Half Yearly Report

RNS Number : 9745S

Standard Life Euro Pri Eqty Tst PLC

29 May 2009

 



29 May 2009

STANDARD LIFE EUROPEAN PRIVATE EQUITY TRUST PLC

INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2009

Highlights

• The Company's net asset value per ordinary share ('NAV') fell by 22.3% to 182.4p as at 31 March 2009 (diluted NAV - 182.4p) (30 September 2008 - undiluted 234.8p; diluted 231.4p).

• The 52.4p fall in NAV during the period comprised 7.7p of net realised gains and income from the Company's portfolio of private equity fund interests, 38.4p of favourable exchange rate movements on the portfolio, 79.7p of unrealised losses on the portfolio on a constant exchange rate basis, 11.6p of losses arising on the disposal of some private equity fund interests, and 7.2p of costs and other movements.

• The closing mid-market price of the Company's ordinary shares on 31 March 2009 was 43.5p (30 September 2008 - 161.0p), a discount of 76.2% to the diluted NAV as at that date. The share price has subsequently risen to 78.0p as at 27 May 2009.

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

• As at 31 March 2009 the Company's net assets were £293.4 million (30 September 2008 - £375.5 million). The Company had interests in 43 private equity funds with a value of £322.9 million (30 September 2008 - 49 funds and £412.1 million) and had net indebtedness of £30.7 million (30 September 2008 - net indebtedness of £36.4 million). 

• Reflecting the significant slow down in the private equity market during the period, distributions from the Company's private equity fund interests totalled £14.6 million (six months ended 30 September 2008 - £18.8 million), including £12.4 million of realised gains and income (six months ended 30 September 2008 - £8.2 million). In addition, the Company has received net proceeds of £31.5 million from the disposal of some of the Company's private equity fund interests during the period (six months ended 30 September - no disposals).

• Similar to the lower quantum of distributions received, the Company funded only £30.0 million of draw downs during the period (six months ended 30 September 2008 - £81.9 million).

• The Company made no new fund commitments and, following the previously announced disposals of part or all of some private equity fund interests, the Company had £317.5 million of outstanding commitments as at 31 March 2009 (30 September 2008 - £389.2 million).

• Post 31 March 2009 the Company has agreed to dispose of all or part of five private equity fund interests, details of which are set out in the Chairman's Statement below. On the basis of these sales, the Company's outstanding commitments were £232.9 million and its net indebtedness was £28.3 million as at 27 May 2009; this is before the receipt of £15.1 million of cash proceeds from these new fund disposals. Adjusting the 31 March 2009 NAV disclosed above for these new fund disposals, the pro-forma 31 March 2009 NAV is 167.5p (diluted - 167.5p) and the Company's pro-forma net assets as at 31 March 2009 are £269.3 million. 

For further information please contact:-

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

  CHAIRMAN'S STATEMENT

Results and performance

Against a background of financial and macro-economic upheaval, the European private equity market saw a significant reduction in new investment and realisation activity and a material downward adjustment in valuations during the six month period ended 31 March 2009. As a result the Company's NAV fell by 22.3% to 182.4p (diluted - 182.4p) (30 September 2008 - undiluted 234.8p; diluted 231.4p). As at 31 March 2009 the Company's net assets were £293.4 million (30 September 2008 - £375.5 million). 

The 52.4p fall in NAV during the period comprised 7.7p of net realised gains and income from the Company's portfolio of private equity fund interests, 38.4p of favourable exchange rate movements on the portfolio, 79.7p of unrealised losses on the portfolio on a constant exchange rate basis, 11.6p of losses arising on the disposal of some private equity fund interests, and 7.2p of costs and other movements. 

The closing mid-market price of the Company's ordinary shares on 31 March 2009 was 43.5p (30 September 2008 - 161.0p), a fall of 73.0% over the period. Underlying this fall in the Company's share price was a further widening in the discount to NAV, from 30.4% at 30 September 2008 to 76.2% at 31 March 2009. Significant share price falls and a widening of discounts to NAV were a feature of listed private equity investment vehicles during the period. Across the sector this reflected not only broader financial and macro-economic concerns, but also investor uncertainty over the timeliness of private equity valuations, the impact of leverage at an underlying investee company level and liquidity issues arising from a slow down in realisations and the requirement to fund over-commitment strategies. More recently, buying interest across the sector and in the Company's shares has seen the Company's share price rise to 78.0p as at 27 May 2009.

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

Portfolio and valuation 

As at 31 March 2009 the Company's portfolio comprised 43 private equity fund interests, of which the largest 20 fund interests represented 90.0% by value of the portfolio. These private equity funds are principally focused on undertaking mid to large sized buyouts in Europe, which are typically transactions with enterprise values of between €200 million and €1.65 billion (approximately £175 million to £1.50 billion sterling equivalent). 

Against the background of difficult financial markets and a deteriorating macro-economic environment, the portfolio fell in value during the period. As at 31 March 2009 the value of the portfolio was £322.9 million (30 September 2008 - £412.1 million), of which net unrealised losses arising during the period were £66.6 million (six months ended 30 September 2008 - £55.6 million of net losses). In line with historic practice, and given the volatility of financial markets and the more difficult trading conditions for corporates, particular care has been exercised to ensure the timeliness and appropriateness of the portfolio valuation. Around 82.8% by value of the private equity fund interests held by the Company were valued by the relevant underlying managers as at 31 March 2009. 

The net unrealised losses comprised £128.2 million of unrealised losses on a constant exchange rate basis (31.2% of the opening portfolio valuation), partially offset by £61.6 million of favourable exchange rate movements (15.0% of the opening portfolio valuation). The unrealised foreign exchange gain was a result of sterling depreciating by 14.9% relative to the euro and by 19.6% relative to the US dollar during the period. As for the net unrealised losses on the portfolio on a constant exchange rate basis, a majority of the movement arose from the fall in comparable listed valuation multiples, as opposed to a decline in underlying earnings at investee companies. By way of comparison, over the same period the MSCI Europe Index (in euros) fell by 31.1% and the FTSE All-Share Index (in sterling) fell by 20.1%.

Investment activity and net indebtedness

The overall value and volume of European private equity investment undertaken during the period fell materially, with a total of €12.0 billion of transactions by enterprise value completed in the six month period to 31 March 2009, compared to €56.0 billion and €117.0 billion in the comparable six month periods to 31 March 2008 and 2007 respectively. In fact, the first quarter of 2009 saw the lowest quarterly value of European private equity deals undertaken since 1996. The Company funded only £29.9 million of draw downs in the six month period to 31 March 2009 (six months ended 30 September 2008 - £81.9 million). 

Reflecting the significant slow down in the private equity market, distributions from the Company's private equity fund interests totalled £14.6 million (six months ended 30 September 2008 - £18.8 million), including £12.4 million of realised gains and income (six months ended 30 September 2008 - £8.2 million). The quantum of distributions received was the lowest semi-annual total received by the Company since 2003. In addition, the Company has received £31.5 million from the disposal of some of the Company's private equity fund interests during the period.

As at 31 March 2009 the Company's net indebtedness was £30.7 million (30 September 2008 - £36.4 million), with the net cash inflow of £5.7 million during the period arising from the disposal of some of the Company's private equity fund interests. As previously reported, the Company entered into a new £100 million three year syndicated revolving credit facility, led by The Royal Bank of Scotland plc, in November 2008.

Fund commitments and the disposal of private equity fund interests

During the six month period the Company made no new fund commitments, reflecting the Board's and the Manager's cautious outlook on the private equity market and, in particular, the pace and quantum of realisations and the ability to fund the Company's over-commitment strategy. At the same time, the lower level of activity in the European private equity market and the need for managers to focus on their existing portfolios has meant that there have been very few quality fund offerings in the marketplace. 

As previously announced, on 14 January and 24 February 2009 the Company reported that it had disposed of, in aggregate, all or part of its fund interests in eight private equity funds and had made an election to cap its exposure to Permira IV. These disposals and election were undertaken as part of the Company's strategy of managing the quantum of its outstanding commitments and reflected the selective disposal of fund interests identified by the Manager. In aggregate all of these disposals and election were undertaken for a net consideration of £31.5 million, as compared to the 30 September 2008 valuations of these fund interests adjusted for subsequent cashflows of £49.1 million, and released the Company from £105.8 million of outstanding commitments. 

In light of the macro-economic and private equity market environment, the intention has been to reduce the Company's aggregate outstanding commitments to a level more appropriate with the Manager's revised estimates of the Company's projected draw downs and distributions and its liquid resources. To that end, I can announce the further sale of all or part of five private equity fund interests held by the Company. 

The Company has agreed to sell:-

• its entire original commitment of €30.0 million to Advent International Global Private Equity IV; 

• €40.0 million of its original commitment to Advent International Global Private Equity VI; 

• its entire original commitment of €25.0 million to Apax Europe VI; and

• €50.0 million of its original commitment to Fourth Cinven Fund.

The formal transfer of the above fund interests to the acquiror is expected to be completed shortly. The sale has been agreed for an aggregate consideration of £15.1 million, as compared to the 31 March 2009 aggregate valuations of these fund interests, of £38.9 million. The fund interests have aggregate outstanding commitments of £52.4 million, from which the Company will be released. 

In addition, the Company has completed the sale of €15.0 million of its original commitment to CVC Europe V. This sale has been undertaken for a consideration of £0.1 million, as compared to the 31 March 2009 valuation of this fund interest, adjusted for subsequent cashflows, of £1.3 million. This fund interest had outstanding commitments at the date of sale of £11.8 million, from which the Company has been released. 

Taking account of these new disposals, subsequent drawdowns and foreign exchange movements from 31 March 2009, the Company's total outstanding commitments were £232.9 million as at 27 May 2009 (31 March 2009 - total outstanding commitments £317.5 million, 30 September 2008 - £389.2 million). As at 27 May 2009 the Company's net indebtedness was £28.3 million; this is before the receipt of £15.1 million of cash proceeds from these new fund disposals. Adjusting the 31 March 2009 NAV disclosed above for these new fund disposals, the pro-forma 31 March 2009 NAV is 167.5p (diluted - 167.5p) and the Company's pro-forma net assets as at 31 March 2009 are £269.3 million. 

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. In undertaking the disposals made, the Board and the Manager have tried to be sensitive to the objective of ensuring that the Company optimises, so far as possible, the diversification of its portfolio while retaining sufficient outstanding commitments to benefit from future investment opportunities. The planned programme of fund disposals undertaken to date has met the objectives set out by the Board in late 2008.

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 2008.  

Outlook

The managers of the fund interests held by the Company remain focused on protecting and enhancing value in their respective investee companies. While much of the movement in European private equity valuations in the six month period to 31 March 2009 has been driven by the fall in comparable listed valuation multiples, the key variables going forward are expected to be underlying profitability and covenant headroom within existing debt structures. Where short-term covenant and funding issues exist at underlying investee companies, it is the Manager's view that fund managers have tended to be conservative in valuing those investments and have sought to engage with debt providers to address potential issues at an early stage. In the current market realisations are likely to be limited to companies which are of significant strategic value to corporate buyers and in sectors that are more defensive in nature.  

Accordingly, it is expected that European private equity fund valuations will remain under pressure in the short-term, however, the Board believes that the actions taken in the last six months have strengthened the Company's financial position.

Finally, the Board and the Manager continue to believe that, as has happened in previous recessions, the counter cyclicality inherent in private equity investing should offer good investment opportunities, but that this will be dependent on the macro-economic environment and the outlook for corporate profitability stabilising and there being an availability of credit to support acquisitions.

Scott Dobbie CBE

Chairman

  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 (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 and a description of the principal risks and uncertainties for the remaining six months of the year; 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 28 May 2009. Signed on behalf of the Board of Directors of Standard Life European Private Equity Trust PLC

Scott Dobbie CBE

Chairman

28 May 2009

  FINANCIAL SUMMARY 

	As at	As at	As at
	27 May  2009	31 March  2009	30 September  2008
NAV per ordinary share	-	182.4p	234.8p
NAV per ordinary share (diluted)	-	182.4p	231.4p
Pro-forma NAV per ordinary share	-	167.5p	-
Pro-forma NAV per ordinary share (diluted)	-	167.5p	-
Share price	78.0p	43.5p	161.0p
Share price discount to diluted NAV		76.2%	30.4%
Net assets	-	£293.4 million	£375.5 million
Pro-forma net assets	-	£269.3 million	-
Number of fund investments	43	43	49
Value of fund investments	-	£322.9 million	£412.1 million
Net indebtedness	£28.3 million	£30.7 million	£36.4 million
Outstanding commitments	£232.9 million	£317.5 million	£389.2 million

	Six months to  31 March 2009 £ million	Six months to  30 September 2008 £ million
Distributions	14.6	18.8
- of which realised gains and income	11.4	8.2
Net proceeds from fund disposals	31.5	-
Drawdowns	30.0	81.9
New/(sold) fund commitments	(105.8)	51.2

	As at	As at	As at	Launch
	31 March  2009	30 September 2008	31 March 2004	29 May 2001
Performance
Capital return
Net asset value per ordinary share (undiluted)	182.4p	234.8p	97.3p	98.7p
Net asset value per ordinary share (diluted) (1)	182.4p	231.4p	97.3p	98.7p
Share price	43.5p	161.0p	85.5p	100.0p
Discount (difference between share price and diluted net asset value)	76.2%	30.4%	12.1%	-
FTSE All-Share Index (2)	1,984.2	2,483.7	2,197.0	2,852.7
MSCI Europe Index (in Sterling(2)	650.3	802.9	638.1	851.3

	Six months to	5 years to
	31 March  2009	31 March  2009	Since  launch
Performance: percentage change	%	%	%
Capital return
Net asset value per ordinary share (undiluted)	(22.3)	87.5	84.8
Net asset value per ordinary share (diluted)	(21.2)	87.5	84.8
Share price	(73.0)	(49.1)	(56.5)
FTSE All-Share Index (2)	(20.1)	(9.7)	(30.4)
MSCI Europe Index (in Sterling) (2)	(19.0)	1.9	(23.6)

	Six months to	Year to
	31 March  2009	30 September 2008
Income returns, discount and expense ratio
Revenue return per ordinary share (undiluted) (3)	0.16p	0.89p
Revenue return per ordinary share (diluted) (3)	0.16p	0.88p
Declared dividend per ordinary share	-	0.70p
Total expense ratio (annualised for 2009)
- as a % of average shareholders' funds	0.90%	0.99%
Highs/Lows (for six months ended 31 March 2009)	High	Low
Share price (mid)	166.5p	30.0p

(1)    The founder A shares do not have a dilutive effect at 31 March 2009, as the conversion price is greater than the share price

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

(3)    The allocation of the management fee and finance costs between the revenue and capital accounts is 10:90.

  INDEPENDENT REVIEW REPORT TO STANDARD LIFE EUROPEAN PRIVATE EQUITY TRUST PLC 

Introduction

We have been engaged by the company to review the set of condensed financial statements in the half-yearly financial report for the six months ended 31 March 2009, which comprise the Income Statement, Reconciliation of Movements in Shareholders' Funds, Balance Sheet and Cashflow Statement and 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 1, the annual financial statements of the Company are prepared in accordance with United Kingdom Accounting Standards ('UK GAAP'). The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with pronouncements on half-yearly financial reports issued by the Accounting Standards Board ('ASB').

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 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 2009 is not prepared, in all material respects, in accordance with pronouncements on half-yearly financial reports issued by the ASB and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

PricewaterhouseCoopers LLP

Chartered Accountants, Edinburgh 

28 May 2009

  INCOME STATEMENT

	(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)
	________	________	________
Return on ordinary activities before taxation	434	(81,961)	(81,527)
Taxation on ordinary activities	(178)	121	(57)
	________	________	________
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
	________	________	________

___________________________________________________________________________________

	(unaudited) Six months to 31 March 2008
	Revenue	Capital	Total
	£'000	£'000	£'000
Total capital gains on investments	-	44,210	44,210
Currency gains	-	249	249
Income	2,022	-	2,022
Investment management fee	(167)	(1,501)	(1,668)
Administrative expenses	(260)	-	(260)
	________	________	________
Net return before finance costs and taxation	1,595	42,958	44,553
Finance costs	(14)	(129)	(143)
	________	________	________
Return on ordinary activities before taxation	1,581	42,829	44,410
Taxation on ordinary activities	(482)	474	(8)
	________	________	________
Return on ordinary activities after taxation	1,099	43,303	44,402
	________	________	________
Net return per ordinary share	0.69p	27.08p	27.77p
	________	________	________
Diluted net return per ordinary share	0.68p	26.70p	27.38p
	________	________	________

___________________________________________________________________________________

	(audited) Year ended 30 September 2008
	Revenue	Capital	Total
	£'000	£'000	£'000
Total capital losses on investments	-	(3,774)	(3,774)
Currency gains	-	448	448
Income	2,921	-	2,921
Investment management fee	(325)	(2,929)	(3,254)
Administrative expenses	(526)	-	(526)
	________	________	________
Net return before finance costs and taxation	2,070	(6,255)	(4,185)
Finance costs	(50)	(449)	(499)
	________	________	________
Return on ordinary activities before taxation	2,020	(6,704)	(4,684)
Taxation on ordinary activities	(594)	586	(8)
	________	________	________
Return on ordinary activities after taxation	1,426	(6,118)	(4,692)
	________	________	________
Net return per ordinary share	0.89p	(3.82)p	(2.93)p
	________	________	________
Diluted net return per ordinary share	0.88p	(3.78)p	(2.90)p
	________	________	________

The total column of this statement represents the income statement 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

	Total
For the period ended 31 March 2009 (unaudited)	£'000
Balance at 30 September 2008	375,513
Total recognised gains	(81,584)
Scrip issue of shares	572
Dividends paid	(1,119)
	________
Balance at 31 March 2009	293,382
	________
	Total
For the period ended 31 March 2008(unaudited)	£'000
Balance at 30 September 2007	385,707
Total recognised gains	44,402
Conversion of founder A shares	95
Dividends paid	(5,597)
	________
Balance at 31 March 2008	424,607
	________
	Total
For the year ended 30 September 2008 (audited)	£'000
Balance at 30 September 2007	385,707
Total recognised gains	(4,692)
Conversion of founder A shares	95
Dividends paid	(5,597)
	________
Balance at 30 September 2008	375,513
	________

A more detailed analysis of the Reconciliation of Movements in Shareholders' Funds is provided in Note109.

BALANCE SHEET

	(unaudited)	(unaudited)	(audited)
	As at	As at	As at
	31 March 2009	31 March 2008	30 September 2008
	£'000	£'000	£'000
Non-current assets
Investments at fair value through profit or loss	322,876	396,359	412,084
Current assets
Investments at fair value through profit or loss	-	15,855	-
Debtors	1,340	78	288
Cash and short term deposits	4,072	12,604	3,289
	________	________	________
	5,412	28,537	3,577
Creditors: amounts falling due within one year
Bank loan	(34,737)	-	(39,722)
Other creditors	(169)	(289)	(426)
	________	________	________
	(34,906)	(289)	(40,148)
Net current (liabilities)/assets	(29,494)	28,248	(36,571)
	________	________	________
Net assets	293,382	424,607	375,513
	________	________	________
Capital and reserves
Called up share capital	356	354	354
Share premium	79,105	78,535	78,535
Special reserve	79,148	79,148	79,148
Capital redemption reserve	2	2	2
Capital reserve - realised	211,456	219,745	226,737
Capital reserve - unrealised	(81,910)	41,062	(15,351)
Revenue reserve	5,225	5,761	6,088
	________	________	________
Total shareholders' funds	293,382	424,607	375,513
	________	________	________
Analysis of shareholders' funds
Equity interests (ordinary shares)	293,347	424,572	375,478
Non-equity interests (founder shares)	35	35	35
	________	________	________
Total shareholders' funds	293,382	424,607	375,513
	________	________	________
Net asset value per equity share	182.4p	265.5p	234.8p
Net asset value per equity share (diluted)	182.4p	261.4p	231.4p

CASHFLOW STATEMENT

	(unaudited)	(unaudited)	(audited)
	Six months to	Six months to	Year to
	31 March 2009	31 March 2008	30 September 2008
	£'000	£'000	£'000
Net return before finance costs and taxation	(79,939)	44,553	(4,185)
Adjusted for:
Realised gains /(losses) on investments	7,308	(31,055)	(39,484)
Unrealised losses/(gains) on investments	66,559	(13,155)	43,258
Currency losses/(gains)	5,594	(249)	(448)
Decrease in accrued income	13	198	-
(Increase)/decrease in other debtors	(84)	16	254
Decrease in creditors	(71)	(650)	(731)
Tax deducted from non - UK income	(80)	(8)	(8)
Net cash outflow from operating activities	(700)	(350)	(1,344)
Net cash outflow from servicing of finance	(1,952)	(144)	(282)
Net cash inflow/(outflow) from taxation	273	(522)	(772)
Financial investment
Purchase of investments	(29,966)	(95,884)	(180,763)
Disposal of underlying investments	13,758	107,158	144,183
Disposal of fund investments	30,496	-	-
Net cash inflow/(outflow) from financial investment	14,288	11,274	(36,580)
Ordinary dividend paid	(547)	(5,597)	(5,597)
	________	________	________
Net cash inflow/(outflow) before financing	11,362	4,661	(44,575)
Net cash (outflow)/inflow from financing
Net proceeds of issue of ordinary shares	-	95	95
Net (repayment)/drawdown of loan	(12,438)	-	40,000
	________	________	________
(Decrease)/increase in cash and cash equivalents	(1,076)	4,756	(4,480)
	________	________	________
Reconciliation of net cash flow to movement in net (debt)/funds
(Decrease)/increase in cash as above	(1,076)	4,756	(4,480)
Net repayment/(drawdown) of loan	12,438		(40,000)
Currency movements	(5,594)	249	448
	________	________	________
Movement in net funds/(debt) in the period	5,768	5,005	(44,032)
Opening net (debt)/funds	(36,433)	7,599	7,599
	________	________	________
Closing net (debt)/funds	(30,665)	12,604	(36,433)
	________	________	________
Represented by:
Cash and short term deposits	4,072	12,604	3,289
Loans	(34,737)	-	(39,722)
	________	________	________
	(30,665)	12,604	(36,433)
	________	________	________

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.

2.    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 in January 2009 and adopted early). 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.

(b)    Revenue, expenses and finance cost - Dividends from quoted investments are included in revenue by reference to the date on which the price is marked ex-dividend. Interest on quoted investments and other interest receivable are dealt with on an accruals basis.  Dividends and income from unquoted investments is included when the right to receipt is established. All expenses are accounted for on an accruals basis. Expenses are charged through the Income Statement except as follows: (i) transaction costs incurred on the purchase and disposal of investments are recognised as a capital item in the Income Statement; and (ii) the Company charges 90% of the investment management fees and finance costs to capital, in accordance with the Board's expected long-term split of returns between capital gains and income from the Company's investment portfolio.  

(c)     Investments - Investments have been designated upon initial recognition as fair value through the profit or loss. Investments are recognised as at the date of commitment to the fund and removed when the fund is wound up. Subsequent to initial recognition, investments are valued at fair value as detailed below. Gains and losses arising from changes in fair value are included in net profit or loss for the period as a capital item in the Income Statement and are ultimately recognised in the unrealised reserve.

Unquoted investments are stated at the Directors' estimate of fair value and follow the recommendations of the EVCA and 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 fund manager in undertaking that valuation will generally be in line with the joint publication from the BVCA and the EVCA, 'International Private Equity and Venture Capital Valuation guidelines'.  Where formal valuations are not completed as at the balance sheet date the valuation from the fund manager is adjusted for any subsequent cashflows 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 formal valuation date to arrive at the estimate of fair value.   

(d)    Dividends payable - Cash 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 reserve - realised - Gains or losses on investments realised in the period that have been recognised in the Income Statement are transferred to the realised capital reserve. In addition, any prior unrealised gains or losses on such investments are transferred from the unrealised capital reserve to the realised capital reserve on disposal of the investment. 

(f)    Capital reserve - unrealised - Increases and decreases in the fair value of investments are recognised in the Income Statement and are then transferred to the unrealised capital reserve.

(g)    Taxation

(i)    Current taxation - Provision for corporation tax is made at the current rate on the excess of taxable income net of any allowable deductions.

(ii)    Deferred taxation is recognised in respect of all temporary differences that have originated but not reversed at the balance sheet date, where transactions or events that result in an obligation to pay more or a right to pay less tax in future have occurred at the balance sheet date, measured on an undiscounted basis and based on enacted tax rates. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the underlying temporary differences can be deducted. Temporary differences are differences arising between the Company's taxable profits and its results as stated in the accounts which are capable of reversal in one or more subsequent periods.

Due to the Company's status as an investment trust company, and the intention to continue meeting the conditions required to obtain approval in the foreseeable future, the Company has not provided deferred tax on any capital gains and losses arising on the revaluation or disposal of investments.  

h)    Overseas currencies - Overseas assets and liabilities are translated at the exchange rate prevailing at the Company's balance sheet date. Gains or losses on the translation of investments held at the period end are accounted for through the unrealised capital reserve. Gains or losses on the translation of overseas currency balances held at the period end are accounted for through the realised capital reserve.

Rates of exchange to sterling were:

	As at	As at	As at
	31 March 2009	31 March 2008	30 September 2008
Euro	1.0796	1.2543	1.2690
US dollar	1.4334	1.9875	1.7825

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

3.    Income

	Six months ended	Six months ended	Year  ended
	31 March  2009	31 March  2008	30 September  2008
	£'000	£'000	£'000
Income from unquoted investments	954	1,023	1,690
Interest from AAA rated money market funds	-	963	988
Deposit interest	78	36	243
	__________	__________	__________
Total income	1,032	2,022	2,921
	__________	__________	__________

4.    Return per ordinary share

	Six months ended 31 March 2009		Six months ended 31 March 2008		Year to 30 September 2008
	p	£'000	p	£'000	p	£'000
The return per ordinary share is based on the following figures:
Revenue return	0.16	256	0.69	1,099	0.89	1,426
Capital return	(51.08)	(81,840)	27.08	43,303	(3.82)	(6,118)
	______	_________	______	_________	______	________
Total return	(50.92)	(81,584)	27.77	44,402	(2.93)	(4,692)
	______	_________	______	_________	______	________
Weighted average number of ordinary shares in issue		160,227,542		159,879,944		159,901,256
The fully diluted return per ordinary share is based on the following figures:
Revenue return (fully diluted)	0.16	256	0.68	1,099	0.88	1,426
Capital return (fully diluted)	(51.08)	(81,840)	26.70	43,303	(3.78)	(6,118)
	______	_________	______	_________	______	________
Total return (fully diluted)	(50.92)	(81,584)	27.38	44,402	(2.90)	(4,692)
	______	_________	______	________	______	________

Fully diluted returns have been calculated on the basis set out in Financial Reporting Standard 14 'Earnings per share' ('FRS 14'). For the six months ended 31 March 2009, this is based on the weighted average of 160,277,542 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 six months ended 31 March 2008, this is based on 162,155,851 shares, comprising the weighted average 159,879,944 ordinary shares and 2,275,907 founder A shares capable of conversion. For the year ended 30 September 2008, this is based on 162,053,535 shares, comprising the weighted average 159,901,256 ordinary shares and 2,152,279 founder A shares capable of conversion.

5.     Fixed Asset Investments

	31 March  2009	31 March  2008*	30 September  2008
	£000	£000	£000
Fair value through profit or loss:
Opening market value	412,084	379,278	379,278
Opening unrealised depreciation /(appreciation)	15,351	(27,907)	(27,907)
	_________	_________	_________
Opening book cost	427,435	351,371	351,371
Movements in the year:
Additions at cost	29,966	95,884	180,763
Disposals of underlying investments	(13,758)	(107,158)	(144,183)
Disposals of fund investments	(31,549)	-	-
	_________	_________	_________
	412,094	340,097	387,951
Realised (losses)/gains on underlying investments	11,416	31,055	39,484
Realised losses on fund investments	(18,724)	-	-
	_________	_________	_________
Closing book cost	404,786	371,152	427,435
Closing unrealised (depreciation)/ appreciation	(81,910)	41,062	(15,351)
	_________	_________	_________
Closing market value	322,876	412,214	412,084
	_________	_________	_________

* As at 31 March 2008 the fixed asset investments of the Company included both 'AAA' money market funds and fund investments.

Transaction costs
	Six months ended	Six months ended	Year  ended
	31 March 2009	31 March 2008	30 September 2007
	£'000	£'000	£'000
The following transaction costs were incurred during the period:
Purchases	26	5	26
Sales	1,025	-	-
	_________	_________	________
	1,051	5	26
	_________	_________	_________

6.    Net asset value per ordinary share

	As at	As at	As at
	31 March  2009	31 March  2008	30 September 2007
Basic:
Equity shareholders' funds	£293,347,000	£424,572,000	£375,478,000
Number of ordinary shares in issue	160,803,607	159,922,567	159,922,567
Net Asset value per ordinary share	182.4p	265.5p	234.8p
Diluted:
Equity shareholders' funds	£293,347,000	£428,654,412	£379,560,412
Number of ordinary shares in issue	160,803,607	164,004,979	164,004,979
Net Asset value per ordinary share	182.4p	261.4p	231.4p

During the period the Company issued 881,040 ordinary shares of 0.2p as a result of elections received following a scrip dividend offer in respect of the 2008 final dividend. One new ordinary share was issued for every 64.9p otherwise payable as a cash dividend.

For the six months ended 31 March 2009, the diluted NAV per share is based on the number of shares in issue, of 160,803,607 as the founder A shares do not have a dilutive effect in this period as the conversion price is greater than the share price.

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

7.    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 2008 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 under section 235 of the Companies Act 1985. The interim accounts have been prepared using the same accounting policies as the preceding annual accounts.

The auditors have reviewed the financial information for the six months ended 31 March 2009 in accordance with the applicable standards issued by the Auditing Practises Board for use in the United Kingdom. The report of the auditors is provided above.  

8.     There will be no interim dividend for the six months ended 31 March 2009. Shareholders are reminded that the objective of the Company is long term capital appreciation.

9.    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 were no new related party transactions in the six months to 31 March 2009 over and above those already disclosed in the Annual Report and Accounts.

10.    Reconciliation of movements in shareholders' funds 

For the period ended 31 March 2009

				Capital	Capital	Capital
	Share	Share	Special	redemption	reserve	reserve	Revenue
	capital	premium	reserve	reserve	- realised	- unrealised	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 30 September 2008	354	78,535	79,148	2	226,737	(15,351)	6,088	375,513
Total recognised gains	-	-	-	-	(15,281)	(66,559)	256	(81,584)
Conversion of founder A shares		570						572
Dividends paid	-	-	-	-	-	-	(1,119)	(1,119)
	_____	_______	_______	_______	_______	_______	_______	_______
Balance at 31 March 2009	354	79,105	79,148	2	211,456	(81,910)	5,225	293,382
	_____	_______	_______	_______	_______	_______	_______	_______

For the period ended 31 March 2008

				Capital	Capital	Capital
	Share	Share	Special	redemption	reserve	reserve	Revenue
	capital	premium	reserve	reserve	- realised	- unrealised	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 30 September 2007	354	78,440	79,148	2	189,597	27,907	10,259	385,707
Total recognised gains	-	-	-	-	30,148	13,155	1,099	44,402
Conversion of founder A shares		95						95
Dividends paid	-	-	-	-	-	-	(5,597)	(5,597)
	_____	_______	_______	_______	_______	_______	_______	_______
Balance at 31 March 2008	354	78,535	79,148	2	219,745	41,062	5,761	424,607
	_____	_______	_______	_______	_______	_______	_______	_______

For the year ended 30 September 2008

				Capital	Capital	Capital
	Share	Share	Special	redemption	reserve	reserve	Revenue
	capital	premium	reserve	reserve	- realised	- unrealised	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 30 September 2007	354	78,440	79,148	2	189,597	27,907	10,259	385,707
Total recognised gains/(losses)	-	-	-	-	37,140	(43,258)	1,426	(4,692)
Conversion of founder A shares	-	95	-	-	-	-	-	95
Dividends paid	-	-	-	-	-	-	(5,597)	(5,597)
	_____	_______	_______	_______	_______	_______	_______	_______
Balance at 30 September 2008	354	78,535	79,148	2	226,737	(15,351)	6,088	375,513
	_____	_______	_______	_______	_______	_______	_______	_______

11.    The half yearly financial report is available on the Manager's website, http://slcapitalpartners.com. The interim report and accounts will be posted to shareholders in June 2009 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

 

END

 

 

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