BPET.L Regulatory News (BPET)

30 Mar 2007 16:54

F&C Private Equity Trust PLC30 March 2007 To: Stock Exchange For immediate release: 30 March 2007 PLEASE NOTE THE ANNOUNCEMENT BELOW REPLACES THE ANNOUNCEMENT RNS 1152U RELEASEDTO THE MARKET AT 14:45 ON FRIDAY 30TH MARCH 2007. The only change is the date in Note 2. which said 29 May 2007 where in fact itshould read 25 May 2007. F&C Private Equity Trust plc Preliminary results for the seventeen months to 31 December 2006 • NAV total return for the three month period of 15.5 per cent for the A shares; • NAV total return for the three month period of 5.0 per cent for the B shares*; • NAV total return for the seventeen month period of 36.8 per cent for the A shares; • NAV total return for the seventeen month period of 36.7 per cent for the B shares*; • A share special dividends of 7.5 pence and 15.5 pence paid; • A share revenue dividends of 1.0 pence paid; • B share revenue dividends of 2.1 pence paid and 0.4 pence declared; • £49.8 million added to net assets by the acquisition of the assets of Discovery Trust plc in August 2005; • Conversion of £50.6 million from C to B shares; • Realisation of private equity investments of £36.1 million during the period; • New investment in private equity investments of £63.0 million during the period. * Based on fully diluted NAV Chairman's Statement The Company has again made good progress and I am pleased to report excellentreturns for our shareholders. As previously intimated the Company has changedits year end to the 31 December and this 'annual' report covers the 17 Monthperiod to the end of December 2006. Over this period the net asset value ("NAV") return to the A shareholders has been 36.8% and to the B shareholders 36.7%.The corresponding share price total returns have been 49.2% and 54.1%,reflecting the narrowing of the discount in both classes. The A pool, which retains the original realisation mandate, is fairly small nowwith £17m of net assets at 31 December giving a NAV per A share of 25.43p. Aspecial dividend of 7.5p was paid on 14 April 2006, another special dividend of15.5p was paid on 20 October 2006 and an ordinary dividend of 1.0p per A sharewas paid on 19 January 2007. The A pool still has a small number of investmentswith potential and we expect a fair proportion of these to be realised during2007. Shareholders will realise that this is now a very concentrated portfolioand future returns may be correspondingly volatile. It is expected that furtherspecial dividends can be paid over the next year. The basic NAV per B share at 31 December 2006 was 178.71p. After adjustment forthe possible future dilution arising from the exercise of management warrantsthe fully diluted NAV per B share at 31 December was 178.06p. The B pool now hasnet assets of £129.2m. The Directors are recommending an ordinary finaldividend of 0.4p per share which, together with the interim dividend of 2.1ppaid on 19 January 2007, makes a total dividend of 2.5p per B share for the 17month period. In August 2005, the Company acquired the assets of Discovery Trust, almostdoubling the size of the continuation investment pool. The C share pool, whichwas established to enable the orderly sell down of fledgling and AiM listedshares and the transfer of the proceeds gradually to the B pool, was completelymerged into the B pool at the final conversion on 26th September 2006. Theincreased scale of the B pool has proved helpful to your manager in constructingand maintaining a distinctive international portfolio of private equityinvestments. The share price rating of the B pool has also improved with thisadditional scale. The Company has outstanding undrawn commitments of £145m, which will be drawndown over the next 5 years. With cash or near cash resources in the B pool of£18m and unutilised borrowing capacity of up to 20% of total assets (to beincreased to 30% subject to shareholder approval) the Company is well placed tocontinue to benefit from the private equity sector's growth. The period under review has seen a sustained period of enhanced value forprivate equity investments and a considerable expansion in the size of the assetclass internationally. This has been accompanied by a rise in its publicprofile. This public scrutiny has not always been from well informed quartersand much of the negative commentary surrounding private equity managers andtheir tactics appears, from our perspective, to be unfounded and unfair.Shareholders can be confident that your Board and Manager do not back 'assetstrippers' or 'locusts' and have no intention of doing so. The additional focusand incentive which private equity managers bring to their investee companiesmust be creative of value for ultimate shareholders such as us to benefit, butit also usually benefits other stakeholders in these enterprises. The UK is theleading country in Europe for private equity. The sector is a top performingcomponent of a successful financial services industry, and our shareholdersshould continue to benefit from this association. The outlook for our private equity investments is not independent of the widerfortunes of the global economy and stockmarket conditions. These are in turninfluenced directly by confidence within the business communities which manageand invest in private companies. At present the managements of private companiesand private equity funds in which we invest are confident that it will bepossible to make strong returns in 2007. For most of this period the Company has been under the management of F&C AssetManagement plc, although with the same managers as previously. I am pleased toreport that this transition has proved entirely satisfactory to the Company. Thegreater resources in all areas are already proving beneficial. The European Advocate General's views on the question of VAT on management feeswere made available last month. These were generally supportive of theAssociation of Investment Companies in its claim that VAT had been wronglyclaimed from Investment Trusts domiciled in the UK. The final judgement from theEuropean Court of justice is not due until June, but if the case is ultimatelysuccessful there will be a reduction in your Company's running costs, as well asa one-off benefit from the recovery of VAT already paid. At the AGM of the Company in December, Sir James McKinnon stood down from theBoard. He joined at the time of the acquisition of Discovery Trust and duringhis short time on the Board made a very valuable contribution. David Simpson Manager's Review Our Investment Approach This review covers an exceptionally busy period for the private equity industry,in which we have been very much involved. Our Company has an evergreen mandate,meaning that the proceeds of disposals must be continually reinvested to lay thefoundations of future returns. It is necessary for us to plan several yearsahead if we are to maintain appropriate levels of growth for shareholders.Unusually amongst investment asset classes private equity is essentially longterm in nature. This is because the value creating changes which private equitypractitioners make to investee companies take time to bear fruit. Occasionallythese changes and associated value uplifts are achieved ahead of plan and thiscan enhance returns, but it is also the case that changes in the businessenvironment or obstacles to successful implementation of agreed plans can extendholding periods and erode returns. Most of the funds in our portfolio areplanning to hold companies for about 4 years before selling and thereforepatience is required. Because of these extended timelines the final performance of a private equityfund cannot be definitely assessed for several years; however, an interimassessment is almost always necessary to determine whether to continue backing aparticular manager when its fund raising for the next fund takes place, usuallywithin 3 years of the immediate predecessor fund. Interim assessment of immaturefunds is a key task of the fund of funds manager, but one which can only besensibly done with the reference points derived from experience. Thisapplication of judgement based on both quantitative and qualitative factors isalso critical in assessing the future performance of emerging management groupswhere the investment case is, by definition, a much less certain proposition.Our policy follows the dual track of continuing to back strong performers whilstseeking out newer groups who have a good chance of delivering sector leadingreturns in the future. Persistence of outperformance is particularly marked inprivate equity investment - for good reasons of franchises providing competitiveadvantage in deal sourcing and execution - compared with other short term andinnately more efficient investment asset classes. This means that identifyingmanagement groups with potential can underwrite outperformance well into thefuture. The growth of private equity globally is continually widening the opportunitiesto invest. Each new market has its own characteristics and these are often noteasily appreciated by outsiders, meaning that appropriately equipped, locallybased specialists usually have a major advantage. In recent years our portfoliohas broadened considerably, most notably into Continental Europe. There we havebenefited from the expansion of the use of private equity to finance the growthof smaller and medium sized companies. Each geographic market in our favouredmid market tier is distinct, but there are common trends and a clear movetowards European wide best practice in the way these firms operate -particularly in process. It is part of our job to assess not only individualgroups but the markets in which they operate, determining whether there reallyare substantive opportunities to make good risk adjusted returns or merelyunfounded hope. During this period we have continued to back funds and to make co-investmentsthat are predominantly involved in the mid market. This is because we see thistier as offering persistent inefficiencies which should continue to provideexcellent opportunities for the foreseeable future. The major expansion inprivate equity both in Europe and in the USA has disproportionately favoured thelarger, so called mega funds, that are typically doing deals in the €1bn +enterprise value category. The increase in the capital available for mid marketfunds has been far less marked and it is our view that it is not out of balancewith the number of suitable investment opportunities available. Our activities over the reporting period can be summarised under the followingheadings; New Fund Commitments We have reinforced a number of existing relationships in the UK market throughnew fund commitments to Primary Capital III (£8m), LGV 5 (£5m), Inflexion 2006Buy-out fund (£10m), RJD Partners II (£8m), Dunedin Buy-Out Fund II (£5m) andPiper Private Equity IV (£4m). We have deepened our European relationships withfollow on commitments to Chequers Capital XV (France €7.5m) and DBAG V (Germany€8m). New relationships have been established with Ibersuizas (Spain & Portugal€5m), Gilde Buyout Fund III (Benelux €5m) and Alto Capital II (Italy €3m). Wehave made fresh commitments to successor Pan European funds including Candover2005 (€15m), TDR Capital II (€10m), Hutton Collins Capital Partners II(mezzanine €10m) and Mezzanine Management IV (€7m). We have also made acommitment to specialists Alchemy, through their Special Situations Fund (£5m). We are deliberately retaining an exposure to the world's largest private equitymarket in the US and we have once again backed Bluepoint Capital, the Clevelandbased mid market fund, in their second fund ($10m) and initiated an investmentwith crossover fund specialists from Baltimore, Camden Strategic Partners III($5m). After several years of consideration we have made a first commitment toan Asian Fund, AIF Asia III ($5m) managed by an accomplished Hong Kong basedteam. The venture capital sub sector of private equity has had a difficult recentpast, but our stance is to continue to support the leaders in this field andhighly selectively to open up new relationships. This should leave us wellplaced as the sector continues its recovery. Accordingly new commitments havebeen made to our longstanding contacts at SEP III (£7.5m) and to Amsterdam basedLife Science Partners III (€5m). Secondaries As the private equity market has grown so have the opportunities to acquiresecondary positions in pre-existing funds. If these can be sourced atappropriate prices and they have an investment focus and management teamconsistent with the remainder of our portfolio then there can be a veryeffective and rapid contribution to performance. This is due to the truncationof the early years of a fund's life when returns can be modest or even negative.Through different contacts in the market we have been able to source and executeseveral secondary deals. In each case the funds have been partially drawn, thefocus of the fund is complementary to the remainder of our portfolio, themanagement team strong and the price paid has been at or below asset value. Wehave acquired secondary positions in the following funds: August Equity IV(£15m), Brown Brothers Harriman 1818 II ($5m), Alto Capital I (€10m), HFP(Inflexion £3m) and Argan Capital (€10m). Secondaries now account forapproximately 15% of the B pool portfolio. Co-investments The Company has always had the ability to invest directly in private companieseither alongside the managers we are backing through funds or with others whomwe know well. During the year the limit for direct investment was increased from25% to 33% and this has given us valuable additional scope to construct aproperly diversified portfolio of co-investments. Six such direct privateequity investments have been made during the period covered by the report. £1.5mwas invested in Equidebt (RJD Partners Lead), a Stratford-on-Avon based debtcollection agency and buyer of bought debt, giving F&C PET a 6.7% equity stake.We have recently added to this investment through an additional investment of£0.75m in loan stock. We have participated in two other RJD led investments; £2minvested in LMS, a market leading provider of remortgage conveyancing for 6.5%of the company and £2m into European Boating Holidays, a boating holidayscompany for 15.5%. We have invested £1.1m in Viking Moorings (Inflexion lead),the market leader in the North Sea for moorings for oil rigs for 10% of thecompany. Stirling Square Capital Partners were the lead for two co-investments:Whittan, a manufacturer of metal pallet racking systems and lockers where wehave invested £2.5m for 6.0%; and 3si, the market leader in cash securitysystems, based in Valley Forge, where we have invested $4.2m for 6.5%. Realisations Realisations totalled £36.1m over the period. The largest of these was GondolaHoldings, the parent company of Pizza Express. This company was a co-investmentmade with TDR Capital in 2003. The business was rejuvenated and then relisted onthe stockmarket before being acquired by Cinven in December 2006. F&C PET'stotal proceeds, including £6.8m received after the year end, were £10m,representing an investment multiple of 4.0X and an IRR of 65%. Other majorrealisations included £4.6m from engineering company, Acertec, which was listedon AIM (Candover 1997 Fund), £2.8m from JJI Lighting (International Mezzanine),£1.7m from Securistyle (August Equity IV), £1.4m from ACIS (Inflexion), £1.2mfrom Eurotaxglass (Hicks Muse Fund IV) and £1.0m from machinery company GAM(Nmas1). There were many smaller distributions from other funds reflecting abuoyant exit environment internationally. New Investments New investments amounted to £63m. These were made by a wide variety of funds andinclude the co-investments described above. Some of the larger ones illustratethe diversity of the underlying portfolio which is being established. In the UKwe now have exposure to Rixonway Kitchens (£1.3m August Equity IV), DX/SMS, aprivate mail company ( £0.9m Candover 2005), Parasol, an employment agency(£0.7m Inflexion), James Hull, a specialist dentist ( £0.6m Hutton Collins),Tobar, a vendor of toys and gifts ( £0.5m Primary III) and WFEL, a manufacturerof temporary bridges ( £0.5m Dunedin Buy-out Fund II) amongst many others. InEurope we have holdings of £1m in Italian boat builder Feretti (Candover 2005),£0.4m in French catering company HBI (Elior) (Chequers) and £0.4m in Germanmedical products company, BSN (Montagu III). Valuation changes Over the period there have been uplifts amounting to over £40m. These reflectboth uplifts in valuation and premiums to carrying value achieved on exit. Theindividually most significant ones represent a mixture of older holdings andnewer ones as well as a spread between UK and European and US investments. Asnoted above Gondola has been a highly successful co-investment and over theperiod this accounts for £7.6m of uplift. The DM&E Railroad, a longstanding USinvestment, has traded very strongly and an uplift of £7.0m is included, most ofthis accruing to the A pool. The combined investments of the now almost fullyliquidated Candover 1997 Fund contributed £3.5m. £3.5m was also accrued from TDRCapital. Our secondary purchase of August Equity IV contributed £3.3m,reflecting a strong fundamental performance, successful realisations and anadvantageous acquisition price. The co-investment with Stirling Square, GDT, ouraerospace components company is also trading well and an uplift of £2.2m hasbeen made. LGV 4 has also performed well and has recently announced the sale ofrestaurant company Tragus to Blackstone achieving a 5.4x investment multiple,contributing to an uplift of £1.4m. Our European funds have contributed stronglywith uplifts of £1.3m from Nmas1 and £1.0m from Chequers. There have also beensome downgrades over the period, but these mainly relate to the start up costsof new funds where the early years suffer slightly from the J Curve effect.Exchange rate impact has been adverse to the extent of £3.6m, entirely due tothe pronounced depreciation of the dollar. Outlook The Company begins 2007 with a well diversified portfolio of funds giving anunderlying portfolio of over 200 companies. The co-investment portfolio isperforming well and further realisations from here are expected during the year.The fund portfolio is maturing and this will continue to build value over thenext few years. The successful fund relationships will be reinforced with newcommitments and new funds which add to the portfolio's strength will also beadded. The Company has outstanding undrawn commitments of £145m, which will bedrawn down over the next 5 years. With cash or near cash resources in the Bpool of £18m and unutilised borrowing capacity of up to 20% of total assets (tobe increased to 30% subject to shareholder approval) the Company is well placedto continue to benefit from the private equity sector's growth. Hamish Mair For more information, please contact: Hamish Mair 0131 718 1184Martin Cassels 0131 718 1095hamish.mair@fandc.com / martin.cassels@fandc.com F&C PRIVATE EQUITY TRUST PLC Income Statement for the seventeen months ended 31 December 2006 Unaudited Revenue Capital Total £'000 £'000 £'000Gains on investments - 34,622 34,622Currency losses - (58) (58)Income - franked 527 - 527 - unfranked 4,344 - 4,344Investment management fee (509) (1,532) (2,041)Other expenses (857) (505) (1,362) _______ _______ _______Net return before finance costs and taxation 3,505 32,527 36,032 Interest payable and similar charges (31) (93) (124) _______ _______ _______Return on ordinary activities before taxation 3,474 32,434 35,908 Taxation on ordinary activities (941) 483 (458) _______ _______ _______Return on ordinary activities after taxation 2,533 32,917 35,450 _______ _______ _______Returns per A share - Basic 1.05p 9.31p 10.36p Returns per B share - Basic 3.21p 46.85p 50.06p Returns per B share - Fully diluted 3.20p 46.70p 49.90p F&C PRIVATE EQUITY TRUST PLC Income Statement for year ended 31 July 2005 Audited (Restated) Revenue Capital Total £'000 £'000 £'000Gains on investments - 19,535 19,535Currency gains - 56 56Income - franked 182 - 182 - unfranked 2,870 - 2,870Investment management fee (170) (510) (680)Other expenses (334) - (334) _______ _______ _______Net return before finance costs and taxation 2,548 19,081 21,629 Interest payable and similar charges (17) (49) (66) _______ _______ _______Return on ordinary activities before taxation 2,531 19,032 21,563 Taxation on ordinary activities (707) 168 (539) _______ _______ _______Return on ordinary activities after taxation 1,824 19,200 21,024 _______ _______ _______Returns per A share 1.58p 12.78p 14.36p Returns per B share 1.96p 27.05p 29.07p F&C PRIVATE EQUITY TRUST PLC BALANCE SHEET As at 31 December 2006 As at 31 July 2005 (unaudited) (audited and restated) £000 £000 £000 £000Investments at fair valueListed on recognised exchanges 23,922 9,210Unlisted 116,354 65,434 _______ _______ 140,276 74,644Current assetsDebtors 416 108Cash at bank 6,764 9,210 _______ _______ 7,180 9,318CreditorsAmounts falling due within one year (1,223) (1,123) _______ _______Net current assets 5,957 8,195 _______ _______Net assets 146,233 82,839 _______ _______Capital and reservesCalled up ordinary capital 1,394 1,063Special distributable capital reserve 40,000 40,000Special distributable revenue reserve 38,363 10,061Capital redemption reserve 664 -Capital reserve 63,146 30,229Revenue reserve 2,666 1,486 _______ _______Total shareholders' funds 146,233 82,839 _______ _______ Net asset value per A share - Basic 25.43p 46.76pNet asset value per B share - Basic 178.71p 131.37pNet asset value per B share - Fullydiluted 178.06p 131.37p F&C PRIVATE EQUITY TRUST PLC RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS Seventeen months ended Year ended 31 December 2006 31 July 2005 (Restated)Opening shareholders' funds (as previously 76,641 66,928reported)Adjustment mid to bid (186) -Dividends accrued added back 6,384 7,575 _______ _______Adjusted shareholders' funds 82,839 74,503 Return on ordinary activities after taxation 35,450 21,024Dividends paid (21,813) (12,688)Issue of C shares 49,757 - _______ _______Closing shareholders' funds 146,233 82,839 _______ _______ F&C PRIVATE EQUITY TRUST PLC CASH FLOW STATEMENT Seventeen months to Year to 31 December 2006 31 July 2005 (unaudited) (audited and restated) £000 £000 £000 £000Operating activitiesNet dividends and interest received from 3,919 3,233investmentsInterest received from deposits 819 348Investment management fee (1,507) (765)Cash paid to and on behalf of directors (138) (72)Bank charges (4) (4)Other cash payments (1,260) (167) _______ _______Net cash inflow from operating activities 1,829 2,573 Servicing of financeInterest paid (124) (68) _______ _______Net cash outflow from servicing of finance (124) (68) TaxationCorporation tax paid (312) (1,528) _______ _______Net cash outflow from taxation (312) (1,528) Capital expenditure and financialinvestmentPayments to acquire investments (135,888) (18,243) Receipts from disposal of investments 150,304 25,471Cash transferred from acquisition of 3,558 -Discovery Trust _______ _______Net cash inflow from capital expenditure 17,974 7,228and financial investment Equity dividends paid (21,813) (12,688) _______ _______ Net cash outflow (2,446) (4,483) _______ _______ Decrease in cash (2,446) (4,483) _______ _______ Notes 1. The results, which were approved by the Board on 30 March2007, have been prepared in accordance with applicable accounting standards andthe AIC's Statement of Recommended Practice "Financial Statements of InvestmentTrust Companies" issued in December 2005. The changes affecting the Companyrelate to the adoption of FRS 21 "Events after the Balance Sheet Date", FRS 25 "Financial Instruments Disclosure and Presentation" and FRS 26 "FinancialInstruments Measurement". Reconciliations of these changes are set out in note6. With the exception of the changes above, this preliminary announcement has beenprepared on the same basis as set out in the annual report for the year ended 31July 2005. 2. The Board has proposed a final A dividend of nil (2005 -1.2p) and a final B dividend of 0.4p (2005 - 1.4p) payable on 15 June 2007 toshareholders on the Register on 25 May 2007. 3. Returns per A share are based on the average number ofshares in issue during the period of 67,084,807. Returns per B share are based on the following number of shares in issue duringthe period:- Basic 56,929,847Fully diluted 57,121,844 Basic net asset value per A share is based on 67,084,807 shares in issue at theend of the period. Basic net asset value per B share is based on 72,282,273 shares in issue at theend of the period. Fully diluted net asset value per B share is based on 73,301,034 shares in issueat the end of the period. 4. These are not full statutory accounts in terms of Section 240 of theCompanies Act 1985. The full audited accounts for the year to 31 July 2005,which were unqualified, have been lodged with the Registrar of Companies. Thestatutory accounts for the seventeen months to 31 December 2006 will bedelivered to the Registrar of Companies following the Company's Annual GeneralMeeting which will be held at the offices of F&C Asset Management plc, 80 GeorgeStreet, Edinburgh, EH2 3BU on 29 May 2007 at 12 noon. 5. The report and accounts for the year will be sent to shareholders andwill be available for inspection at the Company's registered office, 80 GeorgeStreet, Edinburgh EH2 3BU. 6a) Restatement of balances as at and for the year ended 31 July 2005. There have been a number of changes to financial reporting standards that cameinto effect from 1 January 2005. The principal ones affecting the Company arethe requirement to value quoted investments at fair value and only reflectdividends when paid to shareholders. The effect of these changes in policy isset out below: (Audited) Effect of transition to Restated 31 July Previously revised UK GAAP 2005 reported 31 July 2005 £'000 £'000 £'000 Notes Investments 1 74,830 (186) 74,644Net current assets 1,811 6,384 8,195 Net assets 76,641 6,198 82,839 Capital and reservesCalled up share capital 1,063 - 1,063Special distributable capital reserve 40,000 - 40,000Special distributable revenue reserve 5,030 - 5,030Capital reserve 1 30,415 (186) 30,229Revenue reserve 2 133 6,384 6,517 Shareholders' funds 76,641 6,198 82,839 Notes to the reconciliation 1. Investments are designated as held at fair value under FRS 26 and arecarried at bid prices where quoted. The total fair value of investments was£74,644,000. Previously they were carried at mid prices. The aggregatedifference, being a revaluation downwards of £186,000, also decreases theCapital Reserve. 2. No provision has been made for the final dividend on the A and B Shares forthe year ended 31 July 2005 of £6,384,000. Under FRS 21 dividends are notaccounted for until they have been paid. The aggregate amount of £6,384,000increases the revenue reserve. 6b) Restatement of the Income Statement for the year ended 31 July 2005 (Audited) Effect of As restated Previously change in reported policy £'000 £'000 £'000 Notes Gains/(losses) on investments- realised 1 2,991 - 2,991- unrealised 16,730 (186) 16,544Currency gains 2 56 - 56Income- franked 182 - 182- unfranked 2,870 - 2,870Investment management fee (680) - (680)Other expenses (334) - (334)Net Return before finance costs and taxation 21,815 (186) 21,629Finance costs (66) - (66)Return on ordinary activities before taxation 21,749 (186) 21,563Taxation (539) - (539)Return on ordinary activities after taxation 1 21,210 (186) 21,024Dividends in respect of ordinary shares 2 (11,497) 11,497 -Transfer to reserves 9,713 11,311 21,024 Notes to the reconciliation 1. The investments at 31 July 2005 are required to be valued at fair valuefollowing the adoption of FRS 26. The value differs from the previous valuationby £186,000. 2. Under FRS 21 dividends are not accounted for until they are paid and areshown through the Reconciliation of Movements in Shareholders' Funds rather thanthrough the Income Statement. 6c) Restatement of balances as at and for the year ended 31 July 2004 (Audited) Effect of Restated 31 July Previously transition to 2004 reported 31 revised UK GAAP July 2004 £'000 £'000 £'000 NotesInvestments 1 61,728 (115) 61,613Net current assets 5,200 7,575 12,775 Net assets 66,928 7,575 74,388 Capital and reservesCalled up ordinary share capital 1,063 - 1,063Special distributable capital reserve 40,000 - 40,000Special distributable revenue reserve 14,757 - 14,757Capital reserve 11,029 (115) 11,029Revenue reserve 2 79 7,575 7,654 Shareholders' funds 66,928 7,575 74,388 Notes to the reconciliation 1. Investments are designated as held at fair value under FRS 26 and arecarried at bid prices where quoted. The total fair value of investments was£61,728,000. Previously they were carried at mid prices. The aggregatedifference, being a reduction in the value of £115,000 also decreases theCapital Reserve. 2. No provision has been made for the final dividend on the A and B Sharesfor the year ended 31 July 2004. Under FRS 21 dividends are not accounted foruntil they have been paid. The aggregate amount of £7,575,000 increases therevenue reserve This information is provided by RNS The company news service from the London Stock Exchange