SVG Diamond Holdings II Limited. Unaudited financial statements. For the six months ended 31 March 2015

Transcription

1 SVG Diamond Holdings II Limited Unaudited financial statements For the six months ended

2 1 Table of contents Page Company information 2 Activity report 3 Profit and loss account 6 Balance sheet 7 Statement of changes in net assets attributable to holders of preferred equity shares 8 Cash flow statement 9 Notes to the financial statements 10

3 2 Company information Directors Elizabeth Ann Mills (resigned 15 January ) Peter John Richardson David King (appointed 15 January ) Investment adviser Aberdeen SVG Private Equity Advisers Limited Bow Bells House, 1 Bread Street London EC4M 9HH Advisory committee John McLachlan (Chairman) Jeffrey Hodgman Sam Robinson Andrew Sykes James Witter Portfolio administrator, trustee, cash manager and custodian The Bank of New York Mellon SA/NV, Dublin Branch Hanover Building, Windmill Lane Dublin 2 Issue and paying agent Bank of New York Mellon North America London Branch One Canada Square London E14 5AL Corporate service provider, company secretary and share trustee Structured Finance Management Offshore Limited 47 Esplanade St Helier Jersey JE1 0BD Registered office 47 Esplanade St Helier Jersey JE1 0BD Solicitors White & Case 5 Old Broad Street London EC2N 1DW Independent auditors Ernst & Young LLP 1 More London Place London SE1 2AF General enquiries Aberdeen SVG Private Equity Advisers Limited Mercy Koko-Snuggs mercy.koko-snuggs@aberdeensvg.com

4 3 Activity Report SVG Diamond Holdings II Limited and SVG Diamond Private Equity II plc, together SVG Diamond II or the Fund, was established to provide investors with an enhanced exposure to a diversified portfolio of private equity funds. SVG Diamond II closed on 22 February 2006 having raised million of rated Notes (the Notes ) and preferred equity shares representing commitments of million. Overview SVG Diamond II has continued to make considerable progress over the six months to reporting a total return of 23.4% on shareholders net asset value ( NAV ) over the period. The Fund's investment portfolio benefitted from a combination of valuation uplifts driven by robust trading performances of the majority of portfolio companies and crystallised gains as portfolio companies were sold into the current strong markets by the underlying managers. In addition, the Fund has benefitted from the enhancing effect of SVG Diamond II s low cost leverage and continued strengthening of the US dollar against the Euro given the significant weighting of the portfolio to USD denominated assets. However, as only 54% (by value) of the stated March portfolio valuation is based on actual March General Partner ( GP ) valuations received by the cut off date and 46% (by value) is based on December valuations adjusted for known calls and distributions to, we would anticipate the Fund s performance to improve further once we receive the full March GP valuations. The growth in Fund NAV over the last six months is presented in the table below : Value of investment portfolio 379.2m 384.4m Other assets 45.7m 45.1m Note liabilities (165.5)m (219.3)m NAV 259.4m 210.2m Shares in issue 175.0m 175.0m NAV per share The Fund has enjoyed a strong flow of distributions from the underlying portfolio over the six month period and has continued to deleverage. On the interest payment date of 30 March, SVG Diamond II redeemed all the remaining (5.9 million) Class A Notes and 63.5 million (56%) of the Class B Notes. Highlights SVG Diamond II reported a total return of 23.4% over the six months to. At the period end, the Fund had a NAV of million and a NAV per share of 1.48 ( : 1.20) At, the Fund had current total commitments 1 of million - of which 51.9 million remained unfunded - to a portfolio of 74 funds (443 underlying portfolio companies 2 ) valued at million The underlying portfolio reported a total return of 16.7% over the six month period. As a result, the portfolio TVPI increased to 1.44x at ( : 1.34x) As mentioned in the overview, we would anticipate this performance to improve once we have received all the March GP valuations. The robust exit activity over the six months to has resulted in SVG Diamond II receiving proceeds of 75.4 million 3 from the underlying funds (six months to : 68.4 million 3 ). As is to be expected at this stage of the Fund s lifecycle, calls were significantly lower than distributions at 5.3 million over the period (six months to : 5.3 million). We are comfortable with the Fund s liquidity position. SVG Diamond II s unfunded commitments have continued to reduce and at stood at 51.9 million ( : 55.6 million). At 31 March these were almost fully covered by cash and cash equivalents of 51.3 million. We anticipate that distributions will continue as the portfolio matures and we would expect these to provide additional liquidity to cover unfunded commitments and enable continued deleveraging of the Fund. 1 Current total commitments equals unfunded commitments plus funded commitments (where funded commitment is equal to initial cost of secondary deals plus calls, less the cost element of total distribution proceeds, plus unrealised FX translation movement) 2 All portfolio company information is as of 31 December, the latest date at which full information at the portfolio company level is available 3 Including income distributions

5 4 Debt repayment As mentioned earlier, SVG Diamond II is now in its debt amortisation phase of its lifecycle. In September 2013 the Fund commenced repayment of its Notes, in order of seniority, using surplus cash over and above the PEI Reserve Minimum Balance 4. On 30 March, SVG Diamond II redeemed all the remaining (5.9 million) Class A Notes and 63.5 million (56%) of the Class B Notes. We expect that the remaining Class B Notes will be fully repaid at the end of September 5. We also note that, on 19 January, Moody s upgraded the Class A Notes from Baa2 to Aa3 and the Class B Notes from Ba2 to Baa3. They cited that the action was taken as a result of the improvement in the overcollateralisation ratios of the Notes. This is an encouraging endorsement of the Fund s improving performance from this rating agency. Portfolio summary Below is a summary of the portfolio performance over the six month period: Opening valuation million Calls paid 5.3 million Distributions received* 75.4 million Realised and unrealised gains 64.9million Closing portfolio million Total return on the portfolio 16.7% *includes income distributions The underlying portfolio reported a total return of 16.7% aided by the strong appreciation of the US dollar against the Euro over the six month period (on a constant currency basis using September FX rates, the total return for the six month period was 10.1%). The underlying portfolio valuation uplift has been driven by a strong flow of distributions and positive movements in both earnings and multiples from mid cap and large cap buyouts in Europe and in the US. As a result, the portfolio TVPI increased to 1.44x at ( : 1.34x) As mentioned earlier, we would anticipate this portfolio performance to improve once we have received all the March GP valuations. Portfolio calls and distributions As expected at this stage in the Fund s lifecycle, the SVG Diamond II portfolio remained net cash generative as exit activity remained strong - with notable exits and distributions from a mixture of US and European funds. Over the six month period SVG Diamond II received distributions of 75.4 million 3 outweighing calls of 5.3 million. Some of the key distributors during the period included Permira IV (8.2 million), The fourth Cinven Fund (5.9 million), Blackstone Capital Partners V (5.3 million), CVC Europe V (4.9 million) and 3i Eurofund V (4.2 million). The mezzanine portfolio has also continued to provide some good distributions over the period SVG Diamond II received distributions of 6.5 million from Friday Street Mezzanine Fund I and 3.9 million from Alcentra Mezzanine Fund I during the six months to. Since inception SVG Diamond has received distributions of million 3 and paid calls of million. Conclusion SVG Diamond II continues to be at an efficient point in its lifecycle. Although SVG Diamond II is deleveraging, the underlying debt continues to enhance SVG Diamond II s performance as the Fund continues to benefit from low short term interest rates. We believe SVG Diamond II, with its current low cost of leverage and diversified underlying portfolio is well positioned to continue to grow value for SVG Diamond II shareholders as the portfolio continues to mature. 4 PEI Reserve Account Minimum Balance is the cash balance equating to the sum of 78.57% of unfunded commitments plus six months of senior expenses 5 Based on certain Aberdeen SVG Private Equity Advisers Limited s assumptions the timing may differ from this

6 5 Director update We would like to announce the return of Elizabeth Ann Mills to the Company s Board of Directors effective 31 May. David King, who was named Ann s successor following her announcement to retire in January, will be stepping down with immediate effect. We would like to thank David for his contribution to this role over the last few months and we welcome Ann back to the Board. Events after the reporting date Aberdeen Asset Management PLC ( Aberdeen ) acquired a 50.1% stake in Aberdeen SVG Private Equity Managers Limited from SVG Capital plc in May 2013, with the option of acquiring the remaining 49.9% stake. In March, Aberdeen announced that it has agreed to purchase SVG Capital plc s stake in their joint venture vehicle, Aberdeen SVG Private Equity Managers Limited. This transaction is subject to regulatory notification and certain other customary matters and is expected to complete in the first half of. Aberdeen SVG Private Equity Advisers Limited 29 May

7 6 Profit and loss account for the period ended Notes 1 October to 1 October 2013 to Interest income and similar income 3 4,878,292 6,355,637 Interest expense and similar charges 4 (4,454,271) (4,661,463) Net interest income 424,021 1,694,174 Other expenses 5 (2,932,624) (2,770,032) Net gains on investments 7 60,063,816 18,851,987 Other foreign exchange movements 8 (8,322,121) 1,730,890 Profit attributable to holders of preferred equity shares before taxation 49,233,092 19,507,019 Taxation 6 (15,191) (1,013,207) Profit attributable to holders of preferred equity shares after taxation 49,217,901 18,493,812 All items dealt with in arriving at the profit for the period ended related to continuing operations. There are no other gains and losses other than the profit/(loss) for the period. The accompanying notes form an integral part of the financial statements.

8 7 Balance sheet as at Notes Fixed asset investments Financial assets at fair value through profit or loss 7 379,229, ,405, ,229, ,405,840 Current assets Accrued Income 1, Cash 9 51,275,164 50,616,482 51,276,851 50,616,892 Creditors: amounts falling due within one year Other creditors 10 (5,591,483) (5,554,759) Net current assets 45,685,368 45,062,133 Total assets less current liabilities 424,915, ,467,973 Creditors: amounts falling due after more than one year PEI Notes issued 11 (165,497,861) (219,268,631) (165,497,861) (219,268,631) Net assets ,417, ,199,342 Capital and Reserves Ordinary equity shares 12, Preferred equity shares 12, ,705, ,705,140 Profit and loss account 13 76,712,101 27,494, ,417, ,199,342 Net assets attributable to preferred equity shares 259,417, ,199,340 Net asset value per preferred equity share The accompanying notes form an integral part of the financial statements. The financial statements were approved by the Board of Directors and were signed on its behalf by: Peter John Richardson 29 May

9 8 Statement of changes in net assets attributable to holders of preferred equity shares for the period ended 1 October to 1 October 2013 to Total recognised gains for the period 49,217,901 18,493,812 Net assets attributable to holders of preferred equity shares brought forward 210,199, ,711,177 Net assets attributable to holders of preferred equity shares 259,417, ,204,989

10 9 Cash flow statement for the period ended Operating activities Notes 1 October to 1 October 2013 to Expenses (2,425,953) (2,106,086) Foreign exchange movements on cash 7,318,225 (562,900) Net cash inflow/(outflow) from operating activities 4,892,272 (2,668,986) Return on investments and servicing of finance Interest income and similar income 4,877,015 6,360,275 Interest expense and similar charges (4,694,701) (4,571,824) Net cash inflow from return on investments and servicing of finance 182,314 1,788,451 Taxation Withholding tax paid on investment income (15,191) (1,013,207) Net cash outflow from taxation (15,191) (1,013,207) Capital expenditure and financial investment Purchase of investments (5,262,722) (5,350,660) Private equity investment capital distributions 70,502,642 42,389,255 Net cash flow from capital expenditure and financial investment 65,239,920 37,038,595 Net cash inflow before financing activities 70,299,315 35,144,853 Financing Repayments of PEI Notes (69,640,633) (36,328,453) Net cash outflow from financing activities (69,640,633) (36,328,453) Increase/(decrease) in cash 658,682 (1,183,600) Reconciliation of net cash inflow/(out flow) to movement in net debt Increase/(decrease) in cash ,682 (1,183,600) Redemption of PEI Notes issued 15 69,640,633 36,328,453 Foreign exchange movement on debt 15 (15,419,863) 2,279,106 Debt issued in lieu of expense payments 15 (450,000) (460,000) Movement in net debt 54,429,452 36,963,959 Net debt at the beginning of the period (168,652,149) (255,819,558) Net debt at the end of the period 15 (114,222,697) (218,855,599)

11 10 Notes to the financial statements 1. The Company SVG Diamond Holdings II Limited (the Company ) was incorporated on 24 June 2005 as a limited liability company under the laws of Jersey. The Company was established to provide investors with leveraged exposure to a diversified portfolio of private equity funds. 2. Significant accounting policies (a) Basis of preparation The financial statements have been prepared under the historical cost convention, as modified by the revaluation of financial assets and financial liabilities held at fair value through profit or loss. The financial statements are prepared in accordance with United Kingdom Accounting Standards and the Companies (Jersey) Law The preparation of financial statements in conformity with the financial reporting standards applicable in the United Kingdom requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Management believes that the estimates utilised in preparing its financial statements are reasonable and prudent. Actual results could differ from these estimates. These estimates and judgements are reviewed on an ongoing basis and are continually evaluated based on historical experience and other factors. The key area of judgement that has a significant effect on the financial statements, and where there is a significant risk of material adjustment in the next year, is the fair value of investments. Investments in funds held at fair value through profit or loss are carried at fair value as further described in note 2(b) and note 18. The value assigned to underlying private equity investments involves a significant degree of judgement and actual realised amounts may therefore differ from fair value estimates. The Directors have prepared a forecast for the period ahead and based on this, have reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the financial statements. The accounting policies have been applied consistently by the Company. The financial statements are presented in euro () which is also the functional currency.

12 11 2. Significant accounting policies (continued) (b) Financial Instruments (i) Classification FRS 26 Financial Instruments: Recognition and Measurement establishes specific categories into which all financial assets and financial liabilities must be classified. The classification of financial instruments determines how these financial assets or financial liabilities are subsequently measured in the financial statements. There are four categories of financial asset: financial assets at fair value through profit or loss upon initial recognition, loans and receivables, held to maturity investments and available for sale financial assets. There are two categories of financial liabilities: financial liabilities at fair value through profit or loss and other financial liabilities. The Company designated its financial assets into the categories below in accordance with FRS 26. Financial assets designated as at fair value through profit or loss upon initial recognition These are comprised of financial instruments that are not held for trading purposes namely the Company s investments in underlying private equity funds or similar investments with a view to profit from their total return in the form of income or capital gains. Such financial instruments are designated at fair value through profit or loss on initial recognition. These financial instruments are designated on the basis that their fair value can be reliably measured and their performance has been evaluated on a fair value basis in accordance with the investment strategy as set out in the Company s offering circular ( Offering Circular ). The Offering Circular sets out terms and conditions for the issuance of the Private Equity Issuer Notes ( PEI Notes ), provides investment guidelines and provides a general explanation of the structure of the transaction. (ii) Recognition The Company recognises all financial assets and financial liabilities on the trade date at which the Company becomes a party to the contractual provisions of the instrument. (iii) Initial measurement Purchases and sales of financial instruments are accounted for at trade date. Financial assets categorised at fair value through profit or loss, are measured at fair value, with transaction costs for such instruments being recognised directly in the profit and loss account. (iv) Subsequent measurement After initial measurement, the Company measures financial assets which are classified as at fair value through profit or loss, at their fair values. Fair value is the amount at which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm s length transaction. The Company invests in private equity funds, which in turn invest in private companies.

13 12 2. Significant accounting policies (continued) (b) Financial Instruments (continued) (iv) Subsequent measurement (continued) Investments in unlisted private equity funds are recorded at fair value, which will be based on the General Partner ( GP ) reported fair value as adjusted for subsequent calls and distributions where applicable unless, after having obtained an understanding of how these valuations are determined, the Directors of the Company consider such valuations inappropriate. Investments in listed private equity funds are recorded at their quoted bid prices. The GP reported fair value means the last audited or unaudited valuation reported by the underlying private equity fund, based on fair values if disclosed, as adjusted for subsequent calls and distributions where applicable. For the avoidance of doubt, where GP valuations are reported by the Company on both a historical cost basis and based on estimated fair values, the valuation based on estimated fair values will be used by the Company, even if the GP uses a different basis in preparing the underlying private equity fund s statutory accounts. The estimated market values of these underlying private equity funds as determined by the GP may not reflect amounts that could be realised upon immediate sale, or amounts that may be ultimately realised. Accordingly the estimated fair values may differ significantly from the values that would have been used had a ready active market existed for those investments and the difference could be significant. Financial liabilities, other than those as at fair value through profit or loss, are measured at amortised cost using the effective interest rate method. Subsequent changes in the fair value of financial assets at fair value through profit or loss are recognised in the profit and loss account. (v) Derecognition The Company derecognises a financial asset when the contractual rights to cash flows from the financial asset expire or it transfers the right to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in a transferred financial asset that is created or retained by the Company is recognised as a separate asset. (c) Offsetting Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis, or realise the assets and settle the liability simultaneously. (d) Interest income and charges Interest income and interest expense are recognised on an accruals basis in line with the contractual terms. Interest is accrued on a daily basis (PEI Notes and cash) using the effective interest rate method. The effective interest method is a method of calculating the amortised cost of a financial asset or financial liability and of allocating the interest income or interest expense over the relevant period. The effective interest rate is that which exactly discounts estimated future cash payments or receipts throughout the expected life of the financial instruments, or a shorter period where appropriate, to the net carrying amount of the financial asset or financial liability. When calculating the effective interest rate, the Company estimates cash flows considering all contractual terms of the financial instruments but does not consider future credit losses. The calculation includes all fees paid between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums and discounts.

14 13 2. Significant accounting policies (continued) (e) Cash Cash comprises of current deposits with banks and money market investments. (f) Foreign currency translation (i) Functional and presentational currency Items included in the Company s financial statements are measured using the currency of the primary economic environment in which it operates ( the functional currency ). This is the euro, which reflects the currency in which the Company generates equity. Euro is also the presentational currency. (ii) Translation Monetary assets and liabilities denominated in currencies other than euro are translated into euro at the closing rates of exchange at each period end. Transactions during the period, including purchases and sales of securities, and income and expenses, are translated at the rate of exchange prevailing on the date of the transaction, except for interest expense denominated in foreign currency, which is translated at the average rate of exchange for the period. Foreign currency exchange differences arising on translation and realised gains and losses on disposal or settlement of monetary assets and liabilities are recognised in the profit and loss account. (g) PEI Notes issued Interest-bearing Notes issued are recorded at the proceeds received, net of direct issue costs. Finance charges, including premiums payable on settlement or redemption and direct issue costs, are accounted for on accruals basis in the profit and loss account using the effective interest rate method and are added to the carrying amount of the loan notes to the extent that they are not settled in the year in which they arise. (h) Share capital The Company s ordinary shares and preferred equity shares issued are classified as equity in accordance with FRS 25 and the articles of incorporation. The ordinary shares do not participate in the profits of the Company, whereas the preferred equity shares are entitled to the residual assets on the winding up of the Company, as outlined in the Offering Circular and summarised in note 12. (i) Expenses All expenses, including investment advisory fees, are recognised in the profit and loss account on an accruals basis. (j) Preferred equity shares The Company s preferred equity shares are measured as the amount of called up preference shares plus interest accrued on late payment of initial subscription. The preferred equity holders do not have an option to redeem their shares nor receive/accrue interest or dividends. (k) Issue costs Issue costs are amortised over the life of the related PEI Notes.

15 14 3. Interest income and similar income 1 October to 1 October 2013 to Investment income - from money market funds 6,679 6,443 - from private equity investments 4,871,613 6,349,194 4,878,292 6,355,637 Analysed by currency: - denominated 3,998,753 3,615,323 US$ - denominated 864,554 2,740,057 Other 14, ,878,292 6,355, Interest expense and similar charges 1 October to 1 October 2013 to Interest expense on PEI Notes issued (4,454,271) (4,661,463) (4,454,271) (4,661,463)

16 15 5. Other expenses 1 October to 1 October 2013 to Investment advisory fees (2,401,224) (2,485,239) Trustee, custodian and portfolio administration fees (193,667) (96,833) Advisory committee, legal fees and investment related costs (15,000) (28,418) Audit fees (57,302) (18,110) Other costs (265,431) (141,432) (2,932,624) (2,770,032) 6. Taxation 1 October to 1 October 2013 to Profit before taxation 49,233,092 19,507,019 Jersey corporation tax of 0% (March : 0%) - - Net foreign withholding tax paid (15,191) (1,013,207) Total current tax (15,191) (1,013,207) Profits arising in the Company for the year of assessment will be subject to tax at the rate of 0%. The Company is however subject to withholding tax, charged on distributions from underlying private equity fund investments domiciled outside of the European Union. 7. Financial assets at fair value through profit or loss 3i Eurofund V 14,970,368 17,754,182 ACT 2001 Venture Capital Fund 7,766,467 6,604,850 Activa Capital Fund II 7,894,471 9,270,540 Advent International GPE VI 13,600,616 12,051,890 Alcentra Mezzanine Fund I 14,718,319 18,362,041 Almack Mezzanine 8,220,000 8,194,000 American Capital Equity II 4,413,013 4,779,219 Apollo Overseas Partners VI 3,612,483 3,578,195 Blackstone Capital Partners V 21,055,441 20,061,874 Brera Capital Partners 51,181 38,457 Bridgepoint Europe IV 11,454,323 12,077,822 Candover 2005 Fund 1,937,677 2,196,978 Carlyle Europe Partners III 7,460,352 8,628,806 Carlyle International Partners II - 70,222 Carlyle Partners V 14,972,024 13,211,697 Conning Capital Partners VI 3,322,573 2,839,342 Credit Suisse First Boston Equity Partners 195, ,718 CVC European Equity Partners V 19,916,674 18,844,845

17 16 7. Financial assets at fair value through profit or loss (continued) Diamond Castle IV 9,566,495 6,724,532 Doughty Hanson & Co. III 689, ,293 Doughty Hanson & Co. V 6,983,422 10,187,641 Duke Street Capital VI 4,065,347 3,499,756 Electra Private Equity plc 14,062,153 10,963,585 Equistone Partners Europe Fund III 6,753,175 7,385,000 Friday Street Mezzanine Fund I 3,673,369 8,518,729 Gryphon Partners II 104, ,441 Hicks, Muse, Tate & Furst Equity Fund IV 335, ,098 Industri Kapital 1997 Fund 20,651 20,903 Industri Kapital 2007 Fund 13,567,665 12,415,209 Italian Private Equity Fund IV 510, ,852 Jefferies Capital Partners IV 1,292,568 1,283,171 JLL Partners Fund IV 4,792,877 5,137,163 JLL Partners Fund V 5,451,384 4,552,049 KKR 2006 Fund 17,785,360 15,773,585 Landmark Equity Partners XIII 2,996,539 3,732,393 Madison Dearborn Capital Partners V 15,927,053 16,750,720 Nova/Paul Capital Investments SCA 617, ,797 Oakhill Capital Partners II 2,874,781 2,790,036 Olympus Growth Fund V 21,666,832 18,181,044 P123 1,683,593 2,008,186 P1234 6,622,128 7,832,875 Pantheon International Participations plc 6,958,443 5,596,416 Pequot Offshore Healthcare Venture Fund 23,255 21,511 Pequot Offshore Private Equity Fund III 295, ,324 Pequot Venture Partners II 10,765 9,164 Permira Europe I 68,375 68,507 Permira IV 34,221,287 35,319,723 Resolute Fund II 4,835,527 7,338,934 Stonebridge Partners Equity Fund II 50,964 43,554 Symmetric Partners 6,556,640 3,881,623 The second Cinven Fund - 8,493 The fourth Cinven Fund 11,113,858 15,738,120 The Lightyear Fund 797, ,648 The Lightyear Fund II 10,262,220 8,569,010 Vestar Capital Partners III 302, ,037 Welsh, Carson, Anderson & Stowe VI 3,104 2,637 Welsh, Carson, Anderson & Stowe X 6,125,133 7,004, ,229, ,405,840

18 17 7. Financial assets at fair value through profit or loss (continued) Designated as at fair value through profit or loss: - Listed private equity funds 21,020,596 16,560,001 - Unlisted private equity funds 358,209, ,845, ,229, ,405,840 Net gains on financial assets designated at fair value through profit or loss: - Realised and unrealised gains on investments 34,000,267 21,715,153 - Foreign exchange movements on investments 26,063,549 (2,863,166) 60,063,816 18,851, Other foreign exchange movements Other foreign exchange movements are comprised of all foreign exchanges movements other than on the Financial assets at fair value through profit or loss. This includes foreign exchange movements on Cash, Interest payable and PEI Notes issued. 9. Cash Cash 51,275,164 50,616,482 51,275,164 50,616, Other creditors Interest payable (4,018) (23,964) Expense accruals (5,549,997) (5,493,327) Amounts due to SVG Diamond Private Equity II plc (37,468) (37,468) (5,591,483) (5,554,759)

19 PEI Notes issued US$ PEI Notes issued: Class A-1 Floating Rate due (2,711,217) Class B-1 Floating Rate due 2024 (33,556,305) (76,500,000) Class M-1 Fixed Rate due 2024 (43,000,000) (43,000,000) Class F Fixed Rate due 2024 (9,130,000) (8,680,000) Class A-2 Floating Rate due (2,794,325) Class B-2 Fixed Rate due 2024 (17,545,780) (16,350,555) (31,668,118) Class C Floating Rate due 2024 (47,800,000) (44,543,845) (37,843,401) Class M-2 Fixed Rate due 2024 (20,300,000) (18,917,156) (16,071,570) (165,497,861) (219,268,631) Maturity analysis - Within one year years years Greater than 5 years (165,497,861) (219,268,631) (165,497,861) (219,268,631) Opening balance 219,268, ,375,337 Class F Notes issued in lieu of cash 450, ,000 Redemption of PEI Notes issued (69,640,633) (99,592,571) Foreign exchange movements 15,419,863 7,555, ,497, ,268,631 Interest rates: Class A-1 Floating Rate due month Euribor % Class B-1 Floating Rate due ,556,305 6 month Euribor % Class M-1 Fixed Rate due ,000,000 Fixed 6.897% Class F Fixed Rate due ,130,000 Fixed 6.897% Class A-2 Floating Rate due month USD Libor % Class B-2 Fixed Rate due 2024 $ 17,545,780 Fixed 6.056% Class C Floating Rate due 2024 $ 47,800,000 6 month USD Libor % Class M-2 Fixed Rate due 2024 $ 20,300,000 Fixed 8.412% All of the PEI Notes, other than the Class F Notes, issued by the Company are held by SVG Diamond Private Equity II plc. The Class F Notes are held by SVG Capital plc and Aberdeen SVG Private Equity Advisers Limited. SVG Diamond Private Equity II plc issued PEI Notes to its investors with identical terms to those which it acquired from the Company. All of the PEI Notes issued by the Company are listed on the Channel Island Securities Exchange.

20 Stated capital The total authorized share capital of the Company is 2 ordinary shares of no par value and 175,000,000 preferred equity shares of 1. Issued stated capital Issued and fully called 2 Ordinary shares of no par value ,000,000 Preferred equity shares of value 182,705,140* 182,705,140* 182,705, ,705,142 Total preferred equity 182,705, ,705,140 * Includes interest accrued on late payment of initial subscription of 7,705, ,000,000 nil-paid preferred equity shares were issued on 22 February Of these, 90,000,000 were fully called on the same day and a further 16,600,000 shares were fully called during the year ended The remaining 68,400,000 shares were called during the year ended 30 September The ordinary shares (which are held by Structured Finance Management Offshore Limited, as share trustee) carry full voting rights and the preferred equity shares carry none, except where the vote in question concerns a variation to the rights of such preferred equity shares. On a winding up of the Company, the ordinary shares entitle the holders thereof to receive, in priority to the holders of the preferred equity shares, the amount paid up on each ordinary share plus 500 per ordinary share held. On such a winding up, the balance of the assets of the Company (if any) will be distributed to the holders of the outstanding preferred equity shares in proportion to their holdings of such preferred equity shares. The preferred equity shares carry no rights to receive any dividends. The preferred equity holders do not have an option to redeem their shares. The ordinary equity shares also carry no rights to receive any dividends.

21 Reconciliation of movement in shareholders funds Period ended Ordinary equity shares Preferred equity shares Profit and loss account Profit for the period ,217,901 49,217,901 Movement in shareholders funds for the period ,217,901 49,217,901 Balance at the beginning of the period 2 182,705,140 27,494, ,199,342 Balance at the end of the period 2 182,705,140 76,712, ,417,243 Year ended Ordinary equity shares Preferred equity shares Profit and loss account Profit for the year ,488,163 40,488,163 Movement in shareholders funds for the year ,488,163 40,488,163 Balance at the beginning of the year 2 182,705,140 (12,993,963) 169,711,179 Balance at the end of the year 2 182,705,140 27,494, ,199,342 Total Total 14. Net asset value per share Net assets attributable to preferred equity shares 259,417, ,199,340 Preferred equity shares in issue 175,000, ,000,000 Net asset value per preferred equity share Analysis of changes in net debt Period ended Beginning of period Cash flow Foreign exchange movement Class F Notes issued End of period Cash 50,616, , ,275,164 PEI Notes issued (219,268,631) 69,640,633 (15,419,863) (450,000) (165,497,861) Year ended (168,652,149) 70,299,315 (15,419,863) (450,000) (114,222,697) Beginning of year Cash flow Foreign exchange movement Class F Notes issued End of year Cash 54,555,779 (3,939,297) ,616,482 PEI Notes issued (310,375,337) 99,592,571 (7,555,865) (930,000) (219,268,631) (255,819,558) 95,653,274 (7,555,865) (930,000) (168,652,149)

22 Foreign currency translation The financial statements are prepared in euro (). The following exchange rates at have been used to translate assets and liabilities in other currencies to : 30 March USD GBP CHF Risks associated with investments The Company is exposed to market, currency, interest rate, credit, liquidity and holdings risk arising from the investments it holds in underlying private equity funds. The Company holds investments in unlisted private equity funds which in turn hold investments in private companies. The Company has investment guidelines, as more fully described in the Offering Circular, that set out its overall business strategies, its tolerance for risk and its general risk management philosophy and has established processes to monitor and control economic hedging transactions in a timely and accurate manner. The Company makes long term commitments to private equity funds with the objective of achieving capital profits. Valuation/market risk Valuation risk is the risk that an asset is overvalued and may be worth less than expected when it matures or is sold. Market risk is the risk that fair value or cash flows of financial instrument will fluctuate due to changes in market prices. Market risk reflects interest rate risk, currency risk and other price risk. The Offering Circular has put in place investment guidelines in order to ensure diversification within the portfolio of investments for the purposes of reducing the level of market risk to which the Company is exposed. The investment guidelines provides a minimum for the number of different funds which the Company must invest in and also stipulates maximum amounts which may be invested in any one fund. The guidelines also stipulate a maximum amount which may be invested in funds managed by the same fund manager and provides for a minimum number of managers to which the Company must obtain exposure. The guidelines also stipulate minimums and maximums with respect to investment type and currency denomination. The Company invests primarily in a portfolio of private equity funds. The Company 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 private equity fund investments, the majority of which are unquoted and therefore not readily marketable. The investments held by the Company at the period end are disclosed in note 7 to the financial statements.

23 Risks associated with investments (continued) Valuation/market risk (continued) Geographic profile The following table details the Company s current investment commitment in the two geographical regions which are determined by the type of currency denomination of the underlying private equity funds. Commitments percentages are within the limits specified under the investment guidelines set out in the Offering Circular. 30 March % % Europe North America The risks inherent to the investment portfolio are managed by due diligence reporting on the underlying private equity fund manager before participation in such investment is undertaken, to ensure optimal fund manager selection, by review of investment performance and by monitoring compliance with the fund manager s stated objectives, investment strategy and asset allocation. The Investment Adviser reviews the fair value of the investment at each quarter end date and will investigate significant variances. The Company has prepared a sensitivity analysis of each major factor to which the Company is exposed at the period end and shows how the profit or loss of the fund would have been affected by changes in relevant risk variables identified. However, actual results may differ from estimated amounts. A 10% increase/decrease in the value of the Company s investments in underlying private equity funds with all other variables held constant would result in an increase/decrease of 37,922,974 in net asset value (September : 38,440,584) and an increase/decrease of 0.22, 15% in net asset value per share (September : 0.22, 18%). Fair value is based on the GP reported fair value as described in more detail in note 2(b) and note 18. Risk of appropriateness of the fair value prepared by the GP and model used by the GP are managed through due diligence on the underlying private equity funds before investments are made. Ongoing monitoring of the funds is conducted by the investment team of the Investment Adviser. If it is considered that an adjustment to the NAV is appropriate, the valuation is referred to the Pricing Committee of the Investment Adviser. The Pricing Committee reviews, and if considered appropriate, approves the pricing adjustment recommendation. Adjustments to NAV may be considered, for example, where: There has been significant elapsed time between the NAV calculation date and the Company s balance sheet date There has been material movements in quoted prices between the NAV calculation date and the Company s balance sheet date The Company has agreed a sale of its holding in a fund interest at a price other than the NAV The NAV is not derived from the fair value of the underlying portfolio companies The NAV does not include an accrual for unrealised carried interest In the current period there were pricing adjustments applied to the valuations of two underlying private equity fund investments, where the general partner valuation did not include a provision for unrealised carried interest. In the current period a pricing adjustment of 2,860,949 was applied to the valuation of two underlying private equity fund investment. The pricing adjustment represents 0.8% of the adjusted underlying private equity fund investment portfolio value of the Company.

24 Risks associated with investments (continued) Interest rate risk The Company is exposed to risks associated with the effects of fluctuations in the prevailing levels of market interest rates on its financial position and cash flows. The Company issued EUR and USD floating rate PEI Notes. Base interest rate used in the calculation of interest payable on the PEI Notes is based on the Euribor and Libor rates accordingly. If in the next twelve months Euribor and Libor rate increased by 1%, interest paid on the floating rate PEI Notes, based on the PEI Notes balance as of, would increase by 781,001. Libor and Euribor rates as of were below 1%. If in the next twelve months Euribor rate and Libor rate decreased to zero, interest paid on the floating rate PEI Notes, based on the PEI Notes balance as of 31 March, would decrease by 208,887. All cash and money market funds held by the Company carry a floating rate of return. For any given percentage change in market interest rates the return earned by the Company on its cash and money market funds changes by the same percentage. On the assumption that the cash and money market funds balance remained constant at 51,275,164 (September : 50,616,482) for the next twelve months a 1% increase in the floating rate of interest would result in additional interest income of 512,752 (September : 506,165). Conversely a 1% decrease in the floating rate of interest applying would result in a decrease in interest income of 512,752 (September : 506,165). The following table details the Company s exposure to fixed and floating interest rates by class of assets and liabilities. Period ended Fixed rate Floating rate Total Assets - Cash - 51,275,164 51,275,164 Liabilities - PEI Notes Issued (see note 11) (87,397,711) (78,100,150) (165,497,861) (87,397,711) (26,824,986) (114,222,697) Year ended Fixed rate Floating rate Total Assets - Cash - 50,616,482 50,616,482 Liabilities - PEI Notes Issued (see note 11) (99,419,688) (119,848,943) (219,268,631) (99,419,688) (69,232,461) (168,652,149)

25 Risks associated with investments (continued) Interest rate risk (continued) Maturity profile (at carrying amount) Due in one year Cash 51,275,164 50,616,482 51,275,164 50,616,482 Due after five years Investments at fair value through profit or loss 379,229,736* 384,405,840* PEI Notes Issued (165,497,861) (219,268,631) 213,731, ,137,209 * While investments at fair value are classified as maturing in more than five years, it is likely that some distributions may be received prior to this. This would in turn impact the timing of the repayment of the PEI Notes. Currency risk The Company has borrowed and invests in securities and other investments that are denominated in currencies other than the functional currency of the Company. Accordingly, the value of the Company s assets may be affected favourably or unfavourably by fluctuations in currency rates and therefore the Company will necessarily be subject to foreign exchange risks. However, the Company has issued PEI Notes in US$ which will act as a partial hedge against the currency exposure of assets denominated in that currency. The table below shows the euro equivalent of foreign currency financial instruments: US$ 31 September Investments at fair value through profit or loss 160,368, ,815,092 Cash 32,541,360 28,782,054 PEI Notes issued (79,811,556) (88,377,414) 113,098,134 90,219,732 GB 31 September Investments at fair value through profit or loss 21,638,364 17,196,292 21,638,364 17,196,292

26 Risks associated with investments (continued) Currency risk (continued) The table below shows the Company s sensitivity to changes in exchange rates by reference to the net assets of the Company denominated in each foreign currency: Period ended US$ GB Foreign currency net assets in local currency 121,365,608 15,672,667 Foreign currency net assets in 113,098,134 21,638,364 Actual exchange rate Rate if foreign currency strengthened 10% Rate if foreign currency weakened 10% Net assets in if foreign currency strengthens 125,663,293 24,041,520 Net assets in if foreign currency weakens 102,817,357 19,671,981 Change if foreign currency strengthens 12,565,159 2,403,156 Change if foreign currency weakens (10,280,777) (1,966,383) Year ended US$ GB Foreign currency net assets in local currency 113,956,543 13,397,631 Foreign currency net assets in 90,219,732 17,196,292 Actual exchange rate Rate if foreign currency strengthened 10% Rate if foreign currency weakened 10% Net assets in if foreign currency strengthens 100,243,264 19,106,718 Net assets in if foreign currency weakens 82,018,528 15,633,175 Change if foreign currency strengthens 10,023,532 1,910,426 Change if foreign currency weakens (8,201,204) (1,563,117) Commitment/liquidity risk The nature of investing in private equity funds entails making significant financial commitments, as shown on page 27. It is anticipated that over the longer term, and in normal circumstances, commitments would be financed by distributions received on the realisation of existing investments as well as out of current financial resources. However, a residual risk remains that the Company could be unable to meet its future commitments in full. The gross contractual cash flows on page 26 in respect of Investments held and PEI Notes issued and future interest on those PEI Notes issued are based on estimates. It is extremely difficult to judge the precise size or timing of such cash flows. FRS 29 requires the Company to disclose such an analysis and therefore a breakdown is provided in the table below. This analysis is provided purely to comply with accounting standards and is not reflective of the way the Investment Advisor manages liquidity risk. Repayment of the PEI Notes started on 2013.

27 Risks associated with investments (continued) Commitment/liquidity risk (continued) Period ended Carrying Amount Gross contractual cash flows Less than one year One to five years More than five years Investments at fair value through profit or loss* 379,229, ,229, ,229,736 Cash 51,275,164 51,275,164 51,275, Accrued Income 1,687 1,687 1, ,506, ,506,587 51,276, ,229,736 PEI Notes issued (165,497,861) (165,497,861) - - (165,497,861) Future interest on PEI Notes issued** - (68,759,481) (7,604,975) (30,619,604) (30,534,902) Other payables (5,591,483) (5,591,483) (5,591,483) - - (171,089,344) (239,848,825) (13,196,458) (30,619,604) (196,032,763) Net position 259,417, ,657,762 38,080,393 (30,619,604) 183,196,973 Year ended Carrying Amount Gross contractual cash flows Less than one year One to five years More than five years Investments at fair value through profit or loss* 384,405, ,405, ,405,840 Cash 50,616,482 50,616,482 50,616, Accrued Income ,022, ,022,732 50,616, ,405,840 PEI Notes issued (219,268,631) (219,268,631) - - (219,268,631) Future interest on PEI Notes issued** - (86,488,590) (8,652,158) (34,613,611) (43,222,821) Other payables (5,554,759) (5,554,759) (5,554,759) - - (224,823,390) (311,311,980) (14,206,917) (34,613,611) (262,491,452) Net position 210,199, ,710,752 36,409,975 (34,613,611) 121,914,388 * Investments at fair value are classified as maturing in more than five years owing to the long term nature of the underlying private equity fund investments. However the gross cashflows from these investments will vary in accordance with future movements in the value of these investments. The exact timing of the receipt of these investments is not fixed and is at the discretion of the managers of the respective underlying private equity funds. As such, it is likely that some distributions will be received within the next five years. ** Future interest payable on the PEI Notes issued has been estimated based on the interest rates at period end and using contractual maturity dates of the PEI Notes. Due to the occurrence of an early amortisation event the PEI Notes issued by the Company have become immediately repayable as and when the Company collects sufficient funds. The PEI Notes will be redeemed in accordance with the Private Equity Issuer Priorities of Payment ( PEI Priorities of Payment ), an order in which the Company s proceeds are distributed to the Noteholders and other creditors as set out in the Offering Circular.

28 Risks associated with investments (continued) Commitment/liquidity risk (continued) Uncalled commitments are legal obligations to provide investment capital to the underlying private equity funds. Timing and amount of such payments are determined by the GP of these funds. At, the Company had uncalled commitments of 51,911,067 (September : 55,566,925), which are expected to be called 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 uncalled commitments and future interest on the PEI Notes issued are expected to be financed out of a combination of existing cash resources and distributions received from the underlying private equity funds portfolio. The following table details the Company s uncalled commitments to its various unlisted private equity funds which are expected to be called over a number of years. 3i Eurofund V 1,061,670 1,061,670 Activa Capital Fund II 493, ,468 Advent International GPE VI 415, ,000 Alcentra Mezzanine Fund I 542, ,857 Almack Mezzanine 765,336 6,042,083 American Capital Equity II 2,197,009 1,930,337 Apollo Overseas Partners VI 273, ,673 Blackstone Capital Partners V 2,286,588 2,177,460 Brera Capital Partners 274, ,854 Bridgepoint Europe IV 1,741,283 1,794,023 Candover 2005 Fund 10,681 10,681 Carlyle Europe Partners III 1,257,954 1,264,390 Carlyle Partners V 3,882,737 3,335,901 Conning Capital Partners VI 143, ,182 Credit Suisse First Boston Equity Partners 104,233 88,554 CVC European Equity Partners V 1,913,663 2,686,340 Diamond Castle IV 128,528 1,636,319 Doughty Hanson & Co. III 144, ,826 Doughty Hanson & Co. V 3,262,463 3,262,463 Duke Street Capital VI 544, ,723 Equistone Partners Europe Fund III 1,392,205 1,429,767 Gryphon Partners II 120, ,402 Industri Kapital 2007 Fund 520, ,778 Italian Private Equity Fund IV 122, ,151 Jefferies Capital Partners IV 2,200,528 1,875,435 JLL Partners Fund IV - 156,060 JLL Partners Fund V 391, ,249 KKR 2006 Fund 656, ,160 Madison Dearborn Capital Partners V 3,749,391 3,185,395 Nova/Paul Capital Investments SCA 1,147,758 1,067,068