Half Yearly Report

RNS Number : 3882H

Standard Life Euro Pri Eqty Tst PLC

27 May 2011

 



27 May 2011

STANDARD LIFE EUROPEAN PRIVATE EQUITY TRUST PLC

INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2011

Highlights

·     For the six months ended 31 March 2011 the Company's undiluted net asset value per ordinary share ("NAV") rose 14.1% to 222.9p (diluted NAV - 220.3p).

·     The 27.6p rise in NAV during the period comprised 7.1p of net realised gains and income from the Company's portfolio of 37 private equity fund interests, 20.1p of unrealised gains on the portfolio on a constant exchange rate basis, 3.3p of positive exchange rate movements on the portfolio offset by 2.9p of costs and other movements.

·     The closing mid-market price of the Company's ordinary shares on 31 March 2011 was 156.0p, an increase of 37.1% over the period and a discount of 29.2% to the diluted NAV.

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

·     At 31 March 2011 the Company's net assets were £360.1 million and the Company's portfolio of 37 private equity fund interests had a value of £410.9 million. In preparing the portfolio valuation, 99.2% by value of the portfolio was valued at 31 March 2011.

·     In line with the rise in activity levels in the European private equity market, distributions received during the period rose to £36.9 million and the Company funded £29.0 million of draw downs. Accordingly, the Company generated a net cash inflow from investment activities of £7.9 million.  

·     The Company made no new fund commitments during the period and had £123.0 million of outstanding commitments at 31 March 2011. This was a fall of £27.3 million in outstanding commitments during the period. On 4 April 2011 the Company re-commenced its fund investment programme when it committed €30.0 million to Montagu IV.

·     On 29 November 2010 the Company entered into a new £120 million syndicated revolving credit facility, led by The Royal Bank of Scotland plc. This facility expires on 31 December 2013. At 31 March 2011 the Company's net indebtedness was £51.4 million.

·     During the period from 31 March 2011 to 25 May 2011 the Company received £9.1 million of distributions and funded £3.3 million of draw downs. At 25 May 2011 the Company's total outstanding commitments, including the new commitment to Montagu IV, were £143.1 million and its net indebtedness was £45.2 million.

Quote from Scott Dobbie, Chairman

"These results demonstrate continuing growth in the Company's NAV and improvement in its cashflows and balance sheet. They carry the expectation that the Company's portfolio of fund investments will generate an ongoing flow of realisations and distributions. This and further growth in NAV will permit the Company to make additional new fund commitments, following the recent €30 million commitment to Montagu IV."

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 2011 continued to provide an improving environment for European private equity, with an increasing flow of distributions and many underlying investee companies reporting rising earnings and equity valuations. Against this background the Company's net asset valuer per ordinary share ("NAV") rose by 14.1% to 222.9p (diluted - 220.3p), from 195.3p at 30 September 2010 (diluted - 193.3p).  At 31 March 2011 the Company's net assets were £360.1 million (30 September 2010 - £315.2 million).

The 27.6p rise in NAV during the period comprised 7.1p of net realised gains and income from the Company's portfolio of 37 private equity fund interests, 20.1p of unrealised gains on the portfolio on a constant exchange rate basis, 3.3p of positive exchange rate movements on the portfolio offset by 2.9p of costs and other movements.

The closing mid-market price of the Company's ordinary shares on 31 March 2011 was 156.0p, an increase of 37.1% over the period and a discount of 29.2% to the diluted NAV. This compares to rises in the FTSE All-Share Index and the MSCI Europe Index (in euros) over this period of 7.0% and 6.1% respectively.

On 29 May 2011 it will be ten years since the Company was listed on the Stock Exchange. Private equity is a long-term asset class and it is appropriate to compare the Company's performance over longer time periods. For the period from listing to 31 March 2011 the Company's NAV total return and share price total return both on a compound annual basis were 9.4% and 5.6% respectively, while the FTSE All-Share Index and the MSCI Europe Index (in euros) on a similar total return basis rose by 4.2% and 0.6% respectively. Given the difficulties for the private equity asset class, and for financial markets generally, over the last couple of years, the Board believes the Company has delivered a very creditable performance over time, both in absolute terms and relative to market indices and the Company's listed peer group.

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

Portfolio and valuation

The Company's portfolio comprises 37 private equity fund interests. At 31 March 2011 the value of this portfolio was £410.9 million, of which net unrealised gains arising during the period were £37.7 million.  The portfolio valuation was timely and 99.2% by value of the Company's private equity fund interests were valued by the relevant underlying managers at 31 March 2011.

In terms of the breakdown of net unrealised gains, unrealised gains on a constant exchange rate basis were £32.4 million (8.7% of the opening portfolio valuation), while positive exchange rate movements were £5.3 million (1.4% of the opening portfolio valuation). Once again, a majority of the uplift in unrealised gains arose from increased profits at the underlying investee companies, enhanced by the impact of gearing within those companies.

Investment activity and cashflows

The value and volume of all European private equity investment undertaken during the six months to 31 March 2011 rose, with a total of €35.5 billion of transactions by enterprise value reported during the period (six months ended 31 March 2010 - €21.8 billion). Most of this activity took the form of buy-out transactions, principally in the mid and large segments of the market, being transactions with an enterprise value of between €200 million and €2.0 billion. This is the principal area of investment focus for the Company.

In line with the continuing rise in activity levels in the European private equity market, distributions received during the period rose to £36.9 million and the Company funded £29.0 million of draw downs, resulting in a net cash inflow from investment activities of £7.9 million. This was the highest quantum of distributions received by the Company in any six month period since 30 September 2007. The distributions received generated net realised gains and income of £11.8 million, which was equivalent to an average return on the Company's acquisition cost of the realised investments of 1.5 times.

At 31 March 2011 the Company had £123.0 million of outstanding commitments. As previously intimated, due to the age of some of the fund interests held by the Company, the Manager believes that up to £30 million of the Company's existing outstanding commitments are unlikely to be drawn. The remaining outstanding commitments can be expected to be drawn over the next 2-3 years.

During the six month period the Company made no new fund commitments. However, on 4 April 2011, the Company re-commenced its fund investment programme by committing €30.0 million to Montagu IV, a €2.5 billion mid market buy-out fund focused on northern Europe. It is intended that, as the Company continues to receive distributions from its existing fund interests and its net indebtedness declines, new commitments will be made to other private equity funds; such commitments will include new funds being raised and the purchase of selective secondary fund interests.

On 29 November 2010 the Company entered into a new £120 million syndicated revolving credit facility, led by The Royal Bank of Scotland plc. This facility expires on 31 December 2013. At 31 March 2011 the Company's net indebtedness was £51.4 million.

In the period from 31 March 2011 to 25 May 2011 the Company received £9.1 million of distributions and funded £3.3 million of draw downs. At 25 May 2011 the Company's total outstanding commitments, including the new commitment to Montagu IV, were £143.1 million and its net indebtedness was £45.2 million.

The Board

On 1 April 2011 the Company appointed Alastair Barbour as a director. Mr Barbour has recently retired from partnership in KPMG, where he focused on the financial services sector. His wide experience in auditing and advising investment companies and in the valuation of unlisted vehicles will be of material benefit to the Company.

Outlook

These results demonstrate continuing growth in the Company's NAV and improvement in its cashflows and balance sheet. While there remain uncertainties arising principally from weak economic growth in parts of Europe and the impact of sovereign debt issues, underlying managers are reporting growing earnings at many of their investee companies. The expectation is that the Company's portfolio of fund investments will generate an ongoing flow of realisations and distributions. This and further growth in NAV will permit the Company to make additional new fund commitments over the coming year.

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. At 31 March 2011 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 12.3% of the Company's gross assets by valuation and 9.6% by cost.

Portfolio composition and performance

At 31 March 2011 the Company's portfolio comprised 37 private equity fund interests with a value of £410.9 million which, together with its current assets less liabilities, resulted in the Company having net assets of £360.1 million. This represented an undiluted NAV of 222.9p (diluted NAV - 220.3p).

The split of the Company's portfolio by type of private equity fund is set out on page 7 of the interim report. 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 10 to 13 of the interim report.

The valuation of the Company's private equity fund interests at 31 March 2011 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 37 private equity funds in which the Company is invested, 36 of the funds, or 99.2% of the portfolio by value, were valued by their fund managers at 31 March 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 during the period from £369.6 million at 30 September 2010 to £410.9 million at 31 March 2011. A breakdown of the £41.3 million movement in the Company's portfolio during the period is detailed on page 7 of the interim report. The increase in value was driven by unrealised gains on the investment portfolio, at constant foreign exchange rates, of £32.4 million, together with £29.0 million of new investments, £11.5 million of realised gains and income, and £5.3 million of unrealised foreign exchange gains. The above increase was partially offset by £36.9 million of aggregate distributions. During the period to 31 March 2011 sterling depreciated by 2.1% relative to the euro and appreciated by 1.7% relative to the US Dollar.

Investment activity

European private equity activity levels continued to rise during the six month period.  This was reflected in increased drawdowns by, and distributions from, the Company's portfolio of fund interests and by the net cash inflow of £7.9 million from investment activities. Furthermore, many managers are reporting strong deal pipelines, both in terms of new investment opportunities and the sale of existing portfolio companies. As a result, activity levels are expected to remain robust over the course of 2011.

Fund commitments

The Company made no new private equity fund commitments during the six month period, reflecting both a quiet European fund raising market and a continued cautious approach on the part of the Board and the Manager. However, on 4 April 2011, the Company re-commenced its new fund commitment programme with a €30.0 million commitment to Montagu IV, a €2.5 billion mid market buy-out fund focused on northern Europe.

It is envisaged that further new commitments will be made during 2011, as the Company continues to receive positive net cashflows from its investment portfolio and as net indebtedness declines. New commitments are likely to be in the form of both new primary fund commitments and the purchase of selective secondary interests. Secondary interests would enable the Company to gain exposure to attractive funds which are already partially invested, thus widening the Company's vintage year diversification whilst adding a lower quantum of outstanding commitments. At 31 March 2011 the Company had £123.0 million of outstanding commitments. After adjusting for excess available liquid resources, such outstanding commitments were equivalent to 15.1% of the Company's net assets.

Analysis of underlying investments

At 31 March 2011 the Company's 37 private equity fund interests were collectively invested in a total of 519 underlying investments. The diversification of the underlying investments, at 31 March 2011 and 30 September 2010, is set out in the four bar charts on page 9 of the interim report.

The bar charts demonstrate the broad diversification that applies by geography and by sector within the Company's underlying portfolio of investments at 31 March 2011. 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% at 31 March 2011, as other European private equity markets have continued to develop. The broad sector 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 bar chart showing the maturity exposure of underlying investments highlights the increasing maturity of the portfolio, as a result of the reduced levels of private equity activity over the last two to three years. The bar chart showing value relative to the original cost of underlying investments illustrates that, the portfolio remains healthy with 76% of the portfolio valued at or above cost.

Valuation and leverage multiple analysis

The bar charts show the valuation and leverage multiples of the thirty largest underlying portfolio companies held by the Company's private equity fund interests at 31 December 2010, which in aggregate represented 43.9% of the Company's then net assets.  This analysis is at 31 December due to the fact that most private equity funds provide detailed information on the underlying portfolio companies twice a year, in June and December, rather than quarterly.

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

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

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 2010.

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 26 May 2011.

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

Scott Dobbie CBE

Chairman

26 May 2011

FINANCIAL SUMMARY

Performance (Capital return)	As at	As at
	31 March 2011	30 September 2010	% Change
Net asset value per ordinary share (undiluted)	222.9p	195.3p	14.1
Net asset value per ordinary share (diluted)	220.3p	195.3p	13.9
Share price	156.0p	113.75p	37.1
FTSE All-Share Index (1)	3,067.7	2,867.6	7.0
MSCI Europe Index (in euros) (1)	95.5	90.0	6.1
Discount (difference between share price and diluted net asset value)	29.2%	41.2%
Gearing (ratio of borrowing to shareholders' funds)	15.5%	19.2%

⁽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
			annualised	annualised
	%	%	%	%
Share price	88.9	33.5	(1.3)	5.6
Net asset value per ordinary share (diluted)	33.1	23.4	7.8	9.4
FTSE All-Share Index (1)	17.7	8.7	3.7	4.2
MSCI Europe Index (in euros) (1)	14.9	8.0	(0.6)	0.6

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

Highs/Lows during six months ended 31 March 2011	High	Low
Share price (mid)	158.0p	113.0p

INCOME STATEMENT

	Six months to 31 March 2011 (unaudited)
	Revenue	Capital		Total
	£'000	£'000		£'000
Total capital gains on investments	-	46,577	46,577
Currency losses	-	(950)	(950)
Income (Note 4)	2,588	-	2,588
Investment management fee	(141)	(1,271)	(1,412)
Administrative expenses	(374)	-	(374)
	________	________	________
Net return before finance costs and taxation	2,073	44,356	46,429
Finance costs	(144)	(1,294)	(1,438)
	________	________	________
Return on ordinary activities before taxation	1,929	43,062	44,991
Taxation on ordinary activities	(334)	317	(17)
	________	________	________
Return on ordinary activities after taxation	1,595	43,379	44,974
	________	________	________
Net return per ordinary share (Note 6)	0.99p	26.87p	27.86p
	________	________	________
Diluted net return per ordinary share (Note 6)	0.98p	26.72p	27.70p
	________	________	________

___________________________________________________________________________________

	Six months to 31 March 2010 (unaudited)
	Revenue	Capital	Total
	£'000	£'000	£'000
Total capital gains on investments	-	29,662	29,662
Currency gains	-	789	789
Income (Note 4)	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)
	________	________	________
Return on ordinary activities before taxation	243	28,582	28,825
Taxation on ordinary activities	(59)	49	(10)
	________	________	________
Return on ordinary activities after taxation	184	28,631	28,815
	________	________	________
Net return per ordinary share (Note 6)	0.12p	17.77p	17.89p
	________	________	________
Diluted net return per ordinary share (Note 6)	0.12p	17.76p	17.88p
	________	________	________

_________________________________________________________________________________

		for the year ended 30 September 2010 (audited)
		Revenue	Capital	Total
		£'000	£'000	£'000
Total capital gains on investments		-	51,693	51,693
Currency gains		-	944	944
Income (Note 4)		1,714	-	1,714
Investment management fee		(238)	(2,138)	(2,376)
Administrative expenses		(581)	-	(581)
		_________	_________	_________
Net return before finance costs and taxation		895	50,499	51,394
Finance costs		(191)	(1,716)	(1,907)
		_________	_________	_________
Return on ordinary activities before taxation		704	48,783	49,487
Taxation		(161)	141	(20)
		_________	_________	_________
Return on ordinary activities after taxation		543	48,924	49,467
		_________	_________	_________
Net return per ordinary share (Note 6)		0.34p	30.36p	30.70p
		_________	_________	_________
Diluted net return per ordinary share (Note 6)		0.34p	30.30p	30.64p
		_________	_________	_________

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 2011 (unaudited)	£'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	-	-	-	-	43,379	1,595	44,974
Scrip issue of ordinary shares	-	167	-	-	-	-	167
Dividends paid	-	-	-	-	-	(323)	(323)
	_______	_______	_______	_______	_______	_______	_______
Balance at 31 March 2011	357	79,817	79,148	3	193,801	6,934	360,060
	_______	_______	_______	_______	_______	_______	_______
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 ordinary 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 year ended 30 September 2010 (audited)
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	79,356	79,148	3	150,422	5,662	315,242
	_______	_______	_______	_______	_______	_______	_______

BALANCE SHEET

	As at	As at	As at
	31 March 2011	31 March 2010	30 September 2010
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Non-current assets
Investments at fair value through profit or loss (Note 7)	410,889	328,745	369,630
	________	________	________
Current assets
Debtors	865	130	108
Cash and short term deposits	4,380	2,806	6,403
	________	________	________
	5,245	2,936	6,511
Creditors: amounts falling due within one year
Bank loan (Note 9)	(55,774)	(37,019)	(60,645)
Other creditors	(300)	(289)	(254)
	________	________	________
	(56,074)	(37,308)	(60,899)
Net current liabilities	(50,829)	(34,372)	(54,388)
	________	________	________
Net assets	360,060	294,373	315,242
	________	________	________
Capital and reserves
Called up share capital	357	357	357
Share premium	79,817	79,433	79,650
Special reserve	79,148	79,148	79,148
Capital redemption reserve	3	3	3
Capital reserves	193,801	130,129	150,422
Revenue reserve	6,934	5,303	5,662
	________	________	________
Total shareholders' funds	360,060	294,373	315,242
	________	________	________
Analysis of shareholders' funds
Equity interests (ordinary shares)	360,026	294,339	315,208
Non-equity interests (founder shares)	34	34	34
	________	________	________
Total shareholders' funds	360,060	294,373	315,242
	________	________	________
Net asset value per equity share (Note 8)	222.9p	182.6p	195.3p
Net asset value per equity share (diluted) (Note 8)	220.3p	180.7p	193.3p

CASHFLOW STATEMENT

		Six months to	Six months to	Year to
		31 March 2011	31 March 2010	30 September 2010
		(unaudited)	(unaudited)	(audited)
		£'000	£'000	£'000
Net return before finance costs and taxation		46,429	29,747	51,394
Adjusted for:
Gains on disposal of unquoted investments		(8,884)	(755)	(3,795)
Revaluation of unquoted investments		(37,693)	(28,907)	(47,898)
Currency losses/(gains)		950	(789)	(944)
(Increase)/decrease in debtors		(757)	31	53
Increase/(decrease) in creditors		57	(9)	(34)
Tax deducted from non - UK income		(17)	(18)	(28)
Net cash inflow/(outflow) from operating activities		85	(700)	(1,252)
Net cash outflow from servicing of finance		(1,449)	(926)	(1,921)
Net cash inflow from taxation		-	8	8
Financial investment
Purchase of investments		(28,968)	(17,499)	(47,994)
Disposal of underlying investments		34,286	9,620	21,273
Disposal of fund investments		-	1,902	1,890
Net cash inflow/(outflow) from financial investment		5,318	(5,977)	(24,831)
Ordinary dividend paid		(150)	(78)	(78)
		________	________	________
Net cash inflow/(outflow) before financing		3,804	(7,673)	(28,074)
Net (costs)/proceeds of issue of ordinary shares		(6)	(5)	212
Net (repayment)/drawdown of loan		(4,871)	7,317	30,943
		________	________	________
Net cash (outflow)/inflow from financing		(4,877)	7,312	31,155
(Decrease)/increase in cash and cash equivalents		(1,073)	(361)	3,081
		________	________	________
Reconciliation of net cash flow to
movement in net debt
(Decrease)/increase in cash as above		(1,073)	(361)	3,081
Net repayment/(drawdown) of loan		4,871	(7,317)	(30,943)
Currency movements		(950)	789	944
		________	________	________
Movement in net funds/(debt) in the period		2,848	(6,889)	(26,918)
Opening net debt		(54,242)	(27,324)	(27,324)
		________	________	________
Closing net debt		(51,394)	(34,213)	(54,242)
		________	________	________
Represented by:
Cash and short term deposits		4,380	2,806	6,403
Loans		(55,774)	(37,019)	(60,645)
		________	________	________
		(51,394)	(34,213)	(54,242)
		________	________	________

NOTES:

1	Financial Information
	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 2010 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 2011 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 HM Revenue & Customs. 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. In addition, they have been prepared in accordance with the Statement "Half-yearly financial reports" issued by the UK Accounting Standards Board and the applicable guidance within the Disclosure and Transparency Rules of the Financial Services Authority.

3	Exchange rates
	Rates of exchange to sterling were:
		As at	As at	As at
		31 March 2011	31 March 2010	30 September 2010
	Euro	1.1296	1.1211	1.1543
	US dollar	1.6030	1.5169	1.5758

		Six months ended	Six months ended	Year ended
		31 March 2011	31 March 2010	30 September 2010
4	Income	£'000	£'000	£'000
	Income from unquoted investments	2,587	753	1,713
	Deposit interest	1	-	-
	Other income	-	1	1
		________	________	________
	Total income	2,588	754	1,714
		________	________	________

5	Dividend on Ordinary shares
	A dividend of 0.20p per ordinary share, declared as a final dividend, was paid on 28 January 2011 in respect of the year ended 30 September 2010 (Dividend of 0.10p per ordinary share paid on 29 January 2010).
	The Company issued 123,804 ordinary shares of 0.2p 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.
	There will be no interim dividend for the six months ended to 31 March 2011.  Shareholders are reminded that the objective of the Company is long term capital appreciation.

		Six months ended		Six months ended		Year ended
		31 March 2011		31 March 2010		30 September 2010
6	Return per ordinary share	p	£'000	p	£'000	p	£'000
	The return per ordinary share is based on the following figures:
	Revenue return	0.99	1,595	0.12	184	0.34	543
	Capital return	26.87	43,379	17.77	28,631	30.36	48,924
		_____	_______	_____	_______	_____	_______
	Total return	27.86	44,974	17.89	28,815	30.70	49,467
		_____	_______	_____	_______	_____	_______
	Weighted average number of ordinary shares in issue		161,414,968		161,094,549		161,122,847
		Six months ended		Six months ended		Year ended
		31 March 2011		31 March 2010		30 September 2010
		p	£'000	p	£'000	p	£'000
	The fully diluted return per ordinary share is based on the following figures:
	Revenue return (fully diluted)	0.98	1,595	0.12	184	0.34	543
	Capital return (fully diluted)	26.72	43,379	17.76	28,631	30.30	48,924
		_____	_______	_____	_______	_____	_______
	Total return (fully diluted)	27.70	44,974	17.88	28,815	30.64	49,467
		_____	_______	_____	_______	_____	_______

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 2011, this is based on 162,374,866 shares, comprising the weighted average 161,414,968 ordinary shares and 959,898 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 2010, this is based on 161,170,919 shares, comprising the weighted average 161,094,549 ordinary shares and 76,370 founder A shares capable of conversion. For the year ended 30 September 2010, this is based on the weighted average of 161,434,348 ordinary shares, comprising the weighted average 161,122,847 ordinary shares and 311,501 founder A shares capable of conversion.

		31 March 2011	31 March 2010	30 September 2010
7	Fixed Asset Investments	£'000	£'000	£'000
	Fair value through profit or loss
	Opening market value	369,630	293,106	293,106
	Opening investment holding losses	38,265	86,163	86,163
		________	________	________
	Opening book cost	407,895	379,269	379,269
	Movements in the period:
	Additions at cost	28,968	17,499	47,994
	Disposal of underlying investments by funds	(34,286)	(9,620)	(21,273)
	Disposals of fund investments by way of secondary sales	-	(1,902)	(1,890)
		________	________	________
		402,577	385,246	404,100
	Gains on disposal of underlying investments	11,285	3,720	8,433
	Losses on disposal of fund investments	(2,401)	(2,965)	(4,638)
		________	________	________
	Closing book cost	411,461	386,001	407,895
	Closing investment holding losses	(572)	(57,256)	(38,265)
		________	________	________
	Closing market value	410,889	328,745	369,630
		________	________	________

8	Net asset value per ordinary share	31 March 2011	31 March 2010	30 September 2010
	Basic:
	Ordinary shareholders' funds	£360,026,000	£294,339,000	£315,207,880
	Number of ordinary shares in issue	161,496,597	161,149,772	161,372,793
	Net asset value per ordinary share	222.9p	182.6p	195.3p
	Diluted:
	Equity shareholders' funds	£363,622,981	£298,159,002	£318,804,861
	Number of ordinary shares in issue	165,093,578	164,969,774	164,969,774
	Net asset value per ordinary share	220.3p	180.7p	193.3p
	During the period the company issued 123,804 ordinary shares of 0.2p 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.
	For the six months ended 31 March 2011, the diluted NAV per ordinary share is based on the number of shares in issue of 165,093,578, being 161,496,597 ordinary shares and 3,596,981 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.

		31 March 2011	31 March 2010	30 September 2010
9	Bank loans	£'000	£'000	£'000
	Unsecured bank loans repayable within one year:
	€63,000,000 at 3.448% repayable 28 April 2011	55,774	-	-
	€20,000,000 at 3.118% repayable 25 October 2010	-	-	17,327
	€50,000,000 at 3.121% repayable 29 October 2010	-	-	43,318
	€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	-
		________	________	________
		55,774	37,019	60,645
		________	________	________

As at 31 March 2011, the Company had a £120 million committed, multi-currency syndicated revolving credit facility led by The Royal Bank of Scotland plc of which £55.8m has 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.

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 2011.

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 2011 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 Standard Life European Private Equity Trust Plc (the "Company") to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2011, which comprise the Income Statement, the Reconciliation of Movements in Shareholders' Funds, the Balance Sheet, the 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 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 2011 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

26 May 2011

 

END

 

 

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