Annual Financial Report

RNS Number : 1896A

Standard Life Euro Pri Eqty Tst PLC

27 January 2011

 



STANDARD LIFE EUROPEAN PRIVATE EQUITY TRUST PLC

ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 30 SEPTEMBER 2010

Further to the voluntary disclosure of the Company's annual results for the year ended 30 September 2010 by way of a preliminary announcement dated 6 December 2010, in accordance with the Disclosure and Transparency Rules ('the Rules') 4.1.3 and 6.3.5(2) this announcement contains the text of the preliminary announcement dated 6 December 2010 together with the additional text in compliance with the Rules.

The Company's annual report and financial statements for the year ended 30 September 2010, which have been filed with the UK Listing Authority Document Disclosure team, are attached at the end of this announcement, and are available on the website at http://privateequity.standardlifeinvestments.com/products/slepet/index.html.

Financial Summary

Performance (capital only)	As at 30 September 2010	As at 30 September 2009	% Change
Net asset value per ordinary share ("NAV") (undiluted)	195.3p	164.9p	18.4
Net asset value per ordinary share (diluted)	193.3p	163.4p	18.3
Share price	113.75p	112.25p	1.3
FTSE All-Share Index(1)	2,867.6	2,634.8	8.8
MSCI Europe Index (in euros)(1)	90.0	84.3	6.8
Discount (difference between share price and diluted net asset value)	41.2%	31.3%
Gearing (ratio of borrowing to shareholders' funds)	19.2%	11.2%

Performance (total return)	1 year %	5 year %	Since launch %
Share Price	1.4	(23.5)	24.7
Net asset value per ordinary share (diluted)	18.4	41.9	113.8
FTSE All-Share Index (1)	18.7	24.7	38.5
MSCI Europe Index (in euros) (1)	10.5	2.1	(1.2)

⁽¹⁾ The Company has no defined benchmark; the indices above are solely for comparative purposes.

Highs/Lows	High	Low
Share price (mid)	130.50p	93.75p

Historical Record

Summary financial information since the Company's listing.

NAV and share price	Net assets £m	NAV (undiluted) p	NAV (diluted) p	Share price p	Premium/ (discount) to diluted NAV %
As at 30 September 2001	151.0	94.3	94.3	96.50	2.3
As at 30 September 2002	143.8	90.3	90.3	82.00	(9.2)
As at 30 September 2003	148.9	93.6	93.6	82.00	(12.4)
As at 30 September 2004	168.6	105.9	105.9	94.50	(10.8)
As at 30 September 2005	228.3	143.5	143.5	156.25	8.9
As at 30 September 2006	289.8	182.1	179.6	183.50	2.1
As at 30 September 2007	385.7	241.3	237.7	226.50	(4.7)
As at 30 September 2008	375.5	234.8	231.4	161.00	(30.4)
As at 30 September 2009	265.6	164.9	163.4	112.25	(31.3)
As at 30 September 2010	315.2	195.3	193.3	113.75	(41.2)

Performance and Dividends	NAV total return %	Share Price total return1 %	Dividend paid2 £m	Dividend paid per ordinary share p	Expense ratio %
Period to 30 September 2001	(4.3)	(10.2)	-	-	0.703
Year to 30 September 2002	(3.8)	(14.6)	0.7	0.45	0.763
Year to 30 September 2003	5.0	1.6	1.9	1.20	1.07
Year to 30 September 2004	13.8	16.0	0.9	0.55	1.04
Year to 30 September 2005	36.9	67.3	1.9	1.20	1.03
Year to 30 September 2006	26.6	18.7	2.9	1.80	1.01
Year to 30 September 2007	35.4	24.8	3.8	2.40	0.97
Year to 30 September 2008	(1.3)	(27.8)	5.6	3.50	0.99
Year to 30 September 2009	(29.2)	(29.5)	0.6	0.70	0.87
Year to 30 September 2010	18.4	1.4	0.1	0.10	1.02

1   Data supplied by Fundamental Data.

2   Represents the cash dividend paid during the year, declared for the previous financial year.

3   For the period from the Company's listing until 1 July 2002, no management fee was charged on the Company's cash or money market holdings.

	Fund Manager as a % of net assets		Fund Investments as a % of net assets
Investment Exposure	Top 5 %	Top 10 %	Top 10 %	Top 20 %	Top 30 %
As at 30 September 2001	36.0	45.7	39.2	47.1	47.4
As at 30 September 2002	36.6	51.8	42.0	55.5	60.3
As at 30 September 2003	49.1	72.3	61.3	81.9	85.2
As at 30 September 2004	48.6	76.1	64.9	86.7	89.1
As at 30 September 2005	44.9	75.5	60.7	78.3	81.4
As at 30 September 2006	40.9	67.4	50.3	74.0	81.4
As at 30 September 2007	41.0	66.5	42.5	64.8	80.4
As at 30 September 2008	54.5	84.6	55.1	84.0	102.4
As at 30 September 2009	55.5	87.2	61.1	93.8	109.0
As at 30 September 2010	62.1	96.4	67.9	101.0	116.2

Chairman's Statement

Results and performance

The year ended 30 September 2010 was more positive for the Company, following the challenges experienced in the aftermath of the financial crisis in late 2008. During the financial year there was a gradual improvement in the level of activity in the European private equity market, while valuations across the Company's portfolio rose, driven by earnings growth at underlying investee companies. For the year ended 30 September 2010 the Company's NAV increased by 18.4% to 195.3p (diluted NAV - 193.3p), from 164.9p at 30 September 2009 (diluted NAV - 163.4p). Accordingly, the Company can now report five consecutive quarterly increases in NAV. At 30 September 2010 the Company's net assets were £315.2 million.

The closing mid-market price of the Company's ordinary shares on 30 September 2010 was 113.75p, compared to 112.25p a year earlier. The Company's share price was trading at a 41.2% discount to the Company's diluted NAV at the year end. The share price to NAV discount remained wide throughout the financial year, in line with most of the Company's listed European peer group.

The Company's practice is one of reinvestment and to pay a dividend marginally in excess of the minimum required to maintain investment trust status. The Board is recommending a final dividend of 0.2p per ordinary share for the financial year. Subject to shareholder approval at the forthcoming Annual General Meeting, this dividend will be paid on 28 January 2011 to shareholders on the Company's share register at 31 December 2010. Shareholders will have the opportunity to elect to receive the final dividend in the form of ordinary shares. A circular and an election form are enclosed with the Company's annual report and accounts.

Private equity is a long-term asset class. For the five years ended 30 September 2010 the Company's share price total return fell 23.5%, compared to positive returns of 24.7% in the FTSE All-Share Index and 2.1% in the MSCI Europe Index (in euros) on a total return basis. The fall in the Company's share price total return over the five year period reflects, in particular, the fall in the Company's share price in 2008-2009 and the continued wide discount to NAV. Over the same five year period, the Company's NAV total return was 41.9%.

Valuation

At 30 September 2010 the Company's portfolio comprised 39 private equity fund interests. During the financial year the value of the investment portfolio rose by 26.1%.  At 30 September 2010 the value of the portfolio was £369.6 million, of which unrealised gains arising during the year were £47.9 million. This latter amount was net of £12.6 million of unrealised foreign exchange losses.

The unrealised gains before foreign exchange rate movements arose from increased profits at the underlying investee companies, enhanced by the impact of gearing within those companies. In contrast, listed comparable valuation multiples, embodied in the Company's valuation process, declined during the year. The unrealised foreign exchange losses were as a result of sterling appreciating by 5.5% relative to the euro. Of the Company's gross assets of £376.1 million at 30 September 2010, £283.8 million comprised euro denominated assets and £65.3 million dollar denominated assets.

Around 89.8% by value of the private equity funds held by the Company were valued by the relevant fund manager at 30 September 2010.  In undertaking the valuations the fund managers have followed the International Private Equity and Venture Capital Valuation Guidelines. In so doing, the primary valuation methodology is to use listed comparable valuation multiples.

Investment activity

The last eighteen months has seen a rise in the number and value of new private equity investments and realisations completed in Europe. The value of all buy-out transactions completed in the European private equity market during the year ended 30 September 2010 was €51.1 billion (year ended 30 September 2008 and 2009 - €92.0 billion and €21.3 billion respectively). In particular, the mid-market segment of the European buy-out market has been active, albeit a significant number of the transactions have arisen from one private equity owner selling to another. It is expected that this trend will reverse over the coming year, as more buy and sell-side transactions are undertaken by corporate owners. 

Reflecting the gradual improvement in the European private equity market, the Company's draw downs during the year increased to £48.0 million and distributions to £23.0 million. The distributions received generated net realised gains and income of £10.1 million, equivalent to an average return on the Company's acquisition cost of the realised investments of 1.8 times. Most of the distributions received came from investments made between 2003 and 2006. It is still too early to expect significant distributions from investments made in the peak years of 2007 and 2008.

The Company's aggregate outstanding commitments were £150.3 million at 30 September 2010.  Where drawn they will be funded from the Company's cash resources, distributions received from the portfolio of fund investments and the use of the Company's borrowing facility. A number of the private equity funds held by the Company have, however, completed their respective investment periods and any future draw downs are likely to be limited. Accordingly, the Manager believes that up to £30 million of the Company's existing outstanding commitments are unlikely to be drawn. At 30 September 2010 the Company's net indebtedness was £54.2 million.

The European private equity market is starting to see a number of the more experienced mid and large buy-out managers attempting to raise new funds. This is against a background of very few such funds having been raised since 2008. It is the Board's hope that, as distributions to the Company increase and the Company's net indebtedness starts to decline, the Company will be able to make new fund commitments.

During the period from 30 September 2010 to 2 December 2010 the Company funded £13.7 million of draw downs and received £10.8 million of distributions. At 2 December 2010 the Company's total outstanding commitments and net indebtedness were £134.5 million and £57.5 million respectively.

New debt facility

On 29 November 2010 the Company entered into a new £120 million syndicated revolving credit facility, led by The Royal Bank of Scotland plc. This facility expires on 31 December 2013 and is an increase on the existing £100 million facility.

The Board

Clive Sherling, who has served on the Board since December 2006, and who has subsequently increased his range of business interests, intimated some time ago, to the regret of his colleagues, that he wished to step down from the Board after the Annual General Meeting in January 2011.     Clive has made a significant contribution to the Board, where his expertise was particularly valuable on private equity related matters.  Clive carries with him the best wishes of the Board and the Manager for continued success in the future.

The Company has announced that Jonathan Taylor has been co-opted to the Board and will stand for election at the Annual General Meeting.  Jo Taylor, who was selected with the help of recruitment consultants, worked for almost 25 years in 3i Group, where before retirement in 2008 he headed the Ventures Division and was a member of the Group management and investment committees.  Jo has deep practical knowledge of the European private equity and ventures businesses and his new colleagues believe he will provide a material addition to the expertise available to the Company.

Outlook

The last year has seen a continuing recovery in the European private equity market, with an increasing number and value of new investments and realisations. Positive earnings growth at the underlying investee companies gives confidence in our investment portfolio. With the Company's funding position and outstanding commitments now in better balance, the Board believes that the building blocks for future growth are in place.

Scott Dobbie CBE

Chairman

3 December 2010

Investment policy

Objective

The objective of the Company is to achieve long-term capital gains through holding a diversified portfolio

of private equity funds investing predominantly in Europe.

Investment strategy

The principal focus of the Company is to invest in the leading European private equity funds investing in mid to large sized buy-outs, which can be categorised as transactions with enterprise values ranging between €200

million and €2.0 billion.

The Company invests in private equity funds which themselves invest principally in countries in Europe, which the Manager defines as EU Member States, EU Associate Member States and other western European countries.

However, the Company has the flexibility to invest up to 20% of its gross assets, at the time of purchase, in private equity funds which invest principally outside Europe.

The Company's policy is to maintain a broadly diversified portfolio by country, industry sector, maturity and number of underlying investments. The objective is for the portfolio to comprise around 35 - 40 "active" private

equity fund investments; this excludes funds that have recently been raised, but have not yet started investing, and funds that are close to or being  wound up.

The Company invests only in private equity funds, but occasionally may hold direct private equity investments or quoted securities as a result of distributions in specie from its portfolio of fund investments. The Company's

policy is normally to dispose of such assets where they are held on an unrestricted basis.

To maximise the proportion of invested assets it is the Company's policy to follow an over-commitment strategy by making fund commitments which exceed its uninvested capital. In making such commitments, the Manager, together with the Board, will take into account the uninvested capital, the quantum and timing of expected and projected cashflows to and from the portfolio of fund investments and, from time to time, may use borrowings to meet draw downs.

The Company's non-sterling currency exposure is principally to the euro and US dollar. The Company does not seek to hedge this exposure into sterling, although any borrowings in euros and other currencies in which the Company is invested would have such a hedging effect.

Cash held pending investment is invested in short dated government bonds, money market instruments, bank deposits or other similar investments. These investments may be in sterling or such other currencies to which the Company has exposure.

Borrowings

The Company's maximum borrowing capacity is defined in its articles of association, and, unless otherwise sanctioned by an ordinary resolution of the Company, is an amount equal to the aggregate of the amount paid up on the issued share capital of the Company and the amount standing to the credit of the consolidated reserves of the Company, all based on the latest audited consolidated balance sheet. It is expected that bank borrowings

would not exceed more than 30% of the Company's net assets.

Investment trust approval

To comply with one of the conditions for approval as an investment trust, the Company will ensure that when all of its holdings in private equity funds are aggregated, no one underlying investment will represent, at the time of purchase, more than 15% by value of all of the Company's investments. The Company will not invest more than 15% of its total assets in other listed investment companies or listed investment trusts.

Benchmark

The Board has concluded, after careful consideration, that there is no currently available benchmark which is an appropriate measure of the investment performance of the Company. It has, however, resolved to review

this issue at least annually.

Information on how the Company has invested its assets with a view to spreading investment risk in accordance with its investment policy during the year under review is set out in the Portfolio Review section of the Manager's Review.

Manager's Review

The Manager

The Manager, SL Capital Partners LLP ("SL Capital"), is based in Edinburgh, United Kingdom and comprises a team of 14 investment professionals with over 185 years of combined private equity experience. This team manages approximately £5.4 billion of private equity investments on behalf of over 150 clients worldwide.

SL Capital is a limited liability partnership and is 60% owned by Standard Life plc ("Standard Life") and 40% by its eight senior private equity managers. SL Capital has acted as Manager to the Company since its inception in 2001.

With the exception of the Company, all of the Manager's funds under management are held through limited partnership vehicles, which are structured as either pooled or segregated vehicles for clients. SL Capital's

clients range from leading institutional investors in the UK, US, Canada and Europe, to family offices and high net worth individuals globally. The largest clients include Standard Life, the California Public Employees' Retirement System, a large number of UK local authorities and some significant North American pension funds. The Manager is also recommended by many institutional investment and pension fund consultants.

In addition to its Edinburgh investment office, the Manager has four investment professionals based in Boston, United States. This team selects and oversees private equity investments in North America.

SL Capital is one of the largest investors in private equity funds and coinvestments in Europe. One of the key strengths of the investment team is their extensive fund and direct deal experience, which gives the Manager

greater insight into the strategies, processes and disciplines of the funds invested in and allows better qualitative judgements to be made.

The Manager has a detailed and rigorous screening and due diligence process to identify and then evaluate the best private equity fund offerings. The Manager concentrates on opportunities in the buy-out segment of the

European private equity market, but, where it is relevant to a particular investment mandate, it also considers funds targeted on the secondaries, venture, growth and mezzanine segments, as well as funds focused on

particular sectors or geographies.

The private equity asset class has exhibited historically a wide dispersion of returns generated by fund investments and the Manager believes that appropriate portfolio construction and manager selection is vital to optimise investment performance. In that regard, the objective is for the Company's portfolio to comprise around 35-40 "active" private equity fund investments at any one time, with portfolio diversification being controlled through percentage concentration limits applied at an individual fund and manager level.

Finally, the Manager believes that as one of the largest and most experienced private equity investors in Europe, it is able to find and invest in Europe's premier private equity funds, where knowledge of and access to these funds are sometimes limited.

Market Review

European private equity activity recovered during the year, both in value and volume, from the relative low of 2009. Market conditions for realisations have improved and the last year has seen a growing number of sales completed.

European market overview

The global macro-economic environment improved during the year ended 30 September 2010, with most of the major developed economies reporting positive growth. Much of the growth in these economies has been driven

by corporate re-stocking, investment and export growth, particularly to developing countries. The pace of future growth, however, is going to be influenced by the quantum of any ongoing monetary stimulus and, for the major European economies, the impact of any fiscal tightening as governments seek to rein in annual and aggregate deficits.

The listed financial market experienced significant volatility during the year as macro-economic and political concerns impacted investor sentiment. Nevertheless, the major listed financial markets have risen year on year, with underlying corporate earnings growth being the principal driver.

As reported in the Chairman's Statement, European private equity market activity has increased, to the point where the overall enterprise value of transactions completed in 2010 should be similar to that in 2003 and more

than double that completed in 2009. This increase in activity is expected to continue into 2011, with most private equity managers reporting enhanced deal flow. In addition, there now appear to be signs of greater corporate interest in mergers and acquisitions activity, which should be positive for

new private equity investments and realisations.

Debt markets have also improved during the last year. While the multiple and proportion of total debt used to fund transactions remains at the lower end of historic norms, there has been a greater number of syndicated debt facilities and less reliance on single or small groups of banks to provide finance. In addition, although interest rate margins remain wide, there are signs that pricing is becoming more competitive and spreads narrowing. Moreover, there has been record issuance of non-investment grade bonds and this has offered a longer-term funding alternative for private equity managers.

Private equity managers have focused much of their time in the last two years on their portfolio companies, with the aim of protecting and enhancing value. Most private equity managers reduced costs quickly at their investee companies in late 2008 and early 2009 as the fall in global demand impacted sales and inventory levels. This allowed many companies to experience less pronounced falls in operating profit and, as the recovery has started, to see a more significant rise in operating profit and margins.

Market conditions for realisations have improved and the last year has seen a growing number of sales completed. Most of the investments sold were originally made in the years 2003-06 and have been companies that have performed relatively well in the recent economic downturn. The pace of realisations is expected to increase during 2011 and the breadth of the companies sold should widen, to include investments originally made in 2007-08 and companies which are less defensive and more cyclical in nature.

Finally, very few European private equity managers have raised new funds in the last year, particularly in the mid to large sized buy-out segments. With the turmoil in the macro-economic environment and financial markets many traditional private equity investors found themselves constrained in making new commitments to the asset class, while private equity managers were reluctant to raise new funds against a background of depressed valuations, problem investments and few realisations. In the last few months the European private equity market has seen a number of mid and large buy-out managers attempting to raise new funds and the pace of fund raising is expected to accelerate in 2011.

Investment Activity

During the year to 30 September 2010 the Company funded £48.0 million of draw downs and received £23.0 million of distributions.  At 30 September 2010 the Company had £150.3 million of outstanding fund commitments.

Draw downs

As reported above, the Company funded £48.0 million of draw downs during the financial year. This figure is below the long-term average quantum of draw downs funded by the Company, as a result of the low level of new investment activity in the European private equity market and the impact of the reduction in the Company's outstanding fund commitments. The Manager expects the quantum of draw downs to increase during the remainder of 2010 and into 2011 as a result of increasing activity levels within the European private equity market. The private equity funds to which the Company funded the five largest draw downs during the year are set out in the table below.

5 Largest fund draw downs during the year	Type of fund	Aggregate draw downs £m
Industri Kapital 2007	Buy-out	7.0
Barclays European Fund III	Buy-out	6.9
CVC European Equity Partners V	Buy-out	6.4
Candover 2005	Buy-out	4.6
Coller International Partners V	Secondary	3.6
Total of 5 largest drawdowns		28.5
Total of all drawdowns during the year		48.0

Distributions, gains and income

During the year the Company's portfolio of private equity fund interests generated aggregate distributions of £23.0 million, including net realised gains of £8.4 million and income of £1.7 million. The quantum of distributions received also reflected the low level of European private equity activity during the financial year. It is encouraging to note, however, that many of the individual company realisations were at a significant premium to their last reported valuation. The Manager expects to see an increase in the quantum of distributions received by the Company during the remainder of 2010 and into 2011 as realisation activity returns to more historic norms.

Private equity managers continue to use a number of different exit routes for investments and the distributions received by the Company included proceeds from trade sales and, to a lesser extent, refinancings and secondary

buy-outs.

As shown in the bar chart on page 9 of the attached document*, the average return during the year on the Company's acquisition cost of realised investments was 1.8 times. The rise in the average return multiple between 2003 and 2009 can be attributed largely to the previous strength of the European private equity, debt and mergers and acquisitions markets and historic profit growth at underlying investee companies. The recent volatility in listed financial markets and the weaker macro-economic environment are likely to result in a reduction in the average return for realised investments. In particular, investments made during 2006 and 2007, at generally higher prices, will be most affected.

The five largest distributions, gains and income, broken down by fund, received during the year are set out in the table below.

5 Largest fund distributions during the year	Aggregate distributions £m	Aggregate realised gains £m	Aggregate income received £m
Alchemy Investment Plan	4.0	1.0	0.3
Barclays European Fund	4.0	2.6	0.1
Advent Global Private Equity V	3.4	0.9	-
Industri Kapital 2004	2.3	0.6	0.5
Cinven Third Fund	1.4	1.2	-
Total of 5 largest distributions	15.1	6.3	0.9
Total of all distributions during the year	23.0	8.4	1.7

Commitments

The Company made no new fund commitments during the year ended 30 September 2010. This represented a continuation of the cautious approach adopted in the previous financial year.

At 30 September 2010 the Company had £150.3 million of outstanding fund commitments, down from £227.8 million at 30 September 2009. The decline is the result largely of the Company having made no new fund

commitments and having funded £48.0 million of draw downs.

	New (reduced) commitments £m	Draw downs £m	Closing outstanding commitments £m
Year to 30 September 2010	(16.7)	48.0	150.3
Year to 30 September 2009	(169.7)	48.3	227.8
Year to 30 September 2008	138.1	155.2	389.2
Year to 30 September 2007	191.7	137.6	366.0
Year to 30 September 2006	200.5	75.3	307.7
Year to 30 September 2005	148.7	59.1	184.8
Year to 30 September 2004	-	39.9	92.1
Year to 30 September 2003	-	52.6	141.6
Year to 30 September 2002	113.3	36.0	191.0
Period to 30 September 2001	104.4	5.3	117.4

The Company has implemented an over-commitment strategy since late 2001, in line with the Manager's objective of maximising the invested assets. Over time this strategy has helped enhance overall returns generated by the Company.

Over the past five years the Company's outstanding fund commitments less its available liquid resources, expressed as a percentage of the Company's disclosed net asset value, has varied between 30.8% and 132.5%. The bar chart on page 10 of the attached document* shows the relevant percentages at each annual reporting date, from listing to 30 September 2010. The percentage has varied over time  according to the quantum of available liquid resources held by the Company, the rate of draw downs made and distributions received and, importantly, the fund raising cycle of the leading private equity managers in Europe. Given market conditions and the Company's projected cash flows, the Manager will consider carefully the making and timing of any new fund commitments.

Portfolio Review

At 30 September 2010 the Company's net assets were £315.2 million. The Company had interests in 39 private equity funds with a value of £369.6 million.  The effect of drawdowns and distributions over the year was to increase net indebtedness from £27.3 million at 30 September 2009 to £54.2 million at 30 September 2010.

Portfolio composition and performance

At 30 September 2010 the Company's portfolio comprised 39 private equity fund interests with a value of  £369.6 million which, together with its current assets less liabilities, resulted in the Company having net assets of £315.2 million. This represented an undiluted NAV of 195.3p (diluted NAV - 193.3p). A breakdown of the £76.5 million movement in the Company's portfolio valuation during the year is shown in the valuation bridge on page 11 of the attached document*.

The split of the Company's portfolio by type of private equity fund is set out in the pie chart on page 11 of the attached document*.  Details of all of the Company's private equity fund interests, and more detailed information on the ten largest fund investments and thirty largest underlying portfolio companies, can be found below.

The valuation of the Company's private equity fund interests at the year end was carried out by the Manager and has been approved by the Board in accordance with the accounting policies set out in note 1 to the accounts. In undertaking the valuation, the most recent valuation of each fund prepared by the relevant fund manager has been used, adjusted where necessary for subsequent cash flows. The fund valuations are prepared in accordance with the International Private Equity and Venture Capital Valuation guidelines. These guidelines require investments to be valued at "fair value", which is the price at which an orderly transaction would take place between market participants at the reporting date.

Portfolio review

Of the 39 private equity funds in which the Company is invested, 33 of the funds, or 89.8% of the portfolio by value, were valued by their fund managers at 30 September 2010. The Manager continues to believe that the use of such timely valuation information is important.

The value of the Company's portfolio of private equity fund interests increased during the year from £293.1 million at 30 September 2009 to £369.6 million at 30 September 2010. The increase in the valuation was driven by unrealised gains on the investment portfolio, at constant foreign exchange rates, of £60.5 million, together with £48.0 million of new investments and £3.8 million of net realised gains (including the disposal of fund interests). These increases were partially offset by £23.2 million of realisation proceeds and a £12.6 million negative foreign exchange movement.

Information on the valuation movement for the Company's portfolio for each of the financial years since the Company's listing is set out below. This table provides a useful summary of the individual changes and the underlying trends in the Company's portfolio over time.

Valuation movements on unquoted investments
Period/ year to	Draw downs £m	Return of cost £m	Unrealised movement £m	Closing valuation £m
September 2010	48.0	(19.4)	47.9	369.6
September 2009	48.3	(96.5)	(70.8)	293.1
September 2008	155.2	(22.9)	(42.8)	412.1
September 2007	137.6	(59.4)	5.1	322.6
September 2006	75.3	(39.2)	16.6	239.3
September 2005	59.1	(39.4)	16.6	186.6
September 2004	39.9	(26.5)	10.0	150.3
September 2003	52.6	(10.2)	(2.2)	126.9
September 2002	36.0	(10.4)	(10.5)	86.7
September 2001	5.3	(6.3)	(8.1)	71.6

During the year sterling appreciated against the euro by 5.5% and depreciated against the US dollar by 1.5%. This had a negative impact on the Company's NAV. The closing sterling/euro foreign exchange rate at 30 September 2010 was £1/€1.1543 and the closing sterling/dollar foreign exchange rate was £1/$1.5758. The combined effect of foreign exchange movements on the valuation of the portfolio over the year was a 7.8p decline in NAV.

The Manager and the Board do not believe it is appropriate for the Company to undertake any financial hedging of its foreign exchange exposure, given the irregularity in size and timing of individual cash flows to and from its fund interests. Any cash balances and bank indebtedness are generally held in sterling, euro and US dollars, broadly in proportion to the currency of the Company's outstanding fund commitments.

On 29 November 2010 the Company entered into a new £120 million committed, revolving credit facility, led by the Royal Bank of Scotland plc. This new facility expires on 31 December 2013.

Valuation and leverage multiple analysis

The bar charts on page 12 of the attached document* show the valuation and leverage multiples of the thirty largest underlying portfolio companies held by the Company's private equity fund interests at 30 June 2010. This analysis is at 30 June 2010 due to the fact that most private equity funds provide detailed information on the underlying portfolio companies twice a year, in June and December, rather than quarterly.

The valuation multiples of each underlying portfolio company are derived using the relevant listed comparable companies, adjusted where appropriate, in line with the International Private Equity and Venture Capital Valuation guidelines.

The median valuation and leverage multiples for the top thirty underlying portfolio companies are 8-9x EV/EBITDA and 4-5x Debt/EBITDA respectively. The Manager believes that these valuation and leverage multiples are in line with the European private equity market for similar sized deals and vintages.

Diversification

The Board has agreed, and regularly reviews, diversification limits with the Manager regarding the Company's net asset and commitment exposure to both individual private equity funds and their managers. The Manager

also monitors the Company's exposure to the underlying investments held by the different private equity funds in which the Company is invested. At 30 September 2010, the Company was invested in 39 different private

equity funds, which collectively had interests in a total of 510 underlying investments.

Analysis of the underlying investments held by the different private equity funds allows the Manager to track the Company's exposure by geography, industrial sector, maturity of investment and value relative to original cost. Such information is used by the Manager in reviewing the exposure of the Company's portfolio, in assisting it to make new investment decisions and in having a better understanding of the timing of prospective cash flows.

The diversification of the Company's private equity fund interests, at 30 September 2010 and 2009, is set out in the four bar charts shown on page 13 of the attached document*.  The charts demonstrate the broad diversification that applies by geography and by sector within the Company's underlying portfolio of investments. The UK still remains the single largest geographic exposure, although it has fallen from 64% at the time of the Company's listing to 25% at 30 September 2010, as other European private equity markets continue to develop.

At 30 September 2010, the Company had five fund investments - Pomona Capital V, Pomona Capital VI, Coller International Partners IV, Coller International Partners V and Towerbrook Investors II - which are likely to invest a significant proportion of their capital outside Europe. In total, these funds represent 13.2% of the Company's gross assets. The broad diversification in sectors like industrials, consumer services and financial helps to mitigate the effect of volatility in any individual sector.

The chart showing the maturity exposure of underlying investments highlights the increasing maturity of the portfolio, as a result of the reduced levels of private equity activity over the last two years. The chart showing value relative to the original cost of underlying investments illustrates that, despite an increase in the percentage of investments valued below original investments cost, the portfolio remains healthy with 81% of the portfolio valued at or above cost.

SL Capital Partners LLP

3 December 2010

(* Please note that the references are provided in the 2010 Annual Report and Accounts attached to this announcement).

Fund Investments as at 30 September 2010

The private equity funds in which the Company invests usually take the form of limited partnerships. Contractual commitments are made to the funds and these are drawn down by the managers of the funds as required for investment over time. Details of all of the Company's fund investments, by valuation, and a description of the ten largest fund investments follow:

Year of commitment	Fund	Type	Number of investments	Valuation date*	Outstanding commitments £000	Cost £000	Valuation £000	% of net assets
2007	Barclays European Fund III	Buy-out	32	30.09.2009	8,356	40,572	37,076	11.8
2006	Charterhouse Capital Partners VIII	Buy-out	11	30.09.2009	10,706	33,783	32,381	10.3
2007	Apax Europe VII	Buy-out	19	30.09.2009	8,381	24,412	28,287	9.0
2007	Industri Kapital 2007	Buy-out	5	30.06.2009	23,972	17,666	21,154	6.7
2005	Candover 2005 Fund	Buy-out	9	30.09.2009	5,028	37,635	19,978	6.3
2005	Advent Global Private Equity V	Buy-out	15	30.09.2009	1,365	10,338	18,617	5.9
2006	HgCapital 5	Buy-out	13	30.09.2009	3,503	15,427	15,176	4.8
2006	Coller International Partners V	Secondary	37	30.06.2009	9,392	12,137	14,527	4.6
2006	3i Eurofund V	Buy-out	21	30.09.2009	11,176	18,614	13,809	4.4
2006	TowerBrook Investors II	Buy-out	11	30.09.2009	3,905	9,573	13,056	4.1
2000	CVC European Equity Partners III	Buy-out	8	30.09.2009	933	5,717	12,550	4.0
2008	CVC European Equity Partners V	Buy-out	9	30.09.2009	19,327	10,530	12,109	3.8
2006	Cinven Fourth Fund	Buy-out	12	30.09.2009	6,835	9,570	11,974	3.8
2005	Pomona Capital VI Fund	Secondary	40	30.09.2009	1,732	10,337	11,050	3.5
2005	CVC European Equity Partners IV	Buy-out	16	30.09.2009	1,935	8,265	10,683	3.4
2001	Cinven Third Fund	Buy-out	6	30.09.2009	1,153	9,558	10,310	3.3
2002	Charterhouse Capital Partners VII	Buy-out	6	30.09.2009	3,032	8,901	9,854	3.1
2005	Barclays European Fund II	Buy-out	24	30.09.2009	2,216	11,915	9,092	2.9
2006	Permira IV	Buy-out	12	30.09.2009	2,144	17,929	9,020	2.9
2001	Alchemy Plan - SLEPET	Buy-out	5	30.06.2009	0	8,967	7,740	2.5
2002	Coller International Partners IV	Secondary	37	30.09.2009	2,665	2,046	7,681	2.4
2004	Industri Kapital 2004	Buy-out	7	30.06.2009	14	8,227	6,534	2.1
2002	Barclays European Fund	Buy-out	8	30.09.2009	1,052	3,827	6,221	2.0
2006	Terra Firma Capital Partners III	Buy-out	4	30.09.2009	10,194	16,127	5,760	1.8
2006	CVC Tandem Fund	Buy-out	14	30.09.2009	1,175	4,721	5,326	1.7
2001	Candover 2001 Fund	Buy-out	5	30.09.2009	-	10,437	4,787	1.5
2008	Advent Global Private Equity VI	Buy-out	11	30.09.2009	7,039	3,471	3,706	1.2
2001	Pomona Capital V Fund	Secondary	75	30.09.2009	108	6,824	3,492	1.1
2000	Scottish Equity Partners II	Venture capital	12	30.06.2009	-	4,271	2,202	0.7
1998	CVC European Equity Partners II	Buy-out	8	30.09.2009	1,088	2,887	2,085	0.7
1999	Apax Europe IV	Balanced	9	30.09.2009	-	7,879	1,969	0.6
2001	MUST 4	Buy-out	6	30.09.2009	1,906	3,984	1,086	0.3
1997	Apax UK VI	Buy-out	1	30.09.2009	-	3,190	228	0.1
1992	M.M. Investissement	Buy-out	1	30.09.2009	-	430	53	-
1998	Candover 1997 Fund	Buy-out	-	30.06.2009	-	535	25	-
1995	Phildrew Fourth	Buy-out	1	30.09.2009	-	499	20	-
1999	Phildrew Fifth	Buy-out	-	30.09.2009	-	5,864	12	-
1997	Global Rights Development Fund	Development	-	30.09.2009	-	827	-	-
1995	Granville Private Equity V	Buy-out	-	30.06.2009	-	-	-	-
	Total portfolio investments†		510		150,332	407,892	369,630	117.3
	Current assets less current liabilities						(54,388)	(17.3)
	Shareholders' funds						315,242	100.0

* valuation date refers to the date of the last valuation prepared by the manager of the relevant fund.

† the 510 underlying investments represent holdings in 487 separate companies.

Ten Largest Fund Investments as at 30 September 2010

Barclays European Fund III		30 September 2010	30 September 2009
Barclays European Fund III is a €1.8 billion private equity fund focused on European middle market buy-outs. The fund is managed, alongside €800 million from Barclays Bank, by Barclays Private Equity, the private equity arm of Barclays PLC. The manager operates from offices in London, Paris, Munich, Zurich, Milan, Birmingham, Manchester and Reading with just under half of the investments sourced in the UK.	Value (£'000)	37,076	29,089
	Cost (£'000)	40,572	33,675
	Commitment (€'000)	60,000	60,000
	Amount Funded	83.9%	70.4%
	Holding in Fund	3.3%	3.3%
	Income (£'000)	-	-

Charterhouse Capital Partners VIII		30 September 2010	30 September 2009
Charterhouse Capital Partners VIII is a €4.0 billion private equity fund focused on European buy-outs. The fund is managed by Charterhouse Capital Partners, one of the oldest private equity firms in the UK. The manager operates across western Europe from its London office and has a long track record of delivering superior returns for investors. The investment strategy is to target large corporate buy-outs with an equity requirement of €200 million to €450 million per transaction.	Value (£'000)	32,381	23,750
	Cost (£'000)	33,783	32,747
	Commitment (€'000)	60,000	60,000
	Amount Funded	79.4%	77.4%
	Holding in Fund	1.5%	1.5%
	Income (£'000)	-	-

Apax Europe VII		30 September 2010	30 September 2009
Apax Europe VII is a €11.1 billion private equity fund focused on the European market. The fund is managed by Apax Partners, one of the leading and most experienced private equity managers in Europe, where it operates from offices in London, Munich, Milan, Stockholm, Tel Aviv and Madrid. Apax Europe VII focuses on buy-outs and targets Apax Partners' six chosen sectors of information technology, telecommunications, healthcare, media, financial services and retail.	Value (£'000)	28,287	18,848
	Cost (£'000)	24,412	21,633
	Commitment (€'000)	41,385	60,000
	Amount Funded	76.6%	47.5%
	Holding in Fund	0.4%	0.5%
	Income (£'000)	-	-

Industri Kapital 2007		30 September 2010	30 September 2009
Industri Kapital 2007 is a €1.7 billion private equity fund focused on northern European buyouts. The fund is managed by IK Investment Partners which is headquartered in Stockholm, Sweden with further offices in the UK, Norway, France and Germany. IK targets the buy-out of businesses with enterprise values of between €100 million and €500 million. Since its formation in 1989, IK has consistently generated strong performance across several funds.	Value (£'000)	21,154	12,505
	Cost (£'000)	17,666	10,657
	Commitment (€'000)	50,000	50,000
	Amount Funded	44.7%	28.1%
	Holding in Fund	3.0%	3.0%
	Income (£'000)	-	-

Candover 2005 Fund		30 September 2010	30 September 2009
The Candover 2005 Fund is a €3.5 billion private equity fund focused on European buy-outs. The fund is managed by Candover Partners Limited, a subsidiary of Candover Investments plc, an investment company listed on the London Stock Exchange. Historically, Candover concentrated on larger buy-outs in the UK market, however, investments in continental Europe are a significant part of the manager's and this fund's strategy.	Value (£'000)	19,978	16,868
	Cost (£'000)	37,635	33,042
	Commitment (€'000)	60,000	60,000
	Amount Funded	90.3%	81.2%
	Holding in Fund	1.7%	1.7%
	Income (£'000)	-	23

Advent Global Private Equity V		30 September 2010	30 September 2009
Advent Global Private Equity V is a €2.5 billion private equity fund focused on global buyouts. The Company's commitment is to the euro denominated partnership that only invests in European transactions. The fund is managed by Advent International which has a strong track record in Europe, where it operates from offices in London, Paris, Frankfurt, Milan, Madrid and Amsterdam. Advent targets middle market buy-out transactions across a wide range of sectors.	Value (£'000)	18,617	16,220
	Cost (£'000)	10,338	11,809
	Commitment (€'000)	22,500	22,500
	Amount Funded	93.0%	88.0%
	Holding in Fund	8.0%	8.0%
	Income (£'000)	-	-

HgCapital 5		30 September 2010	30 September 2009
HgCapital 5 is a £830 million private equity fund focused on buy-outs of companies with enterprise values of between £100 and £500 million, located in the UK, Germany and the Benelux region. The fund is managed by HgCapital, which has offices in London and Munich. The manager was established in 2000, following a management buy-out from Merrill Lynch.	Value (£'000)	15,176	10,295
	Cost (£'000)	15,427	14,207
	Commitment (€'000)	20,300	20,300
	Amount Funded	82.7%	77.0%
	Holding in Fund	2.4%	2.4%
	Income (£'000)	-	-

Coller International Partners V		30 September 2010	30 September 2009
Coller International Partners V is a $4.5 billion private equity fund focused on secondary private equity opportunities. The fund is managed by Coller Capital, one of the most established managers of secondary funds, which was founded in 1990 and is led by Jeremy Coller. The manager operates from offices in London and New York and targets secondary positions in buy-out and venture funds globally.	Value (£'000)	14,527	10,237
	Cost (£'000)	12,137	9,795
	Commitment (€'000)	40,000	40,000
	Amount Funded	63.0%	49.0%
	Holding in Fund	0.8%	0.9%
	Income (£'000)	-	-

3i Eurofund V		30 September 2010	30 September 2009
3i Eurofund V is a €5.0 billion private equity fund, including a commitment of €2.8 billion from 3i plc, focused on mid to large market European buy-outs. The fund is managed by 3i Buyouts, a division of 3i Group plc, an investment company listed on the London Stock Exchange. 3i is one of the oldest and most experienced private equity managers in Europe and operates from a network of 12 offices including Amsterdam, London, Madrid, Paris and Stockholm. 3i target buyout transactions with enterprise values in the range €50 million to €500 million, across a wide range of business sectors.	Value (£'000)	13,809	10,600
	Cost (£'000)	18,614	16,434
	Commitment (€'000)	40,000	40,000
	Amount Funded	67.8%	58.5%
	Holding in Fund	0.8%	0.8%
	Income (£'000)	-	-

Towerbrook Investors II		30 September 2010	30 September 2009
Towerbrook Investors II is a $1.3 billion private equity fund focused on the North American and European markets. The fund is managed by Towerbrook Capital Partners, a trans-atlantic private equity group founded in 2005 as a result of a spin-off from Soros Private Equity. The manager operates from offices in New York and London and pursues control-oriented, contrarian in nature, investments in middle market companies.	Value (£'000)	13,056	10,328
	Cost (£'000)	9,573	10,284
	Commitment (€'000)	25,000	25,000
	Amount Funded	75.4%	79.0%
	Holding in Fund	2.0%	2.0%
	Income (£'000)	(18)	116

Top 30 Underlying Investments at 30 September 2010

The table below summarises the top 30 underlying investments, by value, in the Company's portfolio of private equity funds. The valuations are gross, before any carry provision.

Entity	Description	Fund	Year of investment	% of net assets
Acromas	Provider of financial, insurance, travel and road side assistance services	Charterhouse Capital Partners VII & VIII, CVC European Equity Partners IV & CVC Tandem Fund	2004	3.6
Elior	Catering provider	Charterhouse Capital Partners VII & VIII	2006	2.5
bpost	Belgian postal service	CVC European Equity Partners III, IV & CVC Tandem	2006	2.3
Vivarte	Footwear and apparel retailer	Charterhouse Capital Partners VIII	2007	2.2
Amadeus	Travel distribution services	Cinven Third Fund	2005	2.2
Parques Reunidos	Amusement parks	Candover 2005 Fund	2007	1.9
Visma	Provider of accounting software and services	HgCapital 5	2006	1.7
Stork	Manufacturing and engineering conglomerate	Candover 2005 Fund	2008	1.6
Cengage Learning	Publisher of books for the higher education sector	Apax Europe VII	2007	1.5
Autobar	Vending machines, distribution and packaging	Charterhouse Capital Partners VII	2004	1.5
Converteam	Manufacturer of power conversion machinery	Barclays European Fund III	2008	1.4
Evonik Industries	Speciality chemicals, power generation and real estate	CVC European Equity Partners V & CVC Tandem	2008	1.4
ista	Heat and water metering	Charterhouse Capital Partners VIII	2007	1.4
Flabeg	Manufacturer of industrial mirror glass components	Industri Kapital 2007	2008	1.3
Jack Wolfskin	Outdoor equipment retailer	Barclays European Fund	2005	1.3
AWAS/Pegasus	Aircraft lessor	Terra Firma Capital Partners III	2007	1.2
Kestrel Holdings	Specialist mortgage lending	Alchemy Investment Plan	2004	1.2
Global Blue	Travel related payment services	Barclays European Fund III	2007	1.2
Minimax	Producer of fire suppression systems	Industri Kapital 2004 & Industri Kapital 2007	2006	1.2
Schenck Process	Provider of industrial weighing and measuring solutions	Industri Kapital 2007	2007	1.1
Flint (Xsys/BASF)	Manufacturer of printing inks	CVC European Equity Partners III	2004	1.1
Not disclosed	Fashion discount retailer	Advent Global Private Equity V	2007	1.1
Tnuva	Food manufacturer and distributor	Apax Europe VII	2008	1.0
Alma Consulting	Operational consulting	Candover 2005 Fund	2007	1.0
Jimmy Choo	Produces women's luxury footwear and handbags	TowerBrook Investors II	2007	1.0
Weather Investments	Portfolio of telecom operators	Apax Europe VII	2008	1.0
PHS	UK business services	Charterhouse Capital Partners VII	2005	0.9
A-Plan Holdings	Retail insurance broking	Barclays European Fund III	2008	0.9
Etanco	Producer of building fastener and fixing systems	Industri Kapital 2007	2008	0.9
Ziggo	Cable operator	Cinven Fourth Fund	2006	0.9
Total of top 30 underlying investments				43.5

Directors' Report

The directors present their report and the audited financial statements for the year ended 30 September 2010.

Business Review

Business and Status

The Company carries on business as an investment trust and has been approved as such by HM Revenue & Customs for the year ended 30 September 2009, subject to their rights to further enquiry under the Finance Act 1998. The Company has subsequently conducted its affairs so as to enable it to continue to seek such approval. The Company is an investment company within the terms of section 833 of the Companies Act 2006. The Manager of the Company is SL Capital Partners LLP. The Board is independent of the Manager and Standard Life.

Investment Objective

The investment objective is to achieve long-term capital gains through holding a diversified portfolio of private equity funds investing predominantly in Europe. The full text of the Company's investment policy can be found above and the Portfolio Review section of the Manager's Review explains how the Company has invested its assets with a view to spreading investment risk in accordance with the Company's investment policy during the year under review.

Review of performance over one year and five years

An outline of the performance, market background, investment activity and portfolio during the year under review and the performance over the last five years, as well as the investment outlook, are provided in the Chairman's Statement and the Manager's Review.

Monitoring performance - Key Performance Indicators

At each Board meeting the directors consider a number of performance indicators to assess the Company's success in achieving its objectives, which include both absolute and relative performance compared to market indices and peer group. The key performance indicators ("KPIs") are established industry measures, covering both the Company and its fund investments, and include:

• Net asset value capital return

• Projected and actual portfolio cashflows

• Discount and discount volatility

• Share price capital return

• Expenses and expense ratio

The net asset value and share price performance for the year and five years ended 30 September 2010 and since listing are provided in the Financial Summary. The Company's expense ratio and discount levels are provided above. An analysis of the portfolio cashflows, including draw downs, distributions and fund commitments, is provided in the Investment Activity section of the Manager's Review.

Principal Risks and Uncertainties

The major focus of the Company is to invest in European private equity funds, which themselves invest in unquoted companies. The Company has the ability to invest up to 20% of its gross assets in funds that operate outside Europe. The aim is to build a portfolio of private equity fund interests diversified by country, industry sector, maturity and number of underlying investments. The financial risk management objectives and policies of the Company are contained in note 19 to the accounts. The principal risks facing the Company relate to the Company's investment activities and include the following:

• market risk

• currency risk

• over-commitment risk

• liquidity risk

• credit risk

• interest rate risk

• operating and control environment risk

An explanation of these risks and how they are managed is contained in note 19 to the accounts.

Social, Community, Employee Responsibilities and Environmental Policy

As an investment trust, the Company has no direct social, community, employee or environmental responsibilities. Its principal responsibility to shareholders is to ensure that the investment portfolio is properly invested and managed. The Company has no employees and no requirement to report separately on this area, as the management of the portfolio has been delegated to the Manager, SL Capital Partners LLP.

Statement of Directors' Responsibilities

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have prepared the financial statements in accordance with United Kingdom Generally Accepted

Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

-          select suitable accounting policies and then apply them consistently;

-          make judgements and accounting estimates that are reasonable and prudent;

-          state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;

-          prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors confirm that they comply with all the above requirements. The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements and the Directors' Remuneration Report comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors are responsible for the maintenance and integrity of the company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Each of the directors confirms that, to the best of their knowledge:

-          the financial statements, which have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), give a true and fair view of the assets, liabilities, financial position and profit of the company; and

-          the directors' report includes a fair review of the development and performance of the business and the position of the company, together with a description of the principal risks and uncertainties that it faces.

For Standard Life European Private Equity Trust PLC

Scott Dobbie CBE

Chairman

Edinburgh, 3 December 2010

INCOME STATEMENT (audited)

for the year ended 30 September 2010

		Revenue	Capital	Total
	Notes	£'000	£'000	£'000
Gains/(losses) on investments	9	-	51,693	51,693
Currency gains/(losses)	14	-	944	944
Income from investments	2	1,713	-	1,713
Interest receivable and other income	2	1	-	1
Investment management fee	3	(238)	(2,138)	(2,376)
Administrative expenses	4	(581)	-	(581)
		_________	_________	_________
NET RETURN ON ORDINARY ACTIVITIES
BEFORE FINANCE COSTS AND TAXATION		895	50,499	51,394
Finance costs	5	(191)	(1,716)	(1,907)
		_________	_________	_________
NET RETURN ON ORDINARY ACTIVITIES
BEFORE TAXATION		704	48,783	49,487
Taxation	6	(161)	141	(20)
		_________	_________	_________
NET RETURN ON ORDINARY ACTIVITIES
AFTER TAXATION		543	48,924	49,467
		_________	_________	_________
NET RETURN PER ORDINARY SHARE	8	0.34p	30.36p	30.70p
		_________	_________	_________
DILUTED NET RETURN PER ORDINARY SHARE	8	0.34p	30.30p	30.64p
		_________	_________	_________

The "Total" column of this statement represents the profit and loss account of the Company.

All revenue and capital items in the above statement derive from continuing operations.

No operations were acquired or discontinued in the year.

A Statement of Total Recognised Gains and Losses has not been prepared as all gains and losses are recognised in the Income Statement.

The dividend which has been recommended based on this Income Statement is 0.2p (2009 - 0.1p) per ordinary share.

INCOME STATEMENT (audited)

for the year ended 30 September 2009

		Revenue	Capital	Total
	Notes	£'000	£'000	£'000
Gains/(losses) on investments	9	-	(100,733)	(100,733)
Currency gains/(losses)	14	-	(4,938)	(4,938)
Income from investments	2	1,363	-	1,363
Interest receivable and other income	2	86	-	86
Investment management fee	3	(220)	(1,984)	(2,204)
Administrative expenses	4	(580)	(7)	(587)
		_________	_________	_________
NET RETURN ON ORDINARY ACTIVITIES
BEFORE FINANCE COSTS AND TAXATION		649	(107,662)	(107,013)
Finance costs	5	(250)	(2,247)	(2,497)
		_________	_________	_________
NET RETURN ON ORDINARY ACTIVITIES
BEFORE TAXATION		399	(109,909)	(109,510)
Taxation	6	(88)	21	(67)
		_________	_________	_________
NET RETURN ON ORDINARY ACTIVITIES
AFTER TAXATION		311	(109,888)	(109,577)
		_________	_________	_________
NET RETURN PER ORDINARY SHARE	8	0.19p	(68.43p)	(68.24p)
		_________	_________	_________
DILUTED NET RETURN PER ORDINARY SHARE	8	0.19p	(68.43p)	(68.24p)
		_________	_________	_________

RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS (audited)

For the year ended 30 September 2010					Capital
		Share	Share	Special	redemption	Capital	Revenue
		capital	premium	reserve	reserve	reserves	reserve	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 30 September 2009		356	79,356	79,148	3	101,498	5,280	265,641
Total recognised gains		-	-	-	-	48,924	543	49,467
Conversion of founder A shares		-	217	-	-	-	-	217
Scrip Issue of ordinary shares		1	77	-	-	-	-	78
Dividends paid	7	-	-	-	-	-	(161)	(161)
		______	_______	______	_______	________	_______	_______
Balance at 30 September 2010	13,14	357	79,650	79,148	3	150,422	5,662	315,242
		______	_______	______	_______	________	_______	_______
For the year ended 30 September 2009					Capital
		Share	Share	Special	redemption	Capital	Revenue
		capital	premium	reserve	reserve	reserves	reserve	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 30 September 2008		354	78,535	79,148	2	211,386	6,088	375,513
Total recognised (losses)/gains		-	-	-	-	(109,888)	311	(109,577)
Conversion of founder A shares		-	256	-	1	-	-	257
Scrip Issue of ordinary shares		2	565	-	-	-	-	567
Dividends paid	7	-	-	-	-	-	(1,119)	(1,119)
		______	_______	______	_______	________	_______	_______
Balance at 30 September 2009	13,14	356	79,356	79,148	3	101,498	5,280	265,641
		______	_______	______	_______	________	_______	_______

BALANCE SHEET (audited)

		As at		As at
		30 September		30 September
		2010		2009
		£000	£000	£000	£000
	Notes
NON-CURRENT ASSETS
Investments at fair value through profit or loss	9		369,630		293,106
CURRENT ASSETS
Debtors	10	108		161
Cash and short term deposits		6,403		2,378
		_________		_________
		6,511		2,539
CREDITORS: AMOUNTS FALLING
DUE WITHIN ONE YEAR	11	(60,899)		(30,004)
		_________		_________
NET CURRENT LIABILITIES			(54,388)		(27,465)
			_________		_________
TOTAL ASSETS LESS CURRENT LIABILITIES			315,242		265,641
			_________		_________
CAPITAL AND RESERVES
Called up share capital	13		357		356
Share premium	14		79,650		79,356
Special reserve	14		79,148		79,148
Capital redemption reserve	14		3		3
Capital reserves	14		150,422		101,498
Revenue reserve	14		5,662		5,280
			_________		_________
TOTAL SHAREHOLDERS' FUNDS			315,242		265,641
			_________		_________
ANALYSIS OF SHAREHOLDERS' FUNDS
Equity interests (ordinary shares)			315,208		265,607
Non-equity interests (founder shares)	13		34		34
			_________		_________
			315,242		265,641
			_________		_________
NET ASSET VALUE PER EQUITY SHARE	16		195.3p		164.9p
			_________		_________

The financial statements were approved by the Board on 3 December 2010 and were signed on its behalf by:

SCOTT DOBBIE CBE, Chairman

3 December 2010

CASHFLOW STATEMENT (audited)

			For the year		For the year
			ended 30 September		ended 30 September
			2010		2009
			£'000	£'000	£'000	£'000
NET CASH OUTFLOW FROM OPERATING ACTIVITIES		15		(1,252)		(1,521)
NET CASH OUTFLOW
FROM SERVICING OF FINANCE				(1,921)		(2,656)
NET CASH INFLOW FROM TAXATION				8		274
FINANCIAL INVESTMENT
Purchase of investments		9	(47,994)		(48,296)
Disposal of underlying investments by funds		9	21,273		18,193
Disposal of fund investments by way of secondary sales		9	1,890		48,348
			_________		_________
NET CASH (OUTFLOW)/INFLOW				(24,831)		18,245
FROM FINANCIAL  INVESTMENTS
ORDINARY DIVIDENDS PAID				(78)		(547)
				_________		_________
NET CASH (OUTFLOW)/INFLOW BEFORE FINANCING				(28,074)		13,795
Net proceeds on issue of ordinary shares			212		252
Bank loans drawn down/(repaid)			30,943		(10,020)
			_________		_________
NET CASH INFLOW/(OUTFLOW)FROM FINANCING				31,155		(9,768)
				_________		_________
INCREASE IN CASH				3,081		4,027
				_________		_________
RECONCILIATION  OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
Increase in cash as above				3,081		4,027
(Drawdown)/repayment of loan				(30,943)		10,020
Currency movements				944		(4,938)
				_________		_________
MOVEMENT IN NET DEBT IN THE PERIOD				(26,918)		9,109
Opening net debt				(27,324)		(36,433)
				_________		_________
CLOSING NET DEBT				(54,242)		(27,324)
				_________		_________
REPRESENTED BY:
Cash and short term deposits				6,403		2,378
Loans				(60,645)		(29,702)
				_________		_________
				(54,242)		(27,324)
				_________		_________

Notes:

1  Accounting Policies
(a) Basis of preparation and going concern
The financial statements have been prepared under the historical cost convention, as modified to include the revaluation of investments, and in accordance with applicable UK Accounting Standards and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies' (issued January 2009). They have also been prepared on the assumption that approval as an investment trust will continue to be granted. The financial statements have been prepared on a going concern basis. The financial statements, and the net asset value per equity share figures, have been prepared in accordance with UK Generally Accepted Accounting Principles ("UK GAAP"). The directors consider the Company's functional currency to be sterling, as the Company is registered in Scotland, the Company's shareholders are predominantly based in the UK and the Company is subject to the UK's regulatory environment.
(b) Revenue, expenses and finance cost
Dividends from quoted investments are included in revenue by reference to the date on which the price is marked ex-dividend. Interest on quoted investments and other interest receivable are dealt with on an effective interest rate basis. Dividends and income from unquoted investments are included when the right to receipt is established. All expenses are accounted for on an accruals basis. Expenses are charged through the revenue account of the Income Statement except as follows:
-    transaction costs incurred on the purchase and disposal of investments are recognised as a capital item in the Income Statement; and
-    the Company charges 90% of investment management fees and finance costs to capital, in accordance with the Board's expected long-term split of returns between capital gains and income from the Company's investment portfolio.
(c) Investments
Investments have been designated upon initial recognition as fair value through the profit or loss. Investments are recognised as at the date of the commitment to the fund and removed when the fund is wound up. Subsequent to initial recognition, investments are valued at fair value as detailed below. Gains and losses arising from changes in fair value are included in net profit or loss for the period as a capital item in the Income Statement and are ultimately recognised in the unrealised reserve.
Unquoted investments are stated at the Directors' estimate of fair value and follow the recommendations of the EVCA and the BVCA. The estimate of fair value is normally the latest valuation placed on a fund by its manager as at the balance sheet date. The valuation policies used by the manager in undertaking that valuation will generally be in line with the joint publication from the BVCA and the EVCA, 'International Private Equity and Venture Capital Valuation guidelines'. Where formal valuations are not completed as at the balance sheet date the valuation from the fund manager is adjusted for any subsequent cash flows occurring between the valuation date and the balance sheet date. The Company's Manager may further adjust such valuations to reflect any changes in circumstances from the last managers formal valuation date to arrive at the estimate of fair value.
(d) Dividends payable - Interim and final dividends are recognised in the period in which they are paid. Scrip dividends are recognised in the period in which shares are issued.
(e) Capital reserves - Gains or losses on investments realised in the year that have been recognised in the Income Statement are transferred to the "capital reserve - gains/(losses) on disposal". In addition, any prior unrealised gains or losses on such investments are transferred from the "capital reserve - revaluation" to the "capital reserve - gains/(losses) on disposal" on the disposal of the investment. Increases and decreases in the fair value of investments are recognised in the Income Statement and are then transferred to the "capital reserve - revaluation".
(f) Taxation
i)   Current taxation - Provision for corporation tax is made at the current rate on the excess of taxable income net of any allowable deductions.
ii)  Deferred taxation is recognised in respect of all temporary differences that have originated but not reversed at the balance sheet date, where transactions or events that result in an obligation to pay more or a right to pay less tax in future have occurred at the balance sheet date, measured on an undiscounted basis and based on enacted tax rates. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the underlying temporary differences can be deducted. Temporary differences are differences arising between the Company's taxable profits and its results as stated in the accounts which are capable of reversal in one or more subsequent periods.
Due to the Company's status as an investment trust company, and the intention to continue meeting the conditions required to obtain approval in the foreseeable future, the Company has not provided deferred tax on any capital gains and losses arising on the revaluation or disposal of investments.
(g)  Overseas currencies - Overseas assets and liabilities are translated at the exchange rate prevailing at the Company's balance sheet date.  Gains or losses on translation of investments held at the year end are accounted for through the unrealised capital reserve.  Gains or losses on the translation of overseas currency balances held at the year end are accounted for through the realised capital reserve.
Rates of exchange to sterling as at 30 September were:
	2010	2009
Euro	1.1543	1.0942
US Dollar	1.5758	1.5993
Transactions in overseas currency are translated at the exchange rate prevailing on the date of transaction.

		Year to	Year to
		30 September 2010	30 September 2009
2	Income	£'000	£'000
	Income from unquoted investments	1,713	1,363
	Interest receivable on cash	-	71
	Other income	1	15
		______________	______________
	Total income	1,714	1,449
		______________	______________

		Year to 30 September 2010			Year to 30 September 2009
		Revenue	Capital	Total	Revenue	Capital	Total
3	Investment management fee	£'000	£'000	£'000	£'000	£'000	£'000
	Investment management fee	238	2,138	2,376	220	1,984	2,204
	The investment management fee payable to the Manager is 0.8% per annum of the investments and other assets of the company and any subsidiaries less the aggregate of the liabilities of the Company and any subsidiaries.  The investment management fee is allocated 90% to the realised capital reserve and 10% to the revenue account.  The management agreement between the Company and the Manager is terminable by either party on twelve months written notice.

		Year to	Year to
		30 September 2010	30 September 2009
		Total	Total
4	Administrative expenses	£'000	£'000
	Secretarial and administration fee	177	172
	Directors' fees	154	151
	Auditors' remuneration - statutory audit	21	26
	- interim review	14	13
	- other assurance	1	1
	Legal fees	25	40
	Fees and subscriptions	44	45
	Professional and consultancy fees	52	60
	Other expenses	93	79
		______________	______________
		581	587
		______________	______________
	Irrecoverable VAT has been shown under the relevant expense line. In the year to 30 September 2010: nil  (2009: £7,000) of administrative expenses were charged to capital.
	The secretarial and administration fee is payable to Aberdeen Asset Managers Limited and is adjusted in line with the retail prices index on 1 July each year.  The secretarial and administration agreement is terminable by either party on three months' notice.
	The emoluments of the Chairman, who was the highest paid Director, were £38,500 (2009 - £38,500) per annum.  The emoluments of each of the other directors were £22,000 (2009 - £22,000) per annum, except for Hamish Buchan who received an additional £5,500 (2009 - £5,500) as Senior Independent Director and Chairman of the Audit Committee.

		Year to 30 September 2010			Year to 30 September 2009
		Revenue	Capital	Total	Revenue	Capital	Total
5	Finance costs	£'000	£'000	£'000	£'000	£'000	£'000
	Bank loans	191	1,716	1,907	250	2,247	2,497

		Year to 30 September 2010				Year to 30 September 2009
		Revenue	Capital	Total		Revenue	Capital		Total
6	Taxation	£'000	£'000	£'000		£'000	£'000			£'000
(a)	Factors affecting the current tax charge for the year
	Return on ordinary activities before taxation	704	48,783	49,487		399	(109,909)			(109,510)
		_______	_______	_______		_______	_______			_______
	The tax assessed for the year is different from the standard rate of corporation tax in the UK.  The differences are explained below.
	Return on ordinary activities multiplied by the
	effective rate of corporation tax in the UK (28%)	197	13,659	13,856		112	(30,775)			(30,663)
	Capital (gains)/losses*	-	(13,659)	(13,659)		-	30,775			30,775
	Franked investment income taxed at source	(25)	-	(25)		-	-			-
	Non taxable overseas dividends	(3)	-	(3)		-	-			-
	Overseas withholding tax	28	-	28		91	-			91
	Overprovision from previous period	(8)	-	(8)		(24)	-			(24)
	Double tax relief	(28)	-	(28)		(91)	-			(91)
	Tax relief for expenses taken to capital	-	(141)	(141)		-	(21)			(21)
		_______	_______	_______		_______	_______			_______
	Current tax charge/(credit) for the year	161	(141)	20		88	(21)			67
		_______	_______	_______		_______	_______			_______
	*The Company carries on business as an investment trust company with respect to sections 1158-1159 of the Corporation Tax Act 2010.  As such any capital gains are exempt from UK taxation.
					Year to			Year to
					30 September 2010			30 September 2009
					£'000			£'000
(b)	Analysis of charge throughout the year
	Current tax
	Overseas withholding tax				28			91
	Overprovision from previous period				(8)			(24)
					____________			____________
					20			67
					____________			____________
(c)	Factors that may affect future tax charges
	At the year end there is a potential deferred tax asset of £938,000 (2009 : £1,164,000) in relation to excess management expenses carried forward. The deferred tax asset is unrecognised at the year end in line with the stated accounting policy.

		Year to	Year to
		30 September 2010	30 September 2009
7	Dividend on ordinary shares	£'000	£'000
	Amount recognised as a distribution to equity holders in the year:
	Dividend paid in the year ended 30 September 2010 of 0.10p (2009 - 0.70p) per ordinary share paid on
	29 January 2010 (2009 - paid on 30 January 2009)	78	547
	Scrip dividend issue of 83,755 shares, in lieu of cash dividend, in the year ended 30 September 2010 (2009 - 881,040 shares)	83	572
		____________	____________
		161	1,119
		____________	____________
	During the period the company issued 83,755 ordinary shares of 0.2p as a result of elections received following a scrip dividend offer in respect of the 2009 final dividend.   One new ordinary share was issued for every 99.1p otherwise payable as a cash dividend.
	Set out below are the total dividend paid and proposed in respect of the financial year, which is the basis on which the requirements of Sections 1158-1159 of the Corporation Tax Act 2010 are considered. The revenue available for distribution by way of a dividend for the year is £543,000 (2009 - £311,000).
	Proposed final dividend of 0.2p per ordinary share (dividend proposed at 30 September 2009 - 0.1p per
	ordinary share) due to be paid on 28 January 2011 (paid 29 January 2010).	323	161
		____________	____________

		Year to 30 September 2010		Year to 30 September 2009
8	Return per ordinary share	p	£'000	p		£'000
	The return per ordinary share is based on the following figures:
	Revenue return	0.34	543	0.19		311
	Capital return	30.36	48,924	(68.43)		(109,888)
		______	_________	______		__________
	Total return	30.70	49,467	(68.24)		(109,577)
		______	_________	______		__________
	Weighted average number of ordinary shares in issue:		161,122,847			160,583,224
		Year to 30 September 2010		Year to 30 September 2009
		p	£'000	p	£'000
	The fully diluted return per ordinary share is based on the following figures:
	Revenue return (fully diluted)	0.34	543	0.19	311
	Capital return (fully diluted)	30.30	48,924	(68.43)	(109,888)
		______	_________	______	__________
	Total return (fully diluted)	30.64	49,467	(68.24)	(109,577)
		______	_________	______	__________
	Fully diluted returns have been calculated on the basis set out in Financial Reporting Standard 22 'Earnings per share' ('FRS 22'). For the year ended 30 September 2010, this is based on 161,434,348 shares, comprising the weighted average 161,122,847 ordinary shares and 311,501 founder A shares capable of conversion. For the year ended 30 September 2009, this is based on the weighted average of 160,583,224 ordinary shares, as the founder A shares do not have a dilutive effect in this period as the conversion price is greater than the average share price.

		30 September 2010	30 September 2009
9	Investments	£'000	£'000
	Fair value through profit or loss:
	Opening market value	293,106	412,084
	Opening investment holding losses	86,163	15,351
		__________	__________
	Opening book cost	379,269	427,435
	Movements in the year:
	Additions at cost	47,994	48,296
	Disposal of underlying investments by funds	(21,273)	(18,193)
	Disposal of fund investments by way of secondary sales	(1,890)	(48,348)
		__________	__________
		404,100	409,190
	Gains on disposal of underlying investments	8,433	13,635
	Losses on disposal of fund investments	(4,638)	(43,556)
		__________	__________
	Closing book cost	407,895	379,269
	Closing investment holding losses	(38,265)	(86,163)
		__________	__________
	Closing market value	369,630	293,106
		__________	__________
		Year to	Year to
		30 September 2010	30 September 2009
		£'000	£'000
	Gains/(losses) on investments:
	Net gains/(losses) on disposal of unquoted investments	3,795	(29,921)
	Net revaluation of unquoted investments	47,898	(70,812)
		__________	__________
		51,693	(100,733)
		__________	__________
	Transaction costs
	During the year expenses were incurred in acquiring or disposing of investments. These have been expensed through capital and are included within gains/(losses) on investments in the Income Statement. The total costs were as follows:
	Secondary sales	53	1,122
	Purchases in respect of new unquoted fund investments	4	27
		__________	__________
		57	1,149
		__________	__________

		30 September 2010	30 September 2009
10	Debtors	£'000	£'000
	Amounts falling due within one year:
	Prepayments	108	161
		__________	__________
		108	161
		__________	__________

		Year to	Year to
		30 September 2010	30 September 2009
11	Creditors: amounts falling due within one year	£'000	£'000
	Bank loans (see note 12)	60,645	29,702
	Management fee	51	86
	Secretarial fee	46	86
	Other accruals	87	46
	Loan interest and commitment fee	70	84
		__________	__________
		60,899	30,004
		__________	__________

		30 September 2010	30 September 2009
12	Bank loans	£'000	£'000
	Unsecured bank loans repayable within one year:
	€20,000,000 at 3.118% repayable 25 October 2010	17,327	-
	€50,000,000 at 3.121% repayable 29 October 2010	43,318	-
	€5,000,000 at 2.949% repayable 23 October 2009	-	4,570
	€27,500,000 at 2.938% repayable 30 October 2009	-	25,132
		__________	__________
		60,645	29,702
		__________	__________
	At 30 September 2010, the Company had a £100 million committed, multi currency syndicated revolving credit facility led by The Royal Bank of Scotland plc of which £60.6m (2009 - £29.7m) had been drawn down in euros. The interest rate on this facility was LIBOR plus 2.5% and the commitment fee payable on non-utilisation was 1.0% per annum.
	On 29 November 2010, the Company entered into a new £120 million committed, multi currency syndicated revolving credit facility led by The Royal Bank of Scotland plc, which expires on 31 December 2013. The interest rate on this facility is LIBOR plus 2.50% and the commitment fee payable on non-utilisation is 1.0% per annum.

		30 September 2010	30 September 2009
13	Called up share capital	£	£
	Issued:
	161,372,793 (2009 - 161,066,017) ordinary shares of 0.2p - fully paid	322,746	322,132
	16,242,002 (2009 - 16,465,023) founder A shares of 0.2p - partly paid	16,426	16,651
	17,500,000 (2009 - 17,500,000) founder B shares of 0.2p - partly paid	17,687	17,687
		__________	__________
		356,859	356,470
		__________	__________
	On 2 May 2001, 14,835,625 founder A shares and 14,835,625 founder B shares were allotted each partly paid up at 0.1p per share and 2,664,375 founder A shares and 2,664,375 founder B shares were allotted each partly paid up at 0.11p per share.  The founder shares are entitled to a fixed non-cumulative dividend of 0.05% per annum on the nominal amount per share paid up.  The founder shares do not carry any right to vote, except in the case of changes to class rights.
	At 30 September 2010, 3,596,981 (2009: 3,820,002) founder A shares were in issue.  During the year 223,021 founder A shares were converted into ordinary shares of 0.2p at a cost of £222,800 before deduction of conversion costs of £5,600.  The Company also issued 83,755 ordinary shares of 0.2p as a result of elections received following a scrip dividend offer in respect of the 2009 final dividend. One new ordinary share was issued for every 99.1p otherwise payable as a cash dividend.
	Following the end of the founder A shares performance period on 30 September 2006, as of 30 September 2010, 3,596,981 founder A shares (2009: 3,820,002) have a right to convert into an equivalent number of ordinary shares at a conversion price of £1 per ordinary share up to 31 December 2013.

					Capital reserves
		Share premium account	Special reserve	Capital redemption reserve	- gains/ (losses) on disposal	- revaluation	Revenue reserve
14	Reserves	£'000	£'000	£'000	£'000	£'000	£'000
	Opening balances at 1 October 2009	79,356	79,148	3	187,661	(86,163)	5,280
	Gains on disposal of unquoted investments	-	-	-	3,795	-	-
	Management fee charged to capital	-	-	-	(2,138)	-	-
	Finance costs charged to capital	-	-	-	(1,716)	-	-
	Tax relief on management fees and finance costs above	-	-	-	141	-	-
	Currency gains	-	-	-	944	-	-
	Revaluation of unquoted investments	-	-	-	-	47,898	-
	Conversion of founder A shares	223	-	-	-	-	-
	Expenses of conversion of founder A shares	(6)	-	-	-	-	-
	Scrip issue of ordinary shares	83	-	-	-	-	-
	Expenses of conversion of scrip issue	(6)	-	-	-	-	-
	Return on ordinary activities after taxation	-	-	-	-	-	543
	Dividends during the period	-	-	-	-	-	(161)
		_______	______	_________	_______	_______	_____
	Closing balances at 30 September 2010	79,650	79,148	3	188,687	(38,265)	5,662
		_______	______	_______	______	_______	_____
	Court approval was given on 27 September 2001 for 50% of the initial premium arising on the issue of the ordinary share capital to be cancelled and transferred to a special reserve.  The reserve is a distributable reserve and may be applied in any manner as a distribution, other than by way of a dividend.

		Year to	Year to
15	Reconciliation of net return on ordinary activities before taxation to net cash outflow from operating activities	30 September 2010	30 September 2009
		£'000	£'000
	Net total return before finance costs and taxation	51,394	(107,013)
	Adjustment for:
	(Gains)/losses on disposal of unquoted investments	(3,795)	29,921
	Revaluation of unquoted investments	(47,898)	70,812
	Currency (gains)/losses on cash balances	(944)	4,938
	Decrease/(increase) in debtors	53	(123)
	(Decrease)/increase in creditors	(34)	35
	Tax deducted from non - UK income	(28)	(91)
		_________	_________
	Net cash outflow from operating activities	(1,252)	(1,521)
		_________	_________

16	Net asset value per ordinary share	30 September 2010	30 September 2009
	Basic:
	Ordinary shareholders' funds	£315,207,880	£265,607,000
	Number of ordinary shares in issue	161,372,793	161,066,017
	Net asset value per ordinary share	195.3p	164.9p
	Diluted:
	Ordinary shareholders' funds	£318,804,861	£269,427,002
	Number of ordinary shares in issue	164,969,774	164,886,019
	Net asset value per ordinary share	193.3p	163.4p
	The net asset value per ordinary share and ordinary shareholders' funds are calculated in accordance with the Company's articles of association.

		30 September 2010	30 September 2009
17	Commitments and contingent liabilities	£'000	£'000
	Outstanding calls on investments	150,331	227,758
		_________	_________
	This represents commitments made to fund investments remaining undrawn.

18	Parent undertaking and related party transactions
	The Manager during the year was SL Capital Partners LLP which is 60% owned by Standard Life Investments Limited and 40% by its eight senior private equity managers. Standard Life Investments Limited is a wholly owned subsidiary of Standard Life PLC, the ultimate parent undertaking of the Company. The accounts of the ultimate parent undertaking are the only group accounts incorporating the accounts of the Company. Copies of the accounts of the ultimate parent undertaking can be obtained at Standard Life House, 30 Lothian Road, Edinburgh EH1 2DH.
	Standard Life PLC and the Company have entered into a relationship agreement which provides that, for so long as Standard Life PLC and its subsidiaries exercise, or control the exercise, of 30% or more of the voting rights of the Company, Standard Life PLC will not seek to nominate directors who are not independent of Standard Life PLC and will not take, in its capacity as a beneficial holder of any ordinary shares, any action which would be detrimental to the general body of shareholders. For this purpose any action which has the support or recommendation of a majority of the directors shall be deemed not to be detrimental. A more detailed summary of the terms of the relationship agreement are set out in the Directors' Report of the 2010 Annual Report and Accounts.
	During the year ended 30 September 2010 the Manager charged management fees totalling £2,376,000 (2009 - £2,204,000) to the Company in the normal course of business. The balance of management fees outstanding at 30 September 2010 was £51,000 (2009 - £86,000).
	At 30 September 2010, the Company had a £100 million committed, multi currency syndicated revolving credit facility led by The Royal Bank of Scotland plc ("RBS"). Standard Life Assurance Limited ("SLAL"), a subsidiary of Standard Life PLC, participated in the syndicated facility on an arm's length basis and had a commitment of £40 million. Under the terms of the agreement, SLAL received £703,000 during the year ended 30 September 2010 (2009 - £826,000). Under the new loan facility disclosed in note 12 above, SLAL retains a £40 million commitment. Donald Workman, who is a director of the Company and an investment director within the Corporate Markets division of RBS, took no part in the Board's deliberations concerning, or its approval of, the credit facilities. Within parameters agreed with the Board, it is Standard Life Investment's treasury team which determines the funds in which the Company's surplus cash is invested from time to time.
	No other related party transactions were undertaken during the year ended 30 September 2010.

19	Risk management, financial assets and liabilities
	Financial assets and liabilities
	The Company's financial instruments comprise fund and other investments, cash balances, loans and debtors and creditors that arise from its operations.  The assets and liabilities are managed with the overall objective of achieving long-term capital gains for shareholders.
	Summary of Financial Assets and Financial Liabilities by category
	The carrying amounts of the Company's financial assets and financial liabilities, as recognised at the balance sheet date of the reporting periods under review, are categorised as follows:
						30 September 2010			30 September 2009
						£'000			£'000
	Financial Assets
	Financial assets at fair value through profit or loss:
	Fixed asset investments - designated as such on initial recognition					369,630			293,106
	Loans and receivables:
	Current assets:
	Debtors (accrued income and other debtors)					108			161
	Cash and short-term deposits					6,403			2,378
						_________			_________
						376,141			295,645
						_________			_________
	Financial Liabilities
	Measured at amortised cost:
	Creditors: amounts falling due within one year:
	Bank loans					60,645			29,702
	Accruals					254			302
						_________			_________
						60,899			30,004
						_________			_________
	Fair values of financial assets and financial liabilities
	The carrying value of the current assets and liabilities is deemed to be fair value due to the short term nature of the instruments and/or the instruments bearing interest at the market rates.
	Risk management
	The directors manage investment risk principally through setting an investment policy and by contracting management of the Company's investments to an investment manager under terms which incorporate appropriate duties and restrictions and by monitoring performance in relation to these. The Company's investments are in private equity funds, typically unquoted limited partnerships. These are valued by their managers generally in line with the EVCA and the BVCA guidelines, which provide for a fair value basis of valuation. The funds may hold investments that have become quoted and these will be valued at the appropriate listed price, subject to any discount for marketability restrictions.
	As explained in the Company's investment policy, risk is spread by investing across a range of countries and industrial sectors, thereby reducing excessive exposure to particular areas.  The Manager's investment review and monitoring process is used to identify and, where possible, reduce risk of loss of value in the Company's investments.  Any surplus funds are invested in 'AAA' rated money market funds, which generate securities income rather than interest in order to meet the income requirements of investment trust status.  The money market fund investments are monitored by the treasury team of Standard Life Investments for credit risk and interest rate risk.
	The Company's investing activities expose it to various types of risk that are associated with the financial instruments and markets in which it invests. The most important types of financial risk to which the Company is exposed are market risk, currency risk, over-commitment risk, liquidity risk, credit risk and interest rate risk.
	The nature and extent of the financial instruments outstanding at the balance sheet date and the risk management policies employed by the Company are discussed below.
	Market risk
	The Company is at risk of the economic cycle impacting the quoted markets and hence potentially affecting the pricing of new underlying investments, the valuation of existing underlying investments and the price and timing of exits.  By having a diversified and rolling portfolio of fund investments the Company is well placed to take advantage of economic cycles.
	100% of the Company's investments are in unquoted funds held at fair value. The valuation methodology employed by the managers of these funds may include the application of EBITDA ratios derived from listed companies with similar characteristics. Therefore, the value of the Company's portfolio is indirectly affected by price movements on listed exchanges. A 10% increase in the valuation of unquoted investments at 30 September 2010 would have increased the net assets attributable to the Company's shareholders and the total return for the year by £36,963,000 (2009: £29,311,000); a 10% change in the opposite direction would have decreased the net assets attributable to the Company's shareholders and the total return for the year by an equivalent amount.
	Currency risk
	The Company makes fund commitments in currencies other than sterling and, accordingly, a significant proportion of its investments and cash balances are in currencies other than sterling.  In addition, the Company's syndicated revolving credit facility is a multi-currency facility. Therefore, the Company's balance sheet is sensitive to movements in foreign exchange rates. The Manager monitors the Company's exposure to foreign currencies and reports to the Board on a regular basis. It is not the Company's policy to hedge this foreign currency risk. Over time, it is expected that the majority of the Company's commitments and investments will be denominated in euros. Accordingly, the majority of the Company's liquidity and any indebtedness is usually held in that currency. No currency swaps or forwards were used during the year.
	The table below sets out the Company's currency exposure.
		30 September 2010					30 September 2009
		Local		Sterling			Local			Sterling
		Currency		Equivalent			Currency			Equivalent
		'000s		£'000			'000s			£'000
	Fixed asset investments: unquoted
	Sterling	26,488		26,488			27,252			27,252
	Euro	321,703		278,700			230,892			211,014
	US Dollar	101,548		64,442			87,708			54,840
	Cash and short term deposits:
	Sterling	438		438			478			478
	Euro	5,866		5,082			1,425			1,303
	US Dollar	1,391		883			955			597
	Other debtors and creditors:
	Sterling	(140)		(140)			(138)			(138)
	Euro	(70,009)		(60,651)			(32,505)			(29,705)
				_________						_________
	Total			315,242						265,641
				_________						_________
	Outstanding commitments:
	Sterling	5,409		5,409			7,616			7,616
	Euro	144,402		125,099			215,939			197,349
	US Dollar	31,237		19,823			36,453			22,793
				_________
	Total			150,331						227,758
				_________						_________
	The revenue account is subject to currency fluctuations arising on overseas income.  The Company does not hedge this currency risk.
	Currency sensitivity
	During the year ended 30 September 2010 sterling appreciated by 5.5% relative to the euro (2009: depreciated 13.8%) and depreciated by 1.5% relative to the US dollar (2009: depreciated 10.3%).
	To highlight the sensitivity to currency movements, if the value of sterling had weakened against both of the above currencies by a further 10%, the capital loss would have decreased for the year by £25,681,000 (2009: decrease of £21,639,000 in capital loss); a 10% change in the opposite direction would have increased the capital loss for the year by an equivalent amount.
	The calculations above are based on the portfolio valuation and cash and loan balances as at the respective balance sheet dates and are not necessarily representative of the year as a whole.
	Based on similar assumptions, the amount of outstanding commitments would have increased by £13,175,000 at the year end (2009: £20,013,000), a 10% change in the opposite direction would have decreased the amount of outstanding commitments by an equivalent amount.
	Over commitment risk
	The Board has taken the decision to make commitments to new fund investments which are greater than the current cash and committed credit facilities. As private equity funds generally call monies over a five year period whilst they are making investments, the draw downs for funds which are investing should be offset by the more mature funds which are realising their investments and distributing cash back to the Company. The Manager monitors the Company's ongoing cash requirements by the use of cash flow modelling and reports to the Board on a regular basis. To minimise the risk of having an obligation to pay out more cash than is in the bank or on short-term deposit on any particular day, a committed, multi-currency revolving credit facility was arranged, led by The Royal Bank of Scotland plc. At 30 September 2010, £60.6 million of the loan facility had been drawn down (2009: £29.7 million). To minimise over commitment risk, during the year ended 30 September 2010, the Company disposed of part of one private equity fund interest (2009: disposed of all or part of 11 private equity fund interests) and made an election to cap its exposure to one fund interest (2009: one fund interest). This released the Company from £16.7 million of outstanding commitments (2009: £169.7 million)
	Liquidity risk
	The Company has significant investments in unquoted fund investments which are relatively illiquid. As a result, the Company may not be able to quickly liquidate its investments in these funds at an amount close to their fair value in order to meet its liquidity requirements, including the need to meet outstanding undrawn commitments. The Company manages its liquid investments to ensure sufficient cash is available to meet contractual commitments and also seeks to have cash available to meet other short term financial needs. Short term flexibility is achieved, where necessary, through the use of the syndicated revolving multi-currency loan facility.  Liquidity risk is monitored by the Manager on an ongoing basis and by the Board on a regular basis. A maturity analysis of all financial liabilities is included in notes 11 and 12.
	Credit risk
	Credit risk is the exposure to loss from failure of a counterparty to deliver securities or cash for acquisitions or disposals of investments or to repay deposits. The Company places funds with authorised deposit takers from time to time and, therefore, is potentially at risk from the failure of any such institution. At the period end, the Company's financial assets exposed to credit risk amounted to the following:
			30 September 2010					30 September 2009
			£'000					£'000
	Cash and short term deposits		6,403					2,378
			_________					_________
	As 30 September 2010, all of the Company's cash was held by JP Morgan Chase Bank ("JP Morgan") which was rated 'AA -' by Standard and Poors. The Board monitors the risk by reviewing the internal control report of JP Morgan annually. Should the credit quality or the financial position of JP Morgan deteriorate significantly the Manager would move the cash balances to another institution.
	Interest rate risk
	The Company will be affected by interest rate changes as it holds some interest bearing financial assets and liabilities which are shown in the table below, however, the majority of its financial assets are investments in private equity funds which are non-interest bearing.  Interest rate movements may affect the level of income receivable on cash deposits and interest payable on the Company's variable rate borrowings. The possible effects on the cashflows that could arise as a result of changes in interest rates are taken into account when making investment and borrowing decisions. Derivative contracts are not used to hedge against any exposure to interest rate risk.
	Interest risk profile
	The interest rate risk profile of the portfolio of financial assets and liabilities at the balance sheet date was as follows:
		30 September 2010					30 September 2009
		Weighted average					Weighted average
		interest rate					interest rate
		%			£'000		%				£'000
	Floating rate
	Financial assets: Cash and short term deposits	-			6,403		-				2,378
		_________			______		_________				_______
		-			6,403		-				2,378
		_________			______		_________				_______
	Fixed rate
	Financial liabilities: Bank loans	3.12			(60,645)		2.94				(29,702)
		_________			______		_________				_______
		3.12			(60,645)		2.94				(29,702)
		_________			______		_________				_______
	The weighted average interest rate is based on the current yield of each asset, weighted by its market value.  The weighted average interest rate on the bank loans is based on the interest rate payable, weighted by the total value of the loans.  The weighted average period for which rates are fixed on the bank loans is 30.5 days (2009 - 30.0 days).  The maturity dates of the bank loans are shown in note 12 to the financial statements.
	Interest rate sensitivity
	An increase of 1% in interest rates would have decreased the net assets attributable to the Company's shareholders and decreased the total gain for the year ended 30 September 2010 by £19,000 (2009: £24,000). A decrease of 1% would have increased the net assets attributable to the Company's shareholders and increase the total gain for the year ended 30 September 2010 by an equivalent amount. The calculations are based on the interest paid and received during the year.
	Operating and control environment risk
	The Board is responsible for the Company's system of internal controls. The Manager and the Administrator have in place control systems which include the custody and safeguard of the Company's assets, compliance with regulations (mainly Sections 1158-1159 of the Corporation Tax Act 2010, Companies Act and Listing Rules) and the provision of accurate financial reporting.  There is a risk that the Manager and Administrator fail to ensure that their controls are performed in a satisfactory manner. The Board monitors the services and systems provided by the Manager and Administrator and reviews their internal control reports to ensure that an effective system of internal controls is maintained.

20.	Fair Value hierarchy
	The Company adopted the amendments to FRS 29 'Financial Instruments:Disclosures' effective from 1 January 2009. These amendments require an entity to classify fair value measurements using a fair value hierarchy that reflects the significance of the input:
	-       Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
	-       Level 2: inputs other than quoted prices included within Level 1 that are observable for the assets or liability, either directly (ie as prices) or indirectly (ie derived from prices); and
	-       Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
	The financial assets and liabilities measured at fair value in the statement of financial position are grouped into the fair value hierarchy at 30 September 2010 as follows:
			Level 1	Level 2	Level 3	Total
		Note	£'000	£'000	£'000	£'000
	Financial assets at fair value through profit or loss
	Unquoted Equities	a)	-	-	369,630	369,630
			_____	_____	_______	_______
	Net fair value		-	-	369,630	369,630
			_____	_____	_______	_______
	Unquoted Equities
	The fair value of the Company's investments in unquoted stocks have been determined by reference to the primary valuation techniques described in note 1(c) to these accounts.
	A reconciliation of fair value measurements in Level 3 is set out in note 9 to these accounts. There have been no movements between the different levels within the fair value hierarchy.

21.    The Annual Financial Report Announcement is not the Company's statutory accounts. The above results for the year ended 30 September 2010 have been agreed with the auditors and are an abridged version of the Company's full accounts, which have been approved and audited with an unqualified report. The 2010 and 2009 statutory accounts received unqualified reports from the Company's auditors and did not include any reference to matters to which the auditors drew attention by way of emphasis without qualifying the reports, and did not contain a statement under either section 498(2) or 498(3) of the Companies Act 2006. The financial information for 2009 is derived from the statutory accounts for 2009 which have been delivered to the Registrar of Companies. The statutory accounts for the year ended 30 September 2010 will be delivered to the Registrar of Companies following the Company's Annual General Meeting, which will be held at The Balmoral Hotel, 1 Princes Street, Edinburgh EH2 2EQ on 25 January 2011 at 12.30pm.

22.    The annual report and accounts for the year ended 30 September 2010 was posted to shareholders in mid-December 2010 and copies are available from the registered office of the Company and on the website http://slcapitalpartners.com.

for Standard Life European Private Equity Trust PLC,

Aberdeen Asset Management PLC Company Secretary

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