend date 14 November 2012).
Board of Directors
It is my belief that the Board has the relevant skills and experience to serve
the Company well into 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
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
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 availability of investment trusts on
fund platforms and less understanding within the IFA industry.
The Annual General Meeting: Thursday 13 December 2012 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
13 December 2012 at 11.00am.
It is the most important meeting that we, the Directors of your Company, have
each year. Alex Wright, the newly appointed Portfolio Manager, will be making a
presentation to Shareholders. We urge as many of you as possible to come and
join us for this occasion.
6 November 2012
The Company's performance in financial year 2012 was encouraging. The stock
market environment remained challenging with equities experiencing heightened
volatility, but significant policy responses in major economies, including the
UK, did help to restore some confidence by the end of the period. Over the same
period, I am pleased to report that the NAV of the Company rose by 15.0% (total
I explain the contributors to this and the reasoning underpinning my portfolio
construction in the Portfolio Review which follows.
Firstly I will address the UK.
* The UK economy remained weak over the period; GDP fell 0.5% during the
second quarter of 2012, and has been shrinking for three consecutive
quarters, marking the country's second recession in four years.
* Inflation is on a downward trend with the annual CPI figure declining in 9
out of the 12 months as the weak economy pushed prices down; at the end of
August 2012, CPI stood at 2.5%, down from 4.5% at the end of August 2011.
* The Bank of England ("BoE") increased its quantitative easing ("QE")
programme to £375 billion in three steps but kept interest rates unchanged
throughout the year at a level of 0.5%.
* The UK market rose during the 12 month period, as policymakers around the
world announced measures to revive global economic growth. In the Eurozone,
authorities declared their commitment to do `whatever it takes' to resolve
the fallout from the credit crisis, which temporarily helped to ease
growing concerns about the break up of the Eurozone.
The Company's financial year ending on 31 August 2012 was marked by high levels
of volatility and shifts in investor sentiment. After a poor start to the year,
markets rallied sharply
into the New Year, before falling sharply in April and May, and then recovered
into the Company's financial year end.
Equities fell sharply at the start of the period amidst growing concerns about
the global economic outlook as rating agency Standard & Poor's lowered the US
long term credit rating and kept the country's outlook at "negative". The
newsflow from Europe was also largely negative, renewing concern that the
region's sovereign debt crisis may spread to its core. These problems brought
about a change of leadership in Greece and Italy, two of Europe's most indebted
countries, whilst efforts to reach a consensus on relief measures seemed still
some way off.
The downbeat sentiment improved after the US Federal Reserve and other major
central banks took coordinated action to ease funding for European lenders.
Eurozone finance ministers agreed to bail out debt-stricken Greece, and with US
economic data showing improvement and the BoE extending its QE programme by
another £50 billion in February, the benchmark FTSE All-Share Index was up by
10.3% at the time of the Company's Half-Yearly report at the end of February
2012. At a broad sector level, industrials, oil & gas and consumer goods were
among the leaders, while financials - led by banks - started their recovery,
helped by the turn in the liquidity cycle.
In April, Eurozone debt concerns came back into focus as restructuring plans
for Greece hit political roadblocks. In the UK, a downward revision in GDP
growth for the fourth quarter of 2011 led to renewed worries about the strength
of the economic recovery. These events combined with weakening global economic
data led to heavy selling pressure in April and May, when the FTSE All-Share
Index fell over 7% over these two months alone. Encouragingly, these concerns
were addressed through significant policy responses from global central banks,
including interest rate cuts in China and Europe, and a further increase of £50
billion in its QE target by the BoE, which took its total bond purchase target
to £375 billion. In Europe, worries about a breakup of the Eurozone subsided to
a large extent after authorities approved several measures to recapitalise
banking systems in troubled countries.
Overall, the improving sentiment was reflected at a sector level, with most
recording positive returns. Industrials, consumer goods and utilities led the
way as companies with proven ability to withstand tough economic conditions as
well as those with strong growth potential emerged as winners. Mining companies
lagged the broader market, as signs of a slowdown in Chinese economy led to a
weak demand outlook.
Performance this year has been encouraging, especially in the context of the
previous financial year's returns. The deviation of performance from that of
the benchmark, in both directions, is a reflection of my long term, contrarian,
value driven approach. My style of investing means that I tend to be
underweight those areas of the market that are both most expensive and most
widely-owned by other fund managers. In calendar year 2011, share prices were
driven by common risk factors, such as the Eurozone crisis, and my value driven
approach underperformed a more growth-orientated style. While macroeconomic
news continues to dominate, there have been signs in 2012 of a renewed focus on
company fundamentals. This has helped my bottom-up stockpicking approach.
The portfolio has benefited from increased recognition of a number of
"turnaround" situations where a strong underlying franchise is supported by one
or more of: new management; attractive valuation; a robust balance sheet; and a
lack of interest from other investors. Examples include QinetiQ (defence),
Ladbrokes (gaming) and ITV (media), which have been among the top contributors
to performance this year.
The Company's performance this year has also been supported by a number of
takeover bids, including those for Logica (IT services), Psion (IT), Cable &
Wireless Worldwide (telecoms) and Aegis (media). It is encouraging that
corporate buyers are also recognising the value that I have identified in a
number of stocks.
I continued to be attracted by selective companies exposed to the stabilising
housing market, where transactions have been low versus history. As these begin
to normalise, I expect higher volumes and the scope for margin improvement for
companies such as Redrow (home construction), which has also been the subject
of corporate interest and is attractively priced. The position in Wolseley, a
builders' merchant, was a key contributor to performance as investors
recognised its balance sheet strength and turnaround in the housing market in
the US, which has led to a brighter earnings outlook.
Despite strong performance in calendar year 2012 to date, several of our key
holdings in the financials sector detracted from performance over the year as a
whole. Names such as Lloyds Banking Group and Royal Bank of Scotland fell
sharply in the first part of the Company's financial year on concerns over
their sovereign debt exposure before rebounding somewhat
since the turn of the calendar year. I have maintained a strong preference for
retail and corporate banking franchises, where my analysis suggests fair values
are in some cases well above today's share prices.
I largely avoided consumer staples such as food and tobacco stocks, which look
expensive and over-owned by other investors. In both of these sectors, as well
as chemicals, margins and returns on equity are at multi year highs. However,
the underweight in these areas did not support relative performance in a highly
uncertain environment as investors largely focused on the defensive nature of
these holdings. Some of my positions in the technology hardware segment also
failed to perform in line with expectations owing to growth concerns. In
particular, wireless network provider Ericsson declined as increasing
competition in Europe and delays in network upgrades in the US impacted
Another feature of the market in the past couple of years has been a
convergence of the valuations of high and low quality growth companies. Where I
was able to find growth at a reasonable price, I increased exposure to shares
such as Reed Elsevier, Pearson and GlaxoSmithKline. Reed Elsevier, for example,
has benefited from a change of management, owns a unique set of assets and is
improving its operating performance. Despite this it trades on an attractive
multiple of just 10 times expected earnings.
During the year I continued to make 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 Company 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 used short CFDs to take
advantage of certain stocks which I believed were overvalued and were likely to
fall in price. Finally, I used Index option strategies on the FTSE 100 Index to
take advantage of periods where I considered the market as a whole to be over
or undervalued. These strategies added a small amount of positive return to the
I remain positive on the outlook for equities and expect shares to continue to
climb the wall of worry for the remainder of this calendar year. As of
September, Alex Wright took over management of the portfolio and I wish him
FIL Investments International
6 November 2012
Introduction to the new Portfolio Manager
I joined Fidelity in 2001 as an analyst. After covering a range of Pan-European
sectors, I launched the Fidelity UK Smaller Companies Fund in February 2008 and
managed a pilot UK all capitalisation fund from May 2010. I took over portfolio
management of Fidelity Special Values PLC from 1 September 2012 and will manage
it as an all capitalisation fund.
KEY INVESTMENT PRINCIPLES
I am very much a bottom-up stock picker who believes that the market
inefficiently prices companies going through a period of change. I also believe
that smaller and medium sized companies generally offer outperformance
potential due to the lower level of analyst coverage on these companies. The
Company will have a bias towards these small and medium sized companies
although investment will be across the market as a whole.
I seek to invest in companies where I believe further downside is limited.
These will usually be companies that have underperformed, but that have some
form of asset or characteristic that gives their share price downside
protection. Typically there is one or more of five key elements that are
assessed to decide the security of a company's valuation. These include hard
assets; for example, property or other
tangible assets; cash on the balance sheet; franchise protection; for example,
high barriers to entry; low institutional ownership/ high short interest; and
low relative valuations versus history.
As well as downside protection, I look for companies with growth options that
are unrecognised by the market. If the market begins to change its perception
of the company, its share price will often move sharply higher. There should be
the prospect of an event or events that materially changes the earnings power
of the business and which is not currently priced into valuations. Examples of
such events include a change in the competitor landscape, a structural change
in market demand, a new product line or expansion into new business areas.
These elements should combine to create a portfolio with an asymmetric risk
profile and a bias towards value stocks. By building a portfolio of stocks
across different stages of their recovery process, the intention is to deliver
outperformance across the market cycle
Small and very large companies are currently trading at significant discounts
to long term averages. These bargain valuations reflect the high degree of
uncertainty in the current macroeconomic environment. My contrarian investment
approach leads me to be positive when others are most negative. Cheap
valuations coupled with low and declining broker coverage among medium sized
and smaller companies create an environment where active stock picking can add
value and provide investors with positive returns.
Additionally, strong balance sheets and record low interest rates are
encouraging large companies to make acquisitions. Weak economic growth has
meant it is harder for companies to grow organically, so they are more inclined
towards acquiring smaller companies in attractive niches with stronger growth
The Company is well placed to benefit from this trend and has significant
exposure to potential acquisition targets.
Since my appointment as Portfolio Manager, I have increased the Company's
exposure to medium sized and smaller stocks. Before my appointment, around 15%
of the Company's assets were invested in companies with a market capitalisation
of less than £1 billion. This is now closer to 35%. I have added a selection of
new positions in medium and smaller companies, including healthcare outsourcer
United Drug, fuel distributor DCC and retailer Mothercare. In terms of sector
weightings, Sanjeev and I will usually have in common a preference for the most
disliked and undervalued sectors in the market. However, one change at a sector
level is my reduced exposure to banks, where I struggle to find a good degree
of the downside risk protection that underpins my investment strategy.
6 November 2012
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 othersupport function risks. The Board reviews and agrees
policies for managing these risks. The process is regularly reviewed by the
Board in accordance with the Financial Reporting Council's ("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 in the
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 16 to the financial statements in the Annual
Report 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; credit risk; and
derivative instruments 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
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.
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.
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 2012 and 31 August 2011 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 consistently;
* 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
* 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 6 November 2012 and signed on its behalf by
Susan Platts-Martin - Head of Investment Trusts, FIL Investments International - 01737 836916
Keren Holland - Corporate Communications, FIL Investments International - 0207 074 5262
Christopher Pirnie - Company Secretary, FIL Investment International, - 01737 837929
Income Statement for the year ended 31 August 2012
revenue capital total revenue capital total
£'000 £'000 £'000 £'000 £'000 £'000
Gains/(losses) on - 35,457 35,457 - (17,846) (17,846)
investments designated at
fair value through profit
Gains/(losses) on long - 557 557 - (6,642) (6,642)
CFDs held at fair value
through profit or loss
Gains on options and short - 36 36 - 5,147 5,147
CFDs held at fair value
through profit or loss
UK dividends 9,513 - 9,513 4,413 - 4,413
UK scrip dividends 908 - 908 5,499 - 5,499
Overseas dividends 857 - 857 178 - 178
Income form REIT 92 - 92 481 - 481
42 - 42 41 - 41
Interest received on short
CFDs 447 - 447 727 - 727
Dividends received on long 66 - 66 57 - 57
(341) - (341) (452) - (452)
(502) - (502) (427) - (427)
Interest paid on long CFDs
Dividends paid on short
Investment management fee (3,412) - (3,412) (3,711) - (3,711)
Other expenses (547) - (547) (562) - (562)
Exchange (losses)/gains on - (117) (117) 1 (67) (66)
other net assets
Net return/(loss) on 7,123 35,933 43,056 6,245 (19,408) (13,163)
ordinary activities before
Taxation on return/(loss) 228 - 228 250 - 250
on ordinary activities(¹)
Net return/(loss) on 7,351 35,933 43,284 6,495 (19,408) (12,913)
ordinary activities after
taxation for the year
Return/(loss) per ordinary 13.25p 64.78p 78.03p 11.43p (34.17p) (22.74p)
(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
All revenue and capital items in the above statement derive from continuing
operations. No operations were acquired or discontinued in the year.
Balance Sheet as at 31 August 2012
Investments designated at fair value through profit 326,618 301,931
Derivative assets held at fair value through profit 3,839 1,553
Debtors 5,247 3,077
Amounts held at futures clearing houses and brokers 1,236 5,359
Cash at bank 8,451 7,716
Creditors - amounts falling due within one year
Derivative liabilities held at fair value through (5,115) (4,881)
profit or loss
Other creditors (1,652) (2,234)
Net current assets 12,006 10,590
Total net assets 338,624 312,521
Capital and reserves
Share capital 13,594 14,131
Share premium account 95,767 95,767
Capital redemption reserve 3,194 2,657
Other non-distributable reserve 5,152 5,152
Capital reserve 212,058 186,987
Revenue reserve 8,859 7,827
Total equity Shareholders' funds 338,624 312,521
Net asset value per ordinary share 622.71p 552.85p
Reconciliation of Movements in Shareholders' Funds for the year ended 31 August
share capital other non-
share premium redemption distributable capital revenue total
capital account reserve reserve reserve reserve equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Opening 14,234 95,767 2,554 5,152 208,765 7,311 333,783
1 September 2010
Repurchase of (103) - 103 - (2,370) - (2,370)
Net (loss)/return - - - - (19,408) 6,495 (12,913)
taxation for the
Dividend paid to - - - - - (5,979) (5,979)
Closing 14,131 95,767 2,657 5,152 186,987 7,827 312,521
31 August 2011
Repurchase of (537) - 537 - (10,862) - (10,862)
Net return on - - - - 35,933 7,351 43,284
taxation for the
Dividend paid to - - - - - (6,319) (6,319)
Closing 13,594 95,767 3,194 5,152 212,058 8,859 338,624
31 August 2012
Cash Flow Statement for the year ended 31 August 2012
Investment income received 10,480 4,093
Net derivative expenses (354) (54)
Deposit interest received 67 57
Investment management fee paid (4,325) (2,790)
Directors' fees paid (160) (121)
Other cash payments (666) (367)
Net cash inflow from operating activities 5,042 818
Overseas taxation recovered 249 290
Taxation recovered 249 290
Purchase of investments (147,520) (197,893)
Disposal of investments 157,186 204,937
Net cash inflow from financial investment 9,666 7,044
Premium paid on options (281) (810)
Premium received on options 263 2,134
Payments on CFDs (1,441) (1,676)
Movements on amounts held at futures clearing 4,123 (2,889)
houses and brokers
Net cash inflow/(outflow) from derivative 2,664 (3,241)
Dividend paid to Shareholders (6,319) (5,979)
Net cash inflow/(outflow) before financing 11,302 (1,068)
Repurchase of ordinary shares (10,450) (2,370)
Net cash outflow from financing (10,450) (2,370)
Increase/(decrease) in cash 852 (3,438)
The above statements have been prepared on the basis of the accounting policies
as set out in the annual financial statements to 31 August 2012. This
preliminary statement, which has been agreed with the Auditor, was approved by
the Board on 6 November 2012. It is not the Company's statutory financial
statements. The statutory financial statements for the financial year ended 31
August 2011 have been delivered to the Registrar of Companies. The statutory
financial statements for the financial year ended 31 August 2012 have been
approved and audited but have not yet been filed. The statutory financial
statements for the financial years ended 31 August 2011 and 31 August 2012
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 13