TIDMFPEO TIDMFPER
RNS Number : 5362B
F&C Private Equity Trust PLC
17 April 2012
To: Stock Exchange For immediate release:
17 April 2012
F&C Private Equity Trust plc
Annual Financial Report for the Year to 31 December 2011
Following the release on 3 April 2012 of the Company's
preliminary results announcement for the year ended 31 December
2011 (the "Preliminary Announcement"), the Company announces that
its annual report and consolidated financial statements for the
year ended 31 December 2011 (the "Annual Report and Financial
Statements") will be published today.
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
The information below, which is extracted in unedited full text
from the Annual Report and Financial Statements, is included in
this announcement solely for the purposes of compliance with
Disclosure and Transparency Rule 6.3.5 and the requirements it
imposes on issuers as to how to make public annual financial
reports. It should be read in conjunction with the Preliminary
Announcement. Together these constitute the material required by
DTR 6.3.5 to be communicated to the media in unedited full text
through a Regulatory Information Service. This material is not a
substitute for reading the full Annual Report and Financial
Statements.
Principal Risks and Uncertainties and Risk Management
The Board believes that the principal risks and uncertainties
faced by the Company are:
-- Investment and strategic - incorrect strategy (including the
deployment of, and managing the repayment of, gearing), asset
allocation, and stock selection could all lead to poor returns for
shareholders.
-- External - events such as terrorism, disease, protectionism,
inflation or deflation, economic shocks or recessions, the
availability of credit and movements in interest rates and exchange
rates could affect share prices and the valuation of
investments.
-- Regulatory - breach of regulatory rules could lead to
suspension of the Company's stock exchange listing, financial
penalties or a qualified audit report. Breach of Section 1158 of
the Corporation Tax Act 2010 could lead to the Company being
subject to tax on capital gains.
-- Operational - failure of the Manager's accounting systems or
disruption to the Manager's business, or that of third-party
service providers, could lead to an inability to provide accurate
reporting and monitoring, leading to a loss of shareholders'
confidence.
-- Financial - inadequate controls by the Manager or third-party
service providers could lead to misappropriation of assets.
Inappropriate accounting policies or failure to comply with
accounting standards could lead to misreporting or breaches of
regulations. Breaching loan covenants, being unable to replace
maturing borrowing facilities or F&C Private Equity Zeros plc
being unable to redeem its ZDP Shares on maturity could lead to a
loss in shareholders' confidence and financial loss for
shareholders.
-- Funding - failure by the Company to meet its outstanding
undrawn commitments could lead to financial loss for
shareholders.
The Company is also exposed to currency risks in respect of the
overseas markets in which it invests.
The assets of the Restricted Voting Shares are highly
concentrated. This is a consequence of the advanced stage of the
realisation process.
The Board seeks to mitigate and manage these risks through
continual review, policy setting, shareholder communication and
enforcement of contractual obligations. It also regularly monitors
the investment environment, the management of the Company's
investment portfolio, the level of undrawn commitments and the
Company's gearing policy.
Further details of the risks associated with the Company's
financial instruments are contained in note 1.
Statement of Directors' Responsibility in Respect of the Annual
Report and Financial Statements
The Directors are responsible for preparing the Annual Report
and the Group and Company financial statements in accordance with
applicable United Kingdom law and those International Financial
Reporting Standards ('IFRS') as adopted by the European Union.
Under company law the Directors must not approve the Group and
Company financial statements unless they are satisfied that they
present fairly the financial position, financial performance and
cash flows of the Group and Company for that period. In preparing
the Group and Company 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 of IFRS is insufficient to enable users to
understand the impact of particular transactions, other events and
conditions on the Group's and the Company's financial position and
financial performance;
-- state that the Group and Company have complied with IFRS,
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 transactions of
the Group and the Company and disclose with reasonable accuracy at
any time the financial position of the Group and 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 Group and
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
Group and the Company; and
-- the Report of the Directors includes a fair review of the
development and performance of the business and the position of the
Group and Company together with a description of the principal
risks and uncertainties that they face.
On behalf of the Board
Mark Tennant
Director
Notes
1. Financial instruments
The Group's financial instruments comprise equity and fixed
interest investments, ZDP Shares, cash balances, bank loan and
liquid resources including debtors and creditors. As an investment
trust the Company holds a portfolio of financial assets in pursuit
of its investment objective. In addition to the ZDP Share funding,
from time to time the Group may make use of borrowings to fund
outstanding commitments and achieve improved performance in rising
markets. The downside risk of borrowings may be reduced by raising
the level of cash balances held.
Quoted fixed asset investments held are valued at bid prices
which equate to their fair values. Unquoted investments are valued
by the Directors on the basis of all the information available to
them at the time of valuation.
The Group's investing activities expose it to various types of
risk that are associated with the financial instruments and markets
in which it invests. The most important types of financial risk to
which the Group is exposed are market risk, interest rate risk,
liquidity and funding risk, credit risk and foreign currency
risk.
The nature and extent of the financial instruments outstanding
at the balance sheet date and the risk management policies employed
by the Group are discussed below.
Market risk
Market risk embodies the potential for both losses and gains and
includes interest rate risk and price risk.
The Group's strategy on the management of investment risk is
driven by the Company's investment objective. The management of
market risk is part of the investment management process and is
typical of private equity investment. The portfolio is managed with
an awareness of the effects of adverse price movements through
detailed and continuing analysis, with an objective of maximising
overall returns to shareholders. Investments in unquoted stocks, by
their nature, involve a higher degree of risk than investments in
the listed market. Some of that risk can be, and is, mitigated by
diversifying the portfolio across business sectors and asset
classes, and by having a variety of underlying private equity
managers. New private equity managers are only chosen following a
rigorous due diligence process. The Group's overall market
positions are monitored by the Board on a quarterly basis.
Interest rate risk
Some of the Group's financial assets are interest bearing, some
of which are at fixed rates and some of which are at variable
rates. As a result, the Group is subject to exposure to fair value
interest rate risk due to fluctuations in the prevailing levels of
market interest rates.
When the Group retains cash balances the majority of the cash is
held in deposit accounts. The benchmark rate which determines the
interest payments received on cash balances is the bank base rate
for the relevant currency.
Liquidity and funding risk
The Group's financial instruments include investments in
unlisted equity investments which are not traded in an organised
public market and which generally may be illiquid. As a result, the
Group may not be able to liquidate quickly some of its investments
in these instruments at an amount close to their fair value in
order to meet its liquidity requirements, including the need to
meet outstanding undrawn commitments or to respond to specific
events such as deterioration in the creditworthiness of any
particular issuer.
The Group's listed securities are considered to be readily
realisable.
Flexibility is achieved where necessary through the use of the
Company's revolving credit facility.
The Group's liquidity risk is managed on an ongoing basis by the
Manager in accordance with policies and procedures in place. The
Group's overall liquidity risks are currently monitored on a
quarterly basis by the Board.
The Group maintains sufficient investments in cash and readily
realisable securities to pay accounts payable and accrued
expenses.
Credit risk
Credit risk is the risk that a counterparty to a financial
instrument will fail to discharge an obligation or commitment that
it has entered into with the Group. The Manager has in place a
monitoring procedure in respect of counterparty risk which is
reviewed on an ongoing basis. The carrying amounts of financial
assets best represents the maximum credit risk exposure at the
balance sheet date.
Credit risk arising on transactions with brokers relates to
transactions awaiting settlement. Risk relating to unsettled
transactions is considered to be small due to the short settlement
period involved and the high credit quality of the brokers used.
The Manager monitors the quality of service provided by the brokers
used to further mitigate this risk.
All the listed assets of the Group (which are traded on a
recognised exchange) are held by The Northern Trust Company, the
Group's custodian. Bankruptcy or insolvency of the custodian may
cause the Group's rights with respect to securities held by the
custodian to be delayed or limited. The Board monitors the Group's
risk by reviewing the custodian's internal control reports.
The Group's cash balances are held by a number of
counterparties. Bankruptcy or insolvency of these counterparties
may cause the Group's rights with respect to the cash balances to
be delayed or limited. The Manager monitors the credit quality of
the relevant counterparties and should the credit quality or the
financial position of these counterparties deteriorate
significantly the Manager would move the cash holdings to another
bank.
Foreign currency risk
The Group invests in overseas securities and holds foreign
currency cash balances which give rise to currency risks. It is not
the Group's policy to hedge this risk on a continuing basis but it
may do so from time to time.
2. The Annual General Meeting of the Company will be held on
Wednesday 23 May 2012 at 12 noon at the offices of F&C Asset
Management plc, Exchange House, Primrose Street, London EC2A
2NY.
3. Copies of the Annual Report and Financial Statements will be
sent to shareholders and will be available at the Company's
registered office, 80 George Street, Edinburgh EH2 3BU. They are
available on its website www.fcpet.co.uk
For more information, please contact:
Hamish Mair (Investment Manager) 0131 718 1184
Gordon Hay Smith (Company Secretary) 0131 718 1018
hamish.mair@fandc.com / gordon.haysmith@fandc.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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