28 Nov 2013 07:00
28 November 2013
STANDARD LIFE EUROPEAN PRIVATE EQUITY TRUST PLC
RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2013
Highlights
· For the financial year ended 30 September 2013 the Company's undiluted net asset value per ordinary share ("NAV") rose by 7.3% to 244.2p (diluted NAV - rose by 8.2% to 243.4p). Including the dividend paid in February 2013, the NAV total return for the year was 9.1%.
· The 16.6p rise in NAV comprised 16.0p of net realised gains and income from the Company's portfolio of 40 private equity fund interests, nil net unrealised gains on the portfolio on a constant exchange rate basis, 8.7p of unrealised foreign exchange gains on the portfolio and 8.1p of fees, dividends, costs and other movements.
· For the final quarter ended 30 September 2013 the Company's portfolio generated a positive return of 3.5% from realised gains and income, largely offset by net unrealised losses on a constant exchange rate basis of 0.4% and unrealised foreign exchange losses of 2.8%.
· The closing mid-market price of the Company's ordinary shares on 30 September 2013 was 198.0p, a rise of 21.9% over the year and a discount of 18.6% to the diluted NAV.
· The Board is recommending a final dividend of 5.0p per ordinary share (year ended 30 September 2012 - 2.0p). The increase in the final dividend reflects a significant uplift in income received by the Company from its fund investments during the year and does not reflect a change in dividend policy.
· At 30 September 2013 the Company's net assets were £401.2 million. The Company had interests in 40 private equity funds with a value of £358.5 million. In preparing the Company's year end valuation, 88.7% by value of the portfolio was valued by the relevant fund manager at 30 September 2013.
· Draw downs and distributions received from the portfolio during the year were £37.6 million and £69.3 million respectively. In addition, the Company sold its entire fund interest in Charterhouse Capital Partners VIII and purchased fund interests in Charterhouse Capital Partners IX and Bridgepoint Europe IV.
· The positive cash inflow from investments and from secondary fund sales less purchases resulted in the Company having a cash balance of £42.3 million at 30 September 2013. The Company continues to have available to it a £80 million revolving credit facility that expires in December 2016.
· The Company made four new fund commitments during the year, with a €20 million commitment to Advent Global Private Equity VII, a €30 million commitment to IK VII, a $35 million commitment to TowerBrook Investors IV and a €30 million commitment to CVC Capital Partners VI.
· The Company had £178.5 million of outstanding commitments at 30 September 2013. After undertaking a detailed review, the Manager continues to believe that up to £40 million of the Company's existing outstanding commitments are unlikely to be drawn.
· During the period from 30 September 2013 to 26 November 2013 the Company funded £5.6 million of draw downs and received £12.7 million of distributions. The Company also made a new commitment of €30 million to Nordic Capital VIII. At 26 November 2013 the Company's total outstanding commitments and cash balance were £198.5 million and £49.5 million respectively.
For further information please contact:-
Peter McKellar of SL Capital Partners LLP (on 0131 245 0055)
Chairman's Statement
Results and performance
In the first six months of the Company's financial year listed financial markets rose strongly, before experiencing some volatility, as the gathering economic recovery in the United States and Europe raised investor concerns about an eventual tightening of monetary policy. Against this background the European private equity market remained relatively subdued. For the year ended 30 September 2013 the Company's NAV rose by 7.3% to 244.2p (diluted NAV - rose by 8.2% to 243.4p), from 227.6p at 30 September 2012 (diluted NAV - 224.9p). Including the dividend paid in February 2013, the NAV total return for the year was 9.1%. At 30 September 2013 the Company's net assets were £401.2 million (30 September 2012 - £369.7 million).
The closing mid-market price of the Company's ordinary shares on 30 September 2013 was 198.0p, a rise of 21.9% over the year. The share price discount to the Company's diluted NAV was 18.6% at the year end. This discount, while still high, continues to narrow, along with many of the Company's peers.
The Board's strategy has been, and remains, one of reinvestment and to pay a dividend marginally in excess of the minimum required to maintain investment trust status. Following the receipt of significant income from the Company's fund investments during the year, most notably from Advent Global Private Equity V, the Board is recommending a final dividend of 5.0p per ordinary share (year ended 30 September 2012 - 2.0p). Subject to shareholder approval at the forthcoming Annual General Meeting, this dividend will be paid on 30 January 2014 to shareholders on the Company's share register at 10 January 2014. In light of the Company's strong liquidity and the position taken by some institutional bodies on the issue of shares by way of a scrip dividend at a discount to a company's last reported NAV, the Board has decided not to offer a scrip dividend this year.
Private equity is a long-term asset class and should be viewed over equivalent time periods. Over the last ten years the Company's NAV and share price, both on an annualised total return basis, rose by 10.8% and 10.2% respectively, while the FTSE All-Share Index and the MSCI Europe Index (in euros), on a similar total return basis, were up 9.2% and 7.4% respectively.
Investment activity
The last year saw a fall in the number, but a rise in the value, of new private equity investments completed in Europe. The volume and value of all new buy-out transactions completed in the European private equity market during the year ended 30 September 2013 was 406 transactions and €72.0 billion (year ended 30 September 2012 - 453 and €58.0 billion respectively). While the volume of transactions remained low by historical standards, the rise in value reflected improving liquidity in debt markets which allowed larger transactions to be funded. As for the exit environment for private equity backed companies, this continued to improve, as corporates became more active buyers and IPO activity picked up materially.
Further to the above trends the Company received distributions from its fund interests of £69.3 million and paid £37.6 million in draw downs during the year (year ended 30 September 2012 - distributions of £76.9 million and draw downs of £40.1 million). The distributions received by the Company generated net realised gains and income of £37.2 million, equivalent to an average return on the acquisition cost of the realised investments of 2.2 times (year ended 30 September 2012 - 2.3 times). In addition, the Company realised a book loss of £6.5 million on the liquidation of two older funds, the Alchemy Investment Plan and the Candover 1997 Fund, where all of the underlying investments had been realised. Importantly, the book loss had been fully provided for previously in the Company's valuation of the respective fund interests. The total return generated over time from the Company's fund interests in the Alchemy Investment Plan and the Candover 1997 Fund was 1.7 times and 1.8 times respectively.
In line with the strategy articulated last December, the Company has been more flexible in the use of its capital resources. As part of a rebalancing exercise and to improve the quality of the Company's exposure by vintage year and to specific underlying investee companies, the Manager sold the entire original fund commitment of €60 million to Charterhouse Capital Partners VIII in two transactions and purchased original fund commitments of €7 million to Charterhouse Capital Partners IX and €10 million to Bridgepoint Europe IV. The fund interest in Charterhouse Capital Partners VIII was sold in two tranches at 11% and 2% discounts to the 30 September 2012 and 31 March 2013 valuations of the fund respectively, while the fund interests in Charterhouse Capital Partners IX and Bridgepoint Europe IV were acquired at 5% and 4% discounts to the 30 June 2012 and 31 December 2012 valuations of these funds respectively. Taken together the four secondary transactions generated net cash of £15.9 million and released the Company from a net £2.2 million of outstanding commitments. The Manager believes the private equity secondary market provides the Company with the opportunity tactically to rebalance and enhance returns from its portfolio.
The Company also acquired 1.95 million ordinary shares in the Company through two share buy-back transactions, for a total of £3.6 million. The ordinary shares were acquired at an average price of 183.3p per share and at a discount to the prevailing NAV of 19.4%. The ordinary shares acquired have been cancelled.
After taking account of the above transactions, management fees, dividends and costs, the Company was £38.8 million cashflow positive during the year and at 30 September 2013 had a cash balance of £42.3 million (year ended 30 September 2012 - £32.0 million and £3.5 million respectively). In addition, the Company continues to have available to it an £80 million syndicated revolving credit facility led by The Royal Bank of Scotland plc that expires in December 2016.
In light of the Company's enhanced liquidity, the Manager made four new fund commitments during the year, with a €20 million commitment to Advent Global Private Equity VII, a €30 million commitment to IK VII, a $35 million commitment to TowerBrook Investors IV and a €30 million commitment to CVC Capital Partners VI. At 30 September 2013 the Company's aggregate outstanding commitments were £178.5 million. As previously reported, a number of the older private equity funds held by the Company have completed their respective investment periods and any future draw downs are likely to be limited. After undertaking a detailed review, the Manager continues to believe that up to £40 million of the Company's existing outstanding commitments are unlikely to be drawn.
Valuation
At 30 September 2013 the Company's portfolio comprised 40 private equity fund interests. The value of this portfolio was £358.5 million, of which net unrealised gains arising during the year were £14.2 million.
Unrealised gains on a constant exchange rate basis were £0.1 million, while positive foreign exchange movements, which principally arose from the 4.7% appreciation in the euro relative to sterling during the year, were £14.1 million.
88.7% by value of the portfolio was valued by the relevant fund manager at 30 September 2013. In undertaking the valuations the fund managers followed the International Private Equity and Venture Capital Valuation Guidelines. In so doing, the principal valuation methodology is to use listed comparable valuation multiples.
Recent activity
During the period from 30 September 2013 to 26 November 2013 the Company funded £5.6 million of draw downs and received £12.7 million of distributions. The Company also made a new commitment of €30 million to Nordic Capital VIII. Accordingly, at 26 November 2013 the Company's total outstanding commitments and cash balance were £198.5 million and £49.5 million respectively.
Investment policy
Given the Company's increasing cash inflow and the low rates of return available on bank deposits and other treasury related investments, the Board would like to widen the Company's investment policy to give the Board and the Manager discretion to invest its cash balances in funds whose principal investment focus is European (including United Kingdom) quoted equities pending investment in private equity funds. Such an amendment requires shareholders' consent and an ordinary resolution to that effect will be proposed at the forthcoming Annual General Meeting.
Outlook
The improving macro-economic environment across most of northern Europe should be positive for the Company in terms of earnings growth at underlying investee companies and rising fund valuations. Coupled to better liquidity in the European debt markets, it is anticipated that this will also translate into an increase in broader mergers and acquisitions activity. Against such a background, the Manager believes that the Company's strong liquidity position will continue and that further primary fund commitments and secondary purchases will be made.
Ed Warner, OBE
Chairman
27 November 2013
PRINCIPAL RISKS AND UNCERTAINTIES
The principal risks facing the Company relate to the Company's investment activities and include the following:
• market risk;
• currency risk;
• over-commitment risk;
• liquidity risk;
• credit risk;
• interest rate risk; and
• operating and control environment risk
Information on each of these risks, and an explanation of how they are managed, is contained in the Company's Annual Report.
DIRECTORS' RESPONSIBILITY STATEMENT
The directors are responsible for preparing the Annual Report, the Directors' Remuneration Report and the 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 the directors have prepared the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). 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 the profit or loss of the Company for that period. In preparing these financial statements, the directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
• state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements respectively; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
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 the financial statements and the Directors' Remuneration Report comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The directors consider that the annual report and accounts, taken as a whole, is fair, balanced and understandable, and provides the information necessary for shareholders to assess the Company's performance, business model and strategy. In reaching this conclusion the directors have assumed that the reader of the annual report and accounts has a reasonable level of knowledge of the investment industry.
The directors are responsible for the maintenance and integrity of the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Each of the directors confirm that, to the best of their knowledge:
• the financial statements, which have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), give a true and fair view of the assets, liabilities, financial position and profit of the Company; and
• the directors' report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.
For Standard Life European Private Equity Trust PLC
Edmond Warner OBE
Chairman
27 November 2013
INCOME STATEMENT (audited)
for the year ended 30 September 2013
Revenue | Capital | Total | |
£'000 | £'000 | £'000 | |
Gains on investments | - | 28,161 | 28,161 |
Currency losses | - | (1,159) | (1,159) |
Income from investments | 12,149 | - | 12,149 |
Interest receivable and other income | 1 | - | 1 |
Investment management fee | (321) | (2,891) | (3,212) |
Administrative expenses | (637) | - | (637) |
_________ | _________ | _________ | |
NET RETURN ON ORDINARY ACTIVITIES | |||
BEFORE FINANCE COSTS AND TAXATION | 11,192 | 24,111 | 35,303 |
Finance costs | (147) | (1,328) | (1,475) |
_________ | _________ | _________ | |
NET RETURN ON ORDINARY ACTIVITIES | |||
BEFORE TAXATION | 11,045 | 22,783 | 33,828 |
Taxation | (1,345) | 1,218 | (127) |
_________ | _________ | _________ | |
NET RETURN ON ORDINARY ACTIVITIES | |||
AFTER TAXATION | 9,700 | 24,001 | 33,701 |
_________ | _________ | _________ | |
NET RETURN PER ORDINARY SHARE | 5.96p | 14.74p | 20.70p |
_________ | _________ | _________ | |
DILUTED NET RETURN PER ORDINARY SHARE | 5.91p | 14.62p | 20.53p |
_________ | _________ | _________ |
The "Total" column of this statement represents the profit and loss account of the Company.
There is no material difference between the profit on ordinary activities before taxation and the profit for the financial year stated above and their historical costs equivalents.
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All revenue and capital items in the above statement derive from continuing operations.
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No operations were acquired or discontinued in the year.
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A Statement of Total Recognised Gains and Losses has not been prepared as all gains and losses are recognised in the Income Statement.
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The dividend which has been recommended based on this Income Statement is 5.0p (2012 - 2.0p) per ordinary share. |
INCOME STATEMENT (audited)
for the year ended 30 September 2012
Revenue | Capital | Total | |
£'000 | £'000 | £'000 | |
Losses on investments | - | (583) | (583) |
Currency gains | - | 1,447 | 1,447 |
Income from investments | 5,986 | - | 5,986 |
Interest receivable and other income | 1 | - | 1 |
Investment management fee | (292) | (2,633) | (2,925) |
Administrative expenses | (696) | - | (696) |
_________ | _________ | _________ | |
NET RETURN ON ORDINARY ACTIVITIES | |||
BEFORE FINANCE COSTS AND TAXATION | 4,999 | (1,769) | 3,230 |
Finance costs | (195) | (1,749) | (1,944) |
_________ | _________ | _________ | |
NET RETURN ON ORDINARY ACTIVITIES | |||
BEFORE TAXATION | 4,804 | (3,518) | 1,286 |
Taxation | (946) | 918 | (28) |
_________ | _________ | _________ | |
NET RETURN ON ORDINARY ACTIVITIES | |||
AFTER TAXATION | 3,858 | (2,600) | 1,258 |
_________ | _________ | _________ | |
NET RETURN PER ORDINARY SHARE | 2.38p | (1.60p) | 0.78p |
_________ | _________ | _________ | |
DILUTED NET RETURN PER ORDINARY SHARE | 2.37p | (1.59p) | 0.78p |
_________ | _________ | _________ |
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS (audited)
For the year ended30 September 2013 | Capital | ||||||
Share | Share | Special | redemption | Capital | Revenue | ||
capital | premium | reserve | reserve | reserves | reserve | Total | |
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
Balance at 1 October 2012 | 359 | 80,954 | 79,148 | 3 | 199,437 | 9,761 | 369,662 |
Total recognised gains | - | - | - | - | 24,001 | 9,700 | 33,701 |
Conversion of founder A shares | 3 | 2,668 | - | 3 | - | - | 2,674 |
Cancellation of deferred shares | (30) | - | (30) | 60 | - | - | - |
Buy back of ordinary shares | (4) | - | (3,599) | 4 | - | - | (3,599) |
Scrip Issue of ordinary shares | 2 | 1,972 | - | - | - | - | 1,974 |
Dividends paid | - | - | - | - | - | (3,247) | (3,247) |
______ | _______ | ______ | _______ | ________ | _______ | _______ | |
Balance at 30 September 2013 | 330 | 85,594 | 75,519 | 70 | 223,438 | 16,214 | 401,165 |
______ | _______ | ______ | _______ | ________ | _______ | _______ | |
For the year ended30 September 2012 | Capital | ||||||
Share | Share | Special | redemption | Capital | Revenue | ||
capital | premium | reserve | reserve | reserves | reserve | Total | |
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
Balance at 1 October 2011 | 357 | 79,817 | 79,148 | 3 | 202,037 | 8,002 | 369,364 |
Total recognised (losses)/gains | - | - | - | - | (2,600) | 3,858 | 1,258 |
Scrip Issue of ordinary shares | 2 | 1,137 | - | - | - | - | 1,139 |
Dividends paid | - | - | - | - | - | (2,099) | (2,099) |
______ | _______ | ______ | _______ | ________ | _______ | _______ | |
Balance at 30 September 2012 | 359 | 80,954 | 79,148 | 3 | 199,437 | 9,761 | 369,662 |
______ | _______ | ______ | _______ | ________ | _______ | _______ |
BALANCE SHEET (audited)
As at | As at | ||||
30 September | 30 September | ||||
2013 | 2012 | ||||
£'000 | £'000 | £'000 | £'000 | ||
NON-CURRENT ASSETS | |||||
Investments at fair value through profit or loss | 358,512 | 365,897 | |||
CURRENT ASSETS | |||||
Debtors | 664 | 587 | |||
Cash and short term deposits | 42,272 | 3,489 | |||
_________ | _________ | ||||
42,936 | 4,076 | ||||
CREDITORS: AMOUNTS FALLING | |||||
DUE WITHIN ONE YEAR | (283) | (311) | |||
_________ | _________ | ||||
NET CURRENT ASSETS | 42,653 | 3,765 | |||
_________ | _________ | ||||
TOTAL ASSETS LESS CURRENT LIABILITIES | 401,165 | 369,662 | |||
_________ | _________ | ||||
CAPITAL AND RESERVES | |||||
Called up share capital | 330 | 359 | |||
Share premium | 85,594 | 80,954 | |||
Special reserve | 75,519 | 79,148 | |||
Capital redemption reserve | 70 | 3 | |||
Capital reserves | 223,311 | 199,437 | |||
Revenue reserve | 16,341 | 9,761 | |||
_________ | _________ | ||||
TOTAL SHAREHOLDERS' FUNDS | 401,165 | 369,662 | |||
_________ | _________ | ||||
ANALYSIS OF SHAREHOLDERS' FUNDS | |||||
Equity interests (ordinary shares) | 401,164 | 369,628 | |||
Non-equity interests (founder shares) | 1 | 34 | |||
_________ | _________ | ||||
401,165 | 369,662 | ||||
_________ | _________ | ||||
NET ASSET VALUE PER EQUITY SHARE | 244.2p | 227.6p | |||
_________ | _________ | ||||
NET ASSET VALUE PER EQUITY SHARE (DILUTED) | 243.4p | 224.9p | |||
_________ | _________ | ||||
CASHFLOW STATEMENT (audited)
For the year | For the year | ||||
ended 30 September | ended 30 September | ||||
2013 | 2012 | ||||
£'000 | £'000 | £'000 | £'000 | ||
NET CASH INFLOW FROM OPERATING ACTIVITIES | 8,261 | 2,444 | |||
SERVICING OF FINANCE | |||||
Interest paid | (1,055) | (1,911) | |||
Arrangement fee | (760) | - | |||
_________ | _________ | ||||
NET CASH OUTFLOW | |||||
FROM SERVICING OF FINANCE | (1,815) | (1,911) | |||
NET CASH FLOW FROM TAXATION | 148 | - | |||
FINANCIAL INVESTMENT | |||||
Purchase of investments | (48,004) | (40,090) | |||
Disposal of underlying investments by funds | 57,304 | 71,043 | |||
Disposal of fund investments by way of secondary sales | 26,246 | - | |||
_________ | _________ | ||||
NET CASH INFLOW FROM FINANCIAL | 35,546 | 30,953 | |||
INVESTMENTS | |||||
ORDINARY DIVIDEND PAID | (1,267) | (960) | |||
_________ | _________ | ||||
NET CASH INFLOW BEFORE FINANCING | 40,873 | 30,526 | |||
Conversion of founder A shares | 2,688 | - | |||
Buy back of ordinary shares | (3,599) | - | |||
Bank loans repaid | (9,895) | (207,333) | |||
Bank loans drawn down | 9,895 | 175,465 | |||
_________ | _________ | ||||
NET CASH OUTFLOW FROM FINANCING | (931) | (31,868) | |||
_________ | _________ | ||||
INCREASE/(DECREASE) IN CASH | 39,942 | (1,342) | |||
_________ | _________ | ||||
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS/(DEBT) | |||||
Increase/ (decrease) in cash as above | 39,942 | (1,342) | |||
Repayment of loan | - | 31,868 | |||
Currency movements | (1,159) | 1,447 | |||
_________ | _________ | ||||
MOVEMENT IN NET FUNDS/(DEBT) IN THE PERIOD | 38,783 | 31,973 | |||
Opening net funds/(debt) | 3,489 | (28,484) | |||
_________ | _________ | ||||
CLOSING NET FUNDS | 42,272 | 3,489 | |||
_________ | _________ | ||||
REPRESENTED BY: | |||||
Cash and short term deposits | 42,272 | 3,489 | |||
_________ | _________ | ||||
Notes:
1. Standard Life European Private Equity Trust PLC is an investment company managed by SL Capital Partners LLP, the ordinary shares of which are admitted to listing by the UK Listing Authority and to trading on the London Stock Exchange. It seeks to conduct its affairs so as to continue to qualify as an investment trust under section 1158-1165 of the Corporation Taxes Act 2010. The Board is wholly independent of the Manager and Standard Life plc.
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2. Accounting Policies | ||
(a) Basis of preparation and going concern | ||
The financial statements have been prepared under the historical cost convention, as modified to include the revaluation of investments at fair value through profit or loss, and in accordance with applicable UK Accounting Standards and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies' (issued January 2009). 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 financial statements, and the net asset value per equity share figures, have been prepared in accordance with the Companies Act 2006 and UK Generally Accepted Accounting Principles ("UK GAAP"). The directors consider the Company's functional currency to be sterling, as the Company is registered in Scotland, the Company's shareholders are predominantly based in the UK and the Company is subject to the UK's regulatory environment. | ||
(b) Revenue, expenses and finance costs | ||
Dividends from quoted investments are included in revenue by reference to the date on which the price is marked ex-dividend. Interest on quoted investments and other interest receivable are dealt with on an effective interest rate basis. Dividends and income from unquoted investments are included when the right to receipt is established. All expenses are accounted for on an accruals basis. Incentive fees are recognised in the Income Statement as they are earned and when the return exceeds the specified hurdle rate.
Expenses are charged through the revenue account of the Income Statement except as follows: | ||
- transaction costs incurred on the purchase and disposal of investments are recognised as a capital item in the Income Statement; | ||
- the Company charges 90% of investment management fees and finance costs to capital, in accordance with the Board's expected long-term split of returns between capital gains and income from the Company's investment portfolio; and | ||
- any incentive fees payable are allocated wholly to capital, as they are expected to be attributable largely, if not wholly, to capital performance. | ||
(c) Investments | ||
Investments have been designated upon initial recognition as fair value through the profit or loss. On the date of making a legal commitment to invest in a fund, such commitment is recorded and disclosed. When funds are drawn in respect of such fund commitment the resulting investment is recognised in the financial statements. The investment is removed when it is realised or the fund 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 in net profit or loss for the period as a capital item in the Income Statement 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 EVCA and the BVCA. The estimate of fair value is normally the latest valuation placed on a fund by its manager as at the balance sheet 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 balance sheet date the last available valuation from the fund manager is adjusted for any subsequent cash flows occurring between the valuation date and the balance sheet 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. | ||
(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 reserves - Gains or losses on investments realised in the year that have been recognised in the Income Statement are transferred to the "capital reserve - gains/(losses) on disposal". In addition, any prior unrealised gains or losses on such investments are transferred from the "capital reserve - revaluation" to the "capital reserve - gains/(losses) on disposal" on the disposal of the investment. Increases and decreases in the fair value of investments are recognised in the Income Statement and are then transferred to the "capital reserve - revaluation". | ||
(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. | ||
ii) Deferred taxation is recognised in respect of all temporary differences that have originated but not reversed at the balance sheet 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 balance sheet 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 accounts 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) Overseas currencies - Overseas assets and liabilities are translated at the exchange rate prevailing at the Company's balance sheet date. Gains or losses on translation of investments held at the year end are accounted for through capital reserves. Gains or losses on the translation of overseas currency balances held at the year end are also accounted for through capital reserves. | ||
Rates of exchange to sterling as at 30 September were: | ||
2013 | 2012 | |
Euro | 1.1963 | 1.2552 |
US dollar | 1.6194 | 1.6148 |
Transactions in overseas currency are translated at the exchange rate prevailing on the date of transaction. | ||
Year to | Year to | ||
30 September 2013 | 30 September 2012 | ||
3. | Income | £'000 | £'000 |
Income from unquoted investments | 12,149 | 5,986 | |
Interest receivable on cash | - | 1 | |
Interest from HMRC | 1 | - | |
______________ | ______________ | ||
Total income | 12,150 | 5,987 | |
______________ | ______________ |
4. The return per ordinary share figure is based on the net profit for the year ended 30 September 2013 of £33,701,000 (year ended 30 September 2012: net profit of £1,258,000) and on 162,828,459 (year ended 30 September 2012: 162,074,937) ordinary shares, being the weighted average number of Ordinary shares in issue during the respective periods.
The fully diluted returns have been calculated on the basis set out in Financial Reporting Standard 22 'Earnings per share' ('FRS 22'). For the year ended 30 September 2013, this is based 164,112,146 shares, comprising the weighted average 162,828,459 ordinary shares and 1,283,687 founder A shares capable of conversion. For the year ended 30 September 2012, this is based on 163,042,162 shares, comprising the weighted average 162,074,937 ordinary shares and 967,224 founder A shares capable of conversion.
5. The number of ordinary shares in issue as at 30 September 2013 was 164,290,213 (30 September 2012 - 162,378,566).
6. The Directors recommend that a final dividend of 5.00p (2012 - 2.00p) per ordinary share be paid on 30 January 2014 to shareholders on the Company's share register as at the close of business on 10 January 2014. The ex-dividend date for the final dividend is 8 January 2014.
7. The financial information for the year ended 30 September 2013 comprises non-statutory accounts as defined in sections 434-436 of the Companies Act 2006. The financial information for the year ended 30 September 2012 has been extracted from published accounts that have been delivered to the Registrar of Companies and on which the report of the auditors was unqualified. The statutory accounts for the year ended 30 September 2013 contain an unqualified audit report and will be delivered to the Registrar of Companies following the Company's Annual General Meeting, which will be held at The Balmoral Hotel, 1 Princes Street, Edinburgh EH2 2EQ on 28 January 2014 at 12.30pm.
8. The report and accounts for the year ended 30 September 2013 will be posted to shareholders in mid-December 2013 and copies will be available from the Company Secretary - Personal Assets Trust Administration Company Limited, 10 St. Colme Street, Edinburgh EH3 6AA.
for Standard Life European Private Equity Trust PLC,
Personal Assets Trust Administration Company Limited, Company Secretary
END