Share Name Share Symbol Market Type Share ISIN Share Description
Standard Life Private Equity Trust Plc LSE:SLPE London Ordinary Share GB0030474687 ORD 0.2P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  -3.00p -0.84% 355.00p 356.00p 362.00p 356.00p 356.00p 356.00p 49,264 16:35:29
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Software & Computer Services 0.0 5.1 2.2 163.6 559

Standard Life Private Eqty Trst PLC Half-year Report

19/06/2019 7:00am

UK Regulatory (RNS & others)


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RNS Number : 6641C

Standard Life Private Eqty Trst PLC

19 June 2019

19 June 2019

STANDARD LIFE PRIVATE EQUITY TRUST PLC

INTERIM RESULTS FOR THE SIX MONTHSED 31 MARCH 2019

INVESTMENT OBJECTIVE

To achieve long-term total returns through holding a diversified portfolio of private equity funds and direct investments into private companies alongside private equity managers, a majority of which will have a European focus.

HIGHLIGHTS

At 31 March 2019:

 
 GBP656.1 million   Net Asset Value ("NAV") 
 426.7 pence        NAV per ordinary share 
 GBP542.7 million   Market capitalisation 
 353.0 pence        Share price 
 GBP419.6 million   Outstanding commitments to 59 private equity 
                     fund and co-investment interests 
 GBP84.6 million    Resources available for investment 
 63.7% of NAV       Top 10 private equity managers* 
 17.3%              Discount to net asset value 
 3.2 pence          2019 second quarter dividend (pay date: 26 July 
                     2019, ex-date: 21 June 2019) 
 

For the six months ended 31 March 2019:

 
 +4.1%             Share price total return 
 +0.4%             NAV total return 
 GBP99.2 million   Primary commitments to 5 private equity fund 
                    and co-investment interests 
 GBP49.5 million   Cash realisations / 2.5x cost on realised investments 
 GBP36.4 million   Cash invested in new and existing private companies 
 

* 63.7% represents the percentage of the Company's NAV invested with the 10 largest private equity fund managers in the portfolio.

CHAIR'S STATEMENT

At 31 March 2019, the Company's net assets were GBP656.1 million (30 September 2018: GBP661.4 million). The NAV per ordinary share fell 0.8% over the six months to 426.7 pence (30 September 2018: 430.2 pence). This decrease in NAV per ordinary share during the period comprised:

 
 NAV movement (capital only)         % of 30 September 
                                              2018 NAV 
 Net realised gains and income 
  from the Company's portfolio                     3.6 
 Unrealised gains on a constant 
  exchange rate basis                              0.3 
 Negative exchange rate movements 
  on the portfolio                                -2.5 
 Other items, fees and costs                      -0.8 
 Dividends paid during the period                 -1.4 
 Total movement in the period                     -0.8 
 

The Company's performance is driven by the change in valuation of underlying private companies, primarily driven by improved trading under the ownership of private equity, and the flow of realisations as businesses are sold by the managers of funds in the Company's portfolio. In the six months to 31 March 2019, these realisations totalled GBP49.5 million compared with GBP75.5 million during the previous equivalent six months. Against this, GBP36.4 million was drawn down from the Company's resources to fund new and existing investments. This compares with GBP73.0 million for the previous equivalent six-month period. The net effect of these cash flows was that, as at the end of March, the Company had resources available for investment of GBP84.6 million (30 September 2018: GBP86.5 million).

In support of the investment strategy, the Manager made four new fund commitments during the period, comprising the following:

 
 Fund commitment                    Commitment       GBP million 
                                  amount (million)    equivalent 
 Triton V                             EUR30.0           26.4 
 Altor V                              EUR35.0           30.7 
 American Industrial Partners 
  Capital Fund VII                     $20.0            15.3 
 Investindustrial VII                 EUR25.0           21.5 
 

In addition, pursuant to the Board's decision to include co-investments in the Company's investment strategy, a EUR6.0 million (GBP5.3 million) commitment was made to Mademoiselle Desserts alongside IK Investment Partners as the lead manager. Mademoiselle Desserts is the leading manufacturer of premium frozen industrial finished and semi-finished pastry in Europe.

As a result of these investment activities, at 31 March 2019, the Company had total outstanding commitments of GBP419.6 million, compared with GBP369.3 million at 30 September 2018, while the portfolio of 59 private equity fund and co-investment interests were valued at GBP571.2 million (30 September 2018: 55 funds valued at GBP574.7 million).

After the period-end, as part of active portfolio management and to improve the quality of the Company's exposure by vintage year, the Manager sold old commitments to Coller V, Pomona V and Pomona VI. The Company also made a EUR25.0 million (GBP21.5 million) commitment to the Seventh Cinven Fund.

In line with the Company's policy of quarterly dividend payments, the Board has proposed a second quarter dividend for the year ended 30 September 2019 of 3.2 pence per share (2018: 3.1 pence per share). The second quarter dividend, together with the first quarter dividend of 3.2 pence per share, totals 6.4 pence per share (2018: 6.2 pence per share) for the first six months of the year. The proposed dividend will be paid on 26 July 2019 to shareholders on the Company's share register at 21 June 2019. The Board is committed to maintaining the real value of dividends, in the absence of unforeseen circumstances. The Board believes that providing a strong, stable dividend is attractive to shareholders.

The Company's portfolio remains predominantly focused on buyout managers who have been able historically to generate value through operational improvements and strategic repositioning, and who the Manager believes are well placed to do so in the future. Consistent with the Company's investment strategy, and with Europe continuing to be an attractive region for private equity investment, the majority of the Company's portfolio has a European focus. Nonetheless, the broadening of the Company's investment policy agreed at the 2017 and 2019 Annual General Meetings has allowed the Manager to consider a number of opportunities further afield. In line with this broadening of the investment policy, the Company made new commitments to American Industrial Partners Capital Fund VII and Mademoiselle Desserts as described earlier.

The Company's underlying portfolio has broad geographic diversification with UK-based companies making up 14% of the Company's portfolio. In general, the UK-based businesses have continued to perform well despite major political and economic uncertainty. It is still not possible to predict the ultimate impact of Brexit, your Board and the Manager continue to monitor closely ongoing developments and their potential effects on the Company and its portfolio.

The outlook for the global private equity market remains competitive, with significant amounts of funds being raised. Absent any major shocks, the Manager expects the Company to continue benefitting from strong levels of exit activity. Brexit notwithstanding, the Company continues also to be exposed to other emerging risks within the global geopolitical space. The Manager is alert to such emerging risks as part of its proactive research and coverage of the private equity market.

The Company is also subject to regulatory changes. The Financial Reporting Council's (FRC) UK Corporate Governance Code 2018 applies to accounting periods beginning on or after 1 January 2019. The new Code places greater emphasis on relationships between companies, shareholders and stakeholders and the Board will be considering its response to these new provisions over the coming months.

I am pleased to report that the Company joined the Aberdeen Standard Investment Trust Share Plan on 1 January 2019 which we believe will provide improved access to the Company's shares. The Board remains committed to maintaining capital discipline. Cash inflows will be invested in a mix of new fund commitments, co-investments, secondary fund purchases and, when appropriate, share buy-backs.

Directorate Changes

Retirement of Director

Having served on the Board since 2008, Ed Warner retired as Chairman on 31 December 2018. The Board wishes to express their thanks to Ed for his significant contribution to the Company during his tenure. Following Ed's retirement, I have assumed the role of Chair of the Board and Chair of the Management Engagement and Nomination Committees, with Alan Devine appointed as the Company's Senior Independent Director ("SID"), with effect from 1 January 2019.

Christina McComb, OBE

Chair

18 June 2019

MANAGER'S REVIEW

Shareholders approved changes to the investment objective and policy at the Annual General Meeting on 22 January 2019. The principal change was to broaden the Company's remit so as to be able to invest in co-investments, as further detailed below.

Investment objective

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

Investment policy

The principal focus of the Company is to invest in leading private equity funds and to manage exposure 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 quantum 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 funds whose principal investment focus is listed equities or in listed direct private equity investment companies or trusts. These investments may be in sterling or such other currencies to which the Company has exposure.

The Company will not invest more than 15% of its total assets in other listed investment companies or trusts.

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

Performance to 31 March 2019

The Company's net assets at 31 March 2019 were 426.7 pence per share

During the period, the NAV per ordinary share declined 3.5 pence from 430.2 pence to 426.7 pence. This decrease in NAV was driven by the following movements:

 
                                    Pence per share 
 30 September 2018 NAV                        430.2 
 Realised gains and income from 
  private equity fund and 
  co-investment interests                      15.8 
 Unrealised gains on a constant 
  exchange rate basis                           1.3 
 Unrealised exchange rate losses 
  on private equity interests                 -10.6 
 Other items, fees and costs                   -3.8 
 Dividends paid                                -6.2 
 31 March 2019 NAV                            426.7 
 

59 private equity fund and co-investment interests with a portfolio value of GBP571.2million

The valuation of the Company's private equity fund and co-investment interests at the period-end was carried out by the Manager and has been approved by the Board in accordance with the accounting policies. In undertaking the valuation, the most recent valuation prepared by the relevant manager of each fund or co-investment has been used, adjusted where necessary for subsequent cash flows. The valuations are prepared in accordance with the International Private Equity and Venture Capital Valuation guidelines.

These guidelines require investments to be valued at "fair value", which is the price at which an orderly transaction would take place between market participants at the reporting date. In addition, through its advisory board relationships and contacts with the relevant managers, the Manager is able to consider the appropriateness of the valuation methodologies employed.

Of the 59 private equity fund and co-investment interests in which the Company is invested, 40 fund and co-investment interests, or 84.1% of the portfolio by value, were valued by their managers at 31 March 2019. The Manager continues to believe that the use of such timely valuation information is important. For 10 funds, or 11.3% of the portfolio by value, were valued by their managers at 31 December 2018 and adjusted by their managers for any subsequent cash flows occurring between that date and 31 March 2019. For the remaining 9 funds, or 4.6% of the portfolio by value, 3 were based on the last available valuations from the fund managers at 31 December 2018 and adjusted by the Manager for any subsequent cash flows occurring between that date and 31 March 2019. The remaining 6 funds were in liquidation.

The Company invested GBP36.4 million into underlying private companies held by the Company's fund and co-investment interests

 
 Investment                       GBPm 
 Advent International GPE VIII     5.8 
                                 ----- 
 CVC Capital Partners VII          5.0 
                                 ----- 
 HgCapital 8                       4.1 
                                 ----- 
 Bridgepoint Europe V              4.1 
                                 ----- 
 Altor Fund IV                     4.1 
                                 ----- 
 Remaining funds                  13.3 
                                 ----- 
 Total                            36.4 
                                 ----- 
 

The Company received GBP49.5 million of distributions from the Company's fund and co-investment interests through the exit of private companies and other partial realisations

Exit activity was driven by the continued appetite for high quality private companies and the majority of realisations were at a premium to the last relevant valuation.

 
 Investment                        GBPm 
 Montagu IV                         8.3 
                                  ----- 
 Equistone Partners Europe Fund 
  IV                                6.7 
                                  ----- 
 IK VII                             6.2 
                                  ----- 
 3i Eurofund V                      3.9 
                                  ----- 
 Terra Firma Capital Partners 
  III                               3.4 
                                  ----- 
 Remaining funds                   21.0 
                                  ----- 
 Total                             49.5 
                                  ----- 
 

Average multiple on realised investments was 2.5 times invested cost

In the six months to 31 March 2019, the private equity fund and co-investment interests generated strong returns from their portfolio of private companies, consistent with prior years. This long-term performance is underpinned by the quality of the assets and the value-add delivered by our private equity managers.

Net unrealised losses from fund and co-investment interests were GBP14.4 million

The movement over the period represented an unrealised valuation gain on constant currency basis of GBP2.0 million and a foreign exchange loss of GBP16.4 million. The unrealised gains and losses include the effect of transfers from the capital unrealised reserve to the capital realised reserve when investments are realised.

 
 Top five net unrealised gains based on 
  constant currency 
 Investment                         Unrealised     Exchange 
                               gain - constant         rate 
                                      currency       Impact 
                                          GBPm         GBPm 
                        ----------------------  ----------- 
 3i Eurofund V                             9.4        (1.3) 
                        ----------------------  ----------- 
 Charterhouse Capital 
  Partners VII                             5.8            - 
                        ----------------------  ----------- 
 Nordic Capital Fund 
  VIII                                     3.8        (1.4) 
                        ----------------------  ----------- 
 CVC Capital Partners 
  VI                                       2.5        (0.8) 
                        ----------------------  ----------- 
 Permira V                                 2.3        (1.0) 
                        ----------------------  ----------- 
 
 
 Top five net unrealised losses based on 
  constant currency 
 Investment                   Unrealised   Exchange 
                         gain - constant       rate 
                                currency     Impact 
                                    GBPm       GBPm 
                       -----------------  --------- 
 Montagu IV                        (5.7)      (0.4) 
                       -----------------  --------- 
 Equistone Partners 
  Europe Fund IV                   (3.8)      (0.4) 
                       -----------------  --------- 
 Equistone Partners 
  Europe Fund V                    (3.0)      (0.8) 
                       -----------------  --------- 
 IK VII                            (2.9)      (1.2) 
                       -----------------  --------- 
 BC European Capital 
  IX                               (2.7)      (0.9) 
                       -----------------  --------- 
 

Total outstanding commitments of GBP419.6 million to 59 private equity fund and co-investment interests

Five new primary and co-investment commitments of GBP99.2 million were made in the period to 31 March 2019. The Company committed to Triton V, Altor V, American Industrial Capital Partners VII, L.P and Investindustrial VII. In each of these cases, the Company is backing private equity managers that the Manager considers 'best in class' and with whom it has deep, long-term relationships with. All four private equity managers drive investment returns largely through operational value creation at the underlying portfolio company level, which will serve the funds well irrespective of wider market conditions.

Furthermore, the Company made its first co-investment in the period, following the change in its Investment Objective in January 2019. It co-invested in Mademoiselle Desserts in February 2019 alongside IK Investment Partners. The business, a French manufacturer of premium frozen pastry, is a European market leader in a defensive sector, with robust cash flow dynamics and a strong management team. The Manager believes that co-investing in a business of such a profile, alongside a high quality private equity manager like IK, is an attractive investment opportunity at this point in the cycle.

 
 Commitment details 
 Manager             Fund/Co-investment     Date          GBPm   $/EURm    Type            Description 
                    ---------------------  ------------  -----  --------  --------------  ----------------------- 
                                                                                           EUR5.0bn fund 
                                                                                            focuses on German 
                                            October                                         speaking and 
 Triton Partners     Triton V                2018         26.4   EUR30.0   Primary          Nordic countries. 
                    ---------------------  ------------  -----  --------  --------------  ----------------------- 
                                                                                           EUR2.5bn fund 
                                                                                            investing in 
                                                                                            middle market 
 Altor Equity                               February                                        segment of Nordic 
  Partners           Altor V                 2019         30.7   EUR35.0   Primary          region. 
                    ---------------------  ------------  -----  --------  --------------  ----------------------- 
                                                                                           Leading manufacturer 
                                                                                            of premium frozen 
                                                                                            industrial finished 
 IK Capital          Mademoiselle           February                                        and semi-finished 
  Partners            Desserts               2019         5.3    EUR6.0    Co-investment    pastry in Europe. 
                    ---------------------  ------------  -----  --------  --------------  ----------------------- 
                     American Industrial                                                   $3.1bn fund focuses 
 American             Partners Capital                                                      on underperforming 
  Industrial          Fund VII,                                                             industrial businesses 
  Partners            L.P                   March 2019    15.3   $20.0     Primary          in North America. 
                    ---------------------  ------------  -----  --------  --------------  ----------------------- 
                                                                                           EUR2.4bn fund 
                                                                                            focuses on European 
                                                                                            investments in 
                     Investindustrial                                                       the lower-mid 
 Investindustrial     VII                   March 2019    21.5   EUR25.0   Primary          market. 
                    ---------------------  ------------  -----  --------  --------------  ----------------------- 
 

The Manager continues to estimate that GBP60.0 million of outstanding commitments will not be drawn by the private equity funds portfolio.

The outstanding commitments in excess of resources available for investment plus the undrawn debt facility as a percentage of the net asset value was 38.9%. The Manager had previously agreed a long-term target range of 30%-75% with the Directors of the Company. The Manager has taken a gradual approach in increasing outstanding commitments over the last few years, highlighting the prudent approach to over-commitments adopted by the Manager in the current market environment.

Resources available for investment total GBP84.6m

Over the period, the private equity fund and co-investment portfolio generated cash inflows of GBP49.5 million from realised investments, partially offset by new investment activity of GBP36.4 million, resulting in a net movement of GBP13.1 million. After accounting for dividends paid and exchange rate movements, resources available for investment were GBP84.6 million at 31 March 2019, down from GBP86.5 million at 30 September 2018.

Analysis of the underlying private company investments

At 31 March 2019, the 59 private equity fund interests were collectively invested in a total of 493 underlying investments. The diversification of the underlying investments is set out in the "Portfolio Review" section of the interim report. Further information on the ten largest underlying private company investments, representing 14.5% of the net asset value is shown in the "Largest 10 Underlying Private Companies" section of the interim report.

Portfolio construction

Investments in buyout funds through primary commitments and buyout funds acquired via secondary transactions represent 98% of the portfolio and demonstrate the core focus on buyouts as the prime investment strategy for investing in private companies. 2% of the portfolio was acquired through secondary fund and co-investment interests.

Geographic exposure

84% of the underlying private companies at 31 March 2019 are headquartered in Europe and this will likely continue to be the majority of exposure over the short to medium term, with 13% headquartered in North America. The underlying private companies in Europe are weighted towards Northern Europe, with a focus on the French, Benelux and Scandinavian markets. The portfolio has historically been deliberately underweight in Southern Europe due to the relative immaturity and underperformance of its private equity market compared to other European regions. However, the Manager considers making commitments to Southern Europe where attractive opportunities arise.

Sector exposure

The Company's sector diversification is a product of the underlying investment strategy of the private equity funds and co-investments, built around their specific sector expertise. In recent years, healthcare, financials and technology (mature software businesses) have increased in significance with consumer-focused and industrial companies retaining their importance. The portfolio is light in the cyclical sectors of oil and gas, utilities and mining.

Maturity exposure and portfolio value growth

The maturity exposure highlights the balanced nature of the underlying private companies. The typical hold period prior to the exit of a private equity backed company is four to five years. With 36% of the underlying private companies in the five years or older category, cash generation is therefore expected to remain positive. Maturity exposure is managed through primary commitments, secondary transactions and co-investments with the objective of achieving balanced exposures over vintage years. Less than 1% of the underlying private companies are exposed to the pre-2007 period and 6% of it is valued below cost.

There is a continual progression in value creation as the portfolio of private companies matures. The development from 1.0 times cost for the year one vintage through to 2.0 times cost in the five year plus vintage demonstrates the value creation the private equity managers achieve through active management. With realised returns from all exited investments of 2.5 times cost for the six months to 31 March 2019, the portfolio remains conservatively valued.

Market Review

Primary investment market

The European and North American private equity markets remain particularly buoyant, with high levels of activity in fundraising, new investments and exits, an ongoing trend since the financial crisis of 2007-8. Many institutional investors have increased their allocations to private equity on the back of strong performance, and the expectation is that this will continue relative to a more muted public market outlook. The high levels of investment activity, tied to increased private equity allocations, continues to prompt managers to come back to the fundraising market earlier and seek to raise ever-larger funds.

In Europe and North America, 2018 buyout activity of $139 billion and $274 billion respectively represents increases of 26% and 34% over 2017. As such, buyout activity in Europe is at its highest level since 2007, and in North America 2018 was broadly in line with 2015 which had the highest activity since 2007.

With respect to fundraising, the best small, mid and large cap managers are raising new funds rapidly (and being frequently oversubscribed), notwithstanding significant fund size increases in many cases. The increasing allocation to private equity by large institutional investors means that many second-tier and new managers are also finding success in reaching fundraising targets. 2018 was another record year for buyout fundraising in Europe with $74.9 billion raised in the period, which was marginally up on the prior year at $74.6 billion. Conversely, North American fund raising was less successful with only $136.7 billion raised in 2018, down 31% on prior year.

Notwithstanding the softer fund raising in 2018 in North America, since 2013 buyout fundraising globally has continued to outstrip new investment activity over the same period. As a result, record levels of dry powder (raised capital not yet invested) are being witnessed across the globe, with North America accounting for approximately 60% of the aggregate amount. The growth in dry powder has not been uniform across the different fund size segments, however. In the mega buyout space, dry powder has seen a rapid increase. However in the mid-market space, where the Company typically invests, dry powder growth has been relatively steady. The capital raised for European and North American private equity now represents around 3.9 years and 4.8 years of investment capacity respectively, up from 2.8 years and 3.3 years at December 2015.

Valuations within the European buyout market have coalesced around 9.0x-10.0x EBITDA since 2008, albeit with some notable fluctuations due to specific large deals in highly or lowly related sectors. In 2018, the average purchase price multiple surpassed 10.0x EBITDA. Total debt multiples have shown a gradual increase since 2009, levelling to just over 5.0x EBITDA from mid-2014, but have increased again in the last 18 months. Valuations within North America have crept upwards in recent years, with 2018 averaging at 10.6x EBITDA, albeit Q4 2018 was lower at 10.3x EBITDA. Increasing debt availability has contributed to higher valuations in North America - average debt of 5.8x EBITDA is now at its highest level since 2007. Notwithstanding the higher debt levels, covenants have tended to loosen over the past few years, as the debt funding market for buyouts has grown increasingly competitive.

Overall, the Company has seen a steady pace of activity over the past few years and it is expected that the levels of new investment and realisation activity will remain robust over 2019 and into 2020. This is driven, in part, by Europe and North America having a large population of privately-owned businesses and a substantial number of corporates looking to divest non-core divisions, providing significant opportunity for private equity managers. European and North American private equity firms account for the significant majority of all private equity firms globally. Given the attractive dynamics in these markets, they will continue to be the focus of the Company.

Secondary transaction market*

2018 was a record year for the secondary market in terms of deal volume, with $74 billion of transactions completed. This represents a 28% increase on volumes transacted in 2017. The key reason for this growth continues to be a combination of strong pricing and innovation, which have together unlocked an increasing number of larger deals. Transactions over $500 million in size accounted for nearly 60% of the overall deal volume and as a result a high proportion of the market (around 70%) is concentrated in buyers managing vehicles with capital greater than $4 billion.

Average pricing in secondary transactions in 2018 declined modestly from 93% of NAV in 2017 to around 92%. This reflects the continued supply of 2008 and older vintage funds, which generally have limited upside and therefore trade at higher discounts to NAV. There was also an increase in emerging market assets which tend to be dilutive to overall pricing levels. Stock market volatility in the fourth quarter of 2018 may also have had an impact.

The trend in average pricing masks the fact that better quality buyout funds and newer vintages, which are typically the ones targeted by the Company, often trade at material premia to NAV and so require the buyer to hold the investment below cost for a period of time.

Another key factor behind the market growth trend has been the ability of secondary buyers to raise capital, both through their own fundraising efforts and with the availability of more leverage. With many of the bigger secondary managers actively raising capital in 2019 and targeting ever larger fund sizes, it is estimated that over $150 billion will be available to invest in secondary transactions over the near term.

On the innovation side, General Partner-led ("GP-led") transactions have continued to gain traction and to be adopted across a wider range of transaction types, size segments and assets classes. This category of secondary deal grew significantly in 2018 and accounted for $24 billion of volume, equivalent to 32% of the total market volume. Many of the best-known private equity managers have used the secondary market to offer liquidity to their investors. Often these deals allow the existing manager more time to develop and sell key assets, sometimes with additional capital and sometimes with adapted incentives.

The level of complexity of some of these GP-led deals has been challenging for managers, their advisers, secondary buyers and the existing investors in the funds being restructured. This has led to the Institutional Limited Partners Association publishing a set of guidelines on these deals in April 2019. The key recommendations in this report focus on the need for proper engagement between GPs and Limited Partners and appropriate levels of disclosure to ensure fair treatment.

The Manager has remained focused on targeting secondary interests in high quality private equity funds that would fit well alongside the Company's existing portfolio of funds, co-investments and managers. The Manager continues to originate and analyse a variety of secondary opportunities on behalf of the Company, but over the course of the last year a number of transactions were declined due to high price levels. The Manager remains highly selective in its secondary strategy for the Company given the current macro and secondary pricing environment.

* Source: market data sourced from Greenhill (January 2019).

PRINCIPAL RISKS 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 these are set out below:

   --    market risk 
   --    currency risk 
   --    over-commitment risk 
   --    liquidity risk 
   --    credit risk 
   --    interest rate risk 
   --    operating and control environment risk 

Information on each of these risks, and an explanation of how they are managed, is contained in the Company's Annual Report for the year ended 30 September 2018.

The Company's principal risks, emerging risks and uncertainties have not changed materially since the date of that Annual Report and are not expected to change materially for the remaining six months of the Company's financial year.

DIRECTORS' RESPONSIBILITY STATEMENT

The Directors are responsible for preparing the half-yearly financial report, in accordance with applicable law and regulations. The Directors confirm that, to the best of their knowledge:

-- the condensed set of financial statements has been prepared in accordance with FRS 104 Interim Financial Reporting; and

   --    the interim management report includes a fair review of the information required by: 

a) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first six 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

b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

On behalf of the Board,

Christina McComb

Chair

18 June 2019

FINANCIAL HIGHLIGHTS

 
  Performance (capital only)                 As at           As at 
                                          31 March    30 September 
                                              2019            2018     % Change 
   SLPET NAV                                426.7p          430.2p        -0.8% 
                                        ----------  --------------  ----------- 
   SLPET share price                        353.0p          345.5p        +2.2% 
                                        ----------  --------------  ----------- 
   FTSE All-Share Index(1)                 3,978.3         4,127.9        -3.6% 
                                        ----------  --------------  ----------- 
   MSCI Europe Index(1)                    3,011.8         3,145.8        -4.3% 
                                        ----------  --------------  ----------- 
   Discount (difference between share 
    price and net asset value)               17.3%           19.7% 
                                        ----------  --------------  ----------- 
 
 
 Performance (total return)(2)                                    Annualised 
                               6 months   1 year   3 years   5 years   10 years        Since 
                                      %        %         %         %          %    inception 
                                                                                        %(3) 
                                                  -------- 
 SLPET NAV                      +0.4%     +12.0%   +13.6%    +13.3%     +10.3%      +9.8% 
                              ---------  -------  --------  --------  ---------  ----------- 
 SLPET share price              +4.1%     +12.7%   +24.2%    +15.0%     +25.8%      +9.1% 
                              ---------  -------  --------  --------  ---------  ----------- 
 FTSE All-Share Index(1)        -1.8%     +6.4%     +9.5%     +6.1%     +11.1%      +5.5% 
                              ---------  -------  --------  --------  ---------  ----------- 
 MSCI Europe Index (GBP)(1)     -3.0%     +4.3%    +10.8%     +6.8%     +10.7%      +5.7% 
                              ---------  -------  --------  --------  ---------  ----------- 
 
 
 Highs/lows for the six months ended 31 March      High      Low 
  2019 
   Share price (mid)                             363.0p   320.0p 
                                                -------  ------- 
 

(1) The Company uses a number of indices as comparator benchmarks for the Company's performance.

(2) Includes dividends reinvested.

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

CONDENSED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

 
                                                  For the six months to 
                                                      31 March 2019 
 
 
                                       Notes   Revenue   Capital     Total 
                                               GBP'000   GBP'000   GBP'000 
 
 Total capital gains on investments                  -     4,166     4,166 
 Currency losses                                     -     (695)     (695) 
 Income                                  4       4,796         -     4,796 
 Investment management fee               5       (311)   (2,802)   (3,113) 
 Administrative expenses                         (506)         -     (506) 
 Profit before finance costs and 
  taxation                                       3,979       669     4,648 
 Finance costs                                    (86)     (316)     (402) 
 Profit before taxation                          3,893       353     4,246 
 Taxation                                        (187)       222        35 
 Profit after taxation                           3,706       575     4,281 
                                              --------  --------  -------- 
 Profit per ordinary share               7       2.41p     0.37p     2.78p 
                                              --------  --------  -------- 
 
                                                  For the six months to 
                                                      31 March 2018 
 
 
                                       Notes   Revenue   Capital     Total 
                                               GBP'000   GBP'000   GBP'000 
 
 Total capital gains on investments                  -    12,681    12,681 
 Currency losses                                     -   (1,061)   (1,061) 
 Income                                  4       4,033         -     4,033 
 Investment management fee               5       (288)   (2,596)   (2,884) 
 Administrative expenses                         (527)         -     (527) 
 Profit before finance costs and 
  taxation                                       3,218     9,024    12,242 
 Finance costs                                   (161)     (315)     (476) 
 Profit before taxation                          3,057     8,709    11,766 
 Taxation                                      (1,503)       155   (1,348) 
 Profit after taxation                           1,554     8,864    10,418 
                                              --------  --------  -------- 
 Profit per ordinary share               7       1.01p     5.77p     6.78p 
                                              --------  --------  -------- 
 
 

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   30 September 
                                           2019           2018 
 
                               Notes    GBP'000        GBP'000 
 Non-current assets 
 Investments                     8      604,355        603,709 
 
 Current assets 
 Receivables                              1,225          1,048 
 Cash and cash equivalents               51,486         57,441 
                                         52,711         58,489 
 
 Creditors: amounts falling 
  due within one year 
 Payables                                 (954)          (835) 
                                      ---------  ------------- 
 Net current assets                      51,757         57,654 
 
 Total assets less current 
  liabilities                           656,112        661,363 
                                      ---------  ------------- 
 
 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                       517,723        522,974 
 Revenue reserve                              -              - 
 Total shareholders' funds              656,112        661,363 
                                      ---------  ------------- 
 
 Net asset value per equity 
  share                          9       426.7p         430.2p 
 

The Financial Statements of Standard Life Private Equity Trust PLC, registered number SC216638 was approved and authorised for issue by the Board of Directors on 18 June 2019 and were signed on its behalf by Christina McComb, Chair.

Christina McComb, OBE

Chair

18 June 2018

CONDENSED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

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 
                  ---------  ---------  ---------  -----------  ---------  ---------  --------- 
 

For the six months ended 31 March 2018

 
                  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 2017          307     86,485     51,503           94    448,751     11,852    598,992 
 Profit after 
  taxation                -          -          -            -      8,864      1,554     10,418 
 Dividends paid           -          -          -            -          -    (9,225)    (9,225) 
 Balance at 31 
  March 2018            307     86,485     51,503           94    457,615      4,181    600,185 
                  ---------  ---------  ---------  -----------  ---------  ---------  --------- 
 

CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED)

 
                                        Six months   Six months 
                                             ended        ended 
                                          31 March     31 March 
                                              2019         2018 
 
                                           GBP'000      GBP'000 
 Cashflows from operating activities 
 Net profit before taxation                  4,246       11,766 
 Adjusted for: 
 Finance costs                                 402          476 
 Gains on disposal of investments         (19,614)     (40,487) 
 Revaluation of investments                 15,447       27,806 
 Currency losses                               695        1,061 
 Increase in debtors                         (238)        (156) 
 Increase in creditors                         119           36 
 Tax rebates/(deducted) from 
  non-UK income                                 35      (1,348) 
 Interest paid                               (341)        (412) 
 Net cash inflow/(outflow) from 
  operating activities                         751      (1,258) 
 
 Investing activities 
                                       -----------  ----------- 
 Purchase of investments                  (42,914)     (87,826) 
 Disposal of underlying investments 
  by funds                                  44,974       73,978 
 Disposal of quoted investments              1,461            - 
                                       -----------  ----------- 
 Net cash outflow from investing 
  activities                                 3,521     (13,848) 
 
 Financing activities 
 Ordinary dividends paid                   (9,532)      (9,225) 
 Net cash outflow from financing 
  activities                               (9,532)      (9,225) 
 
 Net decrease in cash and cash 
  equivalents                              (5,260)     (24,331) 
 
 Cash and cash equivalents at 
  the beginning of the period               57,411       93,648 
 Currency losses on cash and 
  cash equivalents                           (695)      (1,061) 
 Cash and cash equivalents at 
  the end of the period                     51,486       68,256 
                                       -----------  ----------- 
 
 
 Cash and cash equivalents consist 
  of: 
 Money market funds                         23,649       53,163 
 Cash and short-term deposits               27,837       15,093 
 Cash and cash equivalents                  51,486       68,256 
                                       -----------  ----------- 
 

NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)

   1              Financial Information 

The financial information for the year ended 30 September 2018 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 2018 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.

The auditor has reviewed the financial information for the six months ended 31 March 2019 in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity", issued by the Financial Reporting Council for use in the United Kingdom. The independent auditor review report is included at the end of this announcement.

   2              Basis of preparation and going concern 

The condensed financial statements 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'.

In assessing the appropriateness of the adoption of the going concern assumption as a basis for preparing the financial statements, the Directors took account of the GBP80 million committed, syndicated revolving credit facility with a maturity date in December 2020; the future cash flow projections (including forecasts in respect of unfunded commitments); the Company's cash flows during the period; and the Company's net liquid resources at the period end.

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

The financial statements for the six months ended 31 March 2019 have been prepared using the same accounting policies as the preceding annual financial statements.

   3              Exchange rates 

Rates of exchange to sterling were:

 
                      As at          As at 
                              30 September 
              31 March 2019           2018 
 Euro                1.1605         1.1227 
 US Dollar           1.3031         1.3041 
 Canadian 
  Dollar             1.7408         1.6856 
 
   4              Income 
 
                                    Six months   Six months 
                                         ended        ended 
                                      31 March     31 March 
                                          2019         2018 
                                       GBP'000      GBP'000 
---------------------------------  -----------  ----------- 
 Income from fund investments            4,498        3,875 
 Interest from cash balances and 
  money market funds                       298          158 
 Total income                            4,796        4,033 
                                   -----------  ----------- 
 
   5              Transactions with the Manager 
 
                               Six months ended              Six months ended 
                                 31 March 2019                 31 March 2018 
                          Revenue   Capital    Total    Revenue   Capital    Total 
                          GBP'000   GBP'000   GBP'000   GBP'000   GBP'000   GBP'000 
-----------------------  --------  --------  --------  --------  --------  -------- 
 
 Investment management 
  fee                       311      2,802     3,113      288      2,596     2,884 
                         --------  --------  --------  --------  --------  -------- 
 

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

The investment management fee payable to the Manager is 0.95% per annum of the NAV of the Company. The investment management fee is allocated 90% to the realised capital reserve and 10% to the revenue account. The management agreement between the Company and the Manager is terminable by either party on twelve months' written notice.

Investment management fees due to the Manager as at 31 March 2019 amounted to GBP563,000 (30 September 2018: GBP553,000).

   6              Dividend on ordinary shares 

A dividend of 3.1p per ordinary share, declared as a final dividend, was paid on 25 January 2019 in respect of the year ended 30 September 2018 (2017: dividend of 6.0p per ordinary share paid on 31 January 2018).

For the financial period ending 31 March 2019, the first quarterly dividend of 3.2p per ordinary share was paid on 26 April 2019 (2018: dividend of 3.1p was paid on 27 April 2018). The announced dividend of 3.2p per share is due to be paid on 26 July 2019 (2018: dividend of 3.1p was paid on 27 July 2018).

   7              Earnings per share - basic and diluted 
 
                                      Six months     Six months ended 
                                           ended 
                                   31 March 2019        31 March 2018 
                                p        GBP'000      p       GBP'000 
-------------------------  ------  -------------  -----  ------------ 
 The net return per ordinary share is based on the following 
  figures: 
 Revenue net return          2.41          3,706   1.01         1,554 
 Capital net return          0.37            575   5.77         8,864 
 Total net return            2.78          4,281   6.78        10,418 
                           ------  -------------  -----  ------------ 
 
 Weighted average number of 
  ordinary shares in issue           153,746,294          153,746,294 
 
   8              Investments 
 
                                       Six months 
                                            ended     Year ended 
                                         31 March   30 September 
                                             2019           2018 
 Investments                              GBP'000        GBP'000 
------------------------------------  -----------  ------------- 
 Fair value through profit or 
  loss: 
 Opening market value                     603,709        505,107 
 Opening investment holding gains        (58,873)       (27,841) 
                                      -----------  ------------- 
 Opening book cost                        544,836        477,266 
 
 Movements in the period/year: 
 Additions at cost                         42,914        119,678 
 Secondary purchases                            -         21,885 
 Disposal of underlying investments 
  by funds                               (44,974)      (122,845) 
 Disposal of quoted investments           (1,461)        (2,499) 
                                      -----------  ------------- 
                                          541,315        493,485 
 Gains on disposal of underlying 
  investments                              25,248         78,611 
 Gains/(losses) on disposal of 
  quoted investments                          117          (184) 
 Losses on liquidation of fund 
  investments(1)                          (5,751)       (27,076) 
 Closing book cost                        560,929        544,836 
 Closing investment holding gains          43,426         58,873 
 Closing market value                     604,355        603,709 
                                      -----------  ------------- 
 

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

The Company invests in six quoted equities as part of its liquidity management strategy. The figures above relate to both the Company's unquoted investments in private equity funds and in quoted investments. The earlier Performance to 31 March 2019 section presents the performance of the Company's principal activity of investing in private equity fund and co-investment interests. As a result, the differences between the figures within the Manager's Review and the note above relate to quoted investments.

   9              Net asset value per ordinary share 
 
                                        As at 31 March                As at 30 September 
                                                  2019                              2018 
------------------------------  ----------------------  -------------------------------- 
 Basic and diluted: 
 Ordinary shareholders' 
  funds                                 GBP656,111,649                    GBP661,363,392 
 Number of ordinary shares 
  in issue                                 153,746,294                       153,746,294 
 Net asset value per ordinary 
  share                                         426.7p                            430.2p 
 

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

   10           Bank loans 

At 31 March 2019, the Company had an GBP80 million (30 September 2018: GBP80 million) committed, multi-currency syndicated revolving credit facility provided by Citibank and Societe Generale of which GBPnil (30 September 2018: GBPnil) had been drawn down. The facility expires on 31 December 2020. The interest rate on this facility is LIBOR plus 1.50%, rising to 1.70% depending on utilisation, and the commitment fee payable on non-utilisation is 0.7% per annum.

   11           Commitments and contingent liabilities 
 
                                     As at 31 March   As at 30 September 
                                               2019                 2018 
                                            GBP'000              GBP'000 
----------------------------------  ---------------  ------------------- 
 Outstanding calls on investments           419,574              369,275 
 

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 Statement of Financial Position, are grouped into the following fair value hierarchy at 31 March 2019:

 
                                    Level     Level     Level 
                                        1         2         3     Total 
                                  GBP'000   GBP'000   GBP'000   GBP'000 
 Financial assets at fair 
  value through profit or loss 
 Unquoted investments                   -         -   571,199   571,199 
 Quoted investments                33,156         -         -    33,156 
 Net fair value                    33,156         -   571,199   604,355 
 
 As at 30 September 2018 
                                    Level     Level     Level 
                                        1         2         3     Total 
                                  GBP'000   GBP'000   GBP'000   GBP'000 
 Financial assets at fair 
  value through profit or loss 
 Unquoted investments                   -         -   574,689   574,689 
 Quoted investments                29,020         -         -    29,020 
 Net fair value                    29,020         -   574,689   603,709 
 

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 an investment by its manager or lead manager as at the Statement of Financial Position date. The valuation policies used by the manager in undertaking that valuation will generally be in line with the joint publication from the EVCA and the BVCA, 'International Private Equity and Venture Capital Valuation guidelines'. Fair value can be calculated by the manager 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 an investee company's earnings or by reference to recent transactions. Where formal valuations are not completed as at the Statement of Financial Position date, the last available valuation from the manager is adjusted for any subsequent cash flows occurring between the valuation date and the Statement of Financial Position date. The Company's Manager may further adjust such valuations to reflect any changes in circumstances from the last manager's formal valuation date to arrive at the estimate of fair value.

Quoted investments

At 31 March 2019, the Company's investments 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 reporting date of GBP33,156,000 (30 September 2018: GBP29,020,000).

   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 2018 to 31 March 2019 are incorporated into the group financial statements of Phoenix Group Holdings, which will be available to download from the website www.thephoenixgroup.com.

Standard Life Assurance Limited ("SLAL", which is 100% owned by Phoenix Group Holdings), and the Company have entered into a relationship agreement which provides that, for so long as SLAL and its Associates exercise, or control the exercise, of 30% or more of the voting rights of the Company, SLAL and its Associates, will not seek to enter into any transaction or arrangement with the Company which is not conducted at arm's length and on normal commercial terms, take any action that would have the effect of preventing the Company from carrying on an independent business as its main activity or from complying with its obligations under the Listing Rules or 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 2019, SLAL received dividends from the Company totalling GBP5,339,000 (31 March 2018: GBP5,167,000).

As at 30 September 2018, the Company was invested in the Standard Life Investments Liquidity Funds. During an Extraordinary General Meeting held on 21 September 2018, a resolution was passed to merge the Standard Life Investments Liquidity Funds into the Aberdeen Liquidity Fund. The effective date of the merger was 5 October 2018. As at 31 March 2019, the Company was invested in the Aberdeen Liquidity Funds, managed by Aberdeen Standard Investments (Lux), who share the same ultimate parent as the Manager. As at 31 March 2019 the Company had invested GBP600,000 in the Aberdeen Liquidity Funds (30 September 2018: GBP14,163,000) which are included within cash and cash equivalents in the Statement of Financial Position. During the period, the Company received interest amounting to GBP3,000 (31 March 2018: GBP1,000) on sterling denominated positions. The Company incurred GBP22,000 (31 March 2018: GBP56,000) interest on euro denominated positions as a result of negative interest rates. As at 31 March 2019 no interest was due to the Company on sterling denominated positions (30 September 2018: GBPnil) and there was no interest payable on euro denominated positions (30 September 2018: GBPnil). No additional fees are payable to Aberdeen Standard Investments (Lux) as a result of this investment.

During the period ended 31 March 2019 the Manager charged management fees totalling GBP3,113,000 (31 March 2018: GBP2,884,000) to the Company in the normal course of business. The balance of management fees outstanding at 31 March 2019 was GBP563,000 (30 September 2018: GBP553,000).

No other related party transactions were undertaken during the period ended 31 March 2019.

Independent review report to Standard Life Private Equity Trust plc

Introduction

We have been engaged by Standard Life Private Equity Trust plc ("the Company") to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2019 which comprises the Condensed Statement of Comprehensive Income, Condensed Statement of Financial Position, Condensed Statement of Changes in Equity, Condensed Statement of Cash Flows and the related explanatory notes.

We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors' responsibilities

The half-yearly financial report is the responsibility of and has been approved by the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure Guidance and Transparency Rules ("the DTR") of the United Kingdom's Financial Conduct Authority ("the UK FCA").

As disclosed in note 2, the annual financial statements of the Company are prepared in accordance with United Kingdom Accounting Standards, including Financial Reporting Standard ("FRS") 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice). The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with FRS 104 Interim Financial Reporting.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity", issued by the Financial Reporting Council for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2019 is not prepared, in all material respects, in accordance with FRS 104 Interim Financial Reporting and the DTR of the UK FCA.

Use of our report

Our report has been prepared in accordance with the terms of our engagement to assist the Company in meeting its responsibilities in respect of half-yearly financial reporting in accordance with the DTR of the UK FCA and for no other purpose. No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability.

BDO LLP

Chartered Accountants

London

United Kingdom

18 June 2019

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

This information is provided by RNS, the news service of the 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

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