Fidelity Special Values Plc - Half-year Report

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. 1JP 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 40,660 3.6 40,660 Services Reckitt Benckiser Group Personal Care, Drug and 39,428 3.5 39,428 Grocery Stores 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 31,401 2.8 31,401 -Utilities Keller Group (shares and long CFD) Construction and 30,854 2.7 18,994 Materials Coats Group General Industrials 29,298 2.6 29,298 Barclays Banks 27,351 2.4 27,351 Mitie Group Industrial Support 25,081 2.2 25,081 Services Glenveagh Properties Household Goods and 24,786 2.2 24,786 Home Construction Cairn Homes (long CFDs) Household Goods and 24,585 2.2 (769) Home Construction 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 23,661 2.1 23,661 Biotechnology Serco Group (shares and long CFD) Industrial Support 22,414 1.9 17,549 Services --------------- --------------- --------------- Twenty largest long 648,980 57.0 550,895 exposures Other long exposures 614,977 53.9 541,947 --------------- --------------- --------------- Gross Asset Exposure 1,263,957 110.9 (107 holdings) ========= ========= Portfolio Fair Value 1,092,842 ========= 1Asset Exposure is expressed as a percentage of Shareholders' Funds. Fair Value and Asset Exposure of Investments as at 28 February 2025 Fair Asset Value 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 bank2 2,408 (168,707) (14.8) Fidelity Institutional Liquidity 39,268 39,268 3.4 Fund Other net current assets (excluding 5,459 5,459 0.5 derivative assets and liabilities) --------- --------- --------------- ------ ------ 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%). 1Asset Exposure is expressed as a percentage of Shareholders' Funds. 2The 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 suchrisks. 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 Year Six months ended 31 months ended 28 August ended 29 February 2024 February 2025 audited 2024 Unaudited audited Notes Revenue Capital Total Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Gains on - 9,427 9,427 - 166,057 166,057 - 20,869 20,869 investments (Losses)/gai - (1,264) (1,264) - 19,524 19,524 - 5,742 5,742 ns on derivative instruments Investment 4 17,399 - 17,399 48,413 - 48,413 15,462 - 15,462 and derivative income Other 4 845 - 845 2,751 - 2,751 1,861 - 1,861 interest Investment 5 (3,315) - (3,315) (6,095) - (6,095) (2,863) - (2,863) management fees Other (470) - (470) (898) - (898) (468) - (468) expenses Foreign - (66) (66) - 204 204 - 220 220 exchange (losses)/gai ns --------- --------- --------- --------- --------- ---- ----- --------- --------- --------- ------ ------ ------ ------ ------ ---- -- ------ ------ ------ Net return 14,459 8,097 22,556 44,171 185,785 229,956 13,992 26,831 40,823 on ordinary activities before finance costs and taxation Finance 6 (2,956) - (2,956) (5,794) - (5,794) (2,994) - (2,994) costs --------- --------- --------- --------- --------- ---- ----- --------- --------- --------- ------ ------ ------ ------ ------ ---- -- ------ ------ ------ Net return 11,503 8,097 19,600 38,377 185,785 224,162 10,998 26,831 37,829 on ordinary activities before taxation Taxation on 7 (118) - (118) (848) - (848) (154) - (154) return on ordinary activities --------- --------- --------- --------- --------- ---- ----- --------- --------- --------- ------ ------ ------ ------ ------ ---- -- ------ ------ ------ Net return 11,385 8,097 19,482 37,529 185,785 223,314 10,844 26,831 37,675 on ordinary activities after taxation for the period ========= ========= ========= ========= ========= ========= ========= ========= ========= Return per 8 3.51p 2.50p 6.01p 11.58p 57.32p 68.90p 3.34p 8.28p 11.62p ordinary share ========= ========= ========= ========= ========= ========= ========= ========= ========= 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 Notes Share Share Capital Other non- Capital Revenue Total ended 28 capital premium redemption distributable reserve reserve shareholders' February £'000 account reserve reserve £'000 £'000 funds 2025 £'000 £'000 £'000 £'000 (unaudited) Total 16,205 238,442 3,256 5,152 834,580 45,906 1,143,541 shareholders' funds at 31 August 2024 Repurchase of 11 - - - - (2,628) - (2,628) ordinary shares into Treasury Net return on - - - - 8,097 11,385 19,482 ordinary activities after taxation for the period Dividend paid 9 - - - - - (20,418) (20,418) to shareholders --------- --------- ---------- ------------- --------- --------- ------------- ------ ------ ----- -- ------ ------ -- Total 16,205 238,442 3,256 5,152 840,049 36,873 1,139,977 shareholders' funds at 28 February 2025 ========= ========= ========= ========= ========= ========= ========= Year ended 31 August 2024 (audited) Total 16,205 238,442 3,256 5,152 648,795 39,199 951,049 shareholders' funds at 31 August 2023 Net return on - - - - 185,785 37,529 223,314 ordinary activities after taxation for the year Dividends 9 - - - - - (30,822) (30,822) paid to shareholders --------- --------- ---------- ------------- --------- --------- ------------- ------ ------ ----- -- ------ ------ -- Total 16,205 238,442 3,256 5,152 834,580 45,906 1,143,541 shareholders' funds at 31 August 2024 ========= ========= ========= ========= ========= ========= ========= Six months ended 29 February 2024 (unaudited) Total 16,205 238,442 3,256 5,152 648,795 39,199 951,049 shareholders' funds at 31 August 2023 Net return on - - - - 26,831 10,844 37,675 ordinary activities after taxation for the period Dividend paid 9 - - - - - (20,321) (20,321) to shareholders --------- --------- ---------- ------------- --------- --------- ------------- ------ ------ ----- -- ------ ------ -- Total 16,205 238,442 3,256 5,152 675,626 29,722 968,403 shareholders' funds at 29 February 2024 ========= ========= ========= ========= ========= ========= ========= 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 795 - 775 clearing houses and brokers 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 3,256 3,256 3,256 reserve Other non-distributable 5,152 5,152 5,152 reserve 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 12 352.61p 352.84p 298.80p ordinary share ========= ========= ========= 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 17,773 43,283 17,485 activities before finance costs and taxation ========= ========= ========= Finance costs paid (2,974) (5,853) (3,040) Overseas taxation 251 (536) 216 recovered/(suffered) --------- --------- --------------- ------ ------ Net cash inflow from operating 15,050 36,894 14,661 activities ========= ========= ========= 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 (795) - (775) clearing houses and brokers --------- --------- --------------- ------ ------ Net cash inflow/(outflow) from 36,498 (53,987) (4,100) investing activities ========= ========= ========= Net cash inflow/(outflow) before 51,548 (17,093) 10,561 financing activities ========= ========= ========= Financing activities Dividends paid (20,418) (30,822) (20,321) Repurchase of ordinary shares (1,137) - - Net cash outflow from financing (21,555) (30,822) (20,321) activities Net increase/(decrease) in cash and 29,993 (47,915) (9,760) cash equivalents Cash and cash equivalents at the 11,749 59,460 59,460 beginning of the period Effect of movement in foreign (66) 204 220 exchange --------- --------- --------------- ------ ------ Cash and cash equivalents at the end 41,676 11,749 49,920 of the period ========= ========= ========= Represented by: Cash at bank 2,408 2,072 66 Bank overdraft - - (5,260) Amount held in Fidelity Institutional 39,268 9,677 55,114 Liquidity Fund --------- --------- --------------- ------ ------ 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 31August 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 Year Six months months ended ended ended 31.08.24 29.02.24 28.02.25 audited unaudited 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 823 2,723 1,861 deposits, collateral and money market funds 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 Year Six months months ended ended ended 31.08.24 29.02.24 28.02.25 audited unaudited unaudited £'000 £'000 £'000 Interest paid on long CFDs 2,938 5,765 2,992 Interest paid on bank 18 29 2 overdrafts and collateral balances --------- --------------- --------------- ------ 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 118 848 154 charge for the period ========= ========= ========= 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 3.51p 11.58p 3.34p per ordinary share Capital return 2.50p 57.32p 8.28p per ordinary share --------------- --------------- --------------- Total return per 6.01p 68.90p 11.62p ordinary share ========= ========= ========= 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 11,385 37,529 10,844 ordinary activities after taxation Net capital return on 8,097 185,785 26,831 ordinary activities after taxation --------- --------------- --------------- ------ Net total return on ordinary 19,482 223,314 37,675 activities after taxation ========= ========= ========= Number Number Number Weighted average number of 324,066,047 324,098,920 324,098,920 ordinary shares held outside of Treasury ========= ========= ========= 9 Dividends Paid to Shareholders Six Year Six months ended months ended 31.08.24 ended 28.02.25 audited 29.02.24 unaudited £'000 unaudited £'000 £'000 Final dividend of 6.30 pence per ordinary 20,418 - - share paid for the year ended 31 August 2024 Interim dividend of 3.24 pence per ordinary - 10,501 - share paid for the year ended 31 August 2024 Final dividend of 6.27 pence per ordinary - 20,321 20,321 share paid for the year ended 31 August 2023 --------- --------- --------- ------ ------ ------ 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 - (6,096) - (6,096) liabilities ========= ========= ========= ========= 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 - (200) - (200) liabilities ========= ========= ========= ========= 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 - (1,559) (21) (1,580) liabilities ========= ========= ========= ========= 11 Share Capital 28 February 31 August 29 February 2025 2024 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 324,098,920 16,205 324,098,920 16,205 324,098,920 16,205 of the period Ordinary (800,000) (40) - - - - shares repurchased into Treasury ----------- --------- ----------- --------- ----------- ------ --- ---- ------ ---- ------ ---- ------ End of the 323,298,920 16,165 324,098,920 16,205 324,098,920 16,205 period ========= ========= ========= ========= ========= ========= Issued, allotted and fully paid Ordinary shares of 5 pence each held in Treasury1 Beginning - - - - - - of the period Ordinary 800,000 40 - - - - shares repurchased into Treasury ----------- --------- ----------- --------- ----------- ------ --- ---- ------ ---- ------ ---- ------ End of the 800,000 40 - - - - period ========= ========= ========= ========= ========= ========= Total share 16,205 16,205 16,205 capital ========= ========= ========= 1Ordinary 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 323,298,920 324,098,920 324,098,920 of Treasury at the period end Net asset value per ordinary 352.61p 352.84p 298.80p share ========= ========= ========= 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. This information was brought to you by Cision http://news.cision.com https://news.cision.com/fidelity-special-values-plc/r/half-year-report,c4141052

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