Half Yearly Report

RNS Number : 6802M

Standard Life Euro Pri Eqty Tst PLC

28 May 2010

 



STANDARD LIFE EUROPEAN PRIVATE EQUITY TRUST PLC

INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2010

Highlights

·     For the six months ended 31 March 2010 the Company's undiluted net asset value per ordinary share ("NAV") rose 10.7% to 182.6p (diluted NAV - 180.7p).

·     The closing mid-market price of the Company's ordinary shares on 31 March 2010 was 117.0p, an increase of 4.2% over the period and a discount of 35.3% to the diluted NAV. As at 26 May 2010 the Company's share price was 104.0p and the discount to the diluted NAV  was 42.4%.

·     The 17.7p rise in NAV during the period comprised 0.9p of net realised gains and income from the Company's portfolio of 40 private equity fund interests, 18.9p of unrealised gains on the portfolio on a constant exchange rate basis, 0.9p of negative exchange rate movements on the portfolio and 1.2p of costs and other movements.

·     As at 31 March 2010 the Company's net assets were £294.4 million and the Company's portfolio of private equity fund interests had a value of £328.7 million. In preparing the portfolio valuation, 93.5% by value of the portfolio was valued as at 31 March 2010.

·     In line with a rise in activity levels in the European private equity market, distributions and other proceeds received during the period rose to £12.3 million and the Company funded £17.5 million of draw downs. As at 31 March 2010 the Company's net indebtedness was £34.2 million.

·     The Company made no new fund commitments during the period and had £187.2 million of outstanding commitments as at 31 March 2010. This was a fall of £40.6 million in outstanding commitments during the period.

·     In addition to the above draw downs, a significant proportion of the fall in outstanding commitments arose from the sale by the Company of €18.6 million of its then €31.5 million of existing outstanding commitments to Apax Europe VII in December 2009. This transaction was reported in detail in the Company's interim management statement released on 27 January 2010.

·     In line with the Company's dividend policy, the Board has not declared an interim dividend. 

Quote from Scott Dobbie, Chairman

"Recent financial market turmoil resulting from fiscal and consequential macro-economic issues in some parts of the eurozone has demonstated that the path of recovery will not be smooth. Whilst the Company has limited direct exposure to the economies most immediately involved, the general uncertainty has prompted concerns about European private equity activity. Nevertheless, the Board and the Manager remain confident that the Company's financial position and strong portfolio of fund interests will ensure full participation in any upturn. In the meantime, rising earnings in many of the underlying investments provide a base to underpin the Company's valuation"

For further information please contact:-

Peter McKellar of SL Capital Partners LLP (on 0131 245 0055)

CHAIRMAN'S STATEMENT

Results and performance

The six months ended 31 March 2010 saw a more optimistic outlook for European private equity, with many underlying investments reporting an increase in valuation and earnings expectations and managers noting that there had been a modest increase in transactional activity. Against such a background the Company's NAV rose by 10.7% to 182.6p (diluted - 180.7p), from 164.9p as at 30 September 2009 (diluted - 163.4p).  As at 31 March 2010 the Company's net assets were £294.4 million (30 September 2009 - £265.6 million).

The 17.7p rise in NAV during the period comprised 0.9p of net realised gains and income from the Company's portfolio of 40 private equity fund interests, 18.9p of unrealised gains on the portfolio on a constant exchange rate basis, 0.9p of negative exchange rate movements on the portfolio and 1.2p of costs and other movements.

The closing mid-market price of the Company's ordinary shares on 31 March 2010 was 117.0p, an increase of 4.2% over the period and a discount of 35.3% to the diluted NAV. As at 26 May 2010 the Company's share price was 104.0p and the discount to the diluted NAV was 42.4%.

Given the nature of the private equity asset class it remains appropriate to compare the Company's relative performance over longer time periods. For the five years ended 31 March 2010 the Company's NAV total return and share price total return have risen and fallen by 57.1% and 2.8% respectively, compared to increases of 41.3% in the FTSE All-Share Index and 17.1% in the MSCI Europe Index (in euros) on a total return basis.

In line with the Company's dividend policy, the Board has not declared an interim dividend.

Portfolio and valuation

The Company's portfolio comprises 40 private equity fund interests. As at 31 March 2010 the value of the portfolio was £328.7 million, of which net unrealised gains arising during the period were £28.9 million.  The portfolio valuation was timely and 93.5% by value of the Company's private equity fund interests were valued by the relevant underlying managers as at 31 March 2010.

In terms of the breakdown of net unrealised gains, unrealised gains on a constant exchange rate basis were £30.4 million (10.4% of the opening portfolio valuation), partially offset by £1.5 million of negative exchange rate movements (0.5% of the opening portfolio valuation). A majority of the uplift in unrealised gains arose from a rise in listed comparable valuation multiples during the period, followed by debt paydown and improving earnings at an underlying investee company level.

Investment activity and cashflows

The overall value and volume of all European private equity investment undertaken during the six months to 31 March 2010 rose, with a total of €20.8 billion of transactions by enterprise value reported during the period, compared to a historic low of €12.0 billion in the equivalent period to 31 March 2009. This uplift in value was even more pronounced for European buy-outs, with 147 deals and €18.1 billion by enterprise value reported during the period (six months ended 31 March 2009 - 126 deals and €8.7 billion by enterprise value). 

In line with the recovery in activity levels in the European private equity market, distributions and other proceeds received during the period rose to £12.3 million and the Company funded £17.5 million of draw downs. As at 31 March 2010 the Company's net indebtedness was £34.2 million. The Company has a £100 million committed, multi-currency, syndicated revolving credit facility maturing in November 2011.

During the six month period the Company made no new fund commitments, reflecting continuing caution on the part of the Board and the Manager and a quiet European fund raising market. It is expected that there will be few quality fund offerings in the market place until late 2010, and even potentially early 2011, when it is projected that, against a background of rising valuations, increasing liquidity and hopefully improving investor sentiment towards the asset class, some private equity managers will seek to fund raise. It is hoped that, subject to a continuing improvement in the Company's liquidity position, it will be able to commit selectively to some of these fund raisings and/or purchase attractive secondary fund interests from early 2011 onwards.  As at 31 March 2010 the Company had £187.2 million of outstanding commitments.

In the period from 1 April 2010 to 26 May 2010 the Company funded £2.2m of drawdowns and received £1.9m of distributions.  As at 26 May 2010 the Company's net indebtedness and outstanding commitments were £33.2m and £178.2m respectively.

Outlook

Recent financial market turmoil resulting from fiscal and consequential macro-economic issues in some parts of the eurozone has demonstated that the path of recovery will not be smooth. Whilst the Company has limited direct exposure to the economies most immediately involved, the general uncertainty has prompted concerns about European private equity activity. Nevertheless, the Board and the Manager remain confident that the Company's financial position and strong portfolio of fund interests will ensure full participation in any upturn. In the meantime, rising earnings in many of the underlying investments provide a base to underpin the Company's valuation.

Scott Dobbie CBE

Chairman

MANAGER'S REVIEW

Investment strategy

The Company's investment strategy is to invest in the leading European private equity funds focused on mid to large sized buy-outs, which can be categorised as transactions with enterprise values ranging between €200 million and €2.0 billion.

The private equity funds in the Company's portfolio principally invest in countries in Europe, which the Manager defines as EU Member States, EU Associate Member States and other western European countries. 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. As at 31 March 2010 the Company had five fund investments - Coller International Partners IV, Coller International Partners V, Pomona Capital V, Pomona Capital VI and Towerbrook Investors II - which are likely to invest a majority of their capital outside Europe. In total these funds represent 15.1% of the Company's gross assets.

Portfolio composition and performance

As at 31 March 2010 the Company's portfolio comprised 40 private equity fund interests with a value of £328.7 million which, together with its current assets less liabilities, resulted in the Company having net assets of £294.4 million. This represented an undiluted NAV of 182.6p (diluted NAV - 180.7p).

The split of the Company's portfolio by type of private equity fund is set out in the interim report to be sent to shareholders (see note 11). Details of all of the Company's private equity fund investments, and more detailed information on the ten largest fund investments and thirty largest underlying portfolio companies, can be found on pages 9 to 11 of the interim report.

The valuation of the Company's private equity fund interests as at 31 March 2010 was carried out by the Manager and has been approved by the Board in accordance with the Company's accounting policies. In undertaking the valuation, the most recent valuation of each fund prepared by the relevant fund manager has been used, adjusted where necessary for subsequent cash flows. The fund valuations are prepared in accordance with the International Private Equity and Venture Capital Valuation guidelines. These guidelines require investments to be valued at "fair value".

Of the 40 private equity funds in which the Company is invested, 37 of the funds, or 93.5% of the portfolio by value, were valued by their fund managers as at 31 March 2010. The Manager continues to believe that the use of such timely valuation information is important.

The value of the Company's portfolio of private equity fund interests increased during the period from £293.1 million as at 30 September 2009 to £328.7 million as at 31 March 2010. A breakdown of the £35.6 million movement in the Company's portfolio during the period is detailed in the valuation bridge shown in the interim report. The increase in value was driven by an unrealised gain on the investment portfolio, at constant foreign exchange rates, of £30.4 million, reflecting a rise in fund managers' valuations of the underlying investments, together with £0.7 million of net realised gains from fund distributions and other proceeds. The above increase was partially offset by £1.5 million of unrealised foreign exchange losses. During the period to 31 March 2010 sterling appreciated by 2.5% relative to the euro and depreciated by 5.2% relative to the US Dollar.

Investment activity

Despite the fact that many managers are reporting an increase in deal pipelines, it is taking longer for transactions to complete as managers undertake extensive due diligence on target companies and try to assemble competitive funding structures. In the six months to 31 March 2010 the Company funded £17.5 million of draw downs, while distributions from the portfolio of fund interests increased to £10.4 million. The distributions received generated realised gains and income of £4.4 million.

Fund commitments and the disposal of private equity fund interests

During the six month period the Company made no new private equity fund commitments, reflecting both a quiet European fund raising market and a continued cautious approach on the part of the Board and the Manager. As at 31 March 2010 the Company had £187.2 million of outstanding commitments.

As previously announced, as part of the management of the Company's balance sheet and its outstanding commitments, the Company accepted an offer made to all investors in Apax Europe VII in December 2009, from two large private equity investors, to acquire existing outstanding commitments in that fund. To that end, the Company sold €18.6 million of its €31.5 million of existing outstanding commitments in Apax Europe VII to the above investors for an initial nil consideration.

As a result of the above sale the Company reduced its original level of participation in any new investments made by Apax Europe VII by 77%, but it will continue to fund the full amount of any draw downs in respect of existing investments. As part of the sale arrangements, accepting investors have agreed to pay 10% of any distributions in excess of a 2.0X aggregate net return on all existing Apax Europe VII investments to the two large investors acquiring the outstanding commitments, should such returns be generated. Save for the above potential profit share, the sale has no impact on the Company's remaining interest in Apax Europe VII.

In addition, when the Company sold a number of its private equity fund interests in spring 2009 it was unable, as a result of a restriction on fund transfers, to complete and announce the transfer of part of its fund interest in the CVC Tandem Fund to a European private equity investor on terms agreed with that party. The Company completed the formalities regarding that sale in January 2010. The sale was of an original commitment of €10.0 million to the CVC Tandem Fund for an aggregate consideration of £1.9 million, as compared to the 30 September 2009 valuation of that fund interest, increased by subsequent cashflows, of £4.2 million. The fund interest had aggregate outstanding commitments of £3.2 million from which the Company has been released.

The Board and the Manager will continue to monitor the Company's liquidity requirements in light of the macro-economic environment, the value of the Company's portfolio and the actual and projected quantum and rate of distributions and draw downs to and from the Company. It is hoped that the Company will start to make new fund commitments and/or acquire attractive secondary fund interests from early 2011 onwards.

Analysis of underlying investments

As at 31 March 2010 the Company's 40 private equity fund interests were collectively invested in a total of 513 underlying investments. The diversification of the underlying investments, as at 31 March 2010 and 30 September 2009, is set out in the four bar charts in the interim report.

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 in 2001 to 25% as at 31 March 2010, as other European private equity markets have grown. The broad sectoral diversification across a wide range of industries, including 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 levels of private equity activity over the last eighteen months. The chart showing value relative to the original cost of underlying investments illustrates that, despite an increase in the percentage of investments valued below original investment cost, the portfolio remains healthy with 76.0% of the portfolio valued at or above cost.

PRINCIPAL RISKS AND UNCERTAINTIES

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; and

•        operating and control environment risk

Information on each of these risks, and an explanation of how they are managed, is contained in the Company's Annual Report for the year ended 30 September 2009.

The Company's principal risks and uncertainties have not changed materially since the date of that Report and are not expected to change materially for the remaining six months of the Company's financial year. 

DIRECTORS' RESPONSIBILITY STATEMENT

The Directors are responsible for preparing the half-yearly financial report, in accordance with applicable laws and regulations. The Directors confirm that to the best of their knowledge:-

•       the condensed set of financial statements within the half- yearly financial report has been prepared in 
accordance with the UK Accounting Standards Board's Statement "Half-yearly financial reports";

•       the Chairman's Statement and Manager's Review (together constituting the interim management report) includes a fair view of the information required by 4.2.7R of the FSA's Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year;

•       the Statement of Principal Risks and Uncertainties shown above is a fair review of the information required by DTR 4.2.7R; and

•       in accordance with 4.2.8R of the FSA's Disclosure and Transparency Rules there have been no related party transactions during the first six months of the financial year and, therefore, nothing to report on any material effect by such a transaction on the financial position or the performance of the Company during that period.

The half-yearly financial report was approved by the Board on 27 May 2010.

Signed on behalf of the Board of Directors of Standard Life European Private Equity Trust PLC

Scott Dobbie CBE

Chairman

27 May 2010

FINANCIAL SUMMARY

Performance (Capital return)	As at	As at
	31 March 2010	31 March 2009	% Change
Net asset value per ordinary share ("NAV") (undiluted)	182.6p	164.9p	10.7%
Net asset value per ordinary share (diluted)	180.7p	163.4p	10.6%
Share price	117.0p	112.25p	4.2%
FTSE All-Share Index (1)	2,910.2	2,634.8	10.5%
MSCI Europe Index (in euros) (1)	91.4	84.3	8.4%
Discount (difference between share price and diluted net asset value)	35.3%	31.3%
Gearing (ratio of borrowing to shareholders' funds)	12.6%	11.2%

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

Performance (Total return)	Six months	1 year	5 year	Since launch 29 May 2001
	%	%	%	%
Share price	4.3	169.2	(2.8)	28.3
Net asset value per ordinary share (diluted)	10.7	(0.9)	57.1	99.8
FTSE All-Share Index (1)	12.2	52.3	41.3	38.2
MSCI Europe Index (in euros) (1)	9.7	54.2	17.1	(2.0)

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

Highs/Lows during six months ended 31 March 2010	High	Low
Share price (mid)	117.0p	93.8p

INCOME STATEMENT

	(unaudited) Six months to 31 March 2010
	Revenue	Capital	Total
	£'000	£'000	£'000
Total capital gains on investments	-	29,662	29,662
Currency gains	-	789	789
Income	754	-	754
Investment management fee	(116)	(1,039)	(1,155)
Administrative expenses	(303)	-	(303)
	________	________	________
Net return before finance costs and taxation	335	29,412	29,747
Finance costs	(92)	(830)	(922)
	________	________	________
Net return on ordinary activities before taxation	243	28,582	28,825
Taxation on ordinary activities	(59)	49	(10)
	________	________	________
Net return on ordinary activities after taxation	184	28,631	28,815
	________	________	________
Net return per ordinary share	0.12p	17.77p	17.89p
	________	________	________
Diluted net return per ordinary share	0.12p	17.76p	17.88p
	________	________	________

___________________________________________________________________________________

	(unaudited) Six months to 31 March 2009
	Revenue	Capital	Total
	£'000	£'000	£'000
Total capital losses on investments	-	(73,867)	(73,867)
Currency losses	-	(5,594)	(5,594)
Income	1,032	-	1,032
Investment management fee	(119)	(1,064)	(1,183)
Administrative expenses	(320)	(7)	(327)
	________	________	________
Net return before finance costs and taxation	593	(80,532)	(79,939)
Finance costs	(159)	(1,429)	(1,588)
	________	________	________
Net return on ordinary activities before taxation	434	(81,961)	(81,527)
Taxation on ordinary activities	(178)	121	(57)
	________	________	________
Net return on ordinary activities after taxation	256	(81,840)	(81,584)
	________	________	________
Net return per ordinary share	0.16p	(51.08)p	(50.92)p
	________	________	________
Diluted net return per ordinary share	0.16p	(51.08)p	(50.92)p
	________	________	________

___________________________________________________________________________________

___________________________________________________________________________________

	(audited) Year ended 30 September 2009
	Revenue	Capital	Total
	£'000	£'000	£'000
Total capital losses on investments	-	(100,733)	(100,733)
Currency gains	-	(4,938)	(4,938)
Income	1,449	-	1,449
Investment management fee	(220)	(1,984)	(2,204)
Administrative expenses	(580)	(7)	(587)
	________	________	________
Net return before finance costs and taxation	649	(107,662)	(107,013)
Finance costs	(250)	(2,247)	(2,497)
	________	________	________
Net return on ordinary activities before taxation	399	(109,909)	(109,510)
Taxation on ordinary activities	(88)	21	(67)
	________	________	________
Net return on ordinary activities after taxation	311	(109,888)	(109,577)
	________	________	________
Net return per ordinary share	0.19p	(68.43)p	(68.24)p
	________	________	________
Diluted net return per ordinary share	0.19p	(68.43)p	(68.24)p
	________	________	________

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

The Company has no recognised gains or losses other than those recognised in the income statement above.

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

No operations were acquired or discontinued in the period.

___________________________________________________________________________________

 

RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS

				Capital
	Share	Share	Special	redemption	Capital	Revenue
	capital	premium	reserve	reserve	reserves	reserve	Total
For the six months ended 31 March 2010 (unaudited)	£'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	-	-	-	-	28,631	184	28,815
Scrip issue of shares	1	77	-	-	-	-	78
Dividends paid	-	-	-	-	-	(161)	(161)
	_____	_____	_____	_____	_____	_____	_____
Balance at 31 March 2010	357	79,433	79,148	3	130,129	5,303	294,373
	_____	_____	_____	_____	_____	_____	_____
For the six months ended 31 March 2009 (unaudited)
Balance at 30 September 2008	354	78,535	79,148	2	211,386	6,088	375,513
Total recognised gains/(losses)	-	-	-	-	(81,840)	256	(81,584)
Conversion of founder A shares	2	570	-	-	-	-	572
Dividends paid	-	-	-	-	-	(1,119)	(1,119)
	_____	_____	_____	_____	_____	_____	_____
Balance at 31 March 2009	356	79,105	79,148	2	129,546	5,225	293,382
	_____	_____	_____	_____	_____	_____	_____
For the year ended 30 September 2009 (audited)
Balance at 30 September 2008	354	78,535	79,148	2	211,386	6,088	375,513
Total recognised gains /(losses)	-	-	-	-	(109,888)	311	(109,577)
Conversion of founder A shares	-	256	-	1	-	-	257
Scrip Issue of ordinary shares	2	565	-	-	-	-	567
Dividends paid	-	-	-	-	-	(1,119)	(1,119)
	______	_______	______	_______	________	_______	_______
Balance at 30 September 2009	356	79,356	79,148	3	101,498	5,280	265,641
	______	_______	______	_______	________	_______	_______

BALANCE SHEET

	(unaudited)	(unaudited)	(audited)
	As at	As at	As at
	31 March 2010	31 March 2009	30 September 2009
	£'000	£'000	£'000
Non-current assets
Investments at fair value through profit or loss	328,745	322,876	293,106
Current assets
Debtors	130	1,340	161
Cash and short term deposits	2,806	4,072	2,378
	________	________	________
	2,936	5,412	2,539
Creditors: amounts falling due within one year
Bank loan	(37,019)	(34,737)	(29,702)
Other creditors	(289)	(169)	(302)
	________	________	________
	(37,308)	(34,906)	(30,004)
Net current liabilities	(34,372)	(29,494)	(27,465)
	________	________	________
Net assets	294,373	293,382	265,641
	________	________	________
Capital and reserves
Called up share capital	357	356	356
Share premium	79,433	79,105	79,356
Special reserve	79,148	79,148	79,148
Capital redemption reserve	3	2	3
Capital reserves	130,129	129,546	101,498
Revenue reserve	5,303	5,225	5,280
	________	________	________
Total shareholders' funds	294,373	293,382	265,641
	________	________	________
Analysis of shareholders' funds
Equity interests (ordinary shares)	294,339	293,347	265,607
Non-equity interests (founder shares)	34	35	34
	________	________	________
Total shareholders' funds	294,373	293,382	265,641
	________	________	________
Net asset value per equity share	182.6p	182.4p	164.9p
Net asset value per equity share (diluted)	180.7p	182.4p	163.4p

CASHFLOW STATEMENT

	(unaudited)	(unaudited)	(audited)
	Six months to	Six months to	Year to
	31 March 2010	31 March 2009	30 September 2009
	£'000	£'000	£'000
Net return before finance costs and taxation	29,747	(79,939)	(107,013)
Adjusted for:
Realised gains /(losses) on investments	(755)	7,308	29,921
Unrealised losses/(gains) on investments	(28,907)	66,559	70,812
Currency losses/(gains)	(789)	5,594	4,938
Decrease in accrued income	-	13	-
(Increase)/decrease in other debtors	31	(84)	(123)
Decrease in creditors	(9)	(71)	35
Tax deducted from non - UK income	(18)	(80)	(91)
Net cash outflow from operating activities	(700)	(700)	(1,521)
Net cash outflow from servicing of finance	(926)	(1,952)	(2,656)
Net cash inflow from taxation	8	273	274
Financial investment
Purchase of investments	(17,499)	(29,966)	(48,296)
Disposal of underlying investments	9,620	13,758	18,193
Disposal of fund investments	1,902	30,496	48,348
Net cash (outflow)/inflow from financial investment	(5,977)	14,288	18,245
Ordinary dividend paid	(78)	(547)	(547)
	________	________	________
Net cash (outflow)/inflow before financing	(7,673)	11,362	13,795
Net cash (outflow)/inflow from financing
Net proceeds of issue of ordinary shares	(5)	-	252
Net drawdown /(repayment) of loan	7,317	(12,438)	(10,020)
	________	________	________
(Decrease)/increase in cash and cash equivalents	(361)	(1,076)	4,027
	________	________	________
Reconciliation of net cash flow to movement in net debt
(Decrease)/increase in cash as above	(361)	(1,076)	4,027
Net (drawdown)/repayment of loan	(7,317)	12,438	10,020
Currency movements	789	(5,594)	(4,938)
	________	________	________
Movement in net /(debt)/funds in the period	(6,889)	5,768	9,109
Opening net debt	(27,324)	(36,433)	(36,433)
	________	________	________
Closing net debt	(34,213)	(30,665)	(27,324)
	________	________	________
Represented by:
Cash and short term deposits	2,806	4,072	2,378
Loans	(37,019)	(34,737)	(29,702)
	________	________	________
	(34,213)	(30,665)	(27,324)
	________	________	________

NOTES:

1.      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 842 of the Income and Corporation Taxes Act 1988.  The Board is wholly independent of the Manager and Standard Life PLC.

         The financial information in this report comprises non-statutory accounts as defined in sections 434-436 of the Companies Act 2006. The financial information for the year ended 30 September 2009 has been extracted from the published accounts that have been delivered to the Registrar of Companies and on which the report of the auditors was unqualified under section 498 of the Companies Act 2006.

         The auditors have reviewed the financial information for the six months ended 31 March 2010 in accordance with the applicable standards issued by the Auditing Practices Board for use in the United Kingdom. The report of the auditors is provided below.

2.      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 and Venture Capital Trusts' (issued in January 2009). They have also been prepared on the assumption that approval as an investment trust will continue to be granted by HMR & C. 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. The interim accounts have been prepared using the same accounting policies as the preceding annual accounts.      

3.      Exchange rate

         Rates of exchange to sterling were:

	As at	As at	As at
	31 March 2010	31 March 2009	30 September 2009
Euro	1.1211	1.0796	1.0942
US dollar	1.5169	1.4334	1.5993

4.      Income

	Six months ended	Six months ended	Year ended
	31 March 2010	31 March 2009	30 September 2009
	£'000	£'000	£'000
Income from unquoted investments	753	954	1,363
Deposit interest	-	78	71
Other income	1	-	15
	__________	__________	__________
Total income	754	1,032	1,449
	__________	__________	__________

5.      Dividend on Ordinary shares

         A dividend of 0.10p per ordinary share, declared as a final dividend, was paid on 29 January 2010 in respect of the year ended 30 September 2009 (Dividend of 0.70p per ordinary share paid on 30 January 2009). The Company issued 83,755 ordinary shares of 0.2p as a result of elections received following a scrip dividend offer in respect of the 2009 final dividend. One new ordinary share was issued for every 99.1p otherwise payable as a cash dividend.

         There will be no interim dividend for the six months ended to 31 March 2010.  Shareholders are reminded that the objective of the Company is long term capital appreciation.

6.      Return per ordinary share

	Six months ended 31 March 2010		Six months ended 31 March 2009		Year to 30 September 2009
	p	£'000	p	£'000	p	£'000
The return per ordinary share is based on the following figures:
Revenue return	0.12	184	0.16	256	0.19	311
Capital return	17.77	28,631	(51.08)	(81,840)	(68.43)	(109,888)
	______	_________	______	_________	______	________
Total return	17.89	28,815	(50.92)	(81,584)	(68.24)	(109,577)
	______	_________	______	_________	______	________
Weighted average number of ordinary shares in issue		161,094,549		160,227,542		160,583,224
The fully diluted return per ordinary share is based on the following figures:
Revenue return (fully diluted)	0.12	184	0.16	256	0.19	311
Capital return (fully diluted)	17.76	28,631	(51.08)	(81,840)	(68.43)	(109,888)
	______	_________	______	_________	______	________
Total return (fully diluted)	17.88	28,815	(50.92)	(81,584)	(68.24)	(109,577)
	______	_________	______	________	______	________

         Fully diluted returns have been calculated on the basis set out in Financial Reporting Standard 22 'Earnings per share' ('FRS 22').  For the six months ended 31 March 2010, this is based on 161,170,919 shares, comprising the weighted average 161,094,549 ordinary shares and 76,370 founder A shares deemed to be issued for no consideration on exercise of all founder A shares by reference to the average share price of the ordinary shares during the period.  For the six months ended 31 March 2009, this is based on the weighted average of 160,227,542 ordinary shares, as the founder A shares do not have a dilutive effect in this period as the conversion price is greater than the share price. For the year ended 30 September 2009, this is based on the weighted average of 160,583,224 ordinary shares, as the founder A shares do not have a dilutive effect in this period as the conversion price is greater than the average share price.

7.      Fixed Asset Investments

	31 March 2010	31 March 2009	30 September 2009
	£000	£000	£000
Fair value through profit or loss:
Opening market value	293,106	412,084	412,084
Opening investment holding losses	86,163	15,351	15,351
	_________	_________	_________
Opening book cost	379,269	427,435	427,435
Movements in the year:
Additions at cost	17,499	29,966	48,296
Disposals of underlying investments by funds	(9,620)	(13,758)	(18,193)
Disposals of fund investments by way of secondary sales	(1,902)	(31,549)	(48,348)
	_________	_________	_________
	385,246	412,094	409,190
Gains on disposal of underlying investments	3,720	11,416	13,635
Losses on disposal of fund investments	(2,965)	(18,724)	(43,556)
	_________	_________	_________
Closing book cost	386,001	404,786	379,269
Closing investment holding losses	(57,256)	(81,910)	(86,163)
	_________	_________	_________
Closing market value	328,745	322,876	293,106
	_________	_________	_________

8.      Net asset value per ordinary share

	As at	As at	As at
	31 March 2010	31 March 2009	30 September 2007
Basic:
Equity shareholders' funds	£294,339,000	£293,347,000	£265,607,000
Number of ordinary shares in issue	161,149,772	160,803,607	161,066,017
Net Asset value per ordinary share	182.6p	182.4p	164.9p
Diluted:
Equity shareholders' funds	£298,159,002	£293,347,000	£269,427,002
Number of ordinary shares in issue	164,969,774	160,803,607	164,886,019
Net Asset value per ordinary share	180.7p	182.4p	163.4p

         During the period the company issued 83,755 ordinary shares of 0.2p as a result of elections received following a scrip dividend offer in respect of the 2009 final dividend. One new ordinary share was issued for every 99.1p otherwise payable as a cash dividend.

         For the six months ended 31 March 2010, the diluted NAV per ordinary share is based on the number of shares in issue of 164,969,774, being 161,149,772 ordinary shares and 3,820,002 founder A shares.

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

9.      Bank Loans

	As at	As at	As at
	31 March 2010	31 March 2009	30 September 2009
	£000	£000	£000
Unsecured bank loans repayable within one year:
€10,000,000 at 2.906% repayable 19 April 2010	8,920	-	-
€1,500,000 at 2.901% repayable 26 April 2010	1,338	-	-
€30,000,000 at 2.899% repayable 30 April 2010	26,761	-	-
€5,000,000 at 2.949% repayable 23 October 2009	-	-	4,570
€27,500,000 at 2.938% repayable 30 October 2009	-	-	25,132
€37,500,000 at 3.648% repayable 30 April 2009	-	34,737	-
	_________	________	_________
	37,019	34,737	29,702
	_________	________	_________

As at 31 March 2010, the Company had a £100 million committed, multi-currency syndicated revolving credit facility led by The Royal Bank of Scotland plc of which £37.0m has been drawn down in euros. The facility expires on 18 November 2011. The interest rate on this facility is LIBOR plus 2.5% and the commitment fee payable on non-utilisation is 1.0% per annum.

10.    Parent undertaking and related party transactions

         The ultimate parent undertaking of the Company is Standard Life PLC. The accounts of the ultimate parent undertaking are the only group accounts incorporating the accounts of the Company.  

There are no changes in the related parties' transactions described in the last annual report that have had a material effect on the financial position or performance of the Company during the period ended 31 March 2010.

11.    The half yearly financial report is available on the Manager's website, www.slcapitalpartners.com. The interim report and accounts will be posted to shareholders in June 2010 and copies will be available from the Manager - SL Capital Partners LLP, 1 George Street, Edinburgh EH2 2LL.

for Standard Life European Private Equity Trust PLC,

Aberdeen Asset Management PLC, SECRETARY

INDEPENDENT REVIEW REPORT TO STANDARD LIFE EUROPEAN PRIVATE EQUITY TRUST PLC

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2010, which comprise the Income Statement, the Reconciliation of Movements in Shareholders' Funds, the Balance Sheet, the Cashflow Statement and the related notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

As disclosed in note 2, the annual financial statements of the Company are prepared in accordance with applicable law and United Kingdom Accounting Standards ("UK Generally Accepted Accounting Practice"). The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with the statement "Half-yearly financial reports" issued by the UK Accounting Standards Board.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. This report, including the conclusion, has been prepared for, and only for, the Company for the purpose of the Disclosure and Transparency Rules of the Financial Services Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come, save where expressly agreed by our prior consent in writing.

Scope of review

We conducted our review in accordance with the International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity', issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2010 is not prepared, in all material respects, in accordance with the Statement "Half-yearly financial reports" issued by the UK Accounting Standards Board and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

PricewaterhouseCoopers LLP

Chartered Accountants

Edinburgh

27 May 2010

 

END

 

 

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