Interim Results
Standard Life Euro Pri Eqty Tst PLC
02 June 2004
2 June 2004
STANDARD LIFE EUROPEAN PRIVATE EQUITY TRUST PLC
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2004
Highlights
• The six months ended 31 March 2004 saw an improving European
macro-economic environment and relatively stable capital markets.
Against this background the Company has made good progress. As at 31
March 2004 the Company's net asset value per ordinary share ('NAV')
was 97.3p, a 4.0% increase over the NAV of 93.6p as at 30 September
2003.
• The closing mid-market price of the Company's ordinary shares on 31
March 2004 was 85.5p (30 September 2003 - 82.0p).
• While the Company does not have a defined benchmark, the Board
believes it is relevant to compare the change in the NAV with the
movement in the two relevant major stock market indices in the period
since the Company's listing on 29 May 2001. The Company's NAV has
fallen by 1.4% over this period, compared to falls of 23.0% in the
FTSE All-Share index and 25.0% in the MSCI Europe index (sterling
adjusted)).
• In line with the Company's dividend policy, the Board has not declared
an interim dividend.
• The period to 31 March 2004 saw the Company receive a greater value of
distributions than at any time since listing. The portfolio generated
a total of £16.9 million of distributions in the period to 31 March
2004 (six months ended 31 March 2003 - £5.0 million and six months
ended 30 September 2003 - £8.6 million), of which £6.3 million was
realised gains and £1.3 million was income. The average return on the
Company's acquisition cost of the realised investments was 1.8 times,
which compares favourably with the comparative figure for the last
financial year of 1.3 times.
• New investment activity for the funds in the Company's portfolio was
lower in the period than in the preceding 18 months, when volumes were
higher and pricing more attractive. Nevertheless, total draw downs by
the Company's portfolio of fund interests were £18.9 million; this
compares with £24.6 million and £28.0 million in the first and second
halves respectively of the last financial year.
• As at 31 March 2004 the Company had interests in 30 private equity
funds with a value of £136.5 million (30 September 2003 - £126.9
million) and held £18.4 million in cash and other net assets (30
September 2003 - £22.0 million). As at 31 March 2004 the Company had
£68.5 million (sterling equivalent) of euro denominated assets
(30 September 2003 - £72.1 million sterling equivalent).
Quote from Scott Dobbie CBE, Chairman:-
'Since the period end, the Company has continued to enjoy the benefit of a
steady flow of distributions from realisations and re-capitalisations of
existing investments. The improving European macro-economic environment should
also assist trading and cash flow at many of the underlying investee companies
in the Company's portfolio and consequentially the generation of unrealised
value. As regards draw downs, private equity managers generally are reporting
slower deal flow and new investment activity compared to the buoyant conditions
reported previously.'
For further information please contact:-
Jonny Maxwell/Peter McKellar of Standard Life Investments (Private Equity)
Limited (on 0131 245 0055)
Chairman's Statement
Results and performance
The six months ended 31 March 2004 saw an improving European macro-economic
environment and relatively stable capital markets. As indicated in my statement
at the time of the publication of the Company's full year results in December
2003, these conditions have driven an increase in mergers and acquisitions
generally and realisation activity within the European private equity market.
Against this background the Company has made good progress. As at 31 March 2004
the Company's NAV was 97.3p, a 4.0% increase over the NAV of 93.6p as at 30
September 2003. The increase in NAV was principally the result of aggregate
realised and unrealised gains for the period of 7.3p (£11.6 million), offset by
an unrealised foreign exchange loss of 3.8p (£6.1 million).
In line with the Company's dividend policy, the Board has not declared an
interim dividend.
Private equity returns should be viewed over a long-term time horizon. While the
Company does not have a defined benchmark, the Board believes it is relevant to
compare the change in the NAV with the movement in the two relevant major stock
market indices in the period since the Company's listing on 29 May 2001. The
Company's NAV has fallen by 1.4% over this period, compared to falls of 23.0% in
the FTSE All-Share index and 25.0% in the MSCI Europe index (sterling adjusted).
The closing mid-market price of the Company's ordinary shares on 31 March 2004
was 85.5p (30 September 2003 - 82.0p).
Valuation
The value of the Company's portfolio of private equity fund interests was £136.5
million as at 31 March 2004 (30 September 2003 - £126.9 million). The movement
in the unrealised value of the portfolio over the six month period showed an
increase of £0.1 million. This reflected a number of write-ups, partially offset
by a few specific company write-downs, made by underlying fund managers and a
£4.4 million unrealised foreign exchange loss on the portfolio.
It is pleasing to be able to report that, overall, managers reported increasing
valuations for their funds. This reflects improvements in trading and cash flow
at many of the investee companies, the majority of which are buy-outs acquired
on attractive terms in recent years. Of the 30 fund interests held by the
Company, 25 of the funds, equating to 92.1% of the portfolio by value, were
valued by their respective fund managers as at 31 March 2004 and 100% of the
portfolio by value was valued no earlier than 31 December 2003. This continues
the policy of the Company and its Manager of seeking to ensure that the
valuation of the Company's portfolio is as timely as possible.
The Company had aggregate cash and money market holdings of £18.8 million as at
31 March 2004 (30 September 2003 - £23.1 million). The decline in cash and money
market holdings over the period reflects the Company's continuing investment
programme, with £2.0 million of net investment being made, together with a £1.7
million unrealised foreign exchange loss. The Board anticipates that the
remaining cash will be invested over the short-term. As at 31 March 2004, the
Company's £40 million committed revolving credit facility with The Royal Bank of
Scotland plc remained undrawn.
During the six months under review the euro/sterling foreign exchange rate fell
by 4.6% from £1/€1.4267 (30 September 2003) to £1/€1.4956 (31 March 2004). As
at 31 March 2004, the Company had £155.4 million of gross assets, of which £68.5
million (sterling equivalent) comprised euro denominated assets (30 September
2003 - £150.3 million and £72.1 million (sterling equivalent) respectively.
Investment activity
As I predicted in my last report, deal flow and new investment activity for the
private equity managers of the funds in the Company's portfolio were lower in
the period under review than in the preceding 18 months, when volumes were
higher and pricing more attractive. Nevertheless, total draw downs by the
portfolio of fund interests remained healthy at £18.9 million. This compares
with £24.6 million and £28.0 million in the first and second halves respectively
of the last financial year.
As regards cash inflow, the six months to 31 March 2004 saw the Company receive
a greater value of distributions than at any time since listing. This reflects
the success of many private equity managers in realising investments, against a
background of the improving macro-economic environment and less volatile capital
markets. The portfolio generated a total of £16.9 million of distributions in
the period to 31 March 2004 (six months ended 31 March 2003 - £5.0 million and
six months ended 30 September 2003 - £8.6 million), of which £6.3 million was
realised gains and £1.3 million was income. Accordingly, the average return on
the Company's acquisition cost of the realised investments was 1.8 times, which
compares favourably with the comparative figure for the last financial year of
1.3 times.
The distributions received by the Company came from a mixture of full and
partial realisations and re-capitalisations of existing investments. Notable
transactions included the sales of Clondalkin, Riverdeep, Cementbouw and the
re-capitalisation of Halfords.
As at 31 March 2004 the Company had interests in a total of 356 underlying
investments through its portfolio of private equity fund interests (30 September
2003 - 347 underlying investments). The Board continues to believe that such
diversification is a strength, whilst allowing the Company to focus on
optimising portfolio returns from concentrating on a relatively limited number
of fund interests.
No new commitments were made during the period. This remains in line with the
Company's strategy that, having made aggregate new commitments of £215.9 million
to private equity funds since the Company's listing in May 2001 and having met
the Board's target for over-commitment, the pace of new commitments will be
significantly slower. During the coming months the Board and the Manager will
review the Company's future commitment strategy, in light of the actual and
anticipated draw downs made and distributions received by the Company.
The Company's aggregate outstanding commitments to its existing 30 private
equity fund interests were £116.1 million as at 31 March 2004 (30 September 2003
- £141.6 million). These commitments can be expected to be drawn down over the
next 3 years.
Corporate governance
During the six month period the Board reviewed the revised Combined Code and the
AITC Code of Corporate Governance. As a result, I have ceded the chairmanship of
the audit committee to Hamish Buchan, the senior independent director.
Outlook
Since the period end, the Company has continued to enjoy the benefit of a steady
flow of distributions from realisations and re-capitalisations of existing
investments. This has generated further net realised gains and income for the
Company. The improving European macro-economic environment should also assist
trading and cash flow at many of the underlying investee companies in the
Company's portfolio and consequentially the generation of unrealised value for
the private equity funds in which the Company is invested. As regards draw
downs, private equity managers generally are reporting slower deal flow and new
investment activity across Europe compared to the buoyant conditions reported
previously.
The Board views the Company's prospects with confidence.
Scott Dobbie CBE
Chairman
STATEMENT OF TOTAL RETURN
for the 6 months to 31 March 2004 (unaudited)
Revenue Capital Total
£'000 £'000 £'000
TOTAL CAPITAL GAINS ON INVESTMENTS - 5,660 5,660
Currency (losses)/gains on cash balances - (147) (147)
Income from unquoted investments 1,314 - 1,314
Income from AAA money market funds 166 - 166
Interest receivable 24 - 24
Investment management fee (62) (561) (623)
Administrative expenses (191) - (191)
RETURN ON ORDINARY ACTIVITIES BEFORE INTEREST AND TAXATION 1,251 4,952 6,203
Interest (10) (86) (96)
RETURN ON ORDINARY ACTIVITIES BEFORE TAXATION 1,241 4,866 6,107
Taxation (372) 194 (178)
RETURN ON ORDINARY ACTIVITIES AFTER TAXATION 869 5,060 5,929
Dividends payable in respect of ordinary shares - - -
TRANSFER TO RESERVES 869 5,060 5,929
RETURN PER ORDINARY SHARE 0.55p+ 3.18p 3.73p
DIVIDEND PER ORDINARY SHARE -
The revenue column of this statement represents the revenue account of the
Company.
All revenue and capital items in the above statement derive from continuing
operations.
+ Earnings per share - basic and diluted
STATEMENT OF TOTAL RETURN
for the 6 months to 31 March 2003 (unaudited)
Revenue Capital Total
£'000 £'000 £'000
TOTAL CAPITAL GAINS ON INVESTMENTS - 3,711 3,711
Currency gains on cash balances - 137 137
Income from unquoted investments 705 - 705
Income from AAA money market funds 775 - 775
Interest receivable 89 - 89
Investment management fee (59) (532) (591)
Administrative expenses (127) - (127)
RETURN ON ORDINARY ACTIVITIES BEFORE INTEREST AND TAXATION 1,383 3,316 4,699
Interest - - -
RETURN ON ORDINARY ACTIVITIES BEFORE TAXATION 1,383 3,316 4,699
Taxation (416) 160 (256)
RETURN ON ORDINARY ACTIVITIES AFTER TAXATION 967 3,476 4,443
Dividends payable in respect of ordinary shares - - -
TRANSFER TO RESERVES 967 3,476 4,443
RETURN PER ORDINARY SHARE 0.61p+ 2.18p 2.79p
DIVIDEND PER ORDINARY SHARE -
The revenue column of this statement represents the revenue account of the
Company.
All revenue and capital items in the above statement derive from continuing
operations.
+ Earnings per share - basic and diluted
STATEMENT OF TOTAL RETURN (audited)
for the year ended 30 September 2003
Revenue Capital Total
£'000 £'000 £'000
TOTAL CAPITAL GAINS ON INVESTMENTS - 5,604 5,604
Currency gains on cash balances - 47 47
Income from unquoted investments 1,133 - 1,133
Income from AAA money market funds 903 - 903
Interest receivable 109 - 109
Investment management fee (118) (1,063) (1,181)
Administrative expenses (391) - (391)
RETURN ON ORDINARY ACTIVITIES BEFORE INTEREST AND TAXATION 1,636 4,588 6,224
Interest (12) (58) (70)
RETURN ON ORDINARY ACTIVITIES BEFORE TAXATION 1,624 4,530 6,154
Taxation (488) 336 (152)
RETURN ON ORDINARY ACTIVITIES AFTER TAXATION 1,136 4,866 6,002
Dividend in respect of ordinary shares (875) - (875)
TRANSFER TO RESERVES 261 4,866 5,127
RETURN PER ORDINARY SHARE 0.71p+ 3.06p 3.77p
DIVIDEND PER ORDINARY SHARE 0.55p
The revenue column of this statement represents the revenue account of the
Company.
All revenue and capital items in the above statement derive from continuing
operations.
+ Earnings per share - basic and diluted
BALANCE SHEET
(unaudited) (audited)
At 31 March At 31 March At 30 September
2004 2003 2003
£'000 £'000 £'000
FIXED ASSETS
Unquoted investments 136,534 106,138 126,867
AAA money market funds 12,992 42,077 22,816
149,526 148,215 149,683
CURRENT ASSETS
Debtors 28 140 316
Cash and short term deposits 5,818 878 329
5,846 1,018 645
CREDITORS: Amounts falling due within one year (510) (984) (1,395)
NET CURRENT ASSETS/(LIABILITIES) 5,336 34 (750)
TOTAL ASSETS LESS CURRENT LIABILITIES 154,862 148,249 148,933
CREDITORS: Amounts falling due after more than one year - - -
154,862 148,249 148,933
CAPITAL AND RESERVES
Called up share capital - equity 319 319 319
Other reserves 154,508 147,895 148,579
TOTAL EQUITY SHAREHOLDERS' FUNDS 154,827 148,214 148,898
TOTAL NON-EQUITY SHAREHOLDERS' FUNDS 35 35 35
TOTAL SHAREHOLDERS' FUNDS 154,862 148,249 148,933
NET ASSET VALUE PER EQUITY SHARE 97.3p 93.1p 93.6p
CASHFLOW STATEMENT
(unaudited) (audited)
6 months to 6 months to Year to
31 March 31 March 30 September
2004 2003 2003
£'000 £'000 £'000
Net revenue on ordinary activities before taxation 1,251 1,383 1,636
Decrease in accrued income 19 75 137
Increase/(Decrease) in other debtors 13 (23) (7)
(Decrease)/Increase in creditors (283) 22 52
Fees charged to capital reserve (561) (532) (1,063)
NET CASH INFLOW FROM OPERATING ACTIVITIES 439 925 755
NET CASH (OUTFLOW) FROM SERVICING OF FINANCE - - (5)
NET CASH INFLOW/(OUTFLOW) FROM TAXATION 255 (607) (1,014)
FINANCIAL INVESTMENT
Purchase of investments (18,860) (33,256) (61,158)
Sale of investments 24,677 35,614 63,941
NET CASH INFLOW FROM FINANCIAL INVESTMENT 5,817 2,358 2,783
ORDINARY DIVIDENDS PAID (875) (1,910) (1,910)
NET CASH INFLOW BEFORE FINANCING 5,636 766 609
FINANCING
Buyback of ordinary shares - (185) (185)
Expenses of issue - (303) (605)
NET CASH OUTFLOW FROM FINANCING - (488) (790)
INCREASE/(DECREASE) IN CASH 5,636 278 (181)
Notes:
1. Standard Life European Private Equity Trust PLC is an investment company
managed by Standard Life Investments (Private Equity) Limited 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 The Standard Life Assurance Company.
2. The accounts have been prepared under the historical cost convention,
modified to include the revaluation of fixed asset investments. The
accounts have been prepared in accordance with applicable accounting
standards and the Statement of Recommended Practice 'Financial Statements
of Investment Trust Companies' issued in January 2003 on the assumption
that approval as an investment trust will continue to be granted. The
accounting policies used for the year ended 30 September 2003 have been
consistently applied in the interim accounts.
3. Rates of exchange to sterling as at 31 March 2004 were: €1.4956 & US$1.8379
(30 September 2003 - €1.4267 & US$1.6614 and 31 March 2003 - €1.4485 &
US$1.5806).
4. The number of ordinary shares in issue as at 31 March 2004 was 159,150,000
(30 September 2003 - 159,150,000). The return per ordinary share is based
on the weighted average number of ordinary shares in issue.
5. No interim dividend has been declared.
6. The financial information for the year ended 30 September 2003 has been
extracted from the report and accounts of the Company which have been filed
with the Registrar of Companies. The independent auditors' report on those
accounts was unqualified.
The statement of total return, balance sheet and cashflow statement do not
represent full accounts in accordance with section 240 of the Companies Act
1985.
7. The interim report and accounts will be posted to shareholders and copies
will be available from the Manager - Standard Life Investments (Private
Equity) Limited, 1 George Street, Edinburgh EH2 2LL.
for Standard Life European Private Equity Trust PLC,
Edinburgh Fund Managers plc, SECRETARY
END
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