The Private Equity Reporting Group (the “PERG”) has reviewed the private equity industry’s conformity with the Guidelines for Disclosure and Transparency in Private Equity (the “Guidelines”). The Guidelines, recommended by Sir David Walker in 2007, seek to increase transparency through enhanced reporting and disclosure by the largest UK portfolio companies and their private equity owners. The PERG was established in March 2008 to monitor the industry’s compliance with the Guidelines and make periodic recommendations to the British Private Equity and Venture Capital Association (the “BVCA”).

Key findings

• This review covers 64 portfolio companies (2020: 61) that fall within the scope of the Guidelines and the 56 firms (2020: 51) that back them (private equity firms and those operating in a private-equity like manner).
• The Covid-19 pandemic is still having an impact on many portfolio companies in the Guidelines but we have broadly seen a shift back to ‘normal’ reporting timelines (note these were extended last year by regulators). As expected, annual reports still contain significant levels of commentary on the impact of Covid-19 on the results and liquidity of the business.
• All of the portfolio companies reviewed in the sample complied with the disclosure requirements in the annual report (2020: 93%).
  • 67% prepared disclosures to at least a good standard which is a continued improvement on prior years (2020: 60%, 2019: 53%) and is notable given the larger proportion of new companies reviewed for the first time in the sample. However, no companies produced excellent disclosures this year (2020: Two).
  • Improvements are needed on disclosures related to gender diversity and non-financial key performance indicators where the use of the “comply or explain” principle was more prevalent. Following our previous feedback, there was positive progress on environmental and business model disclosures, as well as continued focus on disclosure on financial position and performance.

• 75% of portfolio companies have published an annual report in a timely manner on their website (2020: 70%). 87% of portfolio companies have published a mid-year update in a timely manner on their website (2020: 68%). As companies adjust to a post-pandemic environment, we would expect a higher proportion of companies to publish information on a timely basis.
• 89% of portfolio companies provided data, which is presented in aggregate in the EY performance report published alongside this report (2020: 87%).
• 9% of portfolio companies have not complied with any of the three components of the Guidelines that apply to them – enhanced disclosures, publication of reports and provision of data (2020: 5%). These companies are majority backed by non-BVCA members and include two companies new to the population.
• All BVCA members have published certain disclosures on their own websites to communicate information about themselves, their portfolio companies and their investors as required by the Guidelines.
• The Guidelines are being reviewed over 2022. This work will take into account changes in the broader narrative reporting landscape for both private and listed companies and the increased focus on climate change and societal challenges.