The objective of this guide is to assist private equity owned portfolio companies to improve the transparency and disclosure in their financial and narrative reporting by highlighting good practice examples.

The Guidelines Monitoring Group (the “Group”) was established to monitor conformity of the UK private equity industry with the Guidelines for Disclosure and Transparency in Private Equity (the “Guidelines”). The Guidelines resulted from an independent review of the adequacy of disclosure and transparency in reporting by private equity owned companies undertaken by Sir David Walker at the request of the British Private Equity and Venture Capital Association (“BVCA”). The Group is also responsible for making recommendations to the BVCA for changes to the Guidelines, if required. The Group aims to guide and assist the industry in improving overall levels of disclosure and transparency in reporting.

In December 2011, the Group issued its fourth annual report on monitoring conformity by qualifying private equity firms and portfolio companies. The Group is pleased to see continuous improvement over the four years and the findings of this year’s review identified a higher level of compliance than in previous years.

With the lowering of the Group’s size criteria, there was a group of companies for which this was the first year of reporting under the Guidelines. Some of these new reporters did not achieve as high a standard as those which had reported previously. We provided support and advice to those companies for which initial disclosures fell below expectations in order to ensure that an appropriate level of disclosure was achieved.

Many portfolio companies report to a standard that is consistent with reporting by FTSE 350 companies, and in certain areas, better. The Group is pleased that the majority of portfolio companies aspire to raise the standard of reporting and have embraced the Guidelines not as a regulatory burden but as a healthy and helpful aspect of ensuring transparency for stakeholders of private equity owned companies.

The Group considers that the standard of the FTSE 350 companies is the appropriate benchmark for us to use measure compliance with the Guidelines. The Group has commissioned this guide to help portfolio companies conform to the Guidelines and to understand the appropriate level of disclosure. This guide also includes an analysis of the detailed requirements of the Guidelines and a summary of good practice, using examples from the reviews conducted since the introduction of the Guidelines.

The Group encourages all private equity houses and portfolio companies to build on the achievements of the last four years and continue to enhance their levels of disclosure and transparency in reporting by using this guide.