Half Yearly Report

RNS Number : 3594E

Standard Life Euro Pri Eqty Tst PLC

29 May 2012

 



STANDARD LIFE EUROPEAN PRIVATE EQUITY TRUST PLC

INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2012

Highlights

·     For the six months ended 31 March 2012 the Company's undiluted net asset value per ordinary share ("NAV") rose 2.8% to 235.2p (diluted NAV - 232.3p).

·     The 6.5p rise in NAV during the period comprised 9.3p of net realised gains and income from the Company's portfolio of 37 private equity fund interests and 8.0p of unrealised gains on the portfolio on a constant exchange rate basis, offset by 7.5p of negative exchange rate movements on the portfolio and 3.3p of costs and other movements.

·     The closing mid-market price of the Company's ordinary shares on 31 March 2012 was 146.0p, an increase of 9.0% over the period and a discount of 37.2% to the diluted NAV.

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

·     At 31 March 2012 the Company's net assets were £381.9 million and the Company's portfolio of 37 private equity fund interests had a value of £396.0 million. In preparing the portfolio valuation, 99.3% by value of the portfolio was valued at 31 March 2012.

·     In line with the decline in activity levels in the European private equity market, the Company funded £16.1 million of draw downs and received £33.4 million of distributions during the period. Accordingly, the Company generated a net cash inflow from investment activities of £17.3 million.  

·     The Company made one new fund commitment during the period with a commitment of €35.0 million to BC European Capital IX, a €6.5 billion pan-European large buy-out fund, in October 2011. At 31 March 2012 the Company had £133.9 million of outstanding commitments.

·     At 31 March 2012 the Company's net indebtedness had fallen to £14.4 million. The Company has a £120 million syndicated revolving credit facility, led by The Royal Bank of Scotland plc. This facility expires on 31 December 2013.

·     During the period from 31 March 2012 to 28 May 2012 the Company received £4.5 million of distributions and funded £3.4 million of draw downs. At 28 May 2012 the Company's total outstanding commitments were £126.1 million and its net indebtedness was £13.2 million.

Quote from Scott Dobbie, Chairman

"Although at an investee company level direct exposure to businesses headquartered in southern Europe is minimal, the Company's focus on Europe and the euro is clearly a source of uncertainty. Despite this difficult background the Board believes that the Company's portfolio, which is broadly mature, is well placed to generate strong future returns. "

For further information please contact:-

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

CHAIRMAN'S STATEMENT

Results and performance

The six months ended 31 March 2012 saw a challenging environment for European private equity. While many underlying investee companies continued to report rising earnings and listed equity markets rose over the period, transactional activity, notably for new investments, declined. Against this background the Company's net asset value per ordinary share ("NAV") rose by 2.8% to 235.2p (diluted - 232.3p), from 228.7p at 30 September 2011 (diluted - 225.9p).  At 31 March 2012 the Company's net assets were £381.9 million (30 September 2011 - £369.4 million).

The 6.5p rise in NAV during the period comprised 9.3p of net realised gains and income from the Company's portfolio of 37 private equity fund interests and 8.0p of unrealised gains on the portfolio on a constant exchange rate basis, offset by 7.5p of negative exchange rate movements on the portfolio and 3.3p of costs and other movements.

The closing mid-market price of the Company's ordinary shares on 31 March 2012 was 146.0p, an increase of 9.0% over the period and a discount of 37.2% 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 12.5% and 16.1% respectively.

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

Portfolio and valuation

The Company's portfolio comprises 37 private equity fund interests. At 31 March 2012 the value of this portfolio was £396.0 million, of which net unrealised gains arising during the period were £0.8 million.  99.3% by value of the Company's private equity fund interests were valued by the relevant fund manager at 31 March 2012. In undertaking the valuations the fund managers have followed the International Private Equity and Venture Capital Valuation Guidelines.

In terms of the breakdown of net unrealised gains, unrealised gains on a constant exchange rate basis were £12.9 million (3.2% of the opening portfolio valuation), while negative exchange rate movements contributed an unrealised loss of £12.1 million (3.0% of the opening portfolio valuation). The uplift in unrealised gains on a constant exchange rate basis arose principally from a combination of increased earnings at many underlying investee companies and a rise in listed comparable valuation multiples.

Investment activity and cashflows

The value and volume of all European private equity investments undertaken during the six months to 31 March 2012 fell, with a total of €19.9 billion of transactions by enterprise value reported during the period (six months ended 31 March 2011 and six months ended 30 September 2011 - €40.7 billion and €46.4 billion respectively). This followed the trend seen since summer 2011, as political uncertainty in Europe and broader macro-economic weakness dominated financial markets and impacted the willingness of private equity managers to acquire, and the ability to obtain debt finance for, new investments. Most of the activity by value took the form of buy-out transactions, principally in the mid market segment of the market: this is transactions with an enterprise value of between €100 million and €1.0 billion and is one of the principal areas of investment focus for the Company.

In line with the decline in activity levels in the European private equity market, the Company funded £16.1 million of draw downs and received £33.4 million of distributions during the period. Importantly, this resulted in a net cash inflow from investment activities of £17.3 million. The distributions received generated net realised gains and income of £15.1 million, which was equivalent to an average return on the Company's acquisition cost of the realised investments of 1.8 times.

In October 2011 the Company made one new fund commitment, with a commitment of €35.0 million to BC European Capital IX, a €6.5 billion pan-European large buy-out fund. At 31 March 2012 the Company had £133.9 million of outstanding commitments.

At 31 March 2012 the Company's net indebtedness had fallen to £14.4 million. The Company has a £120 million syndicated revolving credit facility, led by The Royal Bank of Scotland plc. This facility expires on 31 December 2013.

In the period from 31 March 2012 to 28 May 2012 the Company received £4.5 million of distributions and funded £3.4 million of draw downs. At 28 May 2012 the Company's total outstanding commitments were £126.1 million and its net indebtedness was £13.2 million.

The Board

I announced at the Annual General Meeting that Jo Taylor had been appointed to a full time post which was considered incompatible with membership of the Board and, accordingly, he had resigned with immediate effect. Although Jo's period of office was relatively short he made a strong contribution to the Company and he leaves with our best wishes for his future career.

Outlook

The Company has made satisfactory progress in growing its NAV and improving cashflows during the six months ended 31 March 2012, against a challenging background in Europe.  Although at an investee company level direct exposure to businesses headquartered in southern Europe is minimal, the Company's focus on Europe and the euro, which is the reporting currency of most of the fund interests, is clearly a source of uncertainty.  Despite this difficult background the Board believes that the Company's portfolio, which is broadly mature, is well placed to generate strong future returns.

Scott Dobbie CBE

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 2012 the Company had five fund investments - Coller International Partners IV, Coller International Partners V, Pomona Capital V Fund, Pomona Capital VI Fund and Towerbrook Investors II - which are likely to invest a majority of their capital outside Europe. In total these funds represented 11.1% of the Company's gross assets by valuation and 10.8% by cost at 31 March 2012.

Portfolio composition and performance

At 31 March 2012 the Company's portfolio comprised 37 private equity fund interests with a value of £396.0 million which, together with its current assets less liabilities, resulted in the Company having net assets of £381.9 million. This represented an undiluted NAV of 235.2p (diluted NAV - 232.3p).

The split of the Company's portfolio by type of private equity fund is set out 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, can be found on pages 9 to 12 of the interim report.

The valuation of the Company's private equity fund interests at 31 March 2012 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 cashflows. 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 37 private equity funds in which the Company is invested, 36 of the funds, or 99.3% of the portfolio by value, were valued by their fund managers at 31 March 2012. 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 £397.4 million at 30 September 2011 to £396.0 million at 31 March 2012. A breakdown of the £1.4 million movement in the Company's portfolio during the period is detailed on page 6 of the interim report. The decrease in value was driven by £32.6 million of realisation proceeds and £12.1 million of unrealised foreign exchange losses. The above decrease was offset by unrealised gains on the investment portfolio, at constant foreign exchange rates, of £12.9 million, together with £16.1 million of new investments and £14.3 million of realised gains. During the period to 31 March 2012 sterling appreciated by 3.3% relative to the euro and by 2.6% relative to the US Dollar.

Investment activity

European private equity activity levels remained subdued during the six month period as a result of inter alia the ongoing European sovereign debt crisis. This was reflected in the relatively low level of drawdowns by, and to an extent distributions from, the Company's portfolio of fund interests which resulted in a net cash inflow of £17.3 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 portfolio should see realisation activity continue.

 Fund commitments

The Company made one new private equity fund commitment during the six month period, with a €35.0 million commitment to BC European Capital IX, a €6.5 billion private equity fund focused on European buyouts. The new commitment and its quantum was made in light of the Company's positive net cashflow, the low level of outstanding commitments and a continued cautious approach on the part of the Board and the Manager.

It is envisaged that further new commitments will be made during 2012, as the Company continues to receive positive net cashflows from its investment portfolio and as net indebtedness declines. New commitments are likely to be in the form of new primary fund commitments and possibly the purchase

of selective secondary interests. Secondary interests could enable 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 2012 the Company had £133.9 million of outstanding commitments. After adjusting for excess available liquid resources, such outstanding commitments were equivalent to 7.5% of the Company's net assets.

Analysis of underlying investments

At 31 March 2012 the Company's 37 private equity fund interests were collectively invested in a total of 531 underlying investments. The diversification of the underlying investments at 31 March 2012 and 30 September 2011 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 2012. The UK still remains the single largest geographic exposure, although it has fallen from 64% at the time of the Company's listing in 2001 to 25% at 31 March 2012, 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 levels of new private equity investment 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% of the portfolio valued at or above cost.

Valuation and leverage multiple analysis

The bar charts on page 7 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 2011, which in aggregate represented 53.7% of the Company's then net assets. This analysis is at 31 December 2011 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 8-9x EV/EBITDA and 4-5x Debt/EBITDA respectively. These compare to the valuation and leverage multiples for the top fifty underlying portfolio companies at 30 June 2011 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 2011.

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 FSA'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 FSA'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 29 May 2012.

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

Scott Dobbie CBE

Chairman

29 May 2012

FINANCIAL SUMMARY

Performance (Capital only)	As at	As at
	31 March 2012	30 September 2011	% Change
Net asset value per ordinary share ("NAV") (undiluted)	235.2p	228.7p	2.8
NAV (diluted)	232.3p	225.9p	2.8
Share price	146.0p	134.0p	9.0
FTSE All-Share Index (1)	2,987.1	2,654.4	12.5
MSCI Europe Index (in euros) (1)	91.0	78.4	16.1
Discount (difference between share price and diluted net asset value)	37.2%	40.7%
Gearing (ratio of borrowing to shareholders' funds)	4.1%	8.6%

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

Performance (Total return)	Six months	1 year	5 year	Since launch
			annualised	annualised
	%	%	%	%
Share price	10.0	(5.5)	(8.8)	4.5
NAV (diluted)	3.4	6.0	3.3	9.1
FTSE All-Share Index (1)	15.0	1.4	1.8	4.0
MSCI Europe Index (in euros) (1)	17.7	(0.8)	(3.4)	0.5

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

High/Low during six months ended 31 March 2012	High	Low
Share price (mid)	151.0p	113.5p

INCOME STATEMENT

	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
	________	________	________

___________________________________________________________________________________

	Six months to 31 March 2011 (unaudited)
	Revenue	Capital		Total
	£'000	£'000		£'000
Gains on investments	-	46,577	46,577
Currency losses	-	(950)	(950)
Income (Note 4)	2,588	-	2,588
Investment management fee (Note 5)	(141)	(1,271)	(1,412)
Administrative expenses	(374)	-	(374)
	________	________	________
Net return before finance costs and taxation	2,073	44,356	46,429
Finance costs	(144)	(1,294)	(1,438)
	________	________	________
Return on ordinary activities before taxation	1,929	43,062	44,991
Taxation	(334)	317	(17)
	________	________	________
Return on ordinary activities after taxation	1,595	43,379	44,974
	________	________	________
Net return per ordinary share (Note 7)	0.99p	26.87p	27.86p
	________	________	________
Diluted net return per ordinary share (Note 7)	0.98p	26.72p	27.70p
	________	________	________

_________________________________________________________________________________

		Year ended 30 September 2011 (audited)
		Revenue	Capital	Total
		£'000	£'000	£'000
Gains on investments		-	56,281	56,281
Currency losses		-	(4)	(4)
Income (Note 4)		4,521	-	4,521
Investment management fee (Note 5)		(294)	(2,644)	(2,938)
Administrative expenses		(714)	-	(714)
		_________	_________	_________
Net return before finance costs and taxation		3,513	53,633	57,146
Finance costs		(285)	(2,565)	(2,850)
		_________	_________	_________
Return on ordinary activities before taxation		3,228	51,068	54,296
Taxation		(565)	547	(18)
		_________	_________	_________
Return on ordinary activities after taxation		2,663	51,615	54,278
		_________	_________	_________
Net return per ordinary share (Note 7)		1.65p	31.97p	33.62p
		_________	_________	_________
Diluted net return per ordinary share (Note 7)		1.64p	31.74p	33.38p
		_________	_________	_________

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

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

All revenue and capital items in the above statement 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 2012 (unaudited)	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 30 September 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
	_______	_______	_______	_______	_______	_______	_______
				Capital
	Share	Share	Special	redemption	Capital	Revenue
	capital	premium	reserve	reserve	reserves	reserve	Total
For the six months ended 31 March 2011 (unaudited)	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 30 September 2010	357	79,650	79,148	3	150,422	5,662	315,242
Total recognised gains	-	-	-	-	43,379	1,595	44,974
Scrip issue of ordinary shares	-	167	-	-	-	-	167
Dividends paid	-	-	-	-	-	(323)	(323)
	_______	_______	_______	_______	_______	_______	_______
Balance at 31 March 2011	357	79,817	79,148	3	193,801	6,934	360,060
	_______	_______	_______	_______	_______	_______	_______
				Capital
	Share	Share	Special	redemption	Capital	Revenue
	capital	premium	reserve	reserve	reserves	reserve	Total
For the year ended 30 September 2011 (audited)	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 30 September 2010	357	79,650	79,148	3	150,422	5,662	315,242
Total recognised gains	-	-	-	-	51,615	2,663	54,278
Scrip Issue of ordinary shares	-	167	-	-	-	-	167
Dividends paid	-	-	-	-	-	(323)	(323)
	_______	_______	_______	_______	_______	_______	_______
Balance at 30 September 2011	357	79,817	79,148	3	202,037	8,002	369,364
	_______	_______	_______	_______	_______	_______	_______

BALANCE SHEET

	As at	As at	As at
	31 March 2012	31 March 2011	30 September 2011
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Non-current assets
Investments at fair value through profit or loss (Note 8)	395,987	410,889	397,433
	________	________	________
Current assets
Debtors	736	865	709
Cash and short term deposits	1,475	4,380	3,384
	________	________	________
	2,211	5,245	4,093
Creditors: amounts falling due within one year
Bank loan (Note 10)	(15,836)	(55,774)	(31,868)
Other creditors	(424)	(300)	(294)
	________	________	________
	(16,260)	(56,074)	(32,162)
Net current liabilities	(14,049)	(50,829)	(28,069)
	________	________	________
Total assets less current liabilities	381,938	360,060	369,364
	________	________	________
Capital and reserves
Called up share capital	359	357	357
Share premium	80,954	79,817	79,817
Special reserve	79,148	79,148	79,148
Capital redemption reserve	3	3	3
Capital reserves	215,395	193,801	202,037
Revenue reserve	6,079	6,934	8,002
	________	________	________
Total shareholders' funds	381,938	360,060	369,364
	________	________	________
Analysis of shareholders' funds
Equity interests (ordinary shares)	381,904	360,026	369,330
Non-equity interests (founder shares)	34	34	34
	________	________	________
Total shareholders' funds	381,938	360,060	369,364
	________	________	________
Net asset value per equity share (Note 9)	235.2p	222.9p	228.7p
Net asset value per equity share (diluted) (Note 9)	232.3p	220.3p	225.9p

CASHFLOW STATEMENT

		Six months to	Six months to	Year to
		31 March 2012	31 March 2011	30 September 2011
		(unaudited)	(unaudited)	(audited)
		£'000	£'000	£'000
Net return before finance costs and taxation		14,613	46,429	57,146
Adjusted for:
Gains on disposal of unquoted investments		(14,290)	(8,884)	(31,094)
Revaluation of unquoted investments		(797)	(37,693)	(25,187)
Currency (gains)/losses		(537)	950	4
Increase in debtors		(28)	(757)	(601)
Increase in creditors		104	57	41
Tax deducted from non - UK income		(9)	(17)	(18)
Net cash (outflow)/inflow from operating activities		(944)	85	291
Net cash outflow from servicing of finance		(1,043)	(1,449)	(2,851)
Net cash flow from taxation		-	-	-
Financial investment
Purchase of investments		(16,096)	(28,968)	(49,604)
Disposal of underlying investments		32,629	34,286	78,082
Net cash inflow from financial investment		16,533	5,318	28,478
Ordinary dividend paid		(954)	(150)	(156)
		________	________	________
Net cash inflow before financing		13,592	3,804	25,762
Net costs of issue of ordinary shares		(6)	(6)	-
Net repayment of loan		(16,032)	(4,871)	(28,777)
		________	________	________
Net cash outflow from financing		(16,038)	(4,877)	(28,777)
Decrease in cash and cash equivalents		(2,446)	(1,073)	(3,015)
		________	________	________
Reconciliation of net cash flow to
movement in net debt
Decrease in cash as above		(2,446)	(1,073)	(3,015)
Net repayment of loan		16,032	4,871	28,777
Currency movements		537	(950)	(4)
		________	________	________
Movement in net debt in the period		14,123	2,848	25,758
Opening net debt		(28,484)	(54,242)	(54,242)
		________	________	________
Closing net debt		(14,361)	(51,394)	(28,484)
		________	________	________
Represented by:
Cash and short term deposits		1,475	4,380	3,384
Bank loans		(15,836)	(55,774)	(31,868)
		________	________	________
		(14,361)	(51,394)	(28,484)
		________	________	________

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 2011 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 2012 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 Services Authority.

3	Exchange rates
	Rates of exchange to sterling were:
		As at	As at	As at
		31 March 2012	31 March 2011	30 September 2011
	Euro	1.1998	1.1296	1.1611
	US Dollar	1.5978	1.6030	1.5578

		Six months ended	Six months ended	Year ended
		31 March 2012	31 March 2011	30 September 2011
4	Income	£'000	£'000	£'000
	Income from unquoted investments	946	2,587	4,514
	Interest receivable on cash	2	1	7
		________	________	________
	Total income	948	2,588	4,521
		________	________	________

		Six months ended 31 March 2012
		Revenue	Capital	Total
5	Investment management and incentive fees	£'000	£'000	£'000
	Investment management fee	151	1,357	1,508
		________	________	________
		Six months ended 31 March 2011
		Revenue	Capital	Total
		£'000	£'000	£'000
	Investment management fee	141	1,271	1,412
		________	________	________
		Year ended 30 September 2011
		Revenue	Capital	Total
		£'000	£'000	£'000
	Investment management fee	294	2,644	2,938
		________	________	________
	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 any accrual for the 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 (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). No provision is required in respect of the incentive fee at 31 March 2012.

6	Dividend on Ordinary shares
	A dividend of 1.30p per ordinary share, declared as a final dividend, was paid on 6 February 2012 in respect of the year ended 30 September 2011 (dividend of 0.20p per ordinary share paid on 28 January 2011).
	The Company issued 881,969 ordinary shares of 0.2p as a result of elections received following a scrip dividend offer in respect of the 2011 final dividend. One new ordinary share was issued for every 129.9p otherwise payable as a cash dividend.
	There will be no interim dividend for the six months ended to 31 March 2012.  Shareholders are reminded that the objective of the Company is long-term capital appreciation.

		Six months ended		Six months ended		Year ended
		31 March 2012		31 March 2011		30 September 2011
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	0.11	176	0.99	1,595	1.65	2,663
	Capital net return	8.26	13,358	26.87	43,379	31.97	51,615
		_____	_______	_____	_______	_____	_______
	Total net return	8.37	13,534	27.86	44,974	33.62	54,278
		_____	_______	_____	_______	_____	_______
	Weighted average number of ordinary shares in issue		161,771,309		161,414,968		161,455,894
		Six months ended		Six months ended		Year ended
		31 March 2012		31 March 2011		30 September 2011
		p	£'000	p	£'000	p	£'000
	The fully diluted return per ordinary share is based on the following figures:
	Revenue net return (fully diluted)	0.11	176	0.98	1,595	1.64	2,663
	Capital net return (fully diluted)	8.23	13,358	26.72	43,379	31.74	51,615
		_____	_______	_____	_______	_____	_______
	Total net return (fully diluted)	8.34	13,534	27.70	44,974	33.38	54,278
		_____	_______	_____	_______	_____	_______

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 2012, this is based on 162,590,484 shares, comprising the weighted average 161,771,309 ordinary shares and 819,175 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 2011, this is based on 162,374,866 shares, comprising the weighted average 161,414,968 ordinary shares and 959,898 founder A shares capable of conversion. For the year ended 30 September 2011, this is based on the weighted average of 162,597,933 ordinary shares, comprising the weighted average 162,455,894 ordinary shares and 1,142,039 founder A shares capable of conversion.

		As at             31 March 2012	As at          31 March 2011	As at             30 September 2011
8	Fixed Asset Investments	£'000	£'000	£'000
	Fair value through profit or loss
	Opening market value	397,433	369,630	369,630
	Opening investment holding losses	13,078	38,265	38,265
		________	________	________
	Opening book cost	410,511	407,895	407,895
	Movements in the period:
	Additions at cost	16,096	28,968	49,604
	Disposal of underlying investments by funds	(32,629)	(34,286)	(78,082)
		________	________	________
		393,978	402,577	379,417
	Gains on disposal of underlying investments	14,290	11,285	35,157
	Losses on disposal of fund investments	-	(2,401)	(4,063)
		________	________	________
	Closing book cost	408,268	411,461	410,511
	Closing investment holding losses	(12,281)	(572)	(13,078)
		________	________	________
	Closing market value	395,987	410,889	397,433
		________	________	________

9	Net asset value per ordinary share	As at             31 March 2012	As at          31 March 2011	As at             30 September 2011
	Basic:
	Ordinary shareholders' funds	£381,903,457	£360,026,000	£369,330,320
	Number of ordinary shares in issue	162,378,566	161,496,597	161,496,597
	Net asset value per ordinary share	235.2p	222.9p	228.7p
	Diluted:
	Ordinary shareholders' funds	£385,500,438	£363,622,981	£372,927,301
	Number of ordinary shares in issue	165,975,547	165,093,578	165,093,578
	Net asset value per ordinary share	232.3p	220.3p	225.9p
	During the period the company issued 881,969 ordinary shares of 0.2p as a result of elections received following a scrip dividend offer in respect of the 2011 final dividend. One new ordinary share was issued for every 129.9p otherwise payable as a cash dividend.
	For the six months ended 31 March 2012, the diluted NAV per ordinary share is based on the number of shares in issue of 165,975,547, being 162,378,566 ordinary shares and 3,596,981 founder A shares.
	The net asset value per ordinary share and ordinary shareholders' funds are calculated in accordance with the Company's articles of association.

		As at             31 March 2012	As at          31 March 2011	As at             30 September 2011
10	Bank loans	£'000	£'000	£'000
	Unsecured bank loans repayable within one year:
	€16,000,000 at 2.923% repayable 30 April 2012	13,336	-	-
	€3,000,000 at 2.958% repayable 20 April 2012	2,500	-	-
	€37,000,000 at 3.857% repayable 31 October 2011	-	-	31,868
	€63,000,000 at 3.448% repayable 28 April 2011	-	55,774	-
		________	________	________
		15,836	55,774	31,868
		________	________	________

As at 31 March 2012, the Company had a £120 million committed, multi-currency syndicated revolving credit facility led by The Royal Bank of Scotland plc of which £15.8m has been drawn down in euros. The facility expires on 31 December 2013. The interest rate on this facility is LIBOR plus 2.5% 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 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 2012.

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 2012 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 Standard Life European Private Equity Trust PLC (the "Company") to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2012, which comprise the Income Statement, the Reconciliation of Movements in Shareholders' Funds, the Balance Sheet, the cashflow 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 Services 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 Services 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 the 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 2012 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 Services Authority.

PricewaterhouseCoopers LLP

Chartered Accountants

Edinburgh

29 May 2012

 

END

 

 

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