F&C Pr Eq Zeros - Half Yearly Report
23 Agosto 2010 - 1:00AM
UK Regulatory
TIDMFPEO TIDMFPEZ TIDMFPER
RNS Number : 4283R
F&C Private Equity Trust PLC
23 August 2010
+------------------------------------------------+----------------------+
| To: Stock Exchange | For immediate |
| | release: |
+------------------------------------------------+----------------------+
| | 23 August 2010 |
+------------------------------------------------+----------------------+
F&C Private Equity Zeros plc
Chairman's Statement
I am pleased to present the Company's first Half Year Report for the period from
incorporation on 14 October 2009 to 30 June 2010. The Company's first full set
of statutory accounts will be prepared for the 14 month period ended 31 December
2010. A full set of the Company's accounting policies is contained on page 10.
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 redeem in December 2014 at a price
of 152.14 pence per share giving a redemption yield of 8.75 per cent per annum.
The proceeds of the ZDP share issue were passed up to F&C PET for use in future
investment opportunities.
Further details of the ZDP shares can be found in the notes to these accounts.
David Simpson, who was the Company's Chairman from the date of incorporation,
retired form the Board on 24 May 2010.
Mark Tennant
20 August 2010
Half Year Manager's Report
Objective
The objective of the Company is to provide the final capital entitlement of the
Company's Zero Dividend Preference Shares ("ZDP Shares") to the ZDP Shareholders
at the repayment date of 15 December 2014.
Current and Future Development
The Company was incorporated in Scotland on 14 October 2009. The Company is a
wholly owned subsidiary of F&C Private Equity Trust plc ("F&C PET") which is a
closed-ended investment company incorporated in Scotland. In December 2009, the
Company placed 30,000,000 ZDP shares at 100p per share and this placing raised a
total of GBP29.9 million of net proceeds. Pursuant to a loan agreement between
the Company and F&C PET, the Company has lent F&C PET the net proceeds of its
placings. These funds are to be managed in accordance with the investment
policy of F&C PET. This loan is on terms requiring its repayment by F&C PET to
the Company at any time up to or immediately prior to the ZDP repayment date.
Principal Risks and Uncertainties
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.
For more information, please contact:
+-------------------------------+---------------+
| Hamish Mair | 0131 718 1184 |
+-------------------------------+---------------+
| Martin Cassels | 0131 718 1095 |
+-------------------------------+---------------+
| hamish.mair@fandc.com / |
| martin.cassels@fandc.com |
+-----------------------------------------------+
| | |
+-------------------------------+---------------+
+-----------------------------+----------+-----+-------+--------------+
| F&C Private Equity Zeros plc | | | |
+----------------------------------------+-----+-------+--------------+
| | | | | |
+-----------------------------+----------+-----+-------+--------------+
| Unaudited Statement of Comprehensive Income |
| |
| Period from 14 October 2009 to 30 June 2010 |
+---------------------------------------------------------------------+
| | | |
+----------------------------------------------+-------+--------------+
| | | | | Period |
| | | | | ended |
| | | | | 30 |
| | | | | June |
| | | | | 2010 |
+-----------------------------+----------+-----+-------+--------------+
| | | | | GBP'000 |
+-----------------------------+----------+-----+-------+--------------+
| | | | | |
+-----------------------------+----------+-----+-------+--------------+
| Revenue | | | | |
+-----------------------------+----------+-----+-------+--------------+
| Income | | | | 1,474 |
+-----------------------------+----------+-----+-------+--------------+
| Total income | | | | 1,474 |
+-----------------------------+----------+-----+-------+--------------+
| | | | | |
+-----------------------------+----------+-----+-------+--------------+
| Expenditure | | | | |
+-----------------------------+----------+-----+-------+--------------+
| Expenses | | | | - |
+-----------------------------+----------+-----+-------+--------------+
| Total expenditure | | | | - |
+-----------------------------+----------+-----+-------+--------------+
| Profit before finance costs and | | | 1,474 |
| taxation | | | |
+----------------------------------------+-----+-------+--------------+
| Finance costs | | | | (1,472) |
+-----------------------------+----------+-----+-------+--------------+
| Profit before taxation | | | | 2 |
+-----------------------------+----------+-----+-------+--------------+
| Taxation | | | | - |
+-----------------------------+----------+-----+-------+--------------+
| Total comprehensive income | | | | 2 |
+-----------------------------+----------+-----+-------+--------------+
| Earnings per share | | | | 4.75p |
+-----------------------------+----------+-----+-------+--------------+
| | | | | |
+-----------------------------+----------+-----+-------+--------------+
| | | | | |
+-----------------------------+----------+-----+-------+--------------+
| | |
+------------------------------------------------------+--------------+
| | | | | |
+-----------------------------+----------+-----+-------+--------------+
+-------------------------------------------+----+---------+-----------------+
| F&C Private Equity Zeros plc | | | |
+-------------------------------------------+----+---------+-----------------+
| | | | |
+-------------------------------------------+----+---------+-----------------+
| Unaudited Balance Sheet | | | |
+-------------------------------------------+----+---------+-----------------+
| At 30 June 2010 | | | 2010 |
+-------------------------------------------+----+---------+-----------------+
| | | GBP'000 | GBP'000 |
+-------------------------------------------+----+---------+-----------------+
| | | | |
+-------------------------------------------+----+---------+-----------------+
| Non current assets | | | |
+-------------------------------------------+----+---------+-----------------+
| Investments | | 50 | |
+-------------------------------------------+----+---------+-----------------+
| Loan to parent company | | 30,340 | |
+-------------------------------------------+----+---------+-----------------+
| | | | 30,390 |
+-------------------------------------------+----+---------+-----------------+
| Current assets | | | |
+-------------------------------------------+----+---------+-----------------+
| Accrued interest | | 1 | |
+-------------------------------------------+----+---------+-----------------+
| Cash at bank | | 1 | |
+-------------------------------------------+----+---------+-----------------+
| | | | 2 |
+-------------------------------------------+----+---------+-----------------+
| Net current assets | | | 2 |
+-------------------------------------------+----+---------+-----------------+
| Total assets less current liabilities | | | 30,392 |
+-------------------------------------------+----+---------+-----------------+
| Creditors: amounts falling due after one | | | |
| year | | | |
+-------------------------------------------+----+---------+-----------------+
| Zero dividend preference shares | | | (30,340) |
+-------------------------------------------+----+---------+-----------------+
| Net assets | | | 52 |
+-------------------------------------------+----+---------+-----------------+
| | | | |
+-------------------------------------------+----+---------+-----------------+
| Equity | | | |
+-------------------------------------------+----+---------+-----------------+
| Ordinary share capital | | | 50 |
+-------------------------------------------+----+---------+-----------------+
| Revenue reserve | | | 2 |
+-------------------------------------------+----+---------+-----------------+
| Shareholders' funds | | | 52 |
+-------------------------------------------+----+---------+-----------------+
| | | | 104.75p |
| Net asset value per Ordinary share | | | |
+-------------------------------------------+----+---------+-----------------+
| Net asset value per ZDP share | | | 101.13p |
+-------------------------------------------+----+---------+-----------------+
| | | | |
+-------------------------------------------+----+---------+-----------------+
+-------------------------------------------+---------+---------+---------+
| F&C Private Equity Zeros plc | | | |
+-------------------------------------------+---------+---------+---------+
| | | | |
+-------------------------------------------+---------+---------+---------+
| Unaudited Statement of Changes in Equity | | | |
+-------------------------------------------+---------+---------+---------+
| Period from 14 October 2009 to 30 June | | | |
| 2010 | | | |
+-------------------------------------------+---------+---------+---------+
| | | | |
+-------------------------------------------+---------+---------+---------+
| | Share | Revenue | Total |
| |Capital | Reserve | |
+-------------------------------------------+---------+---------+---------+
| | GBP'000 | | GBP'000 |
| | | GBP'000 | |
+-------------------------------------------+---------+---------+---------+
| | | | |
+-------------------------------------------+---------+---------+---------+
| Net assets at start of period | - | | - |
| | | - | |
+-------------------------------------------+---------+---------+---------+
| Share Capital proceeds | 50 | | 50 |
| | | - | |
+-------------------------------------------+---------+---------+---------+
| Profit for the period | - | | 2 |
| | | 2 | |
+-------------------------------------------+---------+---------+---------+
| Net assets at 30 June 2010 | 50 | | 52 |
| | | 2 | |
+-------------------------------------------+---------+---------+---------+
| | | | |
+-------------------------------------------+---------+---------+---------+
+-------------------------------------------+----+----------+
| F&C Private Equity Zeros plc | | |
+-------------------------------------------+----+----------+
| | | |
+-------------------------------------------+----+----------+
| Unaudited Cash Flow Statement | | |
+-------------------------------------------+----+----------+
| At 30 June 2010 | | 2010 |
+-------------------------------------------+----+----------+
| | | GBP'000 |
+-------------------------------------------+----+----------+
| | | |
+-------------------------------------------+----+----------+
| Cash flows from operating activities | | |
+-------------------------------------------+----+----------+
| Profit before finance costs and taxation | | 2 |
+-------------------------------------------+----+----------+
| Increase in other receivables | | (1) |
+-------------------------------------------+----+----------+
| Net cash inflow from operating activities | | 1 |
+-------------------------------------------+----+----------+
| | | |
+-------------------------------------------+----+----------+
| Cash flows from investing activities | | |
+-------------------------------------------+----+----------+
| Purchase of investments | | (50) |
+-------------------------------------------+----+----------+
| Net cash outflow from investing | | (50) |
| activities | | |
+-------------------------------------------+----+----------+
| | | |
+-------------------------------------------+----+----------+
| 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 | | 1 |
+-------------------------------------------+----+----------+
| Cash and cash equivalents at beginning of | | - |
| period | | |
+-------------------------------------------+----+----------+
| Cash and cash equivalents at end of | | 1 |
| period | | |
+-------------------------------------------+----+----------+
DIRECTORS' STATEMENT OF PRINCIPAL RISKS AND UNCERTAINTIES
The Directors believe that the principal risks faced by the Company include
investment and strategic, external, regulatory, operational, financial and
funding risks. These risks, and the way in which they are managed, are
described in more detail under the heading Principal Risks and Risk Management
within the Business Review in the Company's Annual Report for the year ended 31
December 2009. The Company's principal risks and uncertainties have not changed
materially since the date of that report and are not expected to change
materially for the remaining six months of the Company's financial year.
STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE INTERIM REPORT
In accordance with Chapter 4 of the Disclosure and Transparency Rules the
Directors confirm, in respect of the report and accounts for the half-year ended
30 June 2010 of which this statement is an extract, that to the best of their
knowledge:
· the condensed set of financial statements have been prepared in
accordance with IAS 34 as adopted by the European Union;
· the Chairman's Statement and Manager's Review (together constituting the
Half Year Management Report) include a fair review of the assets, liabilities,
financial position and return of the Company;
· the Directors' Statement of Principal Risks and Uncertainties shown above
is a fair review of the principal risks and uncertainties for the remainder of
the financial year; and
· the half-yearly report includes details on related party transactions.
On behalf of the Board
Mark Tennant
Chairman
Notes (unaudited)
1. The Half Year Report is unaudited and does not constitute financial
statements within the meaning of Section 434 of the Companies Act 2006.
The financial information has been prepared in accordance with the Disclosure
and Transparency Rules of the United Kingdom's Financial Services Authority and
International Accounting Standard 34, "Interim Financial Reporting", as adopted
by the European Union. The financial information comprises the Balance Sheet as
at 30 June 2010 and for the period ended 30 June 2010 the related Statement of
Comprehensive Income, Statement of Changes in Equity, Cashflow Statement and
related notes hereinafter referred to as 'financial information'. The principal
accounting policies adopted by the Company are set out below.
The period of the accounts is from incorporation, on 14 October 2009, to 30 June
2010.
The financial information is prepared under the historical cost convention.
The Company's financial information is presented in sterling, which is the
currency of the primary environment in which the Company operates. All values
are rounded to the nearest thousand pounds (GBP'000) except where otherwise
indicated.
These accounting policies are expected to be consistent with those that will be
applied in the annual financial statements of the Company for the period ended
31 December 2010.
Cash and Cash Equivalents
Cash comprises cash at bank.
Revenue
Gilt and loan interest income is recognised on an accruals basis.
Expenses
All expenses are accounted for on an accruals basis.
Investments
Investments are classified as fair value through profit or loss and are
recognised on trade date. These are measured initially and at subsequent
reporting dates at fair value, which for listed investments is bid price.
Zero Dividend Preference Shares
Zero Dividend Preference Shares are recognised as liabilities in the Balance
Sheet in accordance with IAS 32. After initial recognition, these liabilities
are measured at amortised cost, which represents the initial net proceeds of the
issuance after issue costs plus the accrued entitlement to the date of these
financial statements.
Finance Costs
The accrued entitlement (see above) is calculated as the difference between the
proceeds on the issue of these shares and the final liability and is charged as
finance costs over the term of the life of these shares using the effective
interest method.
Taxation
The charge for taxation is based on the taxable profits for the period. Taxable
profit differs from profit before tax as reported in the Statement of
Comprehensive Income because it excludes items of income or expense that are
never taxable or deductible. The Company's liability for tax is calculated
using rates that have been enacted or substantively enacted by the balance sheet
date.
Key Estimates and Assumptions
Estimates and judgements used in preparing the financial statements are
continually evaluated and are based on historical experience and other factors,
including expectations of future events that are believed reasonable. The
resulting estimates will, by definition, seldom equal the related actual
results.
Going Concern
The accounts have been prepared on a going concern basis as the Directors
believe the Company has sufficient resources to continue for the foreseeable
future.
2. 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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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