SLPE.L Regulatory News (SLPE)

STANDARD LIFE PRIVATE EQUITY TRUST PLC

ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 30 SEPTEMBER 2019

KEY HIGHLIGHTS

FINANCIAL HIGHLIGHTS

Investment objective

The Company's investment objective is to achieve long-term total returns through holding a diversified portfolio of private equity funds and direct investments into private companies alongside private equity managers ("co-investments"), a majority of which will have a European focus.

Our strategy

Standard Life Private Equity Trust plc (the "Company" or "SLPET") provides investors with exposure to a diversified portfolio of leading private companies, primarily through investments into private equity funds. We achieve this by partnering with the best private equity managers to build an appropriately diversified portfolio by country, industry sector, maturity and number of underlying investments.

Headlines for the year ended 30 September 2019

1 Alternative Performance Measures ("APMs"). Explanations of APM's and other terms can be found in the glossary of terms & definitions set out below.

2 As at 30 September 2019, based on full year dividend of 12.8p.

STRATEGIC REPORT

CHAIR'S STATEMENT

I am pleased to report that during my first year as Chair of Standard Life Private Equity Trust plc the Company has continued to deliver positive returns to its shareholders, with increases in both the Net Asset Value ("NAV") total return and the dividend for the year.

PerformanceFor the year ended 30 September 2019, the Company's NAV total return was 10.5%. The total shareholder return was 5.7%. For comparison, the return on the FTSE All-Share Index was 2.7% in the same period.

While we are required to report on the performance of the Company over the last 12 months, the Board also recognises that our private equity investment strategy needs to be viewed on a longer-term basis. Investments that the Company makes within the portfolio will take a number of years to mature to the point where they might realise a return and so, as a Board, we are also focused on the trends of the longer-term performance of the portfolio. The table below shows that the Company has consistently provided better returns than the broad UK stock market.

Source: Refinitiv Datastream

A review of the Company's performance, market background and investment activity during the year under review, as well as the Manager's investment outlook, are provided in the Manager's Report set out below.

Investments & realisation activity

During the year, the Company made commitments totalling £188.0m (2018: £117.0m) into its unquoted portfolio. Funds were committed to eight new primary investments, three secondaries and the Company's first co-investment. The Company received £138.1m of realisations and associated income in the year (2018: £128.1m). The realised return from the ongoing investment operations of the Company's core portfolio equated to a solid 2.2 times cost (2018: 2.9 times cost). Outstanding commitments at the year end amounted to £450.3m (2018: £369.3m).

Dividends

The Company has paid three quarterly dividends of 3.2p per share and the Board has announced a fourth quarterly dividend of 3.2p per share. This will be paid on 24 January 2020 to Shareholders on the register on 20 December 2019 and will make a total dividend for the year to 30 September 2019 of 12.8p per share. This represents an increase of 3.2% on the 12.4p paid for the year to 30 September 2018 and compares to the increase in the Retail Price Index ("RPI") of 2.4% in the year to September 2019.

The Board's current dividend policy was introduced in September 2014 and since then the annual dividend per share has risen from 5p to 12.8p. The Board believes that providing a strong, stable dividend is attractive to shareholders and therefore, in the absence of unforeseen circumstances, it is committed to maintaining the real value of this enhanced dividend.

Key performance indicators ("KPIs")

During the year, the Board reviewed and revised the KPIs by which performance of the Manager is measured in order better to align the KPIs with the interests of shareholders. The KPIs are as follows:

These measures encapsulate the key variables that the Board considers are the most important to current and prospective shareholders. More detail on the Company's performance with respect to the KPIs is set out below.

Discount

The discount of the Company's share price to its net asset value ranged between 6.4% to 24.8% during the year, and averaged 17.6%, which is in line with the average of the close peer group. The Board does not have a stated discount control policy. However, the Board and Manager monitor the discount on a regular basis to ensure that the discount is not an outlier versus those of other investment companies with a similar investment approach.

Bank facility

Since the year end, the Board has increased the Company's £80m syndicated multi-currency revolving credit facility with Citibank and Société Générale to £100m and has extended the expiry date to December 2024. The facility is currently undrawn (2018: £nil).

Environmental, social & governance ("ESG")

The Board is strongly committed to responsible and sustainable investing and closely monitors the Manager's commitment to ESG factors. The Board supports the Manager's declaration that it invests in accordance with the Principles of Responsible Investment and is pleased to note that its activities in this field have been recognised with a silver award in the Private Equity Exchange & Awards. More detail on the Manager's credentials are set out below.

Investment manager

The Board believes that the appointment of SL Capital Partners LLP as Investment Manager continues to be in the long-term interests of shareholders. This conclusion has been reached on the basis of the strength of the returns that the Manager has delivered for the Company and being confident that the process by which these returns have been generated remains appropriate for the objectives of the Company and that this process continues to be applied by the Manager.

Since the year end, the Board has agreed with the Manager to some changes in the investment team looking after the Company. The Board is pleased to announce that Alan Gauld will become the lead manager with immediate effect. Alan has been part of the team responsible for the Company since 2017. He has been a member of the private equity team at the Manager for the last 10 years and, in that time, has worked across numerous fund investments, both primary and secondary, as well as co-investments. Alan will be supported by Patrick Knechtli and Mark Nicolson, respectively Head of Secondaries and Head of Primaries at Aberdeen Standard Investments. Our previous lead manager, Merrick McKay, has taken on a wider role within Aberdeen Standard Investments as Head of European Private Equity. The Board wishes Merrick all the best in that role.

Board

This is my first report as Chair of the Board as I assumed the role upon the retirement of Ed Warner on 31 December 2018. The Board has recently reviewed its succession plan and concluded that the Board currently has an appropriate mix of skills and experience but will keep this position under regular review.

AGM and manager's presentation

In order to encourage greater access for, and attendance by, shareholders the Board has agreed in future to alternate its annual general meetings between Edinburgh and London, and to include a presentation by the Manager. Accordingly, the next Annual General Meeting of the Company will be held at the offices of the Investment Manager, Bow Bells House, 1 Bread Street, London EC4M 9HH on Monday, 24 February 2020. The Notice of Annual General Meeting can be found in the Annual Report. I should like to encourage shareholders to attend and the Board looks forward to welcoming you to the Meeting.

Future reporting dates

Following consultation with the Manager and the Company's Broker, the Board has reviewed its valuation cycle and will release its annual report to 30 September in January each year, with the Company's AGM taking place in March from 2021. The Board has agreed to this change in order to ensure that the Annual Report contains the latest available valuations at 30 September each year from the managers of its investments. The Company's Quarterly Update to 31 December will be issued in April each year, rather than March as has previously been the case. 

As a result of this change to reporting, and to ensure that shareholders continue to receive regular dividends from the Company in April, July, October and January each year, the Board will move to the payment of four interim dividends rather than three quarterly dividends and a final dividend, as the latter is subject to shareholder approval. The Board will seek shareholder approval for its dividend policy at the AGM in February 2020 and at each AGM in future.

Outlook

Against a backdrop of political and macroeconomic uncertainty, it is notable that global equity markets remained relatively steady during 2019. However macroeconomic risks, such as US-China tensions and Brexit, continue to have the potential to impact returns.

The ongoing success of private equity has attracted more capital to the asset class. The Board recognises that the current market is very competitive, with uninvested capital or 'dry powder' reaching record levels. This clearly has implications for pricing and average private equity returns in the future.

Despite this backdrop, it is worth remembering that the private equity industry has consistently outperformed the listed markets throughout economic cycles. The number of private companies continues to grow, in stark contrast to the decline in publicly listed businesses. Your Board believes that the Company's investment strategy, with its focus on the mid-market (where relatively less dry powder is accumulating compared to the larger end of the market) and its broad diversification (by underlying sector, geography and maturity) continues to provide an attractive opportunity for shareholders. The Company's focus on private equity managers with differentiated investment sourcing and value creation capabilities should also help to mitigate pricing pressures.

As always, the Board will monitor the market closely and maintain a close dialogue with the Manager on the topics of portfolio construction and management.

Christina McComb

Chair

8 January 2019

STRATEGIC REPORT

COMPANY DETAILS

Standard Life Private Equity Trust provides exposure to:

With the objective of delivering strong, long-term total returns for Shareholders through a combination of capital growth and a progressive dividend.

The Strategic Report provides shareholders with details of the Company's strategy and business model, as well as the principal risks and challenges the Company has faced during the year under review.

The Board is responsible for the stewardship of the Company, including overall strategy, investment policy, borrowings, dividends, corporate governance procedures and risk management. Biographies of the directors can be found in the Annual Report.

The Board has contractually delegated the management of the investment portfolio to the Manager, SL Capital Partners LLP ("SL Capital" or "the Manager"). SL Capital is part of Aberdeen Standard Investments. A summary of the terms of the Investment Management Agreement is contained in the Directors' Report in the Annual Report.

Investment objective

The Company's investment objective is to achieve long-term total returns through holding a diversified portfolio of private equity funds and direct investments into private companies alongside private equity managers ("co-investments"), a majority of which will have a European focus.

Investment policy & guidelines

The principal focus of the Company is to invest in leading private equity funds through the primary and secondary funds markets. The Company's policy is to maintain a broadly diversified portfolio by country, industry sector, maturity and number of underlying investments. In terms of geographic exposure, a majority of the Company's portfolio will have a European focus. The objective is for the portfolio to comprise around 50 ''active'' private equity fund investments; this excludes funds that have recently been raised, but have not yet started investing, and funds that are close to or being wound up. The Company may also invest up to 20% of its assets in co-investments.

The Company may also hold direct private equity investments or quoted securities as a result of distributions in specie from its portfolio of fund investments. The Company's policy is normally to dispose of such assets where they are held on an unrestricted basis. This is in addition to the 20% that can be held in co-investments.

To maximise the proportion of invested assets, it is the Company's policy to follow an over-commitment strategy by making commitments which exceed its uninvested capital. In making such commitments, the Manager, together with the Board, will take into account the uninvested capital, the value and timing of expected and projected cashflows to and from the portfolio and, from time to time, may use borrowings to meet drawdowns. The Company's maximum borrowing capacity, defined in its articles of association, is an amount equal to the aggregate of the amount paid up on the issued share capital of the Company and the amount standing to the credit of the reserves of the Company. However, it is expected that borrowings would not normally exceed 30% of the Company's net assets at the time of drawdown.

The Company's non-sterling currency exposure is principally to the euro and US dollar. The Company does not seek to hedge this exposure into sterling, although any borrowings in euros and other currencies in which the Company is invested would have such a hedging effect.

Cash held pending investment is invested in short-dated government bonds, money-market instruments, bank deposits or other similar investments. Cash held pending investment may also be invested in other listed investment companies or trusts.

The Company will not invest more than 15% of its total assets in such listed equities.

The investment limits described above are all measured at the time of investment.

Strategy implementation

Aberdeen Standard Investments is one of the largest investors in private equity funds in Europe. One of the key strengths of the investment team is their extensive fund and direct deal experience, which gives the Manager greater insight into the strategies, processes and disciplines of the funds invested in and allows better qualitative judgements to be made.

The investment strategy employed by the Manager in meeting the investment objective involves a detailed and rigorous screening and due diligence process to identify and then evaluate the best private equity fund offerings.

The private equity asset class has historically exhibited a wide dispersion of returns generated by fund investments and the Manager believes that appropriate portfolio construction and manager selection is vital to optimise investment performance. The Manager focuses predominantly on investing in the European mid-market space where it has a long track record. The number of potential investment opportunities in that segment is vast and the Manager continues to build a roster of blue chip, private equity firms which has been developed from years of strong relationships and proprietary research. In that regard, the objective is for the Company's portfolio to comprise around 50 ''active'' private equity fund investments at any one time.

Key performance indicators ("KPIs")

As set out in the Chair's Statement, the Board reviewed and revised the KPIs by which the Manager is measured. The Company's performance against each of its KPIs is set out below:

Source: Aberdeen Standard Investments & Refinitiv.

Principal risks & uncertainties

The Board has in place a process to assess and monitor the operating and control environment risks of the Company. The principal risks faced by the Company relate to the Company's investment activities and these are set out below.

The financial risk management objectives and policies of the Company are contained in note 19 to the financial statements.

Review of performance

An outline of the performance, market background, investment activity and portfolio during the year under review and the performance over the longer term, as well as the investment outlook, are provided in the Highlights, Chair's Statement, and Manager's Review. Details of the Company's investments can be found in the Annual Report.

Viability statement

In accordance with Provision C.2.2 of the UK Corporate Governance Code revised in April 2016 and Principle 21 of the AIC Code of Corporate Governance revised in July 2016, the Board has assessed the Company's prospects for a five year period. The Board considers five years to be an appropriate period for an investment trust company with a portfolio of private equity investments and is based on the financial position of the Company as detailed in the Chair's Statement, and the Manager's Review in this Annual Report and Financial Statements.

In determining this time period the directors considered the nature of the Company's commitments and the Company's associated cash flows. Generally the private equity funds and co-investments in which the Company invests call monies over a five year period, whilst they are making investments, and these drawdowns should be offset by the more mature funds and co-investments, which are realising their investments and distributing cash back to the Company. The Manager presents the Board with a comprehensive review of the Company's detailed cash flow model on a regular basis, including projections for up to five years ahead depending on the expected life of the commitments. This analysis takes account of the most up to date information provided by the underlying managers, together with the Manager's current expectations in terms of market activity and performance.

In addition, following the year end, the Board increased and extended the Company's syndicated multi-currency revolving credit facility with Citibank and Société Generale to £100m until December 2024. The facility is currently undrawn (2018: £nil). The Board believes that this will provide additional funding capital if required.

The directors have also carried out an assessment of the principal risks as set out above and discussed in note 19 to the financial statements that are facing the Company over the period of the review. These include those that would threaten its business model, future performance, solvency or liquidity such as over-commitment and market risks. By having a portfolio of fund investments, diversified by manager, vintage year, sector and geography, by assessing market and economic risks as decisions are made on new commitments, and by monitoring the Company's cash flows together with the Manager, the directors believe the Company is well placed to take advantage of economic cycles. The directors are also aware of the Company's indirect exposure to ongoing risks through underlying funds. These are continually assessed by the Manager monitoring the underlying managers themselves and by participation on fund advisory boards.

Based on the results of this analysis, and the ongoing ability to adjust the portfolio, the directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the five year period following the date of this report.

Social, Community, Employee Responsibilities & Environmental Policy

The Company has no employees. The portfolio is managed by the Manager and all activities are contracted out to third party service providers. There are, therefore, no disclosures to be made in respect of employees. The Board is strongly committed to responsible and sustainable investment and closely monitors the Manager's commitment to ESG factors. More details on the Manager's ESG credentials can be found below.

Gender representation

At 30 September 2019, there were three male directors and two female directors on the Board. The Board's approach to diversity is set out in the report from the Nominations Committee in the Annual Report.

Going Concern

The Board considered its obligation to satisfy itself as to the appropriateness of the adoption of the going concern assumption as a basis for preparing the financial statements, taking into account; the £80 million committed, syndicated revolving credit facility with a maturity date of 31 December 2020; the future cash flow projections, and that the Company had net resources available for investment at the year-end. The Board ratified the conclusion of the Audit Committee that the adoption of the going concern basis was appropriate.

The directors believe that the Company has adequate resources to continue in operational existence for the foreseeable future. For this reason, they have adopted the going concern basis in preparing the financial statements.

MANAGER'S REPORT

Private equity

The private equity asset class has grown materially in recent years, driven by increased demand from investors as they seek to diversify portfolios, reduce risk and enhance returns. This has been mirrored by a noticeable shift in the attitude in the boards of companies, who are increasingly electing to stay private for longer or de-listing from public markets.

The vast majority of capital invested in private equity is raised and managed via limited partnership structures, where investors make relatively long-term commitments and have more limited liquidity options relative to public markets. Investors typically expect higher returns from private equity to compensate for this illiquidity. Private equity managers aim to achieve those returns by having a more active role in the management of their investee companies and by applying specific operational and financial skill sets as part of a well-defined value creation plan.

Accessing private equity

The private equity asset class has historically been funded in large part by institutional investors, such as pension funds, endowment and insurance companies. These investors typically have longer-term investment horizons and are able to invest millions of pounds / dollars / euros in a single commitment or investment. Closed-ended investment trusts provide a means for smaller institutional investors and private individuals to gain exposure to this asset class.

SLPET is indirectly invested in a diverse range of companies managed by leading private equity managers. In total, the portfolio has exposure to around 400 underlying companies. The selection of the managers, their funds and the direct investments is the result of years of proprietary research and relationship building by the Manager.

The portfolio consists of three types of investment:

Portfolio construction

The Manager adopts a dynamic approach to portfolio construction, taking into account changes in the SLPET portfolio and the wider market environment. SLPET's focus is predominantly on investing in European mid-market companies. In recent years, SLPET has increased its exposure to North American mid-market companies, driven by access to attractive investment opportunities and the associated diversification benefits. In order to gain access to the best quality private equity managers, the majority of the portfolio is invested via primary investments. As it takes time for the commitments to these primary investments to be drawn down and invested into portfolio companies, the Manager employs an "over commitment" strategy. This ensures the portfolio is as fully invested as possible, but requires careful management of the cash and loan facilities available to meet the obligations to fund outstanding commitments.

In addition to primary investments, the Manager purchases private equity fund interests in the secondary market in order to fill gaps in the portfolio and gain exposure to new managers. Since the expansion of the strategy in January 2019, the Manager also participates in co-investments for the Company. Secondaries and co-investments have a complementary investment profile, helping to deploy cash more quickly and also typically exhibiting shorter holding periods, thereby reducing the overall average duration of SLPET's portfolio and, in most cases, generating higher IRRs. Co-investments sourced by the Manager also typically have no fees or carried interest payable, further enhancing the potential cash returns received by SLPET. The Manager may also sell interests via the secondary market for relative value, portfolio construction or liquidity reasons.

Overview of the Manager

SLPET is managed by the Aberdeen Standard Investments' ("ASI") private equity team which is based in Europe and in the US. The team is one of the largest investors in private equity funds and co-investments in Europe. A key strength of the investment team is their extensive fund and direct deal experience, which gives the Manager greater insight into the strategies, processes and disciplines of the funds invested in and allows better qualitative judgements to be made.

Responsible investment - Environmental, Social & Governance ("ESG")

ASI has been UN PRI for over 10 years and has recently been awarded a PRI rating of A+. It has a central ESG and Stewardship team consisting of 20 people and is active in ESG industry involvement (PRI, ICGN, ACGA, Eurosif, UKSIF, VBDO, UN Global Compact, CDP, EITI, TCFD, 30% Club). The central ESG and Stewardship team works alongside the private equity team to ensure best practice in ESG efforts.

In addition, the Manager's private equity team has its own ESG representatives, headed by the Company's lead manager, Alan Gauld, and supported by the Private Equity ESG Committee. The Committee is responsible for driving forward private equity ESG initiatives and monitoring progress by the Manager. The Committee meets on a quarterly basis and has representation from across the private equity team and the ESG and Stewardship team.

The Manager has its own ESG policy for private equity and has incorporated ESG considerations into investment activity over the last decade. Each new investment made on behalf of the Company this year was subject to full operational due diligence and specific due diligence around ESG. In addition, we have ensured that all primary fund commitments in the year are subject to legal protections relating to socially responsible investing ("SRI").

No primary or secondary fund opportunities were declined solely on ESG grounds during the year, however an advanced co-investment opportunity in the Healthcare space was rejected due to ESG concerns around pricing practices, given the relatively high level of revenue and margin generated from customers in the public sector. During the year the Manager worked with several of the Company's private equity managers regarding ESG. For example, the Manager specifically worked with one of the Company's North America-based private equity managers to help the firm further develop and refine its ESG capabilities, particularly around ESG reporting frameworks.

The Manager recently concluded its 5th annual Private Equity ESG survey. This exercise allows the Manager to monitor responsible investment progress in its portfolio and intervene when there is underperformance in relation to a private equity manager's approach. The survey was sent out to 176 private equity firms, including the Company's core private equity managers. On the back of the results, the Manager has no significant concerns around the ESG focus of the Company's core portfolio. The 2019 ESG survey will be made available to investors upon request.

Finally, the Manager's focus on ESG in the year was recognised with a 'Silver Award' for Best ESG Private Equity Firm at the 10th edition of the Private Equity Exchange & Awards. We are delighted to be recognised by the European private equity market as amongst the leaders in ESG.

Borrowing facilities

Throughout the year SLPET had access to an £80m syndicated multi-currency revolving credit facility with Citibank and Société Générale. Since the year end the Board has agreed an expansion of this facility to £100m and has extended the expiry date to December 2024. The facility was undrawn at the year end (2018: £nil). The interest rate on this facility is LIBOR plus 1.50%, rising to 1.70% depending on utilisation, and the commitment fee payable on non-utilisation is 0.7% per annum. During the year we incurred £683k in fees and interest for the revolving credit facility. Notwithstanding the lack of utilisation of the facility, it is a valuable tool for managing SLPET's resources available for investment and will look to use this opportunistically in the future.

Financial Summary

(1) Includes dividends reinvested.

(2) The Company was listed on the London Stock Exchange in May 2001.

Ten Year Historical Record

Summary financial information

Source: The Manager & Refinitiv

1 Represents the cash dividends paid during the year.

2 The incentive fee arrangement ended on 30 September 2016. Following the end of the incentive fee period, a single management fee of 0.95% per annum of the NAV of the Company replaced the previous management and incentive fees.

Sector Review

Private equity market review

Over recent years there has been a marked shift towards the private equity asset class (buyouts, growth and venture capital), resulting in assets under management ('AuM') growing to a record high of c.$3.4 trillion globally. In the US for example, the number of PE-backed companies increased by 106% between 2006 to 2017 around 4,000 to over 8,000. In contrast, according to the McKinsey Global Private Markets Review 2019, the number of US publicly traded firms fell by 16% over the same time period to around 4,300 (and by 46% since 1996). Investors who invested in private equity through and after the global financial crisis have generally achieved strong returns, driving further interest in, and growth of, the market. Whilst the total market value is at a high relative to historical levels, it remains relatively small in comparison with traditional asset classes.

Private market activity

Total transaction values in 2018 broke post-financial crisis levels in both Europe and North America, driven by the large/mega-cap segment (deals of over €1bn). The first half of 2019 saw subdued levels of activity, particularly when compared with the same period in 2018. The large/mega-cap segment was also significantly down across both markets on the 2018 peak but ahead of the level of activity in the second half of 2018 in Europe and broadly in line with long-term, post-crisis levels.

Exit activity has remained buoyant over the last 10 years. Activity peaked in 2014/15 as private equity managers took advantage of a relatively stable market backdrop to realise their remaining pre-crisis portfolios. Trade acquirers, taking advantage of cheap corporate debt and pricing-in synergies, have been particularly active in recent years, consistently representing the majority of exit value. The first six months of 2019 saw a reduction in exit activity, possibly as buyers became more cautious in anticipation of a potential economic slowdown.

Fundraising and dry powder

In recent years, we have seen increased levels of capital attracted to the private equity asset class. This is due to a combination of long-term outperformance compared to public markets, high levels of cash distributions relative to historical trends and the search for strong returns in an expected low-growth environment. This has led to a fundraising environment at its most buoyant since the global financial crisis in 2008. The best performing managers across all size segments are continuing to attract capital and are raising new funds relatively easily.

The strong fundraising environment has led to record levels of dry powder. The US buyout market currently has around $410bn of uninvested capital committed, or over double the amount when compared to Europe. In both the US and Europe, the increase in dry powder has been primarily driven by larger funds (above $5bn in size). In contrast, mid-market levels remain relatively consistent on both sides of the Atlantic. The Company's core focus remains in the mid-market segment.

Entry pricing and leverage

Overall, pricing levels remain relatively high when compared to the 10 year averages. Mid-market transactions are taking place at an average of around 9x EBITDA in Europe which represents a significant discount to the larger European buyout space, which saw an average entry multiple of 11x EBITDA in 2018. Average multiples in the large/mega-cap segment have consistently exceeded 10x EBITDA since 2014. The trend is similar in the US market.

Leverage multiples have also edged higher since 2009 due to improved debt availability. However, "covenant-lite" structures are becoming increasingly common and equity as a percentage of enterprise value remains high compared to pre-crisis levels. These factors are expected to provide managers with a greater level of capital structure resilience and flexibility if there were short-term trading challenges or an economic downturn. We view this as one of the industry's key lessons learned from the last financial crisis.

Secondary investment market

The development of the secondary market, whereby positions in established funds are bought and sold, has accelerated in recent years, with a combination of strong pricing, buoyant fund-raising and innovation in deal types

driving record levels of deal volume.

According to figures from Greenhill, deal volumes for the first half of 2019 were around $42 billion, up 56% on the same period last year. Strong momentum has continued into the second half of 2019, such that deal volumes for the full year are expected to exceed the record level of $74bn achieved in 2018. Activity levels have been boosted notably by an increase in larger deals (those of over $1 billion) and the growth in manager-led transactions, which include liquidity offerings, fund restructurings and spin-out deals.

Average pricing for secondary deals in the first half of 2019 declined to 89% of NAV, largely due to an increase in the amount of mature fund positions which tend to trade at higher discounts. That being said, funds managed by high quality or well-known managers continue to command strong pricing, often at or above NAV.

Co-investment market

The co-investment market has continued to grow driven by a shift in investor demand towards more direct private equity products. Whilst co-investments can add single company concentration and therefore risk, appropriately sized investments can be accretive to performance. Investors are attracted to co-investment by its core advantages relative to fund investment; having greater control of investment selection and the lower level of fees.

Performance

Performance Summary

NAV performance

The NAV TR for the year was 10.5% versus 2.7% for the FTSE All-Share index and in line with the Company's annualized NAV TR since inception of 10.2% per annum. The underlying portfolio exhibits strong average revenue and EBITDA growth in the year of over 10%.

Underlying performance

The increase in value of the unquoted portfolio on a per share basis was 47.0p. This was made up of net unrealised gains at constant FX of 43.0p, net realised gains and income of 6.9p and net unrealised FX losses of 2.9p.

Notable contributors to the unrealised gains included 3i Eurofund V, Permira V and Advent GPE VIII which together accounted for 21.6p of the NAV increase. Action, as the Company's single largest underlying company at 7.7% of NAV, continued to grow strongly in the year and was a key contributor to unrealised gains in the period via 3i Eurofund V. Conversely, at a fund level, unrealised value decreases were seen at Equistone V and Montagu IV, which together contributed to a NAV reduction of 7.1p.

Material contributors to realised gains were CVC V, Permira V, IK VII, Equistone IV and Montagu IV, which together accounted for 22.6p of the NAV increase, where companies such as Transnorm, Nemera, Parex and TeamViewer were fully or partially sold for strong returns above prior carrying values. Realised losses amounted to a NAV reduction of 4.8p.

During the year, sterling appreciated against the euro by 0.7%, whilst depreciating against US dollar, by 5.5%. This had a negative impact on the Company's NAV. The sterling/euro exchange rate at 30 September 2019 was £1/€1.1227 and the sterling/dollar exchange rate was £1/$1.3041. The combined effect of foreign exchange movements on the valuation of the unquoted portfolio over the year was to reduce the NAV per share by 2.9p (0.6%).

We, and the Board, do not believe it is appropriate for the Company to undertake any financial hedging of its foreign exchange exposure, given the irregularity in size and timing of individual cash flows to and from its fund investments and co-investments. Any cash balances and bank indebtedness are held in sterling, euro and US dollars, broadly in proportion to the currency of the Company's outstanding fund commitments.

Drawdowns

During the year £81.6m was invested through SLPET's portfolio of funds into existing and new underlying companies. Drawdowns were used to invest into a diverse set of predominantly European companies, with notably large new investments in Mehiläinen via CVC Fund VII (a leading provider of healthcare and care services in Finland), Mobility Holdings via Hg 8 (leading European B2B fleet leasing company) and Ginefiv via Investindustrial Growth (leading Spanish fertility clinics). For each of these portfolio companies the value creation plan typically includes the internationalisation of the company, the introduction of new products, undertaking a 'buy and build' acquisition strategy, and / or professionalisation of the company's management team, processes and reporting.

Distributions

Exit activity from the private equity funds was driven by the continued strong market appetite for high quality private companies, both from trade / strategic buyers (for example, Honeywell's acquisition of Transnorm from IK VII) and other private equity firms (Astorg's acquisition of Nemera from Montagu IV). IPO has been less prominent as an exit route during the year, although we note the successful listing of TeamViewer (Permira V) on the Frankfurt stock exchange, one of the largest software IPOs in European history. The majority of portfolio company realisations were at a significant premium to the last relevant valuation, typically in the region of 20%+. This average premium paid at exit has persisted since 2010. Case studies of two of the largest distributions in the year, Transnorm and Nemera, are included in the Annual Report.

Commitments

In total, eight primary fund commitments, three secondary fund commitments and one co-investment were completed during the year as a number of the Company's core private equity managers returned to the fundraising market. The total value of new and recycled commitments in addition to exposure acquired amounted to £188.0m, whilst fund drawdowns were £81.6m. The total outstanding commitments at financial year end were £450.3m (2018: £369.3m).

The over-commitment ratio has increased to its current level of 42.6% but still remains at the lower end of our long-term target range of 30%-75%, highlighting the prudent approach to over-commitment we have adopted in the current market environment. We take additional comfort from the maturity profile of the underlying portfolio, where approximately 50% of the portfolio, by value, has been held for four or more years. We expect that the value in many of these mature positions is likely to be realised in the near term, which will provide further funding for existing commitments. In addition, we estimate that around £62.0m of the reported outstanding commitments are unlikely to be drawn down, driven by the nature of private equity investing. We also estimate that around £48m is currently held by underlying funds as credit facilities and we expect that this amount will be drawn from the Company within the next 12 months.

Primary investment activity

During the year, £122.6m was committed to new private equity primary funds focused on Europe, £24.7m to two North American funds, and £21.4m to a global investment strategy. All new commitments were with core private equity managers with whom the Manager has deep relationships and has tracked over the long term.

The value of primary commitments made in the year is ahead of prior years. This is largely due to a number of the Company's core private equity managers returning to the market to fundraise at the same time. Consequently, we expect that the Company will commit less capital to primary funds in FY20.

Secondary investment activity

During the year, the Company acquired £47.6m of exposure through buying established funds in the secondary market. In addition to offering attractive investment returns, secondaries are also used to fill gaps in the SLPET portfolio, to gain access to new managers, and as an efficient means of redeploying sale proceeds from underlying portfolio company sales.

Whereas most of SLPET's previous secondary investments have comprised purchases of single interests in funds (as was also the case for the recent 3i Eurofund V purchase), this was the first time that SLPET has acquired a portfolio of fund interests managed by different buyout firms. Furthermore, the Vitruvian Continuation Vehicle transaction was the first fund restructuring in which the Company has participated. With the continued increase in size and quality of general partner-led secondaries such as the Vitruvian transaction, we would anticipate this area will offer further attractive opportunities for SLPET in the coming months and years.

As part of its active portfolio management and to improve its exposure by vintage year, in early 2019 SLPET launched a process to sell interests in 17 mature secondary and buyout funds where there was deemed to be limited upside. The sale was structured in two tranches, with the secondary fund interests sold to one buyer in June 2019 and the buyout fund interests sold to another buyer in September 2019. In aggregate, the agreed sale price was equivalent to a 5% discount to the 31 December 2018 valuation (£49.7m), adjusted for subsequent cash flows. These fund interests held outstanding commitments of £32.6m as at 31 December 2018 which have since been released.

During the year we also raised £33.3m from the sale of listed positions. The net realised and unrealised gains, including dividend receipts, from the quoted portfolio amounted to 2.0p per share (2018: 0.2p). The remaining positions, which represented 1.6% of net assets at the year end, were sold in the first two months following the end of the financial year.

1 Exposure acquired equals purchase price plus any unfunded commitment.

Co-investment activity

In January 2019 the investment objective of SLPET was broadened to include the ability to invest in co-investments, thereby benefitting from ASI's long track record of successful investing in this strategy.

The type of co-investments targeted by the Manager for SLPET are those that have a complementary investment profile to the Company's existing underlying assets. They help the Company deploy cash more quickly and also typically exhibit shorter investment periods than funds. Co-investments also give the Manager more control over asset selection, allowing it to actively increase the Company's exposure to certain sectors or geographic regions, or example. Importantly, co-investments sourced by the Manager typically have no, or reduced, fees and carried interest payable to the lead private equity manager, further enhancing the cash returns received by the Company.

The Company's first co-investment was made alongside the lead manager IK Investment Partners, and is a commitment to invest up to €6m in Mademoiselle Desserts, a leading European manufacturer of premium frozen pastries. At the year-end €4m / £3.5m had been invested and the business is trading to plan.

Outlook

Current macroeconomic risks to private equity returns include US-China tensions, Brexit and the threat of a recession. Private equity is subject to the same risks as the wider market but has shown resilience versus other asset classes in the past and has consistently outperformed the listed markets throughout economic cycles. We expect this relationship to persist into the future.

We remain confident that private equity markets offer continued opportunity for value creation. Private equity managers are proving to be astute stewards of a diverse spectrum of companies, and market forces mean that these assets can, and likely will, stay in private hands for longer (as the number of publicly-listed companies continues to shrink). The best private equity managers can support the growth and development of emerging small and mid-market companies, whether that is in terms of ESG, digitalisation, operational improvement, professionalisation, innovation or internationalisation.

We recognise that the private equity market is currently very competitive due to the record levels of dry powder. Asset-price inflation is a significant factor when considering new investments in today's market. However, the weight of capital continues to flow primarily into those managers focused at the large and mega-cap end of the market, pushing up valuations in that segment to what we consider to be relatively expensive levels and making it harder to generate outsized returns.

By contrast, the Company continues to focus on the mid-market segment in Europe, which is not accumulating dry powder at the same rate as the large / mega-cap space. Furthermore, the mid-market remains a deep and fragmented pool of investment opportunities with greater potential for sensible pricing and more rapid value creation. We continue to believe that strong, attractive returns will be driven by mid-market private equity managers that exhibit differentiated deal sourcing and value creation capabilities.

SL Capital Partners

8 January 2020

Portfolio construction - Geographic exposure

At the year end, 86% of underlying private companies were headquartered in Europe and this will continue to be the case over the short to medium term, with the balance mainly headquartered in North America.

We believe that the portfolio is diversified and well positioned to mitigate a potential deterioration in macroeconomic conditions. Brexit, for example, has the potential to impact growth in the Company's underlying portfolio but we note that UK-headquartered companies amount to only 17% of the portfolio and most of these businesses have pan-European or globally diversified revenue bases.

The portfolio remains skewed towards Northern Europe. SLPET has historically been underweight in Southern Europe due to the relative immaturity and underperformance of its private equity market compared to other European regions. However, over recent years the private equity market dynamics have improved and we have increased our exposure to the region. Consequently, we have made two primary fund commitments to Southern European-focused funds (Investindustrial Growth and Investindustrial VII), totalling €50m. We also continue to selectively increase our North American mid-market exposure via recent commitments to American Industrial Partners VII and Great Hill Partners VII, which will modestly grow the Company's exposure to the region as we move forward.

Portfolio construction - Sector exposure

Over recent years the portfolio has shifted towards resilient and defensive areas, such as Information Technology and Healthcare. 2019 has seen a continuation in this trend as private equity managers begin positioning their portfolio for potentially more volatile macroeconomic conditions. Whilst Industrials remain a signi¹cant part of the portfolio, it is worth noting that its weighting has declined from 22% to 17% during the year.

Consumer Discretionary and Staples remain a significant part of the portfolio at a combined 35%, broadly in line with prior year. This weighting represents the size of the sector in Europe more generally whilst also representing the success that private equity managers have had, and continue to have, in this area.

Maturity analysis

With 50% of the underlying portfolio having been held for four years or more, near-term realisations and distributions are expected to remain strong. While the make-up of the portfolio in terms of vintages is largely unchanged from last year, it is encouraging to note that the valuations of the older vintages have improved significantly. In 2018, investments of over 5 years were valued at 1.9 times cost, whereas today the ¹gure is 2.9 times cost. The figure is skewed by exceptionally strong investment performance in Action (3i Eurofund V), TeamViewer and Dr. Martens (both Permira V), to name a few. We have also seen material upward valuations on the 4 and 5 year portions of the portfolio compared to last year.

STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE ANNUAL REPORT AND THE FINANCIAL STATEMENTS

The directors are responsible for preparing the Annual Report and Financial Statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law they are required to prepare the financial statements in accordance with UK accounting standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland.

Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of its profit or loss for that period. In preparing these financial statements, the directors are required to:

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose, with reasonable accuracy at any time, the financial position of the Company and enable them to ensure that its financial statements comply with the Companies Act 2006. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities.

Under applicable law and regulations, the directors are also responsible for preparing a Strategic Report, Directors' Report, Directors' Remuneration Report and Corporate Governance Statement that complies with that law and those regulations.

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Responsibility statement of the directors in respect of the annual financial report

We confirm that to the best of our knowledge:

We consider the Annual Report and Financial Statements, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position and performance, business model and strategy.

Christina McComb

Chair

8 January 2020

STATEMENT OF COMPREHENSIVE INCOME

For the year ended 30 September 2019

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

There are no items of other comprehensive income, therefore this statement is the single Statement of Comprehensive Income of the Company.

All revenue and capital items in the above statement are derived from continuing operations.

No operations were acquired or discontinued in the year.

The dividend which has been recommended based on this Statement of Comprehensive Income is 12.80p (2018: 12.40p) per ordinary share.

The accompanying notes form an integral part of these financial statements.

STATEMENT OF FINANCIAL POSITION

As at 30 September 2019

The accompanying notes form an integral part of these financial statements.

The financial statements of Standard Life Private Equity Trust plc, registered number SC216638 were approved and authorised for issue by the Board of Directors on 8 January 2020 and were signed on its behalf by Christina McComb, Chair.

STATEMENT OF CHANGES IN EQUITY

For the year ended 30 September 2019

For the year ended 30 September 2018

The accompanying notes form an integral part of these financial statements.

STATEMENT OF CASH FLOWS

The accompanying notes form an integral part of these financial statements.

NOTES TO THE FINANCIAL STATEMENTS

1. Accounting Policies

(a) Basis of accounting

The financial statements have been prepared in accordance with the Companies Act 2006, Financial Reporting Standard 102 and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' (the 'SORP'), issued in November 2014 and updated in February 2018 with consequential amendments. They have also been prepared on the assumption that approval as an investment trust will continue to be granted. The financial statements have been prepared on a going concern basis. The directors believe that this is appropriate for the reasons outlined in the Directors' Report of the Annual Report. The principal accounting policies adopted are set out below. These policies have been applied consistently throughout the current and prior year.

Rounding is applied to the disclosures in these financial statements, where considered relevant.

(b) Revenue, expenses and finance costs

Dividends from quoted investments are included in revenue by reference to the date on which the investment is quoted ex-dividend. Other interest receivable is dealt with on an accruals basis. Dividends and income from unquoted investments are included when the right to receipt is established, which is the notice value date. Dividends are accounted for as revenue in the Statement of Comprehensive Income.

All expenses are accounted for on an accruals basis. Expenses are charged through the revenue account of the Statement of Comprehensive Income except as follows:

(c) Investments

Investments have been designated upon initial recognition as fair value through profit or loss. On the date of making a legal commitment to invest in a fund or co-investment, such commitment is recorded and disclosed. When funds are drawn in respect of such a commitment, the resulting investment is recognised in the financial statements. The investment is removed when it is realised or when the investment is wound up. Subsequent to initial recognition, investments are valued at fair value as detailed below. Gains and losses arising from changes in fair value are included as a capital item in the Statement of Comprehensive Income and are ultimately recognised in the capital reserves.

Unquoted investments are stated at the directors' estimate of fair value and follow the recommendations of the European Private Equity & Venture Capital Association ("EVCA") and British Private Equity & Venture Capital Association ("BVCA"). The estimate of fair value is normally the latest valuation placed on an investment by its manager as at the Statement of Financial Position date. The valuation policies used by the manager in undertaking that valuation will generally be in line with the joint publication from the EVCA and the BVCA, 'International Private Equity and Venture Capital Valuation guidelines'. Where formal valuations are not completed as at the Statement of Financial Position date, the last available valuation from the manager is adjusted for any subsequent cash flows occurring between the valuation date and the Statement of Financial Position date. The Company's Manager may further adjust such valuations to reflect any changes in circumstances from the manager's last formal valuation date to arrive at the estimate of fair value.

For quoted investments, which were actively traded on recognised stock exchanges, fair value is determined by reference to their quoted bid prices on the relevant exchange as at the close of business on the last trading day of the Company's financial year.

(d) Dividends payable - Interim and final dividends are recognised in the period in which they are paid. Scrip dividends are recognised in the period in which shares are issued.

(e) Capital and reserves

Share premium - The share premium account represents the premium above nominal value received by the Company on issuing shares net of issue costs.

Special reserve - Court approval was given on 27 September 2001 for 50% of the initial premium arising on the issue of the ordinary share capital to be cancelled and transferred to a special reserve. The reserve is a distributable reserve and may be applied in any manner as a distribution, other than by way of a dividend.

Capital redemption reserve - this reserve is used to record the amount equivalent to the nominal value of any of the Company's own shares purchased and cancelled in order to maintain the Company's capital.

Capital reserves:

Capital reserve - gains/(losses) on disposal - Represents gains or losses on investments realised in the period that have been recognised in the Statement of Comprehensive Income, in addition to the transfer of any previously recognised unrealised gains or losses on investments within "Capital reserve - revaluation" upon disposal. This reserve also represents other accumulated capital related items and expenditure such as management fees, finance costs and other currency gains/losses from non-investment activity.

Capital reserve - revaluation - Represents increases and decreases in the fair value of investments that have been recognised in the Statement of Comprehensive Income during the period.

Revenue reserve - The revenue reserve represents accumulated revenue profits retained by the Company that have not currently been distributed to shareholders as a dividend.

The revenue and capital realised reserves represent the amount of the Company's reserves distributable by way of dividend.

(f) Taxation

i) Current taxation - Provision for corporation tax is made at the current rate on the excess of taxable income net of any allowable deductions. In line with the recommendations of the SORP, the allocation method used to calculate tax relief on expenses presented against capital in the Statement of Comprehensive Income is the "marginal basis". Under this basis, if taxable income is capable of being offset entirely by expenses presented in the revenue column of the Statement of Comprehensive Income, then no tax relief is transferred to the capital column. Withholding tax suffered on income from overseas investments is taken to the revenue column of the Statement of Comprehensive Income.

ii) Deferred taxation is recognised in respect of all timing differences that have originated but not reversed at the Statement of Financial Position date, where transactions or events that result in an obligation to pay more or a right to pay less tax in future have occurred at the Statement of Financial Position date, measured on an undiscounted basis and based on enacted tax rates. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the underlying timing differences can be deducted. Timing differences are differences arising between the Company's taxable profits and its results as stated in the financial statements which are capable of reversal in one or more subsequent periods.

Due to the Company's status as an investment trust company, and the intention to continue meeting the conditions required to obtain approval in the foreseeable future, the Company has not provided deferred tax on any capital gains and losses arising on the revaluation or disposal of investments.

(g) Foreign currency translation, functional and presentation currency

Foreign currency translation - Transactions in foreign currencies are converted to sterling at the exchange rate ruling at the date of the transaction. Overseas assets and liabilities are translated at the exchange rate prevailing at the Company's Statement of Financial Position date. Gains or losses on translation of investments held at the year-end are accounted for through the Statement of Comprehensive Income and transferred to capital reserves. Gains or losses on the translation of overseas currency balances held at the year-end are also accounted for through the Statement of Comprehensive Income and transferred to capital reserves.

Functional and presentation currency - For the purposes of the financial statements, the results and financial position of the Company is expressed in sterling, which is the functional and the presentation currency of the Company and the presentation currency of the Company.

Rates of exchange to sterling at 30 September were:

Transactions in overseas currency are translated at the exchange rate prevailing on the date of transaction.

The Company's investments are made in a number of currencies. However, the Board considers the Company's functional currency to be sterling. In arriving at this conclusion, the Board considers that the shares of the Company are listed on the London Stock Exchange. The Company is regulated in the United Kingdom, principally having its shareholder base in the United Kingdom, pays dividends as well as expenses in sterling.

(h) Cash and cash equivalents - Cash comprises bank balances and cash held by the Company. Cash equivalents comprise money-market funds which are used by the Company to provide additional short-term liquidity. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

(i) Debtors - Debtors are recognised initially at fair value. They are subsequently measured at amortised cost using the effective interest method, less the appropriate allowances for estimated irrecoverable amounts.

(j) Creditors - Creditors are recognised initially at fair value. They are subsequently stated at amortised cost using the effective interest method.

(k) Segmental reporting - The Directors are of the opinion that the Company is engaged in a single segment of business activity, being investment business. Consequently, no business segmental analysis is provided.

(l) Judgements and key sources of estimation uncertainty - The preparation of financial statements requires the Company to make estimates and assumptions and exercise judgements in applying the accounting policies that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses arising during the year. Estimates and judgements are continually evaluated and based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The area where estimates and assumptions have the most significant effect on the amounts recognised in the financial statements is the determination of fair value of unquoted investments, as disclosed in note 1(c).

The Manager to the Company is SL Capital Partners LLP. In order to comply with the Alternative Investment Fund Managers Directive, the Company appointed SL Capital Partners LLP as its Alternative Investment Fund Manager from 1 July 2014.

The investment management fee payable to the Manager is 0.95% per annum of the NAV of the Company. 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.

Investment management fees due to the Manager as at 30 September 2019 amounted to £799,000 (2018: £553,000).

Irrecoverable VAT has been shown under the relevant expense line.

On 1 January 2019 the Company appointed IQ EQ Administration Services (UK) Ltd as its Administrator replacing BNP Paribas Securities S.A.. The current year administration figures are in respect of services provided by both BNP Paribas Securities S.A. and IQ EQ Administration Services (UK) Ltd. The administration fee payable to IQ EQ Administration Services (UK) Ltd. is adjusted annually in line with the retail price index ("RPI"). The prior year figures are in respect of the services provided only by BNP Paribas Securities S.A.. The administration agreement is terminable by the Company on three months' notice.

As of 6 September 2019, the secretarial agreement with Maven Capital Partners UK LLP was terminated. Aberdeen Asset Management PLC has assumed responsibility for the provision of the company secretarial services to the Company from that date. The agreement with Aberdeen Asset Management PLC is terminable by the Company on six months' notice.

The emoluments paid to the directors during the year can be found in the Directors' Remuneration Report in the Annual Report.

* Bank interest expense includes negative interest on euro-denominated money-market funds.

The tax assessed for the year is different from the standard rate of corporation tax in the UK. The differences are explained below.

1 The Company carries on business as an investment trust company with respect to sections 1158-1159 of the Corporation Tax Act 2010. As such any capital gains are exempt from UK taxation.

(c) Factors that may affect future tax charges

At the year-end there is a potential deferred tax asset of £2,134,000 (2018: £1,315,000) in relation to excess management expenses carried forward. The deferred tax asset is unrecognised at the year-end in line with the Company's stated accounting policy.

Changes to the UK corporation tax rates were substantially enacted as part of Finance Bill 2015 (on 26 October 2015) and Finance Bill 2016 (on 7 September 2016). These include reductions to the main rate to reduce the rate to 19% from 1 April 2017 and to 17% from 1 April 2020. Deferred taxes at the Statement of Financial Position date have been measured at these enacted rates and reflected in these financial statements.

Set out below are the total dividends paid and proposed in respect of the financial year, which is the basis on which the requirements of sections 1158-1159 of the Corporation Tax Act 2010 are considered. The total revenue and capital profits available for distribution by way of a dividend for the year is £68,092,000 (2018: £81,128,000).

There are no diluting elements to the earnings per share calculation in 2019 (2018: none).

1 Relates to the write off of investments which were previously already provided for.

Transaction costs

During the year expenses were incurred in acquiring or disposing of investments. These have been expensed through capital and are included within capital gains on investments in the Statement of Comprehensive Income. The total costs were as follows:

£15,173,000 of the receivables falling due after one year and £6,674,000 of the investments receivable per note 11 relate to future proceeds which are due from secondary sales of fund investments during the period. Under the terms of the transaction, the proceeds of sale are to be received at an agreed future date.

1 The investments payable balance relates to the future payment due for the secondary acquisition of fund investments during the period.

2 Bank interest payable includes negative interest on euro-denominated money-market funds.

13. Bank loans

At 30 September 2019, the Company had an £80 million (2018: £80 million) committed, multi-currency syndicated revolving credit facility provided by Citi and Societe Generale of which £nil (2018: £nil) had been drawn down. The facility expires on 31 December 2020. The interest rate on this facility is LIBOR plus 1.50%, rising to 1.70% depending on utilisation and the commitment fee payable on non-utilisation is 0.7% per annum.

Since the year end, the Board has increased the Company's borrowing facility, with Citibank and Société Generale, to £100m and has extended the expiry date to December 2024.

The Company may buy back its own shares where it is judged to be beneficial to shareholders, taking into account the discount between the Company's NAV and the share price, and the supply and demand for the Company's shares in the open market.

No shares were bought back during the year (2018: nil).

The revenue and capital reserve - gain/loss on disposal represent the amounts of the Company's reserve distributable by way of dividend.

The net asset value per ordinary share and the ordinary shareholders' funds are calculated in accordance with the Company's articles of association.

There are no diluting elements to the net asset value per equity share calculation in 2019 (2018: none).

This represents commitments made to fund and co-investment interests remaining undrawn.

18. Parent undertaking and related party transactions

The ultimate parent undertaking of the Company is Phoenix Group Holdings. The results for the year from 1 October 2018 to 30 September 2019 are incorporated into the group financial statements of Phoenix Group Holdings, which will be available to download from the website www.thephoenixgroup.com.

Standard Life Assurance Limited ("SLAL", which is 100% owned by Phoenix Group Holdings), and the Company have entered into a relationship agreement which provides that, for so long as SLAL and its associates exercise, or control the exercise of, 30% or more of the voting rights of the Company, SLAL and its associates, will not seek to enter into any transaction or arrangement with the Company which is not conducted at arm's length and on normal commercial terms, take any action that would have the effect of preventing the Company from carrying on an independent business as its main activity, or from complying with its obligations under the Listing Rules or propose or procure the proposal of any shareholder resolution which is intended or appears to be intended to circumvent the proper application of the Listing Rules. During the year ended 30 September 2019, SLAL received dividends from the Company totalling £10,850,000 (2018: £10,568,000).

As at 30 September 2018, the Company was invested in the Standard Life Investments Liquidity Funds. During an Extraordinary General Meeting held on 21 September 2018, a resolution was passed to merge the Standard Life Investments Liquidity Funds into Aberdeen Liquidity Funds. The effective date of the merger was 5 October 2018. As at 30 September 2019, the Company was invested in the Aberdeen Liquidity Funds, managed by Aberdeen Standard Investments (Lux), which share the same ultimate parent as the Manager. As at 30 September 2019 the Company had invested £600,000 in the Aberdeen Liquidity Funds (30 September 2018: £14,163,000) which are included within cash and cash equivalents in the Statement of Financial Position. During the year, the Company received interest amounting to £5,000 (2018: £3,000) on sterling denominated positions. The Company incurred £22,000 (2018: £91,000) interest on euro-denominated positions as a result of negative interest rates. As at 30 September 2019 no interest was due to the Company on sterling-denominated positions (2018: £nil) and there was no interest payable on euro-denominated positions (2018: £nil). No additional fees are payable to Aberdeen Standard Investments (Lux) as a result of this investment.

During the year ended 30 September 2019 the Manager charged management fees totalling £6,463,000 (2018: £5,987,000) to the Company in the normal course of business. The balance of management fees outstanding at 30 September 2019 was £799,000 (2018: £553,000).

No other related party transactions were undertaken during the year ended 30 September 2019.

19. Risk management, financial assets and liabilities

Financial assets and liabilities

The Company's financial instruments comprise fund and other investments, money-market funds, cash balances, debtors and creditors that arise from its operations. The assets and liabilities are managed with the overall objective of achieving long-term total returns for shareholders.

Summary of financial assets and financial liabilities by category

The carrying amounts of the Company's financial assets and financial liabilities, as recognised at the Statement of Financial Position date of the reporting periods under review, are categorised as follows:

Fair values of financial assets and financial liabilities

The carrying value of the current assets and liabilities is deemed to be fair value due to the short-term nature of the instruments and/or the instruments bearing interest at the market rates.

Risk management

The directors manage investment risk principally through setting an investment policy and by contracting management of the Company's investments to an investment manager under terms which incorporate appropriate duties and restrictions and by monitoring performance in relation to these. The Company's investments are in private equity funds, typically unquoted limited partnerships and co-investments. These are valued by their managers generally in line with the EVCA and the BVCA guidelines, which provide for a fair value basis of valuation. The funds may hold investments that have become quoted or the co-investment may become quoted and these will be valued at the appropriate listed price, subject to any discount for marketability restrictions.

As explained in the Company's investment policy, risk is spread by investing across a range of countries and industrial sectors, thereby reducing excessive exposure to particular areas. The Manager's investment review and monitoring process is used to identify and, where possible, reduce risk of loss of value in the Company's investments.

The Company's investing activities expose it to various types of risk that are associated with the financial instruments and markets in which it invests. The most important types of financial risk to which the Company is exposed are market risk, over-commitment risk, liquidity risk, credit risk and interest rate risk.

The nature and extent of the financial instruments outstanding at the Statement of Financial Position date and the risk management policies employed by the Company are discussed below.

Market risk

a) Price risk

The Company is at risk of the economic cycle impacting the listed financial markets and hence potentially affecting the pricing of new underlying investments, the valuation of existing underlying investments and the price and timing of exits. By having a diversified and rolling portfolio of investments the Company is well placed to take advantage of economic cycles.

100% of the Company's investments are held at fair value. The valuation methodology employed by the managers of these unquoted investments may include the application of EBITDA ratios derived from listed companies with similar characteristics. Therefore, the value of the Company's portfolio is indirectly affected by price movements on listed financial exchanges. A 10% increase in the valuation of investments at 30 September 2019 would have increased the net assets attributable to the Company's shareholders and the total return for the year by £63,873,000 (2018: £60,371,000); a 10% change in the opposite direction would have decreased the net assets attributable to the Company's shareholders and the total return for the year by an equivalent amount. Due to the private nature of the underlying companies in which the Company's funds are invested, it is not possible for the Company to pinpoint the effect to the Company's net assets of changes to the EBITDA ratios of listed markets any more accurately.

b) Currency risk

The Company makes fund commitments in currencies other than sterling and, accordingly, a significant proportion of its investments and cash balances are in currencies other than sterling. In addition, the Company's syndicated revolving credit facility is a multi-currency facility. Therefore, the Company's net asset value is sensitive to movements in foreign exchange rates.

The Company's syndicated revolving credit facility is a multi-currency facility. As at 30 September 2019, the facility is undrawn (2018: undrawn) and therefore there is no impact to the Company's NAV from foreign exchange rate movements. When the facility is drawn to fund investments, it is typically drawn in the currency of the investment and would therefore provide a notional hedging effect to the Company's foreign exchange exposure.

The Manager monitors the Company's exposure to foreign currencies and reports to the Board on a regular basis. It is not the Company's policy to hedge foreign currency risk. It is expected that the majority of the Company's commitments and investments will be denominated in euros. Accordingly, the majority of the Company's liquidity and any indebtedness is usually held in that currency. No currency swaps or forwards were used during the year.

The table below sets out the Company's currency exposure.

c) Currency sensitivity

During the year ended 30 September 2019 sterling appreciated by 0.7% relative to the euro (2018: depreciated 1.1%) and depreciated by 5.5% relative to the US dollar (2018: appreciated 2.8%).

To highlight the sensitivity to currency movements, if the value of sterling had weakened against both of the above currencies by 10% compared to the exchange rates at 30 September 2019, the capital gain would have increased for the year by £71,845,000 (2018: increase of £67,988,000); a 10% change in the opposite direction would have decreased the capital gain for the year by £58,783,000 (2018: £55,653,000).

The calculations above are based on the portfolio valuation and cash and loan balances as at the respective Statement of Financial Position dates and are not necessarily representative of the year as a whole.

Based on similar assumptions, the amount of outstanding commitments would have increased by £43,282,000 at the year-end (2018: £38,348,000), a 10% change in the opposite direction would have decreased the amount of outstanding commitments by £39,347,000 (2018: £31,376,000).

Liquidity risk

The Company has significant investments in unquoted investments which are relatively illiquid. As a result, the Company may not be able to quickly liquidate its investments in these funds at an amount close to their fair value in order to meet its liquidity requirements, including the need to meet outstanding undrawn commitments. The Company manages its liquid investments to ensure sufficient cash is available to meet contractual commitments and also seeks to have cash available to meet other short-term financial needs. Short-term flexibility is achieved, where necessary, through the use of the syndicated revolving multi-currency loan facility. Liquidity risk is monitored by the Manager on an ongoing basis and by the Board on a regular basis. Current liabilities, as disclosed in note 12, all fall due within one year and the loan facility, as described in note 13, remains undrawn.

Credit risk

Credit risk is the exposure to loss from failure of a counterparty to deliver securities or cash for acquisitions or disposals of investments or to repay deposits. The Company places funds with authorised deposit takers from time to time and, therefore, is potentially at risk from the failure of any such institution. At the year-end, the Company's financial assets exposed to credit risk amounted to the following:

The Company's cash is held by BNP Paribas Securities Services S.A., which is rated 'A' by Standard and Poors. The Company's money-market funds are held in two Aberdeen Standard Investments (Lux) Liquidity funds as well as in Société Générale money-market funds. The Aberdeen Standard Investments (Lux) Liquidity fund is rated 'AAA' by Standard and Poors, while Société Générale and BNP Paribas Securities Services S.A., is rated 'A' and 'A+' by Standard and Poors respectively. Should the credit quality or the financial position of either bank deteriorate significantly, the Manager would move the cash balances to another institution.

As at 30 September 2019, £15,173,000 of the receivables falling due after one year and £6,674,000 of the investments receivable per note 11 relate to future proceeds which are due from the secondary sale of fund investments during the period. Under the terms of the transaction, the proceeds of sale are to be received at an agreed future date.

The Manager considers the credit risk associated with these balances to be in line with those arising from the normal course of business. To date, the buyer has met the payment profile outlined and agreed in the contractually binding sales and purchase agreement. The Manager continues to monitor market developments which may affect this assessment.

Interest rate risk

The Company will be affected by interest rate changes as it holds some interest bearing financial assets and liabilities which are shown in the table below, however, the majority of its financial assets are investments in private equity investments which are non-interest bearing. Interest rate movements may affect the level of income receivable on money-market funds and cash deposits and interest payable on the Company's variable rate borrowings. The possible effects on the cash flows that could arise as a result of changes in interest rates are taken into account when making investment and borrowing decisions. Derivative contracts are not used to hedge against any exposure to interest rate risk.

Interest risk profile

The interest rate risk profile of the portfolio of financial assets and liabilities at the Statement of Financial Position date was as follows:

The weighted average interest rate is based on the current yield of each asset, weighted by its market value. The weighted average interest rate on the bank balances is based on the interest rate payable, weighted by the total value of the balances. The weighted average period for which interest rates are fixed on the bank balances is 31.0 days (2018: 31.0 days). The loan facility, as disclosed on note 13, remains undrawn.

Interest rate sensitivity

An increase of 1% in interest rates would have decreased the net assets attributable to the Company's shareholders and decreased the total gain for the year ended 30 September 2019 by £2,000 (2018: £5,000). A decrease of 1% would have increased the net assets attributable to the Company's shareholders and increased the total gain for the year ended 30 September 2019 by an equivalent amount. The calculations are based on the interest paid and received during the year.

20. Fair Value hierarchy

FRS 102 requires an entity to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy shall have the following classifications:

The Company's financial assets and liabilities, measured at fair value in the Statement of Financial Position, are grouped into the following fair value hierarchy at 30 September 2019:

As at 30 September 2018

Unquoted investments

Unquoted investments are stated at the directors' estimate of fair value and follow the recommendations of the EVCA and the BVCA. The estimate of fair value is normally the latest valuation placed on an investment by its manager as at the Statement of Financial Position date. The valuation policies used by the manager in undertaking that valuation will generally be in line with the joint publication from the EVCA and the BVCA, 'International Private Equity and Venture Capital Valuation guidelines'. Fair value can be calculated by the manager of the investment in a number of ways. In general, the managers with whom the Company invests adopt a valuation approach which applies an appropriate comparable listed company multiple to a private company's earnings or by reference to recent transactions. Where formal valuations are not completed as at the Statement of Financial Position date, the last available valuation from the manager is adjusted for any subsequent cash flows occurring between the valuation date and the Statement of Financial Position date. The Company's Manager may further adjust such valuations to reflect any changes in circumstances from the last manager's formal valuation date to arrive at the estimate of fair value.

Quoted investments

At 30 September 2019, the Company's investments included shares which were actively traded on recognised stock exchanges, with their fair value of £11,435,000 being determined by reference to their quoted bid prices as at the close of business on the last trading day of the Company's financial year (2018: £29,020,000).

Securities Financing Transactions (SFT)

The Company has not, in the year to 30 September 2019 (2018: none) participated in any repurchase transactions, securities lending or borrowing, buy-sell back transactions, margin lending transactions or total return swap transactions (collectively called SFT). As such, it has no disclosure to make in satisfaction to the EU regulations on transparency of SFT.

21. Post balance sheet events

Since the year end, the Board has increased the Company's borrowing facility, with its existing lenders, Citibank and Société Générale, to £100m and has extended the expiry date to December 2024.

22. Additional notes

This Annual Financial Report does not constitute the Company's statutory accounts for the years ended 30 September 2019 or 2018 but is derived from those accounts. The statutory accounts for the year ended 30 September 2018 have been delivered to the Registrar of Companies and those for 2019 will be delivered in due course. The statutory accounts for the years ended 30 September 2018 and 30 September 2019 received an audit report which was unqualified, did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying the report and did not include a statement under either section 498(2) or 498(3) of the Companies Act 2006. 

The statutory accounts for the financial year ended 30 September 2019 have been approved and audited but will not be filed with the Registrar of Companies until after the Company's Annual General Meeting which will be held on 24 February 2020 at 12:30pm at the offices of Aberdeen Standard Investments, Bow Bells House, 1 Bread Street, London, EC4M 9HH. The Annual Report will be posted to Shareholders in due course and copies will be available from the Manager or by download from the Company's webpage at https://www.slpet.co.uk.

Please note that past performance is not necessarily a guide to the future and that the value of investments and the income from them may fall as well as rise and may be affected by exchange rate movements. Investors may not get back the amount they originally invested.

Glossary of Terms & Definitions

Alternative Performance Measures

Alternative performance measures ("APMs") are numerical measures of the Company's current, historical or future performance, financial position or cash flows, other than financial measures defined or specified in the applicable financial framework. The Company's applicable financial framework includes FRS 102 and the AIC SORP. The directors assess the Company's performance against a range of criteria which are viewed as particularly relevant for closed-end investment companies. The APMs used by the Company are marked with an * in this glossary and the underlying data used to calculate them is provided.

Buy-out fund

A fund which acquires controlling stakes in established private companies.

Co-investment

An investment made directly into a private company alongside other private equity managers.

Commitment

The amount committed by the Company to a fund investment, whether or not such amount has been advanced in whole or in part by or repaid in whole or in part to the Company (see also Over-commitment).

Comparator Index

A market index against which the overall performance of the Company can be assessed. The manager does not manage the portfolio with direct reference to any index or its constituents.

Discount / Premium*

The amount by which the market price per share is lower (discount) or higher (premium) than the net asset value per share of an investment trust. The discount or premium is normally expressed as a percentage of the net asset value per share.

Dividend yield*

The annual dividend per ordinary share divided by the share price, expressed as a percentage.

Distribution

A return that an investor in a private equity fund receives. Within the Annual Report and Financial Statements, the terms "cash realisations" and "distributions" are used interchangeably, the figure being derived as follows: proceeds from disposal of underlying investments by funds, plus income from those fund investments less overseas withholding tax suffered.

Drawdown

A portion of a commitment which is called to pay for an investment.

Dry power

Capital committed by investors to private equity funds that has yet to be invested.

EBITDA

Earnings before interest expense, taxes, depreciation and amortisation.

Enterprise value ("EV")

The value of the financial instruments representing ownership interests in a company plus the net financial debt of the company.

High-conviction

Refers to an approach whereby investments are concentrated in a limited number of positions.

IPO

Initial Public Offering, the first sale of stock by a private company to the public market.

Liquid resources

Assets that are easily convertible to cash a, or close to, their current value.

Net Asset Value (NAV)

The value of total assets less liabilities. Liabilities for this purpose include current and long-term liabilities. The net asset value divided by the number of shares in issue produces the net asset value per share.

NAV total return*

NAV total return shows how the NAV has performed over a period of time in percentage terms, taking into account both capital returns and dividends paid to shareholders. This involves reinvesting the net dividend into the NAV at the end of the quarter in which the shares go ex-dividend. Returns are calculated to each quarter end in the year and then the total return for the year is derived from the product of these individual returns.

Ongoing charges ratio*

Management fees and all other recurring operating expenses that are payable by the Company excluding the costs of purchasing and selling investments, incentive fee, finance costs, taxation, non-recurring costs, and costs of share buy-back transactions, expressed as a percentage of the average NAV during the period. Ongoing charges and performance-related fees of the Company's underlying investments are excluded. The ongoing charges ratio has been calculated in accordance with guidance issued by the Association of Investment Companies ("AIC").

Over-commitment

Where the aggregate commitments to invest by the Company exceed the sum of its resources available for investment plus the value of any undrawn loan facilities.

Over-commitment ratio*

Outstanding commitments less resources available for investment and the value of undrawn loan facilities divided by net assets.

Primary investment / primary funds

The managers of private equity funds look to raise fresh capital to invest, typically every five years, and the Company commits to investing in such funds. The capital committed to a fund will generally be drawn over a five year period as investments in private companies are made.

Resources available for investment

This corresponds to the Company's assets that are not invested in funds or co-investments. The amount includes

cash and cash equivalents, quoted investments and short-term investment receivables and payables as follows:

Roll forward

The latest fund valuation calculated on a bottom-up valuation basis adjusted for any subsequent cash movements up to the reporting date and updated for exchange rates at the reporting date.

Secondary transaction / secondary funds

The purchase or sale of a commitment to a fund or collection of fund interests in the market. Once a private equity fund is raised, new investors are not typically permitted into the fund. However, an existing investor may exit by selling their interest to another investor. The Company can negotiate to acquire such an interest as a secondary buyer. Within the Annual Report and Financial Statements, the terms "Secondary transaction" and "Secondary investment" are used interchangeably.

Share buy-back transaction

The repurchase by the Company of its own shares in order to reduce the number of shares on the market. This is often used by investment trusts to narrow the discount to NAV.

Total shareholder return*

The theoretical return derived from reinvesting each dividend in additional shares in the Company on the day that the share price goes ex-dividend.

Vintage year

Refers to the year in which the first influx of investment capital is delivered to a fund. This marks the moment when capital is committed.

For Standard Life Private Equity Trust plc

Aberdeen Asset Management PLC, Company Secretary

For further information please contact:

James Thorneley,

Global Head of Media Relations, Aberdeen Standard Investments

Tel: 0131 372 2200

Evan Bruce-Gardyne

Client Director, Investment Trusts, Aberdeen Standard Investments

Tel: 0131 372 2200