SVG Capital plc 6 Kean Street London WC2B 4AS www.svgcapital.com 2016 Accounts and Report Annual plc Capital SVG SVG Capital is an Annual Report international private and Accounts 2016 equity investor listed on the London Stock Exchange

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

Inside this report

Strategic report Financial information Overview Independent auditor’s report 46 Performance at a glance 1 Consolidated statement of Our strategy and business model 2 comprehensive income 52 Our portfolio at a glance 4 Company statement of comprehensive income 53 Chairman’s statement 8 Consolidated statement of Chief Executive’s statement 10 changes in equity 54 Performance Company statement of Key performance indicators 12 changes in equity 55 Financial review 13 Consolidated balance sheet 56 Investment portfolio review 14 Company balance sheet 57 List of investments at 31 Jan 2016 21 Consolidated cash flow statement 58 Company cash flow statement 59 Risks Notes to the accounts 60 Risk and audit oversight 22 AIFMD disclosures 92 CSR Corporate social responsibility 27 Shareholder information Notice of Annual General Meeting 93 Corporate information The Company’s remuneration policy 100 Design and production by Radley Yeldar www.ry.com Company summary and Board of Directors 28 This report has been printed on Hello Silk a paper which is certified by the e-communications for shareholders 108 ® Corporate governance report 30 Forest Stewardship Council . The paper is made at a mill with EMAS and Advisers 109 ISO 14001 environmental management system accreditation. This report Report of the Directors 35 ® was printed using vegetable oil based inks and by a CarbonNeutral printer Remuneration report 38 certified to ISO 14001 environmental management system and registered to EMAS the Eco Management Audit Scheme.

019707_SVG_AR16_Cover_v16.indd 1-4 24/03/2016 14:14 Merger of Operational Freescale and NXP The merger of Freescale and NXP Semiconductors highlights completed in December 2015, creating an industry leader with in excess of $10 billion of revenues.

Realisation of PharMEDium £25m Clayton Dubilier & Rice (CD&R) announced the proceeds from partial realisation 5x sale of PharMEDium to AmeriscourceBergen with the remaining holding cost Corp in October 2015 at a significant multiple of in NXP valued at £111m cost and over 100% uplift to carrying value.

Eyemart Express

An investment made by FFL following two years of research into the optical retail sector, supporting the existing management team to accelerate growth through new store openings and the implementation of retail best practices. AEA Investors Company background Eyemart Express is the second largest independent value-focused AEA’s strategy is to make control investment optical retailer in the US and the seventh-largest overall operating in global mid-market companies, primarily in more than 30 states. The company, founded in 1990 by headquartered in the US, within their core Dr. Doug Barnes, provides a broad selection of high-quality private sectors of value-added industrials, specialty label and branded frames with convenient one-hour service in all chemicals, consumer/retail and business services. locations at an attractive price point. £15m $100m investment commitment to AEA Investors Strategic report | Corporate information | Financial information | Shareholder information 01

SVG Capital is an Performance international private equity investor listed at a glance on the London Growth in net asset value per share % Performance was driven by a 9% total return on the investment portfolio and further +11 Stock Exchange 1 augmented by accretive share buybacks and tenders. to 654p per share Over the longer term, growth in net assets has been 16% p.a. since the Investment objective announcement of the new strategy2 and 6% p.a. since listing. SVG Capital’s investment objective is to achieve capital appreciation by investing in a portfolio of private equity and private equity related assets. Total Shareholder Return % Investment policy The share price increased from 435p to 491p over the year. After adjusting for the +14 tender offers in May 2015 and January 2016, which were at significant premiums Total Shareholder The Company invests in private equity and private equity to the share price, our Total Shareholder Return was 14%3. Return 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 Strong performance of investment portfolio % the time of acquisition. Performance has been driven by the post-2012 investment portfolio and continued +9 total return The Company has a desired maximum average level strong performance of the Diamond fund of funds programme. We are particularly of gearing of approximately 20% of gross assets over pleased with the contribution to performance from the new investment portfolio, time and has an absolute maximum limit on borrowings reflecting strong operating performance of the underlying companies and of two times its adjusted capital and reserves, as set out two realisations. in the Articles of Association of the Company. Good progress against strategic goals Post-2012 investments generated a total return of 19% over the year and now £542m account for 36% of the investment portfolio. of new commitments made since 2012

Inside this report Strategic report Financial information Second record year of distributions 4 Overview Independent auditor’s report 46 The favourable exit environment in the early part of 2015 resulted in a number £486m Performance at a glance 1 Consolidated statement of of distributions Our strategy and business model 2 comprehensive income 52 of our larger, more mature, investments being sold and a second record year Our portfolio at a glance 4 Company statement of of distributions from the portfolio. from investments comprehensive income 53 Chairman’s statement 8 Consolidated statement of Chief Executive’s statement 10 changes in equity 54 Performance Company statement of Key performance indicators 12 changes in equity 55 Financial review 13 Consolidated balance sheet 56 Investment portfolio review 14 Company balance sheet 57 Strong balance sheet List of investments at 31 Jan 2016 21 Consolidated cash flow statement 58 We have a strong balance sheet, which is well positioned to meet our uncalled £291m Company cash flow statement 59 net cash Risks Notes to the accounts 60 commitments and support our future investment programme. Risk and audit oversight 22 AIFMD disclosures 92 CSR Corporate social responsibility 27 Shareholder information Notice of Annual General Meeting 93 Corporate information The Company’s remuneration policy 100 Company summary and Board of Directors 28 e-communications for shareholders 108 Corporate governance report 30 Advisers 109 1 Report of the Directors 35 Fully diluted 2 In December 2011 Remuneration report 38 3 The Total Shareholder Return calculation ignores market buybacks and assumes all shareholders took up their pro-rata allocation in any Tender Offers 4 Includes income distributions of £20m 02 SVG Capital plc Annual Report 2016

Our strategy and business model We invest across the private equity asset class…

Invest across the asset Focused class through investment the cycle strategy

Optimise shareholder returns

Invest across the asset class Focused investment Optimise shareholder through the cycle strategy returns We invest across the asset class, through A focused investment strategy allows us Investment portfolio growth, net asset the cycle, to access the most compelling to select managers and investments that value and total shareholder returns. investment opportunities and provide we believe have the ability to outperform exposure to a balanced portfolio the wider market. We are a long-term of private equity assets. scale investor in the asset class. Strategic report | Corporate information | Financial information | Shareholder information 03

… creating shareholder value through a selection of private equity investments

Identify and selectively invest

Finance Monitor and risk and manage

Disciplined capital allocation

Identify and Monitor Disciplined capital Finance selectively invest and manage allocation and risk We have a dedicated in-house We have a partnership Our capital allocation We maintain financial strength investment team with a long- approach and maintain process looks at current and through the cycle. We have term track record of investing close relationships with our projected liquidity, investment an efficient and flexible in private equity. underlying managers. pipeline, risk appetite and the financing and capital structure attractiveness of investment to support the Company’s We are seeking to invest in We closely monitor our opportunities relative to other ability to access attractive funds managed by eight to investments and actively uses of capital, such as share investment opportunities 10 top performing managers, manage our portfolio. buybacks and tenders. through the cycle. selected co‑investments and smaller control investments. Our rigorous risk management framework supports long-term investment consistent with the Company and Board’s overall risk appetite and tolerance. 04 SVG Capital plc Annual Report 2016

Our portfolio at a glance We continue to build a focused portfolio of investments that have the potential to deliver strong returns for shareholders.

£279m (36%) Post-2012 investments

Core investments £521m 68%

Investment portfolio £242m (32%) Pre-2012 £763m investments

Non-core investments £193m (25%) Diamond fund £242m of funds programme 32% £49m (7%) Other Strategic report | Corporate information | Financial information | Shareholder information 05

PortfolioPortfolio of 45 companiecompaniees,s, includingincluding ffourour co-investments a+19% ((+£52m)+£52m) totatotall return in thethe 12 montmonthshs aPPerformanceerfdbformance drivendriven byby strong ununderlyingderlying earnings growthgrowth andand two early realisations aPPortfolioortfolio bias towards mormoree defensive, structural growth sectors, with Healthcare,Healthcare, TMT and BusinBusineess Services sectors repgpresenting 60% ooff the post-2012 investment pportfolioortfolio

Predominantlydld made up ooffdf NXP SemiconSemiconductorsductors anandd PPlatformlatform SpeciaSpecialtylty Productsroducts a-1% (-£7m)(-£7m) total return in thhee 12 months aPPerformanceerformance driven by movvementsements in the share prices of some ooff thethe quotequotedd hholdingsoldings andd rearealisationlisation activityactivity aNNXPXP Semiconductors and PPlatformlatform Specialty Products are in exitexit process and expected to bbee realised in due course

DDiamond fund of funds pgpprogrammerogramme a+24% (+£45m) total return in the 12 monthmonthss aPPerformanceerformance driven by strong underlying investment performance, realisation activity and for thehe later funds, enhanced through the leverage within the structurrreses aThe funds are significantly deleverdeleveraged and towards the end of the ye arar startestarted to cocommencemmence ddistribbutionsons to shharerehholderers

Other funds a+24% (+£14m)() total return in the 12 monthsmonths 06 SVG Capital plc Annual Report 2016

Our portfolio at a glance continued

Our largest underlying companies

On these pages we show NXP Semiconductors 1 Platform Specialty 2 The Hillman Group 3 the 15 largest investments (Freescale) Products (Arysta LifeScience) Co-investment alongside CCMP of the core investment portfolio, by gross value, at 31 January 2016. This means the valuations of these companies have been presented in accordance with IFRS and do not contain any Cost £120m1 Cost £41m1 Cost £23m1 provision for carried interest. Value January 2016 £111m 2 Value January 2016 £79m2 Value January 2016 £27m A provision for carried interest % of total assets 10% % of total assets 7% % of total assets 2% is taken when calculating the Date of acquisition Nov 06 Date of acquisition Feb 08 Date of acquisition Jun 14 net investment portfolio. Fund Permira IV Fund Permira IV Fund CCMP III + co-investment Fund currency € Fund currency € Unless otherwise stated, Fund currency $ Freescale Semiconductor merged with Arysta LifeScience was sold to New York valuations are based on NXP Semiconductors in Q4 2015. Stock Exchange listed Platform Specialty The Hillman Group is a leader in the 31 December 2015 valuations, Freescale/NXP is a global leader in Products in February 2015. Platform hardware and home improvement rolled forward for cash flow, the design and manufacture of Specialty Products is a global diversified industry distributing over 130,000 semiconductors for the automotive, producer of high technology specialty Stock Keeping Units (SKU) in categories foreign exchange movements consumer, industrial and networking chemical products and provider of including fasteners, key duplication and quoted share prices, if markets. The valuation basis is quoted. technical services. The value of the systems, letters, numbers and signs, remaining holding in Arysta LifeScience engraved tags, builder’s hardware, applicable, to 31 January 2016. is held in convertible preferred stock in and the recently added nail, deck and Platform Specialty Products. drywall. 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 earnings.

TeamViewer 4 Visma 5 Eyemart Express 6 Jetro Cash & Carry 7 Co-investment alongside Permira Co-investment alongside Cinven Co-investment alongside FFL

Cost £18m1 Cost £18m1 Cost £15m1 Cost £8m1 Value January 2016 £25m Value January 2016 £18m Value January 20163 £15m Value January 2016 £14m % of total assets 2% % of total assets 2% % of total assets 1% % of total assets 1% Date of acquisition Jul 14 Date of acquisition Aug 14 Date of acquisition Dec 14 Date of acquisition Jul 14 Fund Permira V + Fund Cinven V + Fund FFL IV + Fund CCMP III co-investment co-investment co-investment Fund currency $ Fund currency € Fund currency € Fund currency $ Established in 1976, Jetro is the largest TeamViewer is a leading global Visma is a leading provider of business Eyemart Express is the second largest cash and carry wholesaler of perishable provider of secure remote support management software and business independent value focused optical and non-perishable food products, software with a focus on small and process outsourcing (BPO) services in retailer in the US and seventh largest household goods, equipment, medium-sized businesses. The the Nordic region. The group comprises overall operating in more than 30 states. supplies and related goods for grocery company is the industry leader in three divisions – Software SMB (small The company, founded in 1990 by retailers and restaurants in the US. remote support and administration and medium-sized businesses), BPO and Dr. Doug Barnes, provides a broad Jetro operates two different store formats: solutions for medium-sized businesses. Software GLA (Government & Large selection of high-quality private label (i) Restaurant Depot warehouses and TeamViewer has been installed on more Accounts). Visma delivers enterprise and branded frames with convenient (ii) Jetro Cash & Carry warehouses. than 1 billion devices and serves more resource planning (ERP) software and one-hour service in all locations at an The valuation basis is earnings. than 340,000 commercial customers. services including accounting, tax and attractive price point. The valuation The product is used in 220 countries payroll applications and services to over basis is cost. and is available in 34 languages. 400,000 SME customers, retailers and The valuation basis is earnings. local authorities across the Nordic region. The valuation basis is earnings.

1 Cost derived using foreign exchange rates at date of call 2 Following the Company’s decision 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 25% provision against future distributions Strategic report | Corporate information | Financial information | Shareholder information 07

Synlab 8 Informatica 9 PQ Corporation 10 Genesys 11

Cost £12m1 Cost £10m1 Cost £9m1 Cost £4m1 Value January 2016 £13m Value January 2016 £11m Value January 2016 £10m Value January 2016 £9m % of total assets 1% % of total assets 1% % of total assets 1% % of total assets 1% Date of acquisition Aug 15 Date of acquisition Apr 15 Date of acquisition Dec 14 Date of acquisition Feb 12 Fund Cinven V Fund Permira V Fund CCMP III Fund Permira IV Fund currency € Fund currency € Fund currency $ Fund currency € Synlab Group is the market leader in Informatica is the world’s leading Founded in 1831, PQ is a leading Genesys is a leading supplier of laboratory services in Europe offering independent provider of enterprise worldwide producer of specialty enterprise software and solutions that reliable and local laboratory services in data integration software and services. inorganic performance chemicals, enable best-in-class customer service 35 countries. It operates a large Informatica is well known for its deep high-end catalysts and engineered for companies and organisations. Its portfolio of hospital outsourcing industry knowledge, extensive systems glass beads for the consumer, oil and gas, software provides products for call contracts, providing services to both integration and services expertise and transportation safety, specialty plastics routing and handling which integrate ambulatory care and hospitals. In specialised solutions. Over 5,800 and industrial markets. The valuation with all major contact centre hardware addition to its core human diagnostic enterprises depend on Informatica to basis is earnings. vendors. The valuation basis is earnings. activities, the group also provides fully leverage their information assets veterinary and environmental analytical residing on-premise, in the Cloud and services. The valuation basis is cost. on the public internet including across social networks. The valuation basis is cost.

Brand Energy & 12 CeramTec 13 Acromas 14 GFKL/Lowell 15 Infrastructure (Saga)

Cost £7m1 Cost £6m1 Cost £1m1 Cost £7m1 Value January 2016 £9m Value January 2016 £8m Value January 2016 £8m Value January 2016 £7m % of total assets 1% % of total assets 1% % of total assets 1% % of total assets 1% Date of acquisition Nov 13 Date of acquisition Aug 13 Date of acquisition Sep 04 Date of acquisition Jun 15 Fund CD&R IX Fund Cinven V Fund Permira Europe III Fund Permira V Fund currency $ Fund currency $ Fund currency € Fund currency € Brand Energy & Infrastructure Services CeramTec is a leading global Acromas is the holding company for GFKL Financial Services and Lowell was formed by the merger of Brand manufacturer of high performance Saga. Saga provides financial services to Group are leading receivables Energy and Harsco Infrastructure. ceramics for application in medical and people aged over 50 in the UK, including management businesses in Germany The business is a premier provider of industrial end-markets. The company’s motor and home insurance as well as and the UK. The group looks after integrated specialty services to the global advanced ceramic products offer personal financial products. Saga also 15 million customers and is active energy, industrial and infrastructure unique, application-specific mechanical, offers a broad range of holidays and in both third-party debt collection markets. Its extensive portfolio of electrical, thermal and biochemical other travel services to its customers and debt purchase across several specialised industrial service offerings properties. Its proprietary product (including the famous Saga world sectors including financial institutions, include scaffolding, coatings, insulation, portfolio includes ceramic hip joint cruises). The valuation basis is quoted. telecommunications, retail and refractory, formwork and shoring, prostheses components, piezo tapes, ecommerce. The valuation basis specialty mechanical services, cathodic high speed cutting tools; and ballistic is cost. protection and other related crafts. ceramics for armoured vehicles. The The valuation basis is earnings. valuation basis is earnings.

3 Based on 30 September 2015 GP valuations, rolled forward for cash flow and foreign exchange movements to 31 January 2016 For the purposes of reporting under IFRS, a cost valuation basis is equivalent to price of recent investment. 08 SVG Capital plc Annual Report 2016

Chairman’s statement

I am pleased to report our sixth During the course of the year we We expect the current volatility in markets consecutive year of double digit completed the sale of our third-party fund to continue and believe our strong growth. Net assets per share management business to Aberdeen Asset balance sheet positions us well to weather Management, generating further proceeds any uncertainty and take advantage of increased by 11% over the 12 months 1 of £43 million. The management contract investment opportunities that may arise to 654p with the performance for SVG Capital has been transferred from a period of dislocation in the markets. driven by a 9% total return on the back to a wholly-owned subsidiary of the SVG Capital continues to make significant investment portfolio and further Company, along with key members of progress against its strategic priorities and, the investment and management team. augmented by accretive share in particular, the implementation of the The in-house team continue to focus on buybacks and tenders. new investment strategy. We expect to implementing our investment strategy add a select number of new relationships The investment portfolio is increasingly and the Board considers their interests to the portfolio over the course of the next weighted towards investments made to be wholly aligned with shareholders. under our new strategy. The post- 12 to 18 months as we continue to build 2012 investments now represent 36% In June, we welcomed Simon Bax to the a focused portfolio of investments that of the portfolio and the early strong Board of the Company as a non-executive have the potential to deliver strong returns performance of these assets reflects the Director of the Company. Simon has held for shareholders. manager selection skills of our team and senior executive positions in both public the disciplined investment selection and and private companies in the US and operational and strategic capability of our Europe, as well as having entrepreneurial Andrew Sykes underlying managers. experience. His election as a Director of the Chairman Company is being proposed at our Annual 22 March 2016 The benign exit environment in the General Meeting in May. early part of 2015 resulted in a number of our larger, more mature, investments The year ahead is likely to present a being sold and a second record year of number of macroeconomic, geopolitical distributions from the portfolio. In total, and financial market challenges. £486 million2 of proceeds were received Global GDP already looks set to follow from the investment portfolio in the year, the pattern of recent years with consensus which in turn facilitated £167 million growth forecasts downgraded as the year of capital returns, £94 million of new progresses. Economic growth continues investment and £67 million of debt to be adversely impacted by unresolved repayment. We ended the year with global imbalances and excessive net cash balances of £291 million. debt levels, which remain daunting. Most recently this has manifested itself Over the last four years, we have in concerns around the re-balancing of returned a significant amount of capital the Chinese economy and more broadly to shareholders as the concentration in slowing emerging markets growth. the investment portfolio has decreased Uncertainty is likely to be heightened in and we have balanced the need for 2016, with the US presidential election, efficient balance sheet management the UK referendum on EU membership with long-term uncalled commitments. and the recent precipitous decline in oil In total, since the announcement of and commodities prices adding to the the new strategy, we have returned ongoing and increasing political tensions £626 million of capital, well in excess of across the globe. our target of £470 million. We will continue to focus on optimising shareholder returns. However, given the increasingly diversified nature of the portfolio, we do not expect distributions from our portfolio to be as large as those received in recent years.

1 Fully diluted 2 Including income distributions of £20 million Strategic report | Corporate information | Financial information | Shareholder information 09

SVG Capital continues to make significant progress against its strategic priorities and, in particular, the implementation of the new investment strategy. 654p NAV per share at 31 January 2016

+11% increase in our NAV per share 10 SVG Capital plc Annual Report 2016

Chief Executive’s statement

Our investment portfolio has We made one new commitment in the US, changed as the year progressed. reported a total return of 9% in the year, a $100 million commitment to After a sustained period of declining year, with performance driven by leading US mid-market private equity financing costs on increasingly attractive manager AEA Investors. AEA’s strategy terms for borrowers, the fall in the oil post-2012 and non-core investments, is to make control investments in global, price has proved to be the catalyst for a which generated returns of 19% and mid-market companies, primarily rapid reversal of this trend in the US credit 24% respectively. headquartered in the United States, market. Along with rising equity market Within the post-2012 investment portfolio within their core sectors of value-added valuations, declining financing costs have we have been encouraged by the early industrials, specialty chemicals, consumer/ contributed to rising valuations in recent strong performance of the investments retail and business services. AEA target years, which reached record levels in the and the two realisations to date. well-positioned companies with good free second half of 2015. cash flow generation where significant The portfolio of 45 companies has a bias Against this backdrop and an increase in operational change, led by their operating towards more defensive, structural growth strategic buying activity, we have seen a partners and network of senior business sectors, mainly the Healthcare, TMT and significant decline in investment activity executives, can accelerate growth and Business Services and has resulted in the in our portfolio, in particular in the second profitability. We believe the US mid-market investments delivering strong weighted half of the year, as our managers have is an attractive area for investment and average LTM earnings and revenue growth shown strong investment discipline in AEA’s deep sector knowledge coupled with of 10% and 11% respectively over the year. deploying capital. We believe that current their network of senior business executives, In particular, we have seen very strong market conditions, and in particular the active operational involvement and focus growth from our underlying companies reversal in debt market trends, will in time on free cash flow allow the firm to deliver in the Healthcare and TMT sectors and our lead to an increasingly attractive equity strong and consistent returns across co-investment in TeamViewer has been investment environment as transaction the cycle. written up to £25 million, or 1.4x cost. pricing multiples adjust. In the shorter Within our non-core investments, Looking at the wider environment, financial term, we are beginning to see some performance has again been driven market conditions changed significantly as compelling investment opportunities by our holdings in the Diamond fund 2015 progressed. The correlation between in private equity related debt. successive monetary and quantitative of funds programme, with the strong Our latest commitment to AEA takes our easing programmes and rising risk asset exit environment enabling the funds to uncalled commitments to £332 million. prices which had characterised markets deleverage significantly and towards the We have a robust pipeline of investment in previous years, has broken down. end of the year, commence distributions opportunities in both Europe and the US The effectiveness of central banks’ policies to shareholders. We expect distributions and expect to make a number of new is being questioned with the realisation from these funds to accelerate over the commitments and investments during that more creative fiscal policy and coming years. the course of this year. We have a strong structural reforms are also required to balance sheet, which is well positioned to The portfolio’s weighting to pre-2012 generate a sustainable improvement in meet our uncalled commitments and to investments fell from 61% to 32% with a real growth. In addition, markets are also support our future investment programme. number of the more mature investments having to digest the impacts of divergent having been sold into a favourable exit monetary policy between the US and the environment. The remaining larger other major central banks. assets in the pre-2012 portfolio, NXP Lynn Fordham Semiconductors and Platform Specialty Within private equity, the first half of Chief Executive 2015 saw a continuation of the trends Products are expected to be fully realised 22 March 2016 in due course. experienced in recent periods: favourable financing markets; rising valuations; robust new deal activity; high levels of distributions; and a strong fundraising environment. With the increase in volatility across financial markets building through the year, the environment for new private equity transactions, most notably in the Strategic report | Corporate information | Financial information | Shareholder information 11

We have a strong balance sheet, which is well positioned to meet our uncalled commitments and support our future investment programme.

+9% Total return on the net investment portfolio 12 SVG Capital plc Annual Report 2016

Key performance indicators

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:

Growth in net asset value per share Rationale a p per share Includes all of the components of the Company’s performance. 800 Progress over 2015/2016 654 a 600 588 11% growth in NAV per share. 514 Progress since change of strategy 400 391 350 a 16% p.a. growth in NAV per share since 200 December 20111.

0 Progress over the longer term Dec 2011Dec 2012 Dec 2013 Jan 2015 Jan 2016 a 6% p.a. growth in NAV per share since listing in 1996.

Total Shareholder Return Rationale a 205p 288p432p 435p 491p Measures performance in the delivery of shareholder value. 500 Progress over 2015/2016 400 a 2 300 14% Total Shareholder Return . 200 Progress since change of strategy 100 a 23% p.a. Total Shareholder Return since 0 2 Dec 2011 Dec 2012 Dec 2013 Jan 2015 Jan 2016 December 2011 . Progress over the longer term a 6% p.a. Total Shareholder Return since listing in 19963. 1 Announcement of strategy change in December 2011 2 Ignores on-market share buybacks and assumes all shareholders take-up their pro-rata allocation in the Tender Offers 3 Assumes shareholders purchased at inception and participated pro-rata in the Rights Issue, Placing and Tender Offers Strategic report | Corporate information | Financial information | Shareholder information 13

Financial review

In the year ended 31 January 2016 Cash balances and borrowings the portfolio reported a total return The Company had gross cash balances £626m of £104 million and has continued returned to shareholders to be strongly cash generative with of £330 million at 31 January 2016. since December 20112 £486 million of proceeds received. Adjusting for the Company’s convertible bonds, net cash totalled £291 million. Capital allocation The Company has an available revolving credit facility (RCF) of €300 million with Investment activity a maturity date of December 2019. The RCF 149m Calls paid in the year totalled £94 million remained undrawn throughout the year. funding 16 new investments, including shares one co-investment. With no senior debt outstanding at bought back since 31 January 2016, the Loan to Value Capital return December 2011, ratio was nil. During the year, the Company returned a 48% reduction in £167 million to shareholders via a Uncalled commitments issued share capital £70 million tender offer priced at 535p per share, a subsequent £50 million Uncalled commitments were reduced tender offer priced at 565p per share and to £332 million from £367 million at £47 million of on-market share buybacks 31 January 2015 reflecting calls paid, at an average price of 490p per share. partially offset by a $100 million The 22 million shares repurchased through commitment to AEA Investors during the tender offers have been cancelled. the year. This included a reduction of The share buybacks and tender offers SVG Capital’s uncalled commitment continue to be accretive to shareholders, to Permira IV of 75% to £12 million. adding 19p per share to NAV in the year. The Company has a strong balance Debt reduction sheet and is well placed to meet these During the period, the Company also commitments with net cash balances repurchased £62 million nominal of of £291 million and an undrawn facility the convertible bonds, reducing the of £228 million (€300 million), giving nominal outstanding debt to £39 million. commitment coverage of 1.6x. The remaining convertible bonds mature Foreign exchange in June 2016. In aggregate, foreign exchange movements had a small positive impact on returns of £3 million over the 12 months.

31 Jan 2016 31 Jan 2015 audited audited Investment portfolio £763m £1,053m Cash £330m £135m Other assets £1m £43m Total assets £1,094m £1,231m Bank facility – – Convertible bonds (£39m) (£97m) Other liabilities (£3m) (£7m) Net assets £1,052m £1,127m Net assets per share 654p 588p

31 Jan 2016 31 Jan 2015 audited audited Gross debt as a % of gross assets 4% 8% Net (cash)/debt as a % of net assets (28%) (3%) Loan to value ratio (maximum of 30%)1 – –

1 With the flexibility to go up to 40% for one three-month period 2 Announcement of new investment strategy 14 SVG Capital plc Annual Report 2016

Investment portfolio review

The investment portfolio has This performance has been driven by Core portfolio (£521 million delivered its sixth consecutive year the post-2012 investment portfolio and – 68% of investment portfolio) of strong growth, reporting a total continued strong performance of the Strong early performance of the post- return of 9% for the 12 months to Diamond fund of funds programme. We are particularly pleased with the contribution to 2012 investment portfolio and realisation 31 January 2016. performance from the post-2012 investment activity within the more mature assets portfolio, reflecting strong operating has generated a total return of 5%, performance of the underlying companies (+£45 million) in the core portfolio and two realisations. The performance of over the year. the pre-2012 investment portfolio continues The portfolio continues to transition to be driven by realisation activity from the towards newer investments with the largest assets. post-2012 investment portfolio now the largest part of the total investment portfolio. This transition will accelerate further as the exit processes for the two largest portfolio companies in the pre-2012 Permira portfolio, NXP Semiconductors (Freescale) and Platform Specialty Products (Arysta LifeScience), are completed and new commitments and investments are made in the post-2012 portfolio.

Fund investment profile

SVG Capital has a $100m commitment Investment strategy to AEA Investors Fund VI. AEA’s strategy is to make control investments in global mid-market Firm overview companies, primarily headquartered AEA was founded in 1968 by the in the US, within their core sectors of Rockefeller, Mellon and Harriman family valued-added industrials, specialty interests and S.G Warburg & Co. to invest chemicals, consumer/retail and business in small to mid-sized businesses, leveraging services. AEA target well-positioned the families’ professional backgrounds, companies with good free cash flow networks and management expertise generation where significant operational in improving businesses. change led by their operating partners The AEA team comprises over 40 and participants, can accelerate growth investment professionals across offices in and profitability. New York, London, Munich and Shanghai SVG Capital’s commitment supported by a participant network of The fund was uncalled at 31 January 2016. over 75 senior business executives. $100m commitment Strategic report | Corporate information | Financial information | Shareholder information 15

Post-2012 investments (£279 million Within Consumer/Retail (19% of the Within Healthcare, Healogics, Medpace – 36% of investment portfolio) portfolio), the portfolio’s holdings and Pantheon Healthcare, have also are weighted towards more defensive performed strongly. Elsewhere within the The post-2012 investment portfolio sub-sectors such as health products and portfolio, within Consumer/Retail, Jamieson performed very strongly over the optical retailing. The portfolio has very Laboratories, Jetro Cash & Carry and 12 months, delivering a total return limited direct exposure to commodity Clarkson Eyecare have all delivered double of 19% (+£52 million). driven end markets. digit earnings growth, as has Mauser within Industrials. The portfolio now consists of six Performance over the 12 months has commitments to leading private equity been driven by strong underlying The value contribution from this strong managers, four in the US and two in earnings growth and two realisations, company operating performance was Europe, with an underlying portfolio of with multiples used to value the companies augmented by two realisations from 45 companies, including four co-investments. remaining constant, on a like-for-like the portfolio. Cinven announced the At 31 January 2016, the portfolio was basis. In aggregate, the underlying sale of AMCo to Concordia Healthcare valued at a net multiple of 1.2x cost. companies reported LTM earnings Corp in October 2015 for £2.3 billion, At an underlying company level, the and revenue growth of 10% and 11% predominantly in cash and Concordia portfolio was valued at 1.3x multiple of respectively. In particular, we have seen shares. Through a combination of cost, rising to 1.4x for those companies very strong growth from our underlying organic growth and acquisitions, AMCo’s over 12 months old. companies in the TMT and Healthcare EBITDA doubled under Cinven’s period The portfolio has a bias towards sectors. Within TMT, two of our four of ownership. During the same month, more defensive, structural growth co-investments, Visma and TeamViewer, having delivered exceptional revenue and sectors, with the TMT, Healthcare have performed particularly well, with our earnings growth since acquisition, CD&R and Business Services sectors together investment in TeamViewer written up to announced the sale of PharMEDium to representing 60% of the portfolio. £25 million, or 1.4x cost. AmerisourceBergen, for $2.6 billion in cash.

Fund investment profile Co-investment alongside CCMP The Hillman Group

CCMP Founded in 1964 and headquartered CAPITAL in Cincinnati, Ohio, The Hillman Group (Hillman) is a leading value-added SVG Capital has a $150m commitment Team of 31 full time investment distributor of fasteners, key duplication to CCMP Capital Investors III. professionals with offices in New York, systems, engraved tags and related Houston and London. CCMP’s investment Firm overview hardware items. approach is sector driven with a focus on CCMP Capital Investors (CCMP) strategy four sectors: consumer/retail, industrial, Hillman has over 26,000 retail customers is to enhance the value of middle-market healthcare and chemicals/energy. in the US, Canada, Mexico, South companies in North America and Europe, America and Australia, including home typically with an enterprise value of $250m CCMP benefits from a differentiated improvement centres, mass merchants, to $2bn, through an active approach to investment model that combines a national and regional hardware stores, operational transformation in leading proprietary, research-driven sourcing pet supply stores and other retailers. buyout and growth equity investments. capability with a fully integrated operating/ Hillman provides a comprehensive investment professional team. solution to its retail customers for SVG Capital’s commitment managing SKU-intensive, complex home a £70m in value1 improvement categories. Hillman also a 9% of the net investment portfolio offers its customers additional services, a 49% called such as inventory management and in-store merchandising services. $150m commitment

1 Including co-investment 16 SVG Capital plc Annual Report 2016

Investment portfolio review continued

Both investments were realised at over One new fund commitment was made Post-2012 investments – 100% uplifts to carrying values and during the year to AEA Investors Fund combined contributed £28 million to the VI. AEA’s strategy is to make control valuation analysis 31 Jan 2016 31 Jan 2015 value of the gross investment portfolio investments in global, mid-market % by value % by value over the period. companies, primarily headquartered in 1. Earnings 69 30 the United States, within their core sectors At 31 January 2016, the EV/EBITDA 2. Cost 29 66 of value-added industrials, specialty multiple of the post-2012 portfolio was chemicals, consumer/retail and business 3. Written down – earnings 2 4 11.1x on a weighted average basis, 11.0x services. AEA targets well-positioned on a simple average basis, reflecting the companies with good free cash flow 3 current portfolio weightings to growth generation where significant operational 2 companies, which are typically valued on change led by their operating partners a higher multiple. The net debt/EBITDA and network of senior business executives, of the portfolio was 4.8x on a weighted can accelerate growth and profitability. average basis, 4.4x on a simple average AEA was founded in 1968 by the basis. During a period of broadly rising Rockefeller, Mellon and Harriman family transaction and leverage multiples within interests and S.G. Warburg & Co. to invest private equity, we believe our managers in small to medium-sized businesses, 1 have shown strong investment discipline in leveraging the families’ professional terms of strategy, leverage and pricing. backgrounds, networks and management expertise in improving businesses.

Fund investment profile

SVG Capital has a €100m commitment Cinven’s investment approach is sector- to The Fifth Cinven Fund. driven, with a focus on six core sectors: business services, consumer, financial Firm overview services, healthcare, industrials and TMT. Cinven’s strategy is to invest in buyouts headquartered in or with significant Cinven’s approach to growing its portfolio strategies in Europe, typically with an is based on a clearly defined model that enterprise value of greater than €300m. has two main pillars: Cinven’s team of 66 investment staff – revenue growth, via both expansion into operates from its offices in Guernsey, new markets and execution of ‘buy and London, Frankfurt, Paris, Milan, Madrid build’ strategies, and and Luxembourg and its Portfolio team – applying global best practices across offices in New York and Hong Kong. the portfolio. The European office footprint provides SVG Capital’s commitment a strong presence on the ground in a £67m in value1 Cinven’s core market, and the Asia a 9% of the net investment portfolio and New York offices help the portfolio a 68% called companies to capitalise on global growth opportunities and drive value creation across the portfolio. €100m commitment

1 Including co-investment Strategic report | Corporate information | Financial information | Shareholder information 17

The AEA team comprises over 40 Post-2012 investment – Post-2012 investment – investment professionals across offices in New York, London, Munich and Shanghai geographical analysis sector analysis supported by a participant network of By value By value 31 Jan 2016 31 Jan 2015 31 Jan 2016 31 Jan 2015 over 75 senior business executives. % by value % by value % by value % by value As announced in the interim results, 1. Global 40 49 1. TMT 27 28 our most recent co-investment, Eyemart 2. North America 35 34 2. Business/Support Express, was completed in April 2015 3. Continental Europe 20 3 Services 22 31 and follows two years of research into the 4. UK 5 14 3. Consumer 19 7 optical retail sector by FFL. Eyemart Express 4. Industrials 14 20 is the second largest independent value- 4 3 5. Healthcare 11 11 focused retailer in the US, operating from 6. Financial 7 3 159 stores across 35 states. SVG Capital’s total investment in Eyemart Express was 2 6 valued at £15 million at 31 January 2016. 5

4 1 1

3

2

Co-investment alongside Cinven Visma

Founded 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. 400,000 customers in Northern Europe use Visma’s products and services, and an additional 355,000 use Visma as a hosting partner. The group has more than 7,100 employees and its net revenue amounted to NOK 8,338m in 2015. 18 SVG Capital plc Annual Report 2016

Investment portfolio review continued

Pre-2012 investments (£242 million Core investment portfolio maturity – investments in companies – 32% of investment portfolio) (£m – year of original investment in underlying companies)

The pre-2012 investment portfolio 200 generated a total return of -1.0% (-£7 million) over the 12 months. 160 The performance of the portfolio was again driven by movements in the share prices of some of the quoted holdings and 120 realisation activity against the backdrop of a favourable exit environment. This realisation activity has further reduced 80 SVG Capital’s exposure to the pre-2012 investment portfolio and Permira IV, in 40 particular, from £448 million at 31 January 2015 to £169 million at the year-end. The two largest remaining Permira IV 0 assets, NXP Semiconductors (Freescale) 2007 2008 2009 2010 2011 2012 2013 2014 2015 and and Platform Specialty Products (Arysta before LifeScience), are in exit processes and expected to be realised in due course. Earnings Quoted Cost Third-party Written down – earnings

Fund investment profile

SVG Capital has a $140m commitment CD&R’s investment model is focused to CD&R IX. on operational improvement within their portfolio companies utilising the Firm overview combined skills of operating partners, who Clayton Dubilier & Rice’s (CD&R) strategy are former CEOs or other senior corporate is to make control investments in upper leaders, and private equity investment mid-market companies in the US and executives. This partnership between Europe (Germany, France and the UK), investment judgement and operating skills typically with enterprise values between runs right through the deal process from $1bn and $5bn. origination through to due-diligence and Team of 50 investment professionals, post investment value creation stages. based in New York and London, SVG Capital’s commitment concentrating primarily on four sectors: a £32m in value industrials, business services, healthcare a 4% of the net investment portfolio and consumer/retail. a 37% called

$140m commitment Strategic report | Corporate information | Financial information | Shareholder information 19

Permira successfully completed the final In December 2015, Freescale completed Non-core portfolio (£242 million – realisation of Hugo Boss in February 2015, its merger with NXP Semiconductors. 32% of the investment portfolio) generating proceeds of £142 million The merger has created an industry leader for SVG Capital. In April 2015, Permira and significant cost synergies which are The non-core portfolio reported a total completed the previously announced sale expected to be of significant benefit return of 24% (+£59 million) over the year. of Arysta LifeScience to Platform Specialty in 2016 and beyond. Post transaction, The Diamond fund of funds programme Products, generating £135 million of Freescale shareholders own approximately delivered another very strong performance. proceeds for SVG Capital. The remaining 32% of NXP Semiconductors, creating This has again been driven by strong value of £79 million represents a a clear path to exit which we expect to underlying investment performance, convertible preferred note in Platform be achieved in due course, subject to realisation activity and for the later funds, Specialty Products. Permira also announced the market environment. SVG Capital enhanced through the leverage within the the sale of iglo Group to Nomad Foods received cash proceeds of £25 million as structures. The strong exit environment has in a cash and shares transaction and New part of the transaction, with the remaining enabled the funds to deleverage significantly Look to Brait SE. Together the exits of iglo exposure to NXP Semiconductors valued and, towards the end of the period, Group and New Look generated proceeds at £111 million at 31 January 2016. commence distributions to shareholders. of £92 million for SVG Capital.

Fund investment profile Co-investment alongside FFL Eyemart Express

Founded in 1990 and headquartered in Farmers Branch, Texas, Eyemart Express is the second largest value-focused SVG Capital has a $100m commitment FFL combines top-down macro and optical retailer in the US. to FFL Capital Partners IV. industry thematic research to identify attractive sub-sectors within its core Eyemart Express provides a broad Firm overview sectors and a focus on active company selection of high quality private label FFL’s strategy is to deliver superior risk involvement post-acquisition. and branded frames with convenient adjusted returns through investment in US one-hour service, at an attractive price middle market companies with a typical SVG Capital’s commitment point. In addition to Eyemart Express, a 1 enterprise value of $100m to $500m. £27m in value the company operates as Vision4Less, a 3% of the net investment portfolio Team of 31 professionals led by Eyewear Express and VisionMart Express a 27% called Tully Friedman and Spencer Fleischer, from 159 stores across 35 states. the firm operates from a single office in San Francisco. Four core sectors of business services, consumer, financial services and healthcare services.

$100m commitment

1 Including co-investment 20 SVG Capital plc Annual Report 2016

Investment portfolio review continued

SVG Capital received £38 million of At 31 January 2016, the Company had uncalled commitments to its fund proceeds over the period and we expect investments as follows: distributions from these investments to Called Uncalled Uncalled accelerate in the short to medium term. commitment commitment Commitment (audited) (audited) (audited)1 The other non-core investments Core portfolio generated a total return of 24% over the AEA Investors Fund VI – $100m £70m year. Contributors to this performance included SV Investments, SV Life Sciences Clayton, Dubilier & Rice Fund IX $51m $89m £62m and Aldwych Capital Partners. CCMP Capital Investors III $73m $77m £54m FFL Capital Partners IV $27m $73m £51m Permira V €83m €42m £32m The Fifth Cinven Fund €68m €32m £25m Permira IV €1,428m €17m £13m £307m Non-core portfolio £25m Total £332m 1 Based on 31 January 2016 exchange rates

Fund investment profile Co-investment alongside Permira TeamViewer

Founded in 2005 and headquartered in Göppingen, Germany, TeamViewer is a leading software platform for remote IT support serving the small and medium business market. SVG Capital has a €125m commitment to Permira V and investments in Permira IV and Permira Europe II and III. TeamViewer has been installed on more than 1 billion devices and serves more than 340,000 commercial customers. Firm overview The company operates in a resilient market, driven by an Permira invests primarily in mid to large cap buyouts with increasingly mobile workforce, rapid device proliferation (mobile, exposure to faster-growing global markets and sectors, typically tablets, etc.) and IT outsourcing. with an enterprise value of up to €3bn. TeamViewer benefits from high customer satisfaction and usage Team of 137 professionals operating from 14 offices based and operates a SaaS (Software as a Service) like business model around the globe, Permira concentrate on five sectors: consumer, (high recurring revenues, scalable and high margin business with technology, industrials, financial services and healthcare. strong cash flow conversion). Within these sectors, Permira V will focus on acquiring businesses with market leadership positions, resilient thematic growth and potential to globalise. At least 70% of Permira V will be invested in businesses which have or intend to have significant activities in Europe. SVG Capital’s commitment to Permira V a £83m in value1 a 11% of the net investment portfolio a 66% called €125m commitment

1 Including co-investment Strategic report | Corporate information | Financial information | Shareholder information 21

List of investments at 31 January 2016

SVG Capital’s Value of holding in SVG Capital’s Vintage Original life the fund holding % of total year (years) % £’000 investments Core portfolio AEA Investors Fund VI Focused on global mid-market investments, primarily headquartered in the US. 2015 10 3.2 – – CCMP Capital Investors III Focused on mid-market investments in the US and Europe. 2014 10 4.2 52,737 7 The Fifth Cinven Fund Focused on upper mid-market to large buyouts based in Europe. 2012 10 1.9 54,324 7 Clayton, Dubilier & Rice Fund IX Focused on upper mid-market to large buyouts in the US and Europe. 2013 10 2.3 31,995 4 FFL Capital Partners IV Focused on lower mid-market investments in the US. 2014 10 5.1 18,754 2 Permira V Focused on buyouts/ins and growth capital investments in businesses which have or intend to have significant activities in Europe. 2014 2.5 66,328 9 Permira IV Focused on buyouts/ins and growth capital investments in businesses which have or intend to have significant activities in Europe. 2006 10 22.21 168,775 22 Economic interest in Nomad Foods (Permira Europe III). 2,313 – Permira Europe II Focused on European buyouts/ins, in addition to growth capital investments. 2000 102,3 15.2 3,399 – Permira Europe I Focused on European buyouts/ins in addition to growth capital investments. 1997 102,3 13.5 1,188 – P123 A fund of Permira buyout funds, with interests in Permira Europe I, II and III. 2003 15 24.8 5,212 1 P1234 A fund of Permira buyout funds, with interests in P123 and Permira IV. 2006 15 42.8 28,328 4 P25 A fund of Permira buyout funds, with interests in Permira Europe III and Permira IV. 2006 15 47.7 27,863 4 Sapphire IV A feeder fund that invests solely in Permira IV. 2006 15 0.6 647 – SVG Sapphire IV A feeder fund that invests solely in Permira IV. 2006 15 32.2 4,323 1 Co-investments Alongside CCMP Capital Investors III, The Fifth Cinven Fund, Permira V and FFL Capital Partners IV. 54,713 7 Total core portfolio 520,899 68

1 Interest in existing portfolio companies as at the date of the Permira IV reorganisation in 2008 2 The lives of these funds have been extended 3 No management fee being paid on extended use

Value of SVG Capital’s holding % of total £’000 investments Non-core portfolio Diamond fund of funds programme 193,079 25 Other non-core investments 49,477 7 Total non-core investments 242,556 32 Total investment portfolio 763,455 100 Other assets less total liabilities 288,313 Total Shareholders’ funds 1,051,768 22 SVG Capital plc Annual Report 2016

Risk and audit oversight

With the growing sophistication of the Board UK Corporate Governance Code and Determines risk appetite and risk framework significantly heightened investor and regulator risk governance expectations, the a Responsible for ensuring appropriate risk management framework is in place SVG Capital Board has adopted a revised a Considers principal risks and uncertainties in detail approach to risk governance with the following objectives: a Oversees operation of risk management framework and acceptability of residual risk linked to business objectives a Increase certainty/reduce uncertainty that the Company’s objectives will a Detailed review of risk matters at annual strategy Board meeting and be achieved while operating within periodic reviews at other meetings management and the Board’s risk appetite and tolerance. a Ensure risk assessments clearly link the Company key strategic objectives, risks, Independent risk Chief Executive risk treatments, and Key Performance oversight provider Overall responsibility for building and Indicators (KPIs). maintaining robust risk management processes a Ensure the Company’s risk culture and delivering reliable and timely information continues to be appropriate. on the current residual risk status linked to objectives to the Board. This includes ensuring a Increase the direct, visible involvement of objectives are assigned owners and sponsors the Company’s Board and management who have primary responsibility to report on in assessing and managing risks of all the risks. types to the Company’s top objectives. a Meet and exceed the governance requirements in the UK Corporate Governance Code. Risk Management Committee a Delegated responsibility for risk management a Seek to improve our external risk governance communications. a Ensures appropriate risk management arrangements, processes and techniques in place a Monitors adherence to risk appetite and risk management framework a Liaises with independent risk oversight provider a Meets at least quarterly

Managers and Other Employees Key managers and employees are assigned owner or sponsor responsibility for reporting on objectives not assigned to Chief Executive or Board. Strategic report | Corporate information | Financial information | Shareholder information 23

All significant risks to objectives are SVG Capital’s risk governance Tone from the top: The board and considered in combination. This approach approach and framework senior management are the starting ensures senior management and the Board point for setting the financial institution’s The risk governance approach the have current information to continuously core values and expectations for the Company has implemented is based on assess whether the current risk treatments risk culture of the institution, and their a customised “Five Lines of Assurance” are resulting in a level of retained risk that is behaviour must reflect the values being process. The diagram on page 22 provides within the Company’s and the Board’s risk espoused. A key value that should be an overview of the roles played by each of appetite and tolerance. the five lines. The Company opted for the espoused is the expectation that staff Five Lines of Assurance approach to elevate The Board agrees the level of risk that act with integrity and promptly escalate the key roles played by SVG Capital’s it is prepared to take in achieving the observed non-compliance within or Board and senior management and better Company’s strategic goals on an annual outside the organisation. The leadership achieve the risk governance objectives basis. As a private equity investor, the of the institution promotes, monitors, listed above. Company accepts some level of investment and assesses the risk culture of the risk in order to achieve its targeted returns, financial institution; considers the impact In accordance with AIFMD requirements, but stipulates that a disciplined approach of culture on safety and soundness; and the Company has put in place a risk to asset allocation is taken. There is very makes changes where necessary. framework that is reviewed by the Board low tolerance for financing risk with the Accountability: Relevant employees at all on a periodic basis. This framework aim to ensure that even under the most levels understand the core values of the includes limits to mitigate various risks severe stress scenario, the Company is likely institution and its approach to risk, are including, for example, financing risk which to meet its financial obligations as they fall capable of performing their prescribed is assessed through cash flow modelling due. Similarly, there is low risk tolerance roles, and are aware that they are held and stress testing. The Risk Management with respect to legal and regulatory risk, accountable for their actions in relation Committee reviews reports prepared to but the Company accepts a certain degree to the institution’s risk-taking behaviour. ensure compliance with the risk limits set of operational risk, for example in areas Staff acceptance of risk-related goals and out in the framework. The Group’s Chief such as staff retention. Risk Officer has oversight responsibility for related values is essential. this process. Board oversight of risk culture Effective communication and challenge: How the approach links strategy A key objective of the new risk governance A sound risk culture promotes an environment of open communication to risks and KPIs framework is to build and maintain a robust and supportive risk culture that fosters sound and effective challenge in which Investors and regulators are increasingly decision making. In 2015, SVG Capital’s decision-making processes encourage interested in how companies assess Board commissioned an independent a range of views; allow for testing of risks to their key strategic objectives assessment of SVG Capital’s risk culture. current practices; stimulate a positive, and core social responsibility objectives. The assessment was completed using critical attitude among employees; and The approach used by SVG Capital starts criteria developed by the Financial Stability promote an environment of open and with the Company’s strategic objectives. Board in its April 2014 guidance to national constructive engagement. Full risk assessments are completed on the regulators (extracted below). Incentives: Performance and talent objectives in the Company’s “Objective The overall conclusion of the independent management encourage and reinforce Register” using a rigorous and consistent audit presented to the Board in late maintenance of the financial institution’s approach that identifies threats to the 2015 was that SVG Capital’s risk culture desired risk management behaviour. objective and treatments of those risks. was appropriate for the Company. Financial and non-financial incentives A residual risk status is created for each Following the assessment, it was support the core values and risk culture objective and these residual risk status recommended that each Group employee at all levels of the institution. reports are ultimately reviewed by the sign a Group code of conduct which has Board at least once a year. The approach now been done. The audit confirmed draws on the core elements of the that the Board was receiving materially Source: Financial Stability Board, ‘Guidance on ISO 2009 international risk management Supervisory Interaction with Financial Institutions on reliable consolidated reports on the Risk Culture: A Framework for Assessing Risk Culture,’ standard 31000, but goes beyond the true risk status linked to the Company’s 7 April 2014, page 3. ISO standard to focus the attention of strategic objectives. decision makers on current performance and the acceptability of the current residual risk status. 24 SVG Capital plc Annual Report 2016

Risk and audit oversight continued

Board oversight of risk Adequacy of risk and audit The Board considers that adequate risk management, internal audit oversight mitigation risk treatments/controls exist and external audit over the financial reporting process. The Board, at least, annually, conducts a An experienced team is responsible for The September 2014 revisions to the UK review of the adequacy of the Company’s preparing the financial reporting for the Corporate Governance Code significantly systems of risk management and internal Company and ensuring that financial elevated expectations related to Board control processes and is responsible for information is accurate, complete, oversight of risk management processes and those systems and for reviewing their reconciled and reviewed by senior internal and external audit. The Board has effectiveness. Due to its size and nature, it members of staff, and that transactions and contracted the services of an independent has not recently been considered necessary balances are recognised and measured on risk adviser to provide regular reports to the for the Company to have an internal a consistent basis and in accordance with Board on the effectiveness and maturity audit function. Regular dialogue has been accounting policies and financial reporting of the Company’s risk management maintained with the external auditor and standards. Management personnel framework and its overall governance the independent risk management services responsible for the integrity and reliability framework. These reviews are done using provider and the Board takes into account of the Company’s financial statements guidance developed by the Global Institute the assurance derived from their work. have completed formal risk assessments of Internal Audit linked to International The Board annually reviews the benefits of on the objective of publishing financial Professional Practices Framework (IPPF) an internal audit function and how it might disclosures that are fair, balanced and standards 2110 and 2120. best be provided. understandable. These risk assessments have been reviewed by the Company’s risk The Board also has heightened The Board has conducted a review in adviser and the Board. Although the Board responsibility under the provisions of accordance with the UK Corporate believes that it has a robust framework the September 2014 revision to the Governance Code and believes that of risk management and internal control UK Corporate Governance Code to the combination of the Company’s over financial reporting in place, this can oversee the effectiveness of the Company’s risk management and governance only provide reasonable and not absolute external auditor Ernst & Young. The framework described in the Company’s assurance against material financial SVG Capital Board was provided with risk management policy and summarised misstatement or loss and is designed to training on board oversight of the external above, risk assessment training provided manage, not eliminate, risk. audit processes in November 2015 at its to key management personnel, reviews annual offsite board meeting. Meetings and feedback provided by the Company’s Further details of the Company’s were held by the chair of the Company’s independent adviser combined with approach to risk management is Audit Committee, Stephen Duckett, with the work done by Ernst & Young, available on the Company’s website Ernst & Young to assess the likely the Company’s external auditor, are at www.svgcapital.com. effectiveness of its annual SVG Capital audit appropriate to the Company’s business as process in March 2016. The SVG Capital an investment company and adequate. Principal risks and uncertainties Board is satisfied that the process used by This review was carried out as part of the The Companies Act and FRC require Ernst & Young meets existing external Board evaluation process, details of which companies to disclose the principal risks audit standards. In conducting its review can be found on page 31. and uncertainties the Company faces. the SVG Capital Board has referred to the The Board is satisfied that there is an oversight of the FRC of Ernst & Young and ‘Principal risks and uncertainties’ are ongoing process for identifying, evaluating defined by the Board as risks with the representations made to them by the Ernst and managing the principal risks faced by & Young audit partner they met with. highest overall potential to affect the the Company; the systems have been in achievement of the Company’s business place for the year under review and up to objectives. These objectives include: the date of approval of the Annual Report ensuring the ability to meet liabilities as and Accounts; the systems are regularly they fall due and meet liabilities in full; and reviewed by the Board; and the systems achieving target returns. Principal risks accord with FRC guidance on this area. relating to delivery of these objectives are described on page 25, along with other principal risks identified in relation to other key objectives. Further information on risk factors is set out in note 27 to the Accounts. Strategic report | Corporate information | Financial information | Shareholder information 25

External

Economic stability k cash flow models are maintained on an ongoing Significant geopolitical uncertainty (for example h basis and forecasts are produced for each Board resulting from mass involuntary migration, Brexit This risk was assessed as increasing meeting that contain appropriate stress testing. k and the US election) along with low economic given recent geopolitical events and senior member of staff is formally responsible for growth may lower risk appetite and impact volatility in the markets. monitoring economic and geopolitical developments investment and divestment rates and assessing their impact on the Company. k For further information on the regular monitoring of portfolio through periodic Company’s view on the current contact with underlying managers. economic situation, please refer to the Chairman’s statement and Chief Executive’s statement.

Sector risk k private equity has outperformed public markets over The private equity sector globally falls out of vk the long term and it has proved to be an attractive favour with investors leading to a reduction in This risk was assessed as stable. asset class through various cycles. demand for the Company’s shares k raising awareness of private equity and attracting From time to time there is heightened new investors mitigates this risk. k regulatory focus and/or media focus increased focus on fee sharing arrangement and on the private equity sector though disclosure of such arrangements. generally this has had limited impact on the attractiveness of the asset class.

For further information on the private equity sector, please see the Chief Executive’s statement.

Investment

Investment selection k the Company’s Investment Committee comprises a The Company invests in funds managed by vk balance of skills and perspectives. k private equity managers, who in turn select and This risk was assessed as stable. the Group seeks to ensure it recruits and retains oversee underlying investee companies. The high calibre staff through its selection process expertise, due diligence, risk management skills For further information on our business and career progression programme. Competitive and integrity of the staff that select private equity model, please see information on page 2. remuneration packages are offered and a supportive managers and the private equity managers culture maintained in order to mitigate this risk. selected by the Company are key to the success See remuneration policy on page 100. of the Company k extensive due-diligence is carried out on the private equity managers that it invests with, which includes assessing the adequacy of the risk management frameworks they use, and post investment monitoring of their performance. k the Company’s investment approach is more diversified than in the past reducing the likelihood of a single investment decision impacting portfolio performance.

Financing risk k cash flow models are maintained on an ongoing Financing risk and the inability to match funding vk basis and forecasts are produced for each Board to the timing of commitments to private equity This risk was assessed as stable in the meeting that contain appropriate stress testing. k funds. Investments by underlying fund managers year. Liquidity is at similar levels to the Company can dispose of assets, raise debt are not sold, or sold for less than expected, or last year. or equity, or renegotiate the terms of borrowing suffer a reduction in value and those managers or investments. k continue to call for new investments leading Details of the Company’s available new investments are subject to commitment tests to higher drawdowns on the loan facility and liquidity and the Company’s liabilities prior to any commitment being made. k an increased risk of being unable to meet are in the Financial review on page 13. returns of cash to shareholders by way of buybacks or commitments as they fall due tenders can be stopped if coverage of future liabilities is not deemed to be sufficient. 26 SVG Capital plc Annual Report 2016

Risk and audit oversight continued

Investment

Concentration risk k k the Board considers the performance of its largest Concentration risk may result in the performance portfolio companies in detail periodically and, of the Company being unduly affected by This risk was assessed as in extremis, can dispose of interests in funds or the performance of one or a small group of decreasing in the period due to other investments. k underlying investee companies. At 31 January the increasing diversification of the the Company has changed its investment objective 2016, the Company’s largest individual investment portfolio. to evolve from a concentrated, single manager underlying company holding represents investor to one that is more diversified. k 19% of the gross investment portfolio and the Further details of the Company’s top the Company’s investment manager has a rigorous Top 15 largest underlying holdings represent 15 core holdings are on page 6 and on due diligence and allocation process that includes 65% of the gross investment portfolio. sector analysis on page 17. steps to prevent inadvertent undue concentration in In addition, the portfolio is concentrated by any single underlying asset. sector with TMT accounting for 38% by value and Industrials 22% by value of the total investment portfolio.

Operational

Cyber security threats k an IT consultant has been retained to assist with The potential loss of operation of core systems or h the monitoring of the Group’s information security sensitive data leading to damage and disruption This risk was assessed as increasing in the monitoring system (ISMS) which identifies material to our business year due to the increased general threats risks and threats to them. k of cyber security breaches. a Group employee has been assigned the responsibility of Information Security Officer to ensure the ISMS is maintained and implemented. k a non-executive Director, Simon Bax, has been appointed as the Board’s representative to monitor the ISMS. k ongoing staff training to identify potential threats and prevent unauthorised access is provided. k a culture of awareness is promoted through ongoing communication of issues and methods of dealing with potential threats.

By order of the Board

Stuart Ballard Company Secretary 22 March 2016 Strategic report | Corporate information | Financial information | Shareholder information 27

Corporate social responsibility

The long-term business success of the on those funds. We aim to develop open, giving programme. During the year, the SVG Capital Group requires effective long-term relationships with the private Company agreed to continue to support management of both financial and non- equity managers with whom we invest. the School for Social Entrepreneurs and the financial performance. Our business relies We engage with general partners to Outward Bound Trust which both focus in particular on strong relationships with our identify where non-financial issues may on education and creation of opportunity. employees, our investors and the general have an impact on our reputation and on A total of £105,000 was committed to our partners of the funds in which we invest. that of our shareholders. We also engage chosen charities in the 12 month period. Overall responsibility for the implementation with relevant industry associations and of the Corporate Social Responsibility (CSR) participate in other initiatives to help raise School for Social Entrepreneurs policy rests with the Board. awareness and understanding of these The School for Social Entrepreneurs (SSE) issues, both within and outside the sector. Employees, social, community and exists to provide training and opportunities Shareholders to enable people to use their creative and human rights issues entrepreneurial abilities more fully for The Group employs 20 people based in Our objective is to ensure that our social benefit. SSE also wants to recruit London broken down by gender as follows: operations address shareholders’ policies more innovative and capable people relating to environmental, social and into voluntary and other organisations. Number Male Female governance issues. To do this we aim to: SSE runs practical learning programmes Group Employees 20 12 8 aimed at helping develop the individual a maintain a high standard of SVG Capital plc Directors 6 4 2 entrepreneur and their organisation corporate governance. Senior Managers1 862 simultaneously. SSE’s approach, and belief, a respond to shareholders’ environmental, is that social change is people-powered, 1 Excludes Lynn Fordham (who is included as a Director of SVG Capital plc) social and governance concerns as they and that the most valuable assets and As a financial services firm, the relate to our own operations. resources we have are human ones. environmental and social impact of our a give full consideration to shareholders’ For more information: www.sse.org.uk activities is low. However, we are looking concerns as they relate to our at ways to reduce our environmental investment activities. Outward Bound Trust impact and to support local communities. Funds in which we invest The Outward Bound Trust is an educational We recognise the mutual benefits that can charity that uses the outdoors to help arise from doing this in a consistent way. Our objective is to develop strong develop young people from all walks of Our objective is to recruit, train and retain relationships, balancing the legitimate life. It runs adventurous and challenging high calibre employees, and to foster a needs of the general partners of the funds outdoor learning programmes that equip work environment that helps them fulfil in which we invest with our interests and young people with valuable skills for their potential. To do this we aim to: the expectations of our shareholders. education, work and life and help them a We aim to do this by: become more confident, more effective provide a supportive work environment and more capable at school, college and in a ensuring the highest levels of integrity in and corporate culture. the workplace. a our relationships with general partners, provide appropriate training including appropriate transparency on For more information: and development. fees and governance matters. www.outwardbound.org.uk a address, where possible, employees’ a developing strong and open working Engagement with the sector interests regarding environmental, social relationships with general partners, and governance issues. so that we can maintain trust Our objective is to engage in debates on the role and impact of private equity. Greenhouse gas emissions without unnecessary restrictions and unrealistic requests. We aim to do this by: For the period to 30 September 2015, a a working with relevant sector associations. the Group had no employees. During the undertaking early and constructive year, the Company entered into a lease engagement on environmental, social a participation in other relevant initiatives. of office premises to accommodate its and governance issues of legitimate a concern to our shareholders. Prior to engaging in discussions 20 employees that joined the Group on with stakeholders. 1 October 2015. It is impractical for the investment, we evaluate how the general Group to report on greenhouse emissions partners assess such issues as part of their for the part-year. due diligence on underlying companies and how they report on such issues. By order of the Board Our investors and investments Charitable giving Although we are a major investor in Lynn Fordham The Group promotes charitable giving by private equity funds, regulations and Chief Executive commercial realities limit the degree to direct donations to charities, in addition which we can have an active influence to supporting staff with time off for 22 March 2016 volunteering and a matched charitable 28 SVG Capital plc Annual Report 2016

Board of Directors

Andrew Sykes Lynn Fordham Simon Bax Chairman Chief Executive Non-Executive Director

Andrew Sykes was appointed as a Director Lynn Fordham was appointed as a Director Simon Bax was appointed as a Director of on 8 February 2010 and became Chairman on 1 July 2008. She is the Company’s Chief the Company on 30 June 2015. Simon is on 8 November 2012. He is chairman of Executive Officer. She has over 20 years of currently chairman of Archant Group and Smith & Williamson Holdings Limited, and financial experience and has worked in a WiSpire, and a non-executive director of also a non-executive director of Record plc number of companies including Mobil Inmarsat and the British Bobsleigh and and Gulf International Bank (UK) Limited. Oil, BAA plc, Boots Group plc and MAN Skeleton Association. He has held senior Group plc. She is a non-executive director executive roles in both public and private Andrew brings significant experience of of Fuller Smith & Turner P.L.C. companies in Europe and the US, including the investment management sector, Pixar and News Corporation, as well as including expertise in alternative asset having entrepreneurial experience in his management, along with many years role as the founder, with private equity of experience as a non-executive backing, of Encompass Digital Media. director or chairman of both public and private companies. Simon has recent experience of private equity with his work for private equity- backed companies. His technology background complements the skills of the other Directors.

Year appointed Year appointed Year appointed 2010 2008 2015

Meetings attended Meetings attended Meetings attended 11/11 11/11 5/6

Committees: Committees: Remuneration Audit and Risk Corporate Governance Remuneration and Nominations Corporate Governance and Nominations Strategic report | Corporate information | Financial information | Shareholder information 29

Stephen Duckett Helen Mahy CBE David Robins Non-Executive Director Non-Executive Director Non-Executive Director

Stephen Duckett was appointed as a Helen Mahy was appointed as a Director David Robins was appointed as a Director Director of the Company on 12 March of the Company on 24 July 2014. She is on 15 August 2013 and is the Senior 2012. Stephen is an experienced private currently chairman of The Renewables Independent Director. David has had a equity professional having worked in Infrastructure Group Limited. She is also distinguished career in financial services the industry for the past 17 years, most a non-executive director of Bonheur ASA/ spanning over 35 years. He is currently recently as a managing director of Hellman Ganger Rolf ASA and SSE plc. Previously, Chairman of Fidelity Japanese Values plc. & Friedman based in London. she was group company secretary and He is also a non-executive director of general counsel of National Grid Plc. NHBS Ltd, SerraLux Ltd and SerraLux Inc. Stephen has been involved with numerous Previously, David was chairman and private equity transactions of various types Helen has experience as a director of chief executive of ING Barings following over the course of his career and this investment companies and her legal nearly 18 years with UBS, where he experience is particularly relevant to the and company secretarial experience reached the position of CEO, London Company’s investment strategy. complements the skills of the and head of Europe. other Directors. David’s experience in financial services is directly relevant and in addition he has significant exposure to the operation of boards in the financial services’ sector.

Year appointed Year appointed Year appointed 2012 2014 2013

Meetings attended Meetings attended Meetings attended 11/11 11/11 11/11

Committees: Committees: Committees: Audit and Risk (Chairman) Audit and Risk Audit and Risk Remuneration Remuneration (Chairman) Remuneration Corporate Governance Corporate Governance Corporate Governance and Nominations and Nominations and Nominations (Chairman) 30 SVG Capital plc Annual Report 2016

Corporate governance report

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 2014 by the Financial Reporting Council (FRC), applies to disclosures in this statement. The Code is available to download from www.frc.org.uk. The Company is subject to the Alternative Investment Fund Managers Directive (AIFMD). The Company entered into a management agreement with SVGC Managers Limited (a wholly owned subsidiary) on 1 October 2015. State Street Trustees Limited continues to act as its depositary, in accordance with the requirements of the AIFMD.

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 report, together with the Statement of Directors’ responsibilities on page 36 and Going-concern statement set out on page 32, 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. 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 and audit oversight section on page 22, the Report of the Directors on page 35 and the Remuneration report on page 38.

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 93 to 99. 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 2016, there were five non-executive Directors, including the Chairman. Lynn Fordham, who became an employee of SVGC Managers Limited on 1 October 2015, continues in her role as Chief Executive of the Company. Profiles of each of the Directors, including length of service, may be found on pages 28 and 29. The Board considers each of Simon Bax, Stephen Duckett, Helen Mahy CBE 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 (including financial expertise), and that no individual or group of individuals is or has been in a position to dominate decision making.

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.

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. Strategic report | Corporate information | Financial information | Shareholder information 31

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 the calendar of events. In addition, meetings are arranged with various members of the management team 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 2014 identified the need to: consider appointing one more non-executive directors to the Board; continue to develop the risk management programme; and focus on succession planning. During the year Simon Bax was appointed to the Board, bringing with him experience of working in private equity-backed companies. Further information on Simon’s experience can be found on page 28. The implementation of the risk management programme has continued throughout the year. Further information on this can be found in the Risk and audit oversight report on pages 22 to 26. At the Company’s two-day strategy offsite, a specific session was held on succession planning and a number of initiatives were identified that continue to be worked on. 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, with Simon Bax joining, the composition of the Board was now settled and it was an appropriate time to undertake an external evaluation. The Company retained the services of Prism Boardroom to perform the evaluation which consisted of: one to one interviews with Directors and certain senior executives; thorough questionnaires on the operation of the Board and its committees; observation at one of the sessions at the Board’s offsite strategy meeting; and a review of compliance with the Corporate Governance Code. The evaluation concluded that the Board was well led and functioned effectively and efficiently. Prism Boardroom presented its findings to the Board following completion of the evaluation. While no material issues were identified, a number of ‘housekeeping’ recommendations were suggested at that meeting. Following the meeting, the various recommendations were considered by the Chairman with the Company Secretary and an action plan to address a number of matters was proposed and then approved by the Board. These include: updating the terms of reference of the Nominations and Governance Committee to better reflect its role and changing governance expectations of such committees; updating the Senior Independent Director’s letter of appointment to reflect the expectations of that role; facilitating continuing education through better information flows to Directors on industry relevant training material and courses. The next performance evaluation will take place at the end of 2016 and is expected to be an internal process.

Information flows The Board receives written reports from management 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 UK 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. 32 SVG Capital plc Annual Report 2016

Corporate governance report continued

Committees The Board has delegated certain responsibilities and functions to the Audit and Risk Committee, the Remuneration Committee and the Corporate Governance and Nominations Committee. 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 2016 may be found on pages 28 and 29 and information regarding attendance at Committee meetings during the year under review may be found below.

Meetings The Board held 11 meetings in the 12 month period to 31 January 2016. 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:

Corporate Governance and Audit and Risk Remuneration Nominations Director Board Committee Committee Committee Stephen Duckett 11/11 5/5 5/5 2/2 Lynn Fordham 11/11––– Simon Bax* 5/6 2/2 3/4 2/2 David Robins 11/11 5/5 5/5 2/2 Helen Mahy CBE 11/11 5/5 5/5 2/2 Andrew Sykes 11/11 – 5/5 2/2

* Simon Bax joined the Board on 30 June 2015. 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. Simon Bax was unable to attend one Board meeting and one Remuneration Committee meeting. 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 discussed or to be discussed.

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. Annual and semi-annual results presentations take place each year along with an annual capital markets day. 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 Risk, Remuneration and 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 Annual General Meeting at page 93 sets out the business of the meeting. As more fully described in the Remuneration report on page 38, following a significant vote against a number of resolutions at the 2015 Annual General Meeting, the Chairman and Chairman of the Remuneration Committee met with major shareholders during the year to better understand their concerns.

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 8 and 9, the Chief Executive’s statement on pages 10 and 11 and the Strategic report on pages 1 to 27. The financial position of the Company, its cash flows, liquidity position and borrowing facilities are described in the Financial review on page 13. In addition, note 27 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 on pages 22 to 26. The Company finished the year with net cash of £291 million and has access to an additional €300 million through the revolving credit facility to December 2016. This provides adequate coverage of the £332 million of uncalled commitments to the investment portfolio. Strategic report | Corporate information | Financial information | Shareholder information 33

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 (being a period of at least 12 months from the date of approval of the Annual Report and Accounts). 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 Group 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.

Viability statement In accordance with provision C.2.2 of the 2014 UK Corporate Governance Code, the Directors have assessed the prospects of the Company over a period of three years. The period selected was considered appropriate as: k it covers a period over which a majority of current unfunded commitments to underlying funds are expected to be called; k it is a long enough period to ensure that stress tests are reasonably challenging; and k it covers a period over which the Board reviews cash flow simulations and performs stress tests. The cash flow simulations stem from reasonable expectations around calls and distributions to and from its fund investments and the evolution of the Company’s portfolio valuation, together with the pipeline of expected investment opportunities. New fund commitments are made in compliance with the Company’s commitment tests and the assumptions adopted take account of the Company’s risk appetite, as detailed on page 23. It should be noted that there are significant uncertainties inherent in this process, including but not limited to: k the uncertain timing and quantum of the Company’s cash flows to and from its fund investments; k the ability to refinance the Company’s loan facility, which currently matures in December 2019; and k a recognition that uncertainty increases over time and therefore the model adopted can only provide a reasonable basis for assessing likely scenarios and will necessarily differ from actual outcomes. The stress scenario is based on experience gained over the life of the Company, including the 2008 financial crisis and involves a significant delay in the timing of investment realisations, a notable reduction in the size of those projected cash inflows, plus a significant diminution in the value of the Company’s investment portfolio. The analysis aims to ensure that the Company remains in compliance with its loan to value covenants and has sufficient financing capacity to meet its obligations as they fall due. The review takes into account the relevant principal risks faced by the Company, which are described in greater detail on pages 22 to 26 and in note 27 to the financial statements. Based on the results of this analysis, the Directors have a reasonable expectation that the Company will be able to continue in operation and meet its obligations as they fall due over the three-year period of assessment.

Audit and Risk Committee report The Audit and Risk Committee, chaired by Stephen Duckett, consists of the non-executive Directors other than the Chairman and meets at least four times each year. Details of attendance at the meetings of the Audit and Risk Committee can be found on page 32. The members of the Audit and Risk Committee consider that they have the requisite skills and experience to fulfil the responsibilities of the Committee. In particular, Stephen Duckett has significant private equity experience which is relevant in assessing the valuations of underlying investments. Simon Bax is a chartered accountant. Further details on the experience and qualifications of members of the Committee can be found on pages 28 and 29. The Board is satisfied that the Committee has recent and relevant financial expertise. 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 and Risk Committee is responsible for ensuring the Company’s risk monitoring programme, internal audit processes and regulatory compliance arrangements are appropriate. Further details of the work performed in this area can be found on page 24. The Audit and Risk Committee has responsibility for the oversight of the external audit function. At the request of the Board, the Audit and Risk 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. 34 SVG Capital plc Annual Report 2016

Corporate governance report continued

During its review of the Company’s financial statements for the year ended 31 January 2016, the Audit and Risk 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 portfolio is screened to identify underlying companies where a combination of operating performance, quality of earnings and leverage raises concerns about the valuation provided by underlying managers. These valuations are reviewed in detail by the investment manager and the Board. The valuation of investments is undertaken in accordance with the accounting policies, disclosed in note 1 to the accounts on page 60. Going concern and viability, in particular The Directors have considered the Company’s investment objective, risk management ensuring the Company can meet calls due policies, capital management policies and procedures and the nature of the portfolio. to underlying funds. 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 and Risk Committee has a primary responsibility for making recommendations to the Board on the reappointment and removal of external auditors. Representatives of the Company’s auditors attended the Audit and Risk Committee meeting at which the draft Annual Report and Accounts were considered. Prior to that, the Chairman of the Audit and Risk Committee met with the new audit partner to discuss the criteria that the FRC recommends be used in assessing auditor effectiveness. Having reviewed the performance of the external auditors, including assessing the quality of work, timing of communications, work with management and the relevant FRC guidance, the Committee considered it appropriate to recommend their reappointment. 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 reappointed. The Company’s year ended 31 January 2016 is the fourth of a five-year maximum term that the current audit partner has been in the role for the Company. That partner will retire in 2016 and be replaced by a new audit partner. The Directors’ statement on the Company’s system of internal control is set out on page 24. The Company has complied with the provisions of the September 2014 Competition and Markets Authority Order. Simon Duckett Chairman, Audit and Risk Committee 22 March 2016

Corporate Governance and Nominations Committee report 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 Simon Bax. The services of JCA Group were retained during the year in connection with the appointment of Simon Bax. In addition, services were received from Odgers Berndston. The Committee also reviewed the corporate governance disclosures made in the Annual Report and Accounts. The Committee has responsibility for monitoring boardroom diversity, of which gender diversity is an important element. Two of the five Board Directors are women and the Company will seek to maintain at least a 25% proportion of female Board membership. The Board’s aim is to have a diverse Board in terms of gender, industry experience, skills and educational background. As part of the Board evaluation process, it was agreed that the Committee should be chaired by one of the non-executive Directors rather than by the Chairman of the Company. Accordingly, David Robins was appointed chair of the Committee with effect from 22 January 2016. David Robins Chairman, Corporate Governance and Nominations Committee 22 March 2016 Strategic report | Corporate information | Financial information | Shareholder information 35

Report of the Directors for the year ended 31 January 2016

The Directors submit their report and the audited accounts of the Company for the year ended 31 January 2016.

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 8 and 9, the Chief Executive’s report on pages 10 and 11 and the Strategic report on pages 1 to 27, which are incorporated by reference into this report. In addition, the Corporate governance report 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 year ended 31 January 2016 (2015: no dividend). The Company’s revenue gain for the year was £7,980,000 (2015: loss of £19,531,000). The Company’s capital gain for the year was £83,029,000 (2015: gain of £129,185,000). The Company’s profit for the year was £91,009,000 (2015: profit of £109,654,000).

Purchase of shares At the Annual General Meeting (AGM) held on 1 May 2015, the Company was authorised to purchase up to 22,000,000 shares (representing 11.68% of share capital in issue on 18 March 2015). The Directors have relied on this authority and the pre-existing authority to make market purchases of shares during the year. During the year ended 31 January 2016 (relying on the 2014/2015 and 2015/2016 shareholder authorities), the Company bought 9,257,965 shares of 100p each (representing 6% of the Company’s issued shares as at 22 March 2016) at an average price of 489.9p per share and at a total cost of £46,309,261 (plus commission and stamp duty). These shares are currently held in treasury though may be cancelled. Since the period end up until 22 March 2016, the Company has bought a further 2,395,000 shares at an average price of 486p per share which are also held in treasury though may be cancelled. At the 2015 AGM, the Company was authorised to apply up to £120 million to make market purchases in connection with one or more tender offers. Up to 24,000,000 shares could be repurchased under this authority. During the year, the Company completed two tender offers, one of £70 million at a tender price of 535p and one of £50 million at a tender price of 565p. The combined number of shares repurchased was 21,993,669, all of which were cancelled.

Annual General Meeting The AGM will be held at 11.30 a.m. on 3 May 2016 at J.P. Morgan, 60 Victoria Embankment, London EC4 0JP. Details of the resolutions to be proposed at the AGM, together with explanations, appear in the Notice of Annual General Meeting on page 93.

Directors In accordance with the Company’s Articles of Association and the Company’s policy on tenure outlined on page 30, Andrew Sykes, Lynn Fordham, David Robins, Stephen Duckett and Helen Mahy CBE will offer themselves for re-election at the Annual General Meeting. Simon Bax offers himself for election at the Annual General Meeting following his appointment on 30 June 2015. Simon is currently Chairman of Archant Group and WiSpire, and a non-executive director of Inmarsat and the British Bobsleigh and Skeleton Association. He has held senior executive roles in both public and private companies in Europe and the US, including Pixar and News Corporation, as well as having entrepreneurial experience in his role as the founder, with private equity backing, of Encompass Digital Media. The Board recommends that shareholders support the election of Simon Bax and the re-elections of the 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 30. Biographical details of all current Directors may be found on pages 28 and 29. No Director has any material interest in any contract that is significant to the Company’s business. 36 SVG Capital plc Annual Report 2016

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 has expressed its willingness to remain in office and resolutions to reappoint it and to authorise the Directors to determine its 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 and Risk 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 and Risk Committee for pre-approval. Certain types of non-audit services (such as tax compliance services) need not be referred to the Audit and Risk Committee. The Audit and Risk 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 £29,580 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 and Risk 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 UK 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 Company’s independent risk oversight provider reviews the financial statements and provides detailed feedback linked to the objective that the Report and Accounts are fair, balanced and understandable. Management prepares a detailed risk assessment on the objective which is audited by the risk oversight provider and a detailed quality assurance report is provided to senior management and the Board. The Company’s auditor is required to report if anything comes to its attention that would indicate the Annual Report and Accounts are not fair, balanced and understandable. Each member of the Board reviews the Report and Accounts. The Directors are comfortable that the Annual Report and Accounts for the year ended 31 January 2016, 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 and Risk Committee, SVGC Managers Limited 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; k make 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. Strategic report | Corporate information | Financial information | Shareholder information 37

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 22 March 2016, the Company had 231,789,499 shares of £1 in issue. 73,787,872 shares were held in treasury. The total number of voting rights as at 22 March 2016 was 158,001,627 (excluding shares held in treasury). As at 22 March 2016, the Company has been notified of the following significant direct or indirect holding of securities in the Company:

Voting rights attached to shares

Number of % of ordinary total voting shares rights1 Coller Investment Management Limited 41,485,452 26.01 Schroder Investment Management, Schroder Channel Islands Limited, Schroder & Co Limited 19,025,808 12.01 Old Mutual plc 12,596,795 7.38 AVIVA plc and its subsidiaries 11,733,687 5.22 Standard Life Investments 8,608,235 4.98 Legal and General Group Plc 8,941,703 3.87 Witan Investment Trust 5,600,629 3.28

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. The Strategic report, Report of the Directors and Remuneration report have been drawn up and presented in accordance with and in reliance upon English company law and the liabilities of the Directors in connection with those reports shall be subject to the limitations and restrictions provided by that law. By order of the Board Stuart Ballard Company Secretary 22 March 2016 Registered Number: 3066856; Registered Office: 6 Kean Street, London WC2B 4AS 38 SVG Capital plc Annual Report 2016

Remuneration report

Introduction I am pleased to introduce the Remuneration report for the financial year 1 February 2015 to 31 January 2016. At our 2015 Annual General Meeting, our remuneration policy was approved. No changes are being made to that policy which is reproduced for reference at page 100 of this Annual Report. Shareholder feedback The Company’s remuneration policy and remuneration report received a significant percentage of votes against at the 2015 Annual General Meeting (36.5% and 37.7% respectively). The majority of these votes against were attributable to one shareholder who voted against a number of other resolutions. Feedback received at the time of the 2015 Annual General Meeting included concern over the potential size of bonus and long-term incentive plan (LTIP) awards in situations where the Committee relied on the exceptional circumstances provision in the remuneration policy. In response to this, the Committee has clarified that bonus and LTIP awards relying on the exceptional circumstances provision will only be made following consultation with larger shareholders. The Board wanted to ensure shareholders’ views were heard and during the year the Chairman and I have met with a number of the larger shareholders to better understand any concerns. Meetings were offered to shareholders representing 58% of the shareholder base. The meetings focused on the following key points: k The reasons behind the introduction of the new remuneration policy at last year’s AGM (principally the impending transaction with AAM that required the introduction of a new policy to allow payments to executive Directors following the sale of Aberdeen SVG Private Equity Managers Limited (ASVGM) to Aberdeen Asset Management plc (AAM)); k The principal changes from the prior Group remuneration policy (including the newly introduced Chief Executive’s shareholding requirement; bonus deferral; introduction of malus and clawback; and reduction in the quantum of potential LTIP awards now based on a multiple of salary only, not salary and bonus); k Clarification of the proposed operation of the current policy (including that the maximum limits for bonus and LTIP awards would only be exceeded in exceptional circumstances and following consultation with major shareholders); k The proposed vesting targets for LTIPs of 7% (0% vesting) to 15% (100% vesting) growth in TSR and NAV over a three and four-year period respectively; and k The remuneration package for the Chief Executive which has been materially reduced in recognition of the reduced scope of the role following the sale of the Company’s remaining interest in ASVGM to AAM, including a reduction in salary for the role from £367,500 to £300,000 p.a. The potential for carried interest to be awarded to the Chief Executive was also discussed and it was noted that any entitlement would likely not be a material part of the Chief Executive’s package (and would result in a commensurate reduction of other variable elements of remuneration in accordance with the policy). Developments during the year At the time of last year’s AGM, the Company was managed by ASVGM, which was a member of the AAM group of companies. Accordingly all staff who provided management services to the Company through ASVGM (including the Company’s Chief Executive) were paid pursuant to the AAM remuneration policy only in the financial year to 31 January 2015. During 2015, the Company’s remaining 49.9% interest in ASVGM was sold to AAM and a new manager, SVGC Managers Limited (a wholly owned subsidiary of the Company) was appointed as investment manager with effect from 1 October 2015. Accordingly, the remuneration report that follows covers remuneration that was paid pursuant to the AAM policy for part of the year and pursuant to the Company’s policy for the balance. Despite the fact that the Chief Executive was employed by AAM for part of the year, all awards of variable compensation to the Chief Executive during the period have been made under the Company’s policy. These were awarded with reference to the weighted average salary earned by the Chief Executive in the period. The net impact of this is a significant reduction in the variable elements of compensation from prior years. From 1 October 2015, all remuneration has been, and will continue to be paid, under the Company’s policy. Strategic report | Corporate information | Financial information | Shareholder information 39

Performance in the year A number of metrics (both financial and non-financial) were used to assess Company and management performance during the year: NAV growth – net asset value (NAV) per share increased by 11% over the year. Total Shareholder Return (TSR) – the share price increased from 435p to 491p over the year. After adjusting for the tender offers in May 2015 and January 2016, Total Shareholder Return was 14%. Capital allocation – the Company continued to exercise discipline in its capital allocation strategy. £167 million was returned to shareholders by way of tender offers and share buybacks. £67 million of debt was repaid through the repurchase of convertible bonds. New fund commitments of $100 million were made during the year and $12 million of co-investments were made. Portfolio performance – the portfolio of fund investments and co-investments has performed strongly in the year. The commitments made since the adoption of the new strategy are performing well, with some good, early realisations. Management team – the Company’s interest in ASVGM was sold to AAM during the year. This necessitated the establishment of a new wholly-owned management subsidiary and the transfer of personnel from ASVGM to this new subsidiary. This complex transaction was executed by the management team, and the Company has retained the expertise it requires through that process. In addition, two new investment professionals have joined the management team. Culture – the management team in place is now focused solely on delivering on the Company’s strategy. Robust risk management and compliance regimes have been put in place to ensure that all staff are focused on these important issues in their day-to-day roles. Investment discipline has developed into a key philosophy of the Company and appropriate processes and procedures have been implemented to ensure this remains the case. Supplementary to this is the desire to form ‘partnership’ relationships with our underlying managers and progress has been made in developing those existing relationships and a select few, potential new relationships. The Committee did not set specific management objectives at the start of the year, as the management team was employed by AAM at that time. However, the Committee has reviewed the results described above and takes the view that the Chief Executive has performed very strongly across the range of both financial and non-financial metrics. Activities of the Remuneration Committee The Committee met on four occasions in the year. It formulated the remuneration policy that was approved by shareholders at the 2015 AGM. It continued to operate the existing LTIP and deferred bonus schemes and approved changes to those schemes introducing malus and clawback. It met to consider the Chief Executive’s new remuneration package and to approve the bonus for the year and the award of LTIPs. Looking forward the Committee remains committed to maintaining a remuneration policy that attracts and retains talent and rewards achievement of strategic goals, thereby aligning management and shareholders, while encouraging prudence from a risk perspective. The Committee monitors regulatory and market developments and will seek to ensure that the policy evolves, if necessary, to reflect these. Helen Mahy CBE Chairman, Remuneration Committee 22 March 2016 40 SVG Capital plc Annual Report 2016

Remuneration report continued

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’ emoluments Directors are only entitled to fees at such rates as are determined by the Board from time to time in accordance with the remuneration policy. None 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. Accordingly the single total figure table for non-executive Directors 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 including the introduction of malus and clawback into the Company’s share schemes. 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. Fees of £24,257 were paid to New Bridge Street during the period. Single total figure tables Set 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. The Directors who served during the year received the following emoluments: Single total figure table (audited information) Non-executive Directors

Fees paid (£) Taxable benefits Total (£) For the For the For the For the For the For the 12 month 13 month 12 month 13 month 12 month 13 month period ended period ended period ended period ended period ended period ended Name of Director1 31 Jan 2016 31 Jan 2015 31 Jan 2016 31 Jan 2015 31 Jan 2016 31 Jan 2015 Andrew Sykes 130,000 140,833 – – 130,000 140,833 Stephen Duckett 47,500 55,208 – – 47,500 55,208 Simon Bax2 27,708 – – – 27,708 – Helen Mahy CBE3 47,500 22,940 – – 47,500 22,940 David Robins 47,500 55,208 – – 47,500 55,208

1 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 2 Appointed 30 June 2015 3 Appointed 24 July 2014 Strategic report | Corporate information | Financial information | Shareholder information 41

Single total figure table (audited information) For the period from 1 February to 30 September 2015, Lynn Fordham was employed by AAM. Since 1 October 2015, Lynn Fordham was employed by SVGC Managers Limited, a wholly-owned subsidiary of the Company. The information in this table comprises the aggregate remuneration received by Lynn Fordham from both AAM, as advised by AAM and SVGCM for the period to 31 January 2016. Lynn Fordham is a non-executive of Fuller Smith & Turner PLC and received fees of £59,000 in respect of this appointment during the period. Such fees were retained by Mrs Fordham and do not form part of remuneration disclosed below. Executive Directors1

Lynn Fordham Notes 2014/15 (13 month 2015/16 period) Salary & Fees (£) 345,000 392,471 A salary of £367,500 p.a. was received from AAM for the period 1 February to 30 September 2015. The CEO’s salary reduced to £300,000 p.a. from 1 October 2015. Benefit (£) 8,217 6,075 Includes private health care, life cover and income protection insurance. Annual bonus (£) 610,000 1,250,000 50% of this is deferred into SVG Capital plc shares and vests in equal tranches over five years. Pension (£) 74,000 78,770 Includes £34,000 paid by way of salary supplement. Total excluding long-term 1,037,217 1,727,316 incentive (£) Vesting of long-term incentive (£) 2,865,628 2,821,195 Relating to awards made in 2011 and 2012 that vested during the year to 31 January 2016. All of this amount was gain. Details of the NAV and TSR performance targets can be found on page 44. NAV increased by 17% p.a. over the performance period and TSR increased by 21% p.a. over the performance period. Total (£) 3,902,845 4,548,511

1 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 Annual bonus Lynn Fordham’s performance was assessed against both financial and non-financial metrics. The growth in NAV, positive Total Shareholder Return and encouraging early performance of the recent new commitments were considered by the Committee. Alongside this, a disciplined capital allocation strategy was displayed during the year, with a sensible balance of returning money to shareholders, retiring debt and making new commitments. During the year, a new management company was established and authorised and employees transferred from AAM to this new entity. The Board as a whole has focused on the culture within the Group, ensuring that robust risk management and compliance processes are in place, creating a culture of risk awareness and the Chief Executive was instrumental in embedding this within the management company. In light of this strong financial performance and the non-financial achievements highlighted above, the Committee awarded Lynn Fordham a bonus of £610,000 (being 88.5% of her maximum bonus opportunity and 177% of her 2015/2016 salary). 50% of this award was paid in cash immediately, with the remaining 50% deferred into shares vesting in equal instalments over five years. Long-term incentives The 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 two separate awards (281,750 and 285,701 respectively) of nil cost options that both vested on 23 March 2015 with a market price of 505p per share. These awards were made on 17 February 2011 and 22 March 2012 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 on page 44. The average growth in undiluted NAV per share over the performance period was 17% p.a. The average annual compound Total Shareholder Return was 21% over the period. No long-term incentives were awarded in the year. The Committee has agreed to award Lynn Fordham long-term incentives with a face value of £610,000 (representing 177% of her 2015/2016 salary). 50% of the award will be subject to a performance target based on TSR over three years with 0% vesting at 7% TSR p.a. and 100% vesting at TSR of 15% p.a. (with straight-line vesting in between). 50% of the award will be subject to a performance target based on NAV growth over four years with 0% vesting at 7% NAV growth and 100% vesting at 15% growth in NAV (with straight-line vesting in between). 42 SVG Capital plc Annual Report 2016

Remuneration report continued

Other benefits Taxable 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 – Lynn Fordham received a pension entitlement of 20% of salary from AAM and 25% of her reduced salary from SVGCM. A portion of Lynn Fordham’s bonus was paid in December 2015 with 50% deferred into SVG Capital plc shares. This award under the Company’s deferred share bonus plan was made on 18 December 2015 over 51,440 shares which will vest in equal instalments over five years, subject to continued employment. The balance of the bonus will be paid in March 2016 with 50% to be deferred into SVG Capital plc shares. Loss of office No payments to Directors for loss of office have been made in the year. Share Price Total Return The 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 upon which the Company’s shares are quoted.

Total Shareholder Return vs FTSE All-Share Total Return Index over five years to 31 January 2016

250

200

150

100

50

0 31 Dec 31 Dec 31 Dec 31 Dec 31 Jan 31 Jan 2010 2011 2012 2013 2015 2016

SVG Capital FTSE All-Share Index Rebased at 100 at 31 December 2010 Source: Bloomberg

Total remuneration of Chief Executive The 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 made in prior years which vested during the year in question, having satisfied the relevant performance conditions. The LTIP vesting figures and bonus payments show the payout for each year as a percentage of the maximum.

For the For the 13 month 12 month period ended period ended 2011 2012 2013 31 Jan 2015 31 Jan 2016 Remuneration other than LTIP vesting (£’000) 970 965 1,907 1,728 1,037 Remuneration attributable to LTIP vesting (£’000) 0 1,112 3,160 2,821 2,866 Total remuneration (£’000) 970 2,077 5,067 4,549 3,903 LTIP vesting (%)2 0% 80.5% 100% 100% 100% Bonus (%)3 80.5% 71% N/A1 N/A1 88.5%

1 Lynn Fordham’s bonus that was paid by AAM was 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. LTIP vesting refers to awards made in prior years to the year in question, which have vested in the year in question 3 Bonus (%) is actual bonus paid against maximum bonus that could have been awarded Strategic report | Corporate information | Financial information | Shareholder information 43

Change in the remuneration of the Chief Executive compared to Other Employees The table below shows the percentage change in remuneration awarded to the Chief Executive and employees as a whole, between the year to 31 January 2015 and the year to 31 January 2016.

Salary Benefits1 Bonus Chief Executive -18% 35% -51% All Other Employees 3% 35% -5%

1 The benefits received by recipients did not increase over the year but the cost to the Company of providing these benefits did increase. Staff were employed by AAM in prior years and the costs of providing equivalent benefits is now more per employee than it was at AAM, due to economies of scale Relative importance of spend on pay The table below shows the proportion of the Company’s income spent on pay. The 13 month period ended 31 January 2015 included the remuneration of non-executive Directors and the Chief Executive. No other staff costs were included as the Company did not have any staff. For the 12 month period ended 31 January 2016, the remuneration of non-executive Directors and the Chief Executive for the entire period is included, along with the remuneration of the staff for the period since 1 October 2015, which was the date that staff became employees of a Group company.

For the For the 12 month 13 month period ended period ended 31 Jan 2016 31 Jan 2015 Difference Total employee pay1 £6.0m2 £4.9m3 £1.1m Distribution to shareholders: (a) dividends £0m £0m £0m (b) share buyback and tenders £167m £205m -£38m Employee pay as a % of distributions to shareholders 3.6% 2.4% 1.2%

1 This includes Directors’ fees and Group employee pay 2 Group employee pay for the period from 1 October 2015 when employed by SVGC Managers Limited plus Directors’ pay for the whole year 3 There were no Group employees during this period as all staff were employed by Aberdeen Asset Management Statement of implementation of the remuneration policy in the coming year The table below sets out how the Committee intends to operate the remuneration policy in the 2016/17 financial year.

Policy element Implementation during 2016/17 Base salary The CEO’s salary was reduced from £367,500 to £300,000 with effect from 1 October 2015 and will remain at that level. Group employees received an average salary increase of 3% which will take effect from 1 April 2016. Pension No changes to current arrangements are proposed. Benefits No changes to current arrangements. Benefits include health cover, life cover and income protection. Annual bonus The maximum annual bonus will remain unchanged. Awards of a bonus in excess of 200% of salary will only be made in exceptional circumstances and following consultation with larger shareholders. At least 50% of any bonus award will be deferred into shares vesting in equal instalments over five years for executive Directors and four years for other staff. Any bonus will be awarded based on an assessment of financial and non-financial targets for the Group and an assessment of individual performance. Financial targets will include portfolio performance, NAV growth, capital allocation, cost management, and the development of new investment opportunities, while non-financial targets will include the development of the investment team, management of key strategic relationships and the continued enhancement of the Company’s risk management culture. The Committee considers that the specific numeric targets agreed are commercially sensitive and these will not therefore be disclosed in advance. The Committee will report on the performance and bonus awards in next year’s accounts. Long-term incentives The maximum awards will remain unchanged. Awards in excess of 200% of salary will only be made in exceptional circumstances and following consultation with larger shareholders. 50% of awards will be measured against Total Shareholder Returns over a three-year period with 0% vesting at 7% TSR and straight-line vesting up to 100% at 15% TSR. 50% of awards will be measured against growth in net asset value per share over a four-year period with 0% vesting at 7% growth and straight-line vesting up to 100% at 15% growth. Shareholding To remain unchanged with the Chief Executive target of 3.0 times salary and other senior members of staff requirements with a target of 1.0 times salary. Non-executive No changes to current arrangements. Director fees 44 SVG Capital plc Annual Report 2016

Remuneration report continued

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 are encouraged to build up an interest in the Company’s shares. In the case of the Chief Executive, the shareholding target is 3.0 times salary. The Chairman and non-executive Directors are encouraged to hold shares in the Company but are not subject to a formal shareholding guideline. None of the Directors has any interests in the convertible bonds of the Company. The interests of the Directors and their connected persons in the equity securities of the Company at 31 January 2016 are shown in the table below:

Ordinary Shares As at As at Director 31 Jan 2016 31 Jan 2015 Andrew Sykes 31,000 31,000 Lynn Fordham 531,024 483,815 Stephen Duckett* Nil Nil Simon Bax** 6,250 – Helen Mahy CBE 3,529 3,529 David Robins 4,000 4,000

* The Company has been advised that Stephen 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. ** Simon Bax was appointed to the Board on 30 June 2015.

Awards held by Directors over ordinary shares of the Company

During the year Exercise dates At At Exercise price 31 January Awards Awards Awards 31 January per share 2015 granted vested lapsed 2016 (pence) Earliest Latest Lynn Fordham 281,7501 –281,7502 – – 0.00 17 Februar y 2015 17 Februar y 2021 285,7011 –285,7013 – – 0.00 22 March 2015 22 March 2022 285,7011 – – – 285,701 0.00 22 March 2016 22 March 2022 77,9221 – – – 77,922 0.00 6 March 2016 6 March 2023 77,9221 – – – 77,922 0.00 6 March 2017 6 March 2023 64,9354 – – – 64,935 0.00 30 May 2016 30 May 2018 108,9505 – – – 108,950 0.00 1 December 2015 12 December 2024 51,4404 – – 51,440 0.00 18 December 2016 18 December 2022 Total 1,182,881 51,440 567,451 – 666,870

1 The awards granted in 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 NAV 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) 2 These awards were over the four-year period from 17 February 2011 subject to the performance condition that average growth in the Company’s undiluted NAV per share of at least 7% p.a. with full vesting taking place at 15% p.a. The actual average growth in undiluted NAV per share was 17% p.a. so the awards vested fully. Lynn Fordham has exercised all of the vested shares 3 These awards were over the three-year period from 22 March 2012 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 21% so the awards vested fully. Lynn Fordham exercised all of the vested shares 4 These awards were made under the Company’s Deferred Share Bonus Plan and will vest subject to continued employment and good/bad leaver provisions 5 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 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 in May 2013. The price of an ordinary share on 12 December 2014, when awards were granted under the AAM bonus deferral scheme, was 430.24p. The price of an ordinary share on 18 December 2015, when awards were made to Lynn Fordham under the deferred share bonus plan, was 486.0p. The mid-market price of shares at 31 January 2016 was 490.8p and the range for the year was 436p to 522p. Strategic report | Corporate information | Financial information | Shareholder information 45

Share plan dilution limits The 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 DSB. During the year, 823,850 shares were transferred from treasury to the EBT to be used to satisfy vested LTIP awards. 1,092,993 shares were sold or transferred by the EBT to satisfy LTIP awards that vested in the period to 31 January 2016. The total number of shares held by the EBT at 31 January 2016 was 417,647 at a total cost of £899,650 (excluding commission and stamp duty) (representing 0.26% of the Company’s issued share capital, excluding treasury shares as at 22 March 2016). The maximum number of shares that the Company may require to satisfy awards (assuming that all awards vest fully and are exercised) is 781,383 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 2016, the total number of new or treasury shares issued or issuable under awards and options made under the PSP and the DBSP in the last 10 calendar years was equal to 1.13% of the issued ordinary share capital on that date excluding treasury shares. Approval This Remuneration report has been approved by the Board of Directors. On behalf of the Board Helen Mahy CBE Chairman, Remuneration Committee 22 March 2016 46 SVG Capital plc Annual Report 2016

Independent auditor’s report to the members of SVG Capital plc

Our opinion on the financial statements In our opinion: k SVG Capital plc’s Group financial statements and the Parent Company financial statements (the “financial statements”) give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 January 2016 and of the Group’s and Parent Company’s profit for the year then ended; k the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union; k the Parent Company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union; and k the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation.

What we have audited SVG Capital plc’s financial statements comprise:

Group* Parent Company Consolidated Statement of Comprehensive Income for the year Company Statement of Comprehensive Income for the year ended 31 January 2016 ended 31 January 2016 Consolidated Statement of Changes in Equity for the year ended Company Statement of Changes in Equity for the year ended 31 January 2016 31 January 2016 Consolidated Balance Sheet as at 31 January 2016 Company Balance Sheet as at 31 January 2016 Consolidated Cash Flow Statement for the year ended Company Cash Flow Statement for the year ended 31 January 2016 31 January 2016 Related notes 1 to 29 to the financial statements Related notes 1 to 29 to the financial statements

* Group constitutes SVG Capital Plc and its subsidiary SVGC Managers Limited. 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.

Overview of our audit approach Risks of material Incorrect valuation of the investment portfolio misstatement Audit scope We performed an audit of the complete financial information of SVG Capital plc and its subsidiary, SVGC Managers Limited. Materiality Group materiality of £10.5 million which represents 1% of total equity (2015: £11.1 million) as at 31 January 2016. Strategic report | Corporate information | Financial information | Shareholder information 47

Our assessment of risk of material misstatement We identified the risks of material misstatement described below as those that had the greatest effect on our overall audit strategy, the allocation of resources in the audit and the direction of the efforts of the audit team. In addressing these risks, we have performed the procedures below which were designed in the context of the financial statements as a whole and, consequently, we do not express any opinion on these individual areas.

Risk Our response to the risk What we concluded to the Audit Committee Incorrect valuation of the We performed the following procedures: Based on the work performed we are investment portfolio satisfied that the investment portfolio is k We obtained and confirmed our reasonably stated The valuation of the investment portfolio understanding of the valuation process at 31 January 2016 was £763 million through performing walkthrough with (2015: £1,053 million). management, including discussions with key valuation team members. The Group’s investment portfolio mainly consists of unlisted investments. k We agreed the net asset value of the The valuation process is highly judgemental underlying investments in the investment giving rise to significant risk of material portfolio to the latest audited financial misstatement. The valuation of the assets statements and/or quarterly reports as held in the investment portfolio is also the received from the relevant general key driver of the Company’s net asset value partners or administrators. and total return. Incorrect asset pricing k We reviewed the underlying financial could have a significant impact on portfolio information to assess whether valuation and, therefore, the return investments in the investment portfolio generated for shareholders. were fair valued in accordance with IFRS 13 Fair Value Measurement and the International Private Equity and Venture Capital Valuation (IPEVC) guidelines. k We considered and re-performed appropriate roll forward procedures to 31 January 2016 where the underlying investment fund information is prior to year-end date, for example agreeing cash movements, year-end FX rates and share prices of quoted securities to independent source. 48 SVG Capital plc Annual Report 2016

Independent auditor’s report continued

The scope of our audit The Group operates from a single office and has common financial systems, processes and controls covering all of its operations. Two legal entities account for 100% of the Group’s revenue, operating profit, and total assets, one being the Parent Company itself, and all of which were subject to full scope audits for the year ended 31 January 2016. The audit of all the companies within the Group is undertaken by one audit team.

Our application of materiality We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the audit and in forming our audit opinion.

Materiality The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the economic decisions of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our audit procedures. We determined planning materiality for the Group to be £10.5 million (2015: £11.1 million), which is 1% of total equity as at 31 January 2016. This provided a basis for determining the nature, timing and extent of our risk assessment procedures, identifying and assessing the risks of material misstatement and determining the nature, timing and extent of further audit procedures. We derived our materiality calculation from a proportion of total equity as we consider that to be the most important financial metric on which shareholders judge the performance of the Group.

Performance materiality The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality. On the basis of our risk assessments, together with our assessment of the Group’s overall control environment, our judgment was that overall performance materiality (i.e. our tolerance for misstatement in an individual account or balance) for the Group should be 75% of planning materiality, being £7.9m (2015: £5.6m). We have set performance materiality at this percentage due to our past experience of the audit that indicates a lower risk of misstatements, both corrected and uncorrected.

Reporting threshold An amount below which identified misstatements are considered as being clearly trivial. We agreed with the audit committee that we would report all audit differences in excess of £0.5 million (2015: £0.6 million) as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in the light of other relevant qualitative considerations. Strategic report | Corporate information | Financial information | Shareholder information 49

Scope of the audit of the financial statements An 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: whether the accounting policies are appropriate to the Group’s and the Parent Company’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Annual Report 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.

Respective responsibilities of directors and auditor As explained more fully in the Statement of Directors’ Responsibilities set out on page 36, 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. 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 Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Opinion on other 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 year for which the financial statements are prepared is consistent with the financial statements. 50 SVG Capital plc Annual Report 2016

Independent auditor’s report continued

Matters on which we are required to report by exception ISAs (UK and Ireland) We are required to report to you if, in our opinion, financial and non-financial We have no exceptions reporting information in the annual report is: to report. k materially inconsistent with the information in the audited financial statements; or k apparently materially incorrect based on, or materially inconsistent with, our knowledge of the Group acquired in the course of performing our audit; or k otherwise misleading. In particular, we are required to report whether we have identified any inconsistencies between our knowledge acquired in the course of performing the audit and the directors’ statement that they consider the annual report and accounts taken as a whole is fair, balanced and understandable and provides the information necessary for shareholders to assess the entity’s performance, business model and strategy; and whether the annual report appropriately addresses those matters that we communicated to the audit committee that we consider should have been disclosed. Companies Act 2006 We are required to report to you if, in our opinion: We have no exceptions reporting to report. k adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from branches not visited by us; or k the Parent Company 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 k we have not received all the information and explanations we require for our audit. Listing Rules review We are required to review: We have no exceptions requirements to report. k the directors’ statement in relation to going concern set out on page 32 and 33, and longer-term viability, set out on page 33; and k the part of the Corporate Governance Statement relating to the Company’s compliance with the provisions of the UK Corporate Governance Code specified for our review Strategic report | Corporate information | Financial information | Shareholder information 51

Statement on the Directors’ assessment of the principal risks that would threaten the solvency or liquidity of the entity ISAs (UK and Ireland) We are required to give a statement as to whether we have anything material to We have nothing reporting add or to draw attention to in relation to: material to add or draw attention to. k the directors’ confirmation in the annual report that they have carried out a robust assessment of the principal risks facing the entity, including those that would threaten its business model, future performance, solvency or liquidity; k the disclosures in the annual report that describe those risks and explain how they are being managed or mitigated; k the directors’ statement in the financial statements about whether they considered it appropriate to adopt the going concern basis of accounting in preparing them, and their identification of any material uncertainties to the entity’s ability to continue to do so over a period of at least twelve months from the date of approval of the financial statements; and k the directors’ explanation in the annual report as to how they have assessed the prospects of the entity, over what period they have done so and why they consider that period to be appropriate, and their statement as to whether they have a reasonable expectation that the entity will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions.

Andrew McIntyre (Senior Statutory Auditor) for and on behalf of Ernst & Young LLP, Statutory Auditor London 22 March 2016 52 SVG Capital plc Annual Report 2016

Consolidated statement of comprehensive income

For the year ended 31 January 2016 For the 13 month period ended 31 January 2015 Revenue Capital Revenue Capital return return Total return return Total Notes £’000 £’000 £’000 £’000 £’000 £’000 Gains on investments – at fair value through profit and loss 12 – 72,928 72,928 –131,149131,149 Movement in fair value of subsidiaries 15 –(1,572)(1,572) –(1,300)(1,300) Exchange gains on other items – 12,525 12,525 –359359 83,881 83,881 –130,208130,208 Operating income Investment income 33,487 – 33,487 11,905 – 11,905 Other operating income 3–3 1–1 Total operating income 4 33,490 – 33,490 11,906 – 11,906 Operating expenses Administrative expenses 5 (10,539) – (10,539) (11,894) – (11,894) Total expenses (10,539) – (10,539) (11,894) – (11,894) Operating profit 22,951 – 22,951 12 – 12 Finance costs 8 (14,971) – (14,971) (19,743) – (19,743) Profit/(loss) before tax 7,980 83,881 91,861 (19,731) 130,208 110,477 Tax 9 –(852)(852) 200 (1,023) (823) Profit/(loss) for the period 7,980 83,029 91,009 (19,531) 129,185 109,654 Earnings per share From continuing activities Basic 11 51.6p 51.7p Diluted 11 51.5p 51.3p

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 Group’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 60 to 91 form an integral part of these accounts. Strategic report | Corporate information | Financial information | Shareholder information 53

Company statement of comprehensive income

For the year ended 31 January 2016 For the 13 month period ended 31 January 2015 Revenue Capital Revenue Capital return return Total return return Total Notes £’000 £’000 £’000 £’000 £’000 £’000 Gains on investments – at fair value through profit and loss 12 – 72,928 72,928 –131,149131,149 Movement in fair value of subsidiaries 15 –(1,572)(1,572) –(1,300)(1,300) Exchange gains on other items – 12,525 12,525 –359359 83,881 83,881 –130,208130,208 Operating income Investment income 33,487 – 33,487 11,905 – 11,905 Other operating income 3–3 1–1 Total operating income 4 33,490 – 33,490 11,906 – 11,906 Operating expenses Administrative expenses 5 (10,419) – (10,419) (11,894) – (11,894) Total expenses (10,419) – (10,419) (11,894) – (11,894) Operating profit 23,071 – 23,071 12 – 12 Finance costs 8 (14,971) – (14,971) (19,743) – (19,743) Profit/(loss) before tax 8,100 83,881 91,981 (19,731) 130,208 110,477 Tax 9 –(852)(852) 200 (1,023) (823) Profit/(loss) for the period 8,100 83,029 91,129 (19,531) 129,185 109,654 Earnings per share From continuing activities Basic 11 51.7p 51.7p Diluted 11 51.5p 51.3p

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 60 to 91 form an integral part of these accounts. 54 SVG Capital plc Annual Report 2016

Consolidated statement of changes in equity

Share Share Own Share Revenue Capital option Other1 capital shares premium reserve reserve reserve reserves Total Notes £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 For the year ended 31 January 2016 Balance at 31 January 2015 253,724 (1,479) 131,230 (162,664) 871,827 18,911 15,556 1,127,105 Profit for the year –––7,98083,029––91,009 Fair value charge of performance share awards 5 –––––445–445 Buy-back of convertible loan notes – – – 7, 554 – – (7, 554) – Purchase of treasury shares ––––(166,791)––(166,791) Own shares disposed by EBT to settle share awards 22 –579––(579)––– Cancellation of shares 21 (21,934)–––21,934––– Balance at 31 January 2016 231,790 (900) 131,230 (147,130) 809,420 19,356 8,002 1,051,768

Share Share Own Share Revenue Capital option Other1 capital shares premium reserve reserve reserve reserves Total Notes £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’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 Fair value charge of performance share awards 5–––––1,613–1,613 Purchase of treasury shares ––––(205,399)––(205,399) Own shares disposed by EBT to settle share awards 22 – 6,911 – – (6,911) – – – Cancellation of shares 21 (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

1 Included within other reserves are the capital redemption and convertible loan note reserves The notes on pages 60 to 91 form an integral part of these accounts. Strategic report | Corporate information | Financial information | Shareholder information 55

Company statement of changes in equity

Share Share Own Share Revenue Capital option Other1 capital shares premium reserve reserve reserve reserves Total Notes £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 For the year ended 31 January 2016 Balance at 31 January 2015 253,724 (1,479) 131,230 (162,664) 871,827 18,911 15,556 1,127,105 Profit for the year –––8,10083,029––91,129 Fair value charge of performance share awards 5 –––––445–445 Buy-back of convertible loan notes – – – 7, 554 – – (7, 554) – Purchase of treasury shares ––––(166,791)––(166,791) Own shares disposed by EBT to settle share awards 22 –579––(579)––– Cancellation of shares 21 (21,934)–––21,934––– Balance at 31 January 2016 231,790 (900) 131,230 (147,010) 809,420 19,356 8,002 1,051,888

Share Share Own Share Revenue Capital option Other1 capital shares premium reserve reserve reserve reserves Total Notes £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 For the 13 month period ended 31 January 2015 Balance at 31 December 2014 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 Fair value charge of performance share awards 5–––––1,613–1,613 Purchase of treasury shares ––––(205,399)––(205,399) Own shares disposed by EBT to settle share awards 22 – 6,911 – – (6,911) – – – Cancellation of shares 21 (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

1 Included within other reserves are the capital redemption and convertible loan note reserves The notes on pages 60 to 91 form an integral part of these accounts. 56 SVG Capital plc Annual Report 2016

Consolidated balance sheet

As at As at 31 January 31 January 2016 2015 Notes £’000 £’000 Non-current assets Investments designated as fair value through profit and loss 12 763,455 1,052,766 Investments in subsidiaries 15 79 1,259 Investment in associates at fair value through profit and loss 16 – 41,000 763,534 1,095,025 Current assets Other receivables 17 362 598 Cash and cash equivalents 17 330,367 134,912 330,729 135,510 Total assets 1,094,263 1,230,535 Current liabilities Convertible loan notes 19 (38,732) – Other payables 18 (3,763) (6,139) (42,495) (6,139) Non-current liabilities Convertible loan notes 19 – (97,291) – (97,291) Net assets 1,051,768 1,127,105 Equity Called up share capital 21 231,790 253,724 Own shares 22 (900) (1,479) Share premium account 23 131,230 131,230 Capital redemption reserve 23 3,204 3,204 Share option reserve 23 19,356 18,911 Convertible loan notes – equity 23 4,798 12,352 Capital reserve 23 809,420 871,827 Revenue reserve 23 (147,130) (162,664) Shareholders’ funds 1,051,768 1,127,105 Net asset value per ordinary share (“Shareholders’ funds”) – undiluted 24 657.4p 593.0p – diluted 24 653.5p 587.8p

The notes on pages 60 to 91 form an integral part of these accounts. The Group’s financial statements were authorised for issue by the Board of Directors on 22 March 2016 and the balance sheets were signed on behalf of the Board by: Lynn Fordham Strategic report | Corporate information | Financial information | Shareholder information 57

Company balance sheet

As at As at 31 January 31 January 2016 2015 Notes £’000 £’000 Non-current assets Investments designated as fair value through profit and loss 12 763,455 1,052,766 Investments in subsidiaries 15 1,329 1,259 Investment in associates at fair value through profit and loss 16 – 41,000 764,784 1,095,025 Current assets Other receivables 17 259 598 Cash and cash equivalents 17 329,452 134,912 329,711 135,510 Total assets 1,094,495 1,230,535 Current liabilities Convertible loan notes 19 (38,732) – Other payables 18 (3,875) (6,139) (42,607) (6,139) Non-current liabilities Convertible loan notes 19 – (97,291) – (97,291) Net assets 1,051,888 1,127,105 Equity Called up share capital 21 231,790 253,724 Own shares 22 (900) (1,479) Share premium account 23 131,230 131,230 Capital redemption reserve 23 3,204 3,204 Share option reserve 23 19,356 18,911 Convertible loan notes – equity 23 4,798 12,352 Capital reserve 23 809,420 871,827 Revenue reserve 23 (147,010) (162,664) Shareholders’ funds 1,051,888 1,127,105 Net asset value per ordinary share (“Shareholders’ funds”) – undiluted 24 657.5p 593.0p – diluted 24 653.6p 587.8p

The notes on pages 60 to 91 form an integral part of these accounts. The Company’s financial statements were authorised for issue by the Board of Directors on 22 March 2016 and the balance sheets were signed on behalf of the Board by: Lynn Fordham 58 SVG Capital plc Annual Report 2016

Consolidated cash flow statement

For the For the 13 month year ended period ended 31 January 31 January 2016 2015 £’000 £’000 Operating activities Interest income 1,117 1,623 Dividends from subsidiaries 902 – Dividends from associates 11,973 1,331 Income distributions 19,783 8,892 Expenses (11,786) (10,384) Finance costs (7,535) (15,499) Tax (paid)/received (852) 714 Net cash generated from/(used in) operating activities 13,602 (13,323) Investing activities Capital distributions from core portfolio 412,509 288,381 Capital distributions from non-core portfolio 54,199 14,660 Calls paid to core portfolio (92,196) (163,304) Calls paid to non-core portfolio (1,380) (13,973) Net consideration received on disposal of associate 29,959 – Receipt of deferred consideration – 13,578 Consideration received on sale of investment interests – 4,256 Capital distributions from subsidiaries upon liquidation 449 – Investment in subsidiaries (841) – Net cash generated from investing activities 402,699 143,598 Financing Purchase of own shares into treasury or for cancellation (166,228) (204,725) Tender offer costs (406) (240) Buy-back of convertible loan notes (66,772) – Settlement of foreign exchange trades 110 203 Net cash used in financing activities (233,296) (204,762) Net increase/(decrease) in cash and cash equivalents 183,005 (74,487) Cash and cash equivalents at beginning of period 134,912 208,643 Effect of foreign exchange rates on cash and cash equivalents 12,450 756 Cash and cash equivalents at end of period 330,367 134,912

The notes on pages 60 to 91 form an integral part of these accounts. Strategic report | Corporate information | Financial information | Shareholder information 59

Company cash flow statement

For the For the 13 month year ended period ended 31 January 31 January 2016 2015 £’000 £’000 Operating activities Interest income 1,117 1,623 Dividends from subsidiaries 902 – Dividends from associates 11,973 1,331 Income distributions 19,783 8,892 Expenses (11,370) (10,384) Finance costs (7,535) (15,499) Tax (paid)/received (852) 714 Net cash generated from/(used in) operating activities 14,018 (13,323) Investing activities Capital distributions from core portfolio 412,509 288,381 Capital distributions from non-core portfolio 54,199 14,660 Calls paid to core portfolio (92,196) (163,304) Calls paid to non-core portfolio (1,380) (13,973) Net consideration received on disposal of associate 29,959 – Receipt of deferred consideration – 13,578 Consideration received on sale of investment interests – 4,256 Capital distributions from subsidiaries upon liquidation 449 – Investment in subsidiaries (2,091) – Loans to subsidiaries (81) – Net cash generated from investing activities 401,368 143,598 Financing Purchase of own shares into treasury or for cancellation (166,228) (204,725) Tender offer costs (406) (240) Buy-back of convertible loan notes (66,772) – Settlement of foreign exchange trades 110 203 Net cash used in financing activities (233,296) (204,762) Net increase/(decrease) in cash and cash equivalents 182,090 (74,487) Cash and cash equivalents at beginning of period 134,912 208,643 Effect of foreign exchange rates on cash and cash equivalents 12,450 756 Cash and cash equivalents at end of period 329,452 134,912

The notes on pages 60 to 91 form an integral part of these accounts. 60 SVG Capital plc Annual Report 2016

Notes to the accounts

1 Accounting policies Basis of preparation The financial statements of the Group and 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 November 2014 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 SVG Capital plc Annual Report and Accounts were prepared for the Company only, as the subsidiary companies in the Group were not considered material. However following the formation of the new subsidiary SVGC Managers Limited (SVGCM) during the year, which acts as the investment manager of the Company, the Annual Report and Accounts for the year ended 31 January 2016 have been prepared on a consolidated basis for the SVG Capital plc Group. As a result of this change, the current period Group amounts are not entirely comparable with the Company-only prior period amounts. In the prior period, the Company changed its year end from 31 December to 31 January. This was 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 prior period is measured over a 13 month period, compared to the 12 month period for the current year results, and therefore amounts provided in these financial statements are not entirely comparable. The Group and 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 (at least 12 months from the end of reporting date) the Group 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. Summary of new standards and interpretations not applied The IASB and IFRIC have issued the following standards and interpretations with an effective date after the date of these financial statements that the Directors deem to be relevant to SVG Capital plc:

Effective date IFRS 9 Financial Instruments Not before 1 January 2019

The Directors do not anticipate that the adoption of these standards will have a material impact on the Group’s financial statements in the period of initial application, however, it is recognised that additional disclosures within the financial statements will be required. Presentation of income statement In 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 instruments Financial assets and financial liabilities are recognised on the balance sheet when the Group becomes a party to the contractual provisions of the instrument. Financial assets are derecognised when the Group’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. Investments Investments 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 Group’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. Strategic report | Corporate information | Financial information | Shareholder information 61

1 Accounting policies continued 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 subsidiaries In line with IFRS 10, the Group consolidates subsidiaries that are not a investment entity and whose main purpose and activities are providing services that relate to the investment entity’s investment activities. Therefore, SVGCM has been consolidated. In line with IAS 28, the investment in SVGCM is carried at cost in the Company’s accounts. All other subsidiaries are measured at fair value in both the Group’s and Company’s accounts. Investments in associates An associate is an entity over which the Group or 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 Group and Company measure their 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 notes Convertible 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 Group, is included in equity. Issue costs are allocated proportionately to the liability and equity components. The liability component is accounted for as a borrowing. The acceleration of premium on the equity components on any early redemptions of the loan notes are recognised in the income statement. Bank borrowings Interest-bearing bank loans 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 instruments Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs. Own shares Own 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. Share-based payments The Group 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 2006. The cost of equity-settled share-based payments issued to employees of the investment manager 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 recognition Revenue 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. 62 SVG Capital plc Annual Report 2016

Notes to the accounts continued

1 Accounting policies continued 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 Group’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. Administrative expenses Administrative expenses are accounted for on an accruals basis. Foreign currencies The functional currency of the Group and Company is pounds sterling, as this is the currency of the primary economic environment in which the Group and Company operate. 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. Taxation The 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 Group’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 Group 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 other comprehensive income. Cash and cash equivalents Cash 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 Group has classified short-term bank deposits, investments in money market funds and short-dated treasury bills as cash equivalents. Strategic report | Corporate information | Financial information | Shareholder information 63

2 Significant accounting judgements, estimates and assumptions The preparation of the Group and Company 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 27. Assessment as an investment entity Entities 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, except for subsidiaries that are not an investment entity and that provide services that relate to the investment entity’s investment activities. 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; and 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 Group and Company 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. Whilst the Company has been deemed an investment entity as detailed above, the new wholly-owned subsidiary SVGCM acts as the investment manager of the Company and is not an investment entity itself, thus in line with IFRS 10 it has been consolidated into the Group financial statements. All remaining subsidiaries in the Group have been measured at fair value through profit and loss. Fair value of financial instruments The Group 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 Group’s share of the net asset value of the Fund, as determined by the general partner (GP) of such funds, adjusted as considered necessary by the Board, and approved by the Board. Further details of the valuation techniques and related analyses of sensitivities are given in note 13. The Group 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 Group’s profits and net assets. Assessment of fund investments as structured entities The Group has assessed whether the Funds in which it invests should be classified as structured entities. The Group 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 Group 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 Group has concluded that some of its fund investments are unconsolidated structured entities; further details can be found in note 12. 64 SVG Capital plc Annual Report 2016

Notes to the accounts continued

3 Business Segments For management purposes, during the year the Group was organised into the following two principal activities: Investing activities The Group’s investment objective is to achieve capital appreciation by investing in a portfolio of private equity and private equity-related assets. Investing activities are undertaken by SVG Capital plc. Investment management and advisory services During the prior period and for a partial period during the current year, investment management and advisory activities were undertaken by Aberdeen SVG Private Equity Managers Limited (ASVGM) and Aberdeen SVG Private Equity Managers Limited (ASVGA), associated companies but not considered part of the SVG Capital plc Group. On 30 October 2015, subsequent to the disposal of the associated investments, the Company terminated its investment management agreement with ASVGM and entered into a new investment management agreement with SVGCM, a subsidiary formed during the year. SVGCM is wholly-owned by the Company and as detailed in note 1, it has been consolidated into the SVG Capital plc Group financial statements. As such, segmental information showing the performance of these services is presented below.

For the year ended 31 January 2016 Investment management Eliminations on Investing and advisory consolidation activities services of SVGCM Total Group £’000 £’000 £’000 £’000 Income from investment management services – 1,813 (1,813) – Other operating and investment income 33,490 – – 33,490 33,490 1,813 (1,813) 33,490 Administrative costs (10,419) (1,933) 1,813 (10,539) Operating profit/(loss) 23,071 (120) – 22,951 Finance costs (14,971) – – (14,971) Gains on investments – at fair value through profit and loss 72,928 – – 72,928 Movement in fair value of subsidiaries (1,572) – – (1,572) Exchange gains 12,525 – – 12,525 Profit before tax 91,981 (120) – 91,861

Total assets 1,094,495 1,911 (2,143) 1,094,263 Total liabilities (42,607) (781) 893 (42,495) Net assets 1,051,888 1,130 (1,250) 1,051,768 Strategic report | Corporate information | Financial information | Shareholder information 65

4 Operating income

For the For the For the year ended year ended 13 month 31 January 31 January period ended 2016 2016 31 January Group Company 2015 £’000 £’000 £’000 Income from investments: Dividends from subsidiaries 902 902 – Dividends from associates* 11,973 11,973 1,331 Income from money market instruments 327 327 266 Interest from fund investments 502 502 1,416 Other income from fund investments 19,783 19,783 8,892 Other operating income: Other interest receivable and other income 331 33,490 33,490 11,906 Represented by: Interest 832 832 1,683 Dividends from subsidiaries and associates 12,875 12,875 1,331 Other income from funds and co-investments 19,783 19,783 8,892 33,490 33,490 11,906

* Dividends of £12.0 million were received from the associated investments in ASVGM and ASVGA, representing accumulated profits distributed prior to the disposal of the investment (note 16).

5 Administrative expenses

For the For the For the year ended year ended 13 month 31 January 31 January period ended 2016 2016 31 January Group Company 2015 £’000 £’000 £’000 Fees payable to Aberdeen SVG* 3,551 3,551 6,110 Fees payable to SVGC Managers Limited* –1,813 – Staff costs 2,890 1,482 – Directors’ remuneration 300 300 311 Performance shares and options fair value charge 445 445 1,613 General expenses 3,198 2,688 3,703 Auditors’ remuneration – Statutory audit fees: Company 98 98 97 – Statutory audit fees: subsidiaries 15 – – – Tax compliance services ––23 – Tax advisory services 20 20 17 – Assurance services: interim report review 22 22 20 10,539 10,419 11,894

* As a result of the requirements under AIFMD, the Company signed a new AIFM agreement with SVGCM on 30 September 2015, and the agreement with ASVGM was terminated on the same date. 66 SVG Capital plc Annual Report 2016

Notes to the accounts continued

6 Staff costs

For the For the For the year ended year ended 13 month 31 January 31 January period ended 2016 2016 31 January Group Company* 2015 £’000 £’000 £’000 Wages, salaries and bonuses 2,405 1,302 – Social security costs 328 180 – Pension costs 128 – – Other staff costs 29 – – 2,890 1,482 –

* The staff costs incurred by the Company relate to accrued staff bonuses for the period to 30 September 2015, payable by the Company as part of the agreement to sell the associated investments in ASVGA and AVSGM. The average number of staff employed by the Group was:

For the For the 13 month year ended period ended 31 January 31 January 2016 2015 Number Number Employees 20 – 20 –

7 Pension costs The charge for pension costs comprises:

For the For the For the year ended year ended 13 month 31 January 31 January period ended 2016 2016 31 January Group Company 2015 £’000 £’000 £’000 Money purchase schemes 128 – – 128 – –

Pension costs for the year relate to contributions to money purchase schemes for employees of SVGCM. Of the £128,000 expense for the period, £115,000 is in respect of staff and £13,000 is in respect of Directors.

8 Finance costs

For the For the For the year ended year ended 13 month 31 January 31 January period ended 2016 2016 31 January Group Company 2015 £’000 £’000 £’000 Convertible loan note interest 4,294 4,294 9,001 Amortisation of issue and listing costs plus premium to redemption on convertible loan notes 1,687 1,687 2,429 Acceleration of premium on buy-back of convertible loan notes 1,304 1,304 – Loss on buy-back of convertible loan notes 5,222 5,222 – Loan facility finance and amendment costs 2,412 2,412 8,313 Other finance costs 52 52 – 14,971 14,971 19,743 Strategic report | Corporate information | Financial information | Shareholder information 67

9 Tax

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

For the year ended 31 January 2016 For the 13 month period ended 31 January 2015 Revenue Capital Total Revenue Capital Total Group and Company £’000 £’000 £’000 £’000 £’000 £’000 Current tax Withholding tax suffered –852852 153 1,023 1,176 Prior year adjustment (Group relief) –––(353) – (353) Total current tax – 852 852 (200) 1,023 823 Deferred tax ––– ––– Total tax (credit)/charge (note 9(c)) – 852 852 (200) 1,023 823

There are no profits chargeable to corporation tax for the Group or Company in the current year. As the Group and Company invest 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 Group and 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 £35.8 million (2015: £30.4 million), of which £nil (2015: £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. (c) Factors affecting total tax charge for the year: The tax assessed for the year is lower than the standard rate of corporation tax in the UK of 20.17% for a large company (2015: 21.46%). The differences are explained below:

For the For the For the year ended year ended 13 month 31 January 31 January period ended 2016 2016 31 January Group Company 2015 £’000 £’000 £’000 Profit before tax 91,861 91,981 110,477 Corporation tax at 20.17% (2015: 21.46%) 18,528 18,553 23,708 Effects of: Non-taxable capital gains (16,919) (16,919) (27,943) Non-taxable income net of disallowable expenses (2,556) (2,557) 89 Difference between accounting and taxable income from investments 1 14,313 Prior year adjustments re UK corporation tax – –(353) Losses brought forward utilised in the period (168) (168) (167) Unutilised current period losses carried forward 1,114 1,090 – Withholding tax suffered 852 852 1,176 Total tax charge/(credit) for the period (note 9(a)) 852 852 823 68 SVG Capital plc Annual Report 2016

Notes to the accounts continued

10 Dividends

For the For the For the year ended year ended 13 month 31 January 31 January period ended 2016 2016 31 January Group Company 2015 £’000 £’000 £’000 Amounts recognised as distributions in the period: Dividend of nil (2015: 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 For the For the year ended year ended 13 month 31 January 31 January period ended 2016 2016 31 January Group Company 2015 £’000 £’000 £’000 Dividend of nil (2015: nil) –––

11 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 For the For the year ended year ended 13 month 31 January 31 January period ended 2016 2016 31 January Group Company 2015 £’000 £’000 £’000 Earnings for the purposes of earnings per share being net profit attributable to equity holders 91,009 91,129 109,654

Number Number Number Number of shares Weighted average number of ordinary shares for the purposes of basic earnings per share 176,342,230 176,342,230 212,033,534 Share options and performance shares 481,938 481,938 1,375,168 Weighted average number of ordinary shares for the purposes of diluted earnings per share 176,824,168 176,824,168 213,408,702 Earnings per share Basic 51.6p 51.7p 51.7p Diluted 51.5p 51.5p 51.3p

The convertible loan notes are exercisable at a strike price of 640p and were, for purposes of calculating the diluted earnings per share, not dilutive for the periods ending 31 January 2016 and 31 January 2015.

12 Investments

31 January 2016 31 January 2015 Core Non-core Total Core Non-core Total portfolio portfolio portfolio portfolio portfolio portfolio Fair value through profit or loss assets £’000 £’000 £’000 £’000 £’000 £’000 Valuation brought forward 811,940 240,826 1,052,766 858,989 206,203 1,065,192 Calls and purchases 92,196 1,444 93,640 163,304 13,973 177,277 Distributions and sales* (412,509) (54,199) (466,708) (288,381) (18,916) (307,297) Gains on investments 29,272 54,485 83,757 78,028 39,566 117,594 Valuation carried forward 520,899 242,556 763,455 811,940 240,826 1,052,766

* The distributions detailed above relate to capital distributions only. Income distributions are taken directly to the income statement. Strategic report | Corporate information | Financial information | Shareholder information 69

12 Investments continued The total gain of £72,928,000 (2015: gain of £131,149,000) shown in the Group and Company income statements also includes a fair value loss on associate during the year of £10,829,000 (2015: gain on associate of £13,555,000). The net gain on investments shown above of £83,757,000 (2015: £117,594,000) includes realised gains on distributions of £146,433,000, split £133,609,000 for the core portfolio and £12,824,000 for the non-core portfolio (2015: realised gains of £34,027,000 split £25,648,000 for the core portfolio and £8,379,000 for the non-core portfolio). All funds in the core portfolio are unlisted. However, some of the underlying companies held within those funds are listed. Included in the total core portfolio value are gross valuations of listed investments amounting to £134.1 million (2015: £320.5 million). The Group and Company investment portfolios include Permira IV at a value of £168.8 million (2015: £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 Group 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, iglo Group, which has subsequently been acquired by Nomad Foods (Nomad). A contract is in place giving the Group the rights to 50% of all future distributions received by the acquirer in relation to its holding in Nomad. The contract has been valued at £2.3 million (2015: £20.1 million). The Board considers that the best indication of the fair value of the right to future distributions from Nomad is the current valuation of the Group’s holding in Nomad as calculated in accordance with the Group’s accounting policies. Significant interests in investment funds Details of investments in which the Group or Company has an interest of 10% or more of any class of share/units are detailed in the list of investments on page 21. The Group has a 35.6% (2015: 35.5%) interest in Aberdeen Diamond Holdings Limited, a 35.8% (2015: 35.8%) interest in Aberdeen Diamond Holdings II Limited and a 25.5% (2015: 25.5%) interest in Aberdeen Diamond Private Equity Holdings III plc. The Group’s holdings in these entities do not represent controlling interests as the Group does not have power over relevant activities of those entities under IFRS 10. Unconsolidated structured entities The Group invests in several investment funds which meet the definition of unconsolidated structured entities in accordance with IFRS 12. 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 £5,785.9 million (2015: £7,224.2 million). As at 31 January 2016, the Group’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 2016 Uncalled Maximum loss Assets Liabilities commitments exposure Balance sheet line item of asset £’000 £’000 £’000 £’000 Investments designated as fair value through profit and loss 280,491 – 219,141 499,632

Carrying Value at 31 January 2015 Uncalled Maximum loss Assets Liabilities commitments exposure Balance sheet line item of asset £’000 £’000 £’000 £’000 Investments designated as fair value through profit and loss 532,797 – 128,451 661,248 70 SVG Capital plc Annual Report 2016

Notes to the accounts continued

13 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 hierarchy IFRS 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: k quoted 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 2016 31 January 2015 Level 1 Level 2 Level 3* Total Level 1 Level 2 Level 3 Total Group and Company £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 Investments: core portfolio ––520,899520,899 ––811,940811,940 Investments: non-core portfolio 11,341 – 231,215 242,556 9,708 – 231,118 240,826 Investment in subsidiaries – – 79 79 ––1,2591,259 Investment in associates –––– – – 41,000 41,000 11,341 – 752,193 763,534 9,708 – 1,085,317 1,095,025

* Note that investments in unlisted private equity funds are classified as Level 3 even if some of the underlying investments within those funds are quoted on an active market. Valuation techniques and process Investment valuations are updated on a quarterly basis following the completion of a detailed valuation process by each GP of the Fund investments. The Valuation Team of the Investment Manager performs a review of the valuations to identify and understand any significant changes to valuation inputs or techniques. 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 its continuous investment monitoring process. The Valuation and Investment Teams hold quarterly calls with the GPs 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. 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 and unlisted managed funds. Listed equities 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. 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. Strategic report | Corporate information | Financial information | Shareholder information 71

13 Fair values continued Unlisted managed funds The Group primarily invests in private equity via limited partnerships or other fund structures. Such vehicles are typically unquoted and in turn invest primarily in unquoted securities. The Group’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 Group’s share of the net asset value of the Fund, as determined by the 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 investee company and then deducting financial instruments, such as external debt, ranking ahead of the Fund’s highest ranking instrument in the entity. The Group’s participation in the remaining instruments is then calculated to assess the fair value of the Group’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 considers that an adjustment to the net asset value is appropriate to better reflect fair value for market participants, 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 Group’s balance sheet date; k there has been material movements in quoted prices between the net asset value calculation date and the Group’s balance sheet date; k the Group has agreed a sale of its holding in a fund interest at a price other than the net asset value; k valuations do not include a provision for carried interest; k net asset value is not derived from the fair value of underlying portfolio companies. Investment in associates at fair value through profit or loss The fair value of the Group’s investment in Aberdeen SVG as at 31 January 2015 was 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 Group’s share of equity in Aberdeen SVG was subject to a put and call option which was exercised during the period ended 31 January 2016, resulting in the Group selling its remaining holding (49.9% of the equity) in the business. Significant unobservable inputs for Level 3 valuations Unlisted managed funds – fair value £752,114,000 As 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 GP of the funds and any approved pricing adjustments recommended by the Valuation 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 82.9% of the unlisted managed funds portfolio, can be seen in note 28. It is recognised that the valuations of these funds are sensitive to movements in the values of the underlying investee companies. The 15 largest underlying investee companies of the core portfolio in total amount to £364.1 million and include both quoted and unquoted companies. At 31 January 2016, 32.7% of aggregate value of the 15 largest underlying investee companies in the core portfolio was derived from quoted prices and 67.3% 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 Group’s valuation date are aligned, the Board does not permit an adjustment to those valuations, unless there are significant restrictions applied to sale. Quoted companies within the managed funds portfolio have been valued using quoted prices and foreign exchange rates as at 31 January 2016. 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 has adjusted the valuation of unquoted companies by between 0% and 100% of the GP’s proposed valuation. For the purposes of sensitivity analysis, a 10% adjustment could be considered reasonable. A 10% adjustment to the valuation of the unquoted constituents of the 15 largest underlying companies would result in a 2.3% movement in Shareholders’ funds. 72 SVG Capital plc Annual Report 2016

Notes to the accounts continued

13 Fair values continued Investments in associates at fair value through profit or loss – fair value £nil As described above, the key inputs to the valuation of the investment in associate at the prior period-end was the quantum of the future cash flows and the discount factor applied. The Board prepared the cash flows, which were 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%. The resultant valuation for the investment in Aberdeen SVG as at 31 January 2015 was £41.0 million. On 30 June 2015, the investment in associate was disposed of in full. The Group’s 49.9% holding in Aberdeen SVG was sold to Aberdeen Asset Management plc for £31.3 million, plus dividends of £12.0 million relating to accumulated profits of the associate, less related transaction costs. Level 3 reconciliation The following table shows a reconciliation of all movements in the fair value of the investment portfolio (including investments in associates) categorised within Level 3 between the beginning and the end of the reporting period:

For the For the 13 month year ended period ended 31 January 31 January 2016 2015 Group and Company £’000 £’000 Valuation of investment portfolio brought forward 1,084,058 1,083,718 Calls and purchases 93,640 177,277 Distributions and sales (466,708) (307,297) Fair value gains and losses on investment portfolio 82,124 116,805 Fair value (losses)/gains on investment in associates (11,973) 13,555 Proceeds received on disposal of investment in associates (29,027) – Valuation carried forward 752,114 1,084,058

As detailed in note 16, the associated investment in Aberdeen SVG was disposed of during the year. Dividends of £12.0 million were received from Aberdeen SVG, which reduced the carrying value to £29.0 million. Proceeds of £31.3 million were received from the purchaser which realised a gain in the Group and Company income statements, after costs, of £1.1 million (2015: £0.3 million gain relating to assets held at the end of the period). The remaining gains and losses in the income statements are in respect of assets held at 31 January 2016. Fair value of financial instruments not held at fair value The Group’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 19). The fair value of the convertible loan notes is based on the offer price of the notes on 31 January 2016 and 31 January 2015. Whilst this offer price is obtainable from the market, the instrument is not frequently traded and would therefore fall under Level 2 of the fair value hierarchy.

31 January 2016 31 January 2015 Carrying value Fair value Carrying value Fair value Group and Company £’000 £’000 £’000 £’000 Convertible loan notes (£39.1 million) 38,732 40,180 97,291 105,220 38,732 40,180 97,291 105,220

Other financial assets and financial liabilities at held at amortised cost, and this carrying value is deemed to approximate fair value. Strategic report | Corporate information | Financial information | Shareholder information 73

14 Geographical analysis of investments

31 January 31 January 2016 2015 Group and Company £’000 £’000 Core portfolio Europe 391,411 717,762 United States 129,488 94,178 Total core portfolio 520,899 811,940 Non-core portfolio Asia 11 2,229 Europe 138,991 125,467 United States 103,554 113,130 Total non-core portfolio 242,556 240,826 Total investment portfolio 763,455 1,052,766

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 27.

15 Investments in subsidiaries

For the For the For the year ended year ended 13 month 31 January 31 January period ended 2016 2016 31 January Group Company 2015 £’000 £’000 £’000 Value at the beginning of the period 1,259 1,259 2,559 Investment in subsidiaries 841 2,091 – Capital distributions upon liquidation of SVG Advisers (Singapore) Pte. Ltd (449) (449) – Fair value losses on subsidiaries (1,572) (1,572) (1,300) Carrying value at the end of the period 79 1,329 1,259

During the year SVGCM was formed and is a wholly-owned subsidiary of the Company. On 30 September 2015 the Company signed a new AIFM agreement with SVGCM, and the agreement with ASVGM was terminated. As discussed in note 2, the Company is classified as an investment entity and IFRS 10 generally requires that such entities should measure subsidiaries at fair value through profit and loss. However as SVGCM provides investment management services to the Company and is not an investment entity itself, it has been consolidated into the SVG Capital plc Group in these financial statements. The remaining subsidiaries in the Group (detailed on the next page) have been measured at fair value as at 31 January 2016. A review has been undertaken and where appropriate the subsidiaries have been written down to their net asset value, which is considered to be the fair value. As at 31 January 2016, SVG North America Inc. and SVG Advisers Inc. are in the closing stages of liquidation and will be making an imminent final capital distribution to the Company. 74 SVG Capital plc Annual Report 2016

Notes to the accounts continued

15 Investments in subsidiaries continued

Subsidiary undertakings at 31 January 2016:

Profit/(loss) after tax Capital and for the year Country of reserves at ended registration, Number and class 31 January 31 January incorporation of shares/interests Company 2016 2016 Subsidiary and business and operation held by SVG Capital plc holding £’000 £’000 SVGC Managers Limited – investment management services UK 1,250,000 ordinary shares 100% 1,131 (120) SVGC Equity Partners LLP* 98 Voting Interests – investment adviser UK 85 Economic Interests 85% Nil 598 SVG North America Inc. – dormant US 3,000 Common Shares 100% 20 (2) SVG Advisers Inc – dormant US 100 Common Shares 100% 59 (5)

* Note that during the year, Aldwych Equity Partners LLP changed its name to SVGC Equity Partners LLP.

16 Investment in associate at fair value through profit and loss On 30 June 2015, the investment in associate was disposed of in full. The Group’s 49.9% holding in Aberdeen SVG was sold to Aberdeen Asset Management plc for £31.3 million, plus dividends of £12.0 million relating to accumulated profits of the associate, less related transaction costs.

17 Current assets

31 January 31 January 2016 2016 31 January Group Company 2015 Other receivables £’000 £’000 £’000 Amounts owed by subsidiary undertakings –8157 Interest receivable 131 131 433 Prepayments and other debtors 231 47 108 362 259 598

31 January 31 January 2016 2016 31 January Group Company 2015 Cash and cash equivalents £’000 £’000 £’000 Bank balances and short-term deposits 18,755 17,840 15,141 Money market funds 311,612 311,612 119,771 330,367 329,452 134,912

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. Strategic report | Corporate information | Financial information | Shareholder information 75

18 Other payables

31 January 31 January 2016 2016 31 January Group Company 2015 £’000 £’000 £’000 Interest payable and similar charges 864 864 1,632 Other creditors and accruals 2,010 1,310 959 Management fee payable 889 1,701 3,548 3,763 3,875 6,139

19 Borrowings

31 January 31 January 2016 2016 31 January Group Company 2015 £’000 £’000 £’000 Convertible loan notes 38,732 38,732 97,291 38,732 38,732 97,291

Loan facility As at 31 January 2016, the Group had a €300.0 million loan facility with Lloyds Bank plc, The Royal Bank of Scotland plc and State Street Bank and Trust Company, of which £nil was drawn (31 January 2015: £nil). The facility matures in December 2019. Drawings on the facility are subject to an interest charge of Euribor plus a margin of 3.00%. Undrawn amounts are subject to a non-utilisation fee of 1.10% per annum. There were no material changes to the terms of the facility during the period. Covenants The loan facility is subject to financial covenants. The maximum loan to value (LTV) covenant is 30% and the Board manages the Group against that limit. However, the Group 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 2016, the LTV covenant stood at 0% (2015: 0%). Convertible loan notes Current liabilities include £39.1 million of 8.25% convertible loan notes maturing on 5 June 2016. The convertible loan notes were included in non-current liabilities in the prior period. Further details are provided in the following table:

31 January 31 January 2016 2015 Group and Company £’000 £’000 8.25% subordinated convertible loan notes 2016 – nominal 39,100 100,650 Unamortised premium, issue and listing costs (368) (3,359) 38,732 97,291

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 23). 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, the conversion price was amended to £6.42 and £6.40 respectively. There was no amendment to the Conversion Price following the Tender Offers completed in the year ended 31 January 2016 (see note 21). The convertible loan notes are convertible at the option of the convertible loan note holder. They are now dilutive as the Conversion Price is above the Group’s undiluted net asset value 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. 76 SVG Capital plc Annual Report 2016

Notes to the accounts continued

20 Capital commitments and contingencies At 31 January 2016, the Group had uncalled commitments to its fund investments as follows:

31 January 2016 31 January 31 January Uncalled 2016 2015 commitment Uncalled Uncalled (local currency) commitment* commitment* Group and Company ‘million £’million £’million Core portfolio AEA Investors Fund VI $100.0 70.2 – Clayton, Dubilier & Rice Fund IX $88.7 62.3 57.2 CCMP Capital Investors III $76.5 53.7 57.9 FFL Capital Partners IV $72.6 51.0 66.4 Permira V €42.2 32.1 63.6 The Fifth Cinven Fund €32.4 24.6 45.4 Permira IV €16.9 12.9 48.7 306.8 339.2 Non-core portfolio Aberdeen Diamond Private Equity III plc €20.0 15.2 15.0 Aldwych Capital Partners, L.P. €10.0 7.6 7. 5 SV Life Sciences Fund IV $3.2 2.2 3.3 Schroder Private Equity Fund of Funds III €0.1 0.1 0.1 SV Investments Fund I ––2.0 25.1 27.9 Total as at period end 331.9 367.1

* Based on exchange rates at the relevant year end. Commitments are payable at short notice. Guarantees The Group has not granted any guarantees to third-parties.

21 Share capital

31 January 31 January 2016 2015 Group and Company £’000 £’000 Allotted, called up and fully paid: Opening balance of 253,723,168 shares (2015: 274,556,500 shares) 253,724 274,557 Cancellation of shares (21,934) (20,833) Closing balance of 231,789,499 shares (2015: 253,723,168 shares) 231,790 253,724

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 2015, the first Tender Offer was at a price of 535.0p per share. The second Tender Offer took place in January 2016 and was at a price of 565.0p per share. The Company purchased a total of 21.9 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. Strategic report | Corporate information | Financial information | Shareholder information 77

21 Share capital continued In addition to the Tender Offers, the Company purchased 9.3 million shares through on-market buy-backs during the year. The cost of shares purchased through the Tender Offers and on-market share buy-backs, along with associated transaction costs, were debited to the Capital Reserve. 0.8 million (2015: 0.2 million) shares were transferred from treasury to satisfy the exercise of LTIP awards. At 31 January 2016, the Company held 71,392,872 shares in Treasury (2015: 62,958,757) and shares held by the SVIIT Employee Benefit Trust and the SVIIT USA Employee Benefit Trust totalled 417,647 (2015: 686,790). Capital management The Group 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 Group’s revolving credit facility limits the amount that may be returned annually to shareholders by way of share buy-backs or tenders to 20% of gross assets. The Group’s total capital as at 31 January 2016 was £1,051,768,000 (2015: £1,127,105,000) comprising equity shares, capital and reserves.

Options over ordinary shares

31 January 31 January Options 2016 2015 Options granted exercised Options lapsed Exercise price number number Issue date Latest exercise date in the year in the year in the year per share in issue in issue

23 March 2005 22 March 2015 – – 226,471 564.00p – 226,471 23 March 2005 22 March 2015 – – 13,355 569.50p – 13,355 ––239,826 – 239,826

31 January 31 December Options 2015 2013 Options granted exercised Options lapsed Exercise price number number Issue date Latest exercise date in the year in the year in the year per share in issue 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 ––196,685 239,826436,511

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 (2015: nil). There were no options in issue as at 31 January 2016 (2015: 239,826 options with a range of exercise prices of 564.0p to 569.5p). 78 SVG Capital plc Annual Report 2016

Notes to the accounts continued

21 Share capital continued Performance shares A 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.

Performance Performance 31 January 31 January shares shares vested/ Performance Exercise 2016 2015 granted exercised shares lapsed/ price per number number Issue date Earliest vesting/exercise date Latest exercise date* in the year in the year in the year share in issue in issue 15 April 2010 15 April 20144 15 April 2020 – 96,029 – 0.0p – 96,029 17 Februar y 2011 17 Februar y 20145 17 Februar y 2021 – 894 – 0.0p – 894 17 Februar y 2011 17 Februar y 2015 6 17 Februar y 2021 – 709,553 400 0.0p 54,024 763,977 22 March 2012 22 March 20157 22 March 2022 – 285,701 – 0.0p – 285,701 22 March 2012 22 March 20168 22 March 2022 – – – 0.0p 285,701 285,701 6 March 2013 6 March 20169 6 March 2023 – – – 0.0p 77,922 77,922 6 March 2013 6 March 201710 6 March 2023 – – – 0.0p 77,922 77,922 –1,092,177 400 495,569 1,588,146

Performance Performance Performance 31 January 31 December shares shares vested/ shares lapsed/ Exercise 2015 2013 granted exercised (reinstated) price per number number Issue date Earliest vesting/exercise date Latest exercise date* in the year in the year in the year share in issue in issue 13 October 2009 13 October 20132 13 October 2019 – 198,930 – 0.0p – 198,930 7 May 2010 13 October 20121 13 October 2019 –18,478–0.0p–18,478 7 May 2010 13 October 20132 13 October 2019 – 504,158 – 0.0p – 504,158 15 April 2010 15 April 20133 15 April 2020 – 127,415 – 0.0p – 127,415 15 April 2010 15 April 20144 15 April 2020 – 1,777,356 (5,822) 0.0p 96,029 1,867,563 17 Februar y 2011 17 Februar y 20145 17 February 2021 – 753,646 10,600 0.0p 894 765,140 17 Februar y 2011 17 Februar y 2015 6 17 February 2021 – – 5,184 0.0p 763,977 769,161 22 March 2012 22 March 20157 22 March 2022 – – – 0.0p 285,701 285,701 22 March 2012 22 March 20168 22 March 2022 – – – 0.0p 285,701 285,701 6 March 2013 6 March 20169 6 March 2023 – – – 0.0p 77,922 77,922 6 March 2013 6 March 201710 6 March 2023 – – – 0.0p 77,922 77,922 –3,379,983 9,962 1,588,1464,978,091 Strategic report | Corporate information | Financial information | Shareholder information 79

21 Share capital continued 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 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 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 8 Awards subject to performance conditions based on growth in the Company’s undiluted NAV over four financial years ending 31 December 2015. 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 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 10 Awards subject to performance conditions based on growth in the Company’s undiluted NAV over four financial years ending 31 December 2016. 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 The price of an ordinary share on 6 March 2013, when awards were granted under the performance shares 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. Deferred shares Deferred shares are share options with a strike price of £nil.

Performance Performance 31 January 31 January shares shares vested/ Performance Exercise 2016 2015 granted exercised shares lapsed price per number number Issue date Latest exercise date in the year in the year in the year share in issue in issue 6 March 2013 6 March 2023 – – – 0.0p 64,935 64,935 18 December 2015 18 December 2022 169,439 – – 0.0p 169,439 – 18 December 2015 18 December 2022 51,440 – – 0.0p 51,440 – –– 285,814 64,935

Performance Performance 31 January 31 December shares shares vested/ Performance Exercise 2015 2013 granted exercised shares lapsed price per number number Issue date Latest exercise date in the year in the year in the year share in issue in issue 6 March 2013 6 March 2023 – – – 0.0p 64,935 64,935 – – – 64,935 64,935

The price of an ordinary share on 18 December 2015, when awards were granted under the deferred shares plan, was 486.0p. The price of an ordinary share on 6 March 2013, when awards were granted under the deferred shares plan, was 391.5p. 80 SVG Capital plc Annual Report 2016

Notes to the accounts continued

21 Share capital continued Share-based payments The mid-market price of shares at 31 January 2016 was 490.8p and the range during the year was 436.0p to 522.0p. A total of 1.1 million performance shares were exercised during the year, at a weighted average price of 505p. 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.

22 Own shares

31 January 31 December 2016 2015 Group and Company £’000 £’000 Opening balance (1,479) (8,390) Movement in the year 579 6,911 Closing balance (900) (1,479)

Own shares consist of shares in SVG Capital plc held by the SVIIT Employee Benefit Trust and the SVIIT USA Employee Benefit Trust (“the Trusts”). During the year, the Trusts made disposals of 1,092,993 shares (2015: 3,363,513 shares) in order to settle performance share awards that vested in the period. During the year, the SVIIT USA Employee Benefit Trust received 823,850 shares (2015: 155,451 shares) which were transferred from treasury in order to satisfy awards granted to US employees. The cost of these share transactions was £0.6 million (2015: £6.9 million). At 31 January 2016, the Trusts held 417,647 shares in SVG Capital plc (2015: 686,790). The market value of these shares at 31 January 2016 was £2.0 million (2015: £3.0 million). The Trusts are funded by an interest-free loan from SVG Capital plc.

23 Reserve accounts The purpose of the various reserve accounts used by the Group is set out below. Share premium account The net proceeds of share issues in excess of the nominal value of such shares are credited to the share premium account. Capital redemption reserve Historically, 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 buy-backs are charged to. Share option reserve The Group’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 income statement. Convertible loan notes – equity This 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 2016, the reserve balance is £4,798,000 (2015: £12,352,000) based on £39,100,000 (2015: £100,650,000) nominal of loan notes still in issue. Capital reserve This reserve represents cumulative capital profits and losses available for distribution. Revenue reserve The revenue reserve represents its cumulative revenue profits and losses available for distribution. Strategic report | Corporate information | Financial information | Shareholder information 81

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

31 January 31 January 31 January 2016 2016 2015 Group Company £’000 Basic 657.4p 657.5p 593.0p Diluted 653.5p 653.6p 587.8p

Calculations of the net asset values per share are based on Group net assets attributable to equity shareholders of the parent of £1,051,768,000, Company net assets of £1,051,888,000 (31 January 2015: £1,127,105,000) and on 159,978,980 (31 January 2015: 190,077,621) ordinary shares in issue at the year end. The Group and Company diluted net asset value per share assumes that share options, performance shares and deferred shares (note 21) 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 781,383 ordinary shares (31 January 2015: 1,892,907) for consideration of £nil (31 January 2015: £1,353,000). The convertible loan notes 2016 are exercisable at a strike price of 640p, less than the undiluted net asset value per share, and were therefore dilutive at 31 January 2016. Assuming the conversion is exercised at the balance sheet date, this would result in the issue of 6,109,375 ordinary shares and an increase in Group and Company net assets of £38,732,000 which the carrying value of the convertible loan notes as at 31 January 2016. The convertible loan notes were not dilutive as at 31 January 2015. Therefore, the calculation of the diluted net asset value per share is based on Group net assets attributable to equity shareholders of £1,090,500,000, Company net assets of £1,090,620,000 (31 January 2015: £1,128,458,000), and on 166,869,738 (31 January 2015: 191,970,528) ordinary shares in issue at the year end.

Reconciliation of net asset value per share

Undiluted Shares net asset value Group £’000 in issue per share Opening Shareholders’ funds 1,127,105 190,077,621 593.0 Disposal of own shares –1,092,993n/a Purchase of shares (166,791) (31,191,634) 534.7 Opening balances adjusted for share movements 960,314 159,978,980 600.2 Gain attributable to equity shareholders of the parent company 91,009 159,978,980 56.9 Other reserve movements during the period 445 159,978,980 0.3 Closing Shareholders’ funds 1,051,768 159,978,980 657.4

Diluted Shares net asset value Group £’000 in issue per share Opening Shareholders’ funds – dilutive basis 1,128,458 191,970,528 587.8 Adjustment re lapses and grants of performance and deferred shares –(871,698)n/a Adjustment re conversion of loan notes 2016 38,732 6,109,375 634.0 Disposal of own shares –1,092,993n/a Purchase of shares (166,791) (31,191,634) 534.7 Adjustment re dilutive options (1,353) (239,826) n/a Opening balances adjusted for share changes 999,046 166,869,738 598.7 Gain attributable to equity shareholders of the parent company 91,009 166,869,738 54.5 Other reserve movements during the period 445 166,869,738 0.3 Closing Shareholders’ funds – dilutive basis 1,090,500 166,869,738 653.5 82 SVG Capital plc Annual Report 2016

Notes to the accounts continued

25 Analysis of changes in net debt

For the period ended 31 January 2016 Cash and cash Long-term Net cash/ equivalents debt (debt) Group £’000 £’000 £’000 Balance brought forward 134,912 (97,291) 37,621 Foreign exchange movements 12,450 – 12,450 Buy-back of convertible loan notes (nominal) (61,550) 61,550 – Acceleration of premium on buy-back of convertible loan notes –(1,304)(1,304) Amortisation of issue costs and accretion to premium –(1,687)(1,687) Cash flow 244,555 – 244,555 Balance carried forward 330,367 (38,732) 291,635

For the period ended 31 January 2016 Cash and cash Long-term Net cash/ equivalents debt (debt) Company £’000 £’000 £’000 Balance brought forward 134,912 (97,291) 37,621 Foreign exchange movements 12,450 – 12,450 Buy-back of convertible loan notes (nominal) (61,550) 61,550 – Acceleration of premium on buy-back of convertible loan notes –(1,304)(1,304) Amortisation of issue costs and accretion to premium –(1,687)(1,687) Cash flow 243,640 – 243,640 Balance carried forward 329,452 (38,732) 290,720

Cash and cash Long-term Net cash/ equivalents debt (debt) For the period ended 31 January 2015 £’000 £’000 £’000 Balance brought forward 208,643 (94,862) 113,781 Foreign exchange movements 756 – 756 Amortisation of issue costs and accretion to premium – (2,429) (2,429) Cash flow (74,487) – (74,487) Balance carried forward 134,912 (97,291) 37,621

26 Related party transactions Lynn Fordham is a member of the Advisory Committees of certain funds in the core strategy portfolio in which the Group invests. She does not receive fees for these services. During the year ended 31 January 2016, Lynn Fordham was a non-executive Director of ASVGA and ASVGM associated companies during the year. Lynn Fordham resigned as a director of ASVGA and ASVGM on 30 June 2015. No other Director has any material interest in any other contract that is significant to the Group’s business. The Directors of the Group and their beneficial family interests in the Company’s share capital during the period to 31 January 2016 are shown in the Remuneration report on page 44. During the year ASVGA and ASVGM provided certain advisory and administrative services to SVG Capital plc in return for a fee of 0.5% p.a. of gross assets. As detailed in note 16, these associated companies were disposed of during the year, and on 30 September 2015 the Company terminated the service agreement. The fees payable in respect of these services during this period in the year ended 31 January 2016 amounted to £3.6 million (2015: £6.1million) of which £0.9 million (2015: £3.5 million) remained payable at the year end. Until the date of disposal of these associated companies, ASVGM paid for all staff costs, including the remuneration costs of the Group’s executive Director Lynn Fordham, as well as the office costs incurred in providing the services to SVG Capital plc. During the year ended 31 January 2016, the Company received dividends of £12.0 million from ASVGA and ASVGM (2015: £1.3 million). The Group sold its stake in these associated entities to Aberdeen Asset Management plc for additional proceeds of £31.3 million. Related party transactions during the year were made on terms equivalent to those that prevail in arm’s-length transactions. Strategic report | Corporate information | Financial information | Shareholder information 83

27 Risk Financial instruments and risk profile The Group’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 Group 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 Group 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 Group’s net assets or a reduction of revenue profits available for dividend. Financial instruments (a) Financial assets

31 January 2016 31 January 2015 Floating Fixed Non-interest Floating Fixed Non-interest rate rate bearing Total rate rate bearing Total Group £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 Currency denomination of assets Sterling 81,092 – 48,862 129,954 19,869 – 171,355 191,224 Euro 31,181 5,552 297,649 334,382 12,583 15,745 393,943 422,271 US dollar 217,944 – 378,390 596,334 102,454 – 486,979 589,433 Canadian dollar 150 – 7,792 7,942 6–3,8333,839 Japanese yen ––2,7622,762 ––3,2993,299 Swiss Franc ––324324 ––262262 Danish Krone ––1,9531,953 ––1,7921,792 South African Rand ––2,1952,195 –––– Norwegian Krone – – 18,417 18,417 – – 17,968 17,968 Singapore Dollar –––– ––447447 330,367 5,552 758,344 1,094,263 134,912 15,745 1,079,878 1,230,535

Non-interest bearing assets represent non-monetary items such as the Group’s investment portfolio, investments in subsidiaries 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 As at 31 January 2016, the Group had a €300.0 million loan facility with Lloyds Bank plc, The Royal Bank of Scotland plc and State Street Bank and Trust Company, of which £nil was drawn (31 January 2015: £nil). The facility matures in December 2019. The Group had £38.7 million (2015: £97.3 million) of subordinated convertible loan notes in issue at the balance sheet date. The level of borrowing will impact on the Group’s performance by amplifying the effect of movements in the valuation of the investment portfolio. In addition to financial liabilities (note 19), the Group also has uncalled fund commitments (note 20) as at 31 January 2016 of £331.9 million (2015: £367.1 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. 84 SVG Capital plc Annual Report 2016

Notes to the accounts continued

27 Risk continued Currency denomination of the financial liabilities of the Group:

31 January 31 January 2016 2015 £’000 £’000 Sterling 42,131 103,067 Euro 364 363 42,495 103,430

Gross contractual cash flows* (cumulative interest and principal amounts) payable on the liabilities of the Group are as follows:

31 January 31 January 2016 2015 £’000 £’000 Convertible loan notes due 5 June 2016 40,712 111,722 Other creditors 3,261 6,139 43,973 117,861

* Based on exchange rates at each year end. A more detailed analysis of the maturity profile of the Group’s financial assets and financial liabilities is shown below. 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. 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 Group 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.

Maturity analysis

< 1 month 1–3 months 3–12 months 1–5 years > 5 years Total 31 January 2016 £’000 £’000 £’000 £’000 £’000 £’000 Financial assets Cash and cash equivalents 330,367––––330,367 Interest receivable –131–––131 Prepayments and other debtors 231––––231 Financial assets at fair value through profit or loss 12,309 65 – 268,443 482,638 763,455 Investment in subsidiaries ––––7979 342,907 196 – 268,443 482,717 1,094,263 Strategic report | Corporate information | Financial information | Shareholder information 85

27 Risk continued

< 1 month 1–3 months 3–12 months 1–5 years > 5 years Total 31 January 2016 £’000 £’000 £’000 £’000 £’000 £’000 Financial liabilities Other creditors and accruals (2,897)(364)–––(3,261) Convertible loan notes due 5 June 2016 – – (40,712) – – (40,712) (2,897) (364) (40,712) – – (43,973)

Payments in respect of debt instruments shown above include interest and principal amounts. Available liquidity/(gap) 340,010 (168) (40,712) 268,443 482,717 1,050,290

< 1 month 1–3 months 3–12 months 1–5 years > 5 years Total 31 January 2015 £’000 £’000 £’000 £’000 £’000 £’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 Investments in subsidiaries ––––1,2591,259 Investments in associates – – – 41,000 – 41,000 136,403 125,364 9,765 472,227 486,776 1,230,535

< 1 month 1–3 months 3–12 months 1–5 years > 5 years Total 31 January 2015 £’000 £’000 £’000 £’000 £’000 £’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

The assumed available liquidity in the above analysis is broadly expected to fund the uncalled commitments of the Group’s investments, which at 31 January 2016 was £331.9 million (2015: £367.1 million). These commitments are expected to be drawn over a number of years. The Group’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 Group’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 Group’s undrawn loan facility amounted to £228.2 million at 31 January 2016 and is subject to financial covenants as discussed in note 19. Uncalled fund commitments At 31 January 2016, the Group had uncalled fund commitments of £331.9 million (2015: £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 Group’s uncalled commitments are covered by the year end cash balance of £330.4 million (2015: £134.9 million), the €300 million loan facility of £228.2 million (€224.9 million) maturing in December 2019, and distributions from the current portfolio investments. 86 SVG Capital plc Annual Report 2016

Notes to the accounts continued

27 Risk continued Risks The main risks arising from the Group’s financial instruments are considered to be funding risk and valuation risk. The Board reviews and agrees policy for managing these and other risks as summarised below. Funding risks The nature of investing in private equity funds entails making significant financial commitments, as shown in note 20. At 31 January 2016, the Group had uncalled commitments of £331.9 million (2015: £367.1 million), compared to cash balances of £330.4 million (2015: £134.9 million) and Shareholders’ funds of £1,051.8 million (2015: £1,127.1 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. It is anticipated that over the longer term, and in normal circumstances, the Group’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 Group has a €300.0 million loan facility, which was undrawn at 31 January 2016, that could be drawn on, subject to financial covenants as described in note 19, to meet fund commitments as they fall due. The Group has never defaulted on any of its borrowing obligations. The Board regularly monitors liquidity risk and, if considered appropriate, could renegotiate its lending arrangements or issue new securities. The Group’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 that, dependent on prevailing market conditions, the realisation value of such assets could be at a significant discount to their previous carrying value. The Group is in a strong financial position but a residual risk remains that the Group 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. The Group or Company has never defaulted on any fund commitment. The Group’s €300.0 million loan facility expires in December 2019. The convertible loan notes are repayable on 5 June 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 risk The Group’s exposure to valuation risk comprises mainly movements in the value of the Company’s underlying investments. A detailed analysis of the investment portfolio and of the 15 largest underlying companies in the core portfolio is given in the investment portfolio review. In accordance with the Group’s accounting policies, all underlying investments are carried at fair value in accordance with the current IPEV Valuation Guidelines and IFRS 13. The IPEV Valuation 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 may be unquoted and therefore the valuation of such companies involves exercising judgement. The Group does not 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 would ordinarily be 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 Group, it benefited from fair value gains on its investment portfolio of £83.8 million during the period (2015: gains of £117.6 million). See note 12 for further details. The Group’s sensitivity to valuation risk will be affected by changes in the Group’s levels of borrowing and liquidity, as approved by the Board. It will also be affected by leverage in the underlying companies in which we invest and the local currency denomination of such investments, which is considered separately under currency risk. At 31 January 2016, a 10% movement in the valuation of the Group’s aggregate investments designated as fair value through profit and loss would result in a 7.3% (2015: 9.3%) change in Shareholders’ funds. The Board manages valuation risk by reviewing and approving the valuation of the private equity fund portfolio. Strategic report | Corporate information | Financial information | Shareholder information 87

27 Risk continued Holdings risk In certain circumstances, the Group may wish to transfer its holdings in particular funds. In the majority of the funds in which the Group will invest, the GP, trustee or manager has the ultimate right, similar to that exercisable by the board of a private company, to refuse to register the transfer of an interest. While the Group has no reason to believe that any request for the transfer of an interest would be refused, it is of course conceivable that the GP’s, trustee’s or manager’s overriding fiduciary duty could result in its refusing to register a particular transfer proposed by the Group. Concentration risk At 31 January 2016, the value of the 15 largest core underlying investee holdings represented 66.9% of the gross core portfolio (2015: 85.1%). In March 2012, the Company received shareholder approval to change its investment objective and is building a portfolio of a select number of top performing private equity managers, co-investments and smaller control investments. The Company has subsequently made commitments to six managers, and four co-investments. In the year, there have been significant realisations from the Company’s legacy holdings in Permira IV, which has reduced concentration risk. That said, the Company’s two largest investments (NXP Semiconductors (Freescale): £111.4 million; and Platform Specialty Products (Arysta LifeScience): £78.5 million) are Permira IV investments, so the process of rebalancing the portfolio is still incomplete and therefore a degree of concentration risk remains. Interest rate risk The Group’s revenue will be affected by changes in prevailing interest rates since a portion of its income ordinarily derives from money market instruments and bank deposit interest (see note 4). It also pays interest on its convertible loan notes and drawings on the loan facility (although £nil drawn at 31 January 2016) as detailed in note 8. The Group’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 2016, the Group held investments in AAA-rated money market funds valued at £311.6 million (2015: £119.8 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 2016 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 £779,000 and similarly a decrease in interest rates of 0.25% would lead to a reduction in annual interest income of £779,000. Other floating rate financial assets comprised cash at bank or short-term deposits. Based on the bank balances held at 31 January 2016 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 £47,000 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, although they could become negative. At 31 January 2016, the Group had £38.7 million (2015: £97.3 million) of convertible loan notes (see note 19). Interest rate risk on the Bonds is mitigated as they pay fixed coupon. Credit risk There are no significant concentrations of credit risk within the Group unless otherwise disclosed. The Group 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 Group’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. 88 SVG Capital plc Annual Report 2016

Notes to the accounts continued

27 Risk continued Currency risk The Group 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 Group 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 Group 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.

Hypothetical Hypothetical Equity value value Shareholders’ (10% £ (10% £ funds depreciation) appreciation) Group £’million £’million £’million 31 January 2016 Equity Shareholders’ funds 1,051.8 1,131.6 986.4 Change in Shareholders’ funds/effect on income +7.6% –6.2% 31 January 2015 Equity Shareholders’ funds 1,127.1 1,241.9 1,038.0 Change in Shareholders’ funds/effect on income +10.2% –7.9%

Capital risk management The objective of the Group is to provide shareholders with long-term growth in capital. In pursuing this long-term objective, the Board has a responsibility for ensuring the Group’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 21. Borrowings are set out in note 19. General risks associated with investment in private equity Investment in private equity involves a high degree of risk. The Group invests in private equity through its exposure to private equity funds and co-investments. 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 fairly concentrated with respect to private equity fund managers and also to vintage as explained in concentration risk on page 87. Default risk A 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 GP 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 GP 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 GP 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 Group holds an interest were to default on a call, this may result in the other investors (including the Group) 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 Group’s interests in underlying portfolio companies, increase volatility, increase the Group’s financing requirements and may have an adverse effect on the Group’s business and prospects. Strategic report | Corporate information | Financial information | Shareholder information 89

27 Risk continued Investment holding period risk Investment in private equity requires a long-term commitment with no certainty of return. Most of the investments made by the Group are illiquid holdings in private equity 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 private equity funds is uncertain and unpredictable. Prevailing market conditions may significantly influence a GP’s ability to achieve exits. Subdued market conditions may result in GP 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 GP’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 Group decides to pay calls with debt finance rather than relying upon receiving distributions from investments which it has made which may therefore increase the Group’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 private equity funds sometimes require the written consent of the GP of the fund, the granting of which is at its discretion. Accordingly, the Group may not be able to sell its investments in private equity funds at their net asset value. The Group’s portfolio is fairly 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 Group, which the Board manages by regularly and reviewing cash flow forecasts and the funding options available. Portfolio company risks Since the Group invests through private equity funds in portfolio companies, the risks experienced by the portfolio companies will closely affect the returns earned by the Group 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 Group’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 Group 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 GP, or other manager, of the relevant fund which holds the portfolio company; k reliance is placed on the GP as to the adequacy or accuracy of information provided during any due diligence exercise conducted prior to an investment being made. The GP, 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 Group 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; 90 SVG Capital plc Annual Report 2016

Notes to the accounts continued

27 Risk continued 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 Group; 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 Group. The value of the portfolio companies held by the funds in which the Group 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 Group, directly or indirectly through the funds in which the Group holds interests, may also be exposed to these risks. The Group receives investment recommendations from SVGCM, who performs extensive due diligence on the private equity managers that it invests with, who in turn select and oversee underlying investee companies. Passive investor with limited recourse The Group 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 Group 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 GPs or managers of the funds in which the Group holds interests will be successful or that the portfolio companies of such funds, or the Group’s investments generally, will appreciate in value. The Group also holds some investments in funds in respect of which associated undertakings are the GP, 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 undertakings are unable to submit each proposed investment for review by the Group which will, therefore, remain a passive investor in respect of the relevant fund. The Group cannot make claims against GPs or managers of the funds in which the Group invests even in cases of poor performance except in very limited circumstances typically involving severe culpability on the part of the GP or manager. The Group’s recourse in the event of poor performance of the funds concerned is highly restricted. Removal of the GP 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 Group is unlikely to be able to procure such participation and consent on its own and it may therefore be very difficult to remove a GP or manager of a fund in which the Group invests such that the Group 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 GP or manager by vote of the limited partners save in circumstances involving severe culpability. Even if those circumstances were to arise, which the Group considers to be unlikely, the consent of a special majority of limited partners would be required which the Group is unlikely to be able to procure on its own. Once the Group 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 Group may have a valid claim against GPs or managers, though it may not be clear whether those GPs 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. Strategic report | Corporate information | Financial information | Shareholder information 91

27 Risk continued Regulatory risks The regulatory environment in which the Group operates is increasingly complex and the Group 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 Group’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, SVGCM, the investment manager and a Group subsidiary, was 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 risk Any change in the taxation legislation or practice could affect the value of the Group’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 Group or 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 Group 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 Group or Company will satisfy the conditions for approval by HMRC as an investment trust under Section 1158 or that the Group or Company will not become a close company, which would result in its being unable to qualify as an investment trust for tax purposes.

28 Largest fund investments (by value)

31 January 31 January 2016 2015 Manager/Adviser £’000 £’000 Permira IV Permira 168,775 447,705 Aberdeen Diamond Holdings II Limited APEA* 83,363 64,249 Permira V Permira 66,328 30,184 Aberdeen Diamond Holdings Limited APEA* 60,023 83,813 The Fifth Cinven Fund Cinven 54,324 34,178 CCMP Capital Investors III CCMP 52,737 39,440 Aberdeen Diamond Holdings plc APEA/APEM* 49,693 37,900 Clayton, Dubilier & Rice Fund IX Clayton, Dubilier & Rice 31,995 38,139 P1234 APEA* 28,328 44,347 P25 APEA* 27,863 69,636 623,429 889,591

* Subsequent to the disposal of associated investments ASVGA and ASVGM to Aberdeen Asset Management plc in the period, the name of the entities were changed to Aberdeen Private Equity Advisers Limited (APEA) and Aberdeen Private Equity Managers Limited (APEM) respectively.

29 Post balance sheet events There have been no other post balance sheet events that require disclosure. 92 SVG Capital plc Annual Report 2016

AIFMD disclosures

Report on remuneration and quantitative remuneration disclosure The Alternative Investment Fund Managers’ Directive (AIFMD) requires certain disclosures to be made with regard the remuneration policy paid by the Company’s Alternative Investment Fund Manager (AIFM) to its staff. Since this report is being made available before the AIFM has completed its first full performance period after becoming authorised, the relevant information is not available at this time. Leverage The Group 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 Group’s investment portfolio may be subject to. For the purposes of this disclosure, leverage is any method by which the Group’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 Group’s exposure and its net asset value, 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 Group is detailed in the table below:

Commitment leverage as Gross leverage as at 31 January 2016 at 31 January 2016 Leverage ratio 1.02 1.02

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 2016, the Group’s LTV ratio was nil, compared with a maximum covenant of 30% contained in the loan facility. In addition the Group had no net gearing as cash balances outweighed the subordinated convertible debt. Other risk disclosures The risk disclosures relating to risk framework and risk profile of the Group are set out in the Risk and audit oversight section of the Strategic report on pages 1 to 27 and in note 27 to the notes to the financial statements on pages 83 to 91. Pre investment disclosures The AIFMD requires certain information to be made available to investors in an Alternative Investment Fund (AIF) 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 Group’s investment strategy and policies, leverage, risk, liquidity, administration, management, fees, conflicts of interest and other shareholder information is available on the Group’s website at www.svgcapital.com. There have been no material changes to this information requiring disclosure. Strategic report | Corporate information | Financial information | Shareholder information 93

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 twentieth Annual General Meeting of SVG Capital plc will be held at 11.30 a.m. on 3 May 2016 at J.P. Morgan, 60 Victoria Embankment, London EC4 0JP 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 2016 together with the Auditors’ report on those Accounts. 2. To approve the Remuneration Report for the year ended 31 January 2016. 3. To elect Simon Bax as a Director of the Company. 4. To re-elect Andrew Sykes as a Director of the Company. 5. To re-elect Lynn Fordham as a Director of the Company. 6. To re-elect Stephen Duckett as a Director of the Company. 7. To re-elect David Robins as a Director of the Company. 8. To re-elect Helen Mahy CBE 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 £1,580,016 (equivalent to 1% of the issued ordinary share capital of the Company as at 22 March 2016) in connection with the SVG Capital 2007 Performance Share Plan; (B) up to a nominal amount of £52,667,209 (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 £105,334,418 (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 2017) 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 £70 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 14,000,000 (equivalent to 8.86% of the issued ordinary share capital of the Company as at 22 March 2016); (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; 94 SVG Capital plc Annual Report 2016

Notice of Annual General Meeting continued

(C) this authority will expire at the conclusion of the Company’s Annual General Meeting held in 2017 or, if earlier, at the close of business on 31 July 2017; (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 15,800,162 Ordinary Shares (equivalent to 10% of the issued ordinary share capital of the Company as at 22 March 2016); (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 2017) 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. Strategic report | Corporate information | Financial information | Shareholder information 95

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 £1,580,016 (equivalent to 1% of the issued ordinary share capital of the Company as at 22 March 2016) 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 11, 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 £7,900,080 (equivalent to 5% of the issued ordinary share capital of the Company as at 22 March 2016), 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 2017) 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. 1 April 2016 By order of the Board Stuart Ballard, Company Secretary Registered Office: 6 Kean Street London WC2B 4AS Registered in England and Wales No. 03066856 96 SVG Capital plc Annual Report 2016

Notice of Annual General Meeting continued

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 0371 384 2776. 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 28 April 2016. 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 28 April 2016 (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 22 March 2016 (being the latest practicable date prior to the publication of this notice), the Company’s issued share capital consisted of 231,789,499 ordinary shares, carrying one vote each. 73,787,872 shares were held in treasury. Therefore, the total voting rights in the Company as at 22 March 2016 were 158,001,627. 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.com 18. 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. Strategic report | Corporate information | Financial information | Shareholder information 97

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 3 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 2016 The 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 2016. Resolution 2: Remuneration Report The purpose of this Resolution is to approve the Remuneration Report for the year ended 31 January 2016. This can be found on pages 38 to 45 of the Annual Report. Resolutions 3 to 8: Directors Biographical details of the Directors presenting themselves for election or re-election can be found on pages 28 and 29 of the Annual Report. The Board confirms that, following the formal Board performance evaluation process carried out during the year it considers all the current Directors seeking appointment or re-appointment to be committed to the role. Resolutions 9 and 10: Auditors 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. 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 allot The 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 £52,667,209 (representing 52,667,209 ordinary shares). This amount represents approximately one-third of the issued share capital of the Company as at 22 March 2016 (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 £105,334,418 (representing 105,334,418 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 22 March 2016, 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 Investment Association 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 2017 and the conclusion of the Annual General Meeting of the Company held in 2017. As at 22 March 2016, being the latest practicable date prior to publication of this notice, the Company held 73,787,872 shares in treasury, representing 46.7% of the Company’s total ordinary share capital in issue (excluding shares held in treasury). 98 SVG Capital plc Annual Report 2016

Notice of Annual General Meeting continued

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’ may 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 £70 million to shareholders through the tender offers, in addition to the other authority being sought at the 2016 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 shares Authority is sought for the Company to purchase up to 10% of its issued shares, renewing the authority granted at previous Annual General Meetings. The Company purchased 7,737,965 Ordinary Shares in the period from the last Annual General Meeting to 22 March 2016 (being the latest practicable date prior to publication of this notice). In addition, 21,933,669 shares were purchased pursuant to two tender offers which closed during the year. 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 22 March 2016, being the latest practicable date prior to publication of the notice, the Company held 73,787,872 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 2017 and the conclusion of the Annual General Meeting of the Company held in 2017. 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 22 March 2016 was 495,569, which represented approximately 0.31% 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 22 March 2016 would represent approximately 0.34% 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 22 March 2016 would represent approximately 0.35% 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 3 May 2016. Strategic report | Corporate information | Financial information | Shareholder information 99

Resolution 14: Notice of general meetings Changes 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 rights This 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 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 £7,900,080 (representing 7,900,080 shares). This nominal amount represents approximately 5% of the issued ordinary share capital of the Company as at 22 March 2016, 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 2017 and the conclusion of the Annual General Meeting of the Company held in 2017. If the Company were to purchase the maximum number of Ordinary Shares permitted by Resolutions 12 and 13, then the Options outstanding at 22 March 2016 would represent approximately 0.39% of the issued ordinary share capital (excluding treasury shares). 100 SVG Capital plc Annual Report 2016

The Company’s remuneration policy

This policy provides details of the remuneration policy for the Directors of the Company. All Directors, other than Lynn Fordham, are non-executive, appointed under the terms of Letters of Appointment, and none has a service contract. Lynn Fordham is the only executive Director of the Company. For the period from 1 February 2015 to 30 September 2015, Lynn Fordham was employed by Aberdeen Asset Management plc (AAM) and her salary, pension and other benefits were paid pursuant to the AAM remuneration policy. The Directors have no liability for these payments made to Lynn Fordham by AAM. Since 1 October 2015, Lynn Fordham has been employed by SVGC Managers Limited (SVGCM), a wholly-owned subsidiary of the Company, and her remuneration (including the variable elements covering her period of employment by AAM) has been paid pursuant to the Company’s remuneration policy. A resolution to approve the Company’s remuneration policy was passed at the 2015 Annual General Meeting of the Company.

Remuneration structure Executive Directors The 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 The Company seeks to pay a fair salary commensurate with the individual’s role, withholding provisions 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 framework 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. Opportunity and recovery or withholding Fringe benefits are not subject to a specific cap as the cost is set by external providers and provisions 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. Performance measurement framework Not applicable. Strategic report | Corporate information | Financial information | Shareholder information 101

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). Opportunity and recovery or Contributions or cash allowances of up to a maximum of 30% of base salary may withholding provisions be provided. No recovery or withholding provisions. Performance measurement framework Not applicable.

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. Opportunity and recovery or The Chief Executive has a share retention target of 3.0 times salary and other senior members withholding provisions 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. No recovery or withholding provisions. Performance measurement framework Not applicable. 102 SVG Capital plc Annual Report 2016

The Company’s remuneration policy continued

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. Opportunity and recovery or The maximum potential bonus is 200% of salary, although bonuses of up to 300% of withholding provisions 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 framework 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. Opportunity and recovery or The maximum value of nil-cost options that may be granted in any year under the withholding provisions 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 framework Nil-cost options awarded under the performance share plan are subject to targets related to the Company’s undiluted net asset value (NAV) per share 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 set the targets for performance share awards to be made during the year at 7% (0% vesting) to 15% (100% vesting) growth in TSR and NAV over a three and four year period respectively. The Committee would first consult with major shareholders before making any significant changes to these targets. Strategic report | Corporate information | Financial information | Shareholder information 103

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. Opportunity and recovery or The carried interest pool for direct investments and/or direct co-investments is capped at withholding provisions 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 framework SVG Capital’s carried interest arrangements require a compound return of 8% p.a., before any proceeds are paid out. 104 SVG Capital plc Annual Report 2016

The Company’s remuneration policy continued

Notes to the remuneration policy table 1. Rationale for choice of performance measures for short-term and long-term incentive plans Bonus The 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-term 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 shares In 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 awards to be granted under the performance share plan consist of (i) the average growth in the Company’s undiluted 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 7% p.a. (0% of the award vests) and 15% p.a. (100% of the award vests), with each determining 50% of the award. These targets were introduced this year following consultation with major shareholders. Carried interest plans The 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 employees SVG 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 policy The 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. Strategic report | Corporate information | Financial information | Shareholder information 105

4. Statement of consideration of conditions elsewhere in the Company The Committee reviews the overall pay and bonus decisions for the Group as a whole to ensure pay and conditions in the wider Group are taken into account when determining Directors’ pay. The Company does not consult with employees when preparing the remuneration policy. A number of employees are shareholders and are able to express their views in the same way as other shareholders. 5. Committee discretions The 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; k determining the timing of grants of awards and/or payment; k determining the quantum of awards and/or payments (within the limits set out in the policy table above); k determining the extent of vesting based on the assessment of performance; k making the appropriate adjustments required in certain circumstances (e.g. change of control, rights issues, corporate restructuring events and special dividends); k determining ‘good leaver’ status for incentive plan purposes and applying the appropriate treatment; and k undertaking 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 44 of the Remuneration report, remain eligible for vesting or exercise based on their original award terms. 6. Scenarios Chief Executive (£’000s)

Maximum 14% 43% 43% 2,415

Actual 36% 64% 955

Minimum 100% 345

Fixed remuneration (excluding benefits and pension) Annual bonus (including deferred element) Long-term incentive

7. External appointments The 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. 106 SVG Capital plc Annual Report 2016

The Company’s remuneration policy continued

Table of Directors’ remuneration components (Non-executive Directors)

Element Purpose and link strategy Operation Maximum Board To attract and retain The Board Chairman is paid a single fee for all his responsibilities. The level There is no Chairman fee a high-calibre Board of the fee is reviewed, periodically by the Remuneration Committee, with maximum Chairman by offering reference to workload, time commitment and market levels in comparably fee level. a market-competitive sized FTSE companies, and a recommendation is then made to the Board fee level. (without the Chairman being present). The Chairman does not receive benefits other than limited travel and hospitality-related benefits which may be provided in connection with the role. Non-executive To attract and retain The non-executives are paid a basic fee and, under certain circumstances, There is no Director fees high-calibre non- an attendance allowance. The Audit and Risk and Remuneration maximum executive Directors Committee Chairmen and the Senior Independent Director are paid fee level. by offering a market- supplements to reflect the additional responsibilities, workload and time competitive fee level. 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 which may be provided in connection with the role.

Notes: 1. The Board only exercises its discretion in setting rates of fees after an analysis of fees paid to non-executive Directors of other companies having similar profiles to that of the Company, and consultation with third-party advisers. 2. No non-executive 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 non-executive Directors’ remuneration in existence to set out in this remuneration policy. Service Contracts – none of the non-executive Directors has a service contract with the Company. Non-executive Directors are engaged under Letters of Appointment. Appointments are generally for an initial three-year term, subject to annual re-election at each AGM and subsequent annual renewal. The dates of the current Letters of Appointment are as follows: Stephen Duckett 12 March 2012 – (initial term expired 11 March 2015) Andrew Sykes 28 September 2012 (replacing original letter of appointment dated 5 February 2010) – (term expired 27 September 2015) David Robins 6 August 2013 – (initial term due to expire 5 August 2016) Helen Mahy CBE 23 July 2014 – (initial term due to expire 22 July 2017) Simon Bax 22 June 2015 – (initial term due to expire 21 June 2018) 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 such Directors. Other Items None 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 policy In 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. Strategic report | Corporate information | Financial information | Shareholder information 107

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 contracts The 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 dated 21 May 2015 (though her employment within a Group Company commenced on 1 October 2015, when SVGC Managers Limited received its FCA authorisation) and the Company has entered into a Letter of Appointment on similar terms to non-executive Directors’ Letters of Appointment (original letter of appointment dated 1 July 2008 which was replaced by the current letter of appointment dated 1 June 2013. The original appointment term expires on 30 June 2011). 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. 108 SVG Capital plc Annual Report 2016

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 31 July and 31 January 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 0371 384 2776. 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. k direct 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. 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 Email: [email protected] Tel: 020 3457 0000 Strategic report | Corporate information | Financial information | Shareholder information 109

Advisers

Secretary and registered office Registrar for ordinary shares Stuart Ballard Equiniti Limited SVG Capital Aspect House 6 Kean Street Spencer Road London WC2B 4AS Lancing West Sussex BN99 6DA Alternative Investment Telephone 0371 384 2776 Fund Manager Overseas helpline +44 121 415 7047 Website www.shareview.co.uk SVGC Managers Limited 6 Kean Street Solicitors London WC2B 4AS Slaughter and May Depository One Bunhill Row London EC1Y 8YY State Street Trustees Limited 20 Churchill Place Brokers and financial advisers London E14 5HJ J.P. Morgan Cazenove Auditors 25 Bank Street Canary Wharf Ernst & Young LLP London E14 5JP 25 Churchill Place London E14 5EY Numis Securities The London Stock Exchange Building 10 Paternoster Square Bankers London EC4M 7LT Lloyds Bank plc Haitong Securities (UK) Limited 10 Gresham Street The London Stock Exchange Building London EC2V 7AE 10 Paternoster Square The Royal Bank of Scotland plc London EC4M 7AL Corporate Banking Office 5–10 Great Tower Street London EC3P 3HX State Street Bank and Trust Company 20 Churchill Place London E14 5HJ

Custodian State Street Bank and Trust Company 20 Churchill Place London E14 5HJ SVG Capital plc 6 Kean Street London WC2B 4AS www.svgcapital.com

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