Half Yearly Report

RNS Number : 8096F

Standard Life Euro Pri Eqty Tst PLC

29 May 2013

 

STANDARD LIFE EUROPEAN PRIVATE EQUITY TRUST PLC

INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2013

Highlights

·     The Company's undiluted net asset value per ordinary share ("NAV") rose by 7.2% to 243.9p during the six months to 31 March 2013 (diluted NAV - 240.9p). Including the dividend paid in February 2013, the NAV total return for the period was 8.0%.

·     The 16.3p rise in NAV during the period included 3.6p of net realised gains and income from the Company's portfolio of 40 private equity fund interests, 3.8p of unrealised gains on a constant exchange rate basis and 12.9p of positive exchange rate movements on the portfolio.

·     The closing mid-market price of the Company's ordinary shares on 31 March 2013 was 185.3p, an increase of 14.1% over the period and a discount of 23.1% to the diluted NAV.

·     At 31 March 2013 the Company's net assets were £394.5 million. In preparing the portfolio valuation, 99.4% by value of the portfolio was valued at 31 March 2013.

·     In line with activity levels in the European private equity market, the Company funded £21.1 million of draw downs and received £28.5 million of distributions during the period, generating a net cash inflow from investment activities of £7.4 million. At 31 March 2013 the Company had a cash balance of £21.5 million.

·     On 31 December 2012 the Company entered into a new £80 million revolving credit facility, replacing the existing facility. The new debt facility expires on 31 December 2016.

·     The Company made three new fund commitments during the period with commitments of €20.0 million to Advent Global Private Equity VII, €30.0 million to IK VII and $35.0 million to TowerBrook Investors IV. In addition, by way of secondary transactions the Company acquired an original commitment of €7.0 million to Charterhouse Capital Partners IX and sold an original commitment of €30.0 million to Charterhouse Capital Partners VIII.

·     At 31 March 2013 the Company had £177.3 million of outstanding commitments.

·     During the period from 31 March 2013 to 27 May 2013 the Company funded £1.9 million of draw downs and received £4.4 million of distributions. At 27 May 2013 the Company's net cash balance was £20.8 million and its total outstanding commitments were £177.4 million.

For further information please contact:-

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

CHAIRMAN'S STATEMENT

Results and performance

This is my first statement following my appointment as Chairman in January 2013. During the six months to 31 March 2013 the Company continued to experience a challenging environment for European private equity. Despite rising confidence in late 2012, transactional activity remained subdued across Europe, as broader mergers and acquisitions activity was held back by weak macro-economic and uncertain political environments. The Company's net asset value per ordinary share ("NAV") rose by 7.2% to 243.9p (diluted - 240.9p), from 227.6p at 30 September 2012 (diluted - 224.9p).  At 31 March 2013 the Company's net assets were £394.5 million (30 September 2012 - £369.7 million).

The 16.3p rise in NAV during the period comprised 3.6p of net realised gains and income from the Company's portfolio of 40 private equity fund interests, 3.8p of unrealised gains on a constant exchange rate basis and 12.9p of positive exchange rate movements on the portfolio, partially offset by 4.0p of costs, the final dividend and other movements.

The closing mid-market price of the Company's ordinary shares on 31 March 2013 was 185.3p, an increase of 14.1% over the period and a discount of 23.1% 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 12.7% and 9.0% respectively.

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

Investment activity

The value of all European private equity investments undertaken during the six months to 31 March 2013 was similar to the previous two six month periods, with  €34.3 billion of transactions by enterprise value announced (six months ended 31 March 2012 and six months ended 30 September 2012 - €32.9 billion and €34.2 billion respectively). However, the final quarter of 2012 was dominated by an increase in larger buy-out transactions of over €1 billion in enterprise value, while the first quarter of 2013 saw a fall in activity across all segments, as renewed concerns about the European macro-economic environment and the euro impacted confidence.

The Company funded £21.1 million of draw downs and received £28.5 million of distributions during the period, thereby generating a net cash inflow from investment activities of £7.4 million.  The distributions received generated net realised gains and income of £14.1 million. In addition, the Company realised a book loss of £6.5 million on the commencement of the liquidation process for two older funds, Alchemy Investment Plan and the Candover 1997 Fund, where all of the underlying investments had been realised. Importantly, the book loss had previously been provided for in the Company's valuation of the respective fund interests.

At 31 March 2013 the Company had a cash balance of £21.5 million and outstanding commitments of £177.3 million.

Valuation

The Company's portfolio comprises 40 private equity fund interests. At 31 March 2013 the value of this portfolio was £375.7 million, of which net unrealised gains arising during the period were £27.0 million.  99.4% by value of the Company's private equity fund interests were valued by the relevant fund manager at 31 March 2013.

Unrealised gains on a constant exchange rate basis were £6.1 million (1.7% of the opening portfolio valuation). The uplift arose principally from a combination of positive            earnings growth at many underlying investee companies and a rise in listed comparable valuation multiples. Exchange rate movements contributed an unrealised gain of £20.9 million (5.7% of the opening portfolio valuation). During the period sterling depreciated by 5.8% against the euro and by 6.0% against the US dollar.

Investment strategy

In line with the statement made at the time of the preliminary announcement in December 2012, the Company has been more flexible in the recent use of its capital resources, undertaking transactions in the secondary fund market and share buy-backs, as well as traditional investments in primary fund commitments.

The Company made three new primary fund commitments during the period: €20.0 million to Advent Global Private Equity VII in November 2012, €30.0 million to IK VII in December 2012 and $35.0 million to TowerBrook Investors IV in February 2013.

In addition, the Company undertook two secondary fund transactions. In January 2013 the Company completed the purchase of an original commitment of €7.0 million to Charterhouse Capital Partners IX, a fund the Company was not able to commit to when it was raised in 2009. The fund interest was acquired at a 5% discount to the 30 June 2012 valuation of the fund, adjusted for subsequent cashflows. The purchase price for the interest was £2.8 million and the Company assumed £2.8 million of outstanding commitments. As part of a portfolio rebalancing exercise, and given the significant exposure to the fund and its underlying investments, the Company sold 50% of its original commitment to Charterhouse Capital Partners VIII in February 2013. The fund interest was sold at an 11% discount to the 30 September 2012 valuation of the fund, adjusted for subsequent cashflows. The sale price for the interest was £15.6 million and the Company was released from £3.4 million of outstanding commitments.

Finally, the Company acquired 1.95 million ordinary shares in the Company through two share buy-back transactions, for a total of £3.6 million, at an average price of 183.3p per share. The ordinary shares acquired have been cancelled.

Recent activity

During the period from 31 March 2013 to 27 May 2013 the Company funded £1.9 million of draw downs and received £4.4 million of distributions. The Company has made no new fund commitments. At 27 May 2013 the Company's net cash balance was £20.8 million and its total outstanding commitments were £177.4 million.

Outlook

The weak macro-economic environment across Europe continues to impact transactional activity with respect to new deals and exits. However, the fund managers of the Company's private equity fund interests continue to report growth in earnings at many of their underlying investee companies. This is likely to support further growth in the valuation of the Company's fund investments should the recent rise in listed equity markets prove sustainable.

Ed Warner OBE

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 2013 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 10.6% of the Company's gross assets by valuation and 8.0% by cost at 31 March 2013.

Portfolio composition and performance

At 31 March 2013 the Company's portfolio comprised 40 private equity fund interests with a value of £375.7 million which, together with its current assets less liabilities, resulted in the Company having net assets of £394.5 million. This represented an undiluted NAV of 243.9p (diluted NAV - 240.9p).

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 2013 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 40 private equity funds in which the Company is invested, 39 of the funds, or 99.4% of the portfolio by value, were valued by their fund managers at 31 March 2013. 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 £365.9 million at 30 September 2012 to £375.7 million at 31 March 2013. A breakdown of the £9.8 million movement in the Company's portfolio during the period is detailed in the valuation bridge shown on page 6 of the interim report. The increase in value was driven by £21.1 million of new investments, £20.9 million of unrealised foreign exchange gains, £6.1 million of unrealised gains on the investment portfolio on a constant exchange rate basis and £1.8 million of realised gains and other movements. This was partially offset by £40.1 million of realisation proceeds, comprising £24.7 million of distribution proceeds from the Company's private equity fund interests and £15.4 million of proceeds from the partial sale of the Company's interest in Charterhouse Capital Partners VIII. During the period to 31 March 2013 sterling depreciated by 5.8% relative to the euro and by 6.0% relative to the US dollar.

Investment activity

European private equity activity levels remained subdued during the six month period as a result of the ongoing European sovereign debt crisis. This was reflected in the relatively low level of draw downs by, and distributions from, the Company's portfolio of fund interests, which resulted in a net cash inflow of £7.4 million from investment activities. This lower level of new investment activity is expected to continue given the current macro-economic and political uncertainty in Europe. Notwithstanding, the maturity of the underlying investment portfolio should see realisation activity continue.

Secondary activity

The Company undertook two secondary fund transactions during the six month period.

In January 2013 the Company completed the purchase of an original commitment of €7.0 million to Charterhouse Capital Partners IX. Charterhouse is one of the oldest private equity firms in the UK and has a long track record of delivering superior returns for investors through its focus on the large segment of the European buyout market. The Charterhouse IX portfolio is performing well and should benefit from having been invested post the financial crisis. The fund interest was acquired at a 5% discount to the 30 June 2012 valuation of the fund, adjusted for subsequent cash flows. The purchase price for the interest was £2.8 million and the Company assumed £2.8 million of outstanding commitments.

As part of a portfolio rebalancing exercise, and given the significant exposure to the fund and its underlying investments, the Company sold 50% of its original commitment to Charterhouse Capital Partners VIII in February 2013. Charterhouse VIII has a robust portfolio, but the fund has been impacted by the fact that much of the portfolio was acquired prior to the financial crisis, often at full prices, which, in the Manager's opinion, is likely to limit the potential for significant value appreciation. The fund interest was sold at an 11% discount to the 30 September 2012 valuation, adjusted for subsequent cash flows, creating a realised loss of £2.0 million. The sale price for the interest was £15.6 million and the Company was released from £3.4 million of outstanding commitments.

Fund commitments

The Company made three new primary fund commitments during the six month period, with a €20.0 million commitment to Advent Global Private Equity VII in November 2012, a €30.0 million commitment to IK VII in December 2012 and a $35.0 million commitment to TowerBrook Investors IV in February 2013. The new commitments were made in light of the Company's positive net cash flow and the low level of aggregate outstanding commitments.

It is envisaged that further new commitments will be made during 2013, 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 2013 the Company had £177.3 million of outstanding commitments. After adjusting for excess available liquid resources, such outstanding commitments were equivalent to 19.2% of the Company's net assets.

Analysis of underlying investments

At 31 March 2013 the Company's 40 private equity fund interests were collectively invested in a total of 540 underlying investments. The diversification of the underlying investments at 31 March 2013 and 30 September 2012 is set out in the four bar charts on page 8 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 2013. The UK still remains the single largest geographic exposure, although it has fallen from 64.0% at the time of the Company's listing in 2001 to 23.0% at 31 March 2013, 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 level of private equity transactions 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 83.0% of the portfolio valued at or above cost.

Valuation and leverage multiple analysis

The bar charts on 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 2012, which in aggregate represented 49.1% of the Company's then net assets. This analysis is at 31 December 2012 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 9-10x EV/EBITDA and 3-4x Debt/EBITDA respectively. These compare to the valuation and leverage multiples for the top fifty underlying portfolio companies at 30 June 2012 of 9-10x EV/EBITDA and 3-4x Debt/EBITDA. 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 2012.

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 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, 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 2013.

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

Edmond Warner OBE

Chairman

28 May 2013

FINANCIAL SUMMARY

Performance (Capital only)	As at	As at
	31 March 2013	30 September 2012	% Change
Net asset value per ordinary share ("NAV") (undiluted)	243.9p	227.6p	7.2
NAV (diluted)	240.9p	224.9p	7.1
Share price	185.3p	162.4p	14.1
FTSE All-Share Index (1)	3,380.6	2,998.9	12.7
MSCI Europe Index (in euros) (1)	100.9	92.6	9.0
Discount (difference between share price and diluted net asset value)	23.1%	27.8%

⁽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	15.4	28.4	(2.6)	6.4
NAV (diluted)	8.0	4.6	(1.3)	8.6
FTSE All-Share Index (1)	14.5	16.8	6.7	5.0
MSCI Europe Index (in euros) (1)	10.3	15.4	2.8	1.6

⁽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 2013	High	Low
Share price (mid)	200.0p	157.5p

INCOME STATEMENT

	Six months to 31 March 2013 (unaudited)
	Revenue	Capital		Total
	£'000	£'000		£'000
Gains on investments	-	28,851	28,851
Currency losses	-	(227)	(227)
Income (Note 4)	3,878	-	3,878
Investment management fee (Note 5)	(153)	(1,375)	(1,528)
Administrative expenses	(371)	-	(371)
	________	________	________
Net return before finance costs and taxation	3,354	27,249	30,603
Finance costs	(97)	(869)	(966)
	________	________	________
Return on ordinary activities before taxation	3,257	26,380	29,637
Taxation	(340)	234	(106)
	________	________	________
Return on ordinary activities after taxation	2,917	26,614	29,531
	________	________	________
Net return per ordinary share (Note 7)	1.79p	16.36p	18.15p
	________	________	________
Diluted net return per ordinary share (Note 7)	1.78p	16.21p	17.99p
	________	________	________

___________________________________________________________________________________

	Six months to 31 March 2012 (unaudited)
	Revenue	Capital		Total
	£'000	£'000		£'000
Gains on investments	-	15,087	15,087
Currency gains	-	537	537
Income (Note 4)	948	-	948
Investment management fee (Note 5)	(151)	(1,357)	(1,508)
Administrative expenses	(451)	-	(451)
	________	________	________
Net return before finance costs and taxation	346	14,267	14,613
Finance costs	(106)	(964)	(1,070)
	________	________	________
Return on ordinary activities before taxation	240	13,303	13,543
Taxation	(64)	55	(9)
	________	________	________
Return on ordinary activities after taxation	176	13,358	13,534
	________	________	________
Net return per ordinary share (Note 7)	0.11p	8.26p	8.37p
	________	________	________
Diluted net return per ordinary share (Note 7)	0.11p	8.23p	8.34p
	________	________	________

_________________________________________________________________________________

		for the year ended 30 September 2012 (audited)
		Revenue	Capital	Total
		£'000	£'000	£'000
Losses on investments		-	(583)	(583)
Currency gains		-	1,447	1,447
Income (Note 4)		5,987	-	5,987
Investment management fee (Note 5)		(292)	(2,633)	(2,925)
Administrative expenses		(696)	-	(696)
		_________	_________	_________
Net return before finance costs and taxation		4,999	(1,769)	3,230
Finance costs		(195)	(1,749)	(1,944)
		_________	_________	_________
Return on ordinary activities before taxation		4,804	(3,518)	1,286
Taxation		(946)	918	(28)
		_________	_________	_________
Return on ordinary activities after taxation		3,858	(2,600)	1,258
		_________	_________	_________
Net return per ordinary share (Note 7)		2.38p	(1.60p)	0.78p
		_________	_________	_________
Diluted net return per ordinary share (Note 7)		2.37p	(1.59p)	0.78p
		_________	_________	_________

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 or losses are recognised in the Income Statement.

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 2013 (unaudited)	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 October 2012	359	80,954	79,148	3	199,437	9,761	369,662
Total recognised gains	-	-	-	-	26,614	2,917	29,531
Conversion of founder A shares	-	133	-	-	-	-	133
Cancelation of deferred shares	(30)	-	(30)	60	-	-	-
Scrip issue of ordinary shares	2	1,972	-	-	-	-	1,974
Buy back of ordinary shares	(4)	-	(3,582)	4	-	-	(3,582)
Dividends paid	-	-	-	-	-	(3,247)	(3,247)
	_______	_______	_______	_______	_______	_______	_______
Balance at 31 March 2013	327	83,059	75,536	67	226,051	9,431	394,471
	_______	_______	_______	_______	_______	_______	_______
For the six months ended 31 March 2012 (unaudited)	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 October 2011	357	79,817	79,148	3	202,037	8,002	369,364
Total recognised gains	-	-	-	-	13,358	176	13,534
Scrip issue of ordinary shares	2	1,137	-	-	-	-	1,139
Dividends paid	-	-	-	-	-	(2,099)	(2,099)
	_______	_______	_______	_______	_______	_______	_______
Balance at 31 March 2012	359	80,954	79,148	3	215,395	6,079	381,938
	_______	_______	_______	_______	_______	_______	_______
For the year ended 30 September 2012 (audited)
Balance at 1 October 2011	357	79,817	79,148	3	202,037	8,002	369,364
Total recognised gains	-	-	-	-	(2,600)	3,858	1,258
Scrip Issue of ordinary shares	2	1,137	-	-	-	-	1,139
Dividends paid	-	-	-	-	-	(2,099)	(2,099)
	_______	_______	_______	_______	_______	_______	_______
Balance at 30 September 2012	359	80,954	79,148	3	199,437	9,761	369,662
	_______	_______	_______	_______	_______	_______	_______

BALANCE SHEET

	As at	As at	As at
	31 March 2013	31 March 2012	30 September 2012
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Non-current assets
Investments at fair value through profit or loss (Note 8)	375,733	395,987	365,897
	________	________	________
Current assets
Debtors	930	736	587
Cash and short term deposits	21,481	1,475	3,489
	________	________	________
	22,411	2,211	4,076
Creditors: amounts falling due within one year
Bank loan (Note 10)	-	(15,836)	-
Other creditors	(3,673)	(424)	(311)
	________	________	________
	(3,673)	(16,260)	(311)
Net current assets/ (liabilities)	18,738	(14,049)	3,765
	________	________	________
Total assets less current liabilities	394,471	381,938	369,662
	________	________	________
Capital and reserves
Called up share capital	327	359	359
Share premium	83,059	80,954	80,954
Special reserve	75,536	79,148	79,148
Capital redemption reserve	67	3	3
Capital reserves	226,051	215,395	199,437
Revenue reserve	9,431	6,079	9,761
	________	________	________
Total shareholders' funds	394,471	381,938	369,662
	________	________	________
Analysis of shareholders' funds
Equity interests (ordinary shares)	394,467	381,904	369,628
Non-equity interests (founder shares)	4	34	34
	________	________	________
Total shareholders' funds	394,471	381,938	369,662
	________	________	________
Net asset value per equity share (Note 9)	243.9p	235.2p	227.6p
Net asset value per equity share (diluted) (Note 9)	240.9p	232.3p	224.9p

CASHFLOW STATEMENT

		Six months to	Six months to	Year to
		31 March 2013	31 March 2012	30 September 2012
		(unaudited)	(unaudited)	(audited)
		£'000	£'000	£'000
Net return before finance costs and taxation		30,603	14,613	3,230
Adjusted for:
Gains on disposal of unquoted investments		(1,866)	(14,290)	(31,893)
Revaluation of unquoted investments		(26,987)	(797)	32,476
Currency losses/ (gains)		227	(537)	(1,447)
(Increase)/ decrease in debtors		(343)	(28)	270
(Decrease)/ increase in creditors		(75)	104	(16)
Tax deducted from non - UK income		(106)	(9)	(176)
Net cash inflow/ (outflow) from operating activities		1,453	(944)	2,444
Net cash outflow from servicing of finance		(865)	(1,043)	(1,911)
Net cash flow from taxation		-	-	-
Financial investment
Purchase of investments		(21,086)	(16,096)	(40,090)
Disposal of underlying investments		24,700	32,629	71,043
Disposal of fund investments		15,403	-	-
Net cash inflow from financial investment		19,017	16,533	30,953
Ordinary dividend paid		(1,267)	(954)	(960)
		________	________	________
Net cash inflow before financing		18,338	13,592	30,526
Net repayment of loan		-	(16,032)	(31,868)
Net costs of issue of ordinary shares		(12)	(6)	-
Conversion of founder A shares		139	-	-
Share buy-back		(246)	-	-
		________	________	________
Net cash outflow from financing		(119)	(16,038)	(31,868)
Increase/ (decrease) in cash and cash equivalents		18,219	(2,446)	(1,342)
		________	________	________
Reconciliation of net cash flow to
movement in net funds/ (debt)
Increase/ (decrease) in cash as above		18,219	(2,446)	(1,342)
Net repayment of loan		-	16,032	31,868
Currency movements		(227)	537	1,447
		________	________	________
Movement in net funds/ (debt) in the period		17,992	14,123	31,973
Opening net funds/ (debt)		3,489	(28,484)	(28,484)
		________	________	________
Closing net funds/ (debt)		21,481	(14,361)	3,489
		________	________	________
Represented by:
Cash and short term deposits		21,481	1,475	3,489
Bank loans		-	(15,836)	-
		________	________	________
		21,481	(14,361)	3,489
		________	________	________

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 2012 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 2013 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 Conduct Authority.

3	Exchange rates
	Rates of exchange to sterling were:
		As at	As at	As at
		31 March 2013	31 March 2012	30 September 2012
	Euro	1.1825	1.1998	1.2552
	US dollar	1.5185	1.5978	1.6148

		Six months ended	Six months ended	Year ended
		31 March 2013	31 March 2012	30 September 2012
4	Income	£'000	£'000	£'000
	Income from unquoted investments	3,878	946	5,986
	Interest receivable on cash	-	2	1
		________	________	________
	Total income	3,878	948	5,987
		________	________	________

 

		Six months ended 31 March 2013
		Revenue	Capital	Total
5	Investment management and incentive fees	£'000	£'000	£'000
	Investment management fee	153	1,375	1,528
		________	________	________
		Six months ended 31 March 2012
		Revenue	Capital	Total
		£'000	£'000	£'000
	Investment management fee	151	1,357	1,508
		________	________	________
		Year ended 30 September 2012
		Revenue	Capital	Total
		£'000	£'000	£'000
	Investment management fee	292	2,633	2,925
		________	________	________
	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 at the end of the five year period, the company's net asset value total return must grow by more than 8% compound per annum (before and accrual for incentive fee) over the 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 total return per share (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 2013 the net asset value total return has not exceeded the 8% per annum compound growth hurdle rate and as such no provision is required in respect of the incentive fee. The opening NAV on 1 October 2011 was 225.9p.

6	Dividend on Ordinary shares
	A dividend of 2.00p per ordinary share, declared as a final dividend, was paid on 1 February 2013 in respect of the year ended 30 September 2012 (dividend of 1.30p per ordinary share paid on 6 February 2012).
	The Company issued 1,171,747 ordinary shares of 0.2p as a result of elections received following a scrip dividend offer in respect of the 2012 final dividend. One new ordinary share was issued for every 169.0p otherwise payable as a cash dividend.
	There will be no interim dividend for the six months ended to 31 March 2013.  Shareholders are reminded that the objective of the Company is long-term capital appreciation.

		Six months ended		Six months ended		Year ended
		31 March 2013		31 March 2012		30 September 2012
7	Return per ordinary share	p	£'000	p	£'000	p	£'000
	The return per ordinary share is based on the following figures:
	Revenue net return	1.79	2,917	0.11	176	2.38	3,858
	Capital net return	16.36	26,614	8.26	13,358	(1.60)	(2,600)
		_____	_______	_____	_______	_____	_______
	Total net return	18.15	29,531	8.37	13,534	0.78	1,258
		_____	_______	_____	_______	_____	_______
	Weighted average number of ordinary shares in issue		162,699,406		161,771,309		162,074,937
		Six months ended		Six months ended		Year ended
		31 March 2013		31 March 2012		30 September 2012
		p	£'000	p	£'000	p	£'000
	The fully diluted return per ordinary share is based on the following figures:
	Revenue net return (fully diluted)	1.78	2,917	0.11	176	2.37	3,858
	Capital net return (fully diluted)	16.21	26,614	8.23	13,358	(1.59)	(2,600)
		_____	_______	_____	_______	_____	_______
	Total net return (fully diluted)	17.99	29,531	8.34	13,534	0.78	1,258
		_____	_______	_____	_______	_____	_______

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 2013, this is based on 164,197,925 shares, comprising the weighted average 162,699,406 ordinary shares and 1,498,519 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 2012, this is based on 162,590,484 shares, comprising the weighted average 161,771,309 ordinary shares and 819,175 founder A shares capable of conversion. For the year ended 30 September 2012, this is based on the weighted average of 163,042,162 ordinary shares, comprising the weighted average 162,074,937 ordinary shares and 967,225 founder A shares capable of conversion.

 

		31 March 2013	31 March 2012	30 September 2012
8	Fixed Asset Investments	£'000	£'000	£'000
	Fair value through profit or loss
	Opening market value	365,897	397,433	397,433
	Opening investment holding losses	45,554	13,078	13,078
		________	________	________
	Opening book cost	411,451	410,511	410,511
	Movements in the period:
	Additions at cost	21,086	16,096	40,090
	Disposal of underlying investments by funds	(24,700)	(32,629)	(71,043)
	Disposal of fund investments by way of secondary sales	(15,403)	-	-
		________	________	________
		392,434	393,978	379,558
	Gains on disposal of underlying investments	10,323	14,290	37,753
	Losses on wind up of fund investments	(6,500)	-	(5,860)
	Losses on disposal of fund investments by way of secondary sales	(1,957)	-	-
		________	________	________
	Closing book cost	394,300	408,268	411,451
	Closing investment holding losses	(18,567)	(12,281)	(45,554)
		________	________	________
	Closing market value	375,733	395,987	365,897
		________	________	________

9	Net asset value per ordinary share	31 March 2013	31 March 2012	30 September 2012
	Basic:
	Ordinary shareholders' funds	£394,467,000	£381,903,457	£369,627,423
	Number of ordinary shares in issue	161,739,702	162,378,566	162,378,566
	Net asset value per ordinary share	243.9p	235.2p	227.6p
	Diluted:
	Ordinary shareholders' funds	£397,924,592	£385,500,438	£373,224,404
	Number of ordinary shares in issue	165,197,294	165,975,547	165,975,547
	Net asset value per ordinary share	240.9p	232.3p	224.9p
	During the six months ended 31 March 2013 139,389 founder A shares were converted into ordinary shares of 0.2p at a cost of £139,250. The Company also issued 1,171,747 ordinary shares of 0.2p as a result of elections received following a scrip dividend offer in respect of the 2012 final dividend. One new ordinary share was issued for every 169.0p otherwise payable as a cash dividend. The Company also repurchased a total of 1,950,000 ordinary shares (31 March 2012 - nil, 30 September 2012 - nil) at a cost of £3,582,000 including expenses. All of these shares were cancelled.
	For the six months ended 31 March 2013, the diluted NAV per ordinary share is based on the number of shares in issue of 165,197,294, being 161,739,702 ordinary shares and 3,457,592 founder A shares.
	The NAV and ordinary shareholders' funds are calculated in accordance with the Company's articles of association.

		31 March 2013	31 March 2012	30 September 2012
10	Bank loans	£'000	£'000	£'000
	Unsecured bank loans repayable within one year:
	31 March 2012 - €16,000,000 at 2.923% repayable 30 April 2012	-	13,336	-
	31 March 2012 - €3,000,000 at 2.958% repayable 20 April 2012	-	2,500	-
		________	________	________
		-	15,836	-
		________	________	________

As at 31 March 2013, the Company had a £80 million committed, multi-currency syndicated revolving credit facility led by The Royal Bank of Scotland plc of which nil had been drawn down. The facility expires on 31 December 2016. The interest rate on this facility is LIBOR plus 2.75% if less than 33% of the facility is utilised, LIBOR plus 3.00% if between 33% and 66% of the facility is utilised, or LIBOR plus 3.25% if more than 66% of the facility is utilised. The commitment fee payable on non-utilisation is 1.03% 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 are no changes in the nature or magnitude of 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 2013.

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 2013 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 2013 which comprises the Income Statement, the Reconciliation of Movement's 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 2013 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 2013

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.

 

END

 

 

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