Annual Financial Report

RNS Number : 3818W

Standard Life Euro Pri Eqty Tst PLC

30 January 2012

 



STANDARD LIFE EUROPEAN PRIVATE EQUITY TRUST PLC

ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 30 SEPTEMBER 2011

Further to the voluntary disclosure of the Company's annual results for the year ended 30 September 2011 by way of a preliminary announcement dated 5 December 2011, 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 5 December 2011 together with the additional text in compliance with the Rules.

The Company's annual report and financial statements for the year ended 30 September 2011, 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 2011	As at 30 September 2010	% Change
Net asset value per ordinary share ("NAV") (undiluted)	228.7p	195.3p	17.1
NAV (diluted)	225.9p	193.3p	16.9
Share price	134.0p	113.75p	17.8
FTSE All-Share Index(1)	2,654.4	2,867.6	(7.4)
MSCI Europe Index (in euros)(1)	78.4	90.0	(12.9)
Discount (difference between share price and diluted net asset value)	40.7%	41.2%
Gearing (ratio of borrowing to shareholders' funds)	8.6%	19.2%

Performance (total return)	1 year %	Annualised 5 year %	Annualised Since launch %
Share Price	18.0	(5.3)	3.8
NAV (diluted)	17.0	5.5	9.2
FTSE All-Share Index (1)	(4.4)	0.8	2.8
MSCI Europe Index (in euros) (1)	(9.7)	(4.7)	(1.1)

Highs/Lows	High	Low
Share price (mid)	168.0p	113.0p

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

Summary financial information

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 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)
As at 30 September 2011	369.4	228.7	225.9	134.00	(40.7)

Performance and Dividends	NAV total return %	Share Price total return1 %	Dividend paid2 £m	Dividend paid per ordinary share p	Expense ratio %
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
Year to 30 September 2011	17.0	18.0	0.2	0.20	1.07

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 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
As at 30 September 2011	57.9	89.1	69.0	95.4	106.8

CHAIRMAN'S STATEMENT

The year ended 30 September 2011 started positively, however, the final quarter saw macro-economic and political concerns, particularly in Europe, dominate global financial markets. 

Results and performance

World stock markets fell sharply in the final quarter of the financial year ended 30 September 2011 due to concerns about political uncertainty in Europe and signs of macro-economic weakness in all major developed economies. Given the use of listed market comparables in valuing the unrealised portfolio of private equity fund interests, the Company's NAV fell in the final quarter, after three quarters of strong growth.  For the year ended 30 September 2011 the Company's NAV increased by 17.1% to 228.7p (diluted NAV - 225.9p), from 195.3p at 30 September 2010 (diluted NAV - 193.3p). At 30 September 2011 the Company's net assets were £369.4 million.

The closing mid-market price of the Company's ordinary shares on 30 September 2011 was 134.0p, compared to 113.75p a year earlier. The share price represented a 40.7% discount to the Company's diluted NAV at the year end. The share price to NAV discount narrowed in the period to summer 2011, before widening as listed market volatility impacted investor sentiment.

The Company's practice remains one of reinvestment and to pay a dividend marginally in excess of the minimum required to maintain investment trust status. Against a background of increased income received during the year, the Board is recommending a final dividend of 1.3p per ordinary share (year ended 30 September 2010 - 0.2p). Subject to shareholder approval at the forthcoming Annual General Meeting, this dividend will be paid on 6 February 2012 to shareholders on the Company's share register at 6 January 2012. 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*.

It is now just over ten years since the Company was listed on the London Stock Exchange. Private equity is a long-term asset class. For the period from listing on 29 May 2001 to 30 September 2011 the Company's NAV and share price, both on an annualised total return basis, were 9.2% and 3.8% higher respectively, while the FTSE All-Share Index and the MSCI Europe Index (in euros), on a similar total return basis, rose by 2.8% and fell by 1.1% respectively.

Valuation

At 30 September 2011 the Company's portfolio comprised 36 private equity fund interests. The value of this portfolio was £397.4 million, of which net unrealised gains arising during the year were £25.2 million.

In terms of the breakdown of net unrealised gains, unrealised gains on a constant exchange rate basis were £26.2 million (7.1% of the opening portfolio valuation), while negative exchange rate movements were modest at £1.0 million (0.3% of the opening portfolio valuation). Pleasingly, increasing earnings at the underlying investee companies was the primary driver of the uplift in valuations, supported by the impact of leverage within those companies.

99.2% by value of the private equity funds held by the Company was valued by the relevant fund manager at 30 September 2011.  In undertaking the valuations the fund managers have followed the International Private Equity and Venture Capital Valuation Guidelines. In so doing, the principal valuation methodology is to use listed comparable valuation multiples. As reported above, during the final quarter of the year ended 30 September 2011 listed comparable multiples broadly fell.

Investment activity

The last year again saw a rise in the number and value of new private equity investments and realisations completed in Europe. The value of all new buy-out transactions completed in the European private equity market during the year ended 30 September 2011 was €77.2 billion (year ended 30 September 2010 and 2009 - €52.5 billion and €21.3 billion respectively). Against, however, a more difficult political and macro-economic environment the final quarter of the Company's financial year did see a fall in activity and value.

As a result of the general improvement in the European private equity market, the Company received distributions during the year of £82.6 million and, also reflecting the lower quantum of its outstanding commitments, paid £49.6 million in draw downs (year ended 30 September 2010 - distributions of £23.0 million and draw downs of £48.0 million). After taking account of fees, costs and other movements, the Company was £25.8 million cashflow positive during the year, compared to a £28.1 million cashflow deficit in the previous year. The distributions received by the Company generated net realised gains and income of £35.6 million, equivalent to an average return on the acquisition cost of the realised investments of 1.8 times (year ended 30 September 2010 - 1.8 times).

The Company made one new fund commitment during the year, with a €30 million commitment to Montagu IV, a €2.5 billion mid-market buy-out fund focussed on northern Europe. The Company's aggregate outstanding commitments were £126.4 million at 30 September 2011.  Where drawn, such outstanding commitments 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. As previously reported, a number of the private equity funds held by the Company have completed their respective investment periods and any future draw downs are likely to be limited. After undertaking a detailed review, the Manager believes that up to £40 million of the Company's existing outstanding commitments are now unlikely to be drawn.

In 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. At 30 September 2011 the Company's net indebtedness was £28.5 million.

During the period from 30 September 2011 to 1 December 2011 the Company funded £1.2 million of draw downs and received £15.8 million of distributions and at 1 December 2011 had net indebtedness of £14.7 million. The Company also made a €35 million commitment to BC Partners IX in October 2011. Accordingly, at 1 December 2011 the Company's total outstanding commitments were £152.3 million.

Management incentive scheme arrangements

When the Company was listed in May 2001, an incentive scheme was put in place for the Company's investment management team.  This scheme operated over two five year performance periods; the second of these periods expired on 30 September 2011. Following the first performance period, which ended on 30 September 2006, 4,854,979 founder A shares were convertible into ordinary shares upon payment of £1 per founder A share. 3,596,981 founder A shares remain outstanding and may be converted up until 31 December 2013.

Over the five year period from 30 September 2006 to 30 September 2011 the compound annual growth rate in the Company's NAV, including dividends paid, was 5.5%.  As a result of this growth rate falling below the minimum threshold required of 10%, no founder B shares have a right to convert into ordinary shares. Accordingly, no value will be derived by the investment management team from the founder B shares. 

The Board considers that there should be a continuing incentive arrangement for the Manager for so long as it serves as the Company's investment manager and that the level of base management fee of 0.8% per annum, which was set on the listing of the Company, envisaged a continuing incentive scheme.  During 2011, the Board has been discussing an appropriate new incentive scheme and has reached agreement with the Manager on the terms of a scheme.  The performance period will run for the five years from 1 October 2011. For an incentive fee to be payable at the end of the five year period, the Company's net asset value total return must grow by more than 8% compound per annum (before any accrual for the incentive fee) over the period to 30 September 2016. Should this hurdle rate be achieved, the Manager will be entitled to an incentive fee of 10% of the growth in NAV (before any accrual for the incentive fee) in excess of the hurdle rate, multiplied by the number of ordinary shares in issue on 1 October 2011 (adjusted in certain circumstances to reflect subsequent share issuance and/or a material reduction in the Company's issued share capital).

Full details of the proposed new incentive scheme are set out in a circular to shareholders enclosed with the Company's annual report and accounts*. The incentive scheme will be put to shareholders for approval at the forthcoming Annual General Meeting. Standard Life plc and its associates will not vote on this resolution.

Corporate governance

The Directors' Report in the Company's 2011 annual report and accounts* gives a detailed review of the Company's corporate governance arrangements. The Board gave particular emphasis during the year under review to a number of issues, which included:-

·     Cashflow estimates - the Manager uses a sophisticated model to project the Company's future cashflows and hence the capacity for future investment. A wide range of assumptions has been examined and the results prompted the decision to begin to make further new fund commitments, the first step of which is described above;

·     Board succession planning and recruitment - recent and prospective Board resignations led to detailed analysis of the skills and competences needed for the Company's long-term needs. Using an outside search consultant, Jo Taylor and Alastair Barbour were recruited to meet the identified job specifications; and

·     Management incentive scheme - the arrangements to provide a management incentive which were put in place at the time of the Company's listing expired on 30 September 2011. Considerable effort was made by the Board to agree a scheme which reflected the current business environment, was broadly comparable to the peer group of similar listed companies, and above all was seen to be of overall benefit to the Company and its shareholders.

 

The Board

Hamish Buchan, who has served on the Board since the Company's listing in May 2001, has to the regret of his colleagues intimated that he intends to step down from the Board after the forthcoming Annual General Meeting. Mr Buchan has made a significant contribution to the Company over the past eleven years. His wide knowledge of the investment trust sector and of investment analysis made him a strong Chairman of the Audit Committee and his counsel, both in Board meetings and, less formally, as the Senior Independent Director has been invaluable. He carries the best wishes for the future of his Board colleagues and of the Manager.

Following Mr Buchan's retirement, Edmond Warner will assume the role of the Senior Independent Director and Alastair Barbour that of Chairman of the Audit Committee.

Outlook

The European macro-economic and political outlook remains uncertain, with continuing sovereign debt worries and an increasing likelihood that a number of European states will experience negative economic growth. Against this background, the Manager has conducted a detailed review of the Company's portfolio, which at an investee company level has minimal direct exposure to businesses headquartered in southern Europe. Ongoing meetings with key fund managers have highlighted that aggregate corporate earnings continue to grow across respective investment portfolios.

Equity markets currently favour higher yielding instruments perceived to be low risk. The listed private equity sector, in which the Company is included, fulfils neither of these criteria and share prices currently stand at a substantial discount to NAV. Nevertheless, the Board and the Manager continue to believe that the Company is well placed strategically to benefit from any improvement in investor sentiment which follows a positive change in the outlook for European economies.

Scott Dobbie CBE

Chairman

2 December 2011

(* Please note that the references are provided in the 2011 annual report and accounts attached to this announcement).

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 headquartered in Edinburgh, United Kingdom and comprises a team of 22 investment professionals with over 254 years of combined private equity experience. This team manages approximately £5.5 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 Partners. 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 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 co-investments 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 continued to increase in the first half of 2011, however, this reversed in the third quarter.

As we enter 2012, activity levels and valuations will be driven by macro-economic and political concerns and the resulting impact on listed financial markets.

European market overview

The global macro-economic environment continued to improve during the first nine months of the Company's financial year, however, increasing concerns over Euro area sovereign debt, the US fiscal position and slowing

economic growth in the major developing and developed economies resulted in a more difficult back drop from summer 2011 onwards. Despite Q3 2011 earnings numbers being better than expected for many US and European corporates, the outlook has become more difficult with European surveys indicating a fall in new orders, production, industrial and consumer sentiment, and economic activity.

All of the above has meant that the listed financial markets have experienced significant volatility and for the year to September 2011 all of the major European indices fell. Further dislocation can be expected over the coming months, as the political crisis in the Euro zone and the consequential impact on European economic sentiment and activity develops.

As reported in the Chairman's Statement, during the year under review European private equity market activity increased, both for the overall market and for buy-outs. Buy-outs comprise around 90% of the European

private equity market by value, with the remainder primarily being growth and venture investments. The total enterprise value and volume of buy-out deals reported for the year ended 30 September 2011 was €77.2 billion and 454 respectively, compared to €52.5 billion and 368 respectively in the prior year. From a historic context the annual value and volume of deals is similar to that concluded in 2003. However, activity has dropped since summer 2011, as private equity managers have become worried about the broader political and economic environment, a potential slow down in corporate earnings and managers have faced difficulties in raising debt for potential transactions. This lower level of activity is likely to continue, at least, until the European political and macro-economic environment has stabilised.

Debt markets continued to improve until early summer 2011, whereupon the issues in Europe, combined with the traditionally quieter summer period, resulted in a significant slowdown in the availability of bank debt. Such

reduced availability was magnified by difficulties in syndicating certain of the larger bank facilities concluded in early summer. Following a similar trend, the first three quarters of the Company's financial year saw record issuance in the European high yield bond market, with €42.3 billion of new issues, of which 42.0% was for private equity backed companies. However, new issuance became very difficult from July 2011 and while some new issues took place in the autumn this was mainly for non-private equity backed corporates.

Realisation activity for European private equity backed companies was robust in the period to summer 2011, with surveys suggesting that realisation activity had been higher in H1 2011 than in any six month period since H1 2007. Most of the private equity investments sold were originally made in the years 2003-07. Since the summer, realisation activity has slowed as private equity managers have become concerned about the broader economic environment, compounded by a lack of debt to fund secondary purchases. Notwithstanding, in a return to a more traditional pattern the percentage of private equity deals being sold to corporates increased during 2011. This is positive and, against a background of good corporate liquidity, more sales to corporates can be expected, particularly when the European political and macro-economic environment starts to improve.

Finally, a few European private equity managers have raised new funds in the last year, particularly in the mid and large sized buy-out segments. Some of these fund raisings have reached, or exceeded, their targeted amounts. A number of high profile fund raisings are currently in the market and it will be interesting to see how the respective managers progress. With the turmoil in the financial markets, many seasoned private equity investors still find themselves constrained in making sizeable new commitments to the asset class.

Investment Activity

During the year to 30 September 2011 the Company funded £49.6 million of draw downs and received

£82.6 million of distributions.

At 30 September 2011 the Company had £126.4 million of outstanding fund commitments.

Draw downs

As reported above, the Company funded £49.6 million of draw downs during the financial year. This figure is below the long-term average, as a result of the decline in the Company's outstanding fund commitments and

the lower level historically of new investment activity in the European private equity market. The Manager expects the quantum of draw downs to remain modest during the remainder of 2011 and into 2012, due to the Manager's cautious approach to making new fund commitments and as a result of the macro-economic uncertainty impacting activity levels in 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	16.0
3i Eurofund V	Buy-out	6.8
CVC European Equity Partners V	Buy-out	6.1
Coller International Partners V	Secondary	3.0
Candover 2005	Buy-out	2.9
Total of 5 largest drawdowns		34.8
Total of all drawdowns during the year		49.6

Distributions, gains and income

During the year the Company's portfolio of private equity fund interests generated aggregate distributions of £82.6 million, including net realised gains of £31.1 million and income of £4.5 million. The quantum of

distributions received reflected an increase in European private equity sales during the year and it is encouraging to note that many of the individual company realisations were at a material premium to their last reported valuation. Despite a slow down in activity since summer 2011, the Manager expects the Company to continue to receive meaningful distributions during the remainder of 2011 and into 2012. This is due to the maturity of the Company's underlying portfolio and the fact that many of the companies have been prepared for exit.

The distributions received by the Company during the year included proceeds from trade sales and secondary buy-outs and, to a lesser extent, refinancings and IPOs. Since the summer, realisation activity has slowed

due to concerns about the broader economic environment and a reduced availability of debt to fund secondary purchases. However, as a result of an increase in corporate activity, the percentage of private equity deals sold to corporates has increased and it could increase further if the macro-economic environment starts to improve.

As shown in the bar chart on page 9 of the 2011 annual report and accounts*, the average return during the year on the Company's acquisition cost of realised investments was 1.76 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 received during the year, split into gains and income and broken down by fund, 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
Equistone Partners Europe Fund III	12.6	5.4	0.8
HgCapital 5	8.1	5.1	-
Towerbrook Investors II	7.4	4.2	-
Apax Europe VII	6.7	1.9	0.6
Cinven Third Fund	5.1	2.6	-
Total of 5 largest distributions	39.9	19.2	1.4
Total of all distributions during the year	82.6	31.1	4.5

Commitments

The Company recommenced making new fund commitments during the year with a £26.5 million commitment to Montagu IV in April 2011. The Manager anticipates following a conservative schedule of new fund commitments over the remainder of 2011 and into 2012, subject to the Company's cashflows and the broader market environment.

At 30 September 2011 the Company had £126.4 million of outstanding fund commitments, down from £150.3 million at 30 September 2010. The decline is the net result of the Company having made one new fund

commitment of £26.5 million and having funded £49.6 million of draw downs. Since the year end, the Company has also made a £30.2 million commitment to BC European Capital IX.

	New (reduced) commitments £m	Draw downs £m	Closing outstanding commitments £m
Year to 30 September 2011	26.5	49.6	126.4
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

The Company has implemented an over-commitment strategy since late 2001. This is in line with the Manager's objective of maximising the Company's invested assets and the Manager believes that such a strategy should enhance the 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 97.3% and 9.5%. The bar chart on page 10 of the attached document* shows the relevant percentages at each annual reporting date, from 2002 to 30 September 2011. 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.

(* Please note that the references are provided in the 2011 Annual Report and Accounts attached to this announcement).

Portfolio Review

At 30 September 2011 the Company's net assets were £369.4 million. The Company had interests in 36 private equity funds with a value of £397.4 million.

The effect of drawdowns and distributions over the year was to decrease net indebtedness from £54.2 million at 30 September 2010 to £28.5 million at 30 September 2011.

Portfolio composition and performance

At 30 September 2011 the Company's portfolio comprised 36 private equity fund interests with a value of £397.4 million which, together with its current assets less liabilities, resulted in the Company having net assets

of £369.4 million. This represented an undiluted NAV of 228.7p (diluted NAV - 225.9p). A breakdown of the £27.8 million movement in the Company's portfolio valuation during the year is detailed in the valuation

bridge on page 11 of the 2011 annual report and accounts.

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 2011 annual report and accounts. 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 the notes 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 cashflows. 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. In addition, through its strong relationships with the fund managers, the Manager is able to consider the appropriateness of the valuation methodologies employed.

Portfolio review

Of the 36 private equity funds in which the Company is invested, 35 of the funds, or 99.2% of the portfolio by value, were valued by their fund managers at 30 September 2011. 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 from £369.6 million at 30 September 2010 to £397.4 million at 30 September 2011. The increase was driven by unrealised gains on the

investment portfolio, at constant foreign exchange rates, of £26.2 million, together with £49.6 million of new investments and £31.1 million of net realised gains. These increases were offset by £78.1 million of realisation

proceeds and a £1.0 million negative foreign exchange movement.

Information on the valuation movement for the Company's portfolio for each of the last ten financial years 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 2011	49.6	(47.0)	25.2	397.4
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

During the year, sterling appreciated against the euro by 0.6% and depreciated against the US dollar by 1.1%. This had a modest negative impact on the Company's NAV. The sterling/euro rate at 30 September

2011 was £1/€1.1611 and the sterling/dollar rate was £1/$1.5578. The combined effect of foreign exchange movements on the valuation of the portfolio over the year was a 0.6p 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 2011 annual report and accounts* show the valuation and leverage multiples of the fifty largest underlying portfolio companies held by the Company's private equity fund interests at 30 June 2011, which account for 54.0% of net assets. This analysis is at 30 June 2011 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 proportion shaded in light blue relates to portfolio companies where sales had been agreed but proceeds had not been received at 30 June 2011.

The valuation multiples of each underlying portfolio company are derived by the fund manager using 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 fifty underlying portfolio companies were 9-10x EV/EBITDA and 3-4x Debt/EBITDA respectively. These compare to median valuation and leverage multiples

for the top thirty underlying portfolio companies in June 2010 of 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 value 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 2011, the Company was invested in 36

different private equity funds, which collectively had interests in a total of 521 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 cashflows.

The diversification of the Company's private equity fund interests, at 30 September 2011 and 2010, is set out in the four bar charts shown on page 13 of the 2011 annual report and accounts*.

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 2011, as other European private equity markets continue to develop.

At 30 September 2011, 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 12.6% of the Company's gross assets. The broad diversification in sectors like industrials, consumer services and financials

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 level of private equity activity over the last three years. The chart showing

value relative to the original cost of underlying investments illustrates that the portfolio remains healthy, with 84% of the portfolio valued at or above cost.

SL Capital Partners LLP

2 December 2011

(* Please note that the references are provided in the 2011 annual report and accounts attached to this announcement).

FUND INVESTMENTS AT 30 SEPTEMBER 2011

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
2006	Charterhouse Capital Partners VIII	Buy-out	11	30.09.11	8,261	36,192	38,880	10.5
2007	Equistone Partners Europe Fund III (formerly known as Barclays European Fund III)	Buy-out	30	30.09.11	6,458	36,195	38,811	10.5
2007	Industri Kapital 2007	Buy-out	11	30.09.11	8,020	33,639	37,207	10.1
2007	Apax Europe VII	Buy-out	25	30.09.11	6,245	22,265	27,231	7.4
2005	Candover 2005 Fund	Buy-out	9	30.09.11	2,137	40,487	26,068	7.1
2008	CVC European Equity Partners V	Buy-out	15	30.09.11	13,130	16,153	18,347	5.0
2006	Coller International Partners V	Secondary	52	30.09.11	6,458	12,829	18,211	4.9
2006	3i Eurofund V	Buy-out	26	30.09.11	4,306	25,438	17,962	4.9
2005	Advent Global Private Equity V	Buy-out	14	30.09.11	1,357	7,037	17,430	4.7
2006	HgCapital 5	Buy-out	12	30.09.11	4,271	11,682	14,376	3.9
2006	Cinven Fourth Fund	Buy-out	13	30.09.11	5,384	10,776	12,786	3.5
2006	Permira IV	Buy-out	14	30.09.11	1,628	15,394	12,124	3.3
2005	Pomona Capital VI Fund	Secondary	40	30.09.11	1,752	9,954	11,815	3.2
2005	CVC European Equity Partners IV	Buy-out	15	30.09.11	1,851	6,467	10,051	2.7
2001	CVC European Equity Partners III	Buy-out	7	30.09.11	943	5,160	9,785	2.6
2002	Coller International Partners IV	Secondary	37	30.09.11	2,696	2,046	9,035	2.4
2006	Towerbrook Investors II	Buy-out	7	30.09.11	3,918	6,416	8,438	2.3
2006	Terra Firma Capital Partners III	Buy-out	4	30.09.11	7,718	18,558	8,250	2.2
2004	Industri Kapital 2004	Buy-out	6	30.09.11	14	7,986	7,918	2.1
2002	Charterhouse Capital Partners VII	Buy-out	6	30.09.11	2,921	7,822	7,616	2.1
2005	Equistone Partners Europe Fund II (formerly known as Barclays European Fund II)	Buy-out	18	30.09.11	2,044	10,017	7,075	1.9
2008	Advent Global Private Equity VI	Buy-out	17	30.09.11	4,549	5,911	6,506	1.8
2001	Cinven Third Fund	Buy-out	6	30.09.11	999	7,199	5,421	1.5
2006	CVC Tandem Fund	Buy-out	15	30.09.11	959	4,357	5,226	1.4
2001	Alchemy Investment Plan	Buy-out	3	30.09.11	-	6,980	4,498	1.2
2002	Pomona Capital V Fund	Secondary	75	30.09.11	109	6,639	3,226	0.9
2001	Scottish Equity Partners II	Venture capital               11		30.06.11	-	3,955	3,051	0.8
2002	Equistone Partners Europe Fund I  (formerly known as Barclays European Fund)	Buy-out	4	30.09.11	1,442	3,150	2,766	0.7
2001	Candover 2001 Fund	Buy-out	3	30.09.11	-	7,492	2,516	0.7
1998	CVC European Equity Partners II	Buy-out	8	30.09.11	1,109	2,725	1,759	0.5
2011	Montagu IV	Buy-out	1	30.09.11	23,895	2,001	1,573	0.4
2001	MUST 4	Buy-out	3	30.09.11	1,856	3,299	843	0.2
1999	Apax Europe IV	Balanced	2	30.09.11	-	7,417	601	0.2
1995	Phildrew Fourth	Buy-out	1	30.09.11	-	499	19	-
1998	Phildrew Fifth	Buy-out	-	30.09.11	-	5,864	12	-
1998	Candover 1997 Fund	Buy-out	-	30.09.11	-	510	-	-
	Total portfolio investments†		521		126,430	410,511	397,433	107.6
	Current assets less  liabilities						(28,069)	(7.6)
	Shareholders' funds						369,364	100.0

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

† the 521 underlying investments represent holdings in 495 separate investments.

TEN LARGEST FUND INVESTMENTS AT 30 SEPTEMBER 2011

Charterhouse Capital Partners VIII		30 September 2011	30 September 2010
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)	38,880	32,381
	Cost (£'000)	36,192	33,783
	Commitment (€'000) (£'000) (£'000) (€'000)	60,000	60,000
	Amount Funded	84.0%	79.4%
	Holding in Fund	1.5%	1.5%
	Income (£'000)	-	-

Equistone Partners Europe Fund III		30 September 2011	30 September 2010
Equistone Partners Europe 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 Equistone Partners Europe, the former private equity arm of Barclays PLC. The manager operates from offices in London, Paris, Munich, Zurich, Milan, Birmingham and Manchester with just under half of the investments sourced in the UK.	Value (£'000)	38,811	37,076
	Cost (£'000)	36,195	40,572
	Commitment (€'000)	60,000	60,000
	Amount Funded	87.5%	83.9%
	Holding in Fund	3.3%	3.3%
	Income (£'000)	797	-

Industri Kapital 2007		30 September 2011	30 September 2010
Industri Kapital 2007 is a €1.7 billion private equity fund focused on northern European buy-outs. 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)	37,207	21,154
	Cost (£'000)	33,639	17,666
	Commitment (€'000)	50,000	50,000
	Amount Funded	81.4%	44.7%
	Holding in Fund	3.0%	3.0%
	Income (£'000)	-	-

Apax Europe VII		30 September 2011	30 September 2010
Apax Europe VII is a €11.1 billion private equity fund predominantly focused on the European market. The fund is managed by Apax Partners, one of the leading and most experienced private equity managers in Europe. Apax operates from offices in London, Munich, Milan, Stockholm and Barcelona in Europe with further offices in New York, Tel Aviv and across Asia. 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)	27,231	28,287
	Cost (£'000)	22,265	24,412
	Commitment (€'000) (€'000)	41,385	41,385
	Amount Funded	82.5%	76.6%
	Holding in Fund	0.4%	0.4%
	Income (£'000)	565	-

Candover 2005 Fund		30 September 2011	30 September 2010
The Candover 2005 Fund is a €3.5 billion private equity fund focused on European buy-outs. The fund is managed by Candover Partners, a subsidiary of ARLE Capital Partners. 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)	26,068	19,978
	Cost (£'000)	40,487	37,635
	Commitment (€'000) (€'000)	60,000	60,000
	Amount Funded	95.9%	90.3%
	Holding in Fund	1.7%	1.7%
	Income (£'000)	-	-

CVC European Equity Partners V		30 September 2011	30 September 2010
CVC European Equity Partners V is a €10.7 billion private equity fund predominantly focused on European buy-outs. The fund is managed by CVC Capital Partners Europe, one of the leading European private equity managers. CVC has a long track record and operates primarily from offices in London, Paris, Frankfurt, Amsterdam, Brussels, Copenhagen, Madrid, Stockholm, Zurich and Milan in Europe with further offices in New York and across Asia. CVC targets medium and large sized buy-out transactions.	Value (£'000)	18,347	12,109
	Cost (£'000)	16,153	10,530
	Commitment (€'000) (€'000)	35,000	35,000
	Amount Funded	56.4%	36.3%
	Holding in Fund	0.4%	0.4%
	Income (£'000)	107	136

Coller International Partners V		30 September 2011	30 September 2010
Coller International Partners V is a $4.5 billion private equity fund focused on secondary private equity opportunities. The fund is managed by Coller Capital, one of the most established managers of secondary funds, which was founded in 1990 and is led by Jeremy Coller. The manager operates from offices in London and New York and targets secondary positions in buy-out and venture funds globally.	Value (£'000)	18,211	14,527
	Cost (£'000)	12,829	12,137
	Commitment ($'000) (€'000)	40,000	40,000
	Amount Funded	74.9%	63.0%
	Holding in Fund	0.8%	0.8%
	Income (£'000)	-	-

3i Eurofund V		30 September 2011	30 September 2010
3i Eurofund V is a €5.0 billion private equity fund, including a commitment of €2.8 billion from 3i Group plc, focused on mid to large market European buy-outs. The fund is managed by 3i Private Equity, 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 targets buy-out transactions with enterprise values of between €100 million and €1 billion, across a wide range of sectors.	Value (£'000)	17,962	13,809
	Cost (£'000)	25,438	18,614
	Commitment (€'000) (€'000)	40,000	40,000
	Amount Funded	87.5%	67.8%
	Holding in Fund	0.8%	0.8%
	Income (£'000)	-	-

Advent Global Private Equity V		30 September 2011	30 September 2010
Advent Global Private Equity V is a €2.5 billion private equity fund focused on global buy-outs. 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)	17,430	18,617
	Cost (£'000)	7,037	10,338
	Commitment (€'000) (€'000)	22,500	22,500
	Amount Funded	93.0%	93.0%
	Holding in Fund	8.0%	8.0%
	Income (£'000)	-	-

HgCapital 5		30 September 2011	30 September 2010
HgCapital 5 is a £830 million private equity fund focused on buy-outs of companies with enterprise values of between £50 and £250 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)	14,376	15,176
	Cost (£'000)	11,682	15,427
	Commitment (€'000) (€'000)	20,300	20,300
	Amount Funded	79.0%	82.7%
	Holding in Fund	2.4%	2.4%
	Income (£'000)	-	-

TOP 30 UNDERLYING INVESTMENTS AT 30 SEPTEMBER 2011

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
Elior	Catering provider	Charterhouse Capital Partners VII & VIII		2006		2.8
Acromas	Travel assistance and financial services	Charterhouse Capital Partners VII & VIII, CVC European Equity Partners IV & CVC Tandem		2004		2.7
Global Refund	Travel related payment services	Equistone Partners Europe Fund III		2007		2.2
Stork	Manufacturing and engineering conglomerate	Candover 2005 Fund		2008		2.1
Vivarte	Footwear and apparel retailer	Charterhouse Capital Partners VIII		2007		1.9
bpost	Belgian postal service	CVC European Equity Partners III, IV & CVC Tandem		2006		1.9
Parques Reunidos	Amusement parks	Candover 2005 Fund		2007		1.9
Evonik Industries	Speciality chemicals, power generation, real estate	CVC European Equity Partners V & CVC Tandem		2008		1.6
Vistra	Trust, fiduciary, corporate and fund services	Industri Kapital 2007		2009		1.6
ista	Heat and water metering	Charterhouse Capital Partners VIII		2007		1.5
Schenck Process	Provides industrial weighing and measuring systems	Industri Kapital 2007		2007		1.5
Cengage Learning	Publisher of books for the higher education sector	Apax Europe VII		2007		1.2
Capital Safety	Producer of safety and fall protection equipment	Candover 2005 Fund		2007		1.2
Etanco	Producer of building fastener and fixing systems	Industri Kapital 2007		2008		1.1
AWAS/Pegasus	Aircraft lessor	Terra Firma Capital Partners III		2007		1.1
Flabeg	Manufacturer of industrial mirror glass components	Industri Kapital 2007		2008		1.1
Not disclosed	Supplier of oxo chemicals and derivatives	Advent Global Private Equity V		2007		1.1
Numericable/Completel	French cable operator	Cinven Third Fund		2005		1.0
Minimax	Producer of fire suppression systems	Industri Kapital 2004 & Industri Kapital 2007		2006		1.0
GHD GesundHeits Deutschland	Home care product sales	Industri Kapital 2007		2010		1.0
Flint (Xsys/BASF)	Manufacturer of printing inks	CVC European Equity Partners III		2004		1.0
A-Plan Holdings	Retail insurance broking	Equistone Partners Europe Fund III		2008		1.0
PHS	UK business services	Charterhouse Capital Partners VII		2005		0.9
Bankrate	Internet based banking and finance network	Apax Europe VII		2009		0.9
Hugo Boss & Valentino	Valentino and Hugo Boss fashion group	Permira IV		2007		0.9
SHL	UK market leader in psychometric testing	HgCapital 5		2006		0.8
Ziggo	Cable operator	Cinven Fourth Fund		2006		0.8
TriZetto Group	Healthcare information technology solutions	Apax Europe VII		2008		0.8
Not disclosed	Provider of extended warranties	Advent Global Private Equity V		2007		0.8
Tnuva	Food manufacturer and distributor	Apax Europe VII		2008		0.8
Total of top 30 underlying investments					40.4

DIRECTORS' REPORT

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 2010, 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 Company's registration number is SC 216638.

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.

Review of Performance

An outline of the performance, market background, investment activity and portfolio during the year under review and the performance over the period since listing, 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, which 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 one year and five years ended 30 September 2011, and since listing, are provided in the Financial Summary. The Company's expense ratio and discount levels are provided in the Summary Financial Information. 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. Further information on the Manager's policy on sustainable and responsible investing is provided in the Company's 2011 Annual Report and Accounts*.   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. Details of the Investment Management Agreement are provided on pages 20 and 21 of the Company's 2011 Annual Report and Accounts*.

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; and

-   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, 2 December 2011

INCOME STATEMENT (audited)

for the year ended 30 September 2011

	Revenue	Capital	Total
	£'000	£'000	£'000
Gains on investments	-	56,281	56,281
Currency losses	-	(4)	(4)
Income from investments	4,514	-	4,514
Interest receivable and other income	7	-	7
Investment management fee	(294)	(2,644)	(2,938)
Administrative expenses	(714)	-	(714)
	_________	_________	_________
NET RETURN ON ORDINARY ACTIVITIES
BEFORE FINANCE COSTS AND TAXATION	3,513	53,633	57,146
Finance costs	(285)	(2,565)	(2,850)
	_________	_________	_________
NET RETURN ON ORDINARY ACTIVITIES
BEFORE TAXATION	3,228	51,068	54,296
Taxation	(565)	547	(18)
	_________	_________	_________
NET RETURN ON ORDINARY ACTIVITIES
AFTER TAXATION	2,663	51,615	54,278
	_________	_________	_________
NET RETURN PER ORDINARY SHARE	1.65p	31.97p	33.62p
	_________	_________	_________
DILUTED NET RETURN PER ORDINARY SHARE	1.64p	31.74p	33.38p
	_________	_________	_________

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 1.3p (2010 - 0.2p) per ordinary share.

INCOME STATEMENT (audited)

for the year ended 30 September 2010

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

RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS (audited)

For the year ended 30 September 2011				Capital
	Share	Share	Special	redemption	Capital	Revenue
	capital	premium	reserve	reserve	reserves	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 30 September 2010	357	79,650	79,148	3	150,422	5,662	315,242
Total recognised gains	-	-	-	-	51,615	2,663	54,278
Scrip Issue of ordinary shares	-	167	-	-	-	-	167
Dividends paid	-	-	-	-	-	(323)	(323)
	______	_______	______	_______	________	_______	_______
Balance at 30 September 2011	357	79,817	79,148	3	202,037	8,002	369,364
	______	_______	______	_______	________	_______	_______
For the year ended 30 September 2010				Capital
	Share	Share	Special	redemption	Capital	Revenue
	capital	premium	reserve	reserve	reserves	reserve	Total
	£'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	-	-	-	-	-	(161)	(161)
	______	_______	______	_______	________	_______	_______
Balance at 30 September 2010	357	79,650	79,148	3	150,422	5,662	315,242
	______	_______	______	_______	________	_______	_______

BALANCE SHEET (audited)

		As at		As at
		30 September		30 September
		2011		2010
		£'000	£'000	£'000	£'000
NON-CURRENT ASSETS
Investments at fair value through profit or loss			397,433		369,630
CURRENT ASSETS
Debtors		709		108
Cash and short term deposits		3,384		6,403
		_________		_________
		4,093		6,511
CREDITORS: AMOUNTS FALLING
DUE WITHIN ONE YEAR		(32,162)		(60,899)
		_________		_________
NET CURRENT LIABILITIES			(28,069)		(54,388)
			_________		_________
TOTAL ASSETS LESS CURRENT LIABILITIES			369,364		315,242
			_________		_________
CAPITAL AND RESERVES
Called up share capital			357		357
Share premium			79,817		79,650
Special reserve			79,148		79,148
Capital redemption reserve			3		3
Capital reserves			202,037		150,422
Revenue reserve			8,002		5,662
			_________		_________
TOTAL SHAREHOLDERS' FUNDS			369,364		315,242
			_________		_________
ANALYSIS OF SHAREHOLDERS' FUNDS
Equity interests (ordinary shares)			369,330		315,208
Non-equity interests (founder shares)			34		34
			_________		_________
			369,364		315,242
			_________		_________
NET ASSET VALUE PER EQUITY SHARE			228.7p		195.3p
			_________		_________

CASHFLOW STATEMENT (audited)

		For the year		For the year
		ended 30 September		ended 30 September
		2011		2010
		£'000	£'000	£'000	£'000
NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES			291		(1,252)
NET CASH OUTFLOW
FROM SERVICING OF FINANCE			(2,851)		(1,921)
NET CASH INFLOW FROM TAXATION			-		8
FINANCIAL INVESTMENT
Purchase of investments		(49,604)		(47,994)
Disposal of underlying investments by funds		78,082		21,273
Disposal of fund investments by way of secondary sales		-		1,890
		_________		_________
NET CASH INFLOW/(OUTFLOW)			28,478		(24,831)
FROM FINANCIAL INVESTMENTS
ORDINARY DIVIDENDS PAID			(156)		(78)
			_________		_________
NET CASH INFLOW/(OUTFLOW) BEFORE FINANCING			25,762		(28,074)
Net proceeds on issue of ordinary shares		-		212
Bank loans (repaid)/drawn down		(28,777)		30,943
		_________		_________
NET CASH (OUTFLOW)/INFLOW FROM FINANCING			(28,777)		31,155
			_________		_________
(DECREASE)/INCREASE IN CASH			(3,015)		3,081
			_________		_________
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
(Decrease)/increase in cash as above			(3,015)		3,081
Repayment/(drawdown) of loan			28,777		(30,943)
Currency movements			(4)		944
			_________		_________
MOVEMENT IN NET DEBT IN THE PERIOD			25,758		(26,918)
Opening net debt			(54,242)		(27,324)
			_________		_________
CLOSING NET DEBT			(28,484)		(54,242)
			_________		_________
REPRESENTED BY:
Cash and short term deposits			3,384		6,403
Loans			(31,868)		(60,645)
			_________		_________
			(28,484)		(54,242)
			_________		_________

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 costs

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. On the date of making a legal commitment to invest in a fund, such commitment is recorded and disclosed. When funds are drawn in respect of such fund commitment the resulting investment is recognised in the financial statements. The investment is removed when it is realised or 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 EVCA and the BVCA, '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 manager's 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

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 at 30 September were:

	2011		2010
Euro	1.1611		1.1543
US dollar	1.5578		1.5758

Transactions in overseas currency are translated at the exchange rate prevailing on the date of transaction.

2	Income	Year to 30 September 2011	Year to 30 September 2010
		£'000	£'000
	Income from unquoted investments	4,514	1,713
	Interest receivable on cash	7	-
	Other income	-	1
		_________	_________
	Total income	4,521	1,714
		_________	_________

3	Investment management fee	Year to 30 September 2011			Year to 30 September 2010
		Revenue	Capital	Total	Revenue	Capital	Total
		£'000	£'000	£'000	£'000	£'000	£'000
	Investment management fee	294	2,644	2,938	238	2,138	2,376
		_________	_________	_________	_________	_________	_________

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.

4	Administrative expenses	Year to 30 September 2011	Year to 30 September 2010
		£'000	£'000
	Secretarial and administration fee	186	177
	Directors' fees	184	154
	Auditors' remuneration - statutory audit	23	21
	- interim review	15	14
	- other services	1	1
	Legal fees	31	25
	Fees and subscriptions	17	44
	Professional and consultancy fees	127	52
	Other expenses	130	93
		_________	_________
		714	581
		_________	_________

Irrecoverable VAT has been shown under the relevant expense line.

The secretarial and administration fee is payable to Aberdeen Asset Managers PLC 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 £42,000 (2010 - £38,500) per annum. The emoluments of each of the other directors were £24,000 (2010 - £22,000) per annum, except for Hamish Buchan who received an additional £6,000 (2010 - £5,500) as Senior Independent Director and Chairman of the Audit Committee.

5	Finance costs	Year to 30 September 2011			Year to 30 September 2010
		Revenue	Capital	Total	Revenue	Capital	Total
		£'000	£'000	£'000	£'000	£'000	£'000
	Bank loans	285	2,565	2,850	191	1,716	1,907
		_________	_________	_________	_________	_________	_________

6	Taxation	Year to 30 September 2011			Year to 30 September 2010
		Revenue	Capital	Total	Revenue	Capital	Total
		£'000	£'000	£'000	£'000	£'000	£'000
	a)         Factors affecting the current tax charge for the year Return on ordinary activities before taxation	3,228	51,068	54,296	704	48,783	49,487
		________	________	________	________	________	________

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 - 27% (2010 : 28%)	872	13,788	14,660	197	13,659	13,856
Capital gains1	-	(13,788)	(13,788)	-	(13,659)	(13,659)
Non taxable income	(307)	-	(307)	(28)	-	(28)
Overseas withholding tax	18	-	18	28	-	28
Overprovision from previous period	-	-	-	(8)	-	(8)
Double tax relief	(18)	-	-	(28)	-	(28)
Tax relief for expenses taken to capital	-	(547)	(547)	-	(141)	(141)
	_________	_________	_________	_________	_________	_________
Current tax charge/(credit) for the year	565	(547)	18	161	(141)	20
	_________	_________	_________	_________	_________	_________

¹ 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 30 September 2011	Year to 30 September 2010
	(b) Analysis of the tax charge throughout the year	£'000	£'000
	Current tax
	Overseas withholding tax	18	28
	Overprovision from previous period	-	(8)
		_________	_________
		18	20
		_________	_________

(c) Factors that may affect future tax charges

At the year end there is a potential deferred tax asset of £2,930,605 (2010 : £938,000) in relation to excess management expenses carried forward. The deferred tax asset is unrecognised at the year end in line with the Company's stated accounting policy.

7	Dividend on ordinary shares	Year to 30 September 2011	Year to 30 September 2010
		£'000	£'000
	Amount recognised as a distribution to equity holders in the year:
	Dividend paid in the year ended 30 September 2011 of 0.20p (2010 - 0.10p) per ordinary share paid on 28 January 2011 (2010 - paid on 29 January 2010)	156	78
	Scrip dividend issue of 123,804 shares, in lieu of the cash dividend, in the year ended 30 September 2011 (2010 - 83,755 shares)	167	83
		_________	_________
		323	161
		_________	_________

During the year the Company issued 123,804 ordinary shares as a result of elections received following a scrip dividend offer in respect of the 2010 final dividend. One new ordinary share was issued for every 139.8p 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 £2,663,000 (2010 - £543,000).

	Proposed final dividend of 1.3p per ordinary share (dividend proposed at 30 September 2010 - 0.2p per ordinary share) due to be paid on 6 February 2012 (paid 28 January 2011).	2,099	323
		_________	_________

8	Net return per ordinary share	Year to 30 September 2011		Year to 30 September 2010
		p	£'000	p	£'000
	The net return per ordinary share is based on the following figures:
	Revenue net return	1.65	2,663	0.34	543
	Capital net return	31.97	51,615	30.36	48,924
		________	________	________	________
	Total net return	33.62	54,278	30.70	49,467
		________	________	________	________
	Weighted average number of ordinary shares in issue:	161,455,894		161,122,847
		Year to 30 September 2011		Year to 30 September 2010
		p	£'000	p	£'000
	The fully diluted net return per ordinary share is based on the following figures:
	Revenue net return (fully diluted)	1.64	2,663	0.34	543
	Capital net return (fully diluted)	31.74	51,615	30.30	48,924
		________	________	________	________
	Total net return (fully diluted)	33.38	54,278	30.64	49,467
		________	________	________	________

Fully diluted net 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 2011, this is based on 162,597,933 shares, comprising the weighted average 161,455,894 ordinary shares and 1,142,039 founder A shares capable of conversion. 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.

9	Investments	Year to 30 September 2011	Year to 30 September 2010
		£'000	£'000
	Fair value through profit or loss:
	Opening market value	369,630	293,106
	Opening investment holding losses	38,265	86,163
		_________	_________
	Opening book cost	407,895	379,269
	Movements in the year:
	Additions at cost	49,604	47,994
	Disposal of underlying investments by funds	(78,082)	(21,273)
	Disposal of fund investments by way of secondary sales	-	(1,890)
		_________	_________
		379,417	404,100
	Gains on disposal of underlying investments	35,157	8,433
	Losses on disposal of fund investments	(4,063)	(4,638)
		_________	_________
	Closing book cost	410,511	407,895
	Closing investment holding losses	(13,078)	(38,265)
		_________	_________
	Closing market value	397,433	369,630
		_________	_________

		Year to 30 September 2011	Year to 30 September 2010
	Gains on investments:	£'000	£'000
	Net gains on disposal of unquoted investments	31,094	3,795
	Net revaluation of unquoted investments	25,187	47,898
		_________	_________
		56,281	51,693
		_________	_________

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 on investments in the Income Statement. The total costs were as follows:

		£'000	£'000
	Secondary sales	-	53
	Purchases in respect of new unquoted fund investments	1	4
		_________	_________
		1	57
		_________	_________

10	Debtors	30 September 2011	30 September 2010
		£'000	£'000
	Amounts falling due within one year:
	Prepayments	709	108
		_________	_________

11	Creditors: amounts falling due within one year	30 September 2011	30 September 2010
		£'000	£'000
	Bank loans (see note 12)	31,868	60,645
	Management fee	70	51
	Secretarial fee	47	46
	Other accruals	108	87
	Loan interest and commitment fee	69	70
		_________	_________
		32,162	60,899
		_________	_________

12	Bank loans	30 September 2011	30 September 2010
		£'000	£'000
	Unsecured bank loans repayable within one year:
	€37,000,000 at 3.857% repayable 31 October 2011	31,868	-
	€20,000,000 at 3.118% repayable 25 October 2010	-	17,327
	€50,000,000 at 3.121% repayable 29 October 2010	-	43,318
		_________	_________
		31,868	60,645
		_________	_________

At 30 September 2011, the Company had a £120 million (2010: £100 million) committed, multi currency syndicated revolving credit facility led by The Royal Bank of Scotland plc of which £31.9m (2010 - £60.6m) had been drawn down in euros. The facility expires on 31 December 2013. The interest rate on this facility is LIBOR plus 2.5% and the commitment fee payable on non-utilisation is 1.0% per annum.

13	Called up share capital	30 September 2011	30 September 2010
		£	£
	Issued:
	161,496,597 (2010 - 161,372,793) ordinary shares of 0.2p - fully paid	322,993	322,746
	16,242,002 (2010 - 16,242,002) founder A shares of 0.2p - partly paid	16,426	16,426
	17,500,000 (2010 - 17,500,000) founder B shares of 0.2p - partly paid	17,687	17,687
		_________	_________
		357,106	356,859
		_________	_________

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 2011, 3,596,981 (2010 : 3,596,981) founder A shares 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. During the year, no founder A shares were converted into ordinary shares. The Company also issued 123,804 ordinary shares as a result of elections received following a scrip dividend offer in respect of the 2010 final dividend. One new ordinary share was issued for every 139.8p otherwise payable as a cash dividend.

Following the end of the founder B share performance period on 30 September 2011, no founder B shares have a right to convert into ordinary shares.

	14 Reserves				Capital reserve
		Share premium account	Special reserve	Capital redemption reserve	gains/(losses) on disposal	revaluation	Revenue reserve
		£'000	£'000	£'000	£'000	£'000	£'000
	Opening balances at 1 October 2010	79,650	79,148	3	188,687	(38,265)	5,662
	Gains on disposal of unquoted investments	-	-	-	31,094	-	-
	Management fee charged to capital	-	-	-	(2,644)	-	-
	Finance costs charged to capital	-	-	-	(2,565)	-	-
	Tax relief on management fees and finance costs above	-	-	-	547	-	-
	Currency losses	-	-	-	(4)	-	-
	Revaluation of unquoted investments	-	-	-	-	25,187	-
	Scrip issue of ordinary shares	173	-	-	-	-	-
	Expenses of conversion of scrip issue	(6)	-	-	-	-	-
	Return on ordinary activities after taxation	-	-	-	-	-	2,663
	Dividends during the period	-	-	-	-	-	(323)
		_________	_________	_________	_________	_________	_________
	Closing balances at 30 September 2011	79,817	79,148	3	215,115	(13,078)	8,002
		_________	_________	_________	_________	_________	_________

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.

15	Reconciliation of net return on ordinary activities before taxation to net cash outflow from operating activities	30 September 2011	30 September 2010
		£'000	£'000
	Net total return before finance costs and taxation	57,146	51,394
	Adjustment for:
	Gains on disposal of unquoted investments	(31,094)	(3,795)
	Revaluation of unquoted investments	(25,187)	(47,898)
	Currency losses/(gains) on cash balances	4	(944)
	(Increase)/decrease in debtors	(601)	53
	Increase/(decrease) in creditors	41	(34)
	Tax deducted from non - UK income	(18)	(28)
		_________	_________
	Net cash inflow/(outflow) from operating activities	291	(1,252)
		_________	_________

16	Net asset value per ordinary share	30 September 2011	30 September 2010
	Basic:
	Ordinary shareholders' funds	£369,330,320	£315,207,880
	Number of ordinary shares in issue	161,496,597	161,372,793
	Net asset value per ordinary share	228.7p	195.3p
	Diluted:
	Ordinary shareholders' funds	£372,927,301	£318,804,861
	Number of ordinary shares in issue	165,093,578	164,969,774
	Net asset value per ordinary share	225.9p	193.3p

The net asset value per ordinary share and ordinary shareholders' funds are calculated in accordance with the Company's articles of association.

17	Commitments and contingent liabilities	30 September 2011	30 September 2010
		£'000	£'000
	Outstanding calls on investments	126,430	150,331
		_________	_________

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 on page 24.

During the year ended 30 September 2011 the Manager charged management fees totalling £2,938,000 (2010 - £2,376,000) to the Company in the normal course of business. The balance of management fees outstanding at 30 September 2011 was £70,000 (2010 - £51,000).

At 30 September 2011, the Company had a £120 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 £1,181,000 during the year ended 30 September 2011 (2010 - £703,000). 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 2011.

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 2011	30 September 2010
			£'000	£'000
	Financial assets
	Financial assets at fair value through profit or loss:
		Fixed asset investments - designated as such on initial recognition	397,433	369,630
	Loans and receivables:
		Current assets:
		Debtors (accrued income and other debtors)	709	108
		Cash and short-term deposits	3,384	6,403
			_________	_________
			401,526	376,141
			_________	_________
	Financial liabilities
	Measured at amortised cost:
		Creditors: amounts falling due within one year:
		Bank loans	31,868	60,645
		Accruals	294	254
			_________	_________
			32,162	60,899
			_________	_________

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 generally 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 listed financial 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 financial exchanges. A 10% increase in the valuation of unquoted investments at 30 September 2011 would have increased the net assets attributable to the Company's shareholders and the total return for the year by £39,743,000 (2010: £36,963,000); 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. 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 2011		30 September 2010
		Local Currency	Sterling Equivalent	Local Currency	Sterling Equivalent
		'000	£'000	'000	£'000
	Fixed asset investments: unquoted
	Sterling	22,798	22,798	26,488	26,488
	Euro	362,688	312,366	321,703	278,700
	US Dollar	97,003	62,269	101,548	64,442
	Cash and short term deposits:
	Sterling	68	68	438	438
	Euro	3,678	3,168	5,866	5,082
	US Dollar	230	148	1,391	883
	Other debtors and creditors:
	Sterling	416	416	(140)	(140)
	Euro	(37,003)	(31,869)	(70,009)	(60,651)
			_________		________
	Total		369,364		315,242
			_________		________
		Local Currency	Sterling Equivalent	Local Currency	Sterling Equivalent
		'000	£'000	'000	£'000
	Outstanding commitments:
	Sterling	6,127	6,127	5,409	5,409
	Euro	119,958	103,317	144,402	125,099
	US Dollar	26,461	16,986	31,237	19,823
			_________		________
	Total		126,430		150,331
			_________		________

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 2011 sterling appreciated by 0.6% relative to the euro (2010: appreciated 5.5%) and depreciated by 1.1% relative to the US dollar (2010: depreciated 1.5%).

To highlight the sensitivity to currency movements, if the value of sterling had weakened against both of the above currencies by 10% compared to the exchange rates at 30 September 2011, the capital gain would have increased for the year by £31,462,000 (2010: increase of £26,224,000 in capital gain); a 10% change in the opposite direction would have decreased the capital gain 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 £10,937,000 at the year end (2010: £13,175,000), 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. As at 30 September 2011, £31.9 million of the loan facility had been drawn down (2010: £60.6 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 2011	30 September 2010
	£'000	£'000
Cash and short term deposits	3,384	6,403
	_________	_________

All of the Company's cash is held by JP Morgan Chase Bank ("JP Morgan"), which is rated 'A+' 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 2011		30 September 2011
	Weighted average interest rate		Weighted average interest rate
	%	£'000	%	£'000
Floating rate
Financial assets: Cash and short term deposits	0.23	3,384	-	6,403
	_________	_________	_________	_________
	0.23	3,384	-	6,403
	_________	_________	_________	_________
Fixed rate
Financial liabilities: Bank loans	3.86	(31,868)	3.12	(60,645)
	_________	_________	_________	_________
	3.86	(31,868)	3.12	(60,645)
	_________	_________	_________	_________

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 interest rates are fixed on the bank loans is 31.0 days (2010 - 30.5 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 2011 by £28,000 (2010: £19,000). A decrease of 1% would have increased the net assets attributable to the Company's shareholders and increased the total gain for the year ended 30 September 2011 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 safeguarding 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 liabilities, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

·   Level 3: inputs for the asset or liabilities that are not based on observable market data (unobservable inputs).

The Company's financial assets and liabilities, measured at fair value in the statement of financial position, are grouped into the following fair value hierarchy at 30 September 2011:

	Level 1	Level 2	Level 3	Total
Financial assets at fair value through profit or loss	£'000	£'000	£'000	£'000
Unquoted equities	-	-	397,433	397,433
	________	________	________	________
Net fair value	-	-	397,433	397,433
	________	________	________	________

As at 30 September 2010:

	Level 1	Level 2	Level 3	Total
Financial assets at fair value through profit or loss	£'000	£'000	£'000	£'000
Unquoted equities	-	-	369,630	369,630
	________	________	________	________
Net fair value	-	-	369,630	369,630
	________	________	________	________

Unquoted equities

The fair value of the Company's investments in unquoted fund interests has been determined by reference to 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  Standard Life European Private Equity Trust PLC is an investment company managed by SL Capital Partners LLP, the ordinary shares of which are admitted to listing by the UK Listing Authority and to trading on the London Stock Exchange. It seeks to conduct its affairs so as to continue to qualify as an investment trust under section 1158-1165 of the Corporation Taxes Act 2010.  The Board is wholly independent of the Manager and Standard Life plc.

22  The financial information for the year ended 30 September 2011 comprises non-statutory accounts as defined in sections 434-436 of the Companies Act 2006.  The financial information for the year ended 30 September 2010 has been extracted from published accounts that have been delivered to the Registrar of Companies and on which the report of the auditors was unqualified.  The statutory accounts for the year ended 30 September 2011 contain an unqualified audit report and 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 2 February 2012 at 12.30pm.

23 The report and accounts for the year ended 30 September 2011 was posted to shareholders in mid-December 2011 and copies are available from the Company Secretary - Aberdeen Asset Management PLC, 40 Princes Street, Edinburgh EH2 2BY.

for Standard Life European Private Equity Trust PLC,

Aberdeen Asset Management PLC Company Secretary

Click on, or paste the following link into your web browser, to view the associated PDF document.

http://www.rns-pdf.londonstockexchange.com/rns/3818W_-2012-1-30.pdf

http://www.rns-pdf.londonstockexchange.com/rns/3818W_1-2012-1-30.pdf

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