FPEZ - Annual results to 31 Dec 2010 replacement

RNS Number : 6129E

F&C Private Equity Trust PLC

08 April 2011

 



To: Stock Exchange	For immediate release:
	8 April 2011

THE ANNUAL FINANCIAL REPORT ANNOUNCEMENT FOR F&C PRIVATE EQUITY TRUST PLC RELEASED TODAY AT 14:21 UNDER RNS NO. 5988E HAS BEEN RE-RELEASED TO FACILITATE ONWARD TRANSMISSION BY THIRD PARTY VENDORS.  THE ANNOUNCEMENT IS UN-CHANGED AND IS REPRODUCED IN FULL BELOW

F&C Private Equity Zeros plc

Audited results for the period from incorporation to 31 December 2010

 

Chairman's Statement

I am pleased to present the Company's first results for the period from incorporation on 9 October 2009 to 31 December 2010. 

The Company is a wholly owned subsidiary of F&C Private Equity Trust plc ('F&C PET') and was established solely for the purpose of issuing and redeeming Zero Dividend Preference Shares ('ZDP Shares').  30,000,000 ZDP Shares were issued on 14 December 2009 at 100 pence per share and will redeem on 15 December 2014 at a price of 152.14 pence per ZDP Share, giving a redemption yield of 8.75 per cent per annum.  The proceeds of the ZDP Shares issue were lent to F&C PET for use in future investment opportunities.

The revenue available for dividends for the period was £2,920. As at 31 December 2010 the net asset value per Ordinary Share was 105.84 pence and the net asset value per ZDP Share was 105.91 pence.

As at 31 December 2010 the ZDP Share price was 121.50 pence, representing a premium of  14.7 per cent over the net asset value per share.

Mr David Simpson, who was the Company's Chairman from the date of incorporation, retired from the Board on 24 May 2010 and I was elected Chairman of the Company on the same date. All the Directors of the Company are also directors of F&C PET.

Mark Tennant

Chairman

F&C Private Equity Zeros plc
Audited Statement of Comprehensive Income Period from 9 October 2009 to 31 December 2010
				Period ended 31 December 2010
				£'000
Revenue
Income				2,909
Total income				2,909
Expenditure
Expenses				-
Total expenditure				-
Profit before finance costs and taxation				2,909
Finance costs				(2,906)
Profit before taxation				3
Taxation				-
Total comprehensive income				3
Earnings per Ordinary Share				5.84p

F&C Private Equity Zeros plc
Audited Balance Sheet
At 31 December 2010			2010
		£'000	£'000
Non current assets
Investments			50
			50
Current assets
Loans and other receivables		31,775
Cash at bank		2
Net current assets			31,777
Total assets less current liabilities			31,827
Creditors: amounts falling due after one year
Zero dividend preference shares			(31,774)
Net assets			53
Equity
Ordinary share capital			50
Revenue reserve			3
Shareholders' funds			53
Net asset value per Ordinary Share			105.84p
Net asset value per ZDP Share			105.91p

F&C Private Equity Zeros plc
Audited Statement of Changes in Equity
Period from 9 October 2009 to 31 December 2010
	Share Capital	Revenue Reserve	Total
	£'000	£'000	£'000
Net assets at start of period	-	-	-
Share Capital proceeds	50	-	50
Profit for the period	-	3	3
Net assets at 30 June 2010	50	3	53

F&C Private Equity Zeros plc
Audited Cash Flow Statement
Period from 9 October 2009 to 31 December 2010		2010
		£'000
Cash flows from operating activities
Profit before finance costs and taxation		3
Increase in other receivables		(1)
Net cash inflow from operating activities		2
Cash flows from investing activities
Purchase of investments		(50)
Net cash outflow from investing activities		(50)
Cash flows from financing activities
Proceeds from issue of share capital		50
Proceeds from issue of ZDPs		30,000
Loan to parent company		(30,000)
Net cash inflow from financing activities		50
Increase in cash and cash equivalents		2
Cash and cash equivalents at beginning of period		-
Cash and cash equivalents at end of period		2

Principal Risks and Uncertainties and Risk Management

Final Capital Entitlement

The ZDP shares offer a pre-determined rate of growth in capital entitlement up to the repayment date of 15 December 2014 but no right of income. 

F&C PET's debt to the Company is pursuant to the loan agreement which ranks behind any secured creditors of F&C PET.  Therefore it is not guaranteed that the final capital entitlement will be paid.  On a return of assets, including a winding up of F&C PET, the Company will only receive payment if there are sufficient assets of F&C PET, having first taken account of prior ranked liabilities and having regard to all other unsecured liabilities of F&C PET. ZDP shares are not a secured, protected or guaranteed investment.  The final capital entitlement of the ZDP Shares is 152.14 pence per share.

Liquid Market for ZDP Shares

The market price and realisable value of the ZDP shares, as well as being affected by the underlying value of F&C PET's net assets, will be affected by interest rates, supply and demand for the ZDP shares, market conditions and general investor sentiment.  As such, the market value and realisable value (prior to redemption) of a ZDP share can fluctuate and may not always reflect its accrued capital entitlement.  In addition, given the Company's size and type, there is no guarantee that an active market will be sustained for the ZDP shares.  If an active trading market is not maintained, the liquidity and trading price of the ZDP shares could be adversely affected.

Macroeconomic and Investment Risks

The Company's obligation to pay the ZDP Shareholders the final capital entitlement is dependent upon F&C PET's ability to comply with its obligations to the Company.  This in turn is impacted by F&C PET's performance and its ability to manage macroeconomic and investment risk.  A material fall in the value of assets in the investment portfolio of F&C PET may lead to a winding up of F&C PET in the longer term.

The performance of F&C PET's underlying investment portfolio is principally influenced by a combination of economic growth, the availability of appropriately priced debt finance, interest rates and the number of active trade and financial buyers.  All of these factors have an impact on F&C PET's ability to invest and on F&C PET's ability to exit from its underlying portfolio or on the levels of profitability achieved on exit.  Financial results may be adversely affected by movements in foreign exchange rates.

F&C PET operates in a very competitive market.  Changes in the number of market participants, the availability of funds within the market, the pricing of assets, or in the ability of its Manager, F&C Investment Business Limited, to access deals could have a significant effect of F&C PET's competitive position and on sustainability of returns.

In order to source and execute good quality of investments, F&C PET is primarily dependent upon F&C Investment Business Limited having the ability to attract and retain executives with the requisite investment experience.

Once invested, the performance of the F&C PET portfolio is dependent on a range of factors.  These include but are not limited to: (i) the quality of the initial investment decision; (ii) the ability of the portfolio company to execute successfully its business strategy; and (iii) actual outcomes against key assumptions underlying the portfolio company's financial projections.  Any one of these factors could have an impact on the valuation of a portfolio company and upon F&C PET's ability to make a profitable exit from the investment within the desired timeframe.  Future F&C PET share issues, share buy backs or raising new debt facilities in the longer term could dilute the interests of the ZDP shareholders and lower the price of the ZDP shares.

Government Policy and Regulation Risk

F&C PET carries on business as an investment trust under section 1158 of the Corporation Tax Act 2010.  Continuation and approval by HM Revenue and Customs is subject to F&C PET conducting its affairs in a manner which will satisfy the conditions for continued approval as an investment trust.  Any change in F&C PET's tax status, or in taxation legislation of practice in the UK or elsewhere, could affect the value of investments in F&C PET's investment portfolio and F&C PET's ability to achieve its investment objective and could also affect the tax treatment of the ZDP Shares and the tax treatment of the final capital entitlement.

The Company is also exposed to risks in relation to its financial instruments.  Further details of these risks and the way they are managed are contained in note 2.

Directors' Responsibility Statement

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable United Kingdom law and those International Financial Reporting Standards ('IFRSs') as adopted by the European Union.

Under company law the Directors must not approve the financial statements unless they are satisfied that they present fairly the financial position, financial performance and cash flows of the Company for that period.  In preparing the financial statements the Directors are required to:

·      select suitable accounting policies in accordance with IAS8:Accounting Policies, Changes in Accounting Estimates and Errors and then apply them consistently;

·      present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

·      provide additional disclosures when compliance with the specific requirements in IFRSs is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Company's financial position and financial performance;

·      state that the Company has complied with IFRSs, subject to any material departures disclosed and explained in the financial statements; and

·      make judgements and estimates that are reasonable and prudent.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006 and Article 4 of the IAS Regulation.  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. 

Each of the Directors confirms that to the best of his or her knowledge:

·          the financial statements, prepared in accordance with IFRS as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company;

·          the Chairman's Statement includes a fair review of the development and performance of the business and the position of the Company; and

·          "Principal Risks and Uncertainties and Risk Management" above includes a description of the principal risks and uncertainties that the Company faces.

On behalf of the Board

Mark Tennant

Director

Notes

1.   The results which were approved by the Board on 8 April 2011, have been prepared in accordance with International Financial Reporting Standards as adopted by the EU ('IFRS').

2.   Financial instruments

The Company's financial instruments comprise fixed interest investments, cash balances and liquid resources including debtors and creditors.

Quoted fixed assets investments held are valued at bid prices which equate to their fair values.

The main risks arising from the Company's financial instruments are market risk, interest rate risk, liquidity risk and credit risk.

Market risk

Market risk embodies the potential for both losses and gains and includes interest rate risk and price risk.

Interest rate risk

The Company's financial assets are interest bearing, some of which are at fixed rates and some at variable.  As a result the Company is subject to exposure to fair value interest rate risk due to fluctuations in the prevailing levels of market interest rates.

Liquidity and funding risk

This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities.

Liquidity risk is considered to be significant as the Company is reliant upon the sale of assets within its parent undertaking, which mainly comprises unlisted investments.  Details of how this risk is managed are contained within the financial statements of the parent company.

Credit risk

This is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered with the Company. 

3.   Earnings per share are based on 50,000 Ordinary Shares in issue during the period.

Net asset value per Ordinary Share is based on 50,000 shares in issue at the end of the period.

Net asset value per ZDP Share is based on 30,000,000 shares in issue at the end of the period.

4.   This announcement is not the Company's statutory accounts.  The statutory accounts for the period to 31 December 2010 (on which the audit report has been signed) will be delivered to the Registrar of Companies.

5.   A copy of the Annual Report and Financial Statements has been submitted to the National Storage Mechanism and will shortly be available for inspection at www.Hemscott.com/nsm.do 

6.   The report and accounts for the period will be sent to shareholders and are available for inspection at the Company's registered office, 80 George Street, Edinburgh EH2 3BU and the parent company's website www.fcpet.co.uk

For more information, please contact:

Hamish Mair	0131 718 1184
Gordon Hay Smith	0131 718 1018
[e-mail]  / [e-mail]

 

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