Half Yearly Report
STANDARD LIFE EUROPEAN PRIVATE EQUITY TRUST PLC
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2014
Highlights
· The Company's net asset value per ordinary share ("NAV") rose by 3.6% to 252.2p during the six months to 31 March 2014. The NAV total return for the period was 5.5%.
· The 8.8p rise in NAV during the period included 13.9p of net realised gains and income from the Company's portfolio of 42 private equity fund interests, 2.3p of unrealised gains on a constant exchange rate basis and 2.8p of negative exchange rate movements on the portfolio.
· The closing mid-market price of the Company's ordinary shares on 31 March 2014 was 204.0p, an increase of 3.0% over the period and a discount of 19.1% to the NAV.
· At 31 March 2014 the Company's net assets were £401.2 million. 94.4% by value of the portfolio was valued by the relevant fund manager at 31 March 2014.
· In line with activity levels in the European private equity market and the maturity of the Company's portfolio, the Company funded £15.9 million of draw downs and received £49.3 million of distributions during the period, generating a net cash inflow from investment activities of £33.4 million.
· At 31 March 2014 the Company had a cash balance, including holdings in liquidity funds, of £22.7 million and had £21.9 million invested in UK and European equity index tracker funds. The Company continues to have an undrawn £80 million syndicated revolving credit facility led by The Royal Bank of Scotland plc that expires in December 2016.
· The Company made two new fund commitments during the period with commitments of €30.0 million to Nordic Capital VIII and €30.0 million to Permira V. In addition, the Company acquired original commitments of €20.0 million to 3i Eurofund V and €6.0 million to IK VII by way of secondary purchases.
· At 31 March 2014 the Company had £213.5 million of outstanding commitments. The Manager continues to believe that up to £40 million of the Company's existing outstanding commitments are unlikely to be drawn.
· During the period to 31 March 2014 the Company acquired a total of 6.1 million ordinary shares through share buy-back transactions for £12.2 million. The ordinary shares were acquired at an average price of 198.2p and at an average discount to the prevailing NAV of 19.0%.
· During the period from 31 March 2014 to 28 May 2014 the Company funded £6.9 million of draw downs and received £9.7 million of distributions. At 28 May 2014 the Company had a cash balance, including holdings in liquidity funds, of £23.8 million and had £22.4 million invested in UK and European equity index tracker funds. At 28 May 2014 the Company had outstanding commitments of £202.9 million.
For further information please contact:-
Peter McKellar of SL Capital Partners LLP (on 0131 245 0055)
CHAIRMAN'S STATEMENT
Results and performance
In the six month period to 31 March 2014 the Company enjoyed a strong inflow of distributions, as the improving European macro-economic environment and better listed financial markets saw increased exit activity across the portfolio. The Company's net asset value per ordinary share ("NAV") rose by 3.6% during the period to 252.2p, from a diluted NAV of 243.4p at 30 September 2013. The NAV total return for the period was 5.5%. At 31 March 2014 the Company's net assets were £401.2 million (30 September 2013 - £401.2 million).
The 8.8p rise in NAV during the period comprised 13.9p of net realised gains and income from the Company's portfolio of 42 private equity fund interests, 2.3p of unrealised gains on a constant exchange rate basis, 2.8p of negative exchange rate movements on the portfolio, a 5.0p impact from payment of the final dividend for the year ended 30 September 2013, a 2.0p benefit from share buy-back transactions and 1.6p of fees, costs and other items.
The closing mid-market price of the Company's ordinary shares on 31 March 2014 was 204.0p, an increase of 3.0% over the period and a discount of 19.1% to the NAV. This compares to rises in the FTSE All-Share Index and the MSCI Europe Index (in euros) over this period of 3.2% and 7.2% respectively.
In line with the Company's dividend policy, the Board has not declared an interim dividend. On 30 January 2014 the Company paid a final dividend for the year ended 30 September 2013 of 5.0p per ordinary share. The cost of the final dividend was £8.2 million.
Investment activity
The value of all private equity investments undertaken in Europe during the six months to 31 March 2014 was slightly higher than the corresponding period in 2013, with €40.4 billion of transactions by enterprise value announced (six months ended 31 March 2013 - €38.5 billion). While the number and aggregate value of large buy-out transactions remains volatile, the middle market of buy-out transactions with an enterprise value between €100 million and €1 billion continues to grow. Positively, the period also saw an increase in mergers and acquisitions activity in Europe.
In line with activity levels in the European private equity market and the maturity of the Company's portfolio, the Company funded £15.9 million of draw downs and received £49.3 million of distributions during the period. Accordingly, the Company generated a net cash inflow from investment activities of £33.4 million. The distributions received generated net realised gains and income of £22.9 million, equivalent to an average return on the acquisition cost of the realised investments of 1.9 times (year ended 30 September 2013 - 2.2 times).
In line with the Company's investment strategy, two new fund commitments were made during the period, with commitments of €30.0 million to Nordic Capital VIII in October 2013 and €30.0 million to Permira V in March 2014. The Company also undertook two secondary fund purchases. The Company acquired an original commitment of €20.0 million to 3i Eurofund V in December 2013. The fund interest was acquired at a 2.5% discount to the 30 June 2013 valuation of the fund, adjusted for subsequent cashflows. The purchase price for the fund interest was £8.2 million and the Company assumed outstanding commitments of £0.7 million. The Company already held an existing original commitment of €40.0 million to 3i Eurofund V. The Company also acquired an original commitment of €6.0 million to IK VII in March 2014. The fund interest was acquired at 100% of the 30 September 2013 valuation of the fund, adjusted for subsequent cashflows. The purchase price for the fund interest was £1.0 million and the Company assumed outstanding commitments of £3.9 million. The Company already held an existing original commitment of €30.0 million to IK VII. At 31 March 2014 the Company had £213.5 million of outstanding commitments (30 September 2013 - £178.5 million).
In addition, reflecting the more flexible approach to the use of the Company's capital resources and the strong cash inflow, in a series of transactions the Company acquired a total of 6.1 million ordinary shares through share buy-back transactions for £12.2 million. The ordinary shares were acquired at an average price of 198.2p and at an average discount to the prevailing diluted NAV of 19.0%. The ordinary shares acquired have been cancelled.
At 31 March 2014 the Company had a cash balance, including holdings in liquidity funds, of £22.7 million and had £21.9 million invested in UK and European equity index tracker funds. The Company continues to have an undrawn £80 million syndicated revolving credit facility led by The Royal Bank of Scotland plc that expires in December 2016.
Valuation
The Company's portfolio comprises 42 private equity fund interests. At 31 March 2014 the value of this portfolio was £356.4 million, of which net unrealised losses arising during the period were £0.8 million. 94.4% by value of the Company's private equity fund interests were valued by the relevant fund manager at 31 March 2014.
Unrealised gains on a constant exchange rate basis were £3.7 million (1.0% of the opening portfolio valuation). The uplift reflected a combination of positive earnings growth and a rise in listed comparable valuation multiples. Exchange rate movements contributed an unrealised loss of £4.5 million (1.3% of opening portfolio valuation). During the period sterling appreciated by 1.1% against the euro and by 2.9% against the US dollar.
Recent activity
During the period from 31 March 2014 to 28 May 2014 the Company funded £6.9 million of draw downs and received £9.7 million of distributions. At 28 May 2014 the Company had a cash balance, including holdings in liquidity funds, of £23.8 million and had £22.4 million invested in UK and European equity index tracker funds. At 28 May 2014 the Company had outstanding commitments of £202.9 million.
Board
The Board is pleased to welcome Alan Devine as a director of the Company, who has been appointed with immediate effect. Alan has spent his entire career working for The Royal Bank of Scotland Group in a variety of senior roles and he is currently CEO of RBS Shipping Group. Alan brings significant experience of the banking market, which the Board believes will be invaluable in its deliberations.
Outlook
An improving macro-economic environment and broadly favourable listed equity markets, coupled to signs of increasing mergers and acquisitions activity in Europe, should result in a continuing flow of realisations from the Company's portfolio. This is particularly true for those investments made in 2006-07, which are mature.
Increasing mergers and acquisitions activity should also result in a rise in deal flow for new investments. The Board and the Manager believe the portfolio is well positioned for further growth in value over the remainder of the year.
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 2014 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 8.6% of the Company's gross assets by valuation and 6.4% by cost at 31 March 2014.
Portfolio composition and performance
At 31 March 2014 the Company's portfolio comprised 42 private equity fund interests with a value of £356.4 million which, together with its current assets less liabilities, resulted in the Company having net assets of £401.2 million. This represented a NAV of 252.2p.
The split of the Company's portfolio by type of private equity fund is set out in the pie chart below. 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 11 of the interim report.
The valuation of the Company's private equity fund interests at 31 March 2014 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 42 private equity funds in which the Company is invested, 40 of the funds, or 94.4% of the portfolio by value, were valued by their fund managers at 31 March 2014. 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 decreased during the period from £358.5 million at 30 September 2013 to £356.4 million at 31 March 2014. A breakdown of the £2.1 million movement in the Company's portfolio during the period is detailed in the valuation bridge shown above. The decrease in value was driven by £46.1 million of realisation proceeds from the Company's private equity fund interests and £4.5 million of unrealised foreign exchange losses. This was partially offset by £25.1 million of new investments, £19.7 million of realised gains and £3.7 million of unrealised gains on the investment portfolio on a constant exchange rate basis. During the period to 31 March 2014 sterling appreciated by 1.1% relative to the euro and by 2.9% relative to the US dollar.
Investment activity
The quantum and value of new European private equity investment continues to be impacted by the level of economic and mergers and acquisitions activity in Europe. However, the value of new investments made during the six months ended 31 March 2014 was slightly higher than the equivalent period in 2013, reflecting a growth in the number and value of mid-market buy-out transactions. The Manager is also encouraged by the signs of a pick-up in mergers and acquisitions activity generally.
The Company had £15.9 million of draw downs by, and £49.3 million of distributions from, the Company's portfolio of fund interests, which resulted in a net cash inflow of £33.4 million from investment activities, excluding secondary purchases, during the period. The strong distribution activity
reflected an improving exit environment; this is expected to continue, supported by the maturity of the Company's investment portfolio.
Secondary activity
The Company undertook two secondary fund transactions during the six month period.
In December 2013 the Company completed the purchase of an original commitment of €20.0 million to 3i Eurofund V. The purchase price was £8.2 million (2.5% discount to the 30 June 2013 valuation of the fund, adjusted for subsequent cashflows) and the Company assumed outstanding commitments of £0.7 million. The Company already held an existing original commitment of €40.0 million to 3i Eurofund V.
In March 2014 the Company also acquired an original commitment of €6.0 million to IK VII. The purchase price was £1.0 million (100% of the 30 September 2013 valuation of the fund, adjusted for subsequent cashflows) and the Company assumed outstanding commitments of £3.9 million. The Company already held an existing original commitment of €30.0 million to IK VII.
Fund commitments
The Company made two new primary fund commitments during the six month period, with a €30.0 million commitment to Nordic Capital VIII in October 2013 and a €30.0 million commitment to Permira V in March 2014. 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 2014, 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 2014 the Company had £213.5 million of outstanding commitments. After adjusting for excess available liquid resources, such outstanding commitments were equivalent to 22.2% of the Company's net assets.
Analysis of underlying investments
At 31 March 2014 the Company's 42 private equity fund interests were collectively invested in a total of 512 underlying investments. The diversification of the underlying investments at 31 March 2014 and
30 September 2013 is set out in the four bar charts at the bottom of 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 2014. 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 2014, 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 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 2013, which in aggregate represented 46.0% of the Company's then net assets. This analysis is at 31 December 2013 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 3-4x Debt/EBITDA respectively. These compare to the valuation and leverage multiples for the top fifty underlying portfolio companies at 30 June 2013 of 9-10x EV/EBITDA and 3-4x Debt/EBITDA. The slight increase in the median valuation multiple reflects the rise in listed comparables. 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 2013.
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, 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 29 May 2014.
Signed on behalf of the Board of Directors of Standard Life European Private Equity Trust PLC
Edmond Warner OBE
Chairman, 29 May 2014
FINANCIAL SUMMARY
Performance (Capital only) |
As at |
As at |
|
|
|
31 March2014 |
30 September2013 |
%
|
|
Net asset value per ordinary share ("NAV") |
252.2p |
243.4p |
3.6 |
|
|
|
|
|
|
Share price |
204.0p |
198.0p |
3.0 |
|
|
|
|
|
|
FTSE All-Share Index (1) |
3,555.6 |
3,443.9 |
3.2 |
|
|
|
|
|
|
MSCI Europe Index (in euros) (1) |
113.8 |
106.2 |
7.2 |
|
|
|
|
|
|
Discount (difference between share price and diluted net asset value) |
19.1% |
18.6% |
|
(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 |
5.6 |
12.9 |
37.6 |
6.9 |
|
|
|
|
|
|
|
NAV |
5.5 |
6.6 |
7.4 |
8.5 |
|
|
|
|
|
|
|
FTSE All-Share Index (1) |
4.8 |
8.8 |
16.4 |
5.3 |
|
|
|
|
|
|
|
MSCI Europe Index (in euros) (1) |
8.3 |
16.6 |
17.3 |
2.7 |
(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 2014 |
High |
Low |
|
Share price (mid) |
208.0p |
195.0p |
INCOME STATEMENT
|
|
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 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 |
|
|
|
|
________ |
________ |
________ |
|
|
|
Diluted net return per ordinary share (Note 7) |
1.36p |
10.61p |
11.97p |
|
|
|
|
________ |
________ |
________ |
|
|
___________________________________________________________________________________
|
|
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 |
|
|
|
|
________ |
________ |
________ |
|
|
_________________________________________________________________________________
|
|
|
for the year ended 30 September 2013 (audited) |
||
|
|
Revenue |
Capital |
Total |
|
|
|
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
Gains on investments |
- |
28,161 |
28,161 |
|
|
Currency losses |
- |
(1,159) |
(1,159) |
|
|
Income (Note 4) |
12,150 |
- |
12,150 |
|
|
Investment management fee (Note 5) |
(321) |
(2,891) |
(3,212) |
|
|
Administrative expenses |
(637) |
- |
(637) |
|
|
|
_________ |
_________ |
_________ |
|
|
|
|
|
|
|
|
Net return before finance costs and taxation |
11,192 |
24,111 |
35,303 |
|
|
Finance costs |
(147) |
(1,328) |
(1,475) |
|
|
|
_________ |
_________ |
_________ |
|
|
|
|
|
|
|
|
Return on ordinary activities before taxation |
11,045 |
22,783 |
33,828 |
|
|
Taxation |
(1,345) |
1,218 |
(127) |
|
|
|
_________ |
_________ |
_________ |
|
|
|
|
|
|
|
|
Return on ordinary activities after taxation |
9,700 |
24,001 |
33,701 |
|
|
|
_________ |
_________ |
_________ |
|
|
Net return per ordinary share (Note 7) |
5.96p |
14.74p |
20.70p |
|
|
|
_________ |
_________ |
_________ |
|
|
Diluted net return per ordinary share (Note 7) |
5.91p |
14.62p |
20.53p |
|
|
|
_________ |
_________ |
_________ |
|
The total column of this statement represents the profit and loss account of the Company.
There is no material difference between the profit on ordinary activities before taxation and the profit for the period stated above and their historical costs equivalent.
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 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 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 |
|
Cancellation 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 year ended 30 September 2013 (audited) |
£'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 |
- |
- |
- |
- |
24,001 |
9,700 |
33,701 |
|
Conversion of founder A shares |
3 |
2,668 |
- |
3 |
- |
- |
2,674 |
|
Cancellation of deferred shares |
(30) |
- |
(30) |
60 |
- |
- |
- |
|
Buy back of ordinary shares |
(4) |
- |
(3,599) |
4 |
- |
- |
(3,599) |
|
Scrip issue of ordinary shares |
2 |
1,972 |
- |
- |
- |
- |
1,974 |
|
Dividends paid |
- |
- |
- |
- |
- |
(3,247) |
(3,247) |
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
Balance at 30 September 2013 |
330 |
85,594 |
75,519 |
70 |
223,438 |
16,214 |
401,165 |
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
BALANCE SHEET
|
|
As at |
As at |
As at |
|
|
31 March |
31 March |
30 September |
|
|
(unaudited) |
(unaudited) |
(audited) |
|
|
£'000 |
£'000 |
£'000 |
|
Non-current assets |
|
|
|
|
Investments at fair value through profit or loss (Note 8) |
378,301 |
375,733 |
358,512 |
|
|
________ |
________ |
________ |
|
Current assets |
|
|
|
|
Debtors |
543 |
930 |
664 |
|
Money market funds |
20,668 |
- |
- |
|
Cash and short term deposits |
2,031 |
21,481 |
42,272 |
|
|
________ |
________ |
________ |
|
|
23,242 |
22,411 |
42,936 |
|
Creditors: amounts falling due within one year |
|
|
|
|
Other creditors |
(361) |
(3,673) |
(283) |
|
|
________ |
________ |
________ |
|
|
|
|
|
|
Net current assets |
22,881 |
18,738 |
42,653 |
|
|
________ |
________ |
________ |
|
Total assets less current liabilities |
401,182 |
394,471 |
401,165 |
|
|
________ |
________ |
________ |
|
Capital and reserves |
|
|
|
|
Called up share capital |
318 |
327 |
330 |
|
Share premium |
86,485 |
83,059 |
85,594 |
|
Special reserve |
63,357 |
75,536 |
75,519 |
|
Capital redemption reserve |
83 |
67 |
70 |
|
Capital reserves |
240,745 |
226,051 |
223,438 |
|
Revenue reserve |
10,194 |
9,431 |
16,214 |
|
|
________ |
________ |
________ |
|
Total shareholders' funds |
401,182 |
394,471 |
401,165 |
|
|
________ |
________ |
________ |
|
Analysis of shareholders' funds |
|
|
|
|
Equity interests (ordinary shares) |
401,182 |
394,467 |
401,164 |
|
Non-equity interests (founder shares) |
- |
4 |
1 |
|
|
________ |
________ |
________ |
|
Total shareholders' funds |
401,182 |
394,471 |
401,165 |
|
|
________ |
________ |
________ |
|
Net asset value per equity share (Note 9) |
252.2p |
243.9p |
244.2p |
|
|
|
|
|
|
Net asset value per equity share (diluted) (Note 9) |
252.2p |
240.9p |
243.4p |
CASHFLOW STATEMENT
|
|
|
Six months to |
Six months to |
Year to |
|
|
|
31 March |
31 March |
30 September |
|
|
|
(unaudited) |
(unaudited) |
(audited) |
|
|
|
£'000 |
£'000 |
£'000 |
|
Net return before finance costs and taxation |
20,066 |
30,603 |
35,303 |
|
|
Adjusted for: |
|
|
|
|
|
Gains on disposal of unquoted investments |
(19,669) |
(1,866) |
(13,985) |
|
|
Revaluation of unquoted investments |
(30) |
(26,985) |
(14,176) |
|
|
Currency losses on cash balances |
972 |
227 |
1,159 |
|
|
Decrease/ (increase) in debtors |
120 |
(343) |
17 |
|
|
(Decrease)/ increase in creditors |
(122) |
(77) |
70 |
|
|
Tax deducted from non - UK income |
(9) |
(106) |
(127) |
|
|
|
|
|
|
|
|
Net cash inflow from operating activities |
1,328 |
1,453 |
8,261 |
|
|
Net cash outflow from servicing of finance |
(327) |
(865) |
(1,815) |
|
|
Net cash flow from taxation |
- |
- |
148 |
|
|
Financial investment |
|
|
|
|
|
Purchase of investments |
(46,198) |
(21,086) |
(48,004) |
|
|
Disposal of underlying investments by funds |
46,108 |
24,700 |
57,304 |
|
|
Disposal of fund investments by way of secondary sales |
- |
15,403 |
26,246 |
|
|
|
|
|
|
|
|
Net cash (outflow)/ inflow from financial investment |
(90) |
19,017 |
35,546 |
|
|
Ordinary dividend paid |
(8,242) |
(1,267) |
(1,267) |
|
|
|
________ |
________ |
________ |
|
|
Net cash (outflow)/ inflow before financing |
(7,331) |
18,338 |
40,873 |
|
|
Bank loans repaid |
- |
- |
(9,895) |
|
|
Bank loans drawn down |
- |
- |
9,895 |
|
|
Net costs of issue of ordinary shares |
- |
(12) |
- |
|
|
Conversion of founder A shares |
892 |
139 |
2,668 |
|
|
Buy back of ordinary shares |
(12,162) |
(246) |
(3,599) |
|
|
|
________ |
________ |
________ |
|
|
Net cash outflow from financing |
(11,270) |
(119) |
(931) |
|
|
|
|
|
|
|
|
(Decrease)/ increase in cash and cash equivalents |
(18,601) |
18,219 |
39,942 |
|
|
|
________ |
________ |
________ |
|
|
Reconciliation of net cash flow to |
|
|
|
|
|
movement in net funds |
|
|
|
|
|
|
|
|
|
|
|
(Decrease)/ increase in cash as above |
(18,601) |
18,219 |
39,942 |
|
|
Currency movements |
(972) |
(227) |
(1,159) |
|
|
|
________ |
________ |
________ |
|
|
Movement in net funds in the period |
(19,573) |
17,992 |
38,783 |
|
|
Opening net funds |
42,272 |
3,489 |
3,489 |
|
|
|
________ |
________ |
________ |
|
|
Closing net funds |
22,699 |
21,481 |
42,272 |
|
|
|
________ |
________ |
________ |
|
|
Represented by: |
|
|
|
|
|
Cash and short term deposits |
2,031 |
21,481 |
42,272 |
|
|
Money market funds |
20,668 |
- |
- |
|
|
|
________ |
________ |
________ |
|
|
|
22,699 |
21,481 |
42,272 |
|
|
|
________ |
________ |
________ |
|
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 2013 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 2014 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 23 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 2014 |
31 March 2013 |
30 September 2013 |
|
|
Euro |
1.2096 |
1.1825 |
1.1963 |
|
|
US dollar |
1.6672 |
1.5185 |
1.6194 |
|
|
|
Six months ended |
Six months ended |
Year |
|
|
|
31 March 2014 |
31 March 2013 |
30 September 2013 |
|
4 |
Income |
£'000 |
£'000 |
£'000 |
|
|
Income from fund investments |
3,227 |
3,878 |
12,149 |
|
|
Income from index tracker funds |
76 |
- |
- |
|
|
Interest from money market funds |
11 |
- |
- |
|
|
Interest from HMRC |
- |
- |
1 |
|
|
|
________ |
________ |
________ |
|
|
Total income |
3,314 |
3,878 |
12,150 |
|
|
|
________ |
________ |
________ |
|
|
|
Six months ended 31 March 2014 |
||
|
|
|
Revenue |
Capital |
Total |
|
5 |
Investment management and incentive fees |
£'000 |
£'000 |
£'000 |
|
|
Investment management fee |
163 |
1,465 |
1,628 |
|
|
|
________ |
________ |
________ |
|
|
|
|
||
|
|
|
Six months ended 31 March 2013 |
||
|
|
|
Revenue |
Capital |
Total |
|
|
|
£'000 |
£'000 |
£'000 |
|
|
Investment management fee |
153 |
1,375 |
1,528 |
|
|
|
________ |
________ |
________ |
|
|
|
|
||
|
|
|
Year ended 30 September 2013 |
||
|
|
|
Revenue |
Capital |
Total |
|
|
|
£'000 |
£'000 |
£'000 |
|
|
Investment management fee |
321 |
2,891 |
3,212 |
|
|
|
________ |
________ |
________ |
|
|
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 2014 the net asset value total return was 260.9p and as such has not exceeded the 8% per annum compound growth hurdle rate at the same date of 274.0p. 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 2014 in respect of the year ended 30 September 2013 (dividend of 2.0p per ordinary share paid on 1 February 2013). |
|
|
|
|
|
There will be no interim dividend for the six months ended to 31 March 2014. Shareholders are reminded that the objective of the Company is long-term capital appreciation. |
|
|
|
|
|
|
|
|
|
Six months ended |
Six months ended |
Year ended |
|||
|
|
|
31 March 2014 |
31 March 2013 |
30 September 2013 |
|||
|
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 |
1.36 |
2,222 |
1.79 |
2,917 |
5.96 |
9,700 |
|
|
Capital net return |
10.61 |
17,307 |
16.36 |
26,614 |
14.74 |
24,001 |
|
|
|
_____ |
_______ |
_____ |
_______ |
_____ |
_______ |
|
|
Total net return |
11.97 |
19,529 |
18.15 |
29,531 |
20.70 |
33,701 |
|
|
|
_____ |
_______ |
_____ |
_______ |
_____ |
_______ |
|
|
Weighted average number of ordinary shares in issue |
|
163,167,871 |
|
162,699,406 |
|
162,828,459 |
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended |
Six months ended |
Year ended |
|||
|
|
|
31 March 2014 |
31 March 2013 |
30 September 2013 |
|||
|
|
|
p |
£'000 |
p |
£'000 |
p |
£'000 |
|
|
The fully diluted return per ordinary share is based on the following figures: |
|
|
|
|
|
|
|
|
Revenue net return (fully diluted) |
1.36 |
2,222 |
1.78 |
2,917 |
5.91 |
9,700 |
|
|
Capital net return (fully diluted) |
10.61 |
17,307 |
16.21 |
26,614 |
14.62 |
24,001 |
|
|
|
_____ |
_______ |
_____ |
_______ |
_____ |
_______ |
|
|
Total net return (fully diluted) |
11.97 |
19,529 |
17.99 |
29,531 |
20.53 |
33,701 |
|
|
|
_____ |
_______ |
_____ |
_______ |
_____ |
_______ |
|
|
Fully diluted returns have been calculated on the basis set out in Financial Reporting Standard 22 'Earnings per share' ('FRS 22'). As at 31 March 2014, all founder A shares had been converted and therefore there was no dilutive effect on earnings per share. 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 capable of conversion. For the year ended 30 September 2013, this is based on the weighted average of 164,112,146 ordinary shares, comprising the weighted average 162,828,459 ordinary shares and 1,283,687 founder A shares capable of conversion. |
|
|
|
|
31 March 2014 |
|
31 March 2013 |
30 September 2013 |
|
8 |
Investments |
Index Tracker Funds |
Fund Investments |
Total |
|
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Fair value through profit or loss: |
|
|
|
|
|
|
|
Opening market value |
- |
358,512 |
358,512 |
365,897 |
365,897 |
|
|
Opening investment holding losses |
- |
31,378 |
31,378 |
45,554 |
45,554 |
|
|
|
________ |
________ |
________ |
________ |
________ |
|
|
Opening book cost |
- |
389,890 |
389,890 |
411,451 |
411,451 |
|
|
|
|
|
|
|
|
|
|
Movements in the period: |
|
|
|
|
|
|
|
Additions at cost |
21,076 |
25,122 |
46,198 |
21,086 |
48,004 |
|
|
Disposal of underlying investments by funds |
- |
(46,108) |
(46,108) |
(24,700) |
(57,304) |
|
|
Disposal of fund investments by way of secondary sales |
- |
- |
- |
(15,403) |
(26,246) |
|
|
|
________ |
________ |
________ |
________ |
________ |
|
|
|
21,076 |
368,904 |
389,980 |
392,434 |
375,905 |
|
|
Gains on disposal of underlying investments |
- |
19,669 |
19,669 |
10,323 |
25,139 |
|
|
Losses on liquidation of fund investments |
- |
- |
- |
(6,500) |
(6,500) |
|
|
Losses on disposal of fund investments by way of secondary sales |
- |
- |
- |
(1,957) |
(4,654) |
|
|
|
________ |
________ |
________ |
________ |
________ |
|
|
Closing book cost |
21,076 |
388,573 |
409,649 |
394,300 |
389,890 |
|
|
Closing investment holding gains/ (losses) |
844 |
(32,192) |
(31,348) |
(18,567) |
(31,378) |
|
|
|
________ |
________ |
________ |
________ |
________ |
|
|
Closing market value |
21,920 |
356,381 |
378,301 |
375,733 |
358,512 |
|
|
|
________ |
________ |
________ |
________ |
________ |
|
|
|
|||||
|
|
There were no index tracker funds for the periods ended 31 March 2013 and 30 September 2013. |
|||||
|
9 |
Net asset value per ordinary share |
31 March 2014 |
31 March 2013 |
30 September 2013 |
|
|
Basic: |
|
|
|
|
|
Ordinary shareholders' funds |
£401,181,565 |
£394,467,826 |
£401,163,734 |
|
|
Number of ordinary shares in issue |
159,097,294 |
161,739,702 |
164,290,213 |
|
|
Net asset value per ordinary share |
252.2p |
243.9p |
244.2p |
|
|
|
|
|
|
|
|
Diluted: |
|
|
|
|
|
Ordinary shareholders' funds |
£401,181,565 |
£397,924,592 |
£402,070,815 |
|
|
Number of ordinary shares in issue |
159,097,294 |
165,197,294 |
165,197,294 |
|
|
Net asset value per ordinary share |
252.2p |
240.9p |
243.4p |
|
|
|
|
|
|
|
|
During the six months ended 31 March 2014 the remaining 907,081 founder A shares were converted into ordinary shares of 0.2p for consideration of £892,000 including expenses. As a result, there were no dilutive shares in issue. The Company also repurchased a total of 6,100,000 ordinary shares (31 March 2013 - 1,950,000, 30 September 2013 - 1,950,000) at a cost of £12,162,000 including expenses (31 March 2013 - £3,599,000, 30 September 2013 - £3,599,000). 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 2014, the Company had an £80 million (2013: £80 million) committed, multi-currency syndicated revolving credit facility led by The Royal Bank of Scotland plc of which nil (2013: 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 2014 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 2014 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 2014 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 2014 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
29 May 2014
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
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