Interim Results
Standard Life Euro Pri Eqty Tst PLC
01 June 2005
1 June 2005
STANDARD LIFE EUROPEAN PRIVATE EQUITY TRUST PLC
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2005
Highlights
• The Company's net asset value per ordinary share ('NAV') rose by 14.4% to
121.1p (30 September 2004 - 105.9p) during the six months ended 31 March
2005.
• The closing mid-market price of the Company's ordinary shares on 31 March
2005 was 126.5p (30 September 2004 - 94.5p), a rise of 33.9% over the six
month period.
• In line with the Company's dividend policy, the Board has not declared an
interim dividend.
• Private equity is a long-term asset class. Since listing in May 2001, the
Company's NAV has materially out-performed the two most relevant stock
market indices, rising by 22.7% while the FTSE All-Share Index has fallen by
13.8% and the MSCI Europe Index (sterling adjusted) by 14.5%.
• As at 31 March 2005 the Company's net assets were £192.8 million (30
September 2004 - £168.6 million). The Company had interests in 35 private
equity funds with a value of £167.2 million (30 September 2004 - 30 funds
and £150.3 million) and held £25.6 million in cash and other net assets (30
September 2004 - £18.3 million).
• The valuation of the Company's private equity fund interests reflected a
strong performance, with unrealised gains during the period of £10.5 million
(six months ended 30 September 2004 - £8.9 million).
• Distributions received during the six months totalled a record £31.7
million (six months ended 30 September 2004 - £23.7 million), including
£15.2 million of realised gains and income (six months ended 30 September
2004 - £7.6 million). The average return on the Company's acquisition cost
of the realised investments rose to 1.9 times (year ended 30 September 2004
- 1.6 times).
• Draw downs made during the period rose marginally to £22.9 million (six
months ended 30 September 2004 - £21.0 million). Although there were signs
of increasing competition from corporates for transactions, the range and
size of opportunities being seen by private equity managers continues to
increase.
• The Company has made five new fund commitments since 30 September 2004,
totalling £73.4 million.
Quote from Scott Dobbie CBE, Chairman:-
'The Company made material progress over the six months to 31 March 2005. This
has continued since the period end, with the Company enjoying further
distributions and uplifts.'
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 Company's net asset value per ordinary share ('NAV') rose materially in the
six months ended 31 March 2005, increasing by 14.4% to 121.1p. The Company
benefited from some improvement in the macro-economic background in Europe,
relatively stable financial markets and a strong environment for
re-capitalisations and exits. This led to the receipt of a record value of
distributions and the generation of substantial gains and income from the
Company's portfolio of private equity fund interests. As at 31 March 2005 the
Company's net assets were £192.8 million (30 September 2004 - £168.6 million).
Private equity returns should be viewed over a long-term time horizon, but it
is, nevertheless, useful to compare the change in the Company's NAV with the
movement in the two most major relevant stock market indices in the period since
the Company's listing in May 2001. The Company's NAV rose by 22.7% over this
period, compared to falls of 13.8% in the FTSE All-Share index and 14.5% in the
MSCI Europe index (sterling adjusted).
The closing mid-market price of the Company's ordinary shares on 31 March 2005
was 126.5p (30 September 2004 - 94.5p). The Company's share price rose by 33.9%
over the six month period and the previous share price/NAV discount has moved to
a small premium.
In line with the Company's dividend policy, the Board has not declared an
interim dividend.
Valuation
The value of the Company's portfolio of private equity fund interests continued
to increase during the period, through a combination of new investment activity
less distributions and unrealised gains. As at 31 March 2005 the value of the
portfolio was £167.2 million (30 September 2004 - £150.3 million). The
unrealised gain on the portfolio for the six month period was £10.5 million (six
months ended 30 September 2004 - £8.9 million). This reflected a strong
performance with the majority of the Company's 35 private equity fund interests
reporting uplifts, driven by the improved economic climate and better trading
and cashflow at many of the underlying investee companies.
Fund interests equating to 93.9% of the portfolio, by value, were valued by
their respective fund managers as at 31 March 2005. This underlines the
Company's policy of ensuring that the valuation of the portfolio is as timely as
possible. The 35 private equity funds in the portfolio had holdings in 380
underlying investments (30 September 2004 - 30 funds and 366 underlying
investments).
Aggregate cash and money market balances rose to £26.9 million as at 31 March
2005 (30 September 2004 - £20.9 million). This was the result of £22.9 million
of new investment in the period, offset by a high level of distributions, with
£31.7 million received. At the end of the period, the Company had more than 86%
of its gross assets invested in private equity fund interests.
The euro/sterling exchange rate was broadly similar at the start and end of the
period and, overall, foreign exchange had a minimal impact on the NAV. As at 31
March 2005, the Company had £194.1 million of gross assets, of which £97.5
million (sterling equivalent) comprised euro denominated assets and £37.8
million (sterling equivalent) dollar denominated assets (30 September 2004 -
£171.2 million, £78.6 million and £35.5 million respectively).
Investment Activity
Deal flow and new investment activity for the private equity managers of the
funds in the Company's portfolio remained strong, although there has been
evidence of greater competition from corporates for new deals as many companies
move into a more expansionary phase. Notwithstanding, the range and size of
opportunities being seen by private equity managers continues to increase. A
total of £22.9 million of drawdowns were funded by the Company during the period
to 31 March 2005, which was the highest amount drawn in any half year period
since the six months to 30 September 2003.
As regards cash inflow, the six months ended 31 March 2005 saw the Company
receive a higher value of distributions than at any time since listing. This was
driven principally by the strong mergers and acquisitions market and by the
availability of debt at attractive prices for private equity transactions.
Significantly, £10.3 million of the total of £31.7 million of distributions
received in the period was generated from the re-capitalisation of existing
investments (six months ended 30 September 2004 - £6.7 million of the total of
£23.7 million).
Of the distributions received, a record £12.2 million was realised gains and
£3.0 million was income (six months ended 30 September 2004 - £5.4 million and
£2.2 million). Importantly, the average return on the Company's acquisition
cost of the realised investments rose to 1.9 times, which compares favourably
with the comparative figure for the last financial year of 1.6 times.
As reported in the Company's report and accounts for the financial year ended 30
September 2004, two new fund commitments totalling £20.6 million were made in
the quarter ended 31 December 2004. These were commitments of £10.3 million to
Apax Europe VI, subsequently increased to £17.2 million, and £10.3 million to
Industri Kapital 2004. Since 31 December 2004 the Company has continued to make
new private equity fund commitments, in line with its over-commitment strategy,
with £45.9 million committed to three funds. These were commitments of £15.5
million to Advent Global Private Equity V, £17.2 million to Barclays Private
Equity European Fund II and £13.2 million to Pomona Capital VI. All of the
above funds, with the exception of Pomona Capital VI, which is focused on
secondary private equity opportunities, are European buy-out funds. The Manager
has invested previously with the managers of all of the funds.
In light of the above new commitments, the Company's aggregate outstanding
commitments to its private equity fund interests had grown to £142.7 million as
at 31 March 2005 (30 September 2004 - £92.1 million). These commitments can be
expected to be drawn down over the next 3-4 years.
Outlook
The Company made material progress over the six months to 31 March 2005. This
has continued since the period end, with the Company enjoying further
distributions and uplifts. As regards drawdowns, the existing fund interests
continue to draw capital and this will be augmented by the new fund commitments
that have recently been made. Looking to the future, many of the leading
European private equity managers that the Manager has previously supported have
been, or are about to begin, fund raising, which should provide good
opportunities for additional new fund commitments.
Scott Dobbie CBE
Chairman
1 June 2005
STATEMENT OF TOTAL RETURN
for the 6 months to 31 March 2005 (unaudited)
Revenue Capital Total
£'000 £'000 £'000
TOTAL CAPITAL GAINS ON INVESTMENTS - 22,659 22,659
Currency gains on cash balances - 51 51
Income from unquoted investments 2,977 - 2,977
Income from AAA money market funds 247 - 247
Interest receivable 47 - 47
Other income 7 - 7
Investment management fee (77) (685) (762)
Administrative expenses (198) - (198)
________ ________ ________
RETURN ON ORDINARY ACTIVITIES BEFORE INTEREST AND TAXATION 3,003 22,025 25,028
Interest (9) (85) (94)
________ ________ ________
RETURN ON ORDINARY ACTIVITIES BEFORE TAXATION 2,994 21,940 24,934
Taxation (975) 231 (744)
________ ________ ________
RETURN ON ORDINARY ACTIVITIES AFTER TAXATION 2,019 22,171 24,190
Dividends payable in respect of ordinary shares - - -
________ ________ ________
TRANSFER TO RESERVES 2,019 22,171 24,190
________ ________ ________
RETURN PER ORDINARY SHARE 1.27p+ 13.93p 15.20p
________ ________ ________
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 2004 (unaudited)
Revenue Capital Total
£'000 £'000 £'000
TOTAL CAPITAL GAINS ON INVESTMENTS - 5,660 5,660
Currency losses 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 (audited)
for the year ended 30 September 2004
Revenue Capital Total
£'000 £'000 £'000
TOTAL CAPITAL GAINS ON INVESTMENTS - 20,143 20,143
Currency losses on cash balances - (31) (31)
Income from unquoted investments 3,508 - 3,508
Income from AAA money market funds 379 - 379
Interest receivable 89 - 89
Investment management fee (129) (1,162) (1,291)
Administrative expenses (360) - (360)
________ ________ ________
RETURN ON ORDINARY ACTIVITIES BEFORE INTEREST AND TAXATION 3,487 18,950 22,437
Interest (19) (172) (191)
________ ________ ________
RETURN ON ORDINARY ACTIVITIES BEFORE TAXATION 3,468 18,778 22,246
Taxation (1,040) 400 (640)
________ ________ ________
RETURN ON ORDINARY ACTIVITIES AFTER TAXATION 2,428 19,178 21,606
Dividends payable in respect of ordinary shares (1,910) - (1,910)
________ ________ ________
TRANSFER TO RESERVES 518 19,178 19,696
________ ________ ________
RETURN PER ORDINARY SHARE 1.53p+ 12.05p 13.58p
________ ________ ________
DIVIDEND PER ORDINARY SHARE 1.20p
________
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
2005 2004 2004
£'000 £'000 £'000
FIXED ASSETS
Unquoted investments 167,151 136,534 150,304
AAA money market funds 24,508 12,992 20,663
________ ________ ________
191,659 149,526 170,967
CURRENT ASSETS
Debtors 71 28 71
Cash and short term deposits 2,414 5,818 242
________ ________ ________
2,485 5,846 313
CREDITORS: Amounts falling due within one year (1,325) (510) (2,651)
________ ________ ________
NET CURRENT ASSETS/(LIABILITIES) 1,160 5,336 (2,338)
________ ________ ________
TOTAL ASSETS LESS CURRENT LIABILITIES 192,819 154,862 168,629
CREDITORS: Amounts falling due after more than one year - - -
________ ________ ________
192,819 154,862 168,629
________ ________ ________
CAPITAL AND RESERVES
Called up share capital - equity 319 319 319
Other reserves 192,465 154,508 168,275
________ ________ ________
TOTAL EQUITY SHAREHOLDERS' FUNDS 192,784 154,827 168,594
TOTAL NON-EQUITY SHAREHOLDERS' FUNDS 35 35 35
________ ________ ________
TOTAL SHAREHOLDERS' FUNDS 192,819 154,862 168,629
________ ________ ________
NET ASSET VALUE PER EQUITY SHARE 121.1p 97.3p 105.9p
CASHFLOW STATEMENT
(unaudited) (audited)
6 months to 6 months to Year to
30 September
31 March 31 March 2004
2005 2004
£'000 £'000 £'000
Net revenue on ordinary activities before taxation 3,003 1,251 3,487
(Increase)/decrease in accrued income (11) 19 (14)
Decrease in other debtors 11 13 4
Increase/(decrease) in other creditors 88 (283) 100
Irrecoverable foreign tax (77) - -
Fees charged to capital reserve (685) (561) (1,162)
________ ________ ________
NET CASH INFLOW FROM OPERATING ACTIVITIES 2,329 439 2,415
NET CASH OUTFLOW FROM SERVICING OF FINANCE (144) - (191)
NET CASH (OUTFLOW)/INFLOW FROM TAXATION (121) 255 (264)
________ ________ ________
FINANCIAL INVESTMENT
Purchase of investments (40,113) (18,860) (52,181)
Sale of investments 42,080 24,677 51,040
________ ________ ________
NET CASH INFLOW/(OUTFLOW) FROM FINANCIAL INVESTMENT 1,967 5,817 (1,141)
ORDINARY DIVIDENDS PAID (1,910) (875) (875)
________ ________ ________
NET CASH INFLOW/(OUTFLOW) BEFORE FINANCING 2,121 5,636 (56)
________ ________ ________
NET CASH OUTFLOW FROM FINANCING - - -
________ ________ ________
INCREASE/(DECREASE) IN CASH 2,121 5,636 (56)
________ ________ ________
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 2004 have been
consistently applied in the interim accounts.
3. Rates of exchange to sterling as at 31 March 2005 were: €1.4540 &
US$1.8896 (30 September 2004 - €1.4570 & US$1.8096 and 31 March 2004 -
€1.4956 & US$1.8379).
4. The number of ordinary shares in issue as at 31 March 2005 was
159,150,000 (30 September 2004 - 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 2004 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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