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Annual Report and Accounts 2011

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Annual Report and Accounts 2011 Annual Report and Accounts 2011 SVG Capital plc Annual Report 2011 01 Welcome to SVG Capital plc 02 SVG Capital at a glance 08 Chairman’s statement Overview 10 Chief Executive’s statement SVG Capital is an international private equity investor and fund management 12 Introduction 12 Investment objective 12 Investment policy 12 Key performance indicators business listed on the 13 Strategy Business review Business 15 Marketplace 16 Financial review 17 Large investments 17 Investment portfolio review London Stock 23 15 largest underlying companies 26 Fund management businesses 26 Contractual arrangements 27 Risks and risk management Exchange. 30 List of investments (Group) 32 Board of Directors 34 Report of the Directors 37 Remuneration report 44 Corporate governance 49 Corporate social responsibility Corporate information Corporate 1 51 Independent auditors’ report 52 Consolidated income statement 52 Consolidated statement of comprehensive income 53 Company income statement 53 Company statement of comprehensive income 54 Consolidated statement of changes in equity Financial information Find us online 55 Company statement of changes in equity 56 Consolidated balance sheet www.svgcapital.com 57 Company balance sheet 58 Consolidated cash flow statement 59 Company cash flow statement 60 Notes to the accounts 102 Notice of Annual General Meeting 107 Company summary and E-communications for shareholders 108 Advisers 108 Financial calendar 109 Glossary of terms Company information Company SVG Capital plc Annual Report 2011 01 Welcome to SVG Capital plc Our objective… SVG Capital’s investment objective is to achieve capital appreciation Overview by investing principally in private equity funds that are managed or advised by Permira, a leading international private equity specialist. In addition, the Company invests in private equity funds that invest in Japan, North America, Asia and the life sciences sectors, and in unquoted and quoted businesses through specialist funds and co-investments alongside these funds. The Company may also invest in other private equity related assets and alternative asset classes. To complement this investment objective and create capital and income for the Company, its fund management business structures, markets, manages and advises products for investment in private equity, private equity related assets, alternative asset classes and in public equity using private equity techniques. More detail on our top 15 investments 23 | 25 p SVG Capital plc 02 Annual Report 2011 SVG Capital at a glance Our business… The Group invests from its own balance sheet as well as on behalf of third-party investors through funds that it manages and/or advises. At 31 December 2011, total assets and commitments under advice or management were £4.1 billion, including £2.7 billion1 managed or advised on behalf of third-parties. Private equity investment SVG Capital invests in a portfolio of private equity funds, the majority of which are advised by Permira, a leading international private equity specialist. Fund management SVG Capital’s fund management businesses, SVG Advisers (SVGA) and SVG Investment Managers (SVGIM), structure, market, manage and advise products for investment in private equity and public equity using private equity techniques. Total assets Balance sheet: 31 Dec 31 Dec £1,306.9m 2011 2010 Investment portfolio £1,168.5m £1,248.8m Net investment portfolio Cash £121.0m £17.1m Other assets £17.4m £15.7m £1,168.5m Total assets £1,306.9m £1,281.6m Senior Notes (£162.0m) (£198.5m) +11.2% Bank facility – (£19.3m) total return Convertible bonds (£90.9m) (£101.9m) Since December 2010 Other liabilities and non-controlling interests (£15.3m) (£16.2m) Net assets of £1,079.2m Shareholders’ funds (audited)2 £1,038.7m £945.7m Directors’ valuation of SVGA and SVGIM (unaudited) £40.4m £53.7m 350.2p per share Net assets (including SVGA and SVGIM) (unaudited) £1,079.1m £999.4m Net assets per share (unaudited) 350.2p 315.9p Shareholders’ funds Net debt as % of Shareholders’ funds 12.3% 31.9% £1,038.7m Loan to value ratio (maximum of 30%)3 13.4% 16.2% 1 This figure excludes SVG Capital’s commitments/investments in SVG Advisers’ and SVG Investment Managers’ managed or advised funds 2 Calculated in accordance with IFRS 3 Maximum decreased to 30% from 1 July 2011 with the flexibility to go up to 40% for one nine month period SVG Capital plc Annual Report 2011 03 Portfolio: Private equity funds Overview Valuation analysis Dec 2011 Dec 2010 4 1 Value £955.9m £1,065.5m1 56 3 Percentage of the investment portfolio 81.8% 85.3%1 By value Investing in 17 funds with an underlying portfolio of 97 companies2, 95.9% of the private equity funds portfolio and 78.4% of the total investment portfolio is invested 2 in Permira funds. £m 1,065.5 14.5 (247.0) 122.9 955.9 31 Dec 2011 31 Dec 2010 1,100 % % (by value) (by value) 1,000 900 1. Earnings 60 39 800 2. Quoted 23 18 700 3. Written down – earnings 10 35 600 4. Third-party 5 6 500 5. Written down 1 1 400 300 6. Cost 1 1 200 100 Geographical analysis 0 Opening Calls Distributions Return Closing 1 5 1 valuation paid received portfolio 4 1 Figures restated to include the one remaining warehoused asset 2 Excluding investments held by American Capital Equity II 3 By value Key features of the 12 months 2 1. Total return of 11.4% over the year as strong earnings momentum across the 31 Dec 2011 31 Dec 2010 portfolio companies outweighed the negative impact of financial market volatility. % % (by value) (by value) 2. Strong earnings momentum supported by top-line growth as management 1. Global 55 51 teams continued to drive initiatives such as geographic expansion and new 2. Continental Europe 18 24 product launches. 3. UK 13 11 3. Weighted average year-on-year revenues and earnings increased by 32% and 40% 4. Asia 12 11 respectively across our investments in Permira IV. 5. North America 2 3 4. Aggregate debt across the top 15 companies decreased by 9.1% over the year (in constant currencies). Sector analysis 7 8 1 6 Major unrealised portfolio movements Change in year1 5 By value 2 Hugo Boss and VFG 260.9 +£96.1m 164.8 4 3 Galaxy Entertainment 120.2 70.5 +£79.4m 111.3 31 Dec 2011 31 Dec 2010 % % 104.3 (by value) (by value) iglo Group +£18.1m 86.2 1. Retail 29 22 Ayrsta LifeScience 148.3 2. Consumer 15 9 +£15.1m 133.2 3. Chemicals 15 20 Freescale 48.8 4. Leisure 14 11 (£14.6m) 63.4 5. Electronics and 13 17 ProSiebenSat 51.9 communications (£14.8m) 66.7 6. Media 7 12 31 Dec 2011 £m2 31 Dec 2010 £m2 Distributions in 12 months 7. Financial 5 4 1 8. Medical/health 2 2 Including Permira feeder vehicles 2 Gross of any carried interest provision 9. Other services – 3 SVG Capital plc 04 Annual Report 2011 SVG Capital at a glance continued 15 largest underlying companies 1 2 3 8 9 10 11 1 2 3 4 5 Hugo Boss Arysta LifeScience Galaxy iglo Group TDC and Valentino Agrochemicals Entertainment Frozen food Communications Fund Fund solutions Fashion Group Permira IV Casino and hotel Permira Europe III Fund Fashion Cost operator Cost Permira Europe II, Permira Europe III Fund Fund Cost Permira IV £151.5m Permira IV £49.0m % of gross private equity portfolio % of gross private equity portfolio Cost Cost £40.8m £205.5m 14.2% £43.5m 10.0% % of gross private equity portfolio Value Dec 2011 Value Dec 2011 % of gross private equity portfolio % of gross private equity portfolio 6.6% 25.0% £148.3m 11.5% £104.3m Value Dec 2011 Value Dec 2011 Value Dec 2011 £69.1m £260.9m £120.2m 6 7 8 9 10 ProSiebenSat.1 Freescale Acromas Legico Marazzi Media Embedded (AA Saga) Finance Ceramic tiles semiconductors Fund Fund Television and radio Motoring, travel, media, Permira IV Permira IV Fund Fund finance Cost Cost Permira IV Permira IV Fund Cost Cost Permira Europe III £50.4m £41.9m £140.3m £145.1m Cost % of gross private equity portfolio % of gross private equity portfolio % of gross private equity portfolio % of gross private equity portfolio £41.8m 4.3% 2.1% 5.0% 4.7% % of gross private equity portfolio Value Dec 2011 Value Dec 2011 Value Dec 2011 Value Dec 2011 4.6% £44.9m £21.6m £51.9m £48.8m Value Dec 2011 £47.7m SVG Capital plc Annual Report 2011 05 Overview 4567 12 13 14 15 11 12 13 14 15 Sisal All3Media Telepizza NDS Just Retirement Gaming TV production Take-away pizza Pay-TV solutions Financial services Fund Fund Fund Fund Fund Permira Europe III Permira Europe III Permira Europe III Permira IV Permira IV Cost Cost Cost Cost Cost £16.9m £14.0m £12.3m £7.7m £3.5m % of gross private equity portfolio % of gross private equity portfolio % of gross private equity portfolio % of gross private equity portfolio % of gross private equity portfolio 2.0% 1.9% 1.5% 1.1% 0.6% Value Dec 2011 Value Dec 2011 Value Dec 2011 Value Dec 2011 Value Dec 2011 £21.1m £19.8m £15.2m £11.4m £6.3m SVG Capital plc 06 Annual Report 2011 SVG Capital at a glance continued Portfolio: Private equity funds of funds Key features of the 12 months Dec 2011 Dec 2010 1. Total return of 19.1% over the year. Value £147.4m £123.7m 2. Substantial rebound in value of the Percentage of the investment portfolio 12.6% 9.9% private equity funds of funds portfolio as increases in underlying investment Focus: values have been amplified by the Investing in six diversified funds of funds, the majority of which are managed or advised leverage within many of the by SVG Advisers.
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