Half Yearly Report

RNS Number : 5713O
Standard Life Euro Pri Eqty Tst PLC
29 May 2015
 



STANDARD LIFE EUROPEAN PRIVATE EQUITY TRUST PLC

INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2015

 

Highlights

·    The Company's net asset value total return for the six months ended 31 March 2015 was 6.1%.

 

·    The net asset value per ordinary share ("NAV") at 31 March 2015 rose 4.4% to 268.6p (30 September 2014 - 257.4p). The increase in NAV during the period included 3.8% of net realised gains and income from the Company's portfolio of 46 private equity fund interests, 7.9% of unrealised gains on a constant exchange rate basis, 5.5% of negative exchange rate movements on the portfolio and payment of a final dividend of 5.0p per ordinary share for the year ended 30 September 2014.

 

·    The actual NAV of 268.6p compares to a previously estimated NAV at 31 March 2015 of 251.4p announced on 16 April 2015.  The uplift is attributable to unrealised gains on the Company's portfolio as reported by underlying fund managers for the quarter ended 31 March 2015.

 

·    The Board has declared an interim dividend, for the first time, of 1.75p to be paid on 10 July 2015. It remains the Board's intention, subject to unforeseen circumstances, to maintain, at least, the real value of last year's 5.0p dividend for the full year.

 

·    The closing mid-market price of the Company's ordinary shares on 31 March 2015 was 222.0p, a decrease of 3.5% over the period and a discount of 17.3% to the NAV.

 

·    At 31 March 2015 the Company's net assets were £422.5 million. 95.4% by value of the portfolio was valued by the relevant fund manager at 31 March 2015.

 

·    In line with activity levels in the European private equity market and the maturity of the Company's portfolio, the Company received £47.9 million of distributions and funded £37.8 million of draw downs during the period, generating a net cash inflow from portfolio activities of £10.1 million.

 

·    At 31 March 2015 the Company had liquid resources of £47.6 million, comprising a cash balance of £15.9 million and £31.7 million invested at value (£29.5 million at cost) in UK and European equity index tracker funds.  The Company has an undrawn £80 million syndicated revolving credit facility led by The Royal Bank of Scotland plc that expires in December 2016.

 

·    The Company made three new fund commitments during the period with commitments of €35.0 million to PAI Europe VI, £28.0 million to Exponent Private Equity Partners III and €35.0 million to Bridgepoint Europe V. In addition, the Company undertook five secondary fund purchases and sold one fund interest.

 

·    At 31 March 2015 the Company had £247.4 million of outstanding commitments. The Manager continues to believe that up to £50 million of the Company's existing outstanding commitments are unlikely to be drawn.

 

·    During the period from 31 March 2015 to 27 May 2015 the Company received £14.5 million of distributions and funded £1.5 million of draw downs. The Company made a new fund commitment of €30.0 million to Equistone Partners Europe Fund V.

 

·    At 27 May 2015 the Company had liquid resources of £59.4 million, comprising a cash balance of £27.5 million and £31.9 million invested at value (£29.5 million at cost) in UK and European equity index tracker funds. The Company had outstanding commitments of £265.2 million at 27 May 2015.

 

For further information please contact:-

Peter McKellar or Roger Pim at SL Capital Partners LLP (on 0131 245 0055)



 

CHAIRMAN'S STATEMENT

 

Results and performance

 

In the six month period to 31 March 2015 the Company benefited from a positive background, as the improving European macro-economic environment, rising listed financial markets and increasing corporate earnings resulted in exit activity and unrealised gains across the portfolio. The uplift in the portfolio, however, was partially offset by depreciation in the euro versus sterling in Q1 2015. The net asset value total return for the period was 6.1%. At 31 March 2015 the Company's net assets were £422.5 million (30 September 2014 - £409.1 million).

 

http://www.rns-pdf.londonstockexchange.com/rns/5713O_1-2015-5-28.pdf         

 

The net asset value per ordinary share ("NAV") at 31 March 2015 rose 4.4% to 268.6p (30 September 2014 - 257.4p). The increase in NAV during the period comprised 3.8% of net realised gains and income from the Company's portfolio of 46 private equity fund interests and 7.9% of unrealised gains on a constant exchange rate basis, partially offset by 5.5% of negative exchange rate movements on the portfolio, 0.2% of fees, costs and other items and payment of the final dividend of 5.0p per ordinary share for the year ended 30 September 2014.

 

The closing mid-market price of the Company's ordinary shares on 31 March 2015 was 222.0p, a decrease of 3.5% over the period and a discount of 17.3% to the NAV. This compares to rises in the FTSE All-Share Index and the MSCI Europe Index (in euros) over this period of 3.7% and 15.4% respectively.

 

The Board has declared an interim dividend, for the first time, of 1.75p to be paid on 10 July 2015 to shareholders on the Company's share register at 12 June 2015. On 30 January 2015 the Company paid a final dividend for the year ended 30 September 2014 of 5.0p per ordinary share.It remains the Board's intention, subject to unforeseen circumstances, to maintain, at least, the real value of last year's 5.0p dividend for the full year, when the amount of the interim dividend is combined with the final dividend.

 

 

Investment activity

 

The value of all private equity investments undertaken in Europe during the six months to 31 March 2015 was marginally higher than the corresponding period in 2014, with  €46.1 billion of transactions by enterprise value announced (six months ended 31 March 2014 - €43.1 billion).  While the number and aggregate value of large buy-out transactions is volatile quarter on quarter, the middle market of buy-out transactions with an enterprise value between €100 million and €1 billion continues to be the core market segment. Just under €25 billion of deals during the period were middle market transactions and this market segment has, and continues to be, one of the Company's primary areas of focus.

 

In line with activity levels in the European private equity market and the maturity of the Company's portfolio, the Company received £47.9 million of distributions and funded £37.8 million of draw downs during the period. Accordingly, the Company generated a net cash inflow from portfolio activities, exclusive of secondary transactions, of £10.1 million.  The distributions received generated net realised gains and income of £19.8 million, equivalent to an average return on the acquisition cost of the realised investments of 1.7 times (year ended 30 September 2014 - 2.0 times). In addition, the Company realised a book loss of £5.0 million on the liquidation of an older fund, the Candover 2001 Fund, where all of the underlying investments had been realised. Importantly, the book loss had been fully provided for previously in the Company's valuation of the fund interest.

 

In support of the Company's investment strategy, three new fund commitments were made during the period, with commitments of €35.0 million to PAI Europe VI in November 2014, £28.0 million to Exponent Private Equity Partners III in January 2015 and €35.0 million to Bridgepoint Europe V in February 2015.

 

Reflecting the disciplined approach to the use of the Company's capital resources and the continuing cash inflow, the Company also undertook five secondary fund purchases. TheCompany acquired an original commitment of €12.9 million to Advent Global Private Equity VI in December 2014, an original commitment of €15.0 million to Cinven Fourth Fund in December 2014, an original commitment of €15.0 million to Nordic Capital Fund VII in February 2015, an original commitment of €5.0 million to Permira Europe III in March 2015 and an original commitment of €8.0 million to Permira IV in March 2015. Finally, the Company sold its entire fund interest in Apax Europe VII in October 2014. Details of all of the secondary transactions are provided in the Manager's Review. 

 

In addition, in a series of transactions the Company acquired a total of 1.625 million ordinary shares through share buy-back transactions for £3.6 million. The ordinary shares were acquired at an average price of 220.7p and at an average discount to the prevailing NAV of 14.8%. The ordinary shares acquired have been cancelled.

 

The Company had liquid resources of £47.6 million at 31 March 2015, comprising a cash balance of £15.9 million and £31.7 million invested at value (£29.5 million at cost) in UK and European equity index tracker funds.  The Company has an undrawn £80 million syndicated revolving credit facility led by The Royal Bank of Scotland plc that expires in December 2016. At 31 March 2015 the Company had £247.4 million of outstanding commitments (30 September 2014 - £214.4 million). After undertaking a detailed review, the Manager continues to believe that up to £50 million of the Company's existing outstanding commitments are unlikely to be drawn.

 

 

Valuation

 

The Company's portfolio comprises 46 private equity fund interests. At 31 March 2015 the value of this portfolio was £375.1 million, of which net unrealised gains arising during the period were £9.6 million.  95.4% by value of the Company's private equity fund interests were valued by the relevant fund manager at 31 March 2015.

 

Unrealised gains on a constant exchange rate basis were £31.9 million (9.1% of the opening portfolio valuation). The uplift reflected a combination of positive earnings growth and a rise in listed comparable valuation multiples. Significantly, exchange rate movements contributed an unrealised loss of £22.3 million (6.4% of opening portfolio valuation) largely as a result of the 7.3% depreciation in in the euro versus sterling in Q1 2015.

 

 

 

Recent activity

 

During the period from 31 March 2015 to 27 May 2015 the Company received £14.5 million of distributions and funded £1.5 million of draw downs. The Company made a new fund commitment of €30.0 million to Equistone Partners Europe Fund V.

 

At 27 May 2015 the Company had liquid resources of £59.4 million, comprising a cash balance of £27.5 million and £31.9 million invested at value (£29.5 million at cost) in UK and European equity index tracker funds. The Company had outstanding commitments of £265.2 million at 27 May 2015.

 

 

Outlook

 

The Board and the Manager have noted some pick-up in economic activity, monetary indicators and business and consumer sentiment in Europe in early 2015. This contrasts with a weaker macro-economic environment in H2 2014. The pick-up in Europe appears to be benefiting earnings at many underlying portfolio companies. In addition, the maturity of the Company's portfolio and a robust mergers and acquisitions market are resulting in significant exit activity across the portfolio.

 

The Board is committed to maintaining capital discipline and the positive cash inflow is being invested in a mix of new fund commitments, secondary fund purchases and, when appropriate, share buy-backs.

 

 

 

Edmond Warner, OBE

Chairman

 

28 May 2015

 

 



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 2015 the Company had six fund investments - Coller International Partners IV, Coller International Partners V, Pomona Capital V Fund, Pomona Capital VI Fund, TowerBrook Investors II and TowerBrook Investors IV - which are likely to invest a majority of their capital outside Europe. In total these funds represented 7.0% of the Company's gross assets by valuation and 4.6% by cost at 31 March 2015.

 

Portfolio composition and performance

At 31 March 2015 the Company's portfolio comprised 46 private equity fund interests with a value of £375.1 million which, together with its current assets less liabilities, resulted in the Company having net assets of £422.5 million. This represented a NAV of 268.6p.

 

The split of the Company's portfolio by type of private equity fund is set out in the pie chart on page 6 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, are shown on pages 9 to 12 of the interim report.

 

The valuation of the Company's private equity fund interests at 31 March 2015 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 46 private equity funds in which the Company is invested, 45 of the funds, or 95.4% of the portfolio by value, were valued by their fund managers at 31 March 2015. 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£348.5million at 30 September 2014 to £375.1million at 31 March 2015. A breakdown of the £26.6 million movement in the Company's portfolio during the period is detailed in the valuation bridge shown above. The increase in value was driven by £37.8 million of draw downs from fund investments, £33.4 million of secondary purchases, £31.9 million of unrealised gains on the investment portfolio on a constant exchange rate basis, and £11.6million of net realised gains and other movements. This increase was partially offset by £44.1 million of realisation proceeds from the Company's underlying investment interests, £21.7million of secondary sales proceeds and £22.3 million of unrealised foreign exchange losses. During the period to 31 March 2015 sterling appreciated by 7.7% relative to the euro and depreciated by 8.4% relative to the US dollar.

 

The Company had £37.8 million of draw downs by, and £47.9 million of distributions from, the Company's portfolio of fund interests, which resulted in a net cash inflow of £10.1 million from investment activities during the period. The strong level of distribution activity reflected the attractive exit environment together with the maturity of the Company's investment portfolio.

 

The Company sold one fund interest and undertook five secondary fund purchases in the six month period.

In October 2014, the Company sold its entire fund interest in Apax Europe VII at a 2.5% premium to the 31 March 2014 valuation of the fund. The sale proceeds for the fund interest were £21.7 million and the Company was released from outstanding commitments of £3.4 million.

 

In December 2014, the Company acquired two interests: an original commitment of €12.9 million in Advent Global Private Equity VI at a 3.0% premium to the 30 June 2014 valuation of the fund. The purchase price for the fund interest was £11.7 million and the Company assumed outstanding commitments of £0.5 million on acquisition; and an original commitment of €15.0 million in Cinven Fourth Fund was acquired at par to the 30 June 2014 valuation of the fund. The purchase price for the fund interest was £7.3 million and the Company assumed outstanding commitments of £1.4 million on acquisition.

 

In February 2015, an original commitment of €15.0 million in Nordic Capital Fund VII was acquired at a 2.5% discount to the 30 September 2014 valuation of the fund. The purchase price for the fund interest was £10.6 million and the Company assumed outstanding commitments of £2.1 million on acquisition.

 

Finally, in March 2015, the Company acquired, through secondary purchases, small fund interests in Permira Europe III for £0.7 million and Permira IV for £3.1 million. These fund interests were acquired at an aggregate 7.0% discount to the valuation of the fund interests at 31 December 2014.

 

 

The Companymade three new primary fund commitments during the period with commitments of €35.0 million to PAI Europe VI, £28.0 million to Exponent Private Equity Partners III and €35.0 million to Bridgepoint Europe V. The new commitments were made in light of the Company's positive net cash flow and the moderate level of aggregate outstanding commitments.

 

It is envisaged that further new commitments will be made during 2015, as the Company continues to receive positive net cash flows from its investment portfolio. New commitments are likely to be in the form of new primary fund commitments and the purchase of selective secondary interests. Secondary fund interests allow the Company to gain exposure to attractive funds which are already partially invested, thus potentially widening the Company's vintage year diversification whilst adding a lower quantum of outstanding commitments.

 

At 31 March 2015 the Company had £247.4 million of outstanding commitments. After adjusting for excess available liquid resources, outstanding commitments were equivalent to 28.4% of the Company's net assets.

 

At 31 March 2015 the Company's 46 private equity fund interests were collectively invested in a total of 508 underlying investments. The diversification of the underlying investments at 31 March 2015 and 30 September 2014 is set out in the four bar charts at the bottom of page 8 of the interim report.

 

The bar charts demonstrate the diversification that applies by geography and by sector within the Company's underlying portfolio of investments at 31 March 2015. The broad geographic and sector diversification across a wide range of industries, including industrials, consumer services and financials, helps to mitigate the effect of volatility in any individual geography or sector.

 

The bar chart showing the maturity exposure of underlying investments highlights the current maturity of the portfolio. The bar chart showing value relative to the original cost of underlying investments illustrates that the portfolio remains healthy with 84.5% of the portfolio valued at or above cost.

 

The two bar charts at the top of page 8 of the interim report show the valuation and leverage multiples of the fifty largest underlying portfolio companies held by the Company's private equity fund interests at 31 December 2014, which in aggregate represented 48.2% of the Company's then net assets. This analysis is at 31 December 2014 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 fifty underlying portfolio companies are 10-11x EV/EBITDA and 4-5x Debt/EBITDA respectively. These compare to the valuation and leverage multiples for the top fifty underlying portfolio companies at 30 June 2014 of 11-12x EV/EBITDA and 3-4x Debt/EBITDA. The increase in the leverage multiples in part reflects the fact that many underlying managers have taken advantage of the current debt markets to refinance companies on more advantageous terms. Overall 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 2014.

 

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. 

 

GOING CONCERN

 

The Audit Committee considered the Board's obligation to satisfy itself as to the appropriateness of the adoption of the going concern assumption as a basis for preparing the financial statements, taking into account: the £80 million committed, syndicated revolving credit facility with a maturity date in December 2016; the future cashflow projections; the Company's cashflows during the period and the Company's net liquid resources at the period end. The Audit Committee concluded that the adoption of the going concern basis was appropriate.

 

The Directors believe that the Company has adequate resources to continue in operational existence for the foreseeable future. For this reason, they have adopted the going concern basis in preparing the accounts.

 

 

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 FCA'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 FCA's Disclosure and Transparency Rules there have been no changes in the nature or magnitude of related party transactions during the first six months of the financial year and, therefore, there is 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 2015.

 

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

 

Edmond Warner OBE

Chairman, 28 May 2015



Performance (Capital only)

As at

As at


 

31 March

2015

30 September

2014

%
Change

Net asset value per ordinary share ("NAV")

268.6p

257.4p

4.4





Share price

222.0p

230.0p

(3.5)





FTSE All-Share Index (1)

3,663.6

3,533.9

3.7





MSCI Europe Index (in euros) (1)

135.3

117.2

15.4





Discount (difference between share price and diluted net asset value)

17.3%

10.6%


 

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

Performance (Total return) (2)

Six months

1 year

5 year

Since launch




annualised

annualised(3)


%

%

%

%






Share price

(1.2)

11.4

15.3

7.2






NAV

6.1

8.3

9.3

8.4






FTSE All-Share Index (1)

5.3

6.6

8.3

5.4






MSCI Europe Index (in euros) (1)

16.6

22.7

12.1

4.1

 

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

(2)  Includes dividends reinvested.

(3)  The Company was listed on the London Stock Exchange in May 2001.

 

 

 

High/Low during six months ended 31 March 2015

High

Low

Share price (mid)

229.1p

200.5p

 

 

 



INCOME STATEMENT

 


 

Six months to 31 March 2015

(unaudited)


Revenue

Capital

Total


£'000

£'000

£'000





Gains on investments    

-

24,089

24,089

 

Currency losses

-

(543)

(543)

 

Income (Note 4)

3,966

-

3,966

 

Investment management fee (Note 5)

(169)

(1,518)

(1,687)

 

Administrative expenses

(341)

-

(341)

 


________

________

________

 

Net return on ordinary activities before finance costs and taxation

3,456

22,028

25,484

 

Finance costs

(53)

(478)

(531)

 


________

________

________

 

Return on ordinary activities before taxation

3,403

21,550

24,953

 

Taxation

(592)

579

(13)

 


________

________

________

 

Return on ordinary activities after taxation

2,811

22,129

24,940

 


________

________

________

 

Net return per ordinary share (Note 7)

1.78p

14.04p

15.82p

 


________

________

________

 

 

___________________________________________________________________________________

 


 

Six months to 31 March 2014

(unaudited)


Revenue

Capital

Total


£'000

£'000

£'000





Gains on investments    

-

19,699

19,699

 

Currency losses

-

(972)

(972)

 

Income (Note 4)

3,314

-

3,314

 

Investment management fee (Note 5)

(163)

(1,465)

(1,628)

 

Administrative expenses

(347)

-

(347)

 


________

________

________

 

Net return on ordinary activities before finance costs and taxation

2,804

17,262

20,066

 

Finance costs

(52)

(476)

(528)

 


________

________

________

 

Return on ordinary activities before taxation

2,752

16,786

19,538

 

Taxation

(530)

521

(9)

 


________

________

________

 

Return on ordinary activities after taxation

2,222

17,307

19,529

 


________

________

________

 

Net return per ordinary share (Note 7)

1.36p

10.61p

11.97p

 


________

________

________

 

 

_______________________________________________________________________________

 

 

 

 

 

 


for the year ended 30 September 2014

(audited)


Revenue

Capital

Total


£'000

£'000

£'000





Gains on investments

-

23,236

23,236

Currency losses

-

(2,085)

(2,085)

Income (Note 4)

12,039

-

12,039

Investment management fee (Note 5)

(328)

(2,952)

(3,280)

Administrative expenses

(657)

-

(657)


_________

_________

_________





Net return on ordinary activities before finance costs and taxation

11,054

18,199

29,253

Finance costs

(104)

(934)

(1,038)


_________

_________

_________





Return on ordinary activities before taxation

10,950

17,265

28,215

Taxation

(1,788)

1,432

(356)


_________

_________

_________





Return on ordinary activities after taxation

9,162

18,697

27,859


_________

_________

_________

Net return per ordinary share (Note 7)

5.69p

11.60p

17.29p


_________

_________

_________

 

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

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

All revenue and capital items in the above statement are derived 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 2015 (unaudited)

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Balance at 1 October 2014

318

86,485

62,947

83

242,135

17,134

409,102

Total recognised gains

-

-

-

-

22,129

2,811

24,940

Buy back of ordinary shares

(3)

-

(3,614)

3

-

-

(3,614)

Dividends paid

-

-

-

-

-

(7,884)

(7,884)


_______

_______

_______

_______

_______

_______

_______

Balance at 31 March 2015

315

86,485

59,333

86

264,264

12,061

422,544


_______

_______

_______

_______

_______

_______

_______









For the six months ended 31 March 2014 (unaudited)

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Balance at 1 October 2013

330

85,594

75,519

70

223,438

16,214

401,165

Total recognised gains

-

-

-

-

17,307

2,222

19,529

Conversion of founder A shares

-

891

-

1

-

-

892

Buy back of ordinary shares

(12)

-

(12,162)

12

-

-

(12,162)

Dividends paid

-

-

-

-

-

(8,242)

(8,242)


_______

_______

_______

_______

_______

_______

_______

Balance at 31 March 2014

318

86,485

63,357

83

240,745

10,194

401,182


_______

_______

_______

_______

_______

_______

_______









For the year ended 30 September 2014 (audited)

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Balance at 1 October 2013

330

85,594

75,519

70

223,438

16,214

401,165

Total recognised gains

-

-

-

-

18,697

9,162

27,859

Conversion of founder A shares

1

891

-

-

-

-

892

Buy back of ordinary shares

(13)

-

(12,572)

13

-

-

(12,572)

Dividends paid

-

-

-

-

-

(8,242)

(8,242)


_______

_______

_______

_______

_______

_______

_______

Balance at 30 September 2014

318

85,485

62,947

83

242,135

17,134

409,102


_______

_______

_______

_______

_______

_______

_______

 

 



BALANCE SHEET


As at

As at

As at


31 March
2015

31 March
2014

30 September
2014


(unaudited)

(unaudited)

(audited)


£'000

£'000

£'000

Non-current assets




Investments at fair value through profit or loss (Note 8)

406,830

378,301

387,623


________

________

________

Current assets




Debtors

361

543

473

Money market funds

-

20,668

16,363

Cash and short term deposits

15,907

2,031

5,212


________

________

________


16,268

23,242

22,048

Creditors: amounts falling due within one year




Other creditors

(554)

(361)

(569)


________

________

________





Net current assets

15,714

22,881

21,479


________

________

________

Total assets less current liabilities

422,544

401,182

409,102


________

________

________

Capital and reserves




Called up share capital

315

318

318

Share premium

86,485

86,485

86,485

Special reserve

59,333

63,357

62,947

Capital redemption reserve

86

83

83

Capital reserves

264,264

240,745

242,135

Revenue reserve

12,061

10,194

17,134


________

________

________

Total shareholders' funds

422,544

401,182

409,102


________

________

________

 

Net asset value per equity share (Note 9)

268.6p

252.2p

257.4p


________

________

________

 



CASHFLOW STATEMENT

 


Six months to

Six months to

Year to

 


31 March
2015

31 March
2014

30 September
2014

 


(unaudited)

(unaudited)

(audited)

 


£'000

£'000

£'000

Net return before finance costs and taxation

25,484

20,066

29,253

Adjusted for:




Gains on disposal of investments

(11,864)

(19,669)

(39,643)

Revaluation of investments

(12,225)

(30)

16,407

Currency losses on cash balances

543

972

2,085

Decrease in debtors

112

120

191

Increase/ (decrease) in creditors

181

(122)

(114)

Tax deducted from non - UK income

(13)

(9)

(356)





Net cash inflow from operating activities

2,218

1,328

7,823

Net cash outflow from servicing of finance

(328)

(327)

(1,038)

Net cash flow from taxation

-

-

-

Financial investment




Purchase of investments

(71,378)

(46,198)

(96,896)

Disposal of investments

54,600

46,108

91,021

Disposal of fund investments by way of secondary sales

21,660

-

-





Net cash inflow/ (outflow) from financial investment

4,882

(90)

(5,875)

Ordinary dividend paid

(7,884)

(8,242)

(8,242)


________

________

________

Net cash outflow before financing

(1,112)

(7,331)

(7,332)

Conversion of founder A shares

-

892

892

Buy back of ordinary shares

(4,013)

(12,162)

(12,172)


________

________

________

Net cash outflow from financing

(4,013)

(11,270)

(11,280)





Decrease in cash and cash equivalents

(5,125)

(18,601)

(18,612)


________

________

________

Reconciliation of net cash flow to




movement in net funds








Decrease in cash as above

(5,125)

(18,601)

(18,612)

Currency movements

(543)

(972)

(2,085)


________

________

________

Movement in net funds in the period

(5,668)

(19,573)

(20,697)

Opening net funds

21,575

42,272

42,272


________

________

________

Closing net funds

15,907

22,699

21,575


________

________

________

Represented by:




Money market funds, cash and short term deposits

15,907

22,699

21,575


________

________

________









 

 




 

 

 

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 2014 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 2015 in accordance with the applicable standards issued by the Auditing Practices Board for use in the United Kingdom. The independent auditors review report is on page 22 of the interim report.

 

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 Conduct Authority.

 

3

Exchange rates 


Rates of exchange to sterling were:








As at

As at

As at



31 March 2015

31 March 2014

30 September 2014


Euro

1.3822

1.2096

1.2834


US dollar

1.4845

1.6672

1.6212

 



Six months ended

Six months ended

Year
ended



31 March 2015

31 March 2014

30 September 2014

4

Income

£'000

£'000

£'000


Income from fund investments

3,796

3,227

11,438


Income from index tracker funds

162

76

569


Interest from money market funds

8

11

32



________

________

________


Total income

3,966

3,314

12,039



________

________

________

  

 



Six months ended 31 March 2015



Revenue

Capital

Total

5

Investment management and incentive fees

£'000

£'000

£'000


Investment management fee

169

1,518

1,687



________

________

________






Six months ended 31 March 2014



Revenue

Capital

Total



£'000

£'000

£'000


Investment management fee

163

1,465

1,628



________

________

________






Year ended 30 September 2014



Revenue

Capital

Total



£'000

£'000

£'000


Investment management fee

328

2,952

3,280



________

________

________


 

The investment management fee payable to the Manager is 0.8% per annum of the investments and other assets of the Company and any subsidiaries less the aggregate of the liabilities of the Company and any subsidiaries. The investment management fee is allocated 90% to the realised capital reserve and 10% to the revenue account. The management agreement between the Company and the Manager is terminable by either party on twelve months' written notice.

 

For an incentive fee to be payable, the Company's net asset value total return must grow by more than 8% compound per annum (before and accrual for the incentive fee) over the five year period to 30 September 2016. Should this hurdle rate be achieved, the Manager will be entitled to an incentive fee of 10% of the growth in NAV (before any accrual for the incentive fee) in excess of the hurdle rate, multiplied by the number of ordinary shares in issue on 1 October 2011 (adjusted in certain circumstances to reflect subsequent share issuance and/ or a material reduction in the Company's issued share capital). At 31 March 2015 the net asset value total return was 282.8p and as such has not exceeded the 8% per annum compound growth hurdle rate at the same date of 296.0p. No provision is required in respect of the incentive fee.

 

 

6

Dividend on Ordinary shares


A dividend of 5.0p per ordinary share, declared as a final dividend, was paid on 30 January 2015 in respect of the year ended 30 September 2014 (2014 - dividend of 5.0p per ordinary share paid on 30 January 2014).




A proposed interim dividend of 1.75p per ordinary share (2014 - nil) is due to be paid on 10 July 2015.

 





  

 



Six months ended

Six months ended

Year ended



31 March 2015

31 March 2014

30 September 2014

7

Net return per ordinary share

p

£'000

p

£'000

p

£'000


The net return per ordinary share is based on the following figures:








Revenue net return

1.78

2,811

1.36

2,222

5.69

9,162


Capital net return

14.04

22,129

10.61

17,307

11.60

18,697



_____

_______

_____

_______

_____

_______


Total net return

15.82

24,940

11.97

19,529

17.29

27,859



_____

_______

_____

_______

_____

_______


Weighted average number of ordinary shares in issue


157,620,316


163,167,871


161,125,089










Fully diluted returns have been calculated on the basis set out in Financial Reporting Standard 22 'Earnings per share' ('FRS 22').   

 




31 March 2015


31 March 2014

30 September 2014

 

8

Investments

Index Tracker Funds

Fund Investments

Total



 



£'000

£'000

£'000

£'000

£'000

 


Fair value through profit or loss:






 


Opening market value

39,161

348,462

387,623

358,512

358,512

 


Opening investment holding losses

395

47,390

47,785

31,378

31,378

 



________

________

________

________

________

 


Opening book cost

39,556

395,852

435,408

389,890

389,890

 








 


Movements in the period:






 


Additions at cost

-

71,243

71,243

46,198

96,006

 


Dividends reinvested

Disposal of underlying investments by funds

135

(10,500)

 

-

(44,100)

135

(54,600)

-

(46,108)

556

(90,687)

 


Disposal of fund investments by way of secondary sales

-

(21,660)

(21,660)

-

-

 



________

________

________

________

________

 



29,191

401,335

430,526

389,980

395,765

 


Gains on disposal of underlying investments

315

16,026

16,341

19,669

39,643

 


Losses on liquidation of fund investments

-

(5,039)

(5,039)

-

-

 


Gains on disposal of fund investments by way of secondary sales

-

562

562

-

-

 



________

________

________

________

________

 


Closing book cost

29,506

412,884

442,390

409,649

435,408

 


Closing investment holding gains/ (losses)

2,201

(37,761)

(35,560)

(31,348)

(47,785)

 



________

________

________

________

________

 


Closing market value

31,707

375,123

406,830

378,301

387,623

 



________

________

________

________

________

 



 



 

9

Net asset value per ordinary share

31 March 2015

31 March 2014

30 September 2014

 


Basic:




 


Ordinary shareholders' funds

£422,543,545

£401,181,565

£409,101,646

 


Number of ordinary shares in issue

157,297,294

159,097,294

158,922,294

 


Net asset value per ordinary share

268.6p

252.2p

257.4p

 






 


During the six months ended 31 March 2015 the Company repurchased a total of 1,625,000 ordinary shares (31 March 2014 - 6,100,000, 30 September 2014 - 6,275,000) at a cost of £3,614,000 including expenses (31 March 2014 - £12,162,000, 30 September 2014 - £12,572,000). All of these shares were cancelled.

 



 


The NAV and ordinary shareholders' funds are calculated in accordance with the Company's articles of association. 

 

 

10

Bank loans





As at 31 March 2015, the Company had an £80 million (2014: £80 million) committed, multi-currency syndicated revolving credit facility led by The Royal Bank of Scotland plc of which nil (2014: nil) had been drawn down in euros. The facility expires in December 2016. The interest rate on this facility is LIBOR plus 2.75 and the commitment fee payable on non-utilisation is 1.0% per annum.

 

 

11

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 were no new related party transactions in the six months to 31 March 2015 over and above those disclosed in the Annual Report and Accounts.

 

 

12.    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 2015 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,

Personal Assets Trust Administration Company Limited, 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 2015 which comprises the Income Statement, the Reconciliation of Movements in Shareholders' Funds, the Balance Sheet, the Cash Flow 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 Conduct 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 Conduct 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 2015 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 Conduct Authority.

 

PricewaterhouseCoopers LLP

Chartered Accountants

Edinburgh

28 May 2015

 

Notes:

 

(a)  The maintenance and integrity of the Standard Life European Private Equity Trust PLC website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.

 

(b)  Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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