F&C Private Equity Trust

F&C Private Equity Trust plc Interim Report and Accounts for the six months ended 30 June 2007 Company Summary Contents Company Summary The Company Financial Highlights 1 The Company was launched in March 1999 as part of the reorganisation of The Scottish Eastern Investment Trust plc with the Performance Summary 1 objective of managing the private equity investments formerly held by The Scottish Eastern Investment Trust plc so as to realise those Chairman’s Statement 2 assets and return cash to Shareholders. Manager’s Review 4 In August 2001, the Company was reorganised and Shareholders were given the opportunity to convert all or part of their existing Portfolio Holdings 6 ordinary shares into A shares and B shares as outlined below. Income Statement 8 In August 2005, Shareholders approved a change of company name from Martin Currie Capital Return Trust plc to F&C Private Amounts Recognised as Dividends in the Period 8 Equity Trust plc and the Company issued 49,758,449 C Shares Balance Sheet 9 following the acquisition of Discovery Trust plc and a subscription of £20 million by Friends Provident. The C Shares subsequently Reconciliation of Movements in converted into B Shares. Shareholders’ Funds 9 Statement of Cash Flows 10 Objective The Company’s realisation (A) shares’ objective is to manage the Notes to the Accounts 11 existing assets and to realise the value of those assets in a tax Independent Review Report 12 efficient manner and return capital to shareholders. The continuation (B) shares’ objective is to achieve long term capital Corporate Information growth through investment in private equity assets. Management The Board has appointed F&C Investment Business Limited as investment managers under a contract terminable by either party giving to the other not less than six months’ notice expiring on 31 July 2008 or at the end of any subsequent calendar month. Net assets as at 30 June 2007 £173.9 million Shareholders’ funds as at 30 June 2007 A shares £ 23.4 million B shares £150.5 million Market capitalisation as at 30 June 2007 A shares £22.7 million B shares £130.8 million Capital structure from September 2006 67,084,807 Realisation or A shares of 1 pence, each entitled to 1 vote; and 72,282,273 Continuation or B shares of 1 pence, each entitled to If you have sold or otherwise transferred all of your 1 vote. shares in F&C Private Equity Trust plc, please forward this document and the accompanying form of proxy as soon as possible to the purchaser or transferee, or to the stockbroker, bank or other agent through whom the sale or transfer was, or is being, effected, for delivery to the purchaser or transferee. Front cover: Ben Lui by Derek Sime Financial Highlights for the six months ended 30 June 2007 . NAV total return for the six months of 42.8 per cent for the A shares; . NAV total return for the six months of 17.4 per cent for the B shares; . A share revenue dividends of 0.30 pence declared; . B share revenue dividend of 0.50 pence declared; . Realisation of private equity assets of £22.1 million; . New investment in private equity assets of £26.3 million; Performance Summary As at As at 30 June 31 December 2007 2006 % change Net Asset Value Net assets (£’000) 173,944 146,233 +18.9 Net asset value per: A share 34.9p 25.4p +37.2 B share (fully diluted) 206.2p 178.1p +15.8 Market Price A share 33.8p 24.3p +38.9 B share 181.0p 161.0p +12.4 Premium/discount: A share 3.2% 4.3% – B share 12.2% 9.6% – Income Revenue return after taxation (£’000) 568 2,533 Revenue return per: A share 0.29p 1.05p B share (fully diluted) 0.50p 3.20p Dividend per: A share 0.30p 1.00p B share 0.50p 2.50p 2007 2007 A Shares B Shares Portfolio Summary Shareholders’ funds (£’000) 23,401 150,543 Loan drawdown (£’000) –– Future commitments (£’000) 1,944 151,187 Total Returns* Net asset value (fully diluted) 42.8 17.4 Share price 39.2 12.7 * Total return is the combined effect of any dividends paid, together with the rise or fall in the net asset value or share price. Any dividends are assumed to have been re-invested in either the Company’s assets or in additional shares. Interim Report and Accounts 2007 1 Chairman’s Statement remaining non cash element of the A pool will be small and undiversified. The Board therefore plan to bring forward proposals to merge the A pool with the B pool and to allow A shareholders to receive cash if they wish. Your Board believes that the move to one class of shares will improve the market’s understanding of the Company and should have a beneficial effect on the share price rating. The NAV per B share, after full dilution for management warrants, was 206.21 pence, an increase of 15.8 per cent since 31 December 2006. The NAV and share price total returns were 17.4 per cent and 12.7 per cent respectively. The B pool at 30 June 2007 had net assets of £150.5 million and, with its well diversified international portfolio of private equity assets, should prove attractive to a wide range of investors. David Simpson Chairman The Board is declaring interim dividends of 0.3 pence per A share and 0.5 pence per B share The year has begun well for your Company with to be paid on 19 October. considerable portfolio activity and excellent growth in the net asset values (‘‘NAV’’) of both classes of Whilst this report records another highly successful share. This growth was broadly based, and has period for the Company, the influence of current been driven by a combination of realisations and uncertainty in financial markets on its portfolio valuation uplifts. During the period the Company has cannot be ignored. Our portfolio is not insulated announced sales of Academy Music Group, Global from events in the wider financial markets, but it is Design Technologies and, most recently, the well diversified and is not obviously vulnerable to the Dakota, Minnesota and Eastern Railroad (‘‘DM&E’’). direct or indirect consequences of the difficulties in The portfolio, which consists of 57 fund investments the US sub-prime mortgage market, nor the and 9 co-investments directly in private companies, associated difficulties in the short term interbank has increased in value by over £30 million in the market. Potential consequences of the change in the year to date. banking environment might be that banks are more reluctant to advance debt to private equity backed The NAV per A share at the 30 June was companies for the purposes of refinancing or 34.88 pence, an increase of 37.2 per cent since the recapitalisations or that banks will lend a smaller start of the year. The NAV total return for the six proportion of the transaction value to new MBOs. month period was 42.8 per cent and the share price Through discussions with our investment partners total return 39.2 per cent. we are still assessing the impact of the summer’s The net assets of the A pool now stand at events. At the level of the individual private equity £23.4 million, of which £1.8 million was in cash at funds and underlying portfolio companies there are the 30 June. Since this date there have been some many encouraging developments and we would significant realisations, most notably the sale of the expect these to continue to build value for our Company’s longstanding holding in DM&E, and shareholders over the medium and longer term. once the proceeds of these are received the cash Apart from the strengths inherent in its portfolio your proportion of the A pool will rise considerably. The Company has substantial resources available to it 2 F&C Private Equity Trust plc which we may use to benefit from the current investment trusts domiciled in the UK. We remain situation. The B pool currently has cash or near some way from the resolution of this issue, but it cash resources of £12.0 million, and the gross appears increasingly likely that your Company will proceeds of DM&E and GDT are expected to add a benefit from a reduction in its running costs as well further £18 million. In addition the Company entered as receiving a one off benefit from the recovery of into a five year £40 million revolving credit facility VAT already paid. with The Royal Bank of Scotland on 30 April 2007 Private Equity is essentially a long term asset class and may borrow up to 30 per cent of total assets. which, if professionally managed, has the potential With total outstanding commitments in excess of to deliver excellent returns to investors. The £150 million, which may be drawn down over diversified international fund of funds structure is periods of up to five years, the Company, through increasingly seen as an attractive and appropriate its investment partners, is well positioned to take way for investors to access these high returns. Our advantage of buying opportunities should these structure as an investment trust combines the arise. benefits of liquidity, strong corporate governance Elizabeth Kennedy joined the Board on 1 July 2007. and low costs and distinguishes us from many other Elizabeth is a corporate finance director with Brewin private equity fund of funds. In uncertain times we Dolphin Securities and her experience will be believe these well established strengths should invaluable to the Board.

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