TIDMSLPE
RNS Number : 2921Q
Standard Life Private Eqty Trst PLC
18 June 2020
STANDARD LIFE PRIVATE EQUITY TRUST PLC
Legal Entity Identifier (LEI): 2138004MK7VPTZ99EV13
HALF YEARLY FINANCIAL REPORT FOR THE SIX MONTHSED 31 MARCH
2020
-- NAV performance - The NAV total return ("NAV TR") for the
first 6 months of the year was -6.3% versus -22.0% for the FTSE
All-Share Index.
-- COVID-19 - Valuations at 31 March 2020 reflected the initial
impact of the outbreak on the Company's portfolio and NAV. The
quarterly movement was -12.5% excluding the impact of FX. This was
the first quarter that the Company's NAV began to reflect the
impact of COVID-19. Going forward, we expect that private equity
valuations will continue to be impacted negatively by COVID-19,
which could lead to further reductions in NAV in the second half of
FY20.
-- New commitments - In total, four primary fund commitments,
one secondary transaction and one co-investment were completed in
the period. We will reduce the overall pace of deployment in the
second half of FY20 given the uncertainty surrounding COVID-19.
-- Realisations - The portfolio continued to generate strong
realisations during the period, with distributions of GBP93.8m.
This includes the realisation of the Company's position in 3i
Eurofund V, which was its largest fund exposure at 30 September
2019 .
-- Outstanding commitments - Total outstanding commitments of
GBP451.2m (30 September 2019: GBP450.3m). The value of outstanding
commitments in excess of liquid resources as a percentage of net
assets is 42.2% (30 September 2019: 42.6%). This remains
comfortably within our long-term target range of 30%-75%. We
estimate that GBP64.4 million of the Company's existing outstanding
commitments are unlikely to be drawn.
-- Balance sheet - The Company had resources available for
investment of GBP74.8m at 31 March 2020 (30 September 2019:
GBP67.7m). In addition, the Company has an undrawn GBP100m
syndicated revolving credit facility, provided by Citibank and
Société Générale, which expires in December 2024.
For further information please contact:
Alan Gauld
Investment Director, Aberdeen Standard Investments
Tel: 0 131 528 4424
Luke Mason
Head of Business Development, Investment Trusts, Aberdeen
Standard Investments
Tel: 0207 463 5971
Evan Bruce-Gardyne
Client Director, Investment Trusts, Aberdeen Standard
Investments
Tel: 0131 372 1692
FINANCIAL HIGHLIGHTS
Six months ended Six months ended
31 March 2020 31 March 2019
--------------------------------------- ----------------- -----------------
Net asset value total return per
Ordinary Share(+) -6.3% 0.4%
--------------------------------------- ----------------- -----------------
Share price total return per Ordinary
Share(+) -25.9% 4.1%
--------------------------------------- ----------------- -----------------
(+) Source: Aberdeen Standard Investments and Refinitiv
Datastream
Performance (capital only) As at 31 As at 30 September % Change
March 2020 2019
------------------------------------------ ------------ ------------------- ---------
Net Asset Value per share 426.4p 461.9p -7.7%
------------------------------------------ ------------ ------------------- ---------
Share price 254.0p 352.0p -27.8%
------------------------------------------ ------------ ------------------- ---------
FTSE All-Share Index 3,107.4 4,061.7 -23.5%
------------------------------------------ ------------ ------------------- ---------
Discount (difference between share price
and net asset value) 40.4% 23.8%
------------------------------------------ ------------ ------------------- ---------
CHAIR'S STATEMENT
COVID-19
The purpose of the Chair's Statement is typically to summarise
the outcomes from the period under review. While this can never be
done without having an eye on activity since the end of the period,
we have witnessed some of the most extreme economic changes for
generations since 31 March 2020, as governments around the world
and markets react to the impact of the COVID pandemic. It should be
acknowledged that the numbers in this report are taken at a point
in time when the full effects of COVID-19 have still to be
established. As the Company invests in funds holding unlisted
companies, there is always a time lag in the reporting of
valuations.
Against such a backdrop, the Board has increased the frequency
of its discussions with the Manager, to ensure that it is being
kept informed of developments on a timely basis. In considering its
response, the Board has confidence that the Company's diversified
portfolio has a good measure of resilience to cope with the
economic fall-out resulting from the lock-downs instigated by
various governments around the world to curb the spread of this
virus. The Board is pleased to note that the Manager has confirmed
that, despite the challenging market conditions, the Manager is
continuing to require adherence to the established ESG principles
by the underlying portfolio managers and the management of the
invested companies. The Board also considers that the Company is
entering this new crisis with a relatively stronger balance sheet
with greater liquidity than was the case in the global financial
crisis of 2008.
Performance
For the six months to 31 March 2020, the Company's NAV total
return was -6.3%. The total shareholder return was -25.9%. For
comparison, the return on the FTSE All-Share Index was -22.0% in
the same period. The significant discrepancy between the share
price return and that of the NAV, which is a feature of a private
investment trust, is in part a timing issue as it is the result of
investors attempting to estimate how much valuations are likely to
fall as a consequence of the crisis.
A review of the Company's performance, market background and
investment activity during the period under review, as well as the
Manager's investment outlook, are provided in the Manager's Report
below.
Investments & realisation activity
During the period, the Company made commitments totalling
GBP83.9m (31 March 2019: GBP99.2m) into its unquoted portfolio.
Funds were committed to four new primary investments, one secondary
and one co-investment. The Company received net realisations of
GBP93.8m (31 March 2019: GBP49.5m). The realised return from
divestments in the Company's core portfolio equated to 5.0 times
cost (30 September 2019: 2.2 times cost). The return was enhanced
by the proceeds from the realisation of 3i Eurofund V. Excluding
the 3i Eurofund V transactions, the realised return was 2.3 times..
Outstanding commitments at 31 March 2020 amounted to GBP451.2m (30
September 2019: GBP450.3m).
Key Performance Indicators ("KPIs")
Last year, the Board reviewed and revised the KPIs by which the
Manager is measured in order to better align the KPIs with the
interests of shareholders. The Company's performance against each
of its KPIs, during the six months to 31 March 2020, is set out
below.
Net asset value total return ("NAV TR") relative to the
Company's comparator index
I am happy to report that the Company has delivered returns in
excess of the wider UK market over all timeframes. A comparison of
the annualised total returns of the share price and NAV with that
of the FTSE All-Share Index, the Company's comparator index, over
various time frames, is included in the Half Yearly Report.
Total shareholder return ("TSR") relative to the Company's
comparator index
The chart in the Half Yearly Report also shows a wide disparity
between the NAV total return and the TSR over 6 and 12 months,
highlighting how the market adjusted the valuation of the Company
very quickly. This fed into a material widening of the discount.
Over the longer term, the TSR has exceeded the comparator
index.
Discount or premium of the ordinary share price to the net asset
value per share of the Company in absolute terms and compared to
the discounts of the close peers* on a rolling 12 month basis
Closing discount Narrowest discount Widest discount
As at 31 March 2020 (%) (%) (%)
----------------------------- ---------------- ------------------ ---------------
Standard Life Private Equity
Trust -40.4 -7.2 -56.7
============================= ================ ================== ===============
Close peer group average -37.4 -6.0 -54.3
----------------------------- ---------------- ------------------ ---------------
Source: Aberdeen Standard Investments and Refinitiv
Datastream
* Sterling denominated UK listed private equity fund of
funds.
In line with peers in the sector, the discount widened very
sharply in late February / early March 2020. Since the end of the
period, the discount has stabilised around the 40% mark.
Ongoing charges ratio
The Ongoing charges ratio ("OCR") is an annual ratio and as such
we only provide an estimate in these accounts. The forecast to 30
September 2020 as at 31 March 2020 is 1.11%, a small increase on
1.09% as at 30 September 2019.
Dividends
The Company paid the first interim dividend for the current year
in April 2020 of 3.3 pence per share. The Board has declared a
second interim dividend of 3.3 pence per share which will be paid
on 31 July 2020 to shareholders on the Company's share register at
26 June 2020. These two payments will make a total for the period
of 6.6 pence per share, compared to 6.4 pence per share for the
equivalent period in 2019, representing a 3.1% increase on the
payments in 2019.
The rapid development of the COVID-19 crisis has put an
unprecedented strain on most aspects of the economies in which the
portfolio is invested. In view of the continuing uncertain economic
outlook, the Board will monitor the portfolio's prospects closely
and will keep the level of future dividends under review.
Discount
Over the period, , the discount of the Company's share price to
its net asset value fluctuated significantly, ranging between 7.2%
and 56.7%. At 31 March 2020, the discount to reported NAV was
40.4%. This widening is unsurprising as it reflected the fact that
valuations of unlisted companies take time to flow through. Against
this backdrop, the Board has not considered it appropriate to buy
in shares. However, the Board will keep this under ongoing review,
particularly as general market conditions show signs of stabilising
and the outlook for valuations becomes clearer.
Bank facilities and liquidity
Since the financial year ended 30 September 2019, the Board has
increased the Company's GBP80m syndicated multi-currency revolving
credit facility with Citibank and Société Générale to GBP100m and
has extended the expiry date to December 2024. The facility is
currently undrawn (2019: GBPnil). In addition, at the end of March,
the Company had cash balances of GBP59.6m (30 September 2019:
GBP66.3m).
Outlook
There is no doubt that the future will be determined by how the
COVID-19 pandemic develops and in particular the scale of impact
that it has on the economic landscape. The challenges that this
creates on economies across the world will put pressure on most
aspects of the Company's investments. The Board takes comfort from
the diversification of the portfolio including, for example, the
exposure to companies in the IT and healthcare sectors. But we do
expect that there will be further negative pressure on all
valuations during the rest of the financial year which will feed
through to the Company's NAV. We also anticipate that there will be
a lower level of distributions than we have experienced in recent
years and the Board will assess the impact that this may have on
future dividends as the situation evolves.
Against this backdrop, the Board considers that the Company is
in a stronger financial position than it was ahead of the Global
Financial Crisis in 2008/09. Private equity investing requires a
long-term perspective and periods of disruption, such as that which
we are currently experiencing, are something that have to be
weathered. Whilst we expect that the number of new primary
investment opportunities will reduce in the short term, we also
take the view that the market adjustment is likely to present
investment opportunities that will provide returns over the long
term for shareholders.
Christina McComb OBE, Chair
Chair
17 June 2020
INTERIM BOARD REPORT
Directors' Responsibility Statement
The Directors are responsible for preparing the Half Yearly
Report, in accordance with applicable laws and regulations. The
Directors confirm that, to the best of their knowledge:
- The condensed set of financial statements has been prepared in
accordance with Financial Reporting Standard 104 (Interim Financial
Reporting) and gives a true and fair view of the assets,
liabilities, financial position and profit or loss of the
Company;
- The Interim Board Report (constituting the interim management
report) includes a fair review of the information required by DTR
4.2.7R of the Disclosure Guidance and Transparency Rules, being an
indication of important events that have occurred during the first
months of the financial year and their impact on the condensed set
of financial statements, and a description of the principal risks
and uncertainties for the remaining six months of the year; and
- The financial statements include a fair review of the
information required by DTR 4.28R of the Disclosure Guidance and
Transparency Rules, being related party transactions that have
taken place in the first six months of the financial year and that
have materially affected the financial position or performance of
the Company during that period, and any changes in the related
party transactions described in the last Annual Report that could
do so.
Principal Risk and Uncertainties
The Board has an ongoing process for identifying, evaluating and
managing the principal risks, emerging risks and uncertainties of
the Company. The principal risks faced by the Company relate to the
Company's investment activities and are set out in the Strategic
Report contained within the Annual Report for the year ended 30
September 2019. They comprise the following risk categories:
- market risk
- currency risk
- over-commitment risk
- liquidity risk
- credit risk
- interest rate risk
- operating and control environment risk
The Board notes that the principal risks may be impacted by the
economic uncertainty stemming from the COVID-19 pandemic. This
includes risks surrounding the performance of the companies in the
portfolio such as employee absence, reduced demand, supply chain
breakdowns and suspension of distributions. The Board and Manager
expect that there will be more pressure on valuations and further
impact on the Company's NAV in the current financial year, as well
as a decline in mergers and acquisitions ("M&A") activity,
followed by a decrease in drawdowns. The Board has been proactive
in engaging with the Manager to ensure that the Company continues
to be managed in accordance with the investment objective and
policy, and in the best interest of shareholders. Operationally,
COVID-19 is affecting the suppliers of services to the Company
including the Manager and other key third party suppliers. To date,
these services have continued to be supplied seamlessly and the
Board will continue to monitor arrangements in the form of regular
updates from the Manager.
In all other respects, the Company's principal risks, emerging
risks and uncertainties have not changed materially since the date
of that Annual Report.
Going Concern
In accordance with the FRC's Guidance on Risk Management,
Internal Control and Related Financial and Business Reporting, the
Directors have undertaken a rigorous review of the Company's
ability to continue as a going concern as a basis for preparing the
financial statements.
The Board has taken into account; the GBP100 million committed,
syndicated revolving credit facility which matures in December
2024; the level of liquid resources, including cash and cash
equivalents ; the future cash flow projection; the Company's cash
flows during the period, the effectiveness of the Manager's
operational resilience processes; and the impact of potential
downside scenarios on asset valuations and liquidity, including
potential management actions.
The Directors are mindful of the principal risk and
uncertainties disclosed above, including the impact of COVID-19.
Having reviewed these matters, the Directors believe that the
Company has adequate financial resources to continue its
operational existence for the foreseeable future and for at least
12 months from the date of this Half Yearly Report. Accordingly,
they continue to adopt the going concern basis in preparing the
Half Yearly Report.
On behalf of the Board,
Christina McComb OBE, Chair
17 June 2020
INVESTMENT STRATEGY
Investment strategy
Standard Life Private Equity Trust provides exposure to:
- A diversified portfolio of leading private companies.
- A carefully selected range of private equity managers, built
from years of established relationships and proprietary
research.
- Investments principally focused on European mid-market private companies.
With the objective of delivering strong, long-term total returns
for Shareholders through a combination of capital growth and a
progressive dividend.
Investment policy and 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 its 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.
INVESTMENTS MANAGER'S REVIEW
Summary
- NAV performance - The NAV total return ("NAV TR") for the
first 6 months of the year was -6.3% versus -22.0% for the FTSE
All-Share Index.
- COVID-19 - Valuations at 31 March 2020 reflected the initial
impact of the outbreak on the Company's portfolio and NAV. The
quarterly movement was -12.5% excluding the impact of FX. This was
the first quarter that the Company's NAV began to reflect the
impact of COVID-19. Going forward, we expect that private equity
valuations will continue to be impacted negatively by COVID-19,
which could lead to further reductions in NAV in the second half of
FY20.
- New commitments - In total, four primary fund commitments, one
secondary transaction and one co-investment were completed in the
period. We will reduce the overall pace of deployment in the second
half of FY20 given the uncertainty surrounding COVID-19.
- Realisations - The portfolio continued to generate strong
realisations during the period, with distributions of GBP93.8m.
This includes the realisation of the Company's position in 3i
Eurofund V, which was its largest fund exposure at 30 September
2019 .
- Outstanding commitments - Total outstanding commitments of
GBP451.2m (30 September 2019: GBP450.3m). The value of outstanding
commitments in excess of liquid resources as a percentage of net
assets is 42.2% (30 September 2019: 42.6%). This remains
comfortably within our long-term target range of 30%-75%. We
estimate that GBP64.4 million of the Company's existing outstanding
commitments are unlikely to be drawn.
- Balance sheet - The Company had resources available for
investment of GBP74.8m at 31 March 2020 (30 September 2019:
GBP67.7m). In addition, the Company has an undrawn GBP100m
syndicated revolving credit facility, provided by Citibank and
Société Générale, which expires in December 2024.
COVID-19
Valuations at 31 March 2020 reflected the initial impact of the
outbreak on the Company's portfolio and NAV. The quarterly movement
was -12.5% excluding the impact of FX. This was the first quarter
that the Company's NAV began to reflect the impact of COVID-19.
It is not possible to quantify the ultimate impact on the
Company with any certainty. We anticipate further declines in both
the NAV and the level of distributions over the remainder of the
financial year. However, we take comfort in the:
(i) Quality and operational capabilities of the private equity
managers that we have selected, all of whom successfully weathered
the global financial crisis in 2008;
(ii) Diversification of the underlying investment portfolio
within the funds, with over 400 companies spread across different
countries, sectors and vintages;
(iii) Available capital in the underlying funds, which will
allow our private equity managers to support underlying companies
through the crisis;
(iv) Greater flexibility of debt structures in underlying
companies compared to levels prior to the global financial crisis
in 2008, with higher equity as a percentage of enterprise value and
"covenant-lite" debt packages more commonplace;
(v) Level of liquid resources and the undrawn revolving credit
facility available to address the Company's funding requirements in
a range of different stressed scenarios.
Deep and established relationships matter more than ever in this
environment. We continue to stay in regular dialogue with the
Company's private equity managers, all of whom we have known for
over a decade. Our strong conviction in the Company's roster of
private equity managers hasn't changed. We are closely monitoring
developments at the underlying portfolio company level, but it
won't be until the second half of the financial year that we expect
that we will see the impact of COVID-19 on portfolio company
revenue, profitability and balance sheets.
Valuation
Of the 54 private equity interests in which the Company is
invested, 50 interests (97.6% of the portfolio by value) were
valued by their underlying managers at 31 March 2020 (31 March
2019: 95.4%).
Out of this 97.6%, 46 funds (86.9% of the portfolio value)
accounted for the initial impact of COVID-19. However four funds
valued at 31 March 2020 (10.7% of the portfolio by value) were
adjusted downward by the Manager to account more fully for the
initial impact of COVID-19. The underlying managers of these four
interests had not reflected the initial impact of COVID-19 within
their 31 March 2020 valuations and intend to undertake a full
review of their valuations as part of their 30 June 2020 valuation
process.
The remaining 2.4% by value of the portfolio has also been
adjusted downward by the Manager based on the valuation as at 31
December 2019, adjusted for subsequent cash flows. Valuation
adjustments were based on either (i) specific information from
underlying managers on the likely movement at 31 March 2020 or (ii)
the weighted average movement in the Company's portfolio.
The unrealised losses in the period are largely attributable to
the initial financial impact of COVID-19. The overall impact is
seen broadly across the Company's underlying fund portfolio.
Private equity managers in SLPET's portfolio have re-valued
underlying companies based largely on listed market comparables at
31 March 2020, when public markets were around recent lows. In
addition, the earnings of underlying companies may also reflect the
initial impact of COVID-19 during the first quarter of 2020.
Performance
The NAV TR for the first six months of FY20 was -6.3% versus
-22.0% for the FTSE All-Share Index.
The decrease in value of the Company on a per share basis was
35.5p. This was principally made up of unrealised losses at
constant FX from the unquoted portfolio of 74.8p, partially offset
by realised gains and income from the unquoted portfolio of
49.2p.
Realised gains were derived from full or partial sales of
companies during the period. The material contributor to realised
gains in the period was 3i Eurofund V, as a result of the
realisation of its underlying company Action. Over the twelve
months to December 2019, the underlying portfolio exhibited average
revenue and EBITDA growth of 13% and 14% respectively. However, we
expect COVID-19 to have a negative impact on the underlying
performance during 2020.
Drawdowns
During the period GBP87.0m was invested into existing and new
underlying companies. Drawdowns were used to invest into a diverse
set of predominantly European headquartered companies. The largest
new investment was the GBP22.6m co-investment / re-investment into
Action. Other notably large new investments in the quarter
included:
- Recordati (CVC VII) - an international specialty pharmaceutical group;
- ConvergeOne (CVC VII) - an IT services provider of technology solutions;
- Orchid (Nordic Capital IX) - a global producer of orthopaedic implant devices;
- Froneri (PAI SPs) - an international ice cream manufacturer; and
- Transporeon (HgCapital 8) - a European cloud-based logistics platform.
We expect that drawdowns will continue in the second half of the
current financial year at similar rates to previous years, largely
owing to underlying private equity funds repaying their credit
facilities in the course of normal business. We estimate that the
Company had around GBP57m held on credit facilities of underlying
funds at 31 March 2020 (30 September 2019: GBP48m), and we expect
that this will all be drawn over the next 12 months.
Distributions
GBP93.8m of distributions were received during the period. Exit
activity from the private equity funds was driven by the strong
market appetite for high quality private companies in 2019, both
from trade / strategic buyers and other private equity firms.
However, as we move into the second half of the financial year, we
expect that distributions will reduce, as a result of market
dislocation during the COVID-19 pandemic.
The headline realised return from the ongoing investment
operations of the Company's core portfolio equated to 5.0 times
cost (30 September 2019: 2.2 times cost). The return was enhanced
by the proceeds from the realisation from 3i Eurofund V. If this
transaction is excluded, then the realised return was 2.3
times.
3i Eurofund V was the most significant realisation in the
period, with gross proceeds of GBP51.1m coming from the liquidity
transaction facilitated by 3i Group plc ("3i"). The 3i Eurofund V
holding largely related to the underlying company Action. The
Company then reinvested GBP22.6m of realised proceeds into a new
co-investment in Action. Accounting for this co-investment, net
cash proceeds to the Company from the overall 3i Eurofund V
transaction amounted to GBP28.5m.
The majority of portfolio company realisations were at a premium
to the last relevant valuation. This premium paid at exit at the
portfolio level has persisted since 2010.
Commitments
During the period, the Company completed four primary fund
commitments, one secondary transaction and one co-investment. In
total, new commitments in the period equated to GBP83.9m. The total
outstanding commitments at 31 March 2020 were GBP451.2m (30
September 2019: GBP450.3m).
The value of outstanding commitments in excess of liquid
resources as a percentage of net assets is broadly flat at its
current level of 42.2% (30 September 2019: 42.6%). Despite the
initial impact of COVID-19 at 31 March 2020, this figure remains
within our long-term target range of 30%-75%. We estimate that
GBP64.4m of the reported outstanding commitments are unlikely to be
drawn down, which is normal for private equity investing.
INVESTMENT ACTIVITY
Primary funds
GBP37.4m was committed to new private equity primary funds
focused on Europe and GBP17.0m to a North American-based fund. The
new commitments were with two core private equity relationships (Hg
and Seidler Equity Partners), with whom Aberdeen Standard
Investments has an established relationship of more than 10
years.
In last year's Annual Report, we stated that we expected that
the Company would commit less capital to primary funds in the
current year compared to FY19. In light of COVID-19, we plan to
further reduce new primary fund commitment activity during the rest
of the year as we take stock of the developing situation.
Investment GBPm Description Rationale for investing
-------------- ---- ---------------------------------------- ----------------------------------------
Hg Saturn 12.2 $4.9bn fund focused primarily on The leading European software-specialist
2 upper mid-market and large software investor with strong sourcing
companies headquartered in Europe and value creation capabilities
and US. that it can use to further
scale its portfolio companies.
============== ==== ======================================== ========================================
Hg Genesis 13.8 EUR4.4bn fund focused primarily As above.
9 on mid-market software and tech-enabled
services companies based in Europe.
============== ==== ======================================== ========================================
Hg Mercury 11.4 c. EUR1.3bn fund investing in lower As above.
3 mid-market
software and tech-enabled services
companies across Europe.
============== ==== ======================================== ========================================
Seidler Equity 17.0 $800m fund focused primarily on Growth-oriented US investor
Partners VII lower with a strong track record
mid-market North American companies. of working discretely with
founder-led businesses, helping
them further professionalise
and scale.
-------------- ---- ---------------------------------------- ----------------------------------------
Secondary investments
During the period, the Company acquired GBP6.7m of secondary
exposure(1) . It purchased a position consisting of the two
remaining assets in PAI Fund V. Going forward the assets will be
managed in a new vehicle called PAI Strategic Partnerships SCSp.
The underlying companies are Froneri (international ice cream
manufacturer) and Marcolin (Italian eyewear manufacturer).
The market dislocation arising out of the COVID-19 crisis could
lead to some attractive investment opportunities in the secondary
market. The Manager has an established track record in secondaries
and a team of nine investment professionals dedicated to this area,
and is well positioned to identify opportunities for the
Company.
1 Exposure acquired equals purchase price plus any unfunded
commitment
Co-investments
During the period, the Company made a GBP22.6m co-investment
into Action alongside the latter's long-term private equity sponsor
3i Group plc ("3i"). The Company's co-investment will be made via
the newly created 3i Venice Partnership SCSp vehicle.
As background, SLPET has held Action since 2011 through its fund
commitment to 3i Eurofund V. Following the announcement by 3i on 14
November 2019 that it was facilitating a transaction for Action on
behalf of 3i Eurofund V investors, the Company elected to realise
part of its position in Action and re-invest part of the proceeds
as a new co-investment. The Company received net cash proceeds of
GBP28.5m from the transaction.
In light of COVID-19, we expect co-investment opportunities to
decrease in the short-term, in line with general M&A trends. At
31 March 2020 there were two co-investments in the Company's
portfolio, namely Action and Mademoiselle Desserts, equating to 5%
of Portfolio NAV.
Portfolio construction
The underlying portfolio consists of over 400 private companies,
largely within the European mid-market and spread across different
countries, sectors and vintages. At 31 March 2020, only 8 companies
equated to more than 1% of Portfolio NAV, with the largest single
underlying company exposure equating to 3.7% (Action).
Geographic exposure (1)
We believe that the portfolio is diversified and well positioned
to mitigate the impact of deteriorating macroeconomic conditions
resulting from of the COVID-19 crisis. At 31 March 2020, 86% of
SLPET's underlying private companies were headquartered in Europe.
The Company's underlying portfolio remains largely positioned to
North Western Europe, with only 6% of Portfolio NAV in Italy and
Spain. SLPET is well diversified by region across North Western
Europe, with the UK the highest exposure at 19%. North America
equates to 12% of the portfolio.
Sector exposure (1)
Over recent years the portfolio's sector exposure has moved more
towards high growth areas, such as Information Technology and
Healthcare, which are also likely to be more resilient in the
current environment. The first six months of the financial year has
seen a continuation of this trend as private equity managers have
been positioning their portfolios for more volatile macroeconomic
conditions. Technology and Healthcare represent a combined 35% of
the portfolio (30 September 2019: 31%).
We expect a negative COVID-19 impact to be particularly felt in
the Consumer Discretionary and Industrials sectors. Together they
represent 33% of the portfolio at 31 March 2020 (30 September 2019:
43%).
(1) Based on the latest information from underlying managers
Maturity analysis
We expect distributions to decrease materially in the near-term
due to the negative impact that COVID-19 is having on M&A
activity. However, with 45% of the portfolio being in vintages of
four years and older (30 September 2019: 50%), we would expect that
distributions will come back strongly once market activity returns
to more normal average levels.
The chart in the Half Yearly Report shows the maturity analysis
of the portfolio. The outer ring shows the percentage exposure to
each vintage as at 31 March 2020 and the inner ring shows the
weighted average valuation of each vintage.
Outlook
COVID-19 and its impact on the Company has been the main focus
of our attention in 2020. Clearly we have only seen the initial
impact of the global pandemic on the portfolio and NAV. Looking
forward, it remains difficult to predict how this will progress
and, importantly, for how long. We are approaching this
unprecedented situation with caution.
Scenario planning is especially important in times of crisis. We
have stress-tested the portfolio in a number of scenarios,
incorporating our experience of what happened to the Company during
the global financial crisis. We believe that the Company has
sufficient liquidity to service its commitments and has comfortable
headroom on covenants relating to its revolving credit facility.
However, the COVID-19 crisis is a unique, fast-moving situation and
we will continue to regularly model out different scenarios for the
portfolio as new developments arise.
We expect that there will be more pressure on valuations and
that the Company's NAV could see a further decline in the current
financial year. In addition, we are seeing little M&A activity
in the market, as sales processes are postponed until late 2020 and
beyond. This will have a knock-on impact on the level of
distributions (i.e. cash) that the Company receives in the short
term.
The decline in M&A activity will be followed by a decrease
in drawdowns, albeit at a later stage in the cycle than
distributions. This time lag is due to (i) the widespread usage of
bridging facilities to fund investments ahead of capital being
drawn from investors; (ii) new deals signed before the impact of
COVID-19 became evident and not yet formally completed; and (iii)
the need for managers to inject further capital to support some of
their existing portfolio companies in the near-term. As a result,
we expect that the Company will draw on its revolving credit
facility within the next 12 months.
We believe it is prudent to slow down new investment activity in
the second half of the financial year. New primary fund commitments
and co-investments are likely to be pursued only on an
opportunistic basis as we take stock of the effects of COVID-19. We
expect that activity levels in the secondary market will not
recover significantly until the latter part of 2020 or early 2021,
as potential sellers assess their own position and wait until
private equity valuations stabilise.
We are also not forgetting about responsible investment at this
time of difficulty. Investments made by the Company have been
subject to due diligence around Environment, Social and Governance
("ESG") factors and that remains the case for all future
investments the Company will make. We are watching the behaviours
of our private equity managers and underlying portfolio companies
closely at this time and expect them to act responsibly. We will be
quick to raise issues with private equity managers that are falling
short of acceptable standards.
Despite the unprecedented situation around COVID-19 and the
strong headwinds that we are currently facing, we remain confident
that private equity continues to offer significant opportunity for
long-term value creation. All of the Company's private equity
managers weathered the global financial crisis and can apply their
lessons from that time period to the COVID-19 situation. In the
short-term their experience and expertise will be largely deployed
in helping their existing portfolio companies to mitigate the
impact of COVID-19. However, private equity has shown time and time
again that it thrives on the opportunities that present themselves
during periods of market dislocation. We expect this time will be
no different and are confident that strong investment performance
will resume once the world returns to a more stable situation.
Alan Gauld
Lead Portfolio Manager
17 June 2020
CONDENSED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
For the six months For the six months
ended 31 March 2020 ended 31 March 2019
Notes Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Total capital (losses)
/ gains on investments - (41,624) (41,624) - 4,166 4,166
Currency gains / (losses) - 254 254 - (695) (695)
Income 4 2,131 - 2,131 4,796 - 4,796
Investment management
fee 5 (326) (2,933) (3,259) (311) (2,802) (3,113)
Administrative expenses (533) - (533) (506) - (506)
-------- --------- --------- -------- -------- --------
Profit / (loss) before finance
costs and taxation 1,272 (44,303) (43,031) 3,979 669 4,648
Finance costs (118) (477) (595) (86) (316) (402)
-------- --------- --------- -------- -------- --------
Profit / (loss) before
taxation 1,154 (44,780) (43,626) 3,893 353 4,246
Taxation (1,222) 167 (1,055) (187) 222 35
-------- --------- --------- -------- -------- --------
(Loss) / profit after
taxation (68) (44,613) (44,681) 3,706 575 4,281
-------- --------- --------- -------- -------- --------
(Loss) / earnings per
share - basic and diluted 7 (0.04)p (29.02)p (29.06)p 2.41p 0.37p 2.78p
-------- --------- --------- -------- -------- --------
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 period.
CONDENSED STATEMENT OF FINANCIAL POSITION (UNAUDITED)
As at As at
31 March 2020 30 September 2019
Notes GBP'000 GBP'000 GBP'000 GBP'000
Non-current assets
Investments 8 580,334 638,733
Receivables falling due after
one year - 15,173
-------- -------- ---------- --------
580,334 653,906
Current assets
Receivables 18,144 10,640
Cash and cash equivalents 59,599 66,315
-------- -------- ---------- --------
77,743 76,955
Creditors: amounts falling due
within one year
Payables (2,516) (20,778)
-------- -------- ---------- --------
Net current assets 75,227 56,177
Total assets less current liabilities 655,561 710,083
-------- -------- ---------- --------
Capital and reserves
Called-up share capital 307 307
Share premium account 86,485 86,485
Special reserve 51,503 51,503
Capital redemption reserve 94 94
Capital reserves 517,240 571,694
Revenue reserve (68) -
-------- -------- ---------- --------
Total shareholders' funds 655,561 710,083
-------- -------- ---------- --------
Net asset value per equity share 9 426.4p 461.9p
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 17 June 2020 and were signed on its behalf
by Christina McComb OBE, Chair.
CONDENSED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
For the six months
ended 31 March
2020
Called-up Share Capital
share premium Special redemption Capital Revenue
capital account reserve reserve reserves reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 October
2019 307 86,485 51,503 94 571,694 - 710,083
Profit after taxation - - - - (44,613) (68) (44,681)
Dividends paid - - - - (9,841) - (9,841)
---------- --------- --------- ------------ --------- --------- ---------
Balance at 31 March
2020 307 86,485 51,503 94 517,240 (68) 655,561
---------- --------- --------- ------------ --------- --------- ---------
For the six months
ended 31 March
2019
Called-up Share Capital
share premium Special redemption Capital Revenue
capital account reserve reserve reserves reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 October
2018 307 86,485 51,503 94 522,974 - 661,363
Profit after taxation - - - - 575 3,706 4,281
Dividends paid - - - - (5,826) (3,706) (9,532)
---------- --------- --------- ------------ --------- --------- ---------
Balance at 31 March
2019 307 86,485 51,503 94 517,723 - 656,112
---------- --------- --------- ------------ --------- --------- ---------
CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED)
For the six months For the six months
ended ended
31 March 2020 31 March 2019
Note GBP'000 GBP'000 GBP'000 GBP'000
Cashflows from operating activities
(Loss) / profit before taxation (43,626) 4,246
Adjusted for:
Finance costs 595 402
Gains on disposal of investments (74,076) (19,614)
Revaluation of investments 115,389 15,447
Currency (gains) / losses (254) 695
Increase in debtors (1,812) (238)
Increase in creditors 1,290 119
Tax (deducted) / rebates from non-UK
income (1,055) 35
Interest paid (595) (341)
---------- --------- ---------- ---------
Net cash (outflow) / inflow from
operating activities (4,144) 751
Investing activities
Purchase of investments (106,533) (42,914)
Distributions of capital proceeds
by funds 92,810 44,974
Disposal of quoted investments 14,065 1,461
Receipt of proceeds from disposal
of unquoted investments 6,673 -
---------- --------- ---------- ---------
Net cash inflow from investing
activities 7,015 3,521
Financing activities
Ordinary dividends paid 6 (9,841) (9,532)
---------- --------- ---------- ---------
Net cash outflow from financing
activities (9,841) (9,532)
Net decrease in cash and cash equivalents (6,970) (5,260)
Cash and cash equivalents at the
beginning of the period 66,315 57,441
Currency gains / (losses) on cash
and cash equivalents 254 (695)
---------- --------- ---------- ---------
Cash and cash equivalents at the
end of the period 59,599 51,486
---------- --------- ---------- ---------
Cash and cash equivalents consist
of:
Money-market funds 38,362 23,649
Cash 21,237 27,837
---------- --------- ---------- ---------
Cash and cash equivalents 59,599 51,486
---------- --------- ---------- ---------
NOTES TO THE FINANCIAL STATEMENTS
1 Financial Information. The financial information for the year ended
30 September 2019 within the report is considered non-statutory
as defined in sections 434-436 of the Companies Act 2006. The financial
information for the year ended 30 September 2019 has been extracted
from the published accounts that have been delivered to the Registrar
of Companies and on which the report of the auditor was unqualified
under section 498 of the Companies Act 2006.
2 Basis of preparation and going concern. The condensed financial
statements for the six months ended 31 March 2020 have been prepared
in accordance with Financial Reporting Standard 104 (Interim Financial
Reporting) and with the Statement of Recommended Practice for 'Financial
Statements of Investment Trust Companies and Venture Capital Trusts'.
The condensed financial statements for the six months ended 31 March
2020 have been prepared using the same accounting policies as the
preceding annual financial statements. This is available at www.slpet.co.uk
or on request from the Company Secretary.
The Directors have made an assessment of the Company's ability to
continue as a going concern and is satisfied that the Company has
the resources to continue in business for a period of at least 12
months from the date of these condensed financial statements. In
preparing these condensed financial statements, the Directors have
also considered the uncertainty created by COVID-19, taking into
account of:
-- the GBP100 million committed, syndicated revolving credit facility
with a maturity date in December 2024 that is presently undrawn;
-- the level of liquid resources, including cash and cash equivalents.
The Manager regularly monitors the Company's cash position to
ensure sufficient cash is held to meet liabilities as they fall
due;
-- the future cash flow projections (including the level of expected
realisation proceeds, the expected future profile of investment
commitments and the terms of the revolving credit facility);
-- the Company's cash flows during the period;
-- the effectiveness of the Manager's operational resilience processes,
including the ability of key outsourcers to continue to provide
services; and
-- the impact of potential downside scenarios on asset valuations
and liquidity, including potential management actions.
Based on a review of the above, the Directors are satisfied that
the Company has, and will maintain, sufficient resources to continue
to meet its liabilities as they fall due for at least 12 months
from the date of approval of the condensed financial statements.
Accordingly, the condensed financial statements have been prepared
on a going concern basis.
3 Exchange rates
-------------------------- ---------- ---------------------------------
Rates of exchange to sterling were:
-------------------------------------------------------------------------
As at 31 March As at 30 September
2020 2019
--------------------------------- ----------------- -------------------
Canadian dollar 1.7649 1.6316
Euro 1.1301 1.1304
US dollar 1.2400 1.2323
4 Income
--------------------------------- ----------------- -----------------
Six months ended Six months ended
31 March 2020 31 March 2019
GBP'000 GBP'000
--------------------------------- ----------------- -----------------
Income from fund investments 1,963 4,498
Interest from cash balances and
money-market funds 168 298
----------------- -----------------
Total income 2,131 4,796
5 Investment management
fees
----------------------- ---------- --------------- ----------- -------- ------------- -------------------
Six months ended 31 March Six months ended 31 March
2020 2019
----------------------- ---------------------------------------- --------------------------------------------
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- -------------- ----------- ----------- -------------- ------------- -------------
Investment management
fee 326 2,933 3,259 311 2,802 3,113
--------------------------- -------------- ----------- ----------- -------------- ------------- -------------
The Manager of 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 31 March 2020
amounted to GBP709,000 (30 September 2019: GBP799,000).
6 Dividend on ordinary shares. In respect of the year ended 30 September
2019, the third quarterly dividend of 3.2p per ordinary share was
paid on 25 October 2019 (2019: dividend of 3.1p per ordinary share
paid on 26 October 2019). The fourth quarterly dividend of 3.2p per
ordinary share was then paid on 24 January 2020 (2019: dividend of
3.1p per ordinary share paid on 25 January 2019).
For the financial period ending 31 March 2020, the first quarterly
dividend of 3.3p per ordinary share was paid on 24 April 2020 (2019:
dividend of 3.2p was paid on 26 April 2019). A proposed dividend
of 3.3p per share is due to be paid on 31 July 2020 (2019: dividend
of 3.2p was paid on 26 July 2019).
7 Earnings per share - basic and diluted
---------------------------------------- -------------- ------------ ----- ------------
Six months ended Six months ended
31 March 2020 31 March 2019
---------------------------------------- ---------------------------- -------------------
p GBP'000 p GBP'000
---------------------------------------- -------- ------------------ ----- ------------
The net return per ordinary share
is based on the following figures:
Revenue net (loss) / return (0.04) (68) 2.41 3,706
Capital net (loss) / return (29.02) (44,613) 0.37 575
--------------------------------------------
Total net (loss) / return (29.06) (44,681) 2.78 4,281
-------------------------------------------- -------- ------------------ ----- ------------
Weighted average number of ordinary
shares in issue: 153,746,294 153,746,294
There are no diluting elements to the earnings per share calculation
in the six months ended 31 March 2020 (2019: none).
8 Investments
---------------------------- -------------------------------------- --------------------------------------
Six months ended 31 March Year ended 30 September
2020 2019
---------------------------- -------------------------------------- --------------------------------------
Quoted Unquoted Quoted Unquoted
Investments Investments Total Investments Investments Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- ------------ ------------ ---------- ------------ ------------ ----------
Fair value through
profit or loss:
Opening market value 11,435 627,298 638,733 29,020 574,689 603,709
Opening investment
holding (gains) /
losses (316) (120,569) (120,885) 26 (58,899) (58,873)
-------------------------------- ------------ ------------ ---------- ------------ ------------ ----------
Opening book cost 11,119 506,729 517,848 29,046 515,790 544,836
Movements in the period
/ year:
Additions at cost - 81,449 81,449 13,352 81,568 94,920
Secondary purchases - 5,532 5,532 - 36,063 36,063
Distribution of capital
proceeds by funds - (92,810) (92,810) - (132,541) (132,541)
Disposal of quoted
investments (11,257) - (11,257) (33,263) - (33,263)
--------------------------------
(138) 500,900 500,762 9,135 500,880 510,015
Gains on disposal
of underlying investments - 73,938 73,938 - 11,600 11,600
Gains on disposal
of quoted investments 138 - 138 1,984 - 1,984
Losses on liquidation
of fund investments{1} - - - - (5,751) (5,751)
-------------------------------- ------------
Closing book cost - 574,838 574,838 11,119 506,729 517,848
Closing investment
holding gains - 5,496 5,496 316 120,569 120,885
--------------------------------
Closing market value - 580,334 580,334 11,435 627,298 638,733
-------------------------------- ------------ ------------ ---------- ------------ ------------ ----------
{1}Relates to the write off of investments which were previously already
provided for.
The total capital loss on investments of GBP41,624,000 (2019: gain of
GBP4,166,000) for the six months ended 31 March 2020 also includes transaction
costs of GBP311,000 (2019: GBP69,000).
9 Net asset value per equity share
---------------------------------------- ---------------- ----------------
30 September
31 March 2020 2019
---------------------------------------- ---------------- ----------------
Basic and diluted:
Ordinary shareholders' funds GBP655,560,617 GBP710,082,563
Number of ordinary shares in issue 153,746,294 153,746,294
Net asset value per ordinary share 426.4p 461.9p
-------------------------------------------- ---------------- ----------------
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 the six months ended 31 March 2020 (2019: none).
10 Bank loans. At 31 March 2020, the Company had an GBP100 million
(30 September 2019: GBP80 million) committed, multi-currency syndicated
revolving credit facility provided by Citibank and Société
Générale of which GBPnil (30 September 2019: GBPnil)
had been drawn down. The facility expires on 6 December 2024.
11 Commitments and contingent liabilities
---------------------------------------- -------------- ------------------
31 March 2020 30 September 2019
GBP'000 GBP'000
---------------------------------------- -------------- ------------------
Outstanding calls on investments 451,186 450,272
--------------------------------------------- -------------- ------------------
This represents commitments made to fund and co-investment interests
remaining undrawn.
12 Fair value hierarchy. FRS 104 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:
Level 1: The unadjusted quoted price in an active market for
identical assets or liabilities that the entity can access at
- the measurement date.
Level 2: Inputs other than quoted prices included within Level
1 that are observable (i.e., developed using market data) for
- the asset or liability, either directly or indirectly.
Level 3: Inputs are unobservable (i.e., for which market data
- is unavailable) for the asset or liability.
The Company's financial assets and liabilities, measured at fair
value in the Condensed Statement of Financial Position, are grouped
into the following fair value hierarchy at 31 March 2020:
Level 1 Level 2 Level 3 Total
Financial assets at fair value
through profit or loss GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------------------- -------- -------- -------- ---------------
Unquoted investments - - 580,334 580,334
Quoted investments - - - -
---------------------------------------------- ---
Net fair value - - 580,334 580,334
----------------------- --------------------- -------- -------- -------- -------- ---------------
As at 30 September 2019
---------------------------------------------- --- -------- -------- -------- ---------------
Level 1 Level 2 Level 3 Total
Financial assets at fair value
through profit or loss GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------------------- -------- -------- -------- ---------------
Unquoted investments - - 627,298 627,298
Quoted investments 11,435 - - 11,435
---------------------------------------- --------- -------- -------- -------- ---------------
Net fair value 11,435 - 627,298 638,733
----------------------- --------------- --------- -------- -------- -------- ---------------
Unquoted investments. Unquoted investments are stated at the directors'
estimate of fair value and follow the recommendations of the EVCA
and the BVCA (European Private Equity & Venture Capital Association
and British Private Equity & Venture Capital Association). The
estimate of fair value is normally the latest valuation placed
on a fund by its manager as at the Condensed 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 Condensed 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 Condensed 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. The Company's investments previously included
shares which were actively traded on recognised stock exchanges,
with their fair value being determined by reference to their quoted
bid prices at the close of business on the last trading day of
the Company's reporting date. As at 31 March 2020, the Company
held GBPnil (30 September 2019: GBP11,435,000) of quoted investments.
13 Parent undertaking and related party transactions. The ultimate
parent undertaking of the Company is Phoenix Group Holdings. The
results for the period from 1 October 2019 to 31 March 2020 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
purpose 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 period ended 31 March
2020, SLAL received dividends from the Company totalling GBP5,512,000
(31 March 2019: GBP5,339,000).
As at 31 March 2020, the Company was invested in the Aberdeen Liquidity
Funds, managed by Aberdeen Standard Investments (Lux), ("ASI Lux")
who share the same ultimate parent as the Manager. As at 31 March
2020 the Company had invested GBP26,264,000 in the Aberdeen Liquidity
Funds (30 September 2019: GBP600,000) which are included within
cash and cash equivalents in the Condensed Statement of Financial
Position. During the period, the Company received interest amounting
to GBP15,000 (31 March 2019: GBP3,000) on sterling denominated
positions. The Company incurred GBPnil (31 March 2019: GBP22,000)
interest on euro denominated positions as a result of negative
interest rates. As at 31 March 2020, interest of GBP5,000 was due
to the Company on sterling denominated positions (30 September
2019: GBPnil). There was no interest payable on euro denominated
positions (30 September 2019: GBPnil). No additional fees are payable
to ASI (Lux) as a result of this investment.
During the period ended 31 March 2020 the Manager charged management
fees totalling GBP3,259,000 (31 March 2019: GBP3,113,000) to the
Company in the normal course of business. The balance of management
fees outstanding at 31 March 2020 was GBP709,000 (30 September
2019: GBP799,000). The Manager also charged promotion fees of GBP90,000
(31 March 2019: GBP30,000) during the period. The balance of promotion
fees outstanding was GBP180,000 (30 September 2019: GBP90,000).
The Company Secretarial services for the Company are provided by
Aberdeen Asset Management PLC, which shares the same ultimate parent
as the Manager. During the period ended 31 March 2020 the Company
incurred secretarial fees of GBP40,000 (31 March 2019: GBPnil)
which are included within payables in the Condensed Statement of
Financial Position.
No other related party transactions were undertaken during the
six months ended 31 March 2020.
14 Events after the reporting date. The initial impact of COVID-19
as at 31 March 2020 has been reflected within these condensed financial
statements, notably in the fair value of the Company's investments.
As COVID-19 progresses, it is expected to result in further adverse
impacts on the Company. This is likely to be significant to the
NAV of the Company in the near term.
As the full impact of COVID-19 has become more apparent after the
reporting period, the Manager consider this to be a non-adjusting
post balance sheet event. The Manager will continue to closely
analyse and review the continued impact of COVID-19 and will take
appropriate action as required.
15 Half Yearly Report. The financial information contained in this
Half Yearly Report does not constitute statutory accounts as defined
in Sections 434-436 of the Companies Act 2006. The financial information
for the six months ended 31 March 2020 and 31 March 2019 has not
been audited.
The information for the year ended 30 September 2019 has been extracted
from the latest published audited financial statements which have
been filed with the Registrar of Companies. The report of the auditors
on those accounts contained no qualification or statement under
Section 498 (2), (3) or (4) of the Companies Act 2006.
This Half Yearly Report was approved by the Board on 17 June 2020.
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 an 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*
The amount by which the market price per share is lower than the
net asset value per share of an investment trust. The discount is
normally expressed as a percentage of the net asset value per
share.
As at 31 March 2020 As at 30 September 2019
------------------------------ ------------------- -----------------------
Share price (p) 254.0 352.0
============================== =================== =======================
Net Asset Value per share (p) 426.4 461.9
============================== =================== =======================
(Discount) (%) 40.4 23.8
------------------------------ ------------------- -----------------------
Dividend yield*
The annual dividend per ordinary share divided by the share
price, expressed as a percentage, calculated at the year end.
2019 2018
----------------------- ----- -----
Dividend per share (p) 12.8 12.4
======================= ===== =====
Share price (p) 352.0 345.5
======================= ===== =====
Dividend yield (%) 3.6 3.6
----------------------- ----- -----
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 powder
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.
IPO
Initial Public Offering, the first sale of stock by a private
company to the public market.
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.
NAV per share (p) Dividend per share (p)
------------------ ----------------- ----------------------
30 September 2019 461.9
================== ================= ======================
31 December 2019 464.5 3.2
================== ================= ======================
31 March 2020 426.4 3.3
================== ================= ======================
NAV total return -6.3%
------------------ ----------------- ----------------------
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").
Six months ended 31 March 2020 Year ended 30 September 2019
GBP'000 GBP'000
-------------------------- ------------------------------ ----------------------------
Investment management fee 3,259 6,463
========================== ============================== ============================
Administrative expenses 533 997
========================== ============================== ============================
Ongoing charges 7,582(+) 7,460
========================== ============================== ============================
Average net assets 682,852 685,723
========================== ============================== ============================
Ongoing charges ratio 1.11%(+) 1.09%
-------------------------- ------------------------------ ----------------------------
(+) As at 31 March 2020. The 2020 ratio is calculated using
actual costs and charges to 31 March 2020 and forecast costs and
charges for the remaining six months of the year dividend by
average net assets.
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.
As at 31 March 2020 As at 30 September 2019
GBP000s GBP000s
---------------------------------------- ------------------- -----------------------
Undrawn Commitments 451,186 450,272
======================================== =================== =======================
Less resources available for investment (74,755) (67,748)
======================================== =================== =======================
Less undrawn loan facility (100,000) (80,000)
======================================== =================== =======================
Net outstanding commitments 276,431 302,524
======================================== =================== =======================
Net assets 655,561 710,083
======================================== =================== =======================
Over-commitment ratio 42.2% 42.6%
---------------------------------------- ------------------- -----------------------
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:
As at 31 March 2020 As at 30 September 2019
----------------------------------- ------------------- -----------------------
Cash and cash equivalents 59,599 66,315
=================================== =================== =======================
Quoted investments - 11,435
=================================== =================== =======================
Investment receivables 15,156 9,550
=================================== =================== =======================
Investment payables - (19,552)
=================================== =================== =======================
Resources available for investment 74,755 67,748
----------------------------------- ------------------- -----------------------
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 typically not 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 this report, 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.
Share Dividend per
Date price (p) share (p)
------------------------- ---------- ------------
30 September 2019 352.0
========================= ========== ============
19 December 2019 339.0 3.2
========================= ========== ============
19 March 2020 192.0 3.3
========================= ========== ============
31 March 2020 254.0
========================= ========== ============
Total shareholder return -25.9%
------------------------- ---------- ------------
Vintage year
Refers to the year in which the first influx of investment
capital is delivered to a fund.
Neither the Company's website nor the content of any website
accessible from hyperlinks on the Company's website (or any other
website) is (or is deemed to be) incorporated into, or forms (or is
deemed to form) part of this announcement.
For Standard Life Private Equity Trust PLC
Aberdeen Asset Management PLC, Company Secretary
END
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London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR FLFFRRLIDLII
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