annual report and accounts 2015 · annual report 2015 our strategy and business model accessing the...

SVG

Cap

ital plc A

nn

ual Report an

d Accounts 2015 For th

e 13 month p

eriod en

ded 31 Jan

uary 2015

Annual Report and Accounts 2015For the 13 month period ended 31 January 2015

Welcome to SVG Capital plc

SVG Capital is an international private equity investor listed on the London Stock Exchange

Investment objectiveSVG Capital’s investment objective is to achieve capital appreciation by investing in a portfolio of private equity and private equity related assets.

Investment policyThe Company invests in private equity and private equity related assets which provide it with exposure to a portfolio of companies that are diversified by vintage year, size, geography, manager and industry sector. The Company will seek to operate with a view to ensuring that no single underlying portfolio investment represents more than 15% of the Company’s investment portfolio by value at the time of acquisition.

The Company has a desired maximum average level of gearing of approximately 20% of gross assets over time and has an absolute maximum limit on borrowings of two times its adjusted capital and reserves, as set out in the Articles of Association of the Company.

Change of year endWith the move away from a single manager focus to one that is more diversified, there are a number of implications for reporting, the most material of which is the expectation that valuations will be received across a broader timeframe. Accordingly, SVG Capital has changed its year end from 31 December to 31 January.

Strategic reportOverviewPerformance at a glance 1

Our portfolio at a glance 2

Our strategy and business model 4

The investment portfolio 6

Chairman’s statement 10

Chief Executive’s statement 12

PerformanceKey performance indicators 14

Financial review 15

Investment Portfolio review 16

List of investments at 31 Jan 2015 26

Diversity and Corporate Social Responsibility 27

RisksPrincipal risks, risk management and risk oversight 28

Corporate informationBoard of Directors 32

Corporate governance 34

Report of the Directors 39

Remuneration report 42

Financial informationIndependent auditors’ report 56

Statement of comprehensive income 58

Statement of changes in equity 59

Balance sheet 60

Cash flow statement 61

Notes to the accounts 62

AIFMD Disclosures 91

Shareholder informationNotice of Annual General Meeting 92

Company summary and E-communications for shareholders 99

Advisers 100

1SVG Capital plc Annual Report 2015Strategic report

Performance at a glance

Growth in net asset value per shareOut-performing FTSE 350 by 7% over the same period.Over the longer term the growth in net asset value per share has been 24% p.a. over five years and 6% p.a. since listing in 1996.

14%to 588p per share

Strong performance of investment portfolioDriven by valuation gains in some of our larger quoted portfolio companies, strong earnings growth and realisation activity. In constant currencies the total return on the investment portfolio was 17%.

10%total return

£330mof distributions1

Good progress on new investment strategyPost-2012 investments now account for 24%2 of the investment portfolio. This includes three co-investments.The post-2012 investments reported weighted average earnings and revenue growth of 12% and 10% respectively3.

£467mof new commitments

made since 2012

Capital return of up to £470m by 2016Since 31 January, we have returned a further £12m4 of capital to shareholders and, subject to Shareholder approval, will be returning a further £70m via tender offer in May.This takes total capital returns to Shareholders since December 2011 to £540m, well in excess of our £470m target.

£458mreturned since 2011

Total Shareholder ReturnThe share price increased from 432p to 435p in the 13 months. After adjusting for the two tender offers, both of which were at significant premium to the share price, our total shareholder return was 2%5.Over the longer term, and including all Tender Offers, our Total Shareholder Return has been 25% p.a. over five years and 6% p.a. since listing in 19965.

2%

Balance sheet remains strong£38m net cash and uncalled bank facility of €300m, a coverage of 0.7x times uncalled commitments.

£38mnet cash

1 Includes income distributions2 As at 18 March 2015. Roll-forward for cash flows post year end, including Arysta LifeScience and Hugo Boss3 Latest available LTM (76% at 31 December 2015 and 24% at 30 September 2014) and weighted using 31 January 2015 values4 At 18 March 20155 The Total Shareholder Return calculation ignores market buybacks and issues of convertibles and assumes shareholders participated in the rights issue and

placing in 2009 (applicable to since inception returns only) and assumes all shareholders took up their pro-rata allocation in any Tender Offers in the period

2 SVG Capital plc Annual Report 2015

Our portfolio at a glance

Core Strategy – fund commitments

Funds Clayton, Dubilier & Rice Fund IX (2013)

Funds The Fifth Cinven Fund (2012)

Funds CCMP Capital Investors III (2014)

Selected underlying companies Brand Energy & Infrastructure Services PharMEDium Solenis Healogics

Selected underlying companies Visma AMCo CeramTec Host Europe

Selected underlying companies The Hillman Group Jamieson Laboratories Jetro PQ Corporation

£38min value

4%of the net investment portfolio

£57muncalled commitments

£45m1

in value



£56m1

in value



Funds Permira V (2013) Permira IV (2006) Permira Europe III (2003) Permira Europe II (2000)

Funds FFL Capital Partners IV (2014)

Selected underlying companies Freescale Hugo Boss iglo Group TeamViewer

Selected underlying companies Eyemart (completed but uncalled)

£672m1

in value



–in value

–of the net investment portfolio


1 Includes co-investment


Core Strategy – top 10 underlying companies

Hugo Boss (Permira)

iglo Group (Permira)

New Look (Permira)

Visma (Cinven)

Brand Energy & Infrastructure (CD&R)

Arysta LifeScience (Permira)

Freescale (Permira)

The Hillman Group (CCMP)

TeamViewer (Permira)

Acromas (Saga) (Permira)

19%of gross investment portfolio











Our strategy and business model

Accessing the private equity marketplace (illustrative)*

Small Enterprise value of transactions Mega<£50m >£3bn

CD&R (US)

FFL (US)

CCMP (US)

Cinven (Europe)

Permira (Europe)

*Based on where the majority of the capital is expected to be invested.

Provide investors with liquid access to the returns from private equity…Private equity can provide superior returns through its long-term ownership model, alignment of interest and a focus to value creation through strategic and operational change.

kk SVG Capital invests across the asset class through commitments to funds managed by top-performing private equity firms, co-investments and, where control offers a better risk-adjusted return, as a lead investor in smaller investments, leveraging off our investment team’s experience.

Private equity is an illiquid asset class with high minimum commitments and a long-term investment horizon.

kk Listed on the London Stock Exchange main market, SVG Capital provides shareholders with liquid access to the asset class and an ability to adjust portfolio weightings.

Skilled manager and investment selection are key to generating superior risk-adjusted returns.

kk SVG Capital has a dedicated investment team with a long-term track record of investing in the asset class.kkWe are building a portfolio of eight to 10 top-performing managers who have clear strategies for value creation. Our current portfolio consists of five managers and three co-investments.kk Our underlying investments provide investors with access to a high-quality portfolio of companies with globally diversified revenue streams.

Over $3.7 trillion1 of assets managed globally by 5,647 private equity firms2 and the asset class accounted for 22% of global merger and acquisitions in 20143.

kk A focused investment strategy allows us to select the managers and investments that we believe have the ability to outperform the wider market.kkWe build strong relationships with our managers.kk Scale is important and, by being one of the larger investors in the underlying funds, SVG Capital seeks access to co-investment opportunities and seats on the advisory board.kk Allows us to build a portfolio of larger underlying investments and provide our shareholders with transparency on performance.

1 The 2015 Preqin Private Equity Compensation and Employment Review

2 Preqin Private Equity Spotlight, August 143 Fortune.com, ‘2014 was a huge year for M&A

and private equity’, 5 January 2015


Small Enterprise value of transactions Mega<£50m >£3bn

…through allocating capital across the asset class dependent on market conditions with a…Flexible investment mandate. kk SVG Capital invests across the asset class providing shareholders

with a balanced single point access to private equity and private equity related assets, allocating capital across the asset class dependent on market conditions.kk SVG Capital invests across geographies, managers and investments, seeking to generate superior risk-adjusted returns through accessing different parts of the private equity asset class in the most efficient and cost-effective way.

Focus on optimising shareholder returns through disciplined capital allocation.

kk Our capital allocation process looks at current and projected resources, investment pipeline, risk appetite and the attractiveness of investment opportunities relative to other uses of capital, such as share buybacks and tenders.kk New investments are assessed in the context of our risk/return criteria, expected returns from the investment or commitment, the macro environment, the fit with the existing portfolio and other investment opportunities.

Financing strategy that is interlinked with the investment strategy.

kkMaintaining optimal risk/return policy through the cycle to support long-term investment opportunities without becoming exposed to inappropriate financing risks.kk Appropriate, efficient and flexible financing and capital structure to support the Company’s ability to access attractive investment opportunities. Flexible financing is currently provided by a multi-currency loan facility to better manage uncertain cash flows.

Risk management framework focused on the risks associated with a portfolio of illiquid assets and uncalled commitments.

kkMacro-economic outlook.kk Portfolio allocation to provide sufficient diversity.kk Coverage of liabilities and commitments to ensure the Company retains a strong balance sheet. Supported by modelling cash flow forecasts and stress testing.kk Alignment of interest to ensure that the capital allocation process is in the long-term interest of shareholders.

Market participation

Con

trol/I

nflue

nce

Low

High

Co-investment and direct

Fund investment/ co-investment


The investment portfolio

Core strategy portfolio

kk Fund commitments are an important component of the investment portfolio.

kk Seeking to invest with a small number of leading private equity managers.

kk A focused investment strategy allows SVG Capital to build strong relationships with its managers. Scale is important and, by being one of the larger investors in the underlying funds, SVG Capital seeks access to co-investment opportunities and seats on the advisory board.

kk There are currently five managers in the portfolio giving us access to a broad cross section of investments.

kSVG Capital has a $150m commitment to CCMP Capital Investors III.

kCCMP Capital Investors (“CCMP”) strategy is to enhance the value of middle-market companies in North America and Europe, typically with an enterprise value of $250m to $2bn, through an active approach to operational transformation in leading buyout and growth equity investments.

kTeam of 36 full time investment professionals (at 31 January 2015) with offices in New York, Houston and London. CCMP’s investment approach is sector driven with a focus on four sectors: consumer/retail, industrial, healthcare and energy.

kCCMP benefits from a differentiated investment model that combines a proprietary, research-driven sourcing capability with a fully integrated operating/investment professional team.

kAt 31 January 2015, the fund was committed to five equity investments and had called 42% from investors.

kSVG Capital has a €100m commitment to the Fifth Cinven Fund.

kCinven’s strategy is to invest in buyouts headquartered in or with significant operations in Europe, typically with an enterprise value of greater than €300m.

kCinven’s team of 57 investment staff operates from its offices in Guernsey, London, Frankfurt, Paris, Milan, Luxembourg, Hong Kong and New York. Cinven is opening an office in Madrid in early 2015.

kThe European office footprint provides a strong presence on the ground in Cinven’s core market, and the Asia and US offices help the portfolio companies to capitalise on global growth opportunities and drive value creation across the portfolio.

kCinven’s investment approach is sector-driven, with a focus on six core sectors: business services, consumer, financial services, healthcare, industrials and TMT.

kCinven’s approach to growing its portfolio is based on a clearly defined model that has two main pillars:

– revenue growth, via both expansion into new markets and execution of ‘buy and build’ strategies, and

– applying global best practices across the portfolio.

kAt 31 January 2015, the fund was c.55% committed to 11 investments and had called 39% from investors.

kSVG Capital has a $140m commitment to CD&R IX.

kClayton Dubilier & Rice’s (“CD&R”) strategy is to make control investments in upper mid-market companies in the US and Europe (Germany, France and the UK), typically with enterprise values between $1bn and $5bn.

kTeam of 48 investment professionals, based in New York and London, concentrating primarily on four sectors: industrials, business services, healthcare and consumer/retail.

kCD&R’s investment model is focused on operational improvement within their portfolio companies utilising the combined skills of operating partners, who are former CEOs or other senior corporate leaders, and private equity investment executives. This partnership between private equity and operating skills runs right through the deal process from origination through to due-diligence and post investment value creation stages.

kAt 31 January 2015, the fund was committed to six investments and had called 38% from investors.


kSVG Capital has a $100m commitment to FFL Capital Partners IV.

k FFL’s strategy is to deliver superior risk adjusted returns through investment in US middle market companies with a typical enterprise value of $100m to $500m.

kTeam of 30 professionals led by three of the founding partners based in a single office in San Francisco.

k Four core sectors of business services, consumer, financial services and healthcare services.

k FFL combines top-down macro and industry thematic research to identify attractive sub-sectors within its core sectors and a focus on active company involvement post-acquisition.

kAt 31 January 2015, the fund was committed to one investment and SVG Capital’s commitment was uncalled.

kSVG Capital has a €125m commitment to Permira V and investments in Permira IV and Permira Europe II and III.

kPermira V will invest primarily in mid to large cap buyouts with exposure to faster-growing global markets and sectors, typically with an enterprise value of up to €3bn.

kTeam of over 120 professionals operating from 13 offices based around the globe, Permira concentrate on five sectors: consumer, technology, industrials, financial services and healthcare.

kWithin these sectors, Permira V will focus on acquiring businesses with market leadership positions, resilient thematic growth and potential to globalise.

kAt least 70% of Permira V will be invested in businesses which have or intend to have significant activities in Europe.

kAt 31 January 2015, the fund was committed to eight investments and had called 32% from investors.


The investment portfolio continued

kk A co-investment portfolio of investments with differing underlying geographic and end-market growth drivers.

kk Core focus for SVG Capital and we will build on this portfolio with a select number of compelling investment opportunities.

HillmanFounded in 1964 and headquartered in Cincinnati, Ohio, The Hillman Group (“Hillman”) is a leading value-added distributor of fasteners, key duplication systems, engraved tags and related hardware items.

Hillman has approximately 26,000 active customers in the US, Canada, Mexico, South America and Australia, including home improvement centres, mass merchants, national and regional hardware stores, pet supply stores and other retailers. Hillman provides a comprehensive

solution to its retail customers for managing SKU1-intensive, complex home improvement categories. Hillman also offers its customers additional services, such as inventory management and in-store merchandising services.

Core strategy portfolio – co-investments

1 Stock Keeping Unit


TeamViewerFounded in 2005 and headquartered in Göppingen, Germany, TeamViewer is a leading software platform for remote IT support serving the small and medium business market.

TeamViewer has 814 million activated devices, 167 million active users and almost 300,000 commercial customers. The company operates in a resilient market, driven by an increasingly mobile workforce, rapid device proliferation (mobile, tablets, etc.) and IT outsourcing.

TeamViewer benefits from high customer satisfaction and usage and operates a SaaS (Software as a Service) like business model (high recurring revenues, scalable and high margin business with strong cash flow conversion).

VismaFounded in 1996 and headquartered in Oslo, Norway, Visma is one of the leading software businesses in Europe and the clear leader in the Nordic region.

Visma makes businesses more efficient, through the provision of software, outsourcing services, commerce solutions, retail IT-solutions, and IT-related projects and consulting. Visma simplifies and digitalises core business processes within the private and public sector.

340,000 customers in Northern Europe use Visma’s products and services, and an additional 330,000 use Visma as a hosting partner. The group has more than 6,100 employees and its net revenue amounted to NOK 7,100 million in 2014.


Chairman’s statement

The Company has made good progress towards its strategic goals.

The Company has continued to perform well. Strong investment returns and significant realisation activity in the investment portfolio translated into an increase of 14% in net asset value per share to 588p, together with capital returns to shareholders aggregating £205 million, including tenders of £100 million and share buybacks of £105 million.

We have also made good progress towards the Company’s strategic goals with commitments to two leading US private equity managers and three co-investments added to the portfolio in the year; post-2012 investments now represent 24%1 of the investment portfolio. The investment portfolio will continue to evolve as we add carefully selected managers and investments in the US and Europe.

Since the change to our investment strategy three years ago, we have committed £467 million to new private equity investments and returned £458 million of capital to shareholders, balancing the need for efficient balance sheet management with longer-term net asset growth. In addition £238 million has been used to repay or service debt.

Since the period end, we have returned a further £12 million2 of capital to shareholders and are seeking permission at our AGM in May for one or more tender offers, with the first of up to £70 million expected in May. This will take total capital returned to shareholders since December 2011 to £540 million, well in excess of our £470 million target. The pricing of the next tender offer will be with reference to the share price and the adjusted 31 January 2015 NAV3. Disciplined capital allocation remains an essential principle of our investment strategy, and we will continue to return excess capital to shareholders, dependent on market conditions and our investment pipeline. Given the nature of private equity investment and realisations, we anticipate that capital returns will be through share buybacks and tenders, rather than through a fixed dividend.

At different points of the cycle, different areas of the private equity asset class will be attractive and our strategy is to invest across the asset class dependent on market conditions, targeting superior risk-adjusted returns for our shareholders in our asset allocation and investments.

1 As at 18 March 2015. Roll forward for cash flows post year end, including the partial realisation of Arysta LifeScience and the full realisation of Hugo Boss

2 As at 18 March3 Rolled forward for movements in quoted holdings, finance

costs, foreign exchange, realisations and fees4 IMF


“ Given the strength of the Company’s balance sheet, we are well positioned to take advantage of investment opportunities as they arise.”

Currently, our largest investment weighting is to mid to large buyout transactions. In this part of the market, our exposure to the underlying assets is through commitments to funds and co-investments alongside a select number of leading private equity managers. Our exposure to small to mid-sized transactions will be through commitments to funds, such as our recent commitment to FFL in the US, and directly through specific co-investments. In smaller investments, where we believe control offers access to better risk-adjusted returns, we are also prepared to be a lead investor, leveraging off the direct investment experience of our investment team.

The global economic recovery remains uneven, with the US and UK achieving a growth rate of 2.4% and 2.6% respectively in 20144, while the Eurozone continues to see relative stagnation, leading to substantial additional monetary stimulus from the European Central Bank. In aggregate, leverage levels across the developed economies have not reduced since 2008, but have been transferred from the banks to the public sector balance sheet. Against a background of slow growth, the burden of public sector debt remains daunting and in some instances unsustainable. Given this challenging economic outlook and heightened geopolitical concerns, we expect markets to remain volatile. At the same time deflationary risks in the Eurozone and elsewhere, together with expected monetary tightening in the US, are likely to weigh on sentiment.

While this volatility may impact the exit and financing markets, a period of dislocation could translate subsequently into an attractive investment environment. We expect to make at least one, if not two further fund commitments and to make further co-investments this year. Given the strength of the Company’s balance sheet, we are well positioned to take advantage of investment opportunities as they arise.

I am fortunate to have the support of a hardworking and capable Board, with a diverse set of skills and backgrounds. During the year, Caroline Goodall stepped down from the Board after four years and I would like to reiterate my thanks for her valuable contribution during a period of significant progress. Helen Mahy joined the Board in July bringing with her a broad range of legal and commercial experience and we are delighted to have her as a colleague.

Andrew Sykes Chairman

23 March 2015

+14%Increase in our NAV per share

588pNAV per share at 31 Jan 2015


Chief Executive’s statement

Our investment portfolio has delivered its fifth consecutive year of double digit returns.

Significant realisation activity and the strong performance of some of the quoted portfolio companies have translated into a 10% total return from our investment portfolio. This is our fifth consecutive year of double digit returns, and has been achieved despite the significant headwinds of foreign exchange, with the euro depreciating by 11% against sterling. In constant currencies the total return on the investment portfolio over the 13 month period was 17%.

The period also marked another record period of distributions, with over £330 million of proceeds received from our portfolio. Our 10 largest companies now represent 66%1 of the gross investment portfolio, down from 88% at the end of 2013 with several of the post-2012 investments featuring in our 10 largest companies. Looking across the portfolio, performance has been driven by both our holdings in the more mature Permira funds, in particular Freescale and also the SVG Diamond portfolio. The post-2012 investments, which reported weighted average earnings and revenue growth of 12% and 10% respectively2, also made a positive contribution to returns.

The transition to the post-2012 investments will continue to gather pace as we invest across the asset class through a differentiated strategy of accessing attractive opportunities, whether that is through funds, co-investments or in select smaller opportunities as lead investors.

During the year we made new commitments to two leading managers, CCMP Capital and FFL, both investing in the US market. The US private equity market is the largest and most developed market and we believe it presents a significant opportunity for SVG Capital to generate superior risk-adjusted returns through the cycle. To date, we have made commitments to three leading US managers: Clayton, Dubilier & Rice, CCMP Capital and FFL, which together give us access to a broad cross section of investment opportunities in the US. In Europe, we have commitments to two leading private equity managers, Cinven and Permira, both investing in mid to large buyout transactions and giving us access to investments in both European and global companies. We will continue to selectively add to our manager relationships over the coming years with a view to creating a portfolio of eight to 10 managers.

We have also started to lay the foundation for our co-investment portfolio with three co-investments made in 2014 and good visibility on potential further investments in 2015. Co-investments are a core part of our strategy and we will look to invest selectively in transactions that we believe are in the manager’s particular area of expertise. Dependent on market conditions and investment opportunities we may also co-invest alongside other private equity investors or as a lead investor on a deal by deal basis.


“ Over the last few years, we have returned a significant amount of capital to shareholders and will continue to return excess capital to shareholders through share buybacks and tenders.”

Turning to the wider market, 2014 was a steady year for private equity with buyout activity in both the US and Europe remaining relatively flat, in terms of deal value, compared to 2013. Pricing in both the US and Europe rose in 2014 to near peak 2007 levels following a period of stable pricing in the preceding three years. This has been driven by a competitive environment, good supply of leverage and a continued general rise in asset prices. Managers have also continued to take advantage of the strong exit market, as evidenced by our record year of distributions in 2014.

Against this backdrop and a continued uncertain macro-economic outlook, we believe investment discipline is paramount. Private equity investors need a clear strategy on the types of business they are seeking to acquire and an approach that enables a granular view on how they will develop the business once under their ownership. Amongst the characteristics we seek in our managers are a clear sector focus and the ability to implement operational improvement over the life of their ownership. These characteristics enable managers to originate in their preferred sub-sectors, demonstrate credibility with management and vendors and, through a proactive operational improvement approach, deliver both more certain and enhanced returns even in less favourable economic environments.

Looking forward, we have a portfolio of high-quality businesses. The portfolio has continued to be highly cash generative and after allowing for the forthcoming tender offer and the repayment of our outstanding convertible bonds we will have net cash balances of £212 million3. Against this we have uncalled commitments of £367 million, a healthy pipeline of potential new investments and we expect to add at least one new manager to the portfolio this year. Over the last few years we have returned a significant amount of capital to shareholders and will continue to return excess capital to shareholders through share buybacks and tenders, dependent on the market conditions and the investment pipeline.

With an outlook of macro-economic uncertainty and volatility in the markets, we are well positioned to take advantage of investment opportunities through disciplined and cautious investment.

Lynn Fordham Chief Executive

23 March 2015

+10%total return on the net investment portfolio.

1 As at 18 March 2015. Roll forward for cash flows post year end, including the partial realisation of Arysta LifeScience and full realisation of Hugo Boss

2 Latest available LTM (76% December 2014 and 24% September 2014) and weighted using 31 January 2015 values

3 At 18 March 2015 and adjusting for the receipt of £275 million from the partial realisations of Arysta LifeScience, Saga and Just Retirement and the full realisation of Hugo Boss


Key performance indicators

Growth in net assets per share

Total shareholder return

450

600

p per share

300

150

0

2009 2010 2011 20132012 Jan 2015

198

299337

391

514588

500

400

300

200

100

0

2010 2011 2012 2013

127p 211p 205p 288p 435p432p

2009 Jan 2015

Rationale

kk Includes all of the components of the Company’s performance.

Progress over 2014/2015

kk +14% growth in NAV per share.

Progress over the longer term

kk +6% p.a. growth in NAV per share since listing in 1996.

Rationale

kkMeasures performance in the delivery of shareholder value.

Progress over 2014/2015

kk +2% shareholder total return1.

Progress over the longer term

kk +6%2 p.a. total shareholder return since listing in 1996.

1 Ignores on-market share buybacks and assumes all shareholders take-up their pro-rata allocation in the Tender Offers

2 Assumes shareholders purchased at inception and participated pro-rata in the Rights Issue, Placing and Tender Offers

A number of performance measures are considered by the Board

In assessing the Company’s success in achieving its objectives, the Key Performance Indicators (“KPIs”) used to measure the progress and performance of the Company are below:


Financial review

31 Jan 2015 audited

31 Dec 20134

audited

Investment portfolio £1,053m £1,065m

Cash £135m £210m

Other assets £43m £44m

Total assets £1,231m £1,319m

Bank facility – –

Convertible bonds (£97m) (£95m)

Other liabilities (£7m) (£4m)

Net assets £1,127m £1,220m

Net assets per share 588p 514p

31 Jan 2015 unaudited

31 Dec 2013 unaudited

Gross debt as a % of gross assets 8% 7%

Net (cash)/debt as a % of net assets (3%) (9%)

Loan to value ratio (maximum of 30%)3 – –

1 Including income distributions2 As at 18 March 20153 As at 18 March 20154 31 Dec 2013 balances are for the SVG Capital Group, as detailed in note 2 of the financial statements,

comparative values in the financial statements are for the Company only

Balance sheet

Investment activity

For the fifth year in succession the investment portfolio has been cash generative with investment proceeds of £330 million1 significantly outweighing calls paid of £177 million.

Of the £177 million of calls paid, £159 million or 90% were for post-2012 investments, including three co-investments. To date £197 million2 of calls have been paid to the post-2012 investment portfolio and we expect the pace of calls to continue to gather pace.

Returns of capital

During the period, the Company returned £205 million to Shareholders through two £50 million tender offers priced at 480p per share and £105 million of share buybacks at an average price of 422p per share resulting in an accretion of 5% or 26p per share to the NAV over the period. The 21 million shares repurchased through the tender offers have been cancelled.

Since 31 January 2015, an additional two million shares have been repurchased at an average share price of 479p3 per share.The Company is also seeking shareholder permission at the forthcoming AGM for one or more tender offers, with the first of up to £70 million expected in May, which will take total capital returned to shareholders since December 2011 to £540 million.

Cash balances and borrowings

The Company had gross cash balances of £135 million at 31 January 2015. Adjusting cash balances for the Company’s convertible bonds which mature in June 2016, net cash balances were £38 million, or 3% of Shareholders’ funds.

During the period the Company increased its revolving credit facility (“RCF”) with Lloyds Bank plc, The Royal Bank of Scotland plc, and State Street Bank and Trust Company by €50 million and extended the maturity date to December 2019. The Company now has an available RCF of €300 million. The RCF was undrawn throughout the period.

With no senior debt outstanding at 31 January 2015, the Loan to Value ratio (“LTV”) was nil. The Company does have outstanding convertible debt, repayable in June 2016, but this debt is subordinated to the senior loan facility and therefore has no impact on the LTV ratio.

Uncalled commitments

Uncalled commitments increased to £367 million from £292 million at 31 December 2013 due to new commitments made during the period, including CCMP and FFL, as the portfolio continues to be rebalanced towards new long-term growth opportunities. The Company remains well capitalised with a strong balance sheet and is well placed to meet these commitments with net cash balances of £38 million and an undrawn facility of £225 million (€300 million), giving commitment coverage of 0.7x.

Valuation of Aberdeen SVG Private Equity

Following the sale of 50% of SVG Advisers to Aberdeen Asset Management in May 2013, Aberdeen has the option to buy the remaining stake in the business in May 2016. The option price is determined by a pre-agreed valuation basis and is subject to a minimum value of £20 million and a maximum value of £35 million. In addition the Company also benefits from its share of the accumulated profits until the option is exercised. At 31 January 2015, the Company’s remaining holding in the business was valued on a discounted cash flow basis at £41 million.

Foreign exchange

The strengthening of sterling against the euro had a negative impact on portfolio gains. In aggregate, foreign exchange movements resulted in a negative return of £74 million. Sterling has continued to appreciate against the euro, which will have a negative impact on the portfolio value but will also reduce the exposure to euro-denominated uncalled commitments.

£458mreturned to shareholders since December 2011

117m sharesbought back since December 2011, a 38% reduction in issued share capital


Investment portfolio review

128

350

300

250

200

150

100

50

0

ArystaFreescale Acromas(AA Saga)

Hugo Boss

Valuation 31 Jan 20151,2 Valuation 31 Dec 20131,2

222208

170

161 336

1612

20

58

Distributions in the 13 month period

Major unrealised portfolio movements

£m

Change in period1,2

+£8m -£5m+£14m+£70m

1 Gross of any carried interest provision2 Including Permira feeder vehicles

Listed below are the Company’s 10 largest fund investments by value at 31 January 2015.

Fund

Permira IV £448m

SVG Diamond Holdings Limited £84m

P25 £70m

SVG Diamond Holdings II Limited £64m

P1234 £44m

CCMP Capital Investors III £39m

Clayton Dubilier & Rice Fund IX £38m

SVG Diamond Private Equity III plc £38m

The Fifth Cinven Fund £34m

Permira V £30m

The investment portfolio has delivered its fifth consecutive year of double digit growth, reporting a total return of 10%, despite the significant headwinds of negative foreign exchange movements on valuations. In constant currencies the investment portfolio generated a total return of 17%.

Looking across the portfolio, returns have been driven by a combination of positive share price movements in some of our larger quoted portfolio companies, realisation activity and robust earnings and revenue growth. In addition, the non-core strategy investments and in particular the SVG Diamond fund of funds programme has also contributed to the strong performance of the portfolio.

Core strategy portfolio (£812 million – 77% of investment portfolio) The core strategy portfolio of management buyout funds and co-investments generated a total return of 8% over the 13 months to 31 January 2015.

The largest valuation gain in the period was the £70 million write-up of SVG Capital’s holding in Freescale, reflecting the 100% increase in the company’s share price and positive foreign exchange movements. Freescale’s five business units reported double-digit growth during the year with performance driven by new leadership and reallocation of R&D initiatives which are resulting in market share gains across the business lines.


1 Using NXP share price at 27 February 20152 Including SVG Capital’s share of Permira Feeder

Vehicles’ distribution3 As at 18 March 2015. Roll forward for cash flows post year

end, including the partial realisation of Arysta LifeScience and full realisation of Hugo Boss

In particular, the Q4 results were very strong relative to analyst expectations, with the company reporting record gross margin levels, and resulted in a 27% increase in Freescale’s share price in January 2015 alone. Since the year end, NASDAQ listed NXP Semiconductors and Freescale have announced that they have entered into a definitive agreement under which the two companies will merge in a transaction valuing the combined businesses at over $40 billion. Under the terms of the agreement, Freescale shareholders will receive a combination of cash and NXP shares. The merger values SVG Capital’s holding in Freescale at approximately £143 million1, of which an estimated £25 million is expected in cash proceeds on closing. The transaction is subject to regulatory approval and is expected to close in the second half of 2015.

The write-up of Arysta LifeScience reflects the sale of the business to New York listed Platform Specialty Products, which was announced in October 2014 and completed in February 2015. The sale valued SVG Capital’s holding in the investment at £222 million. The value of the company at the year end reflects the value of the convertible preference note and sales proceeds at that time. Since the year end, SVG Capital has received net proceeds of £122 million2 with the remainder of the value held in a convertible preferred note and cash within the investment holding company.

The write-up of the investment in Acromas reflects its full exit of The AA and the IPO of Saga in 2014. Saga remains one of SVG Capital’s largest 10 underlying investments and is valued on a quoted basis. The negative movement in the value of Hugo Boss is a reflection of negative foreign exchange movements rather than underlying performance with the company continuing to report top-line and earnings growth and the share price appreciating by 10% over the 13 month period.

The valuation of our fourth largest investment, iglo Group, was broadly unchanged over the year (£58 million). iglo benefits from good margins and strong cash flow generation, however, the markets in which it operates in are challenging, particularly in the UK and Germany. The group has launched several growth initiatives focusing on innovation, brand and promotional activity, firstly into Italy, which has since experienced 16 months of consecutive growth.

The favourable exit environment during 2014 resulted in a record period for distributions with £308 million of proceeds received from the core strategy portfolio. The majority of the distributions were driven by a series of partial realisations of Hugo Boss, which in total generated proceeds of £161 million and the full realisation of ProSiebenSat.1 Media in early 2014 (£92 million). Since the year end, Permira has continued to realise investments with the full realisation of Hugo Boss, the completion of the sale of Arysta LifeScience and the above mentioned merger of Freescale and NXP. Together, these realisations will generate a further approximate £300 million of proceeds, with the bulk of the proceeds coming from the sales of Hugo Boss and Arysta LifeScience. The significant realisation activity at the larger end of the portfolio has also served to de-risk the portfolio with the Top 10 underlying investments now representing 66%3 of the gross investment portfolio, down from 88% at December 2013.

Geographical analysisBy value

31 Jan 2015 % by value

31 Dec 2013 % by value

Global 70 73

North America 13 2

UK 9 9

Continental Europe 8 16


Investment portfolio review continued

4 Latest available LTM (76% December 2014 and 24% September 2014) and weighted using 31 January 2015 values

5 Fund multiple

The weighted average LTM earnings and revenue growth across the portfolio was 9% and 7% respectively. This was heavily influenced by our three largest investments – Arysta LifeScience, Hugo Boss and Freescale. Looking at our post-2012 investment portfolio the respective weighted average earnings and revenue growth was 12% and 10%4. A number of the portfolio companies reporting significant growth in both earnings and revenues over the year. This strong operating performance has translated into a number of write-ups in the portfolio, most notable of which were AMCo (Cinven) and Brand Energy & Infrastructure (CD&R).

AMCo has been valued at 2.0x5 cost on the back of continued strong performance and significant earnings growth. The result of Cinven’s merger in 2013 of Amdipharm and the Mercury Pharma Group, AMCo is a niche speciality pharmaceuticals company. Cinven’s strategy is based on continued buy and build, further internationalisation and applying best practice across the enlarged, fully integrated group to accelerate growth and create value. Having significantly deleveraged AMCo and grown EBITDA by more than 80% in less than two years, Cinven successfully refinanced AMCo’s debt in November 2014, returning 1.1x cost to the fund. AMCo continues to trade well on an organic basis, and to execute its buy and build strategy, most recently acquiring Focus Pharmaceuticals in October. This marks AMCo’s fourth acquisition, building on the original transformative merger of Mercury with

Firm overview

FFL was established in 1997 to undertake buyout and growth-oriented investments in US middle market companies. The FFL team comprises 30 professionals led by three of the founding partners, Tully Friedman, Spencer Fleischer and Chris Masto, and is based in a single office in San Francisco.

Investment strategy

FFL’s strategy is to deliver superior risk adjusted returns through investment in US middle market companies with a typical enterprise value of $100m to $500m. FFL combines top-down macro and industry thematic research to identify attractive sub-sectors within their four core sectors of business services, consumer, financial services and healthcare services. FFL takes a flexible approach to structuring deals to access attractive investments, and brings a focus on active company involvement post-acquisition.

SVG Capital’s commitment

SVG Capital believes the US middle market is an attractive area for investment and FFL’s combination of a macro and sector research-led process, flexible deal structuring and active company involvement enables the firm to deliver superior risk adjusted returns.

FFLInvestment date: December 2014

$100mcommitment

Sector analysisBy value



Industrials 28 23

TMT 20 19

Consumer 18 14

Retail 17 29

Healthcare 9 7

Financial 4 6

Business/Support Services 2 –

Other 2 2


£17m1

SVG Capital value at 31 January 2015

Company background:

Founded in 2005 and headquartered near Stuttgart, Germany, TeamViewer is a leading global provider of secure remote support software with a focus on the small and medium-sized business (“SMB”) market. The company offers an easy-to-install-and-use solution encompassing remote access administration, multi-user web-conferencing, desktop and file sharing. The software is charged as a licence to corporate/business customers but is free for personal/private use, which drives product awareness and commercial adoption. It is currently used in more than 220 countries and is available in 34 languages.

TeamViewerInvestment date: July 2014

Co-investment with Permira V

Initial investment thesis:

kMarket leadership: Global leader in secure remote support software with unique viral distribution approach with more than 814 million activated devices, 167 million active users and almost 300,000 commercial customers.

kAttractive market fundamentals: Remote support market is subject to attractive double-digit growth dynamics driven by mobile workforce, device proliferation, Bring Your Own Device and IT Outsourcing.

kScalable and high margin business model: SaaS like business model with high share of recurring revenues. Limited capex and working capital requirements.

Value creation plan:

kSales and marketing: Build-up of dedicated outbound and key account sales team to increase customer monetisation.

kPricing and packaging: Review and optimisation of existing pricing and packaging approach.

kEnterprise: Develop enterprise offering for large customers with initial focus on US market.

kConversion: Increase the conversion rate from free usage to paying customers.

kNew products: Development of new products such as Monitis, airbackup, IT brain and helpdesk to progress cross-selling opportunities.

An investment thesis based on the build-up of dedicated outbound and key account sales teams to increase customer monetisation, the optimisation of pricing and packaging including an enterprise offering, an improved conversion rate from free usage to paying customers, and the development of new products with cross-selling potential.

1 Permira V 31 December 2014 valuation rolled forward for any cash flow and FX.



6 Fund multiple

Amdipharm and the subsequent acquisitions of Abcur and Fucithalmic.

Brand Energy & Infrastructure (formed by the merger of Brand Energy and Harsco Infrastructure) has been written up to 1.4x6 cost and is now one our 10 largest underlying companies. The business is a premier provider of integrated specialty services to the global energy, industrial and infrastructure markets. Valuation gains have been driven by strong earnings growth and good performance in the US industrial service segment, particularly in the power generation markets. The business is on track to deliver the synergies of the integration of Brand and Harsco, which is now largely complete. Looking ahead to 2015, strategic focus will shift from integration and restructuring to optimisation and growth. SVG Capital’s holding in the company was valued at £11 million at 31 January 2015.

The weighted average net debt/EBITDA ratio of the core strategy portfolio was 4.7x and the weighted average multiple used to value the percentage of the core strategy portfolio valued on an earnings basis (21%) was 9.0x.

Valuation analysisBy value



Quoted 32 43

Earnings 30 47

Third party 22 4

Cost 12 2

Written down – earnings 4 4

CCMP CapitalInvestment date: June 2014

$150mcommitment

Firm overview

CCMP was established in 2006 to continue the successful investment strategy developed and implemented by the firm’s professionals as members of J.P. Morgan Partners, LLC and its predecessors; Chemical Venture Partners, Manufacturers Hanover and Chase Capital Partners. The CCMP team comprises 36 investment professionals (at 31 January 2015) across three offices, New York, Houston and London.

Investment strategy

CCMP’s strategy is to enhance the value of North American and European middle-market companies with a typical enterprise value of $250m to $2bn through an active approach to operational transformation. CCMP focus on four sectors, consumer/retail, industrial, healthcare and energy, using proprietary research to identify sub-sectors and companies that meet its investment criteria.

Operating partner model

CCMP seeks to deliver operational transformation to its portfolio companies through a fully integrated operating partner model. CCMP’s operating partners are former company CEOs and are generally involved in every stage of the investment process from due diligence, decision making and post ownership involvement.

SVG Capital’s commitment

SVG Capital believes CCMP’s combination of full-time financial and operating partners creates the ability to deliver strong returns to investors through the economic cycle.


7 As at 18 March 2015. Roll forward for cash flows post year end, including the partial realisation of Arysta LifeScience and full realisation of Hugo Boss

The transition to post-2012 investments continued to gain momentum with £159 million of calls paid funding 25 new and one follow-on investment, including three co-investments. With 30 investments in total, the post-2012 investment portfolio now represents 24%7 of the net investment portfolio and we expect the influence that this part of the portfolio has on returns to continue to become more meaningful as the number of companies increase and investments mature. Of the 30 investments, three are co-investments in companies that we believe represent compelling opportunities and are in the manager’s particular area of expertise. The largest investment was a $25 million co-investment in The Hillman Group, alongside CCMP and was covered more fully in our interim accounts. In the second half we also made co-investments alongside The Fifth Cinven Fund (Visma) and Permira V (TeamViewer).

Visma is a leading provider of business management software and business process outsourcing (“BPO”) services in the Nordic region. The Group comprises three divisions – Software SMB (small and medium-size businesses), BPO and Software GLA (Government & Large Accounts). The company is a highly cash generative and stable business, delivering critical software to a wide customer base through a subscription-based model with high recurring revenues. Cinven’s strategy is to support Visma through its next stage of organic and acquisitive growth. Building on Visma’s market-leading position in the Nordic region, there is significant growth potential in SaaS, as companies migrate their legacy applications to improve business administration and process efficiencies. Growth will be driven by further bolt-on acquisitions and continued R&D investment, accelerating customer migration from legacy to SaaS and developing new functional services. SVG Capital’s total investment in Visma was valued at £17 million at 31 January 2015.

Dec 2012 Dec 2013 Jan 20151

SVG Diamonds/otherPre-2009 core strategy portfolio

100%

Post-2012 core strategy portfolio

Transition to post-2012 investments

1 At 18 March 2015. Roll forward for cash flows post year end, including Arysta LifeSciences and the full realisation of Hugo Boss

Founded in 2005 and headquartered near Stuttgart, Germany, TeamViewer is a leading global provider of secure remote support software with a focus on the small and medium-sized business market. The company offers an easy-to-install-and-use solution encompassing remote access administration, multi-user web-conferencing, desktop and file sharing. The software is charged as a licence to corporate/business customers but is free for personal/private use, which drives product awareness and commercial adoption. Installed on more than 800 million devices, the product is currently used in more than 220 countries and is available in 34 languages. The investment thesis is based on the build-up of dedicated outbound and key account sales teams to increase customer monetisation, the optimisation of pricing and packaging including an enterprise offering, an improved conversion rate from free usage to paying customers, and the development of new products with cross-selling potential. SVG Capital’s total investment in TeamViewer was valued at £17 million at 31 January 2015.



Two new fund commitments were made in the year; both to US-based private equity managers. The first, a $150 million commitment to CCMP Capital Investors III was made in June 2014 and announced in the interim accounts and is 42% called with six investments. Towards the end of the year, we also made a $100 million commitment to the US mid-market fund, FFL Capital Partners IV. FFL was established in 1997 to undertake buyouts and growth-oriented investments in US middle-market companies with a typical enterprise value of $100 million to $500 million. FFL’s strategy is to deliver superior risk-adjusted returns through a combination of top-down macro and industry thematic research to identify attractive sub-sectors with the firm’s four core sectors: business services, consumer, financial services and healthcare services. We believe that the US middle-market is an attractive area for investment and FFL’s combination of macro and sector research and process, flexible deal structuring and active company involvement should create superior risk-adjusted returns for our shareholders. The fund has made one investment, Eyemart Express, one of the largest optical retailers in the US operating in more than 35 states.

Non-core strategy portfolio (£241 million – 23% of the investment portfolio)The non-core strategy portfolio generated a total return of 19% over the 13-month period. The portfolio is primarily made up of the SVG Diamond fund of funds programme, which was valued at £186 million at 31 January 2015. This represented an uplift of £23 million over the period, with strong realisation activity and valuation gains augmented by leverage in the corporate structure of the SVG Diamond products. The strong distributions from the underlying portfolios have enabled all of the products to repay debt ahead of previous expectations and we expect all three SVG Diamond products to be completely or substantially deleveraged in the next 12 to 18 months, paving the way for distributions back to shareholders. During the year, we also made a small commitment (€20 million) to Aldwych Capital Partners, a fund investing in a number of Carlyle funds giving us access to an attractive portfolio of secondary Carlyle assets and a commitment to a new Carlyle buyout fund. To date the investment has generated a total return of 3% and is currently valued at 1.1x cost.

Investment portfolio maturity – investments in companies

(£m – year of original investment in underlying companies)

2004and before

2005 2006 2007 2008 2009 2010 2011 2012 2013

300

200

150

100

0

50

Cost Earnings Quoted Written down Third-party

2014

250


Capital commitments

At 31 January 2015, the Company had uncalled commitments as follows:

2015 Amount Called

(unaudited)

2015 Uncalled Commitment

(unaudited)

2015 Uncalled Commitment

(unaudited)1


CCMP Capital Investors III $63m $87m £58m

Clayton, Dubilier & Rice Fund IX $54m $86m £57m

FFL Capital Partners IV – $100m £66m

Permira IV €1,379m €65m £49m

Permira V €40m €85m £64m

The Fifth Cinven Fund €39m €61m £45m

£339m

Non-core strategy portfolio

SVG Diamond Private Equity III plc €52m €20m £15m

Other non-core strategy £13m

£28m

Total £367m

1 Based on 31 January 2015 exchange rates



1

3 4

1 Cost derived using foreign exchange rates at date of call

10 largest underlying companies

The valuations of these companies have been presented in accordance with IFRS and do not contain any provision for carried interest. Carried interest is deducted in arriving at the fair value of the relevant fund on the Company’s balance sheet. Following the decision by the Company to cap its commitment to Permira IV in December 2008, the valuations of all of the Permira IV investments made prior to 2009 include a provision against future distributions. Value attributable to follow-ons into Permira IV companies is not subject to this provision.

All valuations are based on 31 December 2014 valuations, rolled forward for cash flow and foreign exchange movements, and quoted share prices if applicable to 31 January 2015.

2Hugo BossFashion retailerFund Permira IV

Cost1 £5m% of total assets 14%Value Jan 2015 £170mDate of acquisition May 2007Hugo Boss operates in the fashion and luxury goods market. It is the global leader in the formal menswear fashion market with a presence of over 6,800 points of sale across 129 countries. The valuation basis is quoted.

Arysta LifeScience AgrochemicalsFund Permira IV

Cost1 £160m% of total assets 18%Value Jan 2015 £222mDate of acquisition Feb 2008Arysta LifeScience is a leading global provider of crop solutions, with expertise in agrochemical and biological products. Arysta LifeScience has a solutions-oriented business model which focuses on product innovation to address grower needs. It is also the second largest company, by revenue, in the high-growth biostimulants market. The valuation basis is expected sales proceeds.

FreescaleEmbedded semiconductorsFund Permira IVCost1 £145m% of total assets 10%Value Jan 2015 £128mDate of acquisition Nov 2006Freescale is a global leader in the design and manufacture of semiconductors for the automotive, consumer, industrial and networking markets. The company has a heritage of innovation and product leadership spanning more than 50 years. It has an extensive intellectual property portfolio, including approximately 6,000 patent families, and serves more than 18,000 customers with leading products and solutions. The valuation basis is quoted.

iglo GroupFrozen foodFund Permira

Europe IIICost1 £25m% of total assets 5%Value Jan 2015 £58mDate of acquisition Nov 2006The iglo Group is a branded European frozen food company that produces fish, vegetables and poultry, including a number of iconic products such as Fish Fingers, Schlemmer Filets and Sofficini. The Group operates under three brands: Birds Eye (UK and Ireland), iglo (Germany, Austria, Belgium, The Netherlands and other countries) and Findus (Italy). The valuation basis is earnings.


75 6

10

The Hillman GroupHardware retailerFund CCMP III +

co-investmentCost1 £23m% of total assets 2%Value Jan 2015 £26mDate of acquisition Jun 2014The Hillman Group is a leader in the hardware and home improvement industry distributing over 130,000 Stock Keeping Units (“SKU”) in categories including fasteners, key duplication systems, letters, numbers and signs, engraved tags, builder’s hardware, and the recently added nail, deck and drywall category. The company provides inventory management and in-store merchandising services to its retail customers for managing these SKU-intensive, complex home improvement categories. The valuation basis is cost.

New LookFashion retailerFund Permira

Europe IICost1 N/M% of total assets 2%Value Jan 2015 £22mDate of acquisition Apr 2004New Look is a leading fast-fashion retailer with over 800 stores worldwide: c. 570 owned stores in the UK, c. 110 in Europe (Ireland, France, Belgium, The Netherlands, Poland and Germany), 16 stores in China and a franchise network mainly in the Middle East. In addition to its store network, the company has a fast-growing eCommerce offering serving over 120 countries. New Look is positioned as a fast-fashion value retailer with a broad product offering that focuses on womenswear, footwear and accessories as well as an expanding menswear offer. The valuation basis is earnings.

TeamViewerTMTFund Permira V +

co-investmentCost1 £18m% of total assets 1%Value Jan 2015 £17mDate of acquisition July 2014TeamViewer is a leading global provider of secure remote support software with a focus on small and medium-sized businesses. The company is the industry leader in remote support and administration solutions for medium-sized businesses. There are over 814 million activated devices, 167 million active users and almost 300,000 commercial customers. The TeamViewer product is used in 220 countries and is available in 34 languages. The valuation basis is cost.

VismaERP softwareFund Fifth Cinven +

co-investmentCost1 £18m% of total assets 1%Value Jan 2015 £17mDate of acquisition August 2014Visma is a leading provider of business management software and business process outsourcing (BPO) services in the Nordic region. The group comprises three divisions – Software SMB (small and medium size businesses), BPO and Software GLA (Government & Large Accounts). Visma delivers enterprise resource planning (ERP) software and services including accounting, tax and payroll applications and services to over 340,000 SME customers, retailers and local authorities across the Nordic region. The valuation basis is cost.

Acromas (Saga)Insurance, travel and financeFund Permira

Europe IIICost1 £3m% of total assets 1%Value Jan 2015 £16mDate of acquisition Sep 2004Acromas is the holding company for Saga. Saga provides financial services to people aged over 50 in the UK, including motor and home insurance as well as personal financial products. Saga also offers a broad range of holidays and other travel services to its customers (including the famous Saga world cruises) as well as private pay domiciliary care services. The valuation basis is quoted.

Brand Energy& Infrastructure Support ServicesFund CD&R IXCost1 £8m% of total assets 1%Value Jan 2015 £11mDate of acquisition Nov 2013Brand Energy & Infrastructure Services was formed by the merger of Brand Energy and Harsco Infrastructure. The business is a premier provider of integrated specialty services to the global energy, industrial and infrastructure markets. Its extensive portfolio of specialised industrial service offerings include scaffolding, coatings, insulation, refractory, formwork & shoring, specialty mechanical services, cathodic protection and other related crafts. The valuation basis is earnings.

98


List of investments at 31 January 2015

Vintage year

Original life (years)

SVG Capital’sholding in

the fund%

Value of SVG Capital’s

holding £’000

% of total investments

Core strategy portfolioPermira Europe I The first $1 billion fund raised for private equity investment in Europe focusing on large and medium-sized leveraged buyout opportunities. 1997 101,3 13.5 1,180 –

Permira Europe II Focused on European buyouts/ins, in addition to growth capital investments. 2000 102,3 15.2 19,837 2

Economic interest in iglo Group (Permira Europe III). 20,060 2

Permira IV Focused on buyouts/ins and growth capital investments in businesses which have or intend to have significant activities in Europe. 2006 10 22.22 447,705 43

Permira VFocused on buyouts/ins and growth capital investments in businesses which have or intend to have significant activities in Europe. 2013 2.5 30,184 3

P123 A fund of Permira buyout funds, with interests in Permira Europe I, II and III. 2003 15 24.8 19,304 2

P1234 A fund of Permira buyout funds, with interests in P123 and Permira IV. 2006 15 42.8 44,347 4

P25A fund of Permira buyout funds, with interests in Permira Europe III and Permira IV. 2006 15 47.7 69,636 7

Sapphire IV A feeder fund that invests solely in Permira IV. 2006 15 0.6 1,145 –

SVG Sapphire IVA feeder fund that invests solely in Permira IV. 2006 15 32.2 7,536 1

The Fifth Cinven FundFocused on upper mid-market to large buyouts based in Europe. 2012 10 1.9 34,178 3

CCMP Capital Investors IIIFocused on mid-market investments in US and Europe. 2014 10 4.2 39,440 4

Clayton, Dubilier & Rice Fund IXFocused on upper mid-market investments in US and Europe. 2013 10 2.3 38,139 4

Co-investmentsAlongside CCMP Capital Investors III, The Fifth Cinven Fund and Permira V. 39,249 4

Total core strategy portfolio 811,940 791 The lives of these funds have been extended2 Interest in existing portfolio companies as at the date of the Permira IV reorganisation in 20083 No management fee being paid on extended use

Value of SVG Capital’s

holding £’000

% of total investments

Non-core strategy portfolioSVG Diamond Holdings Limited 83,814 8

SVG Diamond Holdings II Limited 64,249 6

SVG Diamond Private Equity III plc 37,900 4

Other non-core strategy investments 54,863 3

Total non-core strategy investments 240,826 21

Total investment portfolio 1,052,766 100

Other assets less total liabilities 74,339

Total Shareholders’ funds 1,127,105


Diversity and Corporate Social Responsibility

Board Diversity

The Company has no employees. Two of the five Board Directors are women and the Company will seek to maintain at least a 25% proportion of female Board membership.

Employees, Social, Community and Human Rights Issues

Following the sale of Aberdeen SVG Private Equity Managers Limited (“ASVGM”) to Aberdeen Asset Management plc (“AAM”), the Company no longer has any employees. The Company receives investment management services from ASVGM, whose staff are employed by AAM and are therefore covered by the AAM corporate social responsibility policies.

Greenhouse Gas Emissions

The Company has no premises, and, as such, consumes no electricity, gas or diesel fuel and consequently does not have a measurable carbon footprint.

ASVGM provides investment management services to the Company. ASVGM is 50.1% owned by AAM. Details of AAM’s policies on diversity, employees, social, community and human rights issues can be found in AAM’s report and accounts.

Corporate social responsibility

The long-term business success of the SVG Capital plc requires effective management of both financial and non-financial performance. Our business relies in particular on strong relationships with our investment manager, our Shareholders, and the general partners of the funds in which we invest.

Although we are a major investor in private equity funds, regulations and commercial realities limit the degree to which we can have an active influence on those funds. We aim to develop open, long-term relationships with the private equity managers with whom we invest. Nonetheless, we do engage with general partners to identify where non-financial issues may have an impact on our reputation and on that of our Shareholders. We also engage with relevant industry associations and participate in other initiatives to help raise awareness and understanding of these issues, both within and outside the sector.

Overall responsibility for the implementation of the Corporate Social Responsibility (CSR) Policy rests with the Board.

The Board’s strategic priorities with respect to the CSR policy are:

Shareholders

Our objective is to ensure that our operations address Shareholders’ policies relating to environmental, social and governance issues. To do this we aim to:

kmaintain a high standard of corporate governance.

k respond to Shareholders’ environmental, social and governance concerns as they relate to our own operations.

kgive full consideration to Shareholders’ concerns as they relate to our investment activities.

Funds in which we invest

Our objective is to develop strong relationships, balancing the legitimate needs of the general partners of the funds in which we invest with our interests and the expectations of our Shareholders. We aim to do this by:

k ensuring the highest levels of integrity in our relationships with general partners.

kdeveloping strong and open working relationships with general partners, so that we can maintain trust without unnecessary restrictions and unrealistic requests.

kundertaking early and constructive engagement on environmental, social and governance issues of legitimate concern to our Shareholders. Prior to investment, we evaluate how the general partners assess such issues as part of their due diligence on underlying companies and how they report on such issues.

k seeking to ensure our investment manager is part of a group that is a signatory of the United Nations’ Principles of Responsible Investing.


Diversity and Corporate Social Responsibility continued

Charitable giving

In 2014, the Company agreed to continue to support the School for Social Entrepreneurs. A total of £86,313 was committed to our chosen charities in 2014.

School for Social EntrepreneursThe School for Social Entrepreneurs (“SSE”) exists to provide training and opportunities to enable people to use their creative and entrepreneurial abilities more fully for social benefit. SSE also want to recruit more innovative and capable people into voluntary and other organisations. The SSE runs practical learning programmes aimed at helping develop the individual entrepreneur and their organisation simultaneously. SSE’s approach, and belief, is that social change is people-powered, and that the most valuable assets and resources we have are human ones.

For more information: www.sse.org.uk

In addition, smaller donations were made to Watts Gallery, Christie Charity, Children in Need, See Beyond Borders and Breathe Arts Health Research.

Engagement with the sectorOur objective is to engage in debates on the role and impact of private equity. We aim to do this by:

kworking with relevant sector associations.

kparticipation in other relevant initiatives.

k engaging in discussions with stakeholders.

RisksPrincipal Risks, Risk Management and Risk Oversight

The Board is responsible for managing and overseeing risk. A Board-driven, objective centric approach to risk management and internal audit has been adopted that focuses on identifying the most critical value creation objectives and potential value erosion risks if an objective is not met; recording these objectives in a corporate objectives register; assigning specific management personnel in ASVG to objectives to regularly assess and report to the Board on the state of retained/residual risk, including whether the current residual risk status is consistent with the Company’s risk appetite; and direct, senior ASVG management and Board input and involvement in deciding which end-result objectives warrant formal risk assessments; and the appropriate level of risk assessment rigour and independent assurance to be applied in light of cost/benefit considerations. The Board believes this approach better positions the Company to meet the emerging risk governance expectations proposed by the Financial Stability Board (FSB) globally, and the Financial Reporting Council (FRC).

The Companies Act and FRC require companies to disclose the principal risks and uncertainties the Company faces. The Company believes this process is best done by considering the Company’s most important value creation objectives and objectives that have the potential, if not achieved, to significantly erode shareholder value. Independent expert advice has been obtained to ensure that the processes used to populate and maintain the Company’s objectives register and the related residual risk status information are robust, effective, and ‘fit for purpose’.

‘Principal risks and uncertainties’ are defined by the Board as risks with the highest overall potential to affect the achievement of the Company’s business objectives. These objectives include: ensuring the ability to meet liabilities as they fall due and meet liabilities in full; and achieving target returns. Principal risks relating to delivery of these objectives are described on page 30, along with other principal risks identified in relation to other key objectives. Further information on risk factors is set out in note 29 to the Accounts.

Internal control/risk treatment

The Code requires the Board to at least annually conduct a review of the adequacy of the Company’s systems of risk management and internal control processes and report to Shareholders that it has done so.

The principal risks to two of the Company’s top objectives, including liquidity and solvency, are identified on pages 30 and 31, along with the other risks noted at note 26 to the Accounts which provide details of the risks facing the Company.

A copy of the Company’s risk management policy is available on the Company’s website at www.svgcapital.com. The Board and management believe that implementation of this approach to identifying, measuring, treating, and overseeing risks that create uncertainty that the Company’s key strategic and core objectives will be achieved, will significantly enhance the Company’s risk management and oversight capabilities and better meet the emerging expectations from the FRC in the UK and FSB globally, and provide additional assurance to our Shareholders, clients, institutional investors and regulators that risks are being managed effectively.


Risks

During the year, the Board retained the services of an independent risk adviser to assist the Board and management with the implementation of this new approach to risk and control governance.

Following implementation of the European Alternative Investment Fund Managers (“AIFM”) Directive, Aberdeen SVG Private Equity Managers Limited (“ASVGM”), as the Company’s AIFM, has put in place a risk framework for the Company in accordance with regulatory requirements. This risk framework is reviewed by the Board on a periodic basis. This framework includes limits to mitigate various risks including, for example, financing risk which is assessed through cash flow modelling and stress testing. ASVGM’s Risk Management Committee reviews reports prepared to ensure compliance with the risk limits set out in the framework. ASVGM’s Chief Risk Officer has oversight responsibility for this process.

The Board believes that the combination of the Company’s risk management and governance framework described in the Company’s risk management policy, risk assessment training provided to key ASVG management personnel, reviews and feedback provided by our adviser combined with the work done by Ernst & Young, the Company’s external auditors, are appropriate to the Company’s business as an investment trust.

The Board considers that adequate risk mitigation risk treatments/controls exist over the financial reporting process. An experienced team is responsible for preparing the financial reporting for the Company and ensuring that financial information is accurate, complete, reconciled and reviewed by senior members of staff, and that transactions and balances are recognised and measured on a consistent basis and in accordance with accounting policies and financial reporting standards. Management personnel responsible for the integrity and reliability of the Company’s financial statements have completed formal risk assessments on the objective of publishing financial disclosures that are fair, balanced and understandable. These risk assessments have been reviewed by the Board. Although the Board believes that it has a robust framework of risk management and internal control over financial reporting in place, this can only provide reasonable and not absolute assurance against material financial mis-statement or loss and is designed to manage, not eliminate, risk.

Board

Determines risk appetite and risk framework

k Responsible for ensuring appropriate risk management framework is in place

kOverseas operation of risk management framework

kConsiders principal risks and uncertainties in detail

kDetailed review of risk matters at annual strategy Board meeting and periodic reviews at other meetings

Independent risk oversight provider

Chief Executive of Company’s AIFM

Investment Committee

kConsiders risk in relation to individual investments/ divestments

kMeets on ad-hoc basis

Risk Management Committee

kDelegated responsibility for risk management

k Ensures appropriate risk management arrangements, processes and techniques in place

kMonitors adherence to risk appetite and risk framework

k Liaises with independent risk oversight provider

kMeets at least quarterly


Risks continued

Principal risks and uncertainties Change from 2013 Key risk treatments

Following the sale of 50.1% of ASVG to AAM, the Company now outsources all investment management and associated services to a non-Group company. As such, the Company does not have the same level of control over its investment managers as it had prior to such sale

vkThis risk was assessed as stable. The relationship with ASVG has not changed during the period.

k the Company has a number of rights and protections under the terms of a shareholders agreement in respect of its holding in ASVG and has two appointees to the board of ASVG. The Company has a number of rights and protections in the investment management agreement. The Company is a key client of ASVG. If the Company is dissatisfied with the performance of ASVG it can terminate the investment management agreement.

Concentration risk may result in the performance of the Company being unduly affected by the performance of one or a small group of underlying investee companies. At 31 January 2015, the Company’s largest individual underlying company holding represents 25% of the gross investment portfolio and the Top 10 largest underlying holdings represents 76% of the gross investment portfolio. In addition, the portfolio is concentrated by sector with industrials accounting for 30% by value and TMT 23% by value

k

This risk was assessed as decreasing in the period due to the increasing diversification of the portfolio.

k the Board considers the performance of its largest portfolio companies in detail periodically and, in extremis, can dispose of interests in funds or other investments.

k the Company has changed its Investment Objective to evolve from a concentrated, single manager investor to one that is more diversified.

k the Company’s investment manager has a sophisticated due diligence process that includes steps to ensure inadvertent concentration does not materialise.

Currency risk may impact returns received by the Company as the majority of its assets are denominated in foreign currency. Many investee companies are international and therefore exposed to multiple currencies

hThis risk was assessed as increasing in the period. The majority of assets are in € while the Company reports in £. There were significant currency fluctuations during the period.

k the Company continually monitors foreign exchange risk.

k the Company has the ability to hedge against foreign currency movements, but has decided not to hedge the currency risk on its investment portfolio.

k the Company may hold cash in currencies to match fund commitments or can draw its loan facility in different currencies.

The Company’s excess liquidity is invested in bank accounts and money market funds until the capital is required to fund new investments, fund share buybacks or other returns of capital, deleverage or for general corporate costs. The safety and soundness of the investments made with these funds represents a risk

vkThis risk was assessed as stable. Cash and cash-equivalents remain material.

k the Company has a rigorous process to select and oversee where it invests surplus funds. This includes detailed analysis of the credit worthiness and historical track record of the financial institutions being considered, or in use, and ongoing monitoring of diversification and of national and international developments that have potential to undermine the safety and soundness of those institutions.

The private equity sector globally falls out of favour with investors leading to a reduction in demand for the Company’s shares

vkThis risk was assessed as stable. There has been some criticism, particularly in the US, of private equity managers charging inappropriate fees to investee companies though this has had little impact on the asset class as a whole.

k private equity has outperformed public markets over the long-term and it has proved to be an attractive asset class through various cycles.

k raising awareness of private equity and attracting new investors mitigates this risk.

The Company invests in funds managed by private equity managers, who in turn select and oversee underlying investee companies. The expertise, due diligence, risk management skills and integrity of the staff that select private equity managers and the private equity managers selected by the Company is key to the success of the Company

vkThis risk was assessed as stable. Investment recommendations continue to be received from ASVG. ASVG is no longer controlled by the Company, but the same team performs this function at ASVG as did prior to the sale of 50.1% of ASVG to AAM.

k the Company’s investment committee comprises a balance of skills and perspectives.

k AAM has a robust HR and professional development programme in place to ensure high quality personnel are attracted, retained and developed.

k ASVG performs extensive due-diligence on the private equity managers that it invests with, which includes assessing the adequacy of the risk management frameworks they use, and monitoring their performance.

k the Company’s investment objective is more diversified than in the past reducing the likelihood of a single investment decision impacting portfolio performance.


Principal risks and uncertainties Change from 2013 Key risk treatments

Financing risk and the inability to match funding to the timing of commitments to private equity funds. Investments by underlying fund managers are not sold, or sold for less than expected, or suffer a reduction in value and those managers continue to call for new investments leading to higher drawdowns on the loan facility and an increased risk of being unable to meet commitments as they fall due

vkThis risk was assessed as stable in 2014. Liquidity is at similar levels to last year.

k cash flow models are maintained on a live basis and forecasts are produced for each Board meeting that contain appropriate stress testing.

k the Company can dispose of assets, raise debt or equity, or renegotiate the terms of borrowing or investments.

k new investments are subject to commitment tests. k returns of cash to Shareholders by way of buybacks or tenders can be stopped.

By order of the Board

Stuart Ballard Company Secretary

23 March 2015


Board of Directors

Andrew Sykes Chairman

Lynn Fordham Chief Executive

Andrew Sykes was appointed as a Director on 8 February 2010 and became Chairman on 8 November 2012. He is chairman of Smith & Williamson Holdings Limited, and also a non-executive director of Record plc and Gulf International Bank (UK) Limited.

Committees:

Remuneration, Corporate Governance and Nominations

Lynn Fordham was appointed as a Director on 1 July 2008. She is the Company’s Chief Executive Officer. She has over 20 years of financial experience and has worked in a number of companies including Mobil Oil, BAA plc, Boots Group plc and MAN Group plc. She is CEO of Aberdeen SVG Private Equity and is a non-executive director of Fuller, Smith and Turner P.L.C.

33SVG Capital plc Annual Report 2015Corporate information

David Robins Non-Executive Director, Senior Independent Director

Stephen Duckett Non-Executive Director

Helen Mahy Non-Executive Director

David Robins was appointed as a Director on 15 August 2013 and is the Senior Independent Director. David has had a distinguished career in financial services spanning over 35 years. He is currently Chairman of the Asian Total Return Investment Company plc and Fidelity Japanese Values plc. He is also a non-executive director of NHBS Ltd and SerraLux Inc. Previously, David was Chairman and Chief Executive of ING Barings following nearly 18 years with UBS.

Committees:

Audit Remuneration, Corporate Governance and Nominations

Stephen Duckett was appointed as a Director of the Company on 12 March 2012. Stephen is an experienced private equity professional having worked in the industry for the past 17 years, most recently as a Managing Director of Hellman & Friedman based in London. Stephen has been involved with numerous private equity transactions of various types over the course of his career.

Committees:

Audit (Chairman) Remuneration, Corporate Governance and Nominations

Helen Mahy was appointed as a Director of the Company on 24 July 2014. She is currently Chairman of The Renewables Infrastructure Group Limited and Obelisk Legal Support Solutions Limited. She is also a non-executive Director of Stagecoach Group Plc and Bonheur ASA/Ganger Rolf ASA. Previously, she was Group Company Secretary and General Counsel of National Grid Plc.

Committees:

Audit Remuneration, Corporate Governance and Nominations (Chairman)


Corporate governance

The Board is committed to high standards of corporate governance and has implemented a framework for corporate governance which it considers to be appropriate for the Company. This framework is reviewed on an annual basis as part of the Board evaluation process and will be reviewed in light of any changes to the Company’s strategy. The Corporate Governance Code (the “Code”), published in 2012 by the Financial Reporting Council (“FRC”), applies to disclosures in this statement. The Code is available to download from www.frc.org.uk.

As previously reported, the Company became subject to the AIFMD in July 2014. The Company entered into a management agreement with Aberdeen SVG Private Equity Managers Limited on 22 July 2014. In addition, the Company appointed State Street Trustees Limited as its depositary, in accordance with the requirements of the AIFMD.

The non-executive Directors review the performance of its investment manager, Aberdeen SVG Private Equity Managers Limited, on a regular basis. Lynn Fordham is now employed by AAM and seconded to Aberdeen SVG Private Equity Managers Limited (“ASVGM”), though she retains her executive Director role at SVG Capital plc and is CEO of ASVGM. The Company has a number of rights and protections under the terms of a shareholders agreement in respect of its holdings in ASVGM and Aberdeen SVG Private Equity Advisers Limited (“ASVGA”) (and together “ASVG”). There are also a number of important matters that are wholly reserved for the independent Directors of SVG Capital plc, including (but not limited to) all decisions relating to the continued appointment of ASVGM as the Company’s investment manager and the level of its management fee.

Compliance statement

The UK Listing Authority requires all listed companies to disclose how they have complied with the provisions of the Code. This Corporate governance statement, together with the Statement of Directors’ responsibilities on page 40 and Going-concern set out on page 38, indicates how the Company has complied with the principles of good governance of the Code and its requirements on risk management and internal control. The Board considers that the Company has, throughout the year under review, complied with the principles of the Code, save in respect of the external evaluation of the Board (see page 35). These principles are: leadership; effectiveness; accountability; remuneration and relations with shareholders. Information on each of these themes can be found in this Corporate Governance Report, the Risks section on page 8, the Report of the Directors on page 39 and the Remuneration Report on page 42.

Role of the Board

The Board determines and monitors the Company’s investment objectives and policy and considers the future strategic direction of the Company. The Board is responsible for determining the nature and extent of the significant risks it is willing to take in achieving its strategic objectives. The Board is responsible for presenting fair, balanced and understandable information necessary for shareholders to assess the Company’s performance, business model and strategy, in annual and half-yearly reports and other forms of public reporting. It monitors and reviews the shareholder base of the Company, marketing and shareholder communication strategies, and evaluates the performance of all service providers, with input from its Committees where appropriate.

The business of the Company is managed by the Board, which may exercise all the powers of the Company including those powers relating to the issuing or buying back of shares. Further details of the authorities to be sought at the AGM with respect to issuing or buying back shares can be found on pages 86 to 92. A procedure for Directors, in the furtherance of their duties, to take independent professional advice at the expense of the Company has been agreed.

Composition and independence

At 31 January 2015, there were four non-executive Directors, including the Chairman. Lynn Fordham, who was an employee of Aberdeen SVG Private Equity Advisers Limited (formerly known as SVG Advisers Limited) until 31 May 2013 and has been an employee of AAM since then, continues in her role as Chief Executive of the Company. She is seconded to Aberdeen SVG Private Equity Managers Limited by AAM.

Profiles of each of the Directors, including length of service, may be found on pages 32 and 33. The Board considers each of Stephen Duckett, Helen Mahy and David Robins to be independent.

A review of Board composition and balance, including succession planning for appointments to the Board, is included as part of the annual performance evaluation of the Board, details of which may be found below.

The Board is satisfied that it is of sufficient size, with an appropriate balance of skills and experience, and that no individual or group of individuals is or has been in a position to dominate decision-making. However, there are plans to appoint an additional director.

Senior Independent Director

David Robins is the Senior Independent Director and is available to Shareholders if they have concerns that cannot be resolved through discussion with the Chairman.

http://www.frc.org.uk


Company Secretary

The Directors have access to the advice and services of the Company Secretary, who is responsible to the Board, inter alia, for ensuring that Board procedures are followed and that applicable rules and regulations are complied with.

Tenure

The Directors have adopted a policy on tenure that they consider appropriate for the Company.

The Board does not believe that length of service, by itself, impacts on independence. The independence of non-executive Directors will continue to be assessed on a case-by-case basis.

The Company has a policy of annual re-election for each Director.

The Company’s articles provide that in addition to any power of removal conferred by the Companies Act 2006, the Company may by special resolution remove any Director. The Company may by ordinary resolution elect a Director.

Induction and training

When a Director is appointed he or she receives a full, formal and tailored induction. This includes a detailed briefing from the Company Secretary on the running of the Board covering such matters as terms of reference, governance practices, risk management and oversight, and calendar of events. In addition, meetings are arranged with various members of ASVG to facilitate a better understanding of the business. New Board members are provided with one-on-one risk oversight and governance training and orientation. Changes affecting Directors’ responsibilities are advised to the Board as they arise.

Advisers to the Company also prepare reports for the Board from time to time. In addition, Directors may attend ad hoc seminars covering issues and developments relevant to the Company. The suitability and adequacy of training that is made available to Directors is assessed as part of the performance evaluation process. It was assessed as adequate in the most recent evaluation.

Performance evaluation

The Board performance evaluation at the end of 2013 identified that the Board should conduct: an independent evaluation of the performance of ASVG as its investment manager; a review of the operation of the Board committees; a detailed analysis of the risks of outsourcing investment management.

With respect to the independent evaluation of the performance of the Company’s investment manager, at the Company’s November strategy meeting, the non-executive Directors held a session separate from management where the performance of the manager was considered. It was agreed that the performance was satisfactory and would be reviewed again in the first quarter of 2015.

During 2014, the Board reviewed the composition of its committees. Mr Sykes stepped down from the Audit Committee to satisfy the requirements of the Corporate Governance Code. The other Board committees were rationalised into one committee, the Remuneration, Corporate Governance and Nominations Committee. Details of the role and composition of this Committee is contained on page 37.

The Board’s independent risk oversight consultant attended two Board meetings during the period and co-ordinated a detailed review by the Board of the risks of outsourcing investment management services to a non-Group company. The results of this exercise are summarised on page 30.

In 2014, the Board has again adopted a formal and rigorous annual evaluation of its own performance and that of its Committees and individual Directors. This year, the evaluation process was completed and reviewed by the Board in November 2014. The process was led by Andrew Sykes.

The process involved compiling a discussion guide which covered designated topics, including Board operation, strategy, corporate governance and risk management. A separate questionnaire was sent to members of the management team.

A written report was produced by the Chairman, and sent to Board members and discussed at the following Board meeting.

Overall the evaluation process confirmed that the composition and operation of the Board was satisfactory. It was agreed that it would be appropriate to consider appointing one more non-executive Director to the Board. The evaluation process specifically addressed diversity, including gender, within the Board. The Board was in agreement that it had an appropriate level of diversity, but that this should be kept under review.

The Board has considered carefully whether the evaluation of its performance should be externally facilitated at least once every three years. It was decided that external evaluation was not appropriate in 2014, given the recent changes in composition of the Board and the size of the Board.

The evaluation noted that the new risk management programme was work in progress but that this should continue. Succession was another area that the Board agreed it should focus on.

The next Board performance evaluation is scheduled for late 2015.


Corporate governance continued

Information flows

ASVG and the CEO provide written reports to the Board on at least a quarterly basis and as appropriate on specific matters. The Chairman ensures that Directors are provided, on a regular basis, with key information on the Company’s policies, regulatory requirements, and the Company’s risk management and control results. The Board receives and considers reports regularly from its advisers and ad hoc reports and information are supplied to the Board as required.

Insurance and indemnities

During the year, the Company maintained cover for its Directors and Officers under a directors’ and officers’ liability insurance policy.

The Company provides a Deed of Indemnity to each Director to the extent permitted by United Kingdom law whereby the Company agrees to indemnify such Director against any liability incurred in proceedings in which the Director is successful, and for costs in defending a claim brought against the Director for breach of duty where the Director acted honestly and reasonably.

Conflicts of interest

The Directors are required to disclose all actual and potential conflicts of interest to the Board as they arise for consideration and approval. These are considered carefully, taking into account the circumstances around them, and if considered appropriate, are approved. The Board may impose restrictions or refuse to authorise such conflicts if deemed appropriate.

Committees

The Board has delegated certain responsibilities and functions to Committees. Terms of Reference for each of these Committees are available on the Company’s website at www.svgcapital.com. Details of membership of the Committees at 31 January 2015 may be found on pages 36 and 37 and information regarding attendance at Committee meetings during the year under review may be found below.

Audit Committee

The Audit Committee, chaired by Stephen Duckett, consists of the non-executive Directors other than the Chairman and meets at least four times each year. The members of the Audit Committee consider that they have the requisite skills and experience to fulfil the responsibilities of the Committee.

The Committee’s responsibilities include reviewing the methodologies used in valuing the Company’s investments by underlying fund managers, monitoring changes in accounting practices and policies and reviewing decisions with a significant element of judgement. In addition, the Audit Committee is responsible for ensuring the Company’s risk monitoring programme, internal audit processes and regulatory compliance arrangements are appropriate. The Audit Committee has responsibility for the oversight of the external audit function. At the request of the Board, the Audit Committee provides confirmation to the Board as to how it has discharged its responsibilities so that the Board can be satisfied that information presented in the Accounts is fair, balanced and understandable.

During its review of the Company’s financial statements for the year ended 31 January 2015, the Audit Committee considered the following significant issues, including those communicated by the Auditors during their reporting:

Significant issue How the issue was addressed

Valuation of investments The investment portfolio is reviewed regularly by the Company’s investment manager and the Board. The valuation of investments is undertaken in accordance with the accounting policies, disclosed in note 11 to the accounts on page 64.

Going concern, in particular ensuring the Company can meet calls due to underlying funds.

The Directors have considered the Company’s investment objective, risk management policies, capital management policies and procedures and the nature of the portfolio. Cash flow projections are prepared using a number of scenarios on a regular basis by the Company’s investment manager and reviewed by the Board. As part of this process, the Board challenges the assumptions and methodologies used in preparing the projections. As a result, the Directors have determined that the Company has adequate resources, an appropriate financial structure and suitable management arrangements in place to continue in operational existence for the foreseeable future.

The Board was made fully aware of any significant financial reporting issues and judgements made in connection with the preparation of the financial statements.


The Audit Committee has a primary responsibility for making recommendations to the Board on the re-appointment and removal of external auditors. Representatives of the Company’s Auditors attended the Audit Committee meeting at which the draft Annual Report & Accounts were considered. Having reviewed the performance of the external auditors, including assessing the quality of work, timing of communications and work with ASVG, the Committee considered it appropriate to recommend their re-appointment. The Board supported this recommendation which will be put to Shareholders at the forthcoming Annual General Meeting. The current audit firm has audited the Company’s financial statements since 1996. The Company put out the role of auditors to tender in 2012 and the incumbent auditors were re-appointed. The Company’s year ended 31 January 2015 is the third of a five-year maximum term that the current audit partner has been in the role for the Company.

The Directors’ statement on the Company’s system of internal control is set out on page 28. The Company has complied with the provisions of the September 2014 Competition and Markets Authority Order.

Meetings

The Board held 14 meetings in the 13 month period to 31 January 2015. These included the five scheduled Board meetings and then a number of ad hoc meetings to consider matters such as the tender offers.

Attendance at the Board and Committee meetings was as set out below:

Director BoardAudit

Committee

Remuneration Corporate

Governance and Nominations

Committee

Stephen Duckett 12/14 4/4 3/3

Lynn Fordham 13/14

Caroline Goodall 12/12 3/3 2/2

David Robins 14/14 4/4 3/3

Helen Mahy 6/6 2/2 1/1

Andrew Sykes 14/14 3/3

The Board is satisfied that each of the Chairman and the other non-executive Directors commit sufficient time to the affairs of the Company to fulfil their duties as Directors. Mrs Fordham missed one ad hoc meeting due to illness. Mr Duckett was unable to make two ad hoc meetings called on short notice. In the event that a Director does not attend, the Chairman and/or the Chief Executive will contact him or her prior to and following the meeting to keep him or her apprised and seek views on the matters to be discussed.

Diversity

Details of the Company’s diversity policy can be found on page 28.

Remuneration, Corporate Governance and Nominations Committee

Given the small size of the Board, it was decided that all non-executive Directors and the Chairman should sit on the Remuneration, Corporate Governance and Nominations Committee. This Committee is chaired by Helen Mahy and met three times during the period.

Remuneration

Prior to the sale of ASVG to Aberdeen Asset Management plc, the Committee determined remuneration policy throughout the SVG Group and operated the Company’s Share Awards Schemes. Following this sale, the Company has no control of payments to Mrs Fordham or any other former employees of the Group. Accordingly, the Committee’s role is limited to reviewing the level of fees payable to non-executive Directors and operating the Company’s Share Award Schemes as they relate to historic awards. The Board considers each member of the Committee to be independent. The Committee considered remuneration matters at two of its meetings during the period ended 31 January 2015.

It reviewed the Remuneration Report prior to its publication and also reviewed the satisfaction of performance conditions attaching to the two sets of LTIP awards that vested during the period. In addition, it approved the simplification of Directors’ fees as disclosed in the Remuneration Report.

Nominations and Governance

The Committee considers and makes recommendations to the Board on the Board’s composition and balance of skill and experience, and on individual appointments, leads the process and makes recommendations to the Board. It also monitors the Company’s compliance with corporate governance guidelines.

The Committee considered an evaluation of the balance of skills, experience, independence and knowledge of the Company in the Board succession planning and the appointment of Helen Mahy. It reviewed the corporate governance disclosures made in the 2013 Report and Accounts.


Corporate governance continued

Relations with Shareholders

The Board believes that the maintenance of good relations with both institutional and retail Shareholders is important for the prospects of the Company. It has, since its launch, sought engagement with investors. The Chief Executive and Chairman and other Directors, where appropriate, discuss governance and strategy with major Shareholders and the Chairman ensures communication of Shareholders’ views to the Board. The Board may also undertake shareholder perceptions research from time to time.

The Board believes that the Annual General Meeting provides an appropriate forum for investors to communicate with the Board, and encourages participation. The Annual Report and Accounts is, when possible, sent to Shareholders at least 20 business days before the Annual General Meeting, which is normally attended by the full Board of Directors. There is an opportunity for individual shareholders to question the Chairmen of the Board, Audit and Remuneration, Corporate Governance and Nominations Committees. Details of proxy votes received in respect of each resolution are made available to Shareholders at the meeting. The Board believes that the Company’s policy of reporting to Shareholders as soon as possible after the Company’s year end is valuable. The notice of AGM at page 92 sets out the business of the meeting.

Going concern

The Company’s activities, together with the factors likely to affect its future development, performance and position are set out in the Chairman’s statement on pages 10 and 11, the Chief Executive’s report on pages 12 and 13 and the Strategic Report on pages 1 to 31.

The financial position of the Company, its cash flows, liquidity position and borrowing facilities are described in the Financial Review on page 15. In addition, note 26 to the financial statements includes details of the Group’s financial instruments and its risk profile. A description of the Company’s risks and risk management framework are also outlined in the Strategic Report on pages 28 to 31.

The Company finished the year with net cash of £38 million and has access to an additional €300 million through the Revolving Credit Facility to December 2015. This provides adequate coverage of the £367 million of uncalled commitments to the investment portfolio.

In light of the Company’s financial resources, the Directors believe that the Company is well positioned to manage its business risks within the Company’s risk appetite and tolerance successfully, despite the continuing uncertain economic outlook, and, after making enquiries, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the Annual Report and Accounts.

Liquidity and solvency risks are monitored on an ongoing basis via the Company’s risk management framework. This includes formally defining the ASVG personnel responsible for assessing and monitoring risks, defining an appropriate level of risk assessment rigour to be applied, formal reporting on the Company’s residual/retained risk status, a formal process to define the level of independent assurance on the risk assessment process and representations and Board oversight of the risk management framework for solvency and liquidity risk.

The Annual Report and Accounts for the 13 month period ended 31 January 2015, taken as a whole, are fair, balanced and understandable and provide the information necessary for Shareholders to assess the Company’s performance, business model and strategy.


Report of the Directors for the period ended 31 January 2015

The Directors submit their report and the audited accounts of the Company for the period ended 31 January 2015.

Company’s business

The Company is an investment company within the meaning of Section 833 of the Companies Act 2006. The Company has been approved by HM Revenue & Customs as meeting the qualifying criteria for investment trust status and the Company conducts its affairs so as to enable it to continue to qualify for such approval.

The Company is not a close company for taxation purposes.

A review of the Company’s business and its likely future development is given in the Chairman’s statement on pages 10 and 11, the Chief Executive’s report on pages 12 and 13 and the Strategic Report on pages 1 to 31, which are incorporated by reference into this report. In addition, the Corporate Governance review and Corporate Social Responsibility review are to be treated as part of the Report of the Directors.

Revenue, earnings and dividend

The Company’s investment objective is one of capital growth and it is anticipated that returns for shareholders will derive primarily from capital. No dividend will be paid for the period ended 31 January 2015 (2013: no dividend).

The Company’s revenue loss for the period was £19,531,000 (2013: loss of £32,998,000).

The Company’s capital gain for the period was £129,185,000 (2013: gain of £336,472,000).

The Company’s profit for the period was £109,654,000 (2013: profit of £303,474,000).

Purchase of shares

At the AGM held on 28 March 2014, the Company was authorised to purchase up to 22,732,929 shares (representing 9.83% of share capital in issue on 13 February 2014). The Directors have relied on this authority and the pre-existing authority to make market purchases of shares during the year. During the period from 1 January 2014 to 31 January 2015 (relying on the 2013 and 2014 Shareholder authorities), the Company bought 24,570,000 shares of 100p each (representing 13% of the Company’s issued shares as at 18 March 2015) at an average price of 422.2p per share and at a total cost of £103,734,540 (plus commission and stamp duty). These shares are currently held in treasury though may be cancelled. Since period end up until 18 March 2015, the Company has bought a further 2,425,000 million shares at an average price of 479.2p per share which are also held in treasury though may be cancelled.

At the 2014 AGM, the Company was authorised to apply up to £150 million to make market purchases in connection with one or more tender offers. Up to 34,076,660 shares could be repurchased under this authority. During the period, the Company completed two tender offers of £50 million each. The tender offer price for both tender offers was 480p and the combined number of shares repurchased was 20,833,332.

Annual General Meeting

The AGM will be held at 11.30 a.m. on 1 May 2015 at Bow Bells House, 1 Bread Street, London, EC4M 9HH. Details of the resolutions to be proposed at the AGM, together with explanations, appear in the Notice of AGM on page 86.

Directors

In accordance with the Company’s Articles of Association and the Company’s policy on tenure outlined on page 35, Andrew Sykes, Lynn Fordham, David Robins and Stephen Duckett will offer themselves for re-election at the Annual General Meeting. Helen Mahy offers herself for election at the Annual General Meeting following her appointment on 24 July 2014. Helen is currently Chairman of The Renewables Infrastructure Group Limited and Obelisk Legal Support Solutions Limited. She is also a non-executive Director of Stagecoach Group Plc and Bonheur ASA/Ganger Rolf ASA. Previously, she was Group Company Secretary and General Counsel of National Grid Plc.

The Board recommends that Shareholders support the election of Helen Mahy and the re-elections of other Directors who continue to demonstrate commitment to their roles and provide valuable contributions to the deliberations of the Board and its Committees.

Information on the independence of Directors is continued on page 34.

Biographical details of all current Directors may be found on pages 32 and 33.

Andrew Sykes resigned as the Chairman of Aberdeen SVG Private Equity Advisers Limited (“ASVGA”) and Aberdeen SVG Private Equity Managers Limited (“ASVGM”) in July 2014. Lynn Fordham is a director of ASVGA and ASVGM. No other Director has any material interest in any other contract that is significant to the Company’s business.


Report of the Directors continued

Auditor

The Company is required to appoint auditors for each financial year of the Company, to hold office until the conclusion of the next general meeting at which accounts are presented. Ernst & Young LLP have expressed their willingness to remain in office and resolutions to re-appoint them and to authorise the Directors to determine their remuneration will be proposed at the Annual General Meeting. The Company put out to tender the role of its auditors in 2012.

The Auditor provides non-audit services to the Company, including tax and regulatory services. The Audit Committee has adopted a policy on the engagement of the Auditor to supply non-audit services to the Company. Certain non-audit services are not permitted. Certain types of non-audit services, including any non-audit service with a fee of greater than the lower of £50,000 or 25% of the most recent annual audit fee for the Company, must be referred to the Audit Committee for pre-approval. Certain types of non-audit services (such as tax compliance services) need not be referred to the Audit Committee. The Audit Committee considers whether any engagement of the auditor for non-audit services will impair objectivity and independence and seeks written confirmation from the Auditor on its policies and procedures for maintaining independence. It is not considered that the independence of the Auditor has been prejudiced by the provision of non-audit services during the period. The total amount of fees paid to the Auditor with respect to the provision of non-audit services was £60,000 in the period for tax compliance, tax advisory services around VAT and the review of the Company’s half year report. Terms of Reference of the Audit Committee may be found on the Company’s website, www.svgcapital.com.

Provision of information to auditors

As far as the Directors are aware, there is no relevant audit information of which the Auditor is unaware and they have taken all steps they should have taken as Directors in order to make themselves aware of any relevant audit information and to establish that the auditors are aware of that information.

Statement of Directors’ responsibilities

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable United Kingdom law and those International Financial Reporting Standards (“IFRS”) as adopted by the European Union.

Under company law, the Directors must not approve the Company financial statements unless they are satisfied that they present a fair, balanced and understandable report and provide the information necessary for shareholders to assess the Company’s performance, business model and strategy. The Report and Accounts is reviewed in detail by ASVG’s head of risk and various other members of the ASVG team. The Company’s independent risk oversight provider reviews this document and prepares a detailed risk assessment on the objective that the Report and Accounts is fair, balanced and understandable. The Company’s Auditor is required to report if anything comes to their attention that would indicate the Report and Accounts is not fair, balanced and understandable. Each member of the Board reviews the Report and Accounts. The Directors are comfortable that the Annual Report for the year ended 31 January 2015, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company’s performance, business model and strategy. They have come to this view following a comprehensive review of the work undertaken by the Audit Committee, ASVG and the Auditors including questioning of methodology and controls around the reporting process. In preparing those financial statements, the Directors are required to:

k select suitable accounting policies in accordance with IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors and then apply them consistently;

k present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

k provide additional disclosures when compliance with the specific requirement in IFRS is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Company’s financial position and financial performance;

kmake judgements and estimates that are reasonable; and

k state that the Company has complied with IFRS, subject to any material departures disclosed and explained in the financial statements.

The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the Company financial statements comply with the Companies Act 2006 and Article 4 of the IAS Regulation.

They are responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Board confirms it is satisfied that the annual report and accounts taken as a whole are fair, balanced and understandable and provide the information necessary for shareholders to assess the performance, business model and strategy of the Company.

Each of the Directors, whose names and functions are set out in this report, confirms that, to the best of their knowledge:

k the accounts, which have been prepared in accordance with IFRS, give a true and fair view of the assets, liabilities, financial position and net return of the Company; and

k the Report of the Directors includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.


Substantial share interests

As at 18 March 2015, the Company had 253,723,168 shares of £1 in issue. 65,383,757 shares were held in treasury. The total number of voting rights as at 18 March 2015 was 188,339,411 (excluding shares held in treasury).

As at 18 March 2015, the Company has been notified of the following significant direct or indirect holding of securities in the Company:

Voting rights attached to sharesNumber of

ordinary shares

% of total voting

rights1

Coller Investment Management Limited 54,562,875 23.00

Schroder Investment Management, Schroder Channel Islands Limited, Schroder & Co Limited 21,406,604 10.52

Standard Life Investments 11,893,160 5.68

AVIVA plc and its subsidiaries 11,733,687 5.22

Threadneedle Asset Management 10,326,588 4.46

Legal and General Group Plc 8,941,703 3.87

Norges Bank 6,785,374 3.02

1 % of total voting rights is % at time of notification. If a Shareholder participates in a tender offer, its number of ordinary shares will reduce, but its % of voting rights may not change.

Rights attaching to shares

The Company has one class of shares, namely ordinary shares, with standard rights as to voting, dividends and payment on winding-up and no special rights and obligations attaching to them. There are no material restrictions on transfers of shares. Other than as disclosed above, the Company is not aware of any person who has a significant direct or indirect holding of securities in the Company. There are no restrictions on voting rights. The Company is not aware of any agreements between holders of securities that may result in restrictions on the transfer of securities or on voting rights. The Company follows the established procedure in the Companies Act 2006 for changing Articles of Association and has no other rules about the amendment of the Company’s Articles of Association.

The Board considers that all the resolutions to be put to the Annual General Meeting are in the best interests of the Company and its Shareholders as a whole. Those Directors who are Shareholders will be voting in favour of them and the Board unanimously recommends that you do so as well.


Stuart Ballard Company Secretary

23 March 2015

Registered Number: 3066856; Registered Office: Bow Bells House, 1 Bread Street, London EC4M 9HH


Remuneration report for the period ended 31 January 2015

Introduction and background

As reported last year, all former Group employees, including Lynn Fordham, are now employees of Aberdeen Asset Management plc (“AAM”) and are paid in accordance with AAM’s remuneration policy and not the Company’s remuneration policy. The Company and the Directors therefore have no liability for payments made to these AAM employees by AAM, including payments made to Lynn Fordham. No such employees have received remuneration from the Company or awards granted by the Company over the Company’s shares during the year. Their remuneration is governed by AAM policy, details of which can be found in the AAM annual report and accounts.

Mrs Fordham retains a significant holding in the Company’s shares and holds LTIPs awarded prior to the sale of Aberdeen SVG Managers Limited to AAM, which will continue to vest over the period to March 2017 (subject to satisfaction of relevant performance conditions).

The Remuneration Committee considers that it is prudent to ask Shareholders to approve a remuneration policy that covers both executive Directors and non-executive Directors. Should the Company wish to pay an executive Director in the future, the terms of such remuneration will be covered by this policy.

Notwithstanding that the remuneration is paid by AAM to Lynn Fordham pursuant to AAM policy, regulations require that it be disclosed in the Report on remuneration implementation below.

Remuneration Committee meetings

The Remuneration Corporate Governance and Nominations Committee considered remuneration at two of their meetings during the year: to review the Company’s remuneration policy, approve the 2013 remuneration report and approve the vesting of various LTIP awards.

The Report on remuneration policy and remuneration implementation has been prepared in accordance with The Large and Medium-Sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013.

The Company’s remuneration policy

This policy provides details of the remuneration policy for the non-executive Directors of the Company and for any executive Directors that may be paid by the Company in the future. All Directors, other than Lynn Fordham, are non-executive, appointed under the terms of Letters of Appointment, and none has a service contract. The Company has no employees. Lynn Fordham is currently seconded by AAM to act as executive Director of the Company. As stated above, payments to Lynn Fordham from 1 June 2013 have been, and continue to be made in accordance with AAM’s remuneration policy, not the Company’s remuneration policy. The Directors have no liability for payments made to Lynn Fordham by AAM.

A resolution to approve the Company’s remuneration policy was passed at the 2014 Annual General Meeting of the Company. Given the changes to the remuneration policy to allow flexibility to pay executive Directors, the policy will be put to Shareholders for approval at the AGM to be held on 1 May 2015.


Remuneration structure

Executive DirectorsThe table below sets out SVG Capital’s proposed policy in relation to each component of executive Director remuneration, with further explanation in the notes below:

Salary (fixed pay)

Purpose and link to strategic objectives To support the recruitment and retention of executive Directors of the calibre required to manage and grow the Company successfully.

Operation Reviewed annually.

Opportunity and recovery or withholding provisions

The Company seeks to pay a fair salary commensurate with the individual’s role, responsibilities and experience, importance to the business and having regard to the market rates for similar roles in the sector and other comparable companies.

Salary increases are normally awarded by reference to the increase in the cost of living, but may take into account other factors such as market salary levels, Company performance, individual performance, changes in responsibility and levels of pay elsewhere in the Group. The Committee will consider the impact of any base salary increase in the total remuneration package.

Other than in exceptional circumstances or where there is a change in role or responsibilities, year on year increases in basic salaries will be in line with general workforce increases and will not exceed inflation by more than 5%.

No recovery or withholding provisions.

Performance measurement framework1 Not applicable.

Benefits (fixed pay)

Purpose and link to strategic objectives To provide cost-effective benefits, to support the health and well-being of employees and to attract and retain high performing executive Directors.

Operation The Company will provide a range of benefits such as: medical insurance; disability insurance; life assurance; contributions to gym membership and paid holiday.Specific benefits provision may be subject to minor change from time to time.


Fringe benefits are not subject to a specific cap as the cost is set by external providers and may change from time to time, but represent only a small percentage of total remuneration. The costs associated with benefits provision are monitored and controlled.No recovery or withholding provisions.


Pension (fixed pay)

Purpose and link to strategic objectives To provide contributions to enable executive Directors and wider staff to make long-term savings to provide post-retirement income.

To provide market competitive defined contributions to assist with recruitment and retention of people of the necessary calibre.

Operation Executive Directors are offered a choice between defined contribution funding to a personal pension scheme or a cash salary supplement (or a combination of both).


Contributions or cash allowances of up to a maximum of 30% of base salary may be provided.




Remuneration report continued

Shareholding requirement

Purpose and link to strategic objectives To create alignment with Shareholders by encouraging longer-term focus.

Operation Executive Directors and senior staff are expected to build up over a reasonable period of time, and thereafter maintain, a shareholding in the Company’s shares.


The Chief Executive has a share retention target of 3.0 times salary and other senior members of staff have a target of 1.0 times salary.

Vested shares (net of income tax and National Insurance contributions) under the Deferred Bonus or Long Term Incentive Plans should be retained until the shareholding requirement is met.

Other than in exceptional circumstances it is anticipated that the time period taken to build up the required shareholding would not exceed five years.

The Remuneration Committee will retain the ability to introduce additional retention conditions.



Short-term incentives (variable pay)

Purpose and link to strategic objectives To reward performance on an annual basis against key financial, operational, risk and individual objectives.

Operation Discretionary annual bonus scheme and deferred bonus plan under which a proportion of bonus may be compulsorily deferred into shares.

Bonus is non-pensionable.


The maximum potential bonus is 200% of salary, although bonuses of up to 300% of salary may be awarded in exceptional circumstances. The target bonus pay out is 100% of salary. At least 50% of any bonus will be compulsorily deferred into shares vesting in equal instalments over a period of five years.

All bonus payments are subject to the overriding discretion of the Remuneration Committee, which also retains discretion to amend the proportions of bonus subject to compulsory deferral.

The Remuneration Committee has the right to cancel or reduce any bonus compulsorily deferred into shares in the circumstances described under long-term incentives described below.

Performance measurement framework1 For executive Directors, a maximum of 50% of bonus is normally determined by reference to Company performance and 50% normally by reference to non-financial objectives which may include personal, risk and other key Group targets.

All Group performance targets are reviewed and set by the Committee early in the year to align with the Company’s strategic objectives. The choice and weighting of performance metrics may vary from year to year.

Awards are determined by the Committee after the year end based on the actual performance against these targets. Details of the annual performance targets (and performance against those targets) will be shown in the Remuneration report.


Long-term incentives (variable pay)

Purpose and link to strategic objectives To motivate Directors to deliver long-term Shareholder value, thereby aligning the interests of management with those of Shareholders.

To encourage long-term retention of key executives.

Operation SVG Capital operates a performance share plan under which participants are awarded nil-cost options over the Company’s shares.


The maximum value of nil-cost options that may be granted in any year under the performance share plan rules is 200% of salary and bonus. In practice, in all but exceptional circumstances, this will be limited to 200% of salary.

The Remuneration Committee has the right, in respect of future awards to cancel or reduce long-term incentive awards, in the event of a material misstatement of the Group’s financial results, miscalculation of a participant’s entitlement, individual misconduct or an event resulting in material loss or reputational damage to the Company or any member of the Group. Further details are provided in note 3.

Performance measurement framework1 Nil-cost options awarded previously under the performance share plan are subject to targets related to the Company’s undiluted net asset value per share (NAV) over a four-year period and the Company’s average annual compound total Shareholder return (TSR) over a three-year period. 0% of existing performance share awards vest at a threshold performance level, increasing to full vesting at a stretch performance level.

The rules of the scheme provide discretion to the Remuneration Committee to amend the performance targets or impose different performance targets providing that these are no less challenging than the targets imposed when the plan was first introduced. The Committee has not set the targets for future performance share awards as no awards are currently being granted. However, the Committee would first consult with major Shareholders before making any significant changes to the targets.

Carried interest (variable pay)

Purpose and link to strategic objectives To align the interests of executives involved in direct investments and/or direct co-investments with those of the Shareholders of the Company.

Operation The proceeds of carried interest are only paid out after the performance of the pool of assets has exceeded a minimum level of return.

Carried interest points are allocated on establishment of the scheme and will vest over the investment period of the specified investment pool.

Carry does not apply to any commitments to fund or co-investments alongside these fund commitments.

To be eligible, participants must have satisfied the shareholding retention policy described above and will also be required to co-invest alongside the Company in the pool of assets.


The carried interest pool for direct investments and/or direct co-investments is capped at 20% of net cash profits made on realisations from the underlying investment pool.

If awarded to an executive Director, carried interest is not expected to comprise a large proportion of the overall executive Director’s package and other elements of the total remuneration will be reduced to take account of the carried interest award.

At the time that each carried interest scheme is established, carry is pre-allocated for the benefit of investment staff and cannot be returned to the Company, save in the event of the holder ceasing to be a Group employee. Any carried interest awarded to an executive Director would come from this segregated pool and would not represent any additional exposure to the Company, simply a reduction in the carried interest available to be allocated to other staff.

Performance measurement framework1 SVG Capital’s carried interest arrangements require a compound return of 8% p.a., before any proceeds are paid out.



Notes to the remuneration policy table

1. Rationale for choice of performance measures for short- and long-term incentive plansBonusThe performance targets chosen by the Board for the bonus are designed to ensure the successful implementation of the business plan and strategies agreed by the Board and may be adjusted to take account of risk. The Remuneration Committee will select the performance conditions for determining the bonus awards as they align directly with the short- and long-term strategy of the business. These conditions are set annually by the Remuneration Committee at levels that take into account the Board’s business plan. Non-financial performance is assessed by reference to personal objectives set at the start of the year, including non-financial measures such as risk management, marketing of the Company, team leadership, management skills and promotion of SVG Capital’s corporate culture both internally and externally.

The Remuneration Committee retains discretion to amend or adopt alternative annual bonus targets in order to achieve better alignment with the Company’s strategic objectives

Performance sharesIn order to ensure that long-term incentives provide alignment with Shareholders, the Remuneration Committee sets performance conditions that reward executives for delivering absolute value in the Group. The Remuneration Committee believes that TSR and growth in NAV are appropriate measures of long-term performance for a business which is focused on delivering superior returns in a long-term asset class.

The performance conditions for the last awards granted under the performance share plan consist of (i) the average growth in the Company’s undiluted Net Asset Value (NAV) per share over a four-year period of 7% p.a. (0% of the award vest) and 15% p.a. (100% of the award vests) and (ii) the Company’s average annual compound total Shareholder return (TSR) over a three-year period of 10% p.a. (0% of the award vests) and 20% p.a. (100% of the award vests), with each determining 50% of the award. These targets have remained the same since the 2009 awards.

Carried interest plansThe plans adopt market standard performance measures and targets. These comprise payment of 20% of net cash profits made on the underlying investment pool once a compound 8% return p.a. on contributed amounts has been reached.

2. Consistency with policy for all employeesSVG Capital executive Directors’ remuneration packages tend to be higher than those of other Group employees, but also contain a higher proportion of variable pay. All employees will be eligible to receive salary, pension contributions and benefits and to be considered for a discretionary annual bonus with the maximum opportunities reflecting the role and seniority of each employee. Higher-earning members of staff below the executive Directors will have a portion of their bonus deferred into shares vesting in equal instalments over a four-year period. Within the Group, senior members of staff have part of their compensation linked to the long-term performance of the Group’s investments through carried interest schemes. No carried interest will be paid on investments in private equity funds or on co-investments made alongside these funds. Carried interest will be payable on other equity investments, such as direct co-investments and direct investments.

3. Malus/clawback policyThe Committee has agreed a policy which applies to bonus, deferred share awards and performance share plan awards made during the year to executive Directors (and certain other senior executives) under which awards may be forfeited, or reduced prior to vesting, or recovered after vesting (for a period of three years following vesting) in exceptional circumstances on such basis as the Remuneration Committee considers fair, reasonable and proportionate. This would include material misstatement of Group financial statements, material failure of risk management or cases where an individual is deemed to have caused a material loss for the Group as a result of reckless, negligent or wilful actions or inappropriate values or behaviour.

In the event of a change of control of the Company, the right of forfeiture, reduction or recovery described above will no longer be exercisable by the Remuneration Committee.

The Remuneration Committee may make minor changes to this policy, which do not have a material advantage to Directors, to aid in its operation of implementation without seeking Shareholder approval for a revised version of the Policy report.


4. Statement of consideration of conditions elsewhere in the Company As the Company has no employees, the process of consulting with employees on the setting of the remuneration policy is not relevant.

5. Committee discretionsThe Committee operates the Group’s variable incentive plans according to their respective rules and in accordance with HMRC rules where relevant. To ensure the efficient administration of these plans, the Committee will apply certain operational discretions. These include the following:

k selecting the participants in the plans on an annual basis;

kdetermining the timing of grants of awards and/or payment;

kdetermining the quantum of awards and/or payments (within the limits set out in the policy table above);

kdetermining the extent of vesting based on the assessment of performance;

kmaking the appropriate adjustments required in certain circumstances (e.g. change of control, rights issues, corporate restructuring events and special dividends);

kdetermining ‘good leaver’ status for incentive plan purposes and applying the appropriate treatment; and

kundertaking the annual review of weighting of performance measures, and setting targets for the bonus and performance share plan (“PSP”) from year to year.

If an event occurs which results in the bonus or PSP performance conditions and/or targets being deemed no longer appropriate (e.g. a material acquisition or divestment) the Committee will have the ability to adjust appropriately the measures and/or targets and alter weightings, provided that the revised conditions or targets are not materially less difficult to satisfy.

Outstanding share incentive awards that remain unvested or unexercised at the date of this report, as detailed on page 54 of the Annual report on remuneration, remain eligible for vesting or exercise based on their original award terms.

6. ScenariosAs no executive Directors are paid by the Company, no remuneration scenarios can be shown.

7. External appointmentsThe Company permits executive Directors of the Company to accept limited non-executive directorships and other similar appointments, it being recognised that such appointments increase their commercial knowledge and business experience to the general benefit of the Company. Fees earned from such directorships may be retained by executive Directors.

Chairman and non-executive Directors remuneration policy

The non-executive Directors of the Company are entitled to such rates of annual fees as the Board at its discretion shall from time to time determine (subject to the aggregate annual fees not exceeding £600,000) and reimbursement of reasonable fees and expenses incurred by them in the performance of their duties. In line with the majority of investment trusts, no component of any Director’s remuneration is subject to performance factors. There are no provisions in Directors’ Letters of Appointment for recovery or withholding of fees or expenses. Annual fees are pro-rated where a change takes place during a financial year.

During the year, the Company simplified its arrangements with respect to payments to non-executive Directors. The Chairman’s arrangements did not change. These changes for non-executive Directors are set out below and are consistent with the existing remuneration policy approved by shareholders:

Component Prior position Current position

Basic fee £25,000 £42,500

Chairman Audit Committee £10,000 £5,000

Chairman Remuneration Committee £10,000 £5,000

Senior Independent Director £5,000 £5,000

Non-chairman members of Audit and Remuneration Committees £5,000 £nil

Attendance fee £1,500 per meeting

£1,500 per meeting attended in excess of five in

any financial year (provided more than ten meetings have been attended in that year)

Assuming seven board meetings in a financial year (the number of meetings that took place in 2013 that attendance fees paid were paid in respect of – attendance fees are not paid for certain ad-hoc meetings or briefing meetings) the total aggregate amount paid under the prior position would have been £151,500 and under the current position would have been £150,000.



Table of Directors’ Remuneration Components (Non-executive Directors)

Element Purpose and link strategy Operation Maximum

Board Chairman fee

To attract and retain a high-calibre Board Chairman by offering a market-competitive fee level.

The Board Chairman is paid a single fee for all his responsibilities. The level of the fee is reviewed, periodically by the Remuneration Committee, with reference to workload, time commitment and market levels in comparably sized FTSE companies, and a recommendation is then made to the Board (without the Chairman being present). The Chairman does not receive benefits other than limited travel and hospitality-related benefits may be provided in connection with the role.

There is no maximum fee level.

Non-executive Director fees

To attract and retain high-calibre non-executive Directors by offering a market-competitive fee level.

The non-executives are paid a basic fee and, under certain circumstances, an attendance allowance. The Audit and Remuneration Committee Chairmen and the Senior Independent Director are paid supplements to reflect the additional responsibilities, workload and time commitment. The fee levels are reviewed periodically by the Chairman and the Remuneration Committee, with reference to workload, time commitment and market levels in comparably sized FTSE companies and a recommendation is then made to the Board.Non-executive Directors do not receive benefits other than limited travel and hospitality related benefits may be provided in connection with the role.

There is no maximum fee level.

Notes:

1. The Board only exercises its discretion in setting rates of fees after an analysis of fees paid to Directors of other companies having similar profiles to that of the Company, and consultation with third-party advisers.

2. The Company has no employees. Accordingly, there are no differences in policy on the remuneration of Directors and the remuneration of employees.

3. No Director is entitled to receive any remuneration from the Company which is performance-related. As a result, there are no performance conditions in relation to any elements of the Directors’ remuneration in existence to set out in this remuneration policy.

Service Contracts – none of the Directors has a service contract with the Company. Non-executive Directors are engaged under Letters of Appointment. Appointments are generally for a three-year term, subject to annual re-election at each AGM. The dates of the current Letters of Appointment are as follows:

Stephen Duckett 12 March 2012 Andrew Sykes 28 September 2012 Lynn Fordham 1 June 2013 David Robins 6 August 2013 Helen Mahy 23 July 2014

Loss of Office – Directors’ Letters of Appointment expressly prohibit any entitlement to payment on loss of office.

Scenarios – as the Chairman and non-executive Directors’ remuneration is fixed at annual rates, there are no other scenarios where remuneration will vary. It is accordingly not considered appropriate to provide different remuneration scenarios for each Director.

Statement of consideration of conditions elsewhere in the Company – as the Company has no employees, the process of consulting with employees on the setting of the Remuneration Policy is not relevant.

Other ItemsNone of the non-executive Directors has any entitlement to pensions or pension related benefits, medical or life insurance schemes, share options, long-term incentive plans, or performance related payments. No non-executive Director is entitled to any other monetary payment or any assets of the Company except in their capacity (where applicable) as shareholders of the Company.

Recruitment policyIn determining remuneration arrangements for new executive appointments to the Board (including internal promotions), the Committee will take into consideration all relevant factors, including the calibre of the individual, the nature of the role, local market practice, the individual’s current remuneration package, SVG Capital’s remuneration policy, internal relativities and existing arrangements for current executive Directors. For external appointments, some variation may be necessary in order to attract the successful candidate and to reflect particular skills or experience specifically required. Where relevant, local market practice, with respect to pension and benefits provision may also be taken into account.

The maximum level of variable pay (as expressed as a percentage of base salary) which may be awarded to new executive Directors in respect of their appointment shall be no more generous than the combined maximum levels expressed in the remuneration policy table above in respect of the Chief Executive, with an appropriate mix between annual bonus, excluding any awards made to compensate the executive Director for awards forfeited by their previous employer.


If a new appointment is the result of an internal promotion the Remuneration Committee would expect to honour any pre-existing or contractual arrangements or benefits package agreed with the relevant individual. In the event that a new Director resides overseas, the Remuneration Committee may agree a reasonable relocation package and tax equalisation arrangements.

The Remuneration Committee may make bonus commitments or share awards on the appointment of an external candidate to compensate for remuneration arrangements forfeited on leaving a previous employer, taking into account factors such as any performance conditions attached to those awards, the form in which they were granted, for example cash or shares, and the time over which they would have vested. The aim would be to ensure that replacement awards would be made on no greater than a comparable basis. The Committee’s intention is that any such awards made are in the best interests of both the Company and its Shareholders. The Committee is at all times conscious of the need to pay no more than is necessary, particularly when determining buyout arrangements. The Company would make use of existing arrangements where possible and may also make awards under the exemptions from prior Shareholder approval contained in the Listing Rules.

In the event of an appointment of a new non-executive Director, remuneration arrangements will normally be in line with those detailed in the relevant table below.

Service contractsThe main terms of the service contracts of the executive Directors will be as follows:

Provision Policy

Notice period Six months’ notice if given by the Company

Six months’ notice if given by the executive Director

Company policy is that future executive Directors’ notice periods should not normally exceed six months. Save for these notice periods the contracts have no unexpired terms.

Dates of contracts At the date of this Report and Accounts, Lynn Fordham is the only executive Director. Her employment contract is with Aberdeen Asset Management and the Company has entered into a Letter of Appointment on similar terms to non-executive Directors’ Letters of Appointment.

Termination payments All Directors’ contracts entitle the Company to give pay in lieu of notice. This would be limited payment of salary and benefits for the remainder of the notice period. In future contracts such payments would normally be phased and subject to mitigation.

Remuneration and benefits The operation of all incentive plans, including being eligible to be considered for an annual bonus and deferred share awards is non-contractual. All incentive plans are subject to usual good leaver provisions.

In order to be entitled to an annual bonus, an executive Director must normally be in the Group’s employment and not under notice of termination (either given or received) at the time the bonus is paid. In good leaver circumstances, the Committee has discretion to pay a pro-rata bonus in respect of the proportion of the year worked. Such awards would be subject to application of the performance conditions.

Shares comprised in a compulsory deferral will normally only vest if the Director remains an employee of the SVG Capital Group during the vesting period commencing when the award is made and will vest in equal annual instalments. Awards would vest early on a change of control.

In the event of a change of control before the expiry of the performance measurement period of a long-term incentive award, the vesting level of the award will be determined by the Remuneration Committee based on the extent to which the performance targets have been achieved and vested shares will then be scaled down to reflect the shortened measurement period. The Remuneration Committee may modify such vesting levels if it considers that the performance target would be met to a lesser or greater degree at the testing date and/or if the application of pro-rating would be inappropriate in the circumstances.

On termination of employment, outstanding awards will be treated in accordance with the relevant plan rules.

The Chairman and the non-executive Directors do not have service contracts or contracts for services. Their appointment letters provide no entitlement to compensation or other benefits on ceasing to become a director. Service contracts will be available for inspection at the Company’s headquarters in business hours.



Report on Remuneration Implementation

This Report is prepared in accordance with Schedule 8 of the Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013.

Directors’ emolumentsDirectors are only entitled to fees at such rates as are determined by the Board from time to time in accordance with the Remuneration Policy. The rates of Directors’ fees applicable for the financial year were set out in the Directors’ Remuneration Report contained in the Company’s 2013 Annual Report & Accounts and were amended in 2014, consistent with the Remuneration Policy as more fully described on page 42. A binding Ordinary Resolution proposing approval of the Remuneration Policy was put to shareholders at the Annual General Meeting (“AGM”) of the Company held on 28 March 2014, and was passed by 98.96% of shareholders voting on the resolution. A non-binding Ordinary Resolution proposing approval of the Remuneration Report was also put to shareholders at that meeting and was passed by 65.01% of shareholders voting on the resolution. The Company’s largest shareholder voted against a number of resolutions at the AGM, including the Remuneration Report resolution. Had that shareholder voted in favour of the resolution approving the Remuneration Report, the resolution would have been passed by 94.23% of shareholders. No opinions were expressed by shareholders with respect to the policy that applied to non-executive Directors, being the only policy that will apply going forward.

None of the Directors has any entitlement to pensions or pension related benefits, medical or life insurance schemes, share options, long-term incentive plans, or performance related payments. No Director is entitled to any other monetary payment or any assets of the Company. Accordingly the Single Total Figure table below does not include columns for any of these items or their monetary equivalents.

Directors’ & Officers’ insurance is maintained and paid for by the Company on behalf of the Directors.

In line with market practice the Company has agreed to indemnify the Directors in respect of costs, charges, losses, liabilities, damages and expenses, arising out of any claims or proposed claims made for negligence, default, breach of duty, breach of trust or otherwise, or relating to any application under Section 1157 of the Companies Act 2006, in connection with the performance of their duties as Directors of the Company. The indemnities would also provide financial support from the Company should the level of cover provided by the Directors’ & Officers’ insurance maintained by the Company be exhausted.

Details of the implementation of the remuneration policy are set out below. The Committee appointed New Bridge Street (a trading name of Aon plc) to provide general remuneration advice and specific advice on the operation of its long term incentive plans. New Bridge Street helped establish these plans and was therefore well placed to advise on them. Neither New Bridge Street nor any other part of the Aon Corporation provided other services to the Company during the year and the Committee was therefore comfortable with their objectivity and independence. No fees were paid to New Bridge Street during the period.

Single Total Figure TablesSet out below, are single total figure tables for non-executive Directors and the executive Director. Non-executive Directors are paid their fees by the Company. From 1 June 2013, Lynn Fordham ceased to be an employee of the Group when she became an employee of AAM and her remuneration has been paid by AAM and not by the Company. Regulations require that the remuneration paid by AAM to Lynn Fordham be disclosed in this Remuneration Report.

The Directors who served during the period received the following emoluments:

Single Total Figure Table (audited information)Non-executive Directors3

Fees paid (£) Taxable benefits Total (£)

Name of Director

For the 13 month

period ended 31 Jan 2015 2013

For the 13 month


For the 13 month


Andrew Sykes 140,833 130,000 – – 140,833 130,000

Stephen Duckett 55,208 55,000 – – 55,208 55,000

Caroline Goodall1 37,250 55,500 – – 37,250 55,500

Helen Mahy2 22,940 – – – 22,940 –

David Robins1 55,208 16,500 – – 55,208 16,500

1 Retired 30 September 2014.2 Appointed 24 July 2014.3 None of the fees referred to in the above table were paid to any third-party in respect of the services provided by any of the Directors.


Single Total Figure Table (audited information)From 1 June 2013, Lynn Fordham has been employed by AAM. The information in this table comprises the remuneration received by Lynn Fordham from AAM, as advised by AAM for the 13 month period to 31 January 2015.

Lynn Fordham is a non-executive of Fuller, Smith and Turner PLC and received fees of £63,083 in respect of this appointment during the period. Such fees were retained by Mrs Fordham.

While the Company has no control over the bonus paid to Lynn Fordham by AAM, it is required to disclose information on this payment by virtue of Mrs Fordham’s appointment by the Company as the Company’s nominee on the Board of ASVG.

Executive Directors3

Lynn Fordham Notes

Salary & Fees (£) 392,471 All payments are made by AAM pursuant to the AAM remuneration policy.

Benefit (£) 6,075 Includes private health care, life cover and permanent health insurance.

Annual Bonus (£) 1,250,000 75% of this is deferred into shares and vests in equal tranches over three years. 50% of the deferred amount is in AAM shares with the balance in SVG Capital plc shares.

Vesting of Long Term Incentive (£) 2,821,195 Relating to awards made in 2010 and 2011 that vested during the period to 31 January 2015. All of this amount was gain.

Pension (£) 78,770 Includes £30,483 paid by way of salary supplement.

Total (£) 4,548,511

Total 2013 (£) 5,067,109

Annual BonusLynn Fordham’s key performance parameters, her performance against them and therefore her bonus are all determined by AAM and the bonus is paid by AAM.

Mrs Fordham received a bonus of £1,250,000, 75% of which was deferred in shares which are released in equal tranches over three years, subject to her continued employment with AAM. £468,750 of the bonus was deferred into shares in AAM and £468,750 of the bonus was deferred into shares of the Company.

Long Term IncentivesThe value attributable to Long Term Incentives is the market value of the shares on the day that they vested during the year, regardless of whether they were exercised or not. Lynn Fordham had 384,466 nil cost options that vested on 15 April 2014 with a market price of 416.5p per share and 281,750 nil cost options that vested on 17 February 2014 at 433p per share. Full details of shares vested but unexercised are on page 54. These awards were made on 15 April 2010 and 17 February 2011 respectively and were subject to the four year net asset value per share performance condition and the three year total shareholder return performance condition respectively, full details of which are contained in the table at the top of page 54.

Other BenefitsTaxable Benefits – The Company’s Articles of Association provide that Directors are entitled to be reimbursed for reasonable expenses incurred by them in connection with the performance of their duties and attendance at Board and General Meetings.

Pensions related benefits – Mrs Fordham received a pension entitlement of 20% of salary from AAM.

No awards were made to Directors over ordinary shares of the Company during the period.

Loss of officeFor the period from 1 June 2013, Lynn Fordham’s employment contract has been with AAM and the Company has no contractual liability for loss of office payments. Non-executive Directors do not have service contracts with the Company but are engaged under Letters of Appointment. These specifically exclude any entitlement to compensation upon leaving office for whatever reason.



Share Price Total ReturnThe chart below illustrates the total shareholder return for a holding in the Company’s shares as compared to the FTSE All-Share Index. The Committee has decided that the FTSE All-Share Total Return Index is the most appropriate, available broad market index for comparative purposes as it is the principal index which the Company’s shares are quoted.

Total shareholder return vs FTSE All-Share Total Return Index over five years to 31 January 2015

500

400

300

200

100

0

SVG Capital

Source: Bloomberg

31-Dec2010

31-Dec2009

31-Dec2011

31-Dec2012

31-Dec2013

31-Jan2015

FTSE All-Share Index Rebased at 100 at 31 December 2009

Total remuneration of Chief ExecutiveThe total remuneration of the Chief Executive for each of the financial years shown in the TSR graph is shown in the following table. The total remuneration figure includes the annual bonus and LTIP awards which vested based on performance in each year. The LTIP vesting figures and bonus payments show the payout for each year as a percentage of the maximum.

2010 2011 2012 2013

For the 13 month

period ended 31 Jan 2015

Total remuneration (£000) 865 970 2,077 5,067 4,549

LTIP vesting (%)2 0% 0% 80.5% 100% 100%

Bonus (%)3 65.4% 80.5% 71% N/A1 N/A1

1 Mrs Fordham’s bonus that was paid by AAM is not subject to a cap, therefore a percentage of maximum annual bonus is not shown.2 LTIP vesting (%) is percentage by LTIPs that vested against maximum number that could have vested in that year.3 Bonus (%) is actual bonus paid against maximum bonus that could have been awarded.


Relative Importance of Spend on PayThe table below shows the proportion of the Company’s income spent on pay.

For the 13 month

period ended 31 Jan 2015 2013 Difference

Total employee pay1 £4.9m £7.9m

Distribution to Shareholders:

(a) dividends £0m £0m

(b) share buyback £205.0m £151.1m

1 This includes Directors’ fees and Group employee pay. There were no Group employees following the transaction with Aberdeen Asset Management which closed on 31 May 2013.

Statement of Directors’ shareholding and share interests (audited information)Neither the Company’s Articles of Association nor the Directors’ Letters of Appointment require a Director to own shares in the Company, however executive Directors and members of the Company’s Investment Committee (comprising employees of ASVG) are encouraged to build up an interest in the Company’s shares. In the case of Lynn Fordham, she has agreed to hold shares equivalent to at least 100% of her salary whilst she retains the position of Executive Director. The Chairman and non-executive Directors are encouraged to hold shares in the Company but are not subject to a formal shareholding guideline. The interests of the Directors and their connected persons in the equity securities of the Company at 31 January 2015 are shown in the table below:

Ordinary Shares Loan Stock

Director

For the 13 month


For the 13 month


Andrew Sykes 31,000 31,000 – –

Lynn Fordham 483,815 194,468 – –

Stephen Duckett* Nil Nil – –

Caroline Goodall*** – Nil – –

Helen Mahy** 3,529 – – –

David Robins 4,000 4,000 – –

* The Company has been advised that Mr Duckett is not able to own shares in the Company due to restrictions imposed by other companies that he acts for in a non-executive capacity.

** Helen Mahy appointed to the Board on 24 July 2014.*** Caroline Goodall resigned from the Board on 30 September 2014.



Awards held by Directors over ordinary shares of the Company

During the year Exercise dates

Awards granted

Awards vested

Awards lapsed

At 31 January

2015

Exercise price per share (pence) Earliest Latest

At 31 December

2013

L Fordham 187,044* – – – –1 0.00 13 October 2013 13 October 2019

384,446* – 384,446† – –1 0.00 15 April 2014 15 April 2020

281,750* – 281,750‡ – –1 0.00 17 February 2014 17 February 2021

281,750* – – – 281,750 0.00 17 February 2015 17 February 2021

285,701* – – – 285,701 0.00 22 March 2015 22 March 2022

285,701* – – – 285,701 0.00 22 March 2016 22 March 2022

77,922* – – – 77,922 0.00 22 March 2016 22 March 2023

77,922* – – – 77,922 0.00 22 March 2017 22 March 2023

64,935§ – – – 64,935§ 0.00 30 May 2016 30 May 2018

– 108,950 – – 108,950++ 0.00 1 December 2015 12 December 2024

Total 1,927,171 108,950 666,196 – 1,182,881

* The awards granted in 2009, 2010, 2011, 2012 and 2013 were split equally between awards based on NAV growth and awards based on TSR. The performance conditions consist of (i) average growth in the Company’s undiluted Net Asset Value per Share over a four year period of 7% p.a. (0% of the award vests) and 15% p.a. (100% of the award vests) and (ii) the Company’s annual compound total shareholder return over a three-year period of 10% p.a. (0% of the award vests) and 20% p.a. (100% of the award vests).

+ These awards were over the four year period from 15 April 2010 subject to the performance condition that average growth in the Company’s undiluted Net Asset Value per share of at least 7% p.a. with full vesting taking place at 15% p.a. The actual average growth in undiluted Net Asset Value per share was 24% p.a. so the awards vested fully. Mrs Fordham has exercised all of the vested shares.

++ These awards were made under the AAM bonus deferral scheme and granted by AAM. They will vest subject to continued employment and good/bad leaver provisions.

‡ These awards were over the three year period from 17 February 2011 subject to the performance condition that average annual compound total shareholders return be at least 10% with full vesting taking place at 20%. The actual average annual compound total shareholder return was 20.2% so the awards vested fully. Mrs Fordham exercised all of the vested shares.

§ These awards were made under the Company’s Deferred Share Bonus Plan and will vest subject to continued employment and good/bad leaver provisions.

1 Mrs Fordham exercised these vested awards during the period.

The price of an ordinary share on 13 October 2009, when awards were granted to Lynn Fordham under the PSP, was 126.2p.

The price of an ordinary share on 15 April 2010, when awards were granted to Lynn Fordham under the PSP, was 170.7p.

The price of an ordinary share on 17 February 2011, when awards were granted to Lynn Fordham under the PSP, was 250.5p.

The price of an ordinary share on 22 March 2012, when awards were granted to Lynn Fordham under the PSP, was 278.7p.

The price of an ordinary share on 6 March 2013, when awards were granted to Lynn Fordham under the PSP, was 385.0p. This price was used for awards made to Lynn Fordham under the deferred share bonus plan.

The price of our ordinary share on 12 December 2014, when awards were granted under the AAM bonus deferral scheme was 430.24p.

The mid-market price of shares at 30 January 2015 was 435.3p and the range for the year was 382.2p to 466p.


Share plan dilution limitsThe Company has established an employee benefit trust (“EBT”) to enable it to subscribe for or purchase shares in the market to satisfy awards and options made to employees under the PSP and the 2001 ESOP. During the year, the EBT sold 134,750 shares in the two Tender Offers and with the proceeds received purchased 151,147 shares. In addition, 155,451 shares were transferred from Treasury to the EBT during the year to be used to satisfy vested LTIP awards. 3,239,242 shares were sold or transferred by the EBT to satisfy LTIP awards that vested in 2014. The total number of shares held by the EBT is 686,790 at a total cost of £1,557,194 (excluding commission and stamp duty) (representing 0.83% of the Company’s issued share capital, excluding treasury shares as at 18 March 2015). The maximum number of shares that the Company may require to satisfy awards (assuming that all awards vest fully and are exercised) is 1,892,907 shares. The Board will continue to regularly review the benefit of using the trust to make market purchases. The Board may use new issue shares or shares held in treasury (if any) to satisfy grants. In any 10 calendar year period the Company may not issue (or grant rights to issue) more than 10% of the issued ordinary share capital of the Company under the PSP, the 2001 ESOP and any other employees’ share scheme adopted by the Company. As at 31 January 2015, the total number of shares issued or issuable under awards and options made under the PSP and the 2001 ESOP in the last 10 calendar years was equal to 3.58% of the issued ordinary share capital on that date excluding treasury shares.

AIFMD remuneration requirementsThe AIFMD Remuneration requirements are specific in advising firms that the disclosure of Remunerated Code staff remuneration is to be based on a full accounting period. As this legislation was only introduced in July 2014, it means that only six months information would be available for publication. Based on the information not providing a complete picture for this accounting period, the information is not being disclosed until after the end of the next full accounting period.

ApprovalThis Directors’ remuneration report, including both the report on remuneration policy and remuneration implementation has been approved by the Board of Directors.

On behalf of the Board

Helen Mahy Chairman, Remuneration Committee

23 March 2015


Independent auditor’s reportto the members of SVG Capital plc

Our audit opinion on the financial statementsIn our opinion the financial statements:

kgive a true and fair view of the state of the Company’s affairs as at 31 January 2015 and of its profit for the period then ended;

khave been properly prepared in accordance with IFRSs as adopted by the European Union; and

khave been prepared in accordance with the requirements of the Companies Act 2006.

Our audit opinion on matters prescribed by the Companies Act 2006 In our opinion:

k the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006; and

k the information given in the Strategic Report and the Directors’ Report for the financial period for which the financial statements are prepared is consistent with the financial statements.

What we have auditedWe have audited the financial statements of SVG Capital plc for the period ended 31 January 2015 which comprise the Income Statement, the Statement of Comprehensive Income, the Statement of Changes in Equity, the Balance Sheet, the Cash Flow Statement and the related notes 1 to 27. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditorAs explained more fully in the Statement of Directors’ Responsibilities set out on page 40, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

The scope of the audit of the financial statementsAn audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error.

This includes an assessment of:

kwhether the accounting policies applied are appropriate to the Company’s circumstances and have been consistently applied and adequately disclosed;

k the reasonableness of significant accounting estimates made by the Directors; and

k the overall presentation of the financial statements.

In addition, we read all the financial and non-financial information in the Annual Report and Accounts to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on or materially inconsistent with the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Our assessment of the risk of material misstatement and our audit responseThe material risk of misstatement that has had the greatest impact on our audit strategy and approach for the period ended 31 January 2015 (including the allocation of resources and the directing of efforts of the engagement team), is that the valuation of the investment funds held in the investment portfolio is incorrect (as mentioned in the Corporate Governance section of the Annual Report on page 36).

Our response to the risk identified was as follows:

We checked the net asset value in the quarterly valuation information provided by the underlying general partners or administrators of the investments funds, to substantiate the fund fair values and to assess whether the information was in accordance with IFRS 13 Fair Value Measurement and the International Private Equity and Venture Capital Valuation guidelines.

We checked the accuracy of prior period fund valuations to the respective audited financial statements of the funds to assess the historical accuracy of the valuation estimates.

We considered the appropriateness of adjustments, if any, made by the Company to the amounts reported by the underlying general partners or administrators to arrive at fair value at the reporting date and obtained appropriate audit evidence.

Where there were significant underlying quoted investments we agreed the price per share to an independent source.

In addition, we agreed holdings in investments to information provided by the underlying general partners or administrators.

57SVG Capital plc Annual Report 2015Financial information

Our application of materiality In accordance with the scope of our audit, we defined materiality as the magnitude of an omission or misstatement that, individually or in the aggregate, in light of the surrounding circumstances, could reasonably be expected to influence the economic decisions of the users of the financial statements.

We determined materiality for the Company to be £11.1 million, which is 1% of total equity (2013: £12.2 million based on 1% of total equity). We derived our materiality calculation based on a proportion of total equity as we considered it to be the most important financial metric on which Shareholders would judge the performance of the Company.

We applied the concept of materiality for the purposes of obtaining sufficient evidence to give reasonable assurance that the financial statements were free from material misstatement. For this reason, we also defined a separate performance materiality threshold which reflected our tolerance for misstatement in an individual account balance and was set as a proportion of our overall materiality.

Our objective in setting the performance materiality threshold was to identify the amount of testing required in respect of each balance to reduce to an appropriately low level the probability that the aggregate of any uncorrected and undetected misstatements in the financial statements as a whole exceeded our materiality level.

We determined performance materiality for the Company to be 50% of materiality, or £5.6 million (2013: £6.1 million).

We evaluated any uncorrected misstatements and potential audit differences against both the quantitative measures of materiality discussed above and in the light of other relevant qualitative considerations.

We agreed with the Audit Committee that we would report any audit differences in excess of £559,000 (2013: £610,000), as well as any differences below that threshold that, in our view, warranted reporting on qualitative grounds.

We applied the concept of materiality in planning and performing our audit, in evaluating the effect of identified misstatements on our audit and of uncorrected misstatements on the financial statements, and in forming our audit opinion. When establishing our overall audit strategy, we determined the magnitude of omissions or uncorrected misstatements that we judged would be material to the financial statements as a whole. This provided a basis for determining the nature of our risk assessment procedures, identifying and assessing the risks of material misstatement and determining the nature, timing and extent of further audit procedures.

Matters on which we are required to report by exception We are required by the International Standards on Auditing (UK and Ireland), the Companies Act 2006 and the Listing Rules to report to you by exception if certain matters are identified during the course of our audit. These matters are listed below and we have nothing to report in respect of any of these matters.

Under the ISAs (UK and Ireland), we are required to report to you if, in our opinion, information in the Annual Report is:

kmaterially inconsistent with the information in the audited financial statements; or

k apparently materially incorrect based on, or materially inconsistent with, our knowledge of the Company acquired in the course of performing our audit; or

kotherwise misleading.

In particular, we are required to consider whether we have identified any inconsistencies between our knowledge acquired during the audit and the Directors’ Statement that they consider the Annual Report is fair, balanced and understandable and whether the Annual Report appropriately discloses those matters that we communicated to the audit committee which we consider should have been disclosed.

Under the Companies Act 2006 we are required to report to you if, in our opinion:

k adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

k the financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the accounting records and returns; or

k certain disclosures of Directors’ remuneration specified by law are not made; or

kwe have not received all the information and explanations we require for our audit.

Under the Listing Rules we are required to review:

k the Directors’ Statement, set out on page 38, in relation to going concern; and

k the part of the Corporate Governance Statement relating to the Company’s compliance with the nine provisions of the UK Corporate Governance Code specified for our review.

Andrew McIntyre (Senior Statutory Auditor) for and on behalf of Ernst & Young LLP, Statutory Auditor London

23 March 2015


Statement of comprehensive income

Notes

For the 13 month period ended 31 January 2015 For the year ended 31 December 2013

Revenue return £’000

Capital return £’000

Total £’000

Revenue return £’000

Capital return £’000

Total £’000

Gains on investments – at fair value through profit and loss 10 – 131,149 131,149 – 296,673 296,673

Gains on loss of control of subsidiaries – – – – 42,908 42,908

Impairment of subsidiaries 13 – (1,300) (1,300) – – –

Exchange gains/(losses) on other items – 359 359 – (1,586) (1,586)

Movement in fair value of derivative contracts – – – – (1,523) (1,523)

– 130,208 130,208 – 336,472 336,472

Operating income

Investment income 11,905 – 11,905 13,959 – 13,959

Other operating income 1 – 1 150 – 150

Total operating income 3 11,906 – 11,906 14,109 – 14,109

Operating expenses

Administrative expenses 4 (11,894) – (11,894) (12,654) – (12,654)

Total expenses (11,894) – (11,894) (12,654) – (12,654)

Operating profit 12 – 12 1,455 – 1,455

Finance costs 6 (19,743) – (19,743) (34,549) – (34,549)

(Loss)/profit before tax (19,731) 130,208 110,477 (33,094) 336,472 303,378

Tax 7 200 (1,023) (823) 96 – 96

(Loss)/profit for the period (19,531) 129,185 109,654 (32,998) 336,472 303,474

Earnings per share

From continuing activities

Basic 9 51.7p 123.3p

Diluted 9 51.3p 121.1p

There is no other comprehensive income and therefore the profit for the period is the total comprehensive income for the period.

The total column of this statement represents the Company’s income statement, prepared in accordance with IFRS. The supplementary revenue return and capital return columns are both prepared under guidance published by the Association of Investment Companies. All items in the above statement derive from continuing operations.

The notes on pages 62 to 90 form an integral part of these accounts.


Statement of changes in equity

Share capital £’000

Own shares £’000

Share premium

£’000

Revenue reserve

£’000

Capital reserve

£’000

Share option reserve

£’000

Other1

reserves £’000

Total £’000

For the 13 month period ended 31 January 2015

Balance at 31 December 2013 274,557 (8,390) 131,230 (143,133) 934,119 17,298 15,556 1,221,237

(Loss)/profit for the period – – – (19,531) 129,185 – – 109,654

Issue of performance share awards – – – – – 1,613 – 1,613

Purchase of treasury shares – – – – (205,399) – – (205,399)

Own shares disposed by EBT to settle share awards – 6,911 – – (6,911) – – –

Cancellation of shares (20,833) – – – 20,833 – – –

Balance at 31 January 2015 253,724 (1,479) 131,230 (162,664) 871,827 18,911 15,556 1,127,105

Share capital £’000

Own shares £’000

Share premium

£’000

Revenue reserve £’000

Capital reserve £’000

Share option reserve £’000

Other1reserves

£’000Total

£’000

For the year ended 31 December 2013


(Loss)/profit for the year – – – (32,998) 336,472 – – 303,474

Issue of performance share awards – – – – – 2,965 – 2,965

Purchase of treasury shares – – – – (146,879) – (4,240) (151,119)

Own shares disposed by EBT to settle share awards – 7,040 – – (7,040) – – –

Cancellation of shares (15,476) – – – 15,476 – – –


1 Included within other reserves are the share purchase, capital redemption and convertible loan note reserves



Balance sheet

Notes

As at 31 January

2015 £’000

As at 31 December

2013 £’000

Non-current assets

Investments designated as fair value through profit and loss 10 1,052,766 1,065,192

Investments in subsidiaries 13 1,259 2,559

Investment in associates at fair value through profit and loss 14 41,000 27,445

1,095,025 1,095,196

Current assets

Deferred consideration receivable – 14,184

Other receivables 15 598 2,759

Cash and cash equivalents 15 134,912 208,643

135,510 225,586

Total assets 1,230,535 1,320,782

Current liabilities

Other payables 16 (6,139) (4,683)

(6,139) (4,683)

Non-current liabilities

Convertible loan notes 17 (97,291) (94,862)

(97,291) (94,862)

Net assets 1,127,105 1,221,237

Equity

Called up share capital 19 253,724 274,557

Own shares 20 (1,479) (8,390)

Share premium account 21 131,230 131,230

Capital redemption reserve 21 3,204 3,204

Share purchase reserve 21 – –

Share option reserve 21 18,911 17,298

Convertible loan notes – equity 21 12,352 12,352

Capital reserve 21 871,827 934,119

Revenue reserve 21 (162,664) (143,133)

Shareholders’ funds 1,127,105 1,221,237

Net asset value per ordinary share (“Shareholders’ funds”)

– undiluted 22 593.0p 526.1p

– diluted 22 587.8p 515.1p


The Company’s financial statements were authorised for issue by the Board of Directors on 23 March 2015 and the balance sheet was signed on behalf of the Board by:

Lynn Fordham


Cash flow statement

Notes

For the 13 month

period ended 31 January

2015 £’000

For the year ended

31 December 2013

£’000

Operating activities

Interest income 1,623 2,035

Dividends from subsidiaries and associates 1,331 7,927

Income distributions 8,892 4,244

Expenses (10,384) (12,144)

Finance costs (15,499) (36,789)

Tax received/(paid) 714 (105)

Net cash used in operating activities (13,323) (34,832)

Investing activities

Capital distributions from core strategy portfolio 288,381 224,550

Capital distributions from non-core strategy portfolio 14,660 5,426

Capital distributions from SVGIM managed funds – 42,548

Calls paid to core strategy portfolio (163,304) (24,492)

Calls paid to non-core strategy portfolio (13,973) (5,728)

Receipts in respect of the Diamond Investment Scheme – 312

Receipt of deferred consideration 13,578 22,431

Loans to subsidiaries repaid – 624

Investment in subsidiaries – (2,539)

Capital distributions from subsidiaries – 10,792

Consideration received on sale of investment interests 4,256 –

Consideration received on sale of subsidiaries – 18,708

Investment in associate – (773)

Net cash from investing activities 143,598 291,859

Financing

Purchase of own shares into treasury or for cancellation (204,725) (150,954)

Tender offer costs (240) (131)

Buyback of Senior Notes – (154,683)

Settlement of currency swaps and foreign exchange trades 203 3,319

Net cash used in financing activities (204,762) (302,449)

Net decrease in cash and cash equivalents (74,487) (45,422)

Cash and cash equivalents at beginning of period 208,643 253,242

Effect of foreign exchange rates on cash and cash equivalents 756 823

Cash and cash equivalents at end of period 15 134,912 208,643



Notes to the accounts

1 Accounting policies

Basis of preparationThe financial statements of the Company have been prepared in accordance with International Financial Reporting Standards (“IFRS”), which comprise standards and interpretations approved by the International Accounting Standards Board (“IASB”), and International Accounting Standards and Standing Interpretations Committee interpretations approved by the International Accounting Standards Committee (“IASC”) that remain in effect, and to the extent that they have been adopted by the EU and as applied in accordance with the provisions of the Companies Act 2006.

The principal accounting policies adopted are set out below. Where presentational guidance set out in the Statement of Recommended Practice (“SORP”) for the Financial Statements of Investment Trust Companies and Venture Capital Trusts issued by the Association of Investment Companies (“AIC”) in January 2009 is consistent with the requirements of IFRS, the financial statements have been prepared on a basis compliant with the SORP.

In the prior period, the Annual Report and Accounts were prepared on a consolidated basis for the SVG Capital plc Group. Following the sale of subsidiaries last year, the financial position and performance of the remaining subsidiary companies are not considered material and for the current period, the Annual Report and Accounts have been prepared for the Company only.

The Company has changed its year end from 31 December to 31 January. This is driven by the Company’s move away from a single manager focus to one that is more diversified and the resultant expectation that Fund investment valuations will be received across a broader timeframe, which the change in year end is anticipated to accommodate. As a result of this reporting date change, performance for the current period is measured over a 13 month period, compared to the 12 month period for the 2013 comparatives, and therefore amounts provided in the financial statements are not entirely comparable.

The Company financial statements are presented in sterling and all values are rounded to the nearest thousand pounds (£’000) except when otherwise indicated.

The accounts have been prepared on a going concern basis as the Directors consider that for the foreseeable future the Company will continue to be able to meet its liabilities as they fall due.

The accounting policies adopted are consistent with those of the previous financial year, except for the adoption of new standards and interpretations effective 1 January 2014.

The nature and impact of each new standard/amendment is described below:

IFRS 10 Consolidated Financial StatementsIFRS 10 sets out the principles for the presentation and preparation of consolidated financial statements and establishes a single control model that applies to all entities including special purpose entities. In addition, IFRS 10 includes an exception from consolidation for entities which meet the definition of an investment entity, and requires such entities to recognise substantially all investments at fair value through profit or loss. The Company does meet the definition of an investment entity (see note 2) however as consolidated financial statements are not being prepared, the implementation of this standard has no impact on these financial statements.

IFRS 12 Disclosure of Interests in Other EntitiesIFRS 12 sets out the requirements for disclosures relating to an entity’s interests in subsidiaries, joint arrangements, associates and structured entities. The requirements in IFRS 12 are more comprehensive than the previously existing disclosure requirements. Following the adoption of IFRS 12, the Company considers some of its fund investments to be structured entities.

This standard has required a number of new disclosures to be made in the financial statements, including disclosures regarding the Company’s investments considered as unconsolidated structured entities, but has not impacted the Company’s financial position or performance.

IAS 28 Investments in Associates and Joint Ventures (revised)IAS 28 outlines how to apply, with certain exceptions, the equity method to investments in associates and joint ventures. As the Company considers itself an investment entity (see note 2), it measures its investment in associates at fair value and therefore the implementation of this revised standard has had no impact on the financial position or performance of the Company or the disclosures within these financial statements.

IAS 32 Financial Instruments: Presentation (revised) IAS 32 sets out the principles for presenting financial instruments as liabilities or equity and for offsetting financial assets and financial liabilities. The implementation of this standard has had no impact on the financial position or performance of the Company or the disclosures within these financial statements.

Summary of new standards and interpretations not appliedThe IASB and IFRIC have issued the following standards and interpretations with an effective date after the date of these financial statements:

Effective date

IFRS 9 Financial Instruments Not before 1 January 2018

The Directors do not anticipate that the adoption of these standards will have a material impact on the Company’s financial statements in the period of initial application however it is recognised that additional disclosures within the financial statements will be required.


1 Accounting policies continued

Presentation of income statementIn order to better reflect the activities of an investment trust company and in accordance with guidance issued by the AIC, supplementary information which analyses the income statement between items of a revenue and capital nature has been presented alongside the income statement.

Financial instrumentsFinancial assets and financial liabilities are recognised on the balance sheet when the Company becomes a party to the contractual provisions of the instrument. Financial assets are derecognised when the Company’s contractual right to the cash flow from the asset expires or substantially all the risks and rewards of ownership are transferred. Financial liabilities are derecognised when the contractual obligation is discharged, with gains and losses recognised in the income statement.

InvestmentsInvestments are recognised and derecognised on a trade date where a purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value.

As the Company’s business is investing in financial assets with a view to profiting from their total return in the form of income or capital gains, such financial assets are designated as fair value through profit or loss on initial recognition. Incidental costs on acquisition of such assets are expensed.

Financial assets designated as fair value through profit or loss are measured at subsequent reporting dates at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction which would take place between market participants at the reporting date.

Quoted instruments are valued at either the bid price or the last traded price, depending on the convention of the exchange on which the investment is quoted.

In respect of unquoted instruments, or where the market for a financial instrument is not active, fair value is established by using recognised valuation methodologies, in accordance with International Private Equity and Venture Capital (“IPEV”) Valuation Guidelines.

Gains and losses arising from investments, designated as investments held at fair value through profit or loss, are included in the income statement in the period in which they arise. Foreign exchange gains and losses on fair value through profit or loss investments are included within the changes in its fair value.

Investments in subsidiariesThe Company recognises its investment in subsidiaries at cost, unless they are investment vehicles, in which case they are included at fair value. Subsidiaries recognised at cost are subject to an annual impairment review.

Investments in associatesAn associate is an entity over which the Company is in a position to exercise significant influence, but not control or joint control, through participation in the financial and operating policy decisions of the investee.

The Company measures its investments in associates at fair value, with changes in fair value recognised in profit and loss in the period in which they occur.

Convertible loan notesConvertible loan notes are regarded as compound instruments, consisting of a liability component and an equity component. At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for similar non-convertible debt. The difference between the proceeds of issue of the convertible loan notes and the fair value assigned to the liability component, representing the embedded option to convert the liability into equity of the Company, is included in equity. Issue costs are allocated proportionately to the liability and equity components. The liability component is accounted for as a borrowing.

Bank borrowings and loan notesInterest-bearing bank loans and loan notes issued are recorded at the value of proceeds received, net of direct issue costs. Finance charges, including premiums payable on settlement or redemption and direct issue costs, are accounted for on an accruals basis in the income statement account using the effective interest method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.

Equity instrumentsEquity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

Own sharesOwn shares represent SVG Capital plc shares held in Employee Benefit Trusts (“EBT”) to meet the future requirements of the employee share-based payment plans. The EBTs are accounted for as extensions of the parent company.


Notes to the accounts continued


Share-based paymentsThe Company has applied the requirements of IFRS 2 ‘Share-based Payments’. In accordance with the transitional provisions, IFRS 2 has been applied to all grants of equity instruments after 7 November 2002 that were unvested as of 1 January 2005.

The cost of equity-settled share-based payments issued to employees of Aberdeen SVG Private Equity Advisers Limited and Aberdeen SVG Private Equity Managers Limited are measured at fair value at the date of grant and recognised as an expense over the vesting period, which ends on the date on which the employees become unconditionally entitled to the award. Fair value is determined by an external valuer using an appropriate valuation model. In valuing equity-settled transactions, no account is taken of any non-market vesting conditions.

At each balance sheet date before vesting, the cumulative expense is calculated, representing the extent to which the vesting period has expired and management’s best estimate of the number of equity instruments that will ultimately vest. The movement in cumulative expense since the previous balance sheet date is recognised in the income statement, with a corresponding entry in equity.

Revenue recognitionRevenue is measured at the fair value of the consideration received or receivable and represents amounts received or receivable for services provided in the normal course of business.

Interest income is accrued on a time basis, by reference to the principal outstanding and the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount. Interest income is classified within operating activities in the cash flow statement.

Dividend income from investments is recognised when the shareholders’ rights to receive payment has been established and is classified within operating activities in the cash flow statement.

Revenue that has been earned, but the receipt of which is contingent on the occurrence of a future event, such as investors receiving a return of capital, is only recognised when Management judges the realisation of that income to be virtually certain.

The Company’s revenue and realised capital gains are derived primarily from distributions in respect of its holdings in fund investments.

Realised gains on capital distributions which arise from the realisation of investments within the funds, and on sale of investments are credited to the income statement and taken to the capital reserve. Income distributions are credited to the income statement and taken to the revenue reserve.

Foreign currenciesThe functional currency of the Company is pounds sterling, as this is the currency of the primary economic environment in which the Company operates. Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Gains and losses arising on retranslation are included in the income statement and are allocated either to revenue or capital, as appropriate.

TaxationThe tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Investment trusts which have approval under Section 1158 Income and Corporation Tax Act 2010 are not liable for taxation on capital gains.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.



Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to other comprehensive income, in which case the deferred tax is also dealt with in equity.

Cash and cash equivalentsCash and cash equivalents are held for the purpose of meeting short-term cash commitments rather than for investment purposes. Assets are classified as cash equivalents if they are readily convertible to cash and are not subject to significant changes in value. The Company has classified short-term bank deposits, investments in money market funds and short-dated treasury bills as cash equivalents.

Deferred considerationThe deferred consideration that is not contingent on future events is recognised as a receivable on the Company’s balance sheet. Amounts due within 12 months are recorded as current assets. Amounts due in greater than 12 months are recorded as non-current assets.

2 Significant accounting judgements, estimates and assumptions

The preparation of the Company’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of profits and net assets at the end of the reporting period. However, uncertainty about these assumptions and estimates could result in outcomes that have a material impact on net assets in future periods.

The key assumptions and sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to net assets within the next financial year are discussed below. Other areas of uncertainty and risk are discussed in note 26.

Assessment as an investment entityEntities that meet the definition of an investment entity within IFRS 10 are required to measure their subsidiaries at fair value through profit or loss rather than consolidate them. The criteria which define an investment entity are, as follows:

k an entity that obtains funds from one or more investors for the purpose of providing those investors with investment services;

k an entity that commits to its investors that its business purpose is to invest funds solely for returns from capital appreciation, investment income or both;

k an entity that measures and evaluates the performance of substantially all of its investments on a fair value basis.

SVG Capital plc is an international private equity investor listed on the London Stock Exchange. The Company’s annual and interim accounts clearly state its objective of achieving capital appreciation and investment income by investing in a portfolio of private equity and private equity related assets.

The Company reports to its investors via quarterly investor information, and to its management, via internal management reports, on a fair value basis. Substantially all investments are reported at fair value to the extent allowed by IFRS in the Fund’s annual and interim reports.

The Board has also concluded that the Company meets the additional characteristics of an investment entity, in that it has more than one investment; the investments are predominantly in the form of private equity and similar securities; it has more than one investor and its investors are not related parties.

The Board has concluded that the Company meets the definition of an investment entity. These conclusions will be reassessed on an annual basis, if any of these criteria or characteristics change.

Fair value of financial instrumentsThe Company primarily invests in private equity limited partnerships (“Funds”) that in turn invest in companies that are typically unquoted. Valuing unquoted investments involves a significant degree of judgement.

Fair values of the invested Funds is generally considered to be the Company’s share of the Net Asset Value of the Fund, as determined by the general partner of such funds, adjusted as considered necessary by the Board, and approved by the Board. Further details of the valuation techniques are given in note 11.

The Company values its investment portfolio in accordance with IPEV Valuation Guidelines which is considered to be industry standard. However, amounts ultimately realised on disposal of an investee company can differ materially from the previous carrying value and therefore have a significant impact on the Company’s profits and net assets.

Assessment of fund investments as structured entitiesThe Company has assessed whether the Funds in which it invests should be classified as structured entities. The Company has considered the voting rights and other similar rights afforded to investors in these Funds, including the rights to remove the fund manager or liquidate the fund. The Company has concluded on whether these rights are the dominant factor in controlling the Funds, or whether the contractual agreement with the fund manager is the dominant factor in controlling the Funds.

The Company has concluded that some of its fund investments are unconsolidated structured entities, further details can be found in note 10.



3 Operating incomeFor the

13 month period ended

31 January 2015

£’000

For the year ended

31 December 2013

£’000

Income from investments:


Income from money market instruments 266 388

Interest from fund investments 1,416 1,555

Other income from fund investments 8,892 4,089

Other operating income:

Other interest receivable and other income 1 150

11,906 14,109

Represented by:

Interest 1,683 2,093


Other income from funds and co-investments 8,892 4,089

11,906 14,109

4 Administrative expensesFor the


31 January 2015

£’000

For the year ended

31 December 2013

£’000

Fees payable to Aberdeen SVG* (ASVGA/ASVGM) 6,110 7,232

Directors’ remuneration 311 302

Performance shares and options fair value charge 1,613 1,750

General expenses 3,703 3,117

Auditors’ remuneration

– Statutory audit fees: Company 97 102

– Tax compliance services 23 55

– Tax advisory services 17 63

– Assurance services 20 18

– Other non-audit services – 15

11,894 12,654

* As a result of the requirements under AIFMD, the Company signed a new AIFM agreement with Aberdeen SVG Private Equity Managers Limited (“ASVGM”) on 22 July 2014, and the agreement with Aberdeen SVG Private Equity Advisers Limited (“ASVGA”) was terminated.

The Directors are the only key management personnel of the Company. Their total remuneration is discussed in more detail in the Remuneration Report. The fair value charge to the Company in respect of performance shares includes an amount of £807,000 (2013: £936,000) attributable to Lynn Fordham.

5 Staff costs

The Company has no employees (2013: nil). There were no pension or other staff costs during the period ended 31 January 2015 (2013: £nil).


6 Finance costsFor the


31 January 2015

£’000

For the year ended

31 December 2013

£’000

Convertible loan note interest 9,001 8,262

Amortisation of issue and listing costs plus premium to redemption on convertible loan notes 2,428 2,048

Senior Note interest and make whole premium* – 18,531

Amortisation of issue costs on Senior Notes – 575

Net swap expenses – 31

Loan facility finance and amendment costs 8,314 5,113

Other finance costs – (11)

19,743 34,549

* The make whole premium on the Senior Notes was the early repayment charge paid on the prepayment of the Senior Notes on 30 September 2013.

7 Tax

(a) The charge for tax for the period is made up as follows:

For the 13 month period ended 31 January 2015 For the year ended 31 December 2013

Revenue £’000

Capital £’000

Total £’000

Revenue £’000

Capital £’000

Total £’000

Current tax

Withholding tax suffered 153 1,023 1,176 161 – 161

Group relief – – – (15) – (15)

Prior year adjustment (Group relief) (353) – (353) (242) – (242)

Total current tax (200) 1,023 823 (96) – (96)

Deferred tax – – – – – –

Total tax (credit)/charge (note 7(c)) (200) 1,023 823 (96) – (96)

There are no profits chargeable to corporation tax for the Company in the current year. As the Company invests primarily through partnership structures, excess management expenses relating to the private equity funds’ portfolio incurred by those partnerships are available to set off against any taxable income of the Company. These excess management expenses are not capitalised but unutilised expenses are carried forward to future periods.

(b) Deferred income taxes:A deferred tax asset of £30.4 million (2013: £33.7 million), of which £nil (2013: £nil) would have been recognised in equity, relating to excess management expenses, losses and other temporary differences, has not been recognised as there is insufficient evidence that there will be sufficient taxable profits against which these losses and temporary differences can be utilised. The excess management expenses and other temporary differences to which this unrecognised asset relates are available indefinitely for offset against future taxable profits.



7 Tax continued

(c) Factors affecting current tax charge for the year:The tax assessed for the year is lower than the standard rate of corporation tax in the UK of 21.46% for a large company (2013: 23.25%). The differences are explained below:

For the 13 month


2015 £’000

For the year ended

31 December 2013

£’000

Profit before tax 110,477 303,378

Corporation tax at 21.46% (2013: 23.25%) 23,708 70,535

Effects of:

Non-taxable capital gains (27,943) (78,230)

Non-taxable income net of disallowable expenses 89 (1,151)

Difference between accounting and taxable income from funds 4,313 7,933

Prior year adjustments re UK corporation tax (353) (242)

Losses brought forward utilised in the period (167) –

Unutilised current period losses carried forward – 898

Withholding tax suffered 1,176 161

Total tax charge/(credit) for the period (note 7(a)) 823 (96)

8 DividendsFor the


31 January 2015

£’000

For the year ended

31 December 2013

£’000

Amounts recognised as distributions in the period:

Dividend of nil (2013: nil) – –

In order to maintain investment trust status, the Company must not retain more than 15% of its income from shares and securities. The total dividend payable in respect of the financial year and which will be taken into account in determining the amount of net revenue retained under the requirements of Section 1159 of the Corporation Tax Act 2010, is set out below.

For the 13 month


2015 £’000

For the year ended

31 December 2013

£’000

Dividend of nil (2013: nil) – –


9 Earnings per share

The calculation of the basic and diluted earnings per share, in accordance with IAS 33, is based on the following data:

For the 13 month period ended

31 January 2015

£’000

For the year ended

31 December 2013

£’000

Earnings for the purposes of basic earnings per share being net profit attributable to equity holders 109,654 303,474

Number Number

Number of shares

Weighted average number of ordinary shares for the purposes of basic earnings per share 212,033,534 246,133,768

Share options and performance shares 1,375,168 4,505,369

Weighted average number of ordinary shares for the purposes of diluted earnings per share 213,408,702 250,639,137

Earnings per share

Basic 51.7p 123.3p

Diluted 51.3p 121.1p

The convertible loan notes are exercisable at a strike price of 640p and were therefore not dilutive at 31 January 2015 or 31 December 2013.

10 Investments31 January 2015 31 December 2013

Fair value through profit or loss assets

Corestrategy

portfolio £’000

Non-core strategy

portfolio £’000

Totalportfolio

£’000


£’000


£’000

SVGIM managed

funds £’000

Total portfolio

£’000

Valuation brought forward 858,989 206,203 1,065,192 802,923 164,958 42,562 1,010,443

Calls and purchases 163,304 13,973 177,277 24,492 5,728 – 30,220

Distributions and sales (288,381) (18,916) (307,297) (224,550) (5,426) (42,548) (272,524)

In specie distribution of equities – – – – 7,920 (7,920) –

Unrealised gains on investments 52,380 31,187 83,567 202,075 30,155 – 232,230

Realised gains on investments 25,648 8,379 34,027 54,049 2,868 7,906 64,823

Valuation carried forward 811,940 240,826 1,052,766 858,989 206,203 – 1,065,192

The total gain of £131,149,000 (2013: gain of £296,673,000) shown in the Company’s income statement also includes a gain on associate during the year of £13,555,000 (2013: loss on subsidiaries of £380,000).

All funds in the core strategy portfolio are unlisted. However, some of the underlying companies held within those funds are listed. Included in the total core strategy portfolio value are gross valuations of listed investments amounting to £320.5 million (2013: £494.0 million). The Company investment portfolio includes Permira IV at a value of £447.8 million, which is net of a 25% provision against future distributions on the realisation of investments held by Permira IV, in accordance with the terms of the Permira IV reorganisation in December 2008. It should also be noted that the value of the Permira IV investments attributed to follow-ons that were made after 2008 are not subject to a provision, as distributions in respect of such investments will be received in full.

During 2012, the Company sold its direct holding in Permira Europe III (“PE III”), however it retained 50% of its exposure through PE III to one of the underlying investments, the iglo Group (“iglo”). Deferred consideration due on the disposal of PE III amounted to £14.2 million at 31 December 2013. The consideration due was received in full during the period ended 31 January 2015.

A contract is in place giving the Company the rights to 50% of all future distributions received by the acquirer in relation to its holding in iglo.

The contract has been valued at £20.1 million (2013: £19.6 million). The Board considers that the best indication of the fair value of the right to future distributions from iglo is the current valuation of iglo as calculated in accordance with the Company’s accounting policies.

Significant interests in investment fundsDetails of investments in which the Company has an interest of 10% or more of any class of share/units are detailed in the list of investments on page 26.

The Company has a 35.5% interest in SVG Diamond Holdings Limited, a 35.8% interest in SVG Diamond Holdings II Limited, and a 25.5% interest in SVG Diamond Private Equity Holdings III plc, for all of which Aberdeen SVG Private Equity Advisers Limited provides services under an investment advisory contract.



10 Investments continued

The Company’s holdings in these entities do not represent controlling interests as the Company does not have power over relevant activities of those entities under IFRS 10.

Unconsolidated structured entitiesThe Company invests in several investment funds which meet the definition of unconsolidated structured entities in accordance with IFRS 12 – Disclosure of Interests in Other Entities. The investment funds are closed ended private equity limited partnerships or investment companies which invest in underlying companies for the purposes of capital appreciation. These entities are generally financed through committed capital from limited partners or shareholders, with cash being drawn down for financing investment activity. Based on the latest available information relating to these funds, the total size of the unconsolidated structured entities is £7,224 million (2013: £7,393 million).

As at 31 January 2015, the Company’s maximum exposure to loss attributable to these entities comprises the current carrying value of the assets, along with the uncalled committed capital relating to those investments, as summarised below:

Carrying Value at 31 January 2015

Balance sheet line item of assetAssets £’000

Liabilities £’000


£’000

Maximum loss exposure

£’000

Investments designated as fair value through profit and loss 532,798 – 128,451 661,248

Carrying Value at 31 December 2013

Balance sheet line item of assetAssets £’000

Liabilities £’000


£’000

Maximum loss exposure

£’000

Investments designated as fair value through profit and loss 652,802 – 135,076 787,878

11 Fair values

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction that would take place between market participants at the reporting date.

Fair value hierarchyIFRS 13 requires disclosures relating to fair value measurement using a three-level fair value hierarchy. The level within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement. Assessing the significance of a particular input requires judgement, considering factors specific to the asset or liability. The following table shows financial instruments recognised at fair value, analysed between those whose fair value is based on:

kquoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);

k those involving inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices) (Level 2); and

k those with inputs for the instrument that are not based on observable market data (unobservable inputs) (Level 3).

31 January 2015 31 December 2013

Level 1 £’000

Level 2 £’000

Level 3 £’000

Total £’000

Level 1 £’000

Level 2 £’000

Level 3 £’000

Total £’000

Investment portfolio

Core strategy portfolio – – 811,940 811,940 – – 858,989 858,989

Non-core strategy portfolio 9,708 – 231,118 240,826 8,919 – 197,284 206,203

Investment in associates at fair value through profit and loss – – 41,000 41,000 – – 27,445 27,445

9,708 – 1,084,058 1,093,766 8,919 – 1,083,718 1,092,637

Valuation techniques and processInvestment valuations are updated on a quarterly basis following the completion of a detailed valuation process. The Valuation Team of the Investment Manager perform a review of the valuations to identify and understand any significant changes to valuation inputs. The valuations are then discussed with the Investment Team of the Investment Manager, to ensure valuation movements are in line with expectations based on the performance of the investment. The Investment Team’s expectations are established based on the results of their continuous investment monitoring process.

The Valuation and Investment Teams hold quarterly calls with the general partners of the Fund investments to discuss updates on the Fund investments performance, position and outlook and, where considered appropriate, hold further meetings to understand and challenge valuation inputs.


11 Fair values continued

On a quarterly basis, after the checks above have been performed the Valuation Team presents the valuation results to the Board. This includes a discussion of the major assumptions used in the valuations, with an emphasis on the more significant investments and investments with fair value changes. The valuations are reviewed and, if considered appropriate, approved by the Board.

Valuations consist of listed equities, unlisted managed funds and investments in associates at fair value through profit or loss.

Listed equitiesQuoted instruments are valued at either the bid price or the last traded price, depending on the convention of the exchange on which the investment is quoted. When fair values of publicly traded equities are based on quoted market prices in an active market without any adjustments, the investments are included within Level 1 of the hierarchy.

Unlisted managed fundsThe Company primarily invests in private equity via limited partnerships or other fund structures. Such vehicles are typically unquoted and in turn invest in unquoted securities. The Company’s investment portfolio is recognised in the balance sheet at fair value, in accordance with IPEV Valuation Guidelines and IFRS.

Fair value is based on the Company’s share of the Net Asset Value of the fund, as determined by the general partner (“GP”) of such funds. Updated Net Asset Values are received for each fund on a quarterly basis. The Net Asset Value of a fund is calculated after determining the fair value of a Fund’s investment in any investee companies. This value is generally obtained by calculating the Enterprise Value (“EV”) of the company and then deducting financial instruments, such as external debt, ranking ahead of the Fund’s highest ranking instrument in the company. The Company’s participation in the remaining instruments is then calculated to assess the fair value of the Company’s investment. These valuations are then adjusted for material cash flows that have taken place between the date of the valuation as determined by the GP and the reporting date.

A common method of determining the EV is to apply a market-based multiple (e.g. an average multiple based on a selection of comparable quoted companies) to the ‘maintainable’ earnings of the investee company. This market-based approach presumes that the comparator companies are correctly valued by the market. A discount is sometimes applied to market based multiples to adjust for points of difference between the comparators and the company being valued.

If the Valuation Team consider that an adjustment to the Net Asset Value is appropriate, the valuation is referred to the Pricing Committee of the Investment Manager. The Pricing Committee reviews, and if considered appropriate, approves the Valuation Team’s pricing adjustment recommendation.

Adjustments to Net asset value may be considered, for example, where:

k there has been significant elapsed time between the Net Asset Value calculation date and the Company’s balance sheet date;

k there has been material movements in quoted prices between the Net Asset Value calculation date and the Company’s balance sheet date;

k the Company has agreed a sale of its holding in a fund interest at a price other than Net Asset Value;

kNet Asset Value not derived from the fair value of underlying portfolio companies.

Investment in associates at fair value through profit or lossThe fair value of Company’s investment in Aberdeen SVG is derived from a Discounted Cash Flow (“DCF”) calculation based on the expected future cash flows receivable from the associate, discounted at an appropriate rate. The Company’s share of equity in Aberdeen SVG is subject to a put and call option which, when exercised, would result in the Company receiving between £20.0 million and £35.0 million in proceeds in exchange for its remaining holding in the business. In addition, the Company will receive a prorated share of dividend income from Aberdeen SVG for the duration of its ownership.

Significant unobservable inputs for Level 3 valuationsUnlisted managed funds – fair value £1,043,058,000As described above, in arriving at the fair value of the unlisted managed funds the key inputs are the Net Asset Values as determined by the general partner (“GP”) of the funds and any approved pricing adjustments recommended by the valuations team. In both the current and prior periods, the approved pricing adjustments to the GP valuations relate to carried interest provisions. The range of Net Asset Values for the 10 largest funds, which have an aggregate valuation of 85.3% of the unlisted managed funds portfolio, can be seen in note 27. It is recognised that the valuations of these funds are sensitive to movements in the values of the underlying investee companies. The 10 largest underlying investee companies of the Management Buyout Funds include both quoted and unquoted companies. At 31 January 2015, 45.7% of aggregate value of the 10 largest underlying investee companies was derived from quoted prices and 54.3% represented unquoted valuations. Quoted companies are valued based on market prices. IFRS and IPEV valuation guidelines stipulate that quoted price should be used to value these companies at the valuation date. Therefore, provided the Net Asset Value calculation date and the Company’s valuation date are aligned, the Board does not permit an adjustment to those valuations, unless there are significant restrictions applied to sale. For unquoted investments, however, significant judgement is applied when calculating fair value. The Board may consider adjustments to unquoted valuations as described above. The range of possible adjustments could be broad and would vary based on the circumstances driving the adjustment. In the past, the Board have adjusted the valuation of unquoted companies by between 0% and 100% of the GP’s proposed valuation. For the purposes of sensitivity analysis,



11 Fair values continued

a 10% adjustment could be considered reasonable. A 10% adjustment to the valuation of the unquoted constituents of the 10 largest underlying companies would result in a 3.3% movement in shareholders’ funds.

Investments in associates at fair value through profit or loss – fair value £41,000,000As described above the key inputs to the valuation of the investment in associate are the quantum of the future cash flows and the discount factor applied. The Board has prepared the cash flows, which are based on dividends and the final payment under the option, using its best estimate at the reporting date and discounted these cash flows at 15% (2013: 12%). The increase in discount rate reflects the increased risks around the associate’s funds under management following strong realisations from the funds managed.

If the future dividends and option payment were to be 10% higher or lower over the remaining holding period, shareholders’ funds would increase or decrease by 0.3% accordingly.

If the discount factor were to be increased or decreased by 5%, shareholders’ funds would increase or decrease by 0.2% accordingly.

Level 3 reconciliationThe following table shows a reconciliation of all movements in the fair value of financial instruments categorised within Level 3 between the beginning and the end of the reporting period:

For the 13 month


2015 Level 3 £’000

For the year ended

31 December 2013

Level 3 £’000

Valuation of investment portfolio brought forward 1,083,718 984,452

Calls and purchases 177,277 30,220

Distributions and sales (307,297) (241,346)

In specie distribution of equities (transfer to Level 1) – (7,920)

Fair value gains on investment portfolio 116,805 290,867

Investment in associates – 1,104

Fair value gains on investment in associates 13,555 26,341

Valuation carried forward 1,084,058 1,083,718

Out of the total fair value gains recognised in the Company Income Statement in respect of Level 3 investments, gains of £0.3 million (2013: £2.5 million) relate to assets sold in part or in full in the period. The remaining gains are in respect of assets held at 31 January 2015.

In addition to the receipts detailed above in respect of Level 3 assets, deferred consideration of £nil (2013: £14.2 million) is due within one year.

Fair value of financial instruments not held at fair valueThe Company’s debt instruments, such as the loan facility and convertible loan notes, are not held at fair value. Indicative fair values of these instruments are shown below along with their carrying value in the balance sheet (see note 17). The fair value of the convertible loan notes is based on the offer price of the notes on 31 January 2015 and would therefore fall under Level 1 of the fair value hierarchy.


Carrying value £’000

Fair value £’000

Carrying value £’000

Fair value £’000

Convertible loan notes (£100.7 million) 97,291 105,220 94,862 111,470

Total 97,291 105,220 94,862 111,470


12 Geographical analysis of investments31 January

2015 £’000

31 December 2013

£’000


Europe 717,762 858,989

United States 94,178 –

Total core strategy portfolio 811,940 858,989


Asia 2,229 2,319

Europe 125,467 105,939

United States 113,130 97,945

Total non-core strategy portfolio 240,826 206,203

Total investment portfolio 1,052,766 1,065,192

Allocations are based on the expected geographical focus of the funds. A further analysis of the estimated currency exposure of assets is provided in note 26.

13 Investments in subsidiariesFor the


31 January 2015

£’000

Year ended 31 December

2013 £’000

Cost at the beginning of the period 2,559 22,107

Purchase of subsidiaries – 2,539

Repayment of share capital – (4,150)

Capital distributions – (6,642)

Loss of control of subsidiaries – (1,489)

Capital contribution in respect of performance shares and options over SVG Capital plc shares – 233

Liquidation of investments at fair value through profit and loss – (10,039)

Impairment of subsidiaries (1,300) –

Carrying value at the end of the period 1,259 2,559

During May 2013, a restructuring of the SVG Capital plc Group was undertaken prior to the sale of 50.1% of Aberdeen SVG Private Equity Advisers Limited (“ASVGA”) and Aberdeen Private Equity Managers Limited (“ASVGM”) to Aberdeen Asset Management plc. As part of the restructuring ASVGA repaid share capital and made capital distributions to the Company (which are included in the table above) for 2013.

During January 2015, Aldwych Equity Partners LLP was formed but has not yet commenced trading.

The remaining subsidiaries of the Company (as detailed in the table below) have ceased to trade and are considered dormant. An impairment review has been undertaken and where appropriate the subsidiaries have been written down to their net asset value, which is considered to be the recoverable amount. During the period ending 31 January 2015, SVG Investments Limited was struck off, and SVG Advisers (Singapore) Pte. Ltd entered liquidation. Proceedings to wind down the remaining subsidiaries are ongoing and it is anticipated that these will be finalised in the next 12 months.



13 Investments in subsidiaries continued

Subsidiary undertakings at 31 January 2015:

Company and business

Country of registration, incorporation and operation

Number and class of shares/interests held by the Company

Company holding

Capital and reserves at 31 January

2015 £’000

Profit/(loss) after tax

for the year ended

31 January 2015

£’000

Aldwych Equity Partners LLP– investment advisory services UK

98 Voting Interests85 Economic Interests 85% (57) (23)

SVG North America Inc.– dormant US 3,000 Common Shares 100% 157 –

SVG Advisers Inc – dormant US 100 Common Shares 100% 862 (6)

SVG Advisers (Singapore) Pte. Ltd – dormant Singapore 1,017,097 Ordinary Shares 100% 446 (54)

14 Investment in associate at fair value through profit and loss

In the prior period, on 31 May 2013, the Company’s interests in ASVGA and ASVGM ceased to be classified as subsidiaries following the sale of 50.1% of the share capital to Aberdeen Asset Management plc.

The remaining 49.9% interest in these companies has been recognised as an associate as the Board consider the Company to have significant influence over the affairs of the businesses. In addition to owning 49.9% of the voting rights, the Company’s nominees make up half of the directors of those companies.

The Company measures its investments in associates at fair value, with changes in fair value recognised in profit and loss in the period in which they occur. Further information on fair value can be found in note 11.

For the period ended 31 January 2015 investment income included dividends received from ASVGM and ASVGA of £1.3 million (2013: £2.1 million) and £nil (2013: £5.8 million) respectively.

15 Current assets

Other receivables

31 January 2015

£’000

31 December 2013

£’000

Amounts owed by subsidiary undertakings 57 –

Interest receivable 433 393

Prepayments and other debtors 108 828

Tax relief receivable – 1,538

598 2,759

Cash and cash equivalents

31 January 2015

£’000

31 December2013

£’000

Bank balances and short-term deposits 15,141 36,042

Money market funds 119,771 172,601

134,912 208,643

Cash equivalents are highly liquid investments readily convertible to known amounts of cash and subject to insignificant risk of change in value, other than those arising from fluctuations in foreign exchange rates.

Cash at bank and investments in money market funds earn interest at floating rates. Money market funds are redeemable for same-day value and are AAA-rated.


16 Current liabilities

Other payables

31 January 2015

£’000

31 December2013

£’000

Interest payable and similar charges 1,632 743

Other creditors and accruals 959 325

Advisory fee payable 3,548 3,615

6,139 4,683

17 Borrowings31 January

2015£’000

31 December 2013

£’000

Convertible loan notes 97,291 94,862

97,291 94,862

Loan facilityAt December 2013, the Company had a €250.0 million loan facility with Lloyds Bank plc and The Royal Bank of Scotland plc, of which £nil was drawn (“the original facility”). During June 2014, the Company entered into an amended and restated loan facility agreement (“the amended facility”) whereby the facility was increased to €300.0 million, at which time the loan facility was split into two tranches. Tranche A was a €200.0 million facility from Lloyds Bank plc maturing in December 2019. Tranche B was a €100.0 million facility from the Royal Bank of Scotland plc and State Street Bank and Trust Company, maturing in June 2019. During January 2015, the Tranche B lenders extended the maturity on the facility to December 2019.

The loan facility remains undrawn at 31 January 2015.

Drawings on the facility are subject to an interest charge of Euribor plus a margin of 3.00%. Undrawn amounts on the original facility were subject to a non-utilisation fee of 1.375% per annum. Undrawn amounts on the amended facility are subject to a non-utilisation fee of 1.10% per annum. There were no other material changes to the terms of the facility upon these amendments.

CovenantsThe loan facility is subject to financial covenants. The maximum loan to value (LTV) covenant is 30% and the Board manages the Company against that limit. However, the Company has the flexibility of one three month period to rectify an LTV above 30% (up to a maximum of 40%) to below 30%. At 31 January 2015, the LTV covenant stood at 0% (2013: 0%). Borrowings under the loan facility are subject to an increased margin should the LTV exceed 30%.

Convertible loan notesNon-current liabilities include £100.7 million of convertible loan notes. Further details are provided in the following table:

31 January 2015

£’000

31 December2013

£’000

8.25% subordinated convertible loan notes 2016 – nominal 100,650 100,650

Unamortised premium, issue and listing costs (3,359) (5,788)

97,291 94,862

The loan notes were issued on 5 June 2008 and are redeemable at par on 5 June 2016. At issue the conversion option was valued at £14,726,000 and this amount was credited to an equity reserve (see note 21).

As a result of the Rights Issue and Placing in 2009, the Conversion Price was amended to £6.48 on 10 February 2009, in accordance with the Terms and Conditions of the convertible loan notes. Following the Tender Offer completed in 2012 the Conversion Price was amended to £6.44. The Tender Offer completed in 2013 was at a premium of less than 5% to the share price and therefore no amendment to the Conversion Price was required. Following the Tender Offers completed in May 2014 and December 2014 (see note 19), the conversion price was amended to £6.42 and £6.40 respectively. The convertible loan notes are convertible at the option of the convertible loan note holder. They are not currently dilutive as the Conversion Price is above the Company’s undiluted NAV per share.

As the convertible loan notes are subordinated to the loan facility, they are not counted as debt for the purposes of calculating the loan to value covenants.



18 Capital commitments and contingencies

At 31 January 2015, the Company had uncalled commitments to its fund investments as follows:

31 January 2015

Uncalledcommitment

(local currency)‘million

31 January 2015

Uncalledcommitment*

£’million

31 December 2013

Uncalledcommitment*

£’million


Permira IV €65.0 48.7 57.9

The Fifth Cinven Fund €60.6 45.4 66.0

Permira V €84.8 63.6 83.0

Clayton, Dubilier & Rice Fund IX $86.1 57.2 60.4

CCMP Capital Investors III $87.2 57.9 –

FFL Parallel IV Fund L.P. $100.0 66.4 –

339.2 267.3


Aldwych Capital Partners, L.P. €10.0 7.5 –

SVG Diamond Private Equity III €20.0 15.0 16.6

Schroder Private Equity Fund of Funds III €0.1 0.1 0.1

SV Investments Fund I $3.0 2.0 1.8

SV Life Sciences Fund IV $4.9 3.3 6.0

27.9 24.5

Total as at period end 367.1 291.8

* Based on exchange rates at the relevant year end

Commitments are payable at short notice.

GuaranteesThe Company has not granted any guarantees to third-parties.

19 Share capital31 January

2015£’000

31 December2013

£’000

Allotted, called up and fully paid:

Opening balance of 274,556,500 (2013: 290,032,690) shares 274,557 290,033

Cancellation of shares (20,833) (15,476)

Closing balance of 253,723,168 (2013: 274,556,500) shares 253,724 274,557

During the year, the Company twice invited shareholders to tender ordinary shares for sale to J.P.Morgan Cazenove and subsequent on-sale to the Company (“the Tender Offers”). In May 2014, the first Tender Offer was at a price of 480.0p per share. The second Tender Offer took place in December 2014 and again was at a tender offer price of 480.0p per share. The Company purchased a total of 20.8 million shares from J.P.Morgan Cazenove following the Tender Offers. All shares purchased through the Tender Offers have been subsequently cancelled by the Company.

In addition to the Tender Offers, the Company purchased 24.6 million shares through on-market buybacks. The cost of shares purchased through the tender offers and on-market share buybacks, along with associated transaction costs, were debited to the Capital Reserve. In the year ended 31 December 2013, the cost of share buybacks and associated transaction costs were debited to the Share Purchase Reserve until that was fully utilised and were thereafter debited to the Capital Reserve.

0.2 million shares were transferred from treasury to satisfy the exercise of LTIP awards in respect of former US employees. At 31 January 2015, the Company held 62,958,757 shares in Treasury (2013: 38,544,208). At 31 January 2015, shares held by the SVIIT Employee Benefit Trust and the SVIIT USA Employee Benefit Trust totalled 686,790 (2013: 3,894,852).


19 Share capital continued

Capital managementThe Company allocates capital with the over-riding objective of maximising long-term value for shareholders. New investment opportunities must pass two hurdles. The first is a level of return that enables SVG Capital plc to achieve its long-term objective of 5.0% net outperformance of public markets. The second is to be sufficiently attractive given the associated risk, relative to alternative uses of capital including deleveraging or returning capital to shareholders.

The Company’s revolving credit facility limits the amount that may be returned annually to shareholders by way of share buybacks or tenders to 20% of gross assets.

The Company’s total capital as at 31 January 2015 was £1,127,105,000 (2013: £1,221,237,000) comprising equity shares, capital and reserves.

Options over ordinary shares

Issue date Latest exercise date

Optionsgranted

in the year

Optionsexercised

in the year

Optionslapsed

in the year

Exercise price

per share

31 January 2015

number in issue

31 December 2013

number in issue

12 March 2004 11 March 2014 – – 192,001 479.00p – 192,001

12 March 2004 11 March 2014 – – 4,684 492.00p – 4,684

23 March 2005 22 March 2015 – – – 564.00p 226,471 226,471

23 March 2005 22 March 2015 – – – 569.50p 13,355 13,355

– – 196,685 239,826 436,511

Issue date Latest exercise date

Options granted

in the year

Options exercised

in the year

Options lapsed

in the year

Exercise price

per share

31 December 2013

number in issue

31 December 2012

number in issue

13 March 2003 12 March 2013 – – 153,658 392.75p – 153,658

13 March 2003 12 March 2013 – – 3,522 397.50p – 3,522

15 October 2003 14 October 2013 – – – 493.00p – –

12 March 2004 11 March 2014 – – – 479.00p 192,001 192,001

12 March 2004 11 March 2014 – – – 492.00p 4,684 4,684

23 March 2005 22 March 2015 – – – 564.00p 226,471 226,471

23 March 2005 22 March 2015 – – – 569.50p 13,355 13,355

– – 157,180 436,511 593,691

Prior to the 2007 AGM, the Company granted options with a performance target for growth of the Company’s net asset value per ordinary share to exceed the growth in the Retail Prices Index plus 4% per annum over the three years from the date of grant (“the old option plan”).

The performance target has been met for all options issued by the end of March 2005.

No options were granted under the old option plan during the year (2013: nil). The range of exercise prices for options outstanding at the year end was 564.0p to 569.5p (2013: 479.0p to 569.5p). The weighted average exercise price of options in issue at the year end under the old option plan was 564.3p (2013: 526.0p). All options in issue under the old option plan will be equity-settled.



19 Share capital continued

Performance sharesA new option plan was approved at the 2007 AGM (“performance shares”) to replace further grants of options under the old plan, other than in exceptional circumstances. Performance shares are share options with a strike price of £nil.

Issue date Earliest vesting/exercise date Latest exercise date*

Performance shares

granted in the year

Performance shares vested/

exercised in the year

Performance shares lapsed/

(reinstated) in the year

Exercise price per

share

31 January 2015

number in issue

31 December 2013

number in issue

13 October 2009 13 October 2013(2) 13 October 2019 – 198,930 – 0.0p – 198,930

7 May 2010 13 October 2012(1) 13 October 2019 – 18,478 – 0.0p – 18,478

7 May 2010 13 October 2013(2) 13 October 2019 – 504,158 – 0.0p – 504,158

15 April 2010 15 April 2013(3) 15 April 2020 – 127,415 – 0.0p – 127,415

15 April 2010 15 April 2014(4) 15 April 2020 – 1,777,356 (5,822) 0.0p 96,029 1,867,563

17 February 2011 17 February 2014(5) 17 February 2021 – 753,646 10,600 0.0p 894 765,140

17 February 2011 17 February 2015(6) 17 February 2021 – – 5,184 0.0p 763,977 769,161

22 March 2012 22 March 2015(7) 22 March 2022 – – – 0.0p 285,701 285,701





– 3,379,983 9,962 1,653,081 5,043,026

Issue date Earliest vesting/exercise date Latest exercise date*

Performance shares

granted in the year

Performance shares vested/

exercised in the year

Performance shares lapsed/

(reinstated) in the year

Exercise price per

share

31 December 2013

number in issue

31 December 2012

number in issue

13 October 2009 13 October 2013(2) 13 October 2019 – 658,834 – 0.0p 198,930 857,764

7 May 2010 13 October 2012(1) 13 October 2019 – 458,937 – 0.0p 18,478 477,415

7 May 2010 13 October 2013(2) 13 October 2019 – 888,560 (5,857) 0.0p 504,158 1,386,861

15 April 2010 15 April 2013(3) 15 April 2020 – 1,700,556 (175) 0.0p 127,415 1,827,796

15 April 2010 15 April 2014(4) 15 April 2020 – – (44,654) 0.0p 1,867,563 1,822,909

17 February 2011 17 February 2014(5) 17 February 2021 – – 2,655 0.0p 765,140 767,795

17 February 2011 17 February 2015(6) 17 February 2021 – – (3,608) 0.0p 769,161 765,553



6 March 2013 6 March 2016(9) 6 March 2023 77,922 – – 0.0p 77,922 –



220,779 3,706,887 (51,639) 5,043,026 8,477,495

* Vesting of these awards will be satisfied by market purchase of shares, transfers from the Employee Benefit Trust or transfers of treasury shares

Performance condition footnotes:(1) Awards subject to performance conditions based on growth in Total Shareholder Return (“TSR”) over three years ending 13 October 2012. Specifically, 0%

and 100% of an award will vest or become capable of exercise if average annual TSR over the performance period is equal to 10% and equal to or greater than 20% respectively. For performance between these two points awards will vest on a straight-line basis

(2) Awards subject to performance conditions based on growth in the Company’s undiluted Net Asset Value per Share of the Company (“NAV”) over four financial years ending 30 June 2013. Specifically, 0% and 100% of an award will vest or become capable of exercise if average annual NAV growth over the performance period is equal to 7% and equal to or greater than 15% respectively. For performance between these two points awards will vest on a straight-line basis

(3) Awards subject to performance conditions based on growth in Total Shareholder Return (“TSR”) over three years ending 15 April 2013. Specifically, 0% and 100% of an award will vest or become capable of exercise if average annual TSR over the performance period is equal to 10% and equal to or greater than 20% respectively. For performance between these two points awards will vest on a straight-line basis

(4) Awards subject to performance conditions based on growth in the Company’s undiluted Net Asset Value per Share of the Company (“NAV”) over four financial years ending 31 December 2013. Specifically, 0% and 100% of an award will vest or become capable of exercise if average annual NAV growth over the performance period is equal to 7% and equal to or greater than 15% respectively. For performance between these two points awards will vest on a straight-line basis

(5) Awards subject to performance conditions based on growth in Total Shareholder Return (“TSR”) over three years ending 17 February 2014. Specifically, 0% and 100% of an award will vest or become capable of exercise if average annual TSR over the performance period is equal to 10% and equal to or greater than 20% respectively. For performance between these two points awards will vest on a straight-line basis

(6) Awards subject to performance conditions based on growth in the Company’s undiluted NAV over four financial years ending 31 December 2014. Specifically, 0% and 100% of an award will vest or become capable of exercise if average annual NAV growth over the performance period is equal to 7% and equal to or greater than 15% respectively. For performance between these two points awards will vest on a straight-line basis


19 Share capital continued(7) Awards subject to performance conditions based on growth in Total Shareholder Return (“TSR”) over three years ending 22 March 2015. Specifically, 0% and

100% of an award will vest or become capable of exercise if average annual TSR over the performance period is equal to 10% and equal to or greater than 20% respectively. For performance between these two points awards will vest on a straight-line basis


(9) Awards subject to performance conditions based on growth in Total Shareholder Return (“TSR”) over three years ending 6 March 2016. Specifically, 0% and 100% of an award will vest or become capable of exercise if average annual TSR over the performance period is equal to 10% and equal to or greater than 20% respectively. For performance between these two points awards will vest on a straight-line basis


The price of an ordinary share on 6 March 2013, when awards were granted under the performance share plan, was 391.5p. The price of an ordinary share on 22 March 2012, when awards were granted under the performance shares plan, was 274.8p. The price of an ordinary share on 17 February 2011, when awards were granted under the performance shares plan, was 240.3p. The price of an ordinary share on 15 April 2010, when awards were granted under the performance shares plan, was 170.7p. The price of an ordinary share on 13 October 2010, when awards were granted under the performance shares plan, was 126.2p.

Share-based paymentsThe mid-market price of shares at 31 January 2015 was 435.0p and the range during the year was 382.2p to 466.0p. A total of 3.4 million performance shares were exercised during the year, at a weighted average price of 424.3p.

The fair value of equity-settled share options granted under both plans is estimated as at the date of grant using a stochastic model, taking into account the terms and conditions upon which the options were granted. The expected lives of the options under both plans are based on historical data and are not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also not necessarily be the actual outcome. No other features of options granted under either plan were incorporated into the measurement of fair value.

20 Own shares31 January

2015 £’000

31 December 2013

£’000

Opening balance (8,390) (15,430)

Additions – –

Disposals 6,911 7,040

Closing balance (1,479) (8,390)

Own shares consist of shares in SVG Capital plc held by the SVIIT Employee Benefit Trust and the SVIIT USA Employee Benefit Trust. During the period the Trusts made disposals of 3,363,513 shares in order to settle performance share awards that vested in the period. During the period, the SVIIT USA Employee Benefit Trust received 155,451 shares (2013: 281,327 shares) which were transferred from treasury in order to satisfy awards granted to US employees. The cost of these share transactions was £6.9 million.

At 31 January 2015, the Trusts held 686,790 shares in SVG Capital plc (2013: 3,894,852). The market value of these shares at 31 January 2015 was £2,987,537 (2013: £16,825,761). The Trusts are funded by an interest-free loan from SVG Capital plc.

21 Reserve accounts

The purpose of the various reserve accounts used by the Company is set out below.

Share premium accountThe net proceeds of share issues in excess of the nominal value of such shares are credited to the share premium account.

Capital redemption reserveHistorically this reserve represented the nominal amount of the Company’s own shares that have been purchased for cancellation. Since embarking on the capital return programme, the nominal value of shares purchased for cancellation are set against the reserve that the costs of the buybacks are charged to.



21 Reserve accounts continued

Share purchase reserveOn 24 June 1998, the Company obtained permission from the High Court to cancel its share premium account (in existence at that date) and set up a new distributable reserve, the share purchase reserve, against which the cost of purchasing the Company’s own shares for cancellation can be debited.

31 January 2015

£’000

31 December 2013

£’000

Opening balance – 4,240

Transfer of shares for cancellation – –

Purchase of own shares into Treasury – (4,240)

Closing balance – –

During the 13 month period ended 31 January 2015 the Company acquired 45,403,333 shares at a cost of £205.4 million (2013: 37,342,690 shares at a cost of £151.4 million). In the current period the cost of shares purchased were debited to the Capital Reserve. In the year ended 31 December 2013, the costs were debited to the Share Purchase reserve until that was fully utilised and thereafter the costs were debited to the Capital Reserve.

Share option reserveThe Company’s share option reserve represents the contribution to subsidiaries up until 31 May 2013 and thereafter the fair value charge of the options to the Company’s income statement.

Convertible loan notes – equityThis reserve represents the equity component of the convertible loan notes 2016, which were issued on 5 June 2008. At issue, the option element was valued at £14,726,000, based on £120,000,000 nominal of loan notes in issue. At 31 January 2015, the reserve balance is £12,352,000 (2013: £12,352,000) based on £100,650,000 (2013: £100,650,000) nominal of loan notes still in issue.

Capital reserveThis reserve represents cumulative capital profits and losses available for distribution.

Revenue reserveThe revenue reserve represents its cumulative revenue profits and losses available for distribution.

22 Net asset value per ordinary share (“Shareholders’ funds”)31 January

2015£’000

31 December2013

£’000

Basic 593.0p 526.1p

Diluted 587.8p 515.1p

Calculations of the net asset values per share are based on net assets attributable to equity Shareholders of £1,127,105,000 (31 December 2013: £1,221,237,000), and on 190,077,621 (31 December 2013: 232,117,440) ordinary shares in issue at the period end.

The Company diluted net asset value per share assumes that share options and performance shares (note 19) with a strike price lower than the undiluted net asset value per share are exercised at the balance sheet date. This would result in the issue of 1,892,907 ordinary shares (31 December 2013: 5,174,776) for consideration of £1,353,000 (31 December 2013: £942,000).

The convertible loan notes 2016 are exercisable at a strike price of 640p and were therefore not dilutive at 31 January 2015 or 31 December 2013.

Therefore, the calculation of the diluted net asset value per share is based on net assets attributable to equity shareholders of £1,128,458,000 (31 December 2013: £1,222,179,000), and on 191,970,528 (31 December 2013: 237,292,216) ordinary shares in issue at the period end.


22 Net asset value per ordinary share (“Shareholders’ funds”) continued

Reconciliation of NAV per share

£’000Shares in issue

Undiluted NAV

per share

Opening shareholders’ funds at 1 January 2014 1,221,237 232,117,440 526.1

Disposal of own shares – 3,363,513 n/a

Purchase of shares (205,399) (45,403,332) 452.4

Opening balances adjusted for share movements 1,015,838 190,077,621 534.4

Gain attributable to equity shareholders of the Company 109,654 190,077,621 57.7

Other reserve movements during the period 1,613 190,077,621 0.9

Closing shareholders’ funds 1,127,105 190,077,621 593.0

£’000Shares in issue

Diluted NAV

per share

Opening shareholders’ funds at 1 January 2014 – dilutive basis 1,222,179 237,292,216 515.1

Adjustment re lapses and grants of performance shares – (3,325,010) n/a

Disposal of own shares – 3,363,513 n/a

Purchase of shares (205,399) (45,403,332) 452.4

Adjustment re dilutive options 411 43,141 n/a

Opening balances adjusted for share changes 1,017,191 191,970,528 529.9

Gain attributable to equity shareholders of the Company 109,654 191,970,528 57.1

Other reserve movements during the period 1,613 191,970,528 0.8

Closing shareholders’ funds – dilutive basis 1,128,458 191,970,528 587.8

23 Post balance sheet events

There have been no other post balance sheet events that require disclosure.

24 Analysis of changes in net debt

For the period ended 31 January 2015


£’000

Short-term debt

£’000

Long-term debt

£’000

Net cash/ (debt) £’000

Balance brought forward 208,643 – (94,862) 113,781

Foreign exchange movements 756 – – 756

Amortisation of issue costs – – (2,429) (2,429)

Cash flow (74,487) – – (74,487)

Balance carried forward 134,912 – (97,291) 37,621

For the year ended 31 December 2013


£’000

Short-term debt

£’000

Long-term debt

£’000

Net cash/ (debt) £’000

Balance brought forward 253,242 – (240,701) 12,541

Foreign exchange movements 823 – (3,791) (2,968)

Amortisation of issue costs – – (2,623) (2,623)

Cash flow (45,422) – 154,683 109,261

Termination of currency swap – – (2,430) (2,430)

Balance carried forward 208,643 – (94,862) 113,781



25 Related party transactions

Lynn Fordham is a member of the Advisory Committees of certain funds in the core strategy portfolio in which the Company invests. She does not receive fees for these services.

Lynn Fordham is eligible to participate in the Performance Share Plan (“PSP”) at the discretion of the Remuneration Committee. During the period ended 31 January 2015, Lynn Fordham received no awards of performance shares (2013: 155,844 performance shares). Lynn Fordham is employed by a member of the Aberdeen Asset Management plc (“AAM”) group of companies and her compensation is determined and paid by AAM.

Lynn Fordham is employed by a member of the AAM group of companies and is seconded to Aberdeen SVG Private Equity Advisers Limited (“ASVGA”). During the period ended 31 January 2015, Andrew Sykes was a non-executive Director of Aberdeen SVG Private Equity Advisers Limited and Aberdeen SVG Private Equity Managers Limited (“ASVGM”). Andrew Sykes resigned as a director of ASVGA and ASVGM on 21 July 2014. No other Director has any material interest in any other contract that is significant to the Company’s business.

The Directors of the Company and their beneficial family interests in the Company’s share capital during the period to 31 January 2015 are shown in the Remuneration Report on page 53.

In addition, certain Directors and their beneficial family interests also have an interest in funds managed or advised by associated entities of the Company, as detailed below:

Director Investment as at 31 January 2015

Andrew Sykes – 100,000 shares in SVG Diamond Holdings Limited

– 100,000 shares in SVG Diamond II Holdings Limited

– 100,000 shares in SVG Diamond Private Equity III plc

– 10,608 shares in Schroder Private Equity Fund of Funds plc

– 87,263 shares in Schroder Private Equity Fund of Funds III plc

– 149,980 shares in Sapphire (PCC) Limited

Lynn Fordham – €200,000 commitment to Aldwych Capital Partners, L.P.

No other Director has any material interest in any funds managed or advised by associated entities of the Company.

The Directors are the only key management personnel of the Company. Details of their remuneration are included in the Remuneration Report.

The Company invests in a number of funds for which the associated companies ASVGA and ASVGM act as either investment adviser or investment manager and receive fees for their services. The following table details funds managed or advised by ASVGA or ASVGM that are also part of SVG Capital plc’s investment portfolio.

InvestmentManager/ adviser

Uncalled commitment

£ million Valuation £ million


P123 ASVGA – 19.3

P1234 ASVGA – 44.4

P25 ASVGA – 69.6

Sapphire IV ASVGA – 1.2

SVG Sapphire IV ASVGA – 7.5


SVG Diamond Holdings ASVGA – 83.8

SVG Diamond Holdings II ASVGA – 64.3

SVG Diamond Holdings III ASVGM/ASVGA 15.0 37.9

Schroder PE Fund of Funds III Schroders/ASVGA 0.1 0.7

Aldwych Capital Partners, L.P. ASVGM 7.5 8.4

The Company has no employees but during the period used the services of ASVGA and ASVGM, associated companies, to provide certain advisory and administrative services to SVG Capital plc in return for a fee of 0.5% p.a. of gross assets. The fees payable in respect of these services for the period ended 31 January 2015 amounted to £6.1 million (2013: £7.2 million) of which £3.5 million (2013: £3.6 million) remained payable at the period end. ASVGM pays for all staff costs, including the remuneration costs of the Company’s executive Director, Lynn Fordham, as well as the office costs incurred in providing the services to SVG Capital.

During the period ended 31 January 2015, the Company received a dividend of £1.3 million from ASVGM (2013: £2.1 million). In addition the Company received a dividend of £nil from ASVGA (2013: £10.0 million). There were no other distributions paid by associates or subsidiaries during the period.


25 Related party transactions continued

As previously disclosed, the ‘Diamond Investment Scheme’ enabled staff to purchase shares in SVG Diamond II from the Company. Until they have been transferred, shares remain in the name of SVG Capital plc but are held on trust for the beneficiaries. At 31 January 2015, the total amounts receivable by the Company under the Scheme was £0.1 million (2013: £0.1 million).

Related party transactions during the year were made on terms equivalent to those that prevail in arm’s-length transactions.

26 Risk

Financial instruments and risk profileThe Company’s primary investment objective is to achieve capital appreciation by investing in a portfolio of private equity and private equity-related assets. These investments are typically illiquid. In addition, the Company holds money market instruments, cash and short-term deposits and various items such as debtors and creditors that arise directly from its operations. These financial instruments held by the Company are generally liquid.

The holding of securities, investing activities and associated financing undertaken pursuant to this objective involve certain inherent risks. Events may occur that would result in either a reduction in the Company’s net assets or a reduction of revenue profits available for dividend.

Financial instruments(a) Financial assets


Floating rate

£’000

Fixed rate

£’000

Non-interest bearing

£’000Total

£’000

Floating rate

£’000

Fixed rate

£’000

Non-interest bearing

£’000Total

£’000

Currency denomination of assets

Sterling 19,869 – 172,614 192,483 166,153 – 149,855 316,008

Euro 12,583 15,745 393,943 422,271 39,050 17,431 636,981 693,462

US dollar 102,454 – 486,167 588,621 3,429 – 301,018 304,447

Canadian dollar 6 – 3,833 3,839 11 – – 11

Japanese yen – – 3,299 3,299 – – 3,064 3,064

Swiss Franc – – 262 262 – – 501 501

Danish Krone – – 1,792 1,792 – – 1,990 1,990

Indian rupee – – – – – – 44 44

Norwegian Krone – – 17,968 17,968 – – 1,255 1,255

134,912 15,745 1,079,878 1,230,535 208,643 17,431 1,094,708 1,320,782

Non-interest bearing assets represent non-monetary items such as the Company’s investment portfolio, warehoused assets and other short-term debtors. Floating rate financial assets consist of cash at bank, short-term deposits and AAA-rated money market funds. Fixed rate financial assets include interest-bearing investments. All financial assets are included at fair value.

(b) Financial liabilities At December 2013, the Company had a €250.0 million loan facility with Lloyds Bank plc and The Royal Bank of Scotland plc, of which £nil was drawn (“the original facility”). During June 2014, the Company entered into an amended and restated loan facility agreement (“the amended facility”) whereby the facility was increased to €300.0 million, at which time the loan facility was split into two tranches. Tranche A was a €200.0 million facility from Lloyds Bank plc maturing in December 2019. Tranche B was a €100.0 million facility from the Royal Bank of Scotland plc and State Street Bank and Trust Company, maturing in June 2019. During January 2015, the Tranche B lenders extended the maturity on the facility to December 2019. There were no other material changes to the terms of the facility as a result of this increase and maturity extension.

The Company had £97.3 million (2013: £94.9 million) of subordinated convertible loan notes in issue at the balance sheet date.

The level of borrowing will impact on the Company’s performance by amplifying the effect of movements in the valuation of the investment portfolio.

In addition to financial liabilities (note 17), the Company also has uncalled fund commitments (note 18) as at 31 January 2015 of £367.1 million (2013: £291.8 million), which are discussed below as part of borrowing and funding risks.

It should also be noted that fund investments and underlying investee companies may also utilise borrowings to varying degrees. This is particularly the case with respect to CLO funds and structured private equity funds of funds, which are highly leveraged vehicles.



26 Risk continued

Currency denomination of the financial liabilities of the Company:

31 January 2015

£’000

31 December 2013

£’000

Sterling 103,067 99,379

Euro 363 166

103,430 99,545

Gross contractual cash flows* (cumulative interest and principal amounts) payable on the liabilities of the Company are as follows:

31 January 2015

£’000

31 December 2013

£’000

Convertible loan notes due 5 June 2016 111,722 121,409

Other creditors 6,139 4,106

117,861 125,515

* Based on exchange rates at each year end and allowing for interest rate swaps

A more detailed analysis of the maturity profile of the Company’s financial assets and financial liabilities is shown below.

Financial liabilities (maturity)The maturity groupings are based on the remaining period from the end of the reporting period to the contractual maturity date. When a counterparty has a choice of when the amount is paid, the liability is allocated to the earliest period in which the Company can be required to pay. For loan facility drawdowns this will be within three months, the maximum interest period of any loan utilisation. At the loan maturity date, the loan amounts are available for effective re-drawing at the agreed terms subject to compliance with loan covenants. For the purposes of this analysis it is assumed that outstanding loan amounts, if any, will remain drawn until the quarter-end prior to the expiry date of the facility, i.e. 30 September 2019.

Financial assets (maturity)Analysis of financial assets at fair value through profit or loss into maturity groupings is based on the long-term nature of these assets and, in the absence of evidence to the contrary, it is assumed that no distributions or realisations will occur within 12 months of the balance sheet date, although it is clearly possible that realisations will occur within that period. Beyond that it is extremely difficult to judge the precise size or timing of such cash flows. It is, however, a requirement under IFRS 7 to disclose such an analysis and therefore a breakdown is provided in the following table for illustrative purposes only. It is emphasised that the analysis is provided purely to comply with accounting standards. It is not a forecast and should not be construed as such. It is based on broad assumptions, further details of which are provided below the table. For other assets, the analysis into maturity groupings is based on the remaining period from the end of the reporting period to the contractual maturity date or if earlier, the expected date the assets will be realised.

Maturity analysis

31 January 2015< 1 month

£’0001–3 months

£’0003–12 months

£’0001–5 years

£’000> 5 years

£’000Total

£’000

Financial assets

Cash and cash equivalents 134,912 – – – – 134,912

Interest receivable 433 – – – – 433

Prepayments and other debtors 108 – 57 – – 165

Financial assets at fair value through profit or loss 950 125,364 9,708 431,227 485,517 1,052,766

Investment in subsidiaries – – – – 1,259 1,259

Investments in associates at fair value through profit and loss – – – 41,000 – 41,000

136,403 125,364 9,765 472,227 486,776 1,230,535

31 January 2015< 1 month


£’0003–12 months

£’0001–5 years

£’000> 5 years

£’000Total

£’000

Financial liabilities – – – – – –

Other creditors and accruals (6,139) – – – – (6,139)

Convertible loan notes due 5 June 2016 – – (8,304) (103,418) – (111,722)

(6,139) – (8,304) (103,418) – (117,861)

Payments in respect of debt instruments shown above include interest and principal amounts.

Available liquidity/(gap) 130,264 125,364 1,461 368,809 486,776 1,112,674


26 Risk continued

31 December 2013< 1 month


£’0003–12 months

£’0001–5 years

£’000> 5 years

£’000Total

£’000

Financial assets

Cash and cash equivalents 208,643 – – – – 208,643

Interest receivable 393 – – – – 393

Prepayments and other debtors 145 – 2,221 – – 2,366

Deferred consideration – – 14,184 – – 14,184

Financial assets at fair value through profit or loss 6,355 73,541 8,919 637,609 338,768 1,065,192

Investments in subsidiaries – – – – 2,559 2,559

Investments in associates – – – 27,445 – 27,445

215,536 73,541 25,324 665,054 341,327 1,320,782

31 December 2013< 1 month


£’0003–12 months

£’0001–5 years

£’000> 5 years

£’000Total

£’000

Financial liabilities

Other creditors and accruals (4,106) – – – – (4,106)

Convertible loan notes due 5 June 2016 – – (8,304) (113,105) – (121,409)

(4,106) – (8,304) (113,105) – (125,515)

Payments in respect of debt instruments shown above include interest and principal amounts.

Available liquidity/(gap) 211,430 73,541 17,020 551,949 341,327 1,195,267

The assumed available liquidity in the above analysis is broadly expected to fund the uncalled commitments of the Company’s investments, which at 31 January 2015 was £367.1 million (2013: £291.8 million). These commitments are expected to be drawn over a number of years.

The Company’s actual liquidity profile is likely to be very different to the analysis outlined above. In particular, it is very difficult to predict the quantum and timing of returns on the Company’s long-term investment portfolio. As already mentioned, it is important to note that the maturity analysis in respect of financial assets at fair value (i.e. the investment portfolio) is highly subjective and is not a forecast of the expected cash flows. For the purposes of the maturity analysis it has been assumed that all financial assets will be realised at their year end carrying value. The amounts receivable within three months are based on actual cash flows. The residual balance has been allocated based on the current contractual maturities of the fund vehicle. However in order to facilitate the orderly winding up of the investments, the terms of the funds may be extended beyond the contractual maturity date. Similarly, underlying investments may be realised prior to the contractual maturity date of the funds as investments are sold at timings deemed appropriate by the fund manager. The Company’s undrawn loan facility amounted to £224.9 million at 31 January 2015 and is subject to financial covenants as discussed in note 17.

Uncalled fund commitmentsAt 31 January 2015, the Company had uncalled fund commitments of £367.1 million, which are expected to be drawn over a number of years. It should be noted that when these commitments are funded they will typically be used to make investments and therefore create an asset that would be expected to be realised for cash over the longer term. The Company’s uncalled commitments are covered by the year end cash balance of £134.9 million, the £224.9 million loan facility maturing in December 2019, and expected distributions from the current portfolio investments.

RisksThe main risks arising from the Company’s financial instruments are considered to be commitment risk and valuation risk. The Board reviews and agrees policy for managing these and other risks as summarised below.

Borrowing and funding risksThe nature of investing in buyout and development capital funds entails making significant financial commitments, as shown in note 18. At 31 January 2015, the Company had uncalled commitments of £367.1 million (2013: £291.8 million), compared to cash balances of £134.9 million (2013: £208.6 million) and shareholders’ funds of £1,127.1 million (2013: £1,221.2 million).

The Company is a ‘closed-ended’ investment trust and is therefore not subject to redemption requests from its investors. The Company’s shares are listed on the London Stock Exchange.



26 Risk continued

It is anticipated that over the longer term, and in normal circumstances, the Company’s commitments to private equity funds and other financial liabilities will be financed by available cash resources and distributions received on the realisation of underlying investments within the fund portfolio. To mitigate the risk that the timing of distributions being received does not match the timing of capital called for new investments, the Company has a €300.0 million loan facility, which was undrawn at 31 January 2015, that could be drawn on, subject to financial covenants as described in note 17, to meet fund commitments as they fall due. The Board monitors liquidity risk and, if considered appropriate, could renegotiate its lending arrangements or issue new securities. The Company’s investments are mainly illiquid but, in extremis, the Board could consider selective disposals of long-term investments, if required to meet commitments as they fall due. In these circumstances it is possible, dependent on prevailing market conditions, that the realisation value of such assets could be at a significant discount to their previous carrying value.

The Company is in a relatively strong financial position but a residual risk remains that the Company could be unable to meet its future commitments in full. If as a consequence of a failure to pay a call, the Company is treated as a defaulting investor to the relevant Fund, it will suffer a resultant dilution in interest and possibly the compulsory sale of its interest. A default on a fund commitment would also result in a cross-default on the Company’s senior debt. In December 2008 the Company agreed to reduce its commitment to Permira IV. The total direct commitment by the Company to Permira IV was €2.4 billion, of which 57.3% has been called as at 31 January 2015. The Company elected to cap its commitment at 60% of the total. At 31 January 2015 the Company had an uncalled commitment to Permira IV of €65.0 million (2013: €69.8 million), which will only be called to finance follow-on investments and fees. The terms of these arrangements require that future distributions from the realisation of portfolio companies receivable by those investors in Permira IV that elected to cap their commitments will be reduced by 25%, such benefit to accrue to the Limited Partners that did not elect to cap their uncalled commitments.

The Company’s loan facility expires in December 2019 (€300.0 million). The convertible loan notes are repayable in 2016.

The Board manages liquidity risk by regularly and rigorously reviewing cash flow forecasts and available funding options. Commitments to fund investments are reviewed by the Board.

Valuation/market price riskThe Company’s exposure to valuation risk comprises mainly movements in the value of its underlying investments. A breakdown of the Fund portfolio is given on page 26 and a detailed analysis of the 10 largest underlying companies is given on pages 24 and 25. In accordance with the Company’s accounting policies, set out on pages 64 and 65, all underlying investments are valued at fair value by the Directors in accordance with the current International Private Equity and Venture Capital (“IPEV”) Valuation Guidelines. The IPEV Guidelines contain detailed methodology setting out best practice with respect to valuing unquoted investments. It should be noted that a large proportion of the Company’s underlying investee companies are expected to be unquoted and therefore the valuation of such companies involves exercising judgement. The Company does not ordinarily hedge against movements in the value of these investments. Uncertainty arises as a result of future changes in the valuation of the Company’s underlying investments, the majority of which are unquoted, and the effect changes in exchange rates may have in the sterling value of these investments. Development-stage equity investments and early-stage equity investments, by their nature, involve uncertainty as to the ultimate value likely to be realised on the disposal of those investments, particularly as their unquoted nature means that a ready market may not exist for them. As an indication of the valuation risk facing the Company, it benefited from gains on its investment portfolio of £131.2 million during the period (2013: gains of £296.7 million).

The Company’s sensitivity to valuation risk will be affected by changes in the Company’s levels of borrowing (see note 17) and liquidity, as approved by the Board. It will also be affected by leverage in the funds in which we invest and the local currency denomination of such funds, which is considered separately under currency risk.

At 31 January 2015, a 10% movement in the valuation of the Company’s aggregate investments designated as fair value through profit and loss would result in a 9.3% (2013: 8.9%) change in Shareholders’ funds.

The Board manages valuation risk by reviewing and approving the valuation of the private equity fund portfolio.

Holdings riskIn certain circumstances, the Company may wish to transfer its holdings in particular funds. In a majority of the funds in which the Company will invest, the general partner, trustee or manager has the ultimate right, similar to that exercisable by a board of a private company, to refuse to register the transfer of an interest. While the Company has no reason to believe that any request for the transfer of an interest would be refused, it is of course conceivable that the general partner’s, trustee’s or manager’s overriding fiduciary duty could result in it refusing to register a particular transfer proposed by the Company.

Concentration riskAt present, the Company holds a significant proportion of its investments in private equity funds that are managed or advised by Permira. At 31 January 2015, the value of the Top 10 largest underlying investee holdings represented 80.3% of the gross management buyout portfolio (2013: 92.2%).


26 Risk continued

The future performance of the Company in the short term will therefore be largely dependent on the future performance of the Permira funds in which we invest (see note 27 for an indication of the Company’s exposures). Investors should also be aware that greater concentration of the investment portfolio presents a risk. The performance of Permira funds depends to a significant extent upon the skills and experience of Permira and its personnel. The continued service of these individuals is not guaranteed and there can be no assurance that key individuals can be replaced with equally skilled and experienced professionals by Permira. Therefore, the departure of one or several key investment professionals or partners at Permira may have an adverse effect on the performance of the Company and the value and trading price of the Ordinary Shares. Each fund investment proposition is considered by the Board in accordance with a structured investment process. This includes presentations from the manager of the proposed fund, extensive due diligence, consideration of the terms and conditions for investment in the fund, consideration of the Company’s own cash flows and future commitments and a review of the effect of any such investment on portfolio concentration.

During 2012 the Company’s shareholders passed a resolution to change the Company’s Investment Objective to achieve wider asset diversity and better flexibility in the management of the Company’s cash flows. In the last 18 months, the Company has begun to build on the Permira portfolio through commitments to a limited number of other leading private equity funds, evolving the Company from a concentrated, single manager investor to one that is more diversified. The Company has also commenced making co-investments alongside funds.

Interest rate riskThe Company’s revenue will be affected by changes in prevailing interest rates since a large portion of its income ordinarily derives from money market instruments and bank deposit interest. It also pays interest on its convertible loan notes and drawings on the loan facility.

The Company’s primary objective is to achieve capital returns from its investments and, as such, the main exposure to interest rate risk is indirect, through its impact on the valuation of the private equity funds, although it is not possible to quantify such effects. Interest rates are one of the key determinants of economic growth. At a more specific level, interest rates and credit spreads also have an important role in the ability of private equity funds to secure profitable deals, as many transactions are partly financed by debt. The effect of interest rate changes on the valuation of investments and debt forms part of valuation risk, which is considered separately.

At 31 January 2015, the Company held investments in AAA-rated money market funds valued at £119.8 million (2013: £172.6 million), earning interest at market rates. The money market funds are redeemable on less than 24 hours’ notice. Based on the money market funds held at 31 January 2015 and the interest rates as at that date, a 0.25% increase in interest rates, with all other variables held constant, would generate additional annual interest income of £299,000 and a decrease in interest rates of 0.25% would lead to a reduction in annual interest income of £49,000.

Other floating rate financial assets comprised cash at bank or short-term deposits. Based on the bank balances held at 31 January 2015 and interest rates as at that date, a 0.25% increase in interest rates, with all other variables held constant, would lead to an annual increase of £38,000 of interest income. A decrease in interest rates of 0.25% would have no impact on annual interest income as the current interest earnings are negligible.

At 31 January 2015, the Company had £97.3 million (2013: £94.9 million) of convertible loan notes (see note 17). Interest rate risk on the Bonds is mitigated as they pay fixed rates of interest.

Credit riskThere are no significant concentrations of credit risk within the Company unless otherwise disclosed. The Company is subject to credit risk on its cash and cash equivalents. The maximum credit risk exposure relating to cash and cash equivalents is represented by carrying value as at the balance sheet date. The Company’s cash and deposits are held with a variety of counterparties. Cash equivalents at the year end comprised money market funds with a variety of counterparties, each fund having a credit rating of AAA.

Currency riskThe Company is exposed to currency risk directly since the majority of its assets and liabilities are denominated in foreign currency and their sterling value can be significantly affected by movements in foreign exchange rates. The Company does not normally hedge against foreign currency movements affecting the value of its investments, but takes account of this risk when making investment decisions. The Company has a €300.0 million loan facility which, if drawn, would also act as a hedge against the currency risk on the value of its euro-denominated assets.

A sensitivity analysis has been performed on the effect of exchange rate fluctuations on the value of shareholders’ funds, the results of which are set out in the table below.

Equity shareholders’

funds £’million

Hypothetical value

(10% £depreciation)

£’million

Hypothetical value

(10% £appreciation)

£’million

31 January 2015Equity shareholders’ funds 1,127.1 1,241.9 1,038.0Change in shareholders’ funds/effect on income +10.2% –7.9%31 December 2013Equity shareholders’ funds 1,221.2 1,330.2 1,113.9Change in shareholders’ funds/effect on income +8.9% –8.8%



26 Risk continued

Capital risk managementThe objective of the Company is to provide shareholders with long-term growth in capital. In pursuing this long-term objective, the Board has a responsibility for ensuring the Company’s ability to continue as a going concern. It must therefore maintain an appropriate capital structure through varying market conditions. This involves the ability to: issue and buyback share capital within limits set by the shareholders in general; and borrow monies in the short and long term.

Changes to ordinary share capital are set out in note 19. Borrowings are set out in note 17.

General risks associated with investment in private equityInvestment in private equity involves a high degree of risk. The Company invests in private equity through its exposure to buyout and development capital funds. Such investments are illiquid and as such may be difficult to realise, particularly within a short timeframe. The Directors seek to maintain a diversified portfolio of investments to mitigate these risks, although the portfolio does remain concentrated with respect to private equity fund managers and also to vintage as explained in concentration risk on pages 86 and 87.

Default riskA fund’s documentation generally provides for certain penalties in the event that an investor in the fund fails to meet a call. There is typically a grace period during which interest accrues on the unpaid amount. If the default continues, the investor may become subject to various sanctions, including termination of the investor’s right to participate in future investments, loss of its entitlement to distributions or income but not its liability for losses or expenses, mandatory transfer or sale of its interest, continuing liability for the principal and interest in respect of the defaulted amount and partial or total forfeiture of the investor’s interest. In addition, the general partner or manager may have other rights and remedies (including legal remedies). The investor may also remain liable for future calls in respect of the relevant fund as and when they are made. There can be no assurance as to the price which may be achieved in any mandatory transfer or sale following a default on a call. Certain funds give the general partner or manager the right to proceed directly to forfeiture proceedings following notice and continuation of default by an investor. In the case of a forfeiture, the share of the fund held by the defaulting investor would generally be allocated among the general partner or manager and the remaining investors. In addition, the investor may remain liable for the defaulted amount.

Consequently, any failure by SVG Capital to meet any call may have a material adverse effect on the value of SVG Capital’s interest in a fund and/or on the net asset value of SVG Capital and/or on SVG Capital’s ability to generate returns for its Shareholders. In addition, a failure to meet a call may result in a cross-default under the Revolving Credit Facility which could result in a substantial loss.

If another investor or limited partner in a fund in which the Company holds an interest were to default on a call, this may result in the other investors (including the Company) in the fund in question becoming subject to individual calls of a larger amount (but subject to each investor’s original capital commitment) and, in addition, the fund in question may make fewer or smaller or more highly leveraged investments. Any such occurrence may lead to a reduction in the diversification of the Company’s interests in underlying portfolio companies, increase volatility, increase the Company’s financing requirements and may have an adverse effect on the Company’s business and prospects.

Investment holding period riskInvestment in private equity requires a long-term commitment with no certainty of return. Many of the investments made by the Company are illiquid holdings in buyout and development capital funds and, in some cases, may not be capable of being realised in a timely manner or at all, dependent on prevailing market conditions. The timing of cash distributions, if any, made by the buyout and development capital funds is uncertain and unpredictable.

Prevailing market conditions may significantly influence a general partner’s ability to achieve exits. Subdued market conditions may result in general partners delaying the sale of portfolio companies until conditions improve. Moreover, certain exit routes may be more challenged in these conditions, such as the IPO route.

A general partner’s ability to realise its interest in certain portfolio companies in whole or in part may be subject to contractual restrictions such as shareholder lock-up arrangements. It may therefore be the case that the Company decides to pay calls with debt finance rather than relying upon receiving distributions from investments which it has made which may therefore increase the Company’s borrowings and, in turn, risk and volatility for shareholders.

Disposals of a fund interest could have a long lead time since there is only a limited market for secondary sales of private equity investments. Further, sales or other transfers of interests in buyout and development capital funds sometimes require the written consent of the general partner of the fund, the granting of which is at its discretion. Accordingly, the Company may not be able to sell its investments in buyout and development capital funds at their net asset value.

The Company’s portfolio is concentrated with respect to private equity fund managers as explained previously and this may impact the ability to place a large holding of a single fund on the secondary market at any one time.

These factors relating to investment holding contribute to the overall liquidity and funding risks faced by the Company, which the Board manages by regularly and reviewing cash flow forecasts and the funding options available.


26 Risk continued

Portfolio company risksSince the Company invests through private equity funds in portfolio companies, the risks experienced by the portfolio companies will closely affect the returns earned by the Company and the trading price and value of its Ordinary Shares. The risks which the portfolio companies may experience, and the risks posed by an investment in such companies, include:

k these companies may be highly leveraged and subject to significant debt service obligations, stringent operating and financial covenants and a higher risk of default under financing and other contractual arrangements, which would lead to severe adverse consequences for the relevant portfolio company and the value of the Company’s investment in such company if a default were to occur;

k the valuations of highly leveraged companies are typically more sensitive to changes in value in public company comparable earnings multiples, declines in revenues, increases in expenses and interest rates and adverse economic, market and industry developments. The risk of loss associated with a highly leveraged company is generally far greater than for companies with comparatively less debt;

k they may have limited financial resources and may be unable to meet their obligations under their debt facilities, or to refinance debt facilities when they fall due, which may be accompanied by a deterioration in the value of their equity securities in which the Company is ultimately invested;

k they may require significant additional capital investment or operational or management support to improve their operations, finance expansions or maintain their competitive positions. Such investment and support may not be forthcoming;

k often, little public information exists about these companies and investors in these companies generally must rely on information obtained by the general partner, or other manager, of the relevant fund which holds the portfolio company;

k reliance is placed on the general partner as to the adequacy or accuracy of information provided during any due diligence exercise conducted prior to an investment being made. The general partner, or relevant manager, of the fund in question may have made judgements concerning the materiality of contingent or actual risks or liabilities identified during due diligence that may not in practice turn out to have been accurate;

k the purchase agreements relating to the investment in question may contain only limited representations and warranties from the relevant vendors and these may be limited in, for example, time and amount. Such contractual protection would typically not be addressed to the Company directly and, in any case, there can be no assurance as to the ability of the relevant vendor to satisfy any claims which may be made under any such agreement;

k general operating risks arising from or being, amongst other matters, the cost of goods and services, difficulty in obtaining customers, losses arising from customer failure, market developments, competition risk, key man risk, foreign exchange risk, financing risks, an increase in costs and the legal and regulatory framework within which the portfolio company operates;

k there are likely to be prior claims on the assets of portfolio companies from debt providers which would reduce the amounts earned by the equity holders including, indirectly, the Company; and

k lenders to portfolio companies may take actions which are adverse to the interests of the holders of equity interests in the portfolio company including, indirectly, the Company.

The value of the portfolio companies held by the funds in which the Company holds interests may be affected by uncertainties, such as political developments, changes in government policies, regulations, laws, taxation, currency fluctuations, currency repatriation and other restrictions, in some of the countries in which the funds may invest. The Company, directly or indirectly through the funds in which the Company holds interests, may also be exposed to these risks.

The Company continues to receive investment recommendations from ASVG, who performs extensive due diligence on the private equity managers that it invests with, who in turn select and oversee underlying investee companies. This due diligence includes assessing the adequacy of the risk management frameworks that are in use by the managers when assessing the underlying portfolio companies.

Passive investor with limited recourseThe Company is generally a passive investor and has limited powers under the governing documents of the funds in which it holds interests. The funds concerned are, within certain broad parameters, generally authorised to follow broad investment guidelines and, subject thereto, are able to invest in geographies, industries and investment opportunities at their discretion. The Company does not review each proposed investment and is, subject to certain limited exceptions, unable to refuse to meet a call without suffering the consequences of a default. There can be no assurance that the strategies adopted by general partners or managers of the funds in which the Company holds interests will be successful or that the portfolio companies of such funds, or the Company’s investments generally, will appreciate in value.

The Company also holds some investments in funds in respect of which associated undertakings are the general partner, manager and/or adviser. In these instances, fiduciary duties are owed by the associated undertakings to other investors which, together with the terms of the relevant fund management or advisory agreement, mean that the relevant associated undertaking are unable to submit each proposed investment for review by the Company which will, therefore, remain a passive investor in respect of the relevant fund.The Company cannot make claims against general partners or managers of the funds in which the Company invests even in cases of poor performance except in very limited circumstances typically involving severe culpability on the part of the general partner or



26 Risk continued

manager. The Company’s recourse in the event of poor performance of the funds concerned is highly restricted. Removal of the general partner or manager of a fund generally requires a high level of investor participation and consent with the relevant threshold often being set so as to require the consent of holders of 75% of the capital committed to the fund in question. The Company is unlikely to be able to procure such participation and consent on its own and it may therefore be very difficult to remove a general partner or manager of a fund in which the Company invests such that the Company may potentially find itself locked into an under-performing fund. The fund documentation relating to certain funds contain no provision for the removal of the general partner or manager by vote of the limited partners save in circumstances involving severe culpability. Even if those circumstances were to arise, which the Company considers to be unlikely, the consent of a special majority of limited partners would be required which the Company is unlikely to be able to procure on its own. Once the Company has made a capital commitment to a fund, it may be difficult to terminate its participation or reduce its capital commitment even if the investment returns arising from that fund are poor or not competitive.

In circumstances of severe culpability, the Company may have a valid claim against general partners or managers, though it may not be clear whether those general partners or managers will have sufficient substance, or whether professional indemnity insurance is in place, to meet such claims.

Fund investments are often made relying, in part, on key individuals that have played a significant role in the returns generated by that manager in the past. The governing documents of such funds typically contain provisions that address what happens in the event of incapacity or withdrawal of such individuals providing partial treatment of the risk.

Outsourcing of investment adviceFollowing the sale of 50.1% of ASVG to AAM in May 2013, the Company now outsources all investment advice and associated services to an associated company. As such, the Company does not have the same level of control over its investment advisers as it had prior to the sale. The Company has a number of rights and protections under the terms of a shareholders agreement in respect of its holding in ASVG and has two appointees to the board of ASVG. The Company is a key client of ASVG. If the Company is dissatisfied with the performance of ASVG it can terminate the investment advisory agreement.

Regulatory risksThe regulatory environment in which the Company operates is increasingly complex and the Company faces a number of regulatory risks. Breaches of regulations such as the UK Listing Authority’s Listing Rules could lead to a number of detrimental outcomes and damage the Company’s reputation. Breaches of controls by service providers could also lead to reputational damage or loss. Key regulatory risks have been identified and appropriate monitoring of such risks is undertaken regularly on behalf of the Board.

During the year the Company’s investments in associates (ASVGA and ASVGM) were authorised and regulated by the Financial Conduct Authority.

There are a number of legislative initiatives to increase regulation of the alternative investments sector including private equity. Such legislation has not been finalised, however there is a risk that such legislation, when enacted, could materially affect the business of the Company or its subsidiaries.

Taxation riskAny change in the taxation legislation or practice could affect the value of the Company’s investments and as a result, its performance. A breach of Section 1158 of the United Kingdom Corporation Tax Act 2010 could result in the Company being subject to corporation tax on realised gains on the sale of portfolio investments which would have a material adverse effect on the net returns earned by SVG Capital. However, the Company has strict controls in place to ensure that it complies with the requirements of Section 1158 and contracts with specialist tax advisers to provide advice on changes to tax regulation and practice. However, there can be no guarantee in advance that the Company will satisfy the conditions for approval by HMRC as an investment trust under Section 1158 or that the Company will not become a close company, which would result in its being unable to qualify as an investment trust for tax purposes.

27 Largest fund investments (by value)

Manager/Adviser

31 January2015

£’000

31 December2013

£’000

Permira IV Permira 447,705 621,287SVG Diamond ASVGA 83,813 77,899P25 ASVGA 69,636 90,452SVG Diamond II ASVGA 64,249 55,577P1234 ASVGA 44,347 59,053CCMP Capital Investors III CCMP 39,440 –Clayton, Dubilier & Rice Fund IX Clayton, Dubilier & Rice 38,139 –SVG Diamond III ASVGM/ASVGA 37,900 30,648The Fifth Cinven Fund Cinven 34,178 16,139Permira V Permira 30,184 – 889,591 951,055


AIFMD Disclosures

Report on remuneration and quantitative remuneration disclosureThe Alternative Investment Fund Managers’ Directive (the AIFMD) requires certain disclosures to be made with regard to the remuneration policy of the Company’s AIFM which can be found within the Remuneration Report on pages 42 to 55.

LeverageThe Company may employ leverage and borrow cash in accordance with its stated investment policy or investment strategy. The use of borrowings and leverage has attendant risks and can, in certain circumstances, substantially increase the adverse impact to which the Company’s investment portfolio may be subject to.

For the purposes of this disclosure, leverage is any method by which the Company’s exposure is increased, whether through borrowing of cash or securities, or leverage embedded in foreign exchange forward contracts or by any other means. The AIFMD requires that each leverage ratio be expressed as the ratio between a Company’s exposure and its NAV, and prescribes two required methodologies, the gross methodology and the commitment methodology (as set out in AIFMD Level 2 Implementation Guidance), for calculating such exposure. Using the methodologies prescribed under the AIFMD, the leverage of the Company is detailed in the table below:

Commitment leverage as at 31 January 2015

Gross leverage as at 31 January 2015

Leverage ratio 1.05 1.05

It should be noted that from a commercial perspective, the most relevant measures of leverage are considered to be the loan-to-value (“LTV”) ratio and net gearing. At 31 January 2015, the Company’s LTV ration was nil, compared with a maximum covenant of 30% contained in the loan facility. In addition the Company had no net gearing as cash balances outweighed the subordinated convertible debt.

Other risk disclosuresThe risk disclosures relating to risk framework and risk profile of the Company are set out in the Risk section of the Strategic Report on pages 1 to 31 and in note 26 to the notes to the financial statements on pages 83 to 90.

Pre investment disclosuresThe AIFMD requires certain information to be made available to investors in AIFs before they invest and requires that material changes to this information be disclosed in the annual report of the AIF. An investor report relating to AIFMD Article 23 Supplemental Disclosures, setting out information on the Company’s investment strategy and policies, leverage, risk, liquidity, administration, management, fees, conflicts of interest and other shareholder information is available on the Company’s website at www.svgcapital.com.

There have been no material changes to this information requiring disclosure.


Notice of Annual General Meeting

This document is important and requires your immediate attention. If you are in any doubt about the action you should take, you should consult an independent adviser authorised under the Financial Services and Markets Act 2000 in the United Kingdom, or another appropriately authorised independent adviser. If you have sold or transferred all your shares in SVG Capital plc, please send this document and the accompanying proxy form to the purchaser, transferee or agent through whom you acted for forwarding to the purchaser or transferee.

NOTICE is hereby given that the nineteenth Annual General Meeting of SVG Capital plc will be held at 11.30 a.m. on 1 May 2015 at Bow Bells House, 1 Bread Street, London EC4M 9HH to consider and, if thought fit, pass the following resolutions (the “Resolutions”), of which Resolutions 1 to 13 will be proposed as ordinary resolutions and Resolutions 14 and 15 will be proposed as special resolutions:

Ordinary resolutions

1. To receive the Reports of the Directors and the audited Accounts for the year ended 31 January 2015 together with the Auditors’ report on those Accounts.

2. To approve the Company’s Remuneration Policy.

3. To approve the Remuneration Report for the year ended 31 January 2015.

4. To elect Helen Mahy as a Director of the Company.

5. To re-elect Andrew Sykes as a Director of the Company.

6. To re-elect Lynn Fordham as a Director of the Company.

7. To re-elect Stephen Duckett as a Director of the Company.

8. To re-elect David Robins as a Director of the Company.

9. To re-appoint Ernst & Young LLP as Auditors of the Company.

10. To authorise the Directors to determine the remuneration of Ernst & Young LLP as Auditors of the Company.

11. That, in substitution for all subsisting authorities, the Board be generally and unconditionally authorised to allot shares in the Company and to grant rights to subscribe for or convert any security into shares in the Company:

(A) up to a nominal amount of £1,883,394 (equivalent to 1% of the issued ordinary share capital of the Company as at 18 March 2015) in connection with the SVG Capital 2007 Performance Share Plan;

(B) up to a nominal amount of £62,779,803 (such amount to be reduced by the nominal amount allotted or granted under paragraph (C) below in excess of such sum); and

(C) comprising equity securities (as defined in the Companies Act 2006) up to a nominal amount of £125,559,607 (such amount to be reduced by any allotments or grants made under paragraph (B) above) in connection with an offer by way of a rights issue:

(i) to ordinary shareholders in proportion (as nearly as may be practicable) to their existing holdings; and

(ii) to holders of other equity securities as required by the rights of those securities or as the Board otherwise considers necessary,

and so that the Board may impose any limits or restrictions and make any arrangements which it considers necessary or appropriate to deal with treasury shares, fractional entitlements, record dates, legal, regulatory or practical problems in, or under the laws of, any territory or any other matter;

such authorities to apply until the end of next year’s Annual General Meeting (or, if earlier, until the close of business on 31 July 2016) but, in each case, during this period the Company may make offers and enter into agreements which would, or might, require shares to be allotted or rights to subscribe for or convert securities into shares to be granted after the authority ends and the Board may allot shares or grant rights to subscribe for or convert securities into shares under any such offer or agreement as if the authority had not ended.

12. Without prejudice to any future or subsisting authorities and in addition to the power granted pursuant to Resolution 13, the Company be and is hereby generally authorised for the purposes of Section 701 of the Companies Act 2006 to apply an amount not exceeding £120 million to make market purchases (as defined in Section 693(4) of the Companies Act 2006) of its ordinary shares of £1.00 each (“Ordinary Shares”), in connection with one or more tender offers for Ordinary Shares, provided that:

(A) the maximum number of Ordinary Shares that may be purchased under this authority is 24,000,000 (equivalent to 12.74% of the issued ordinary share capital of the Company as at 18 March 2015);

(B) the maximum price that may be paid for any Ordinary Share shall be such amount as equals the Adjusted Diluted NAV per Ordinary Share and the minimum price that may be paid for any Ordinary Share is £1.00;

93SVG Capital plc Annual Report 2015Shareholder information

(C) this authority will expire at the conclusion of the Company’s Annual General Meeting held in 2016 or, if earlier, at the close of business on 31 July 2016;

(D) the Ordinary Shares are (as at the pricing of the relevant tender offer) trading at a discount to the Adjusted Diluted NAV per Ordinary Share;

(E) the Company may make a contract or contracts to purchase Ordinary Shares under this authority before its expiry which will or may be executed wholly or partly after the expiry of this authority and may make a purchase of Ordinary Shares pursuant to any such contract; and

(F) for the purposes of paragraphs (B) and (D):

(i) the ‘Adjusted Diluted NAV per Ordinary Share’ shall mean the Company’s most recent published net asset value per Ordinary Share as at the pricing of the relevant tender offer and updated for changes to the value of quoted holdings, Fees and Financing Costs, foreign exchange movements and gains or losses in connection with realisations of investments up to the latest practicable date prior to the pricing of the relevant tender offer (“Relevant NAV”), with the denominator used for calculating the per Ordinary Share value determined on the basis of: (a) all the Ordinary Shares in issue, less any Ordinary Shares held by the Company in treasury, in each case as at the latest practicable date prior to pricing of the relevant tender offer; and (b) all Options outstanding as at the latest practicable date prior to pricing of the relevant tender offer which (x) if having an exercise price, have an exercise price which is less than the Relevant NAV per Ordinary Share on an undiluted basis as described in paragraph (a) above, having been exercised; and (y) if having no exercise price, having been satisfied;

(ii) ‘Fees and Financing Costs’ shall mean management or advisory fees paid (or accrued) with respect to investments held by the Company, interest, non-utilisation or commitment fees and swap costs paid (or accrued) with respect to the Company’s senior debt and the Company’s £120,000,000, 8.25% convertible bonds due 2016; and

(iii) ‘Options’ shall mean awards made under the SVG Capital Share Incentives Plan, the SVG Capital 2007 Performance Share Plan, the SVG Capital 2010 Performance Share Plan, the Schroder Ventures International Investment Trust plc Executive Share Option Plan 2001 and any awards made under any other employees’ share scheme or long-term incentive scheme (as such terms are defined in the Listing Rules of the Financial Services Authority) made by the Company in respect of Ordinary Shares from time to time.

13. Without prejudice to any future or subsisting authorities, that the Company be authorised for the purposes of Section 701 of the Companies Act 2006 to make one or more market purchases (as defined in Section 693(4) of the Companies Act 2006) of its ordinary shares of £1.00 each (“Ordinary Shares”), such power to be limited:

(A) to a maximum number of 22,000,000 Ordinary Shares (equivalent to 11.68% of the issued ordinary share capital of the Company as at 18 March 2015);

(B) by the condition that the minimum price which may be paid for an Ordinary Share is £1.00 and the maximum price which may be paid for an Ordinary Share is the highest of:

(i) an amount equal to 5% above the average market value of an Ordinary Share for the five business days immediately preceding the day on which that Ordinary Share is contracted to be purchased; and

(ii) the higher of the price of the last independent trade and the highest current independent bid on the trading venues where the purchase is carried out,

in each case, exclusive of expenses; and

(C) by the condition that purchases may only be made pursuant to this authority if the Ordinary Shares are (at the date of the proposed purchase) trading on the London Stock Exchange at a discount to the latest published net asset value per Ordinary Share,

such power to apply until the end of next year’s Annual General Meeting (or, if earlier, until the close of business on 31 July 2016) but in each case so that the Company may enter into a contract to purchase Ordinary Shares which will or may be completed or executed wholly or partly after the power ends and the Company may purchase Ordinary Shares pursuant to any such contract as if the power had not ended. Ordinary Shares purchased under this authority may be sold for cash, transferred to satisfy claims under employee share schemes, held in treasury or cancelled.


Notice of Annual General Meeting continued

Special resolutions

14. That a general meeting other than an Annual General Meeting may be called on not less than 14 clear days’ notice.

15. That if Resolution 11 is passed, the Board be given power to allot equity securities (as defined in the Companies Act 2006) for cash under the authority given by that Resolution and/or to sell ordinary shares held by the Company as treasury shares for cash as if Section 561 of the Companies Act 2006 did not apply to any such allotment or sale, such power to be limited:

(A) to the allotment of equity securities and/or sale of treasury shares up to a nominal amount of £1,883,394 (equivalent to 1% of the issued ordinary share capital of the Company as at 18 March 2015) in connection with the SVG Capital 2007 Performance Share Plan;

(B) to the allotment of equity securities and sale of treasury shares for cash in connection with an offer of, or invitation to apply for, equity securities (but in the case of the authority granted under paragraph (C) of Resolution 10, by way of a rights issue only):

(i) to ordinary Shareholders in proportion (as nearly as may be practicable) to their existing holdings; and

(ii) to holders of other equity securities, as required by the rights of those securities, or as the Board otherwise considers necessary,

and so that the Board may impose any limits or restrictions and make any arrangements which it considers necessary or appropriate to deal with treasury shares, fractional entitlements, record dates, legal, regulatory or practical problems in, or under the laws of, any territory or any other matter; and

(C) in the case of the authority granted under paragraph (B) of Resolution 11 and/or in the case of any sale of treasury shares for cash, to the allotment (otherwise than under paragraph (B) above) of equity securities up to a nominal amount of £9,411,970 (equivalent to 5% of the issued ordinary share capital of the Company as at 18 March 2015),

such power to apply until the end of next year’s Annual General Meeting (or, if earlier, until the close of business on 31 July 2016) but, in each case, during this period the Company may make offers and enter into agreements which would, or might, require equity securities to be allotted (and treasury shares to be sold) after the power ends and the Board may allot equity securities (and sell treasury shares) under any such offer or agreement as if the power had not ended.

23 March 2015


Company Secretary Stuart Ballard

Registered Office: Bow Bells House, 1 Bread Street, London EC4M 9HH Registered in England and Wales No. 03066856


1. Members are entitled to appoint a proxy to exercise all or any of their rights to attend and to speak and vote on their behalf at the meeting. A shareholder may appoint more than one proxy in relation to the Annual General Meeting provided that each proxy is appointed to exercise the rights attached to a different share or shares held by that shareholder. A proxy need not be a Shareholder of the Company. A proxy form which may be used to make such appointment and give proxy instructions accompanies this notice. If you do not have a proxy form and believe that you should have one, or if you require additional forms, please contact Equiniti on 0871 384 2776. Calls cost 8p per minute plus network extras. Lines open 8.30 a.m. to 5.30 p.m., Monday to Friday. The Equiniti overseas helpline number is +44 121 415 7047.

2. To be valid any proxy form or other instrument appointing a proxy must be received by post or (during normal business hours only) by hand at Equiniti, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA or at www.sharevote.co.uk, in each case no later than 11.30 a.m. on 29 April 2015.

3. The return of a completed proxy form, other such instrument or any CREST Proxy Instruction (as described in paragraph 9 below) will not prevent a Shareholder attending the Annual General Meeting and voting in person if he/she wishes to do so.

4. Any person to whom this notice is sent who is a person nominated under Section 146 of the Companies Act 2006 to enjoy information rights (a “Nominated Person”) may, under an agreement between him/her and the Shareholder by whom he/she was nominated, have a right to be appointed (or to have someone else appointed) as a proxy for the Annual General Meeting. If a Nominated Person has no such proxy appointment right or does not wish to exercise it, he/she may, under any such agreement, have a right to give instructions to the shareholder as to the exercise of voting rights.

5. The statement of the rights of Shareholders in relation to the appointment of proxies in paragraphs 1 and 2 above does not apply to Nominated Persons. The rights described in these paragraphs can only be exercised by Shareholders of the Company.

6. To be entitled to attend and vote at the Annual General Meeting (and for the purpose of the determination by the Company of the votes they may cast), Shareholders must be registered in the register of members of the Company at 6.00 p.m. on 29 April 2015 (or, in the event of any adjournment, 6.00 p.m. on the date which is two working days before the time of the adjourned meeting). Changes to the register of members after the relevant deadline shall be disregarded in determining the rights of any person to attend and vote at the meeting.

7. As at 18 March 2015 (being the latest practicable date prior to the publication of this notice) the Company’s issued share capital consisted of 253,723,168 ordinary shares, carrying one vote each. 65,383,757 shares were held in treasury. Therefore, the total voting rights in the Company as at 18 March 2015 were 188,339,411.

8. Copies of the service contracts and letters of appointment of the Directors of the Company will be available for at least 15 minutes prior to the Annual General Meeting and during the Annual General Meeting.

9. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so by using the procedures described in the CREST Manual. CREST Personal Members or other CREST sponsored members, and those CREST members who have appointed a service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf.

10. In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a “CREST Proxy Instruction”) must be properly authenticated in accordance with Euroclear UK & Ireland Limited’s specifications, and must contain the information required for such instruction, as described in the CREST Manual (available via www.euroclear.com). The message, regardless of whether it constitutes the appointment of a proxy or is an amendment to the instruction given to a previously appointed proxy must, in order to be valid, be transmitted so as to be received by the issuer’s agent (ID RA19) by the latest time for the receipt of proxy appointments specified above. For this purpose, the time of receipt will be taken to be the time (as determined by the time stamp applied to the message by the CREST Application Host) from which the issuer’s agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means.

11. CREST members and, where applicable, their CREST sponsors, or voting service providers should note that Euroclear UK & Ireland Limited does not make available special procedures in CREST for any particular message. Normal system timings and limitations will, therefore, apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member, or sponsored member, or has appointed a voting service provider, to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting system providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.

12. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001.

13. Any corporation which is a member can appoint one or more corporate representatives who may exercise on its behalf all of its powers as a member provided that they do not do so in relation to the same shares.

14. In the case of joint holders of a share, the vote of the senior holder who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders and, for this purpose, seniority shall be determined by order in which the names appear in the register of members. A company which is a member can appoint one or more corporate representatives who may exercise on its behalf all its powers as a member, provided that they do not do so in relation to the same shares.

15. Under Section 527 of the Companies Act 2006 members meeting the threshold requirements set out in that Section have the right to require the Company to publish on a website a statement setting out any matter relating to: (i) the audit of the Company’s accounts (including the auditors’ report and the conduct of the audit) that are to be laid before the Annual General Meeting; or (ii) any circumstance connected with an auditor of the Company ceasing to hold office since the previous meeting at which annual accounts and reports were laid in accordance with Section 437 of the Companies Act 2006. The Company may not require the shareholders requesting any such website publication to pay its expenses in complying with Sections 527 or 528 of the Companies Act 2006. Where the Company is required to place a statement on a website under Section 527 of the Companies Act 2006, it must forward the statement to the Company’s auditor not later than the time when it makes the statement available on the website. The business which may be dealt with at the Annual General Meeting includes any statement that the Company has been required under Section 527 of the Companies Act 2006 to publish on a website.

16. Any member attending the meeting has the right to ask questions. The Company must cause to be answered any such question relating to the business being dealt with at the meeting but no such answer need be given if (a) to do so would interfere unduly with the preparation for the meeting or involve the disclosure of confidential information, (b) the answer has already been given on a website in the form of an answer to a question, or (c) it is undesirable in the interests of the Company or the good order of the meeting that the question be answered.

17. A copy of this notice, and other information required by Section 311A of the Companies Act 2006, can be found at www.svgcapital.com18. You may not use any electronic address provided either in this notice or any related documents (including the proxy form) to communicate with the

Company about proceedings at the meeting or the contents of this notice or for any purpose other than those expressly stated.



Explanatory Notes to the Notice of Annual General Meeting

The notes on the following pages give an explanation of the Resolutions.

Resolutions 1 to 13 are proposed as ordinary resolutions. This means that for each of those Resolutions to be passed, more than half of the votes cast must be in favour of the Resolution. Resolutions 14 and 15 are proposed as special resolutions. This means that for each of those Resolutions to be passed, at least three-quarters of the votes cast must be in favour of the Resolution.

The Directors believe that the proposals set out in this notice are in the best interests of the Company’s Shareholders as a whole. Accordingly, the Board (other than, in the case of Resolutions 4 to 8, the Director proposed for appointment or re-appointment in each Resolution), unanimously recommends that members vote in favour of each Resolution.

Resolution 1: Annual Report and Accounts 2015The purpose of this Resolution is to receive the Company’s Accounts and the Reports of the Directors and Auditors for the year ended 31 January 2015.

Resolution 2: Remuneration PolicyThe purpose of this Resolution is to approve the Company’s Remuneration Policy. This can be found on pages 42 to 49 of the Annual Report.

Resolution 3: Remuneration ReportThe purpose of this Resolution is to approve the Directors’ Remuneration Report for the year ended 31 January 2015. This can be found on pages 42 to 55 of the Annual Report.

Resolutions 4 to 8: DirectorsBiographical details of the Directors presenting themselves for election or re-election can be found on pages 32 and 33 of the Annual Report.

Resolutions 9 and 10: AuditorsThe Company is required to appoint Auditors for each financial year of the Company, to hold office until the conclusion of the next general meeting at which accounts are presented. The purpose of these Resolutions is to re-appoint Ernst & Young LLP as Auditors of the Company and to authorise the Directors to agree the remuneration of the Auditors.

Resolution 11: General power to allotThe Directors intend to exercise the authority referred to in paragraph (A) of Resolution 11 to grant options under the SVG Capital 2007 Performance Share Plan. Options granted pursuant to this authority will nevertheless count towards limits on the number of new shares that may be issued pursuant to the exercise of options.

Paragraph (B) of this Resolution would give the Directors the authority to allot shares or grant rights to subscribe for or convert any securities into shares up to an aggregate nominal amount equal to £62,779,803 (representing 62,779,803 ordinary shares). This amount represents approximately one-third of the issued share capital of the Company as at 18 March 2015 (excluding treasury shares), the latest practicable date prior to publication of this notice.

In line with guidance issued by the Association of British Insurers, paragraph (C) of this Resolution would give the Directors authority to allot shares or grant rights to subscribe for or convert any securities into shares in connection with a rights issue in favour of shareholders up to an aggregate nominal amount equal to £125,559,607 (representing 125,559,607 ordinary shares), as reduced by the nominal amount of any shares issued under paragraph (B) of this Resolution. This amount (before any reduction) represents approximately two-thirds of the issued ordinary share capital of the Company (excluding treasury shares) as at 18 March 2015, the latest practicable date prior to publication of this notice.

The Directors have no present intention to exercise any of the authorities sought under paragraphs (B) and (C) of this Resolution. However, if they do exercise the authorities, the Directors intend to follow recommendations from the Association of British Insurers concerning their use (including as regards the Directors standing for re-election in certain cases).

The authorities sought under paragraphs (A), (B) and (C) of this Resolution will expire at the earlier of 31 July 2016 and the conclusion of the Annual General Meeting of the Company held in 2016.

As at 18 March 2015, being the latest practicable date prior to publication of this notice, the Company held 65,383,757 shares in treasury, representing 34.7% of the Company’s total ordinary share capital in issue (excluding shares held in treasury).


Resolution 12: Authority to undertake market purchase of own shares by tender offer(s)Authority is sought for the Company to purchase ordinary shares in connection with one or more tender offers. Subject to the passing of the Resolution, the Directors’ current intention is to give Shareholders the opportunity from time to time to tender the shares through a series of tender offers for cash if and when the Directors consider that do so would be in the best interests of the Company and shareholders generally. Authority is sought to return up to £120 million to Shareholders through the tender offers, in addition to the other authority being sought at the 2015 Annual General Meeting under Resolution 13. If the Resolution is passed and the Directors decide to proceed with a tender offer, a circular will be prepared and sent to Shareholders providing the necessary details.

The minimum price which may be paid for a share is £1.00. The maximum price which may be paid for a share is such amount as equals the Adjusted Diluted NAV per ordinary share, as described in the Resolution.

Under the Company’s accounting policies, the net asset value will be determined in accordance with the latest issued International Private Equity and Venture Capital Valuation Guidelines. Updates (for the purposes of determining the Adjusted Diluted NAV per ordinary share) for changes to the value of quoted holdings, Fees and Financing Costs, foreign exchange movements and gains or losses in connection with realisations will be determined in accordance with the Company’s accounting policies.

Resolution 13: Authority to undertake market purchase of own sharesAuthority is sought for the Company to purchase up to 11.68% of its issued shares, renewing the authority granted at previous Annual General Meetings. The Company purchased 19,012,000 Ordinary Shares in the period from the last Annual General Meeting to 18 March 2015 (being the latest practicable date prior to publication of this notice). In addition, 20,833,332 shares were purchased pursuant to two tender offers which closed during 2014.

The Directors would consider exercising the authority provided by this Resolution to acquire shares to hold in treasury to satisfy share options. The Directors believe holding such shares as treasury shares will provide the Company with increased flexibility in managing its share capital. As at 18 March 2015, being the latest practicable date prior to publication of the notice, the Company held 65,383,757 shares in treasury.

The Directors intend to exercise the authority to continue the Company’s buyback programme as part of their strategy to keep under review and manage the share price discount to net asset value. The Directors will exercise this authority only when to do so would be in the best interests of the Company, and of its Shareholders generally, and could be expected to result in an increase in the net asset value per share taking into account relevant factors and circumstances at the time.

The minimum price, exclusive of expenses, which may be paid for a share is £1.00. The maximum price, exclusive of expenses, which may be paid for a share is the highest of (i) an amount equal to 5% above the average market value for a share for the five business days immediately preceding the date of the contract for purchase and (ii) the higher of the price of the last independent trade and the highest current independent bid on the trading venues where the purchase is carried out.

The authority will expire at the earlier of 31 July 2016 and the conclusion of the Annual General Meeting of the Company held in 2016.

Shares purchased pursuant to the authorities given in Resolutions 12 and/or 13 may be sold for cash, transferred to satisfy claims under employee share schemes, held in treasury or cancelled.

The total number of options to subscribe for ordinary shares outstanding at 18 March 2015 was 1,892,907, which represented approximately 1.01% of the issued ordinary share capital (excluding treasury shares) at that date. If the Company were to purchase the maximum number of Ordinary Shares permitted by Resolution 12 then the options outstanding at 18 March 2015 would represent approximately 1.15% of the issued ordinary share capital (excluding treasury shares). If the Company were to purchase the maximum number of Ordinary Shares permitted by Resolution 13 then the options outstanding at 18 March 2015 would represent approximately 1.14% of the issued ordinary share capital (excluding treasury shares). The Directors intend to continue to purchase Ordinary Shares under the existing authority prior to its expiry on 1 May 2015.



Resolution 14: Notice of general meetingsChanges made to the Companies Act 2006 by the Shareholders’ Rights Regulations increase the notice period required for general meetings of the Company to 21 days unless Shareholders approve a shorter notice period, which cannot however be less than 14 clear days. (Annual General Meetings will continue to be held on at least 21 clear days’ notice.)

Before the coming into force of the Shareholders’ Rights Regulations on 3 August 2009, the Company was able to call general meetings other than an Annual General Meeting on 14 clear days’ notice without obtaining such shareholder approval. In order to preserve this ability, Resolution 14 seeks such approval. The approval will be effective until the Company’s next Annual General Meeting, when it is intended that a similar resolution will be proposed. The shorter notice period would not be used as a matter of routine for such meetings, but only where the flexibility is merited by the business of the meeting and is thought to be to the advantage of Shareholders as a whole.

Note that the changes to the Companies Act 2006 mean that, in order to be able to call a general meeting on less than 21 clear days’ notice, the Company must make a means of electronic voting available to all Shareholders for that meeting.

Resolution 15: General power to disapply pre-emption rightsThis Resolution will be proposed as a special resolution, which requires a 75% majority of the votes to be cast in favour. It would give the Directors the authority to allot shares (or sell any shares which the Company may elect to hold in treasury) for cash without first offering them to existing shareholders in proportion to their existing shareholdings.

The Directors intend to exercise the authority referred to in paragraph (A) of Resolution 15 whenever they believe it is advantageous to shareholders to do so.

The Directors are seeking the authority referred to in paragraph (B) of Resolution 15 in order to provide flexibility in raising monies to take advantage of opportunities arising through the launch of new funds and for general corporate purposes. It is the intention of the Board that any equity securities allotted under this authority will be allotted at an effective premium to the estimated net asset value per share at the date of pricing of the issue of the relevant equity securities.

The authority in paragraphs (B) and (C) would be limited to allotments or sales in connection with pre-emptive offers and offers to holders of other equity securities if required by the rights of those securities or as the Board otherwise considers necessary, or otherwise up to a nominal amount of £9,411,970 (representing 9,411,970 shares). This nominal amount represents approximately 5% of the issued ordinary share capital of the Company as at 18 March 2015, the latest practicable date prior to publication of this notice. In respect of this aggregate nominal amount, the Directors confirm their intention to follow the Pre-Emption Group’s Statement of Principles regarding cumulative usage of authorities within a rolling three-year period where the Principles provide that usage in excess of 7.5% should not take place without prior consultation with Shareholders.

The authority will expire at the earlier of 31 July 2016 and the conclusion of the Annual General Meeting of the Company held in 2016.

If the Company were to purchase the maximum number of Ordinary Shares permitted by Resolutions 12 and 13, then the options outstanding at 18 March 2015 would represent approximately 1.33% of the issued ordinary share capital (excluding treasury shares).


Company summary and E-communications for Shareholders

The Company

SVG Capital plc is a private equity investor listed on the London Stock Exchange.

The Company carries on business as an investment company within the meaning of Section 833 of the Companies Act 2006.

In order to obtain exemption from capital gains tax the Company conducts itself with a view to continuing as an approved investment trust for the purposes of Section 1158 of the United Kingdom Corporation Tax Act 2010. The Company is not a close company for taxation purposes.

Information for Shareholders

The Company’s shares are listed on the London Stock Exchange. The stock exchange code for the shares is SVI. The price of the shares is quoted daily in the Financial Times, the Daily Telegraph and The Times.

The net asset value is calculated quarterly, with the Company publishing accounts with a full investment portfolio review as at 30 June and 31 December each year.

A factsheet containing information including the diversification of the portfolio and the Company’s largest investments is published quarterly and is available on the website and also by request from the Company Secretary.

Registrar services and E-communications for Shareholders

Communications with Shareholders are mailed to the address held on the share register. Any notifications and enquiries relating to registered share holdings, including a change of address or other amendment should be directed to Equiniti Registrars at Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA. The helpline telephone number of Equiniti Registrars is 0871 384 2776 (Calls cost 8p per minute plus network extras). Lines open 8.30 a.m. to 5.30 p.m., Monday to Friday. If calling from overseas, please call +44 (0)121 415 7047.

SVG Capital would like to encourage Shareholders to receive Shareholder documents electronically, via our website or by email notification instead of hard copy format.

This is a faster and more environmentally friendly way of receiving Shareholder documents.

The online ‘Shareview’ service from our registrar, Equiniti, provides all the information required regarding your shares.

Its features include:

k the option to receive Shareholder communications electronically instead of by post.

kdirect access to data held for you on the share register including recent share movements and dividend details.

k the ability to change your address or dividend payment instructions online.

k to receive Shareholder communications electronically in future, including all reports and notices of meetings, you just need the ‘shareholder reference’ printed on your proxy form or dividend notices, and knowledge of your registered address.

Please register your details free on: www.shareview.co.uk

Should you require further information, please visit: www.svgcapital.com or contact [email protected] 020 7463 6000


Advisers

Secretary and registered office

Stuart Ballard SVG Capital Bow Bells House 1 Bread Street London EC4M 9HH

Alternative Investment Fund Manager

Aberdeen SVG Private Equity Managers Limited Bow Bells House 1 Bread Street London EC4M 9HH

Depository

State Street Trustees Limited 20 Churchill Place London E14 5HJ

Auditors

Ernst & Young LLP 1 More London Place London SE1 2AF

Bankers

Lloyds Bank plc 10 Gresham Street London EC2V 7AE

The Royal Bank of Scotland plc Corporate Banking Office 5–10 Great Tower Street London EC3P 3HX

Custodian

State Street Bank and Trust Company 20 Churchill Place London E14 5HJ

Registrar for ordinary shares

Equiniti Limited Aspect House Spencer Road Lancing West Sussex BN99 6DA Telephone 0871 384 2776* Overseas helpline +44 121 415 7047 Website www.shareview.co.uk

* Calls cost 8p per minute plus network extras. Lines open 8.30 a.m. to 5.30 p.m. Monday to Friday.

Solicitors

Slaughter and May One Bunhill Row London EC1Y 8YY

Brokers and financial advisers

J.P. Morgan Cazenove 25 Bank Street Canary Wharf London E14 5JP

Numis Securities The London Stock Exchange Building 10 Paternoster Square London EC4M 7LT

Espirito Santo Investment Bank The London Stock Exchange Building 10 Paternoster Square London EC4M 7AL

SVG Capital plc Annual Report 2015Shareholder information

Design and production by Radley Yeldar www.ry.com

This report has been printed on Hello Silk a paper which is certified by the Forest Stewardship Council®. The paper is made at a mill with EMAS and ISO 14001 environmental management system accreditation. This report was printed using vegetable oil based inks and by a CarbonNeutral® printer certified to ISO 14001 environmental management system and registered to EMAS the Eco Management Audit Scheme.

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SVG Capital plc Bow Bells House 1 Bread Street London EC4M 9HH

www.svgcapital.com

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