UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 20-F
                                   (Mark One)
      |_|    REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                                       OR
      |X|      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                     For fiscal year ended December 31, 2005
                                       OR
      |_|    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                     For the transition period from __ to __
                                       OR
      |_|   SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934
                Date of event requiring this shell company report

                         Commission File Number: 0-27336

                                 SVG Capital plc
             (Exact name of Registrant as Specified in Its Charter)
                                England and Wales
                         (Jurisdiction of Incorporation)

                               31 Gresham Street,
                            London EC2V 7QA, England
                    (Address of Principal Executive Offices)
                       __________________________________

 Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of Each Class:                  Name of Each Exchange On Which Registered:
None                                  Not applicable

 Securities registered or to be registered pursuant to Section 12(g) of the Act:

Title of Class:   Ordinary Shares of GBP1 each

Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act: None

Indicate the number of outstanding shares of each of the issuer's classes of
capital or common stock as of the close of the period covered by the annual
report: 128,529,853 Ordinary Shares of GBP1 each.

Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act.

                                 |X| Yes |_| No

If this report is an annual or  transition  report,  indicate by check mark if
the  registrant is not required to file reports pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934.

                                 |_| Yes |X| No


Indicate by check mark whether the  registrant:  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities  Exchange Act of
1934 during the preceding 12 months (or for such shorter  period that the
registrant  was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                                 |X| Yes |_| No

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer.  (Check one):

   Large Accelerated Filer |X| Accelerated Filer |_| Non-Accelerated Filer |_|

    Indicate by check mark which financial statement item the registrant has
                               elected to follow:

                             |X| Item 17 |_| Item 18

 If this is an annual report, indicate by check mark whether the registrant is a
  shell company (as defined in Rule 12b-2 of the Exchange Act). |_| Yes |X| No


                                        i
                                 SVG Capital plc
                           Annual Report on Form 20-F
                            for the fiscal year ended
                                December 31, 2005

                                TABLE OF CONTENTS


                                 Item Page No.

PART I........................................................................1
Item 1.      Identity of Directors, Senior Management and Advisers............1
Item 2.      Offer Statistics and Expected Timetable..........................2
Item 3.      Key Information..................................................2
A.       Selected Financial Data..............................................2
B.       Capitalization and Indebtedness......................................7
C.       Reasons for the Offer and Use of Proceeds............................7
D.       Risk Factors.........................................................7
Item 4.     Information on the Company.......................................12
A.       History and Development of the Company..............................12
B.       Business Overview...................................................15
C.       Organizational Structure............................................34
D.       Property, Plants and Equipment......................................34
Item 4A.       Unresolved Staff Comments.....................................34
Item 5.     Operating and Financial Review and Prospects.....................35
A.       Operating Results...................................................35
B.       Liquidity and Capital Resources.....................................59
C.       Research and Development, Patents and Licenses, etc.................66
D.       Trend Information...................................................66
E.       Off-Balance Sheet Arrangements......................................67
F.       Tabular Disclosure of Contractual Arrangements......................68
Item 6.     Directors, Senior Management and Employees.......................69
A.       Directors and Senior Management.....................................69
B.       Compensation........................................................71
C.       Board Practices.....................................................78
D.       Employees...........................................................83
E.       Share Ownership.....................................................83
Item 7.     Major Shareholders and Related Party Transactions................84
A.       Major Shareholders..................................................84
B.       Related Party Transactions..........................................86
C.       Interests of Experts and Counsel....................................88
Item 8.     Financial Information............................................88
A.       Consolidated Statements and Other Financial Information.............88
B.       Significant Changes.................................................88
Item 9.     The Offer and Listing............................................89
A.       Offer and Listing Details...........................................89
B.       Plan of Distribution................................................90
C.       Markets.............................................................90
D.       Selling Shareholders................................................91
E.       Dilution............................................................91
F.       Expenses of the Issue...............................................91
Item 10.    Additional Information...........................................91
A.       Share Capital.......................................................91
B.       Memorandum and Articles of Association of SVG Capital plc...........91
C.       Material Contracts..................................................97
D.       Exchange Controls..................................................101
E.       Taxation...........................................................102


                                       i

F.       Dividends and Paying Agents........................................108
G.       Statement by Experts...............................................108
H.       Documents on Display...............................................108
I.       Subsidiary Information.............................................108
Item 11.    Quantitative and Qualitative Disclosures About Market Risk......109
Item 12     Description of Securities other than Equity Securities..........111
PART II.....................................................................111
Item 13.    Defaults, Dividend Arrearages and Delinquencies.................111
Item 14.    Material Modifications to the Rights of Security Holders
            and use of Proceeds.............................................111
Item 15.    Controls and Procedures.........................................111
Item 16.    [RESERVED]......................................................112
Item 16A.      Audit Committee Financial Expert.............................112
Item 16B.      Code of Ethics...............................................112
Item 16C.      Principal Accountant Fees and Services.......................113
Item 16D.      Exemptions from the Listing Standards for Audit Committees...113
Item 16E.      Purchases of Equity Securities by the Issuer and
               Affiliated Purchasers........................................114
PART III....................................................................115
Item 17.    Financial Statements............................................115
Item 18.    Financial Statements............................................115
Item 19.    Exhibits........................................................115

                                       ii

                         FINANCIAL AND OTHER INFORMATION

Unless  otherwise  indicated  herein,  all  information in this annual report is
presented  as of December  31,  2005.  Amounts  expressed in "GBP" are in United
Kingdom  ("U.K.")  pounds  sterling.  Amounts  expressed  in "EUR"  are in euro.
According  to the  Federal  Reserve  Bank of New York,  the Noon Buying Rate for
pounds sterling in New York City expressed in U.S.  dollars per GBP1.00 (rounded
to the nearest cent) on December 30, 2005 was $1.72 and the Noon Buying Rate for
euro in New York City  expressed  in U.S.  dollars per  EUR1.00  (rounded to the
nearest cent) on December 30, 2005 was $1.18.

                           FORWARD-LOOKING STATEMENTS

This Annual Report  contains  forward-looking  statements  within the meaning of
Section 27A of the  Securities Act of 1933, as amended (the  "Securities  Act"),
and  Section  21E of the  Securities  Exchange  Act of  1934,  as  amended  (the
"Exchange  Act"),  and  information  relating to the  Company  that are based on
beliefs  of its  management  as well  as  assumptions  made  by and  information
currently  available to the Company.  When used in this Annual Report, the words
"anticipate",   "believe",   "estimate",   "expect",  "intend",  "may",  "plan",
"project" and "should" and similar expressions, as they relate to the Company or
its  management,  are  intended to  identify  forward-looking  statements.  Such
statements reflect the current views and assumptions of the Company with respect
to future events and are subject to risks and uncertainties.  Many factors could
cause the actual results,  performance or achievements  that may be expressed or
implied by such forward-looking statements,  including, among others, changes in
general economic and business conditions, changes in currency exchange rates and
interest rates,  introduction of competing products by other companies,  lack of
acceptance  of new  products  or  services by the  Company's  target  customers,
inability to meet efficiency and cost reduction objectives,  changes in business
strategy and various other factors,  both  referenced and not referenced in this
Annual Report.  Should one or more of these risks or uncertainties  materialize,
or should  underlying  assumptions  prove  incorrect,  actual  results  may vary
materially from those  described  herein as  anticipated,  believed,  estimated,
expected,  intended, planned or projected. The Company does not intend or assume
any obligation to update these forward-looking statements.

                                     PART I

This  annual  report  on  Form  20-F  (this  "annual  report"  or  "Form  20-F")
constitutes  the annual  report of SVG Capital plc (the  "Company").  Unless the
context  requires  otherwise,  the term "Company"  includes SVG Capital plc, its
subsidiary undertakings and associated undertakings (as defined in the Companies
Act 1985 of Great Britain (the "Companies Act")), the Platinum Trust (a Guernsey
unit trust  referred  to in this annual  report as the  "Trust"),  SVG  Advisers
Limited ("SVGA"), SVG Investment Managers Limited ("SVGIM"),  SVG Advisers, Inc.
("SVGI") and SVG North America, Inc. ("SVGNA").  For the purposes of this annual
report, "SVGA Group" includes SVGA, SVGIM, SVGNA and SVGI.

Item 1.           IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable to this Form 20-F.

                                       1

Item 2.           OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable to this Form 20-F.

Item 3.           KEY INFORMATION

A.       Selected Financial Data

The following selected financial information for the fiscal years ended December
31, 2004 and 2005 and at December  31,  2004 and  December  31, 2005 are derived
from the audited  consolidated  financial  statements included elsewhere in this
Form 20-F. The selected financial  information for the years ended June 30, 2001
and 2002,  the six month period ended December 31, 2001 and 2002, the year ended
December  31, 2003 and at June 30, 2001 and 2002 and December 31, 2002 and 2003,
are derived from the Company's audited consolidated financial statements,  which
are not  included in this Form 20-F.  The  selected  financial  information  for
periods  prior  to  2004  are US  GAAP  figures  only,  as  comparative  data in
accordance with International  Financial  Reporting  Standards as adopted by the
European Union are not available.  The "Operating  Data" are for the Company and
the Trust,  an operating  subsidiary of the Company  described in more detail in
"Item 4. Information on the Company - Organizational  Structure - Description of
the Trust," and also include SVGA, SVGNA,  SVGIM and SVGI after their respective
dates of incorporation.

The audited  consolidated  financial statements for the years ended December 31,
2004 and 2005 have been  prepared in  accordance  with  International  Financial
Reporting  Standards  ("IFRS") as adopted in the European Union ("EU").  IFRS as
adopted  by the EU  differ  in  certain  respects  from  IFRS as  issued  by the
International  Accounting  Standards Board ("IASB").  However,  the consolidated
financial  statements  for the periods  presented  would be no different had the
Company applied IFRS as issued by the IASB.  References to IFRS hereafter should
be  construed  as  references  to IFRS as adopted by the EU.  Earlier  reporting
periods have not been  restated in  accordance  with IFRS and are  therefore not
included in this Form 20-F.

The operating data set out below include both capital returns and revenue
returns.

                                       2

<TABLE>
<CAPTION>
Operating data                                                                              Year ended  Year ended
                                                                                           December 31 December 31
                                                                                                  2004        2005
                                                                                            (restated)*
IFRS                                                                                           GBP'000     GBP'000
<S>                                                                                                <C>         <C>
Investment gains and
foreign exchange
movements                                                                                      134,836     143,382
Total operating
income                                                                                          11,171      33,368
Total operating
expenses                                                                                       (11,767)    (14,596)
Interest payable and
similar charges                                                                                 (5,402)     (4,588)
Taxation                                                                                            72        (855)
Minority interest                                                                                  (86)        137
Profit after taxation
attributable to equity
holders of the parent                                                                          128,824     156,574
Earnings per
ordinary share                                                                                   113.7p      123.7p
</TABLE>

<TABLE>
<CAPTION>
                              Year ended  Year ended      6 months     6 months   Year ended   Year ended   Year ended
                                                             ended        ended
                                 June 30     June 30   December 31  December 31  December 31  December 31  December 31
                                    2001        2002          2001         2002         2003         2004         2005
                                 GBP'000     GBP'000       GBP'000      GBP'000      GBP'000      GBP'000      GBP'000
<S>                                  <C>         <C>           <C>          <C>          <C>          <C>          <C>
US GAAP
Profit after taxation            (42,412)       6,215      (11,576)      40,105       14,145      103,638      169,289
Earnings per
ordinary share                     (41.5)p        6.1p       (11.3)p       39.2p        13.6p        91.4p       133.7p
Diluted
earnings per
ordinary share                     (41.5)p        6.1p       (11.3)p       39.2p        13.6p        79.0p       122.9p
Dividends per
ordinary share                       3.8p         1.8p         1.8p         0.0p         0.0p         0.0p         0.0p
</TABLE>

                                       3

<TABLE>
<CAPTION>
Balance sheet data                                                           December 31 December 31
                                                                                    2004        2005
IFRS                                                                             GBP'000     GBP'000
<S>                                                                                  <C>         <C>
Total assets                                                                     760,045     955,398
Current liabilities                                                               (8,194)     (7,763)
Non-current liabilities                                                          (42,927)    (44,205)
Minority interest                                                                    505         642
Net assets attributable
to equity holders of the
parent                                                                           708,850     902,357
Net asset value per
Ordinary Share                                                                     578.5p      702.1p
Capital stock (excluding
long-term debt and
redeemable preferred stock)                                                      708,850     902,357
Number of Ordinary Shares
outstanding as adjusted to
reflect changes in capital                                                       122,530     128,530
</TABLE>

<TABLE>
<CAPTION>
                                 June 30     June 30  December 31  December 31  December 31  December 31
                                    2001        2002         2002         2003         2004         2005
US GAAP                          GBP'000     GBP'000      GBP'000      GBP'000      GBP'000      GBP'000
<S>                                  <C>         <C>          <C>          <C>          <C>          <C>
Total assets                     419,574     464,755      507,176      622,837      733,645      954,714
Net assets                       414,827     421,246      463,192      526,618      676,403      896,411
Net asset value per
Ordinary Share                     405.6p      411.9p       452.9p       467.5p       552.0p       697.4p
Capital stock (excluding
long-term debt and redeemable
preferred stock)                 414,827     421,246      463,192      526,618      676,403      902,357
Number of Ordinary Shares
outstanding as adjusted to
reflect changes in capital       102,266     102,266      102,266      112,655      122,530      128,530
</TABLE>

                                       4

On January 1, 2005 the Company changed its valuation policy to a more preferable
policy for the valuation of investments in certain quoted companies (see note 36
to  the  financial  statements).   Had  this  valuation  policy  been  in  place
previously,  the pro forma effects on the Company's  (loss)/profit after tax and
(loss)/earnings per share adjusted for US GAAP would have been as follows:


<TABLE>
<CAPTION>

<S>                                                <C>             <C>        <C>             <C>          <C>             <C>
Pro forma (loss)/profit disclosure             Year ended   Year ended  6 months ended  6 months ended   Year ended    Year ended
                                                  June 30      June 30     December 31      December 31  December 31   December 31
                                                     2001         2002           2001              2002         2003          2004



(Loss)/profit after taxation as adjusted for
US GAAP before the cumulative effect of
change in accounting principle                   (42,412)       6,215       (11,576)            40,105       14,145       103,638



(Loss)/gains for the change in the fair value
of investments                                    (8,826)      (1,152)          391            (2,268)        2,242        18,751



Pro forma net(loss)/profit for US GAAP           (51,238)       5,063       (11,185)           37,837        16,387      122,389



Pro forma net(loss)/earnings per ordinary
share as adjusted for US GAAP after the
change in accounting principle                   (50.1)p         5.0p         (10.9)p            37.0p        15.8p        108.0p



Pro forma diluted net(loss)/earnings per
ordinary share as adjusted for US GAAP after
the change in accounting principle               (50.1)p         5.0p         (10.9)p            37.0p        15.8p         93.0p

</TABLE>


                                        5


Dividend per Ordinary Share Information

For the fiscal year ended  December  31,  2005,  the board of  directors  of the
Company  (each  a  "Director,"  and  collectively,   the  "Directors")  has  not
recommended the payment of, and the Company will not pay, a final dividend.  The
Company reported a deficit for the fiscal year on its revenue account. See "Item
5. Operating and Financial  Review and  Prospects"  for more  information on the
Company's operations during its fiscal year ended December 31, 2005.

The following table presents a complete  summary of dividends per Ordinary Share
stated in both pounds sterling and U.S. dollars. The amounts in U.S. dollars are
based on the exchange rates at each respective payment date.
<TABLE>
<CAPTION>

Payment Date                             Pounds Sterling                        U.S. Dollars
<S>                                         <C>                                    <C>

November 26, 2001                          1.80p                                  $0.0261
Calendar Year Ended 2002                   0.00p                                  $0.0000
Calendar Year Ended 2003                   0.00p                                  $0.0000
Calendar Year Ended 2004                   0.00p                                  $0.0000
Calendar Year Ended 2005                   0.00p                                  $0.0000

</TABLE>

The Company paid an interim dividend of 3.1p  per share on May 31, 2006.
Exchange Rate Information

(a)  The Federal  Reserve Bank of New York Noon Buying Rate for pounds  sterling
     in New York City  expressed  in U.S.  dollars per  GBP1.00  (rounded to the
     nearest cent) (the "Noon Buying Rate") at June 30, 2006 was $1.85.

(b)  The table below sets forth, for the periods indicated the high and low Noon
     Buying Rates for each of the most recent six full months.

Last Six Months                          High              Low

January                                  $1.7885           $1.7404
February                                 $1.7807           $1.7343
March                                    $1.7567           $1.7256
April                                    $1.8220           $1.7389
May                                      $1.8911           $1.8286
June                                     $1.8817           $1.8108

(c)  The table  below sets forth for the  periods  indicated  the  average  Noon
     Buying Rate for each  period,  calculated  by using the average of the Noon
     Buying Rates on the last day of each month during the period.

Fiscal Year Ended                                          Average

June 30, 2001                                              $1.47
June 30, 2002                                              $1.46
December 31, 2002 (six-month period)                       $1.57
December 31, 2003                                          $1.64
December 31, 2004                                          $1.84
December 31, 2005                                          $1.72


                                        6



B.       Capitalization and Indebtedness

         Not applicable to this Form 20-F.

C.       Reasons for the Offer and Use of Proceeds

         Not applicable to this Form 20-F.

D.       Risk Factors

Risks Relating to Value and Liquidity of Ordinary Shares

The Company's  Ordinary  Shares are listed on the Official  List (the  "Official
List") of the United Kingdom Listing Authority  ("UKLA") and admitted to trading
on the market for listed  securities  of London Stock  Exchange plc (the "LSE").
There is no guarantee that the market price of the Ordinary  Shares will reflect
the underlying net asset value of the Company,  nor is there any guarantee as to
the level of liquidity in the market for Ordinary  Shares.  The Ordinary  Shares
have not  been  and  will not be  registered  in the  United  States  under  the
Securities  Act or the  securities  laws  of any  state.  The  Company  has  not
registered  under the  Exchange  Act for the purpose of  facilitating  secondary
market  trading with respect to its  securities  in the United  States,  and the
Company does not intend,  directly or indirectly,  to facilitate  such secondary
market  activity.  Accordingly,  it is expected that there will be no market for
these securities in the United States.

Risks Relating to the Company's Lack of Control of Underlying Investments

The  Company's  portfolio  consists  largely  of  holdings  in  Funds  that  are
principally  managed or advised by  Permira,  one of  Europe's  leading  private
equity firms. See also "Item 10.  Additional  Information - Material  Contracts"
for further details regarding the Company's relationship with Permira.  Pursuant
to statutory requirements governing U.K. investment trusts and the listing rules
of the UKLA (the "Listing Rules"),  however,  the Company may not hold interests
in any Fund which would  enable the Company to control  that Fund.  As a result,
the Company will only be able to alter the  investment  policies of a particular
Fund in which it is invested by acting in  conjunction  with other  investors in
that  Fund.  As a result,  the  Directors  have no control  over the  investment
decisions made by the managers of individual  investee  companies.  An "Investee
Company"  is a company  in which one of the Funds has  invested.  Although  Fund
managers must act in accordance with common  investment  objectives and policies
and are subject to the restrictions set out in the documents  establishing  each
Fund,  the  Company can make no  assurance  that the Funds'  managers  will make
investment  decisions  according to the  Directors'  expectations.  See "Item 4.
Information  on the  Company  -  Business  Overview  -  Investment  Portfolio  -
Diversification of Investment Portfolio Relating to Fund Investments."

Risks Relating to Changes in Value of the Company's Portfolio

Investment in Funds is speculative  and requires a long-term  commitment with no
certainty of return.  The ability to achieve  capital  appreciation of the Funds
could  be  affected  by any  significant  general  change  in the  value  of the
investments  held by the Funds.  Private  equity  investments,  by their nature,
involve  uncertainty  as to  the  ultimate  value  likely  to be  realized  upon
disposition  of those  investments,  particularly  because  their  predominantly
unquoted  nature means that a ready market may not exist for them.  The value of
these investments could decrease and the Company, as an investor in these Funds,
may not recover the full amount of its original investment, which may affect the
market price of the Ordinary Shares.


                                          7



Risks Relating to Illiquidity of the Company's Investments

Many of the interests will be highly  illiquid and, in the case of a liquidation
of the interests,  may not be capable of being realized in a timely manner or at
all. Consequently,  the timing of cash distributions,  if any, to the Company is
uncertain  and  unpredictable.  Fund  investments  may be difficult to value and
dispositions,  if any, of such  investments  may  require a lengthy  time period
since there is only a limited market for secondary sales of Fund investments. In
certain  circumstances,  the Company may wish to transfer its holdings in one or
more Funds. In a majority of the Funds, the general partner,  trustee or manager
has the ultimate right, similar to that exercised by the board of directors of a
private  corporation,  to refuse to register the transfer of an interest in such
Fund.  While the  Company  has no reason to  believe  that any  request  for the
transfer  of an interest  in a Fund would be  refused,  it is possible  that the
overriding fiduciary duty of the general partner, trustee or manager of the Fund
could  require it to refuse to register a particular  transfer of an interest in
that Fund proposed by the Company.

Risks Relating to Indemnities

Funds documentation  typically contains  indemnities from each investor in Funds
in favor of the general  partner or manager (as  applicable) and related persons
such as directors,  officers,  employees and agents,  in respect of specified or
general liabilities  incurred in connection with the business of the Funds or as
a result of acting in the relevant capacity.  Such indemnities are often limited
to the assets of the relevant Funds and therefore, as regards each investor in a
Fund, to the amount of the capital  contribution  of such investor in a Fund but
potential  investors  should be aware that claims under such  indemnities  could
result  in the  loss in  whole  or in part of the  Company's  investment  in any
relevant Funds.

Risks Relating to Fund Clawback

During the term of a Fund the general  partner or manager (as applicable) of the
Fund will in some  circumstances be permitted to make capital calls on a limited
basis to indemnify the general  partner or manager (as applicable) or to pay the
claims of the creditors of that Fund. If  obligations  to indemnify such general
partner or manager (as  applicable)  or to pay third party claims arise when the
Fund has  insufficient  assets,  the general  partner or manager (as applicable)
will  often  have a  contractual  right to a  Clawback  in  order  to fund  this
obligation.  "Clawback"  means the right of a general  partner  or  manager  (as
applicable)  of a Fund to require its investors to return  specified  amounts of
distributions  received  by such  investors  from the  relevant  Fund if  assets
otherwise available to such Fund are insufficient to satisfy certain liabilities
of such Fund.

Risks Relating to Key Individuals

Investors in Funds need to rely on key individuals to determine their investment
strategies and to make investment and disposition decisions.  The loss of any of
such individuals may jeopardize investment results of that Fund.


                                        8


Risks Relating to Unregulated Investment Vehicles

Substantially all of the Funds will constitute limited partnership interests and
are not registered  under the  Securities  Act or the Investment  Company Act of
1940.  Therefore,  substantially  all of the  Funds  may be  wholly  unregulated
investment vehicles.

Risks Relating to Operational History of the Funds

Certain of the Funds may have  limited  or no  operational  history  and have no
proven track  record in  achieving  their  stated  investment  objectives.  Past
performance of the Funds, or other vehicles  managed by the same persons as such
Funds,  cannot be considered a guarantee  of, or  necessarily a guide to, future
performance. No assurance can be given that the performance of a Fund will match
industry averages.

Risks  Relating to Fund Leverage  could Subject Assets of the Fund to the Claims
of Creditors of the Fund

The general partners or managers (as applicable) of certain Funds have the right
to cause the Fund to enter into a credit  facility.  The obligations  under such
credit  facility  are  sometimes  secured by all or a portion  of the  aggregate
unpaid capital  obligations of all investors in the Fund. Such a credit facility
is  generally  used to bridge  the period  between  the making of a call and the
payment of such call by  investors  in the Fund and for other  similar cash flow
purposes.  The  existence of leverage at the Fund level could subject the assets
of such Funds to the claims of  creditors  of the Fund or  adversely  impact the
distributions of income to its investors.

Risks Relating to Contingent Liabilities on Disposition of Funds Investments

In connection with the disposition of interests,  a Fund may be required to make
representations  about its  business and  financial  affairs that are typical of
those  made in  connection  with the sale of a  business.  Such Fund also may be
required to indemnify the  purchasers of such  investment to the extent that any
such  representations  are  inaccurate.  These  arrangements  may  result in the
incurrence of contingent  liabilities  for which the general  partner or manager
(as  applicable)  of such Fund may  establish  reserves or escrow  accounts.  In
addition,  investors in such Funds may be required to return some or all amounts
distributed to them to fund indemnity obligations.

Risks Relating to Capital Calls

Generally,  the Funds documentation  provides for certain penalties in the event
that an investor in the Funds fails to meet a capital 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 an escalating level of 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 interest in respect of the defaulted amount, partial or
total  forfeiture of the investor's  interest and liability for any other rights
and  remedies  (including  legal  remedies)  the general  partner or manager (as
applicable) may have against the investor. Certain of the Funds give the general
partner or manager (as applicable)  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 defaulting  investor would  generally be
allocated among the general partner or manager (as applicable) and the remaining
investors. Consequently, any failure by the Company to meet any capital call may
adversely  affect the net asset value of the Fund.  See "Item 4.  Information on
the Company - Business Overview - Description of the Funds - Calls."


                                        9


Risks Relating to Over-Commitment

An  important   factor  in  the  performance  of  the  Funds  is  the  Company's
over-commitment program. Although the Company will monitor cash flow projections
relating to the Funds,  there can be no assurance that all  commitments to Funds
will be met in full or at all or otherwise that the over-commitment program will
be successfully implemented.

The Company will be permitted to make  over-commitments  in making  investments.
The Company's ability to make over-commitments  could result in periods in which
the Company has  inadequate  liquidity to fund its  commitments  or to pay other
amounts  payable by the Company.  Failure by the Company to meet its commitments
would  result in  defaults by the Company  under the  documentation  pursuant to
which the  investments  are  made,  which  would  likely  result in the  Company
incurring losses on such investments.

Risks Relating to Changes in Value of Funds' Investments

The value of the assets of the Funds may be affected by  uncertainties,  such as
political  developments,  changes in  government  policies,  taxation,  currency
repatriation and other restrictions, in some of the countries in which the Funds
may invest.  The Company,  directly or indirectly through the Funds, may also be
exposed  to  countries,  currencies  and  industries  in which  the Funds do not
currently hold any interest.

Risks Relating to Currency Fluctuations

In addition, the Funds are denominated in a number of currencies. The Funds may,
but are not required to, seek to minimize the exposure to currency  fluctuations
through  the  use of  hedging  techniques  and  instruments,  but it may  not be
possible or practicable to hedge against consequent currency exposure. See "Item
4. Information on the Company - Business Overview - Foreign Exchange."

Risks Relating to the Company's Investment Flexibility

The Company's principal  investment objective is to achieve capital appreciation
by investing  principally in private equity funds that are managed or advised by
Permira. Other than this important investment restriction, which is set out more
fully in the  Operating  Agreement  that is  discussed  in "Item 10.  Additional
Information  - Material  Contracts,"  and certain  investment  restrictions  and
diversification obligations required by applicable laws and regulations relating
to qualification as an investment trust,  there are no restrictions on the types
of funds in which the Company may invest.  Many of these  investments  involve a
high degree of risk, including a possible loss of the entire investment.

Risks Relating to Investment Returns

The  Company's  past  performance  is not  necessarily  a  guide  to its  future
performance.  The income from the  Company's  investments  is subject to change,
which in turn could affect the  Company's  investment  return and may affect the
amount of dividends the Company pays to its investors.  The  investment  returns
for the Company in the future may differ materially from the historical  returns
of the Funds and will depend,  among other things, on changes in the composition
of the Company's portfolio.


                                        10


The task of identifying investment opportunities in private operating companies,
managing such  investments  and realizing a significant  return for investors is
difficult.  Many  organizations  operated by persons of competence and integrity
have been unable to manage and realize gains on such  investments  successfully.
There is no  assurance  that the Funds will be able to invest  their  capital on
attractive terms or generate returns for the Company.

Risk of Limited  Number of  Investments;  Dependence on  Performance  of Certain
Investments

The  Funds  will  participate  in a  limited  number of  investments  and,  as a
consequence,  the aggregate return of any Fund may be adversely  affected by the
unfavorable performance of any single investment.  Moreover,  because it can not
reasonably  be expected  that all of a Fund's  investments  will perform well or
even return capital,  such Fund generally can achieve above-average returns only
if one or a few of its investments  perform very well. There can be no assurance
that this will be the case.

Risks Relating to Competition for Investments

The Funds expect to encounter  competition  from other  entities  having similar
investment   objectives.   Potential   competitors   include  other   investment
partnerships  and  corporations,   business  development  companies,   strategic
industry acquirers and other financial  investors  investing directly or through
affiliates.  Furthermore,  over  the  past  several  years,  there  has  been  a
substantial increase in the number of private equity funds that have been formed
and in the size of many existing funds. Additional funds with similar investment
objectives may be formed in the future by other unrelated parties.

The private equity investment  industry in which the Funds are engaged is highly
competitive. There can be no assurance that the Funds will be able to locate and
complete  investments  which  satisfy each Fund's rate of return  objectives  or
realize upon their values,  or that the Funds will be able to invest fully their
committed  capital,  in which cases the Funds could generate lower than expected
returns.

Risks Relating to Leverage

The  Funds'   investments  are  expected  to  include  companies  whose  capital
structures may have significant  leverage.  Such investments are inherently more
sensitive  to declines in revenues  and to  increases  in expenses  and interest
rates.  Although the general partner of each Fund is expected to use leverage in
a prudent  manner,  the leveraged  capital  structure of such  investments  will
increase the exposure of the  portfolio  companies to adverse  economic  factors
such as  downturns  in the  economy or  deterioration  in the  condition  of the
portfolio company or its industry.  Additionally, the securities acquired by the
Funds  may be the most  junior  in what  will  typically  be a  complex  capital
structure, and thus subject possibly to the greatest risk of loss.

Risks Relating to Taxation

There can be no  guarantee  in advance  that the Company  will be approved as an
investment  trust for U.K.  tax  purposes  by H.M.  Revenue  and Customs for any
accounting periods. See "Item 10. Additional Information - Taxation."

There is a risk that  certain  of the  Company's  holdings  in unit  trusts  and
non-U.K.  resident  companies  (held through  partnerships or directly) could be
treated as "loan relationships" for the purposes of the regime for borrowers and
lenders  established  by the UK  Finance  Act  1996.  The  consequence  of  such
treatment  would be that the amount of any  movements  in the value of that loan
relationship  taken to income are  taxable/deductible.  Any  movements  taken to
capital are not taxable/not deductible.


                                        11


There is a risk  that tax  regimes  in both the UK and  overseas  might  change,
adversely affecting the Company's returns on its investments.

Risks Relating to U.S. Federal Income Taxation Of Ordinary Shares

The Company believes that it was a "passive foreign investment company" ("PFIC")
for U.S.  federal  income tax purposes  for its taxable year ended  December 31,
2005 and expects to be so classified for the foreseeable future.  Under the PFIC
rules, a U.S. Holder will be subject to generally  adverse rules with respect to
certain  distributions  on, and gains realized from the disposition of, Ordinary
Shares.  U.S. Holders may be permitted to make a  mark-to-market  election which
may,  under  certain   circumstances,   ameliorate  the  generally  adverse  tax
consequences of owning shares in a PFIC. For further information,  See "Taxation
- United States Taxation" under Item 10.E.

Item 4.           INFORMATION ON THE COMPANY

A.       History and Development of the Company

The Company was  incorporated and registered under the laws of England and Wales
under the Companies Act as a public  company  limited by shares on June 12, 1995
under the name Chamwell  Services plc. On February 20, 1996, the Company changed
its name to Schroder Ventures  International  Investment Trust plc, and on April
3, 1996, the Company received its official  certificate under section 117 of the
Companies Act entitling the Company to commence  business.  The Company  changed
its name to SVG Capital plc on May 7, 2004.  The Company does not have a limited
life.

The Company's board of directors consists of eight Directors, a majority of whom
are required by the Company's Articles of Association to be persons  independent
of Schroder  Ventures  and of  Schroders  plc and its  subsidiaries,  subsidiary
undertakings and associated  undertakings  (all as defined in the Companies Act)
(the "Schroder Group").

Nature of the business

The Company  carries on business as an  investment  trust,  and is listed on the
Official  List and  admitted  to  trading  on the  London  Stock  Exchange.  The
Company's  investment  objective is to achieve capital appreciation by investing
principally in private equity funds.

Financial position

The consolidated  net assets of the group  attributable to equity holders of the
parent  amounted to GBP902.4  million at December  31, 2005,  of which  GBP675.1
million related to investments in private equity.


                                        12


Enlargement of the Company's Operations

In June 2001,  following  approval by the  Company's  shareholders,  the Company
acquired SVGA and SVGNA. SVGA and SVGNA each became  subsidiaries of the Company
at that time.  The Company  acquired  SVGA from  Schroder  Ventures  Limited for
GBP100, and assumed responsibility for the costs and received the benefit of the
income streams of SVGA beginning on January 1, 2001. On June 26, 2001, April 22,
2002,  December  19, 2002 and May 14, 2004 the Company  subscribed  for 749,900,
750,000, 1,500,000 and 1,250,000 ordinary shares of GBP1 each, respectively,  in
SVGA.

On June 18, 2001,  SVGA acquired  SVGNA,  a  broker-dealer  registered  with the
Securities and Exchange Commission ("SEC"),  from Schroder Venture Managers Inc.
for $50,000,  and subsequently paid the Schroder Group an additional $250,000 in
respect  of an  increase  in  required  capital  for  regulatory  reasons.  SVGA
subscribed for additional capital of SVGNA amounting to $279,000 during the year
ended December 31, 2004.  SVGNA repaid  $275,000 of capital to SVGA on December,
31 2005.  On  December  31,  2005  SVGA  subscribed  for a further  $275,000  of
additional paid-in capital of SVG Advisers Inc. ("SVGI").

On December 13,  2002,  SVGA  acquired 100 common  shares of $1 each in SVGI for
$100. SVGA  subscribed for additional  capital of $141,463 during the year ended
December  31,  2004.  On  December,  31 2005 SVGA  subscribed  for  $275,000  of
additional  paid-in  capital  of SVGI.  On May 26,  2006 SVGA  subscribed  for a
further $300,000 of additional paid-in capital of SVGI.

The Company  acquired  100  ordinary  shares of GBP1 each in SVGIM for GBP100 on
October 16,  2002.  On May 16,  2003 and May 4, 2005,  SVGIM  issued  99,900 and
150,000  ordinary  shares  of  GBP1  each  to  the  Company  for  GBP99,900  and
GBP150,000, respectively.

The  acquisitions  of SVGA,  SVGIM and SVGNA have allowed the Company to provide
the following  specialist  financial  advisory  services:  SVGA, SVGIM and SVGNA
manage or advise  investment  vehicles  that invest in private  equity or public
equity using private equity techniques. These products seek to generate absolute
returns or outperform public markets.

On December 30, 2005,  the Company  invested  EUR1.25  million in KC II Limited,
acquiring an equity stake of almost 20%.

The Company has also  granted  options  over its own shares to employees of SVGA
and SVGI. Further details regarding option grants are included in note 21 to the
Financial Statements, included in Part III.

For more  information  regarding the acquisition of SVGA and SVGNA, see "Item 5.
Operating and Financial Review and Prospects - Liquidity and Capital Resources."

Arrangements with Permira

On March 21, 2005, the Company entered into an Operating  Agreement with Permira
Holdings  Limited  ("PHL") and a  Subscription  Agreement  with Permira  Capital
Limited  ("PCL").  Both of  these  agreements  were  approved  by the  Company's
shareholders  at the Company's  Annual General Meeting ("AGM") held on April 25,
2005 and further details thereof are set out in "Item 10. Additional Information
- Material Contracts".


                                        13


Euro Depositary Receipts

The Company  cancelled  its  euro-denominated  receipts  ("EDRs") on February 7,
2005.  EDRs are  securities  issued  by a  depositary  bank that  represent  the
underlying shares of a company. They are denominated and traded in euro.

Subordinated Convertible Bonds due 2011

On  November  21,  2001,  the  Company  issued  GBP40,000,000  nominal  of  4.5%
Subordinated  Convertible Bonds due November 2011 (the "Bonds 2011").  The Bonds
2011 are  convertible,  at the  option of the  holders of the Bonds  2011,  into
Ordinary  Shares at a price of 399p per  Ordinary  Share.  The  Bonds  2011 were
listed on the Official  List and were  admitted to trading on the LSE on July 5,
2002.  During the year ended December 31, 2003, a total of GBP600,000 Bonds 2011
were converted into 150,375 Ordinary Shares. On January 19, 2005, the listing of
the Bonds 2011 was cancelled.

On November 22, 2004,  the Company  announced that it had exercised its right to
call for redemption of all the Bonds 2011 in issue and gave holders of the Bonds
2011 the option to convert their holding into  Ordinary  Shares.  On December 6,
2004, a total of 9,874,679  Ordinary  Shares were  allotted on conversion of all
the Bonds 2011 in issue.

Subordinated Convertible Bonds due 2013

On May 21, 2003, the Company issued  GBP40,000,000  nominal of 4.5% Subordinated
Convertible Bonds due May 2013 ("Bonds 2013"). The Bonds 2013 are convertible at
the option of the holders of the Bonds 2013 into  Ordinary  Shares at a price of
480p per Ordinary Share. The Bonds 2013 are listed on the Official List and were
admitted to trading on the LSE on May 21, 2003.

On July 16, 2003,  July 18, 2003 and August 7, 2003 the Company  issued in three
tranches an  additional  GBP9,000,000  nominal of Bonds 2013.  These  subsequent
tranches of Bonds 2013 are also  convertible at the option of the holders of the
Bonds 2013 into  Ordinary  Shares at a price of 480p per Ordinary  Share.  These
subsequent  tranches  of Bonds  2013 are  listed on the  Official  List and were
admitted to trading on the LSE on August 18, 2003.

On May 22, 2006,  the Company  announced that it had exercised its right to call
for redemption of all the Bonds 2013 in issue and gave holders of the Bonds 2013
the option to convert  their holding into  Ordinary  Shares.  On June 7, 2006, a
total of 10,208,327 Ordinary Shares were allotted on conversion of all the Bonds
2013 in issue. On June 14, 2006, the listing of the Bonds 2013 was cancelled.

Electronic Settlement

The  Company's   Ordinary  Shares  are  traded  through  the  CREST  system,   a
multi-currency electronic settlement system for securities in the United Kingdom
and Ireland.

Registered and Head Offices

The Company's  registered  office is 31 Gresham Street,  London EC2V 7QA England
(Tel: +44 20 7658 3206),  and its head office and principal place of business is
111 Strand, London WC2R 0AG (Tel: +44 20 7010 8900).



                                          14

B.       Business Overview

Summary

The Company  carries on business as an  investment  trust,  and is listed on the
Official  List and  admitted  to trading on the LSE.  Following  the  investment
review and the decision of the Board referred to and described in more detail on
page 16, the Company obtained shareholder approval at the Annual General Meeting
held on April 25, 2005,  to change its  investment  policy.  As a result of this
change, the Company's investment objective is to achieve capital appreciation by
investing  principally  in private  equity  funds that are managed or advised by
Permira, one of Europe's leading private equity firms. 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.  See  "Item 10.
Additional  Information  -  Material  Contracts"  for  more  information  on the
relationship between the Company and Permira.

To complement  this  investment  objective and create capital and income for the
Company,  its fund advisory business  structures,  markets,  manages and advises
products for  investment  in private  equity and in public  equity using private
equity  techniques.  The Company's  consolidated  revenues are expected to arise
mainly from UK operations.

The  Directors  intend to manage  the  affairs  of the  Company  so that it will
continue to satisfy  the  current  conditions  for  approval by the U.K.  Inland
Revenue  as an  investment  trust  under  section  842 of the  U.K.  Income  and
Corporation Taxes Act 1988 ("Section 842"). The last accounting period for which
the Company has been treated as approved by the U.K.  Inland  Revenue as meeting
the qualifying criteria for investment trust status is the period ended December
31, 2004, and the Company subsequently has conducted its affairs so as to enable
it to continue to qualify for such approval.

Investment Portfolio

         Investment in the Funds.

In order to satisfy the Company's investment objective, its investment portfolio
at  December  31,  2005  consisted  of  interests  in 18  private  equity  funds
("Funds"),  which for purposes of this annual report means private  equity funds
that are directly or indirectly managed or advised by Permira,  or other private
equity funds that invest in Japan,  North  America,  Asia and the life  sciences
sectors,  including  various  co-investments,  and is  expected  to  continue to
consist  primarily of interests in these Funds and similar  funds offered in the
future. Of these Funds, 11 were mature and 7 were immature. A mature Fund is one
that has substantially  completed its investment program, while an immature Fund
is one that has yet to complete its  investment  program.  See "- Description of
the Funds - Calls."

The Funds, which consist of limited  partnerships,  corporations and unit trusts
organized  in the  United  States  and  various  foreign  countries,  have  been
organized at various times since 1985 for the purpose of making venture  capital
and  buy-out  investments  in  various  business  ventures  located  in  various
countries,  including the United States. As of December 31, 2005, the Funds held
investments  in 125  business  enterprises.  The Funds have not been  offered or
traded publicly in the United States and are subject to various  restrictions on
transfers of interests  therein.  There is no public market for any of the Funds
in any country,  and there is no intention to create a public  market for any of
the Funds in the future.  Of the 18 Funds, 16 are 10-year  closed-end funds, one
is an 8-year closed-end fund and one is a 15-year  closed-end fund. Seven of the
Funds that have reached the end of their original  terms have,  with the consent
of their respective investors, had their original terms extended.  Following the
expiration  of their  respective  terms,  the Funds will  dissolve  to permit an
orderly  liquidation of their assets, and then terminate.  The life of the Funds
generally  may be extended  only with the consent of investors  and/or  Advisory
Committees.


                                        15



In addition to the Funds  discussed  above,  the Company also had investments in
other private equity funds of funds or public equity funds managed or advised by
SVGA or SVGIM. SVG Capital may also warehouse investments for existing or future
products.

     Diversification of Investment Portfolio Relating to Fund Investments.

Following a review of its future investment policy, the Board concluded that the
Company's core focus should remain on  international  private equity and, within
that,  its primary  focus  should be on Europe and, to a lesser  extent,  Japan.
While the  Company  will  continue  to have  valuable  commitments  in the US in
smaller company  buy-outs and in the life sciences  sectors,  the Board believes
that the buy-out markets of Europe and Japan will provide  excellent  investment
opportunities over the next five to ten years.

Within  these two  markets the Board has decided to  concentrate  the  Company's
investments with our existing, highly rated investment advisers, Permira and MKS
Advisers.  SVG Capital plc has therefore  entered into  agreements  with Permira
which  give the  Company  full  access to the next two funds  which  Permira  is
expected to raise,  Permira IV and Permira V, and which strengthen the Company's
long-standing relationship with Permira.

In addition,  both the conditions for  qualification  as an investment trust and
the Listing Rules impose certain investment diversification requirements. A list
of the Company's investments at December 31, 2005 is shown below:


                                        16

<TABLE>
<CAPTION>

<S>                                                                                <C>                   <C>

List of Fund Investments                                                        Value of SVG        SVG Capital's
                                                                          Capital's  Holding           Net Assets
                                                                                    GBP'000                    %
Asia
Asia Pacific Trust                                                                       825                0.1
Asia Pacific Fund II                                                                   6,408                0.7
Schroder Ventures Asia Pacific Fund ("SVAPF")                                         45,343                5.0
Co-investments with APF II and SVAPF                                                   3,237                0.4
The Japan Venture Fund III                                                               641                0.1
The Japan Venture Fund IV                                                             29,519                3.3

-----------------------------------------------------------------------------------------------------------------
Total Asia                                                                            85,973                9.6
-----------------------------------------------------------------------------------------------------------------


Europe
Permira Europe I                                                                      13,034                1.4
Permira Europe II                                                                    253,687               28.1
Permira Europe III                                                                   159,564               17.7
P123                                                                                  80,762                8.9
Permira German Buy-Outs                                                               10,171                1.1
Permira Italy II                                                                       1,562                0.2
Permira UK III                                                                            55                0.0
Permira UK Venture III                                                                   120                0.0
Permira UK Venture IV                                                                    962                0.1
-----------------------------------------------------------------------------------------------------------------
Total Europe                                                                         519,917               57.5
-----------------------------------------------------------------------------------------------------------------


North America
Schroder Canadian Buy-Out Fund III                                                     1,177                0.1
Co-investments  with  Schroder  Canadian  Buy-Out  Fund III and SV
Investments Fund I                                                                     5,177                0.6
SV Life Sciences Fund II                                                              20,344                2.2
SV Life Sciences Fund III                                                             19,787                2.2
SV Investments Fund I                                                                 21,676                2.4
-----------------------------------------------------------------------------------------------------------------
Total North America                                                                   68,161                7.5
-----------------------------------------------------------------------------------------------------------------


Total private equity funds and co-investments                                        674,051               74.6
Generalist private equity funds of funds                                               1,031                0.1
Public equity funds and other investments                                             28,643                3.2


-----------------------------------------------------------------------------------------------------------------
Total investment portfolio                                                           703,725               77.9
Other assets less total liabilities                                                  199,274               22.1


-----------------------------------------------------------------------------------------------------------------
Total net assets                                                                     902,999              100.0
-----------------------------------------------------------------------------------------------------------------
</TABLE>


         Diversification by Geographical Area and Sector.

Although  the Company has no formal  guidelines  concerning  diversification  by
geographical area and sector, the Directors expect that the Company's investment
portfolio of private  equity funds and  co-investments  will continue to reflect
the broad  geographical  spread and  sector  diversification  of the  underlying
investments of the Funds. The information  below provides a brief description of
the  diversification  of the Company's  investment  portfolio of private  equity
funds and  co-investments by geographical area and sector.  The Directors do not
believe  that there are any risks  specific to the  countries in which the Funds
have invested that would have a materially adverse effect on the Company.

                                           17

<TABLE>
<CAPTION>

Geographical Analysis
<S>                                                    <C>                        <C>

                                                December 31, 2005          December 31, 2004
                                                   % of Portfolio             % of Portfolio
                                                       (by Value)                 (by Value)


Multinational                                                  21                         25


Continental Europe                                             36                         36


UK                                                             26                         21


North America                                                   7                          8


Far East/Asia Pacific                                          10                         10
</TABLE>


There were two small changes in the portfolio's  geographical  weighting  during
the year ended December 31, 2005.  First,  there was an increase in its exposure
to  companies  operating  in the UK and,  second,  there was a  decrease  in its
exposure  to  multinational  companies.   These  changes  are  a  reflection  of
realizations and revaluations in the portfolio,  such as the recapitalization of
Cognis and  write-ups of  companies  such as New Look and the AA, which has been
written up on an earnings basis to GBP34.1 million.

There have been several changes to the portfolio's sector exposure,  the largest
of   which   is   the    increase   in   its    exposure    to    computer/other
electronics/communications sectors, a result of new investments such as Intelsat
and TDC, in addition to the uplifts in value of Avnet, Inc. and Inmarsat.

Of the 49%  invested  in the  consumer  and  leisure  sector as a whole,  21% is
invested in  companies in the leisure  sector,  16% in retail  companies,  5% in
media companies and 7% in 'other consumer'.
<TABLE>
<CAPTION>

Sector Analysis
<S>                                                         <C>                          <C>

                                                     December 31, 2005           December 31, 2004
                                                        % of Portfolio              % of Portfolio
                                                            (by Value)                  (by Value)


Consumer and Leisure                                                49                          29


Medical/Health                                                      11                          21


Computer/Other Electronics/                                         25                          22
Communications


Chemicals                                                            1                           7


Industrial Products/Services                                         3                           7


Other Manufacturing                                                  1                           3


Other Services                                                      10                          10

</TABLE>

         Future Investments

It has been agreed with Permira that, subject to the cashflow projections of the
SVG Capital  Group,  as defined in "Item 10.  Additional  Information - Material
Contracts",  agreement on terms,  due diligence and Board approval,  the Company
will be the major  investor in future Permira  Funds,  including  Permira IV and
Permira V. On that basis,  the  Company  will be entitled to full access to such
funds.

For the period of the Operating  Agreement,  as outlined more fully in "Item 10.
Additional Information - Material Contracts", the Company will not commit to any
non-Permira  private equity fund or product for direct investment other than the
agreed  commitments  to other  private  equity  funds  referred  to in "Item 10.
Additional  Information - Material  Contracts" and Japan Funds.  The Company may
also, within certain limits, carry out the temporary  warehousing of investments
for any structured products managed or advised by the SVG Capital Group.

                                    18


The Company intends that, once it, or any other member of the SVG Capital Group,
has made a  commitment  to Permira IV, which is expected to be on or around June
30,  2006,  the SVG Capital  Group will operate so that not more than 20% of the
gross assets and uncalled  commitments  of the SVG Capital Group are invested in
or committed to SVG Products,  as defined in "Item 10. Additional  Information -
Material Contracts",  or other non-Permira funds or products (subject to certain
limited exceptions), over time. After that commitment to Permira IV is made, the
aggregate amount invested in or committed to such funds or products (at the time
of such  investment or  commitment)  will not exceed 25% of the gross assets and
uncalled  commitments of the SVG Capital Group. Within these  restrictions,  the
SVG Capital Group may also invest in private equity (or other) funds of funds.

The  restrictions  above will not apply to SVG  Products,  which may continue to
invest  in any funds  and  products.  However,  any  investment  made by the SVG
Capital  Group in SVG Products  will be subject to the  restrictions  more fully
outlined in "Item 10. Additional Information - Material Contracts".

Members of the SVG Capital Group may continue to manage and advise any funds and
products, including new funds and products launched by the SVG Capital Group. It
is  expected  that these  funds and  products  will  maintain a focus on private
equity or public equity using private equity techniques.

As part of the  agreement,  the SVG Capital  Group also has the right to launch,
manage and advise  future  structured  products for third party  funding  around
Permira IV and Permira V in priority,  subject to certain limited exceptions, to
Permira. In other words, the SVG Capital Group can launch funds that will invest
in Permira IV and Permira V.

SVG Capital plc will remain self managed. None of Permira, the SVGA Group or any
third party will have management discretion over the Company's capital available
for  investment  or any  authority to take  investment  management  decisions on
behalf of the Company.

Any surplus  capital that the Company has beyond its permitted  investments  and
commitments,  as outlined in this document, will continue to be invested in cash
and liquid securities.

The Directors  will consider each such  investment on its merits and may decline
to invest  if they  determine  that  such  investment  is not  suitable  for the
Company's  portfolio.  The Company will invest on terms at least as favorable as
those  available  to other  investors,  subject to any  alteration  which may be
appropriate for the Company in accordance with the investment  restrictions  set
out below. It is anticipated  that such  investments will only be made where the
Company's  cash  resources  (including  ongoing  distributions  from the Funds),
revenues  and  credit   facilities  will  be  sufficient  to  finance  the  full
subscription  amount  payable by the Company in connection  with any such future
investments.  See "Item 5.  Operating  and  Financial  Review  and  Prospects  -
Liquidity and Capital Resources," below, for additional  information relating to
the Company's Facility Agreement.


                                        19


The Company may acquire  further  interests in existing Funds from existing Fund
investors if the Directors  believe that such action is  appropriate  and can be
accomplished on acceptable terms. The Company does not intend to acquire further
interests  in any  Fund if such  an  acquisition  would  result  in the  Company
acquiring control of that Fund.

Co-Investment and Limitations.  The Company may also co-invest  alongside one or
more  of the  Funds.  Co-investment  opportunities  arise  principally  where  a
proposed  investment in an Investee Company exceeds the capacity of the relevant
Fund.  The aggregate of a single  co-investment  and  participation  in the same
company  through the Funds may not exceed 5% of the Company's  consolidated  net
assets.  The  overall  restriction  on  co-investments  remains  at  10%  of the
Company's  consolidated net assets. The calculation of these percentages will be
made at the time any such  co-investment is made. These percentage  restrictions
on  co-investments  are  subject to change  and are  regularly  reviewed  by the
Directors.  Any co-investment by the Company will be on an arm's-length basis on
terms  that  are at least  substantially  similar  to those of the  co-investing
Fund's  investment.  At  December  31,  2005,  the Company  held  co-investments
totaling GBP8.4 million and representing 1.0% of the net assets of the Company.

Other Permitted  Investments.  The Company may also invest in alternative listed
or unlisted companies or other entities with exposure to buy-out and development
capital  markets.  In addition,  the Company may,  from time to time,  invest in
other listed  companies and fixed interest  securities and other marketable debt
securities  that are  unrelated to buy-out and  development  capital  markets or
retain cash balances pending re-investment.  At December 31, 2005, the Company's
gross cash balance of GBP205.0  million was held  principally  in a portfolio of
money  market funds and cash  deposits.  The Company also has the power to enter
into transactions  involving  synthetic or traded derivative  instruments over a
range of different  underlying  securities and currencies.  The Directors expect
this  power  may be used  for  hedging  or to gain  exposure  to  quoted  equity
instruments,  but not for speculative or trading purposes.  Subject to the terms
of the Operating Agreement discussed in "Item 10. Material Contracts," there are
no restrictions on the types of funds in which the Company may invest.

Portfolio at Fiscal Year End

As of December  31,  2005,  the  Company's  investment  portfolio  consisted  of
interests  in each of the 18 Funds,  which for  purposes of this  annual  report
includes  various  co-investments.  The "List of  Investments"  table on page 17
presents summary information,  as of December 31, 2005, on each of the Funds, as
well as the  Company's  percentage  ownership  of each  Fund,  the  value of the
Company's  holdings in each Fund and the  percentage of the Company's net assets
constituted by each Fund.

As of December 31, 2005, no underlying Investee Company comprised more than 6.3%
by value of the Company's net assets. The "Twenty Largest Underlying  Companies"
table set out below provides a brief  description  of the 20 largest  underlying
Investee  Companies which, as of December 31, 2005,  represented 74% by value of
the Company's portfolio, determined based on the value of investments.



                                          20



Twenty Largest Underlying Companies


1. Seat Pagine Gialle (Italy)
Company (GBP000's)
Cost                        28,486
Value                       57,227
% of net assets             6.3%
Date of Acquisition         July 2003
SEAT  Pagine  Gialle  is  a  telephone  directories,  business  information  and
directory assistance company,  which demerged from the internet,  television and
business  publishing  arm of SEAT in August  2003.  The company has  significant
market share in Italy,  the UK and Germany and is Italy's  leading  yellow pages
and telephone directory publisher. The valuation basis is quoted.


2. Avnet, Inc. (US)
Company (GBP000's)
Cost                        34,876
Value                       53,154
% of net assets             5.9%
Date of Acquisition         October 2000
Avnet is one of the world's largest electronic component  distributors.  Serving
customers in 68  countries,  Avnet markets  inventories  and adds value to these
products and provides  supply chain  management and  engineering  services.  The
valuation basis is quoted. Since December 31, 2005, SVG Capital's entire holding
in Avnet, Inc. has been sold.


3. Gala Group (UK)
Company (GBP000's)
Cost                        42,760
Value                       42,760
% of net assets             4.7%
Date of Acquisition         September 2005
The Gala Coral Group is one of Europe's  pre-eminent  gaming groups operating in
the low  stake,  high  volume  betting,  casino and online  gaming  sector.  The
valuation basis is cost.


                                        21



4. Travelodge (UK)
Company (GBP000's)
Cost                        31,973
Value                       34,934
% of net assets             3.9%
Date of Acquisition         December 2002
Travelodge  is the  second  largest  operator  in the UK  budget  hotel  sector,
providing around 16,000 rooms in 260 hotels located around Britain.  It also has
operations  in  Spain  and the  Republic  of  Ireland.  The  valuation  basis is
earnings.


5. AA (UK)
Company (GBP000's)
Cost                        28,197
Value                       34,148
% of net assets             3.8%
Date of Acquisition         September 2004
The AA is the UK's  largest  roadside  recovery  business and one of the leading
insurance  brokers.  The AA's other activities include providing personal loans,
publishing  and driving  school  services.  The  roadside  division  has over 15
million  members,  of which six million are personal  customers.  The  valuation
basis is earnings.


6. SBS (The Netherlands)
Company (GBP000's)
Cost                        32,078
Value                       32,078
% of net assets             3.6%
Date of Acquisition         October 2005
SBS  Broadcasting  is  a  leading  European  commercial   television  and  radio
broadcasting  company with  operations  across Western and Central  Europe.  The
company  operates 16  television  stations,  21 premium pay  channels,  11 radio
networks and 11 stand-alone radio stations.  The valuation basis is cost in fund
currency.


7. Ferretti (Italy)
Company (GBP000's)
Cost                        21,130
Value                       31,596
% of net assets             3.5%
Date of Acquisition         October 2002
Ferretti Group is a world leading producer of luxury motor yachts larger than 40
feet,  created  through a buy and build  strategy of  complementary  motor yacht
builders. The valuation basis is earnings.


8. New Look (UK)
Company (GBP000's)
Cost                        599
Value                       26,908
% of net assets             3.0%
Date of Acquisition         April 2004
New Look is one of the leading UK fashion retailers  targeting the young (15-44)
female market.  The company was  established in 1969 and has grown to become the
UK's third largest single fascia retailer of womenswear with around 4% of the UK
market.  New Look has 543  stores in the UK and 215  stores  in France  (trading
under the MIM fascia). The valuation basis is earnings.



                                        22




9. Parkway Holdings (Singapore)
Company (GBP000's)
Cost                        18,909
Value                       24,893
% of net assets        2.8%
Date of Acquisition         December 1999
Parkway  is a private  healthcare  provider  in  Singapore  with an  established
network of hospitals and clinics in Malaysia,  Indonesia and India.  The company
has the  region's  best known  brand  name and a  reputation  for  technological
leadership. The valuation basis is quoted.


10. Marazzi (Italy)
Company (GBP000's)
Cost                        9,259
Value                       23,781
% of net assets        2.6%
Date of Acquisition         December 2004
Marazzi is the world's  largest  manufacturer  of ceramic tiles.  The company is
active in 130  countries and has over 5,800  employees and 20 plants  located in
Italy,  Spain,  France,  Russia and the US. The valuation  basis is third-party.
Since  December  31, 2005,  Marazzi has had a successful  IPO on the Milan Stock
Exchange.


11. TDC (Denmark)
Company (GBP000's)
Cost                        23,186
Value                       22,823
% of net assets        2.5%
Date of Acquisition         December 2005
TDC is a Danish-based  provider of  communications  solutions  with  significant
presence in selected markets in Northern and Central Europe. TDC is organised as
six  main  business  lines:  TDC  Solutions,   TDC  Mobile  International,   TDC
Switzerland, TDC Cable TV, TDC Directories and TDC Services. The valuation basis
is quoted.


12. austriamicrosystems (Austria)
Company (GBP000's)
Cost                       14,419
Value                      21,637
% of net assets            2.4%
Date of Acquisition        June 2000
austriamicrosystems   is  a  market  leader  in  the  design,   development  and
manufacture of semiconductor speciality products, focusing on analogue and mixed
signal ASICS (Application - Specific  Integrated  Circuits).  The company serves
the wireless  communications,  industrial,  medical and automotive  end-customer
markets.  The valuation basis is quoted.  Since December 31, 2005, SVG Capital's
holding in austriamicrosystems has been completely sold.


                                        23



13. Dinosol Supermercados (Spain)
Company (GBP000's)
Cost                        18,023
Value                       21,456
% of net assets             2.4%
Date of Acquisition         December 2004
Dinosol  Supermercados  (formerly  Ahold  Supermercados)  operates 572 stores in
Spain and the Canary Islands, trading primarily under the SuperSol and HiperDino
fascias. The valuation basis is earnings.


14. Inmarsat (UK)
Company (GBP000's)
Cost                        375
Value                       19,710
% of net assets             2.2%
Date of Acquisition         December 2003
As a leading  provider of global mobile  satellite  services,  Inmarsat has been
designing,  implementing and operating satellite networks for over 26 years. The
company's  services include voice,  fax,  intranet and internet access and other
data services used by multinational corporations, government agencies, media and
international  aid  organisations  and  other  users in the  maritime,  land and
aeronautical  sectors.  The valuation basis is quoted.  Since December 31, 2005,
SVG Capital's entire holding in Inmarsat has been sold.


15. Intelsat (Bermuda)
Company (GBP000's)
Cost                        436
Value                       19,694
% of net assets             2.2%
Date of Acquisition         January 2005
Intelsat  is a  leading  provider  of fixed  satellite  communications  services
worldwide,  supplying video,  data and voice  connectivity in over 200 countries
and territories. The valuation basis is earnings.


16. debitel (Germany)
Company (GBP000's)
Cost                        361
Value                       19,209
% of net assets             2.1%
Date of Acquisition         June 2004
debitel is Europe's  largest mobile service  provider,  offering a wide range of
telecommunications  products (mobile,  fixed line and internet).  The company is
headquartered in Germany and has over 10.8 million  customers and operates via a
network of 8,000 retail  partners and 213 of its own shops.  The valuation basis
is earnings.


                                      24




17. Cortefiel (Spain)
Company (GBP000's)
Cost                        16,803
Value                       16,803
% of net assets             1.9%
Date of Acquisition         September 2005
Cortefiel is the number two specialist  apparel retailer in Spain. It operates a
multi-format  network  with  three  main  fascias:  Cortefiel,  with 222  stores
primarily in the Iberian market offering casual wear for 30+; Springfield,  with
329 stores and 113 franchises  targeting the 18-30s and Women's Secret,  selling
underwear  through  169  stores  and 70  franchises.  Headquartered  in  Madrid,
Cortefiel  employs  around 10,000  people.  The valuation  basis is cost in fund
currency.


18. Jet Aviation (Switzerland)
Company (GBP000's)
Cost                        16,668
Value                       16,668
% of net assets             1.8%
Date of Acquisition         October 2005
Jet  Aviation  was  founded in 1967 and is a leading  global  business  aviation
service  company  employing more than 3,500  personnel in over 60 facilities and
stations around the world.  The company  provides  maintenance,  completions and
engineering  services,  fixed base operations and airline  handling,  along with
aircraft  sales,  charter and  management  on a global basis.  In addition,  Jet
Aviation operates an aircraft management and charter fleet of more than 160 jets
in Europe, Asia, the Middle East and the US. The valuation basis is cost in fund
currency.


19. Vendex (Benelux)
Company (GBP000's)
Cost                        9,793
Value                       16,609
% of net assets             1.8%
Date of Acquisition         September 2004
Vendex is the  largest  non-food  retailer in the  Benelux  with market  leading
positions  in the  department  store,  DIY,  apparel  and  consumer  electronics
sectors.  The company  trades from 15 store  fascias and around  1,800  outlets,
employing  43,000  people.  Vendex has a diversified  portfolio of strong brands
with  most  of  the  company's  retail  formats  being  household  names  in the
Netherlands and Belgium. The valuation basis is earnings.


20. Grand Navi Veloci (GNV) (Italy)
Company (GBP000's)
Cost                        12,713
Value                       14,113
% of net assets             1.6%
Date of Acquisition         October 2004
GNV is a leading European ferry company,  with a fleet of eight ships. The first
of its eight ships was  launched in 1993,  while its two largest and most recent
ships, Superba and Suprema,  were launched in 2002 and 2003. The valuation basis
is earnings.

                                        25




For a  description  of the analyses used to determine the value of the Company's
investments, see "Valuation Policies," below.

Investment Restrictions and Diversification Obligations

The  Directors  intend to  continue to manage the affairs of the Company so that
the  Company  will  satisfy the current  conditions  for  approval by the Inland
Revenue as an  investment  trust  under  Section  842.  One of these  conditions
restricts  the  investments  that a company  seeking such  approval can make. In
order to  satisfy  this  condition,  the  Company  will not  acquire  shares  or
securities  in any one company if such  shares or  securities  (taken  together)
would represent more than 15% of the Company's  investments by value at the time
of  acquisition.  For this  purpose,  unit  trusts  will  normally be treated as
companies and units therein as shares of such companies.  There are also special
rules under which all of the Company's holdings in subsidiary companies in which
it owns 51% or more (as defined for purposes of Section 842) will be  aggregated
and  treated as one holding in a single  company  for  purposes of the 15% test.
Further,  if the  Company's  interest in a company  increases  due to additional
investment in the same company (including further investment in the same company
through different funds or  co-investment),  the entire interest will be treated
as having been acquired at the time of the increased investment for the purposes
of satisfying the 15% test.

In addition,  the Listing Rules independently  require that the Company maintain
an adequately diverse spread of investments by investing no more than 20% of its
total  assets by value at the time of  acquisition  in any  Investee  Company or
investee group.  For the purposes of calculating the above  percentage  interest
for the Listing Rules, the Company's interest in an underlying  Investee Company
of  the  Funds  is  calculated,  where  applicable,  by  aggregating  all of the
Company's  interests in investments in such Investee  Company or investee group,
irrespective  of the Funds  through  which the Company holds its interest in the
Investee Company.  If the Company's  interest in an underlying  Investee Company
increases  due to further  investment  in that  Investee  Company,  the existing
holding must be aggregated  with the proposed new  investment for the purpose of
calculating this percentage interest.

In order to ensure that the Company  satisfies  both the 15% and 20%  investment
limitations  described  above,  the general  partner or manager of the Fund will
notify the Company in advance of any proposed  investment in excess of specified
thresholds so that the Company can assess the effect of the  investment  and, if
necessary,  take  appropriate  action in order to avoid violating either of such
restrictions.  The Company  will only make new  investments  in future  funds if
either (i) the Directors  are satisfied  that the  investment  restrictions  set
forth above cannot be breached or (ii)  appropriate  opt-out  mechanisms  can be
obtained with the relevant Fund that will enable the Company,  without  penalty,
to limit or  eliminate  its  investment  in an Investee  Company if necessary to
permit the Company to ensure its own compliance with the above restrictions.  In
making other investments,  the Directors intend to ensure, where necessary, that
similar opt-out  mechanisms are available to the Company and that the investment
restrictions set forth above can be satisfied.


                                        26



Borrowing Facility

The Directors  expect the Company to meet its commitments to pay future Calls in
respect of its existing  holdings in immature  Funds from (i) the existing  cash
resources of the Company, (ii) the facilities available under the EUR600,000,000
Revolving Credit Facility  Agreement (the "Facility  Agreement") dated March 10,
2006 between the  Company,  The Governor and Company of The Bank of Scotland and
The Royal Bank of Scotland plc,  (iii)  subject to completion of  documentation,
the proceeds of the $170,000,000 7.10% Fixed Rate Series A Senior Notes due July
18, 2013, the EUR20,000,000  5.57% Fixed Rate Series B Senior Notes due July 18,
2013 and the GBP7,000,000  Floating Rate Series C Senior Notes due July 18, 2013
(together,  the "Notes"),  and (iv) from the proceeds of distributions  from its
holdings in the Funds.  These  distributions  are expected to be principally the
net proceeds of  realizations  of investments  held by the Funds.  The timing of
future realizations and the dates of future Calls are necessarily uncertain. The
Directors  are able to draw on the  Facility  Agreement to enable the Company to
meet its commitment to pay future Calls.  In addition,  the Company may use this
borrowing  facility to make new investments or for general  corporate  purposes.
See "Item 5.  Operating  and  Financial  Review and  Prospects -  Liquidity  and
Capital Resources," below, for additional  information  relating to the Facility
Agreement.

Valuation Policies

         General Valuation Policies.

In valuing its investments,  the Company has complied and intends to continue to
comply  with the  International  Private  Equity and Venture  Capital  Valuation
Guidelines and International Financial Reporting Standards . In particular,  the
Directors  will  consider  whether a fixed  asset  investment  falls  within the
definition of a subsidiary  undertaking or associated undertaking (as defined in
the  Companies  Act) and apply the relevant  provisions of the Companies Act and
accounting standards.  Accordingly,  investments in limited partnerships or unit
trusts will not usually be consolidated with the Company's financial statements,
because  control  of the  affairs  of these  entities  typically  rests with the
general partners or trustees.  In addition,  where the Company does not exercise
significant  influence over the operating and financial  policy of a fixed asset
investment  due to the  nature  of  that  investment  (for  example,  a  limited
partnership  interest or unit in a trust), the Directors believe that the equity
method of accounting does not give a true and fair value.

The  Company's  investments  in the various Funds are valued by the Directors at
the balance  sheet date by valuing the  underlying  investments  comprising  the
portfolios of the Funds in accordance with the valuation policies set out below,
as adjusted,  where appropriate,  for other assets and liabilities of the Funds.
The  valuation  policies of the Company are  consistent  with the  International
Private Equity and Venture Capital Valuation Guidelines developed by the British
Venture  Capital  Association,  the European  Private  Equity & Venture  Capital
Association  and  the  Association   Francaise  des  Investisseurs  en  Capital,
effective from January 1, 2005, and in accordance with  International  Financial
Reporting Standards.



                                        27



         Valuation of the Portfolio at December 31, 2005.

The  valuations  of the  Company's  holdings  were  based  on the  value  of the
underlying assets of the Funds as of December 31, 2005,  determined as described
above and adjusted  where  appropriate  for other assets and  liabilities of the
Funds.

Description of the Funds

Of the 18 Funds,  16 are for  investment  primarily  within a single  country or
region,  and 2 are  international  Funds  focusing  on  investment  in the  life
sciences sector.  The geographical  spread of the Funds and their advisers as of
December 31, 2005 are summarized in the table below:


<TABLE>
<CAPTION>


<S>                                 <C>              <C>               <C>              <C>

                          Number of Funds   Total Value of     Total Uncalled     Location of Advisers
Region                                            Funds at        Commitments
                                             (GBP Millions)      (GBP Millions)





Europe                                  9            519.9              268.0     France, Germany, Italy, Spain, Sweden,
                                                                                  United Kingdom and United States


Asia                                    5             86.0               31.0     Hong Kong, India, Japan, Singapore


North America /                         4             68.2               29.8     Canada, United States, United Kingdom
International (Life
Sciences)


                                       18            674.1              328.8

</TABLE>


The  value  of  Funds  and  uncalled  commitments  shown  above  is based on the
Company's  exposure to those  private  equity  funds at December  31,  2005.  In
addition,  the Company also had an uncalled commitment of GBP35.3 million to SVG
Diamond Holdings Limited.

Following the year-end the Company made  commitments  of EUR72.5  million to SVG
Diamond  Holdings II Limited,  EUR5 million to Schroder  Private  Equity Fund of
Funds III and $50 million to SV Life Sciences Fund IV. In addition,  the Company
will also be committing up to EUR2.8 billion to Permira IV.

Operation of Funds

The  following  information  relates to the  structure,  operations,  investment
policies and restrictions, and management of the Funds.

The  Funds  do not  seek to  take  day-to-day  management  control  of  Investee
Companies. However, in exceptional circumstances, Funds, through the exercise of
shareholder  rights,  may take management  control for a short period of time to
facilitate a reorganization  or financial  restructuring of the investment.  The
Funds  work  closely  with the  Investee  Companies  throughout  the life of the
investment to assist it in achieving its full  potential and to seek to maximize
returns for the Funds.

Some Funds consist of a single investment vehicle and others are structured as a
number of investment vehicles,  usually limited partnerships and/or unauthorized
unit  trusts.  The general  partner of a limited  partnership  in a Fund and the
trustee  of a unit  trust are  responsible  for the  operation,  management  and
administration  of the investment  vehicles  comprising a Fund. They must act in
accordance with common investment objectives and policies and are subject to the
restrictions set out in the documents establishing the Fund.


                                        28


The  terms  and  conditions  of the  individual  Funds  differ,  reflecting  the
investment  focus of the Fund, the state of development of the market  concerned
at the time of  formation  of the Fund and the  investment  requirements  of the
investors in the Fund.

Advisory or  consultancy  services to the Funds are provided by entities  wholly
owned by their individual principals. Affiliates of Schroders plc act as general
partner  or  manager to Funds  launched  prior to  January  1,  2000.  For Funds
launched after January 1, 2000,  entities connected with the Fund's advisers act
as general partner or manager.

The general partner or manager is responsible  for the day-to-day  management of
the Fund and makes all the investment decisions. The general partner or manager,
in turn,  appoints and is advised by a local  adviser or  consultant to the Fund
with experience in the relevant  country,  region or industry.  The advisers and
consultants  have no  authority  to conduct  negotiations  resulting  in legally
binding obligations for, or in any way to bind, the Funds.

The custody and security of the assets of the Funds is maintained by the general
partners of  partnerships  or the  managers or  trustees of unit  trusts.  These
functions are performed either directly by entities  affiliated with the general
partner,  manager  or  trustee  or by  delegation  to  professional  independent
investment  managers.  Where  these  controls  are  delegated,  the  responsible
affiliate  liaises closely with the independent  managers and receives  frequent
reports. Internal control procedures are subject to an
annual external audit.

Management contracts are typically terminable on 6 or 12 months' prior notice by
either party.

         Co-Investment by Executives

When a new Fund is offered,  executives of the general partner and/or the Fund's
advisers  (which  included  executives  of the  Company in the past) are usually
offered the  opportunity  to co-invest  alongside the Fund (via a  Fund-specific
co-investment  scheme) on the same or substantially  the same terms on which the
Fund invests. Co-investment schemes have been offered for all Funds with a final
closing  after 1992,  except  Permira  Europe III, SV Life Sciences Fund III and
Japan Fund IV.

In addition,  Schroder Ventures  Investments  Limited was established in 1997 to
provide  Schroder  Group and senior  executives of Schroder  Ventures or Permira
(each of which  included  executives  of the Company)  with the  opportunity  to
co-invest  alongside  new Funds on the same or  substantially  the same terms on
which those Funds invest.

         Advisory Committees

Each  Fund  has  an  advisory   committee   which  consists  of  a  majority  of
representatives   of  investors  in  the  Fund  or  other  individuals  who  are
independent  of the  Fund's  advisers  and  the  Schroder  Group.  The  advisory
committee is not involved in the management of the Fund, but may be consulted by
the general  partner or the Fund's  manager for advice on matters such as issues
of policy,  strategy and potential  conflicts of interest,  although neither the
general partner nor the Fund's manager is required to follow the recommendations
of the advisory committee.  The advisory committee is not responsible for making
investment  decisions.  In some of the Funds,  advisory  committee  approval  is
required for certain actions of the general partner or manager.

                                       29

         Investment Policies

Despite the  increasing  globalization  of industry  and  commerce,  significant
national   differences  in  business  methods  and  business   cultures  remain,
particularly in Europe. A key element of the Funds' investment philosophy is the
use of local country advisers, many of whom are industry specialists.

While each of the  individual  Funds  pursues the same  investment  objective of
seeking  above  average  returns  for  investors,  each of the Funds has its own
investment  policies to achieve  this end.  These  policies are agreed to by the
investors at the time of the formation of the Fund and cannot be changed without
the  consent of the  investors.  To the extent  that a Fund  consists of several
entities, the consent of each component entity is required before the investment
policies can be changed. In some cases,  however,  the required consent is based
on the relative  percentages  of capital  committed by the investors  across the
whole Fund. Typically,  a Fund that is a limited partnership can only change its
investment policies with the consent of investors holding at least 60% to 75% of
its  committed  capital  (and in certain  cases with the  consent of the general
partner),  and a Fund  that is a unit  trust  can  only  change  its  investment
policies  with the  approval of 75% of the  unitholders  present and voting at a
meeting for which a special quorum will apply. The terms of certain unit trusts,
however,  require  the  consent of  holders of at least 75% in nominal  value of
units in addition  to, or instead of, the approval  described  in the  preceding
sentence.

A key feature of the investment policies of each Fund is to achieve diversity of
risk.  Consequently,  there are restrictions in the investment  policies of each
Fund which limit the amount that can be invested in a single  entity.  In all of
the country- or region-specific Funds, a balanced portfolio in terms of industry
sectors is sought,  with  investment  focusing on those  sectors  where there is
particular expertise within the investment adviser. SV Life Sciences Fund II and
SV Life Sciences Fund III, which are industry specific,  are diversified between
the United States and Europe.

Before making an investment, the general partner or investment manager of a Fund
reviews the exit options which have been  discussed  with the  management of the
potential Investee Company.  The investment  consultant  thereafter monitors the
progress  of the  Investee  Company and general  economic  conditions  and works
actively with management of the company to review, refine and implement the exit
plan.  Investments  by the Funds in Investee  Companies are  typically  realized
after three to seven years from the date of the original investment.  Since most
transactions  will  not  be  structured  to  provide  for a  liquidation  of the
investment  before  this  time,  it is  possible  that a Fund  will not  realize
significant  cash returns from the  disposition of its  investments  for several
years after the Fund's inception.

         Calls

Typically,  an investor in a Fund commits to subscribe for a specified amount of
capital  to the Fund in  return  for  units in a unit  trust or  interests  in a
limited  partnership  constituting  the relevant  Fund.  The adviser to the Fund
reviews  investment  opportunities  and recommends  suitable  investments to the
Fund's manager or general partner in accordance with the investment  policies of
the Fund. If the manager or general partner decides that the Fund should make an
investment,  further Calls are made to the investors in that Fund for payment of
part or all of the  outstanding  committed  capital of the Fund.  The  committed
capital of a Fund is typically  called within five years of the final closing of
the Fund.  The  failure  by an  investor  in a Fund to pay a Call when due could
result in that  investor  being  obliged to sell its existing  interests in that
Fund at a  discount  of up to 25% of  their  value  and/or  in  that  investor's
existing  interests  in that Fund being  diluted by up to 25%.  In the case of a
unit  trust,  it could  result in the units with  respect  to which the  default
occurred being forfeited.  The investor could also lose the right to participate
in further investments made by the Fund.

                                       30

         Distributions

When an investment  is realized or income from an  investment  is received,  the
capital  realized or income  received  (after  payment of  expenses  and special
allocation of profits  interest to individuals  connected with a particular Fund
in  accordance  with  the  terms  of the  Fund's  organizational  documents,  as
described  in more  detail  in "-  Special  Allocation  of  Profits,"  below) is
generally  distributed  to the investors in proportion to their  holdings in the
Fund. In certain limited  circumstances,  which may vary between Funds,  capital
realizations  can  be  reinvested  by  the  Fund.  Investors  generally  receive
distributions (principally the proceeds of capital realizations) both before and
after the Fund  becomes  fully  called.  The Fund's term may be  extended  for a
specified  period to enable an orderly  disposition  of the Fund's  investments.
Alternatively,  the Fund's investments may be distributed as a dividend in kind.
Extension of a Fund's term usually requires the consent of investors holding, in
total,  at least 60% to 75% of the interests in that Fund. If, toward the end of
any  such  extension,  there  are  still  unrealized  investments  in the  Fund,
investors may agree either to a further  extension or to a distribution  in kind
of the Fund's investments.

         Restrictions on Investments

Each Fund has investment  restrictions  to ensure that the Fund is run according
to pre-determined  investment  policies.  Certain levels of investor consent are
required to change any of the  restrictions,  including  100%  approval from all
investors  (including the Company in respect of its holdings) for a change which
would require more  investment  in the Fund or which might affect  significantly
the interests of the investors in that Fund. These  restrictions are designed to
ensure  that  each  Fund  continues  to be run  solely  for the  benefit  of all
investors  equally.  Because the Company will not control any Fund, it will only
be able to alter the  investment  policies of a particular  Fund in which it has
invested by acting in conjunction with other investors.

In order to achieve  diversity of risk,  each Fund is typically  prohibited from
investing more than a specified  percentage of its committed capital in a single
Investee Company. In addition, immature Funds (which may have further investment
capacity because Calls will not have been made for total committed  capital) are
usually  prohibited  from investing in property and other buy-out or development
capital funds.

Remuneration

The  entitlement to remuneration  and the entities and  individuals  entitled to
receive  remuneration  is agreed upon by all  investors at the formation of each
Fund and is embodied in its organizational documents. The remuneration takes the
form of management fees,  carried  interest and, in some cases,  fees payable by
Investee Companies.

         Management Fees

Management  fees are generally paid quarterly in advance to the general  partner
or  manager  of  the  particular  Fund  on the  basis  set  out  in  the  Fund's
organizational  documents.  In some  Funds,  there is a priority  profit  charge
instead of a management fee but, for ease of reference,  both are referred to as
management fees in this annual report.

                                       31

         Special Allocation of Profits

Individuals  connected  with the  Funds  are  entitled  to an  allocation,  as a
"carried  interest," of an aggregate of 20% of the profits arising in each Fund.
In some Funds,  performance  hurdles must be met before the carried  interest is
payable. The performance hurdles are established upon the formation of each Fund
and are based on a range of criteria. These usually take the form of a specified
internal rate of return for investors,  which is generally in the range of 5% to
12% for any one Fund.

Profit  for the  purpose  of  determining  the  carried  interest  is  generally
calculated using one of the following methods:

(i)     following the return to investors of all capital they have subscribed
        and, if applicable, the achievement of the appropriate performance
        hurdle, the carried interest is calculated as 20% of all subsequent
        distributions; or

(ii)    upon the realization of an investment in an Investee Company, the
        internal rate of return based on either the disposition of that
        investment or on all investments realized to date will be calculated.
        An allocation of carried interest is calculated as 20% of the excess of
        the investment proceeds over the cost of investment and, if applicable,
        the achievement of the appropriate performance hurdle.

In certain of the Funds which have  performance  hurdles,  the carried  interest
holders have a "catch-up"  right whereby they receive all profit once the hurdle
has been  achieved,  until they have received 20% of the profit  distributed  to
investors.  All  distributions  from the Funds are made after  allocation of any
carried  interest (where  appropriate) in accordance with the terms of the Fund.
Distributions  to the Company,  in respect of its holdings,  will be on the same
basis as distributions to other investors.

         Fees Payable by Investee Companies

The  advisers or  consultants  to the Funds may be entitled to  directors'  fees
and/or   transaction  fees  from  certain  Investee   Companies  of  the  Funds.
Transaction  fees are negotiated and the amount of any directors'  fees reflects
those payable to other directors on the relevant boards of the relevant Investee
Company.

Foreign Exchange

The Funds are  denominated  in a number of  currencies.  The Directors  have not
caused the Company to enter into any  foreign  exchange  contracts  to hedge the
Company's  expected  liabilities or receipts in these currencies.  However,  the
Directors, in their discretion, may cause the Company to enter into such foreign
exchange  contracts in the future.  The Company may invest in specified types of
swap agreements, forward contracts, and foreign exchange contracts.

                                       32

Material Regulations

         Distributions

Pursuant  to  section  263 of the  Companies  Act,  the  Company  may not make a
distribution  except  out of  profits  available  for that  purpose.  For  these
purposes a  "distribution"  includes  the  payment of a dividend,  and  "profits
available for distribution" are the Company's accumulated,  realized profits (so
far as not  previously  utilized by  distribution  or  capitalization)  less its
accumulated  realized  losses  (to the extent not  previously  written  off in a
reduction  or  reorganization  of capital duly made).  In addition,  because the
Company has "investment company" status within the meaning of Section 266 of the
Companies Act, it may also,  subject to and in accordance with the provisions of
Section 265 of the  Companies  Act, make a  distribution  at any time out of its
accumulated,  realized  revenue profits (so far as not previously  utilized by a
distribution or  capitalization),  less its accumulated  revenue losses (whether
realized or unrealized),  so far as not previously written off in a reduction or
reorganization  of capital duly made, if at the time the amount of its assets is
at least equal to one and one-half times the aggregate of its  liabilities,  and
if, and to the extent that, the distribution does not reduce that amount to less
than one and  one-half  times  that  aggregate.  This  section  provides a short
summary  of  the   provisions   contained  in  the  Companies  Act  relating  to
distributions  by  companies  that  have  "investment  company"  status  for the
purposes thereof;  further detailed provisions are set out in Section 265 of the
Companies Act.

         Qualification as an Investment Trust

In order to qualify as an investment  trust for U.K. tax  purposes,  the Company
must comply with certain  specific  requirements  relating to its  structure and
operation.  See  "Item  10.  Additional  Information  -  Taxation"  for  a  full
discussion of material tax regulations.

         Listing Rules

The Listing Rules include certain requirements relating to investment trusts and
the  Company's  ongoing  status as a listed  company.  In order to maintain  the
listing of its  securities  on the  Official  List,  the Company must be able to
demonstrate  that  the  Directors  will  act  independently  of  any  investment
managers.  In  addition,  a majority of the  Directors  cannot be  directors  or
employees of or  professional  advisers to the investment  managers or any other
company  in the same group as the  investment  managers  or to other  investment
companies that are managed by the investment  managers or any  other company  in
the same group as the investment  manager.  The Listing Rules contain  extensive
provisions dealing with, among other matters, the announcement of information to
the UKLA and the LSE and to  shareholders of the Company,  transactions  entered
into by the Company and Directors' responsibilities.

                                       33

C.       Organizational Structure

A detailed  description  of the  subsidiaries  of the Company as at December 31,
2005 is set out below:

<TABLE>
<CAPTION>
                                          Country of                                                                    Profit after
                                       registration,                                                   Capital and       tax for the
                                       incorporation             Number of class of                    reserves at        year ended
                                                 and       shares/units held by the         Group     December 31,      December 31,
                                           operation     Group at December 31, 2005     holding %             2005              2005
                                                                                                           GBP'000           GBP'000
<S>                                             <C>                            <C>           <C>              <C>                <C>
Company and business
The Platinum Trust (unit trust)             Guernsey               23,112,'A' units            99           55,243            13,803
- investment                                                          900 'B' units            90
SVG Advisers Limited                              UK      4,250,000 Ordinary Shares           100            2,454           (1,509)
- advisory and administration
services
SVG North America Inc                             US            3,000 Common Shares           100              112                12
- broker/dealer
SVG Advisers Inc.                                 US              375 Common Shares           100              200              (40)
- investment advisor
SVG Investment Managers Limited                   UK        250,000 Ordinary Shares           100              375                30
- investment manager
</TABLE>

Further details relating to the Company's  subsidiaries are included in "Item 4.
Information on the Company - Enlargement of the Company's Operations."

Relationship between the Funds and the Company

The Company is an independent fund of funds that has holdings in 18 Funds.

The Directors manage the Company's  investment  portfolio,  with advice from the
Company's  subsidiary,  SVGA,  and from its investment  committee.  See "Item 6.
Directors, Senior Management and Employees - Directors and Senior Management."

In addition,  the investment  managers,  advisers and consultants of each of the
Funds manage and advise upon the investment strategy and portfolio of that Fund.
The Company is entitled to receive  information  with respect to its holdings on
the same basis as other investors in the Funds.

D.       Property, Plants and Equipment

SVG  Capital  plc  does  not own or  lease  any  real  property.  The  Company's
registered office is maintained at the offices of Schroder Investment Management
Limited,  the company  secretary and a wholly owned subsidiary of Schroders plc.
The Company's  principal  place of business and head office is maintained at 111
Strand, London WC2R 0AG, England.  SVGA is the lessee of this property,  and the
Company guarantees SVGA's payment obligations under the lease.

Item 4A. UNRESOLVED STAFF COMMENTS

Not applicable.

                                       34

Item 5.           OPERATING AND FINANCIAL REVIEW AND PROSPECTS


A.       Operating Results

Overview

As required by the  Companies  Act 1985 and Article 4 of the European  Union IAS
Regulation,  the  consolidated  financial  statements  of the  Group  have  been
prepared,  for the  first  time,  in  accordance  with  International  Financial
Reporting Standards as adopted by the European Union.

To  facilitate  comparison,  a  balance  sheet  as  at  1  January  2005  and  a
reconciliation  of shareholders'  funds as at 31 December 2004 are shown in note
34 to the financial statements. For a further discussion of the Group's adoption
of IFRS, see notes 1 and 2 to the financial statements.

The Group's 2004  financial  statements  were prepared in  accordance  with then
current UK  generally  accepted  accounting  principles  ("UK GAAP" or "previous
GAAP")  comprising  standards  issued  by the  UK  Accounting  Standards  Board,
pronouncements  of  the  Urgent  Issues  Task  Force,   relevant  Statements  of
Recommended Accounting Practice and provisions of the Companies Act 1985.

The  Group  also  presents   information  under  generally  accepted  accounting
principles  in the US ("US  GAAP").  Please  refer  to note 36 to the  financial
statements.

As  discussed  above,  the results for the years to December  31, 2004 and 2005,
have been prepared in accordance  with IFRS,  which SVG Capital  adopted for the
first time during 2005.  The results for earlier years have not been restated on
a comparable basis and are therefore not discussed in this section.

Over the two years to December 31, 2005,  SVG Capital's  fully diluted net asset
value per share, calculated in accordance with IFRS, has increased by 43.6% from
465.0p to 667.8p.

Key  contributing  factors to this increase  have been  improved  earnings and a
focus on cash flow generation and debt repayment within the underlying portfolio
companies,  which have had a positive impact on portfolio company valuations. In
addition,  SVG Capital has benefited from several large realizations  during the
two years in the period ended December 31, 2005.

SUMMARY  RESULTS FOR THE YEAR ENDED DECEMBER 31, 2005 COMPARED TO THE YEAR ENDED
DECEMBER 31, 2004

The Company's  consolidated  net assets per share increased by 19.6% from 558.2p
at  December  31, 2004 to 667.8p at December  31, 2005  (shareholders'  funds of
GBP902.4  million).  This compares  with a 20.0%  increase in  consolidated  net
assets per share  (from  465.0p to 558.2p)  during the year ended  December  31,
2004.

Overall,  the operating  environment for the portfolio companies improved during
the year ended  December  31, 2005,  with many  companies  successfully  growing
earnings,  and there  were  several  material  write-ups  during  the  year.  In
addition,  the  portfolio  benefited  from rising  equity  markets,  which had a
significant impact on the valuation of the quoted portfolio.

                                       35

         Company's Business

The  Company  carries on business as an  investment  trust and is an  investment
company within the meaning of section 266 of the Companies Act 1985. In order to
obtain exemption from capital gains tax, the Company has conducted itself with a
view to being an approved  investment trust for the purposes of Section 842. The
last  accounting  period for which the Company  has been  treated as approved by
H.M. Revenue and Customs as meeting the qualifying criteria for investment trust
status is the year ended  December  31, 2004 and the  Company  has  subsequently
conducted  its  affairs  so as to  enable it to  continue  to  qualify  for such
approval.

         Profitability

Total consolidated  profit for the year attributable to equity  shareholders was
GBP156.6 million (2004: GBP128.8 million). Consolidated profits are dominated by
returns on the  investment  portfolio,  as would be expected given the nature of
the Company's activities.

As an investment trust and an investment company, it is important to distinguish
between revenue profits and capital profits,  and it is anticipated that returns
for shareholders  will derive  primarily from capital profits.  The consolidated
revenue profit  attributable to equity  shareholders for the year ended December
31, 2005 was GBP14.3 million (2004: loss of GBP5.1 million). The increase in net
revenue was largely because  returns on the investment  portfolio in the form of
income  rather than  capital  increased  from GBP1.1  million in 2004 to GBP17.7
million  in  2005.  The  consolidated  capital  profit  attributable  to  equity
shareholders for the year was GBP142.2 million (2004: GBP133.9 million).

         Dividend

The Company is prohibited by its Articles of Association  from  distributing  as
dividends any capital  surpluses that arise from the realisation of investments.
Accordingly, any dividends paid by the Company will be funded out of its revenue
account.

The  Company's  investment  objective  is  one  of  capital  growth  and  it  is
anticipated  that returns for  shareholders  will derive primarily from capital.
However,  following  the  Annual  General  Meeting  in April  2006 at which  the
accounts for the year ended December 31, 2005 were laid, the Directors  declared
an interim  dividend  of 3.1p per share out of  available  profits  for the year
ended  December  31, 2005 in order to meet the  requirements  to ensure that the
Company continues to qualify as an Investment Trust.

         Purchases of Shares for Cancellation

The Directors  have not used the authority  given to them at the Annual  General
Meeting of the Company  held on April 25, 2005 to purchase  any of the  ordinary
shares of the Company.

The total number of shares in issue on March 20, 2006 was 128,545,588 shares. To
provide maximum flexibility,  the Directors renewed the authority to purchase up
to 14.99% of the share capital in issue on March 20, 2006 at the Annual  General
Meeting on April 24, 2006.

This  authority  will lapse at the  conclusion of the Company's  Annual  General
Meeting in 2007, unless renewed earlier.

                                       36

As at June 30, 2006,  the Company held no shares in treasury.  Accordingly,  the
percentage  figures in this and other  sections of the report are all calculated
exclusive of treasury shares.

The total number of options to subscribe for ordinary shares outstanding at June
30,  2006 was  8,555,060,  which  represented  approximately  6.2% of the issued
ordinary share capital at that date.

         Issue of New Shares

At the Annual  General  Meeting of the Company on April 25, 2005,  the Directors
were given powers to allot relevant securities and to allot equity securities as
if the pre-emption provisions in section 89(1) of the Companies Act 1985 did not
apply. The Directors  renewed these powers at the Annual General Meeting held on
April 24, 2006 pursuant to Resolutions 9 and 10, as detailed
below.

Resolution 9 gave the Directors the power to allot relevant  securities up to an
aggregate nominal amount of (a) GBP1,285,455  (equivalent to 1% of the Company's
issued  ordinary  share  capital as at March 20,  2006) in  connection  with the
Company's  Executive  Share Option Plan,  and (b)  GBP42,848,529  (equivalent to
one-third of the Company's issued ordinary share capital as at March 20, 2006).

Resolution 10 gave the Directors the power to allot equity  securities as if the
pre-emption  provisions in section 89(1) of the Companies Act 1985 did not apply
(a) up to an aggregate  nominal amount of GBP1,285,455  (equivalent to 1% of the
Company's issued ordinary share capital as at March 20, 2006) in connection with
the  Company's  Executive  Share Option Plan;  (b) pursuant to rights issues and
other  pre-emptive  issues;  and  (c)  up  to an  aggregate  nominal  amount  of
GBP12,854,558 (equivalent to 10% of the Company's
issued ordinary share capital as at March 20, 2006).

The  Directors  were  granted  the  authority  referred to in  paragraph  (c) of
Resolution  10 in  order  to  provide  flexibility  in  raising  monies  to take
advantage  of  opportunities  arising  through the launch of new funds,  and for
general  corporate  purposes.  It is the  intention of the Board that any equity
securities  allotted  under this  authority  will be  allotted  at an  effective
premium  to the  estimated  net asset  value per  ordinary  share at the date of
pricing of the issue of the relevant equity securities.

The Directors  intend to exercise the authority  referred to in paragraph (b) of
Resolution 9 generally to issue relevant  securities whenever they believe it is
advantageous to shareholders to do so.

The Directors  intend to exercise the authority  referred to in paragraph (a) of
Resolution 9 and paragraph (a) of Resolution 10 to grant options under part D of
the Company's Executive Share Option Plan to individuals seconded to the Company
or its subsidiaries (which, for this purpose,  include joint ventures).  Options
granted pursuant to this authority will nevertheless count towards limits on the
number of new  ordinary  shares that may be issued  pursuant to the  exercise of
options.

The authorities taken under Resolutions 9 and 10 will lapse at the conclusion of
the Company's Annual General Meeting in 2007, unless renewed earlier.

                                       37

         Foreign Currency Fluctuations

Information regarding the impact of foreign currency fluctuations on the Company
is contained in Note 33 of the accompanying financial statements.

                                       38

INFORMATION FOR THE YEAR ENDED DECEMBER 31, 2005

         Portfolio Overview

The  private  equity  portfolio  was very cash  generative  during the year.  In
particular,  both the debt and equity  capital  markets were  favourable,  and a
significant  percentage of distributions were the result of recapitalizations or
successful IPOs and subsequent sales of quoted holdings.

Over the  longer  period,  SVG  Capital's  growth  in net  assets  continues  to
outperform public markets.  SVG Capital reported a compound growth in net assets
per share of 8.7% p.a. over the last five years and 13.8% p.a.  since listing in
1996,  a  respective  out-performance  of 9.7% p.a.  and 9.4%  p.a.  of the FTSE
All-Share (capital only).

         Outlook

The portfolio of companies is well  diversified,  by vintage year,  industry and
geography,  with many companies successfully growing earnings and repaying debt,
through strong underlying cash flows.

SVG Capital has outperformed  public markets since its launch in 1996.  However,
manager selection is key, as the differential between top and median managers is
far more  pronounced  than in most other asset  classes.  SVG Capital is aligned
with one of Europes'  leading private equity firms,  Permira,  who have produced
top quartile returns for investors.

         CEO's Operating Review

SVG Advisers has continued to build on its strong start.  The business has grown
substantially  and, at December 31, 2005,  had over 40  employees,  advising six
private  equity fund of funds and three public equity funds.  Third-party  funds
under management and commitments totalled EUR2.8 billion at June 30, 2006.

In line with its principal  investment  objective,  SVG Capital will be making a
commitment of EUR2.8 billion to Permira IV, as outlined in "Item 5. B. Liquidity
and Capital Resources - Permira IV commitment".

         Private equity fund of funds

         New fund launches

         Schroder Private Equity Fund of Funds III (SPEFOF III)

Launched  in  September  2005,  SPEFOF III had a final  close in April 2006 with
total commitments of EUR422 million.  SVG Advisers is the investment  adviser to
SPEFOF  III.  Like its  predecessors,  the fund is  listed on the  Dublin  Stock
Exchange and has been structured to meet the requirements of both high-net-worth
individuals,  in  addition  to small and large  institutions.  The  Company  has
committed  EUR5  million to SPEFOF III, of which  EUR1.25  million was called in
April 2006.

         SVG Diamond II(1)

In February 2006, SVG Diamond II  successfully  raised EUR500 million  through a
Collateralised  Fund  Obligation  ('CFO') of private  equity  funds,  comprising
EUR325   million  of  investment   grade  bonds  and  preferred   equity  shares
representing commitments of EUR175 million as at closing. A similar structure to
its award-winning  predecessor,  SVG Diamond II is a CFO of private equity funds
incorporating drawable equity,  reinvestment and over-commitment strategies. The
CFO will be focused  predominantly  on buy-outs in Western Europe and the US and
will have an  over-commitment  facility of 140%  (allowing  a target  investment
capacity of EUR700  million).  SVG Capital has a long-term  commitment  of EUR60
million to the preferred equity shares and a total initial commitment of EUR72.5
million.


(1) SVG Diamond Holdings II Limited and SVG Diamond Private Equity II plc


                                       39

         Existing funds

All of the fund of funds advised by SVG Advisers have reported strong results in
2005.

         Schroder Private Equity Fund of Fund (SPEFOF)

The 2001 vintage  SPEFOF  completed its  investment  program during the year. In
total,  the fund has  commitments of EUR290 million to 25 funds and has reported
growth in net assets of 21.3% since launch (as at 30 September 2005).

         Schroder Private Equity Fund of Fund II (SPEFOF II)

SPEFOF II raised EUR285  million in 2003. As at 30 September  2005, the fund had
made  commitments  totalling  approximately  EUR299  million to 20 funds and had
reported growth in net assets of 9.9% since launch.

         P123

P123,  which launched in 2003 as a fund of Permira  pan-European  buy-out funds,
benefited from significant  distributions and several material  write-ups in its
portfolio  during 2005.  Since its  inception,  P123 has reported  growth in net
assets of 37.4%.  SVG Capital has a 38.6% holding in P123. It is included in the
Company's  core  portfolio  of 18 Funds  that form the basis for  achieving  its
primary investment objective.

         SVG Diamond(2)

SVG  Diamond,  is a EUR400  million CFO of private  equity  funds that closed in
September 2004 comprising EUR260 million of investment grade bonds and preferred
equity  shares  representing  commitments  of EUR140  million as at closing.  At
December 31, 2005,  SVG Diamond had an investment  portfolio  valued at EUR191.6
million, with EUR179.9 million of uncalled commitments.  On closing, SVG Capital
had a long-term commitment of EUR50 million to the preferred equity shares.

         Public equity

The SVG  Advisers  public  equity  team was  established  in 2002 and managed or
advised  combined  commitments,  funds and segregated  mandates of approximately
GBP307 million (EUR450 million) at the year end.

         New fund launches

         Strategic Equity Capital plc

Strategic  Equity Capital plc is an investment  trust listed on the London Stock
Exchange. Strategic Equity Capital plc listed in July 2005 having raised GBP70.4
million, which at the time represented the largest primary fund-raising for a UK
investment trust since the start of 2003. The investment  objective of Strategic
Equity  Capital plc is to achieve  absolute  returns over a medium-term  period,
principally  through  capital  growth,  by  primarily  investing  in  UK  public
companies  that the Manager  believes  are  undervalued  and could  benefit from
strategic,  operational  and management  initiatives.  The investment  appraisal
process used for Strategic Equity Capital plc involves private equity investment
techniques and a practice of constructive corporate engagement.  At December 31,
2005,  Strategic Equity Capital plc was approximately 40% invested with holdings
in 10 companies.  SVG Capital plc purchased 15 million  Strategic Equity Capital
plc shares at launch, equating to 21% of the issued share capital.


(2) SVG Diamond Holdings Limited and SVG Diamond Private Equity plc


                                       40

         Existing funds

The funds advised by the team have produced strong results.

         SVG UK Focus Fund

The SVG UK Focus Fund, a sub-fund of SVG Investment Funds (Dublin) plc, which is
an open-ended investment company,  finished the year with net assets of GBP190.5
million (up from GBP15.4 million at launch in 2003) and reported a growth in net
assets per share of 45% since launch. A new sub-fund, the SVG UK Alpha Fund, was
launched in 2006.

The SVG UK Alpha Fund aims to invest in  publicly  listed  equities  to maximise
absolute  returns.  The fund will invest in a maximum of 60  companies  that are
listed  on the UK stock  market.  The fund was  launched  in March  2006 and had
assets of GBP5.6 million at June 21, 2006.

SVG Capital plc invested  GBP7.6  million in the SVG UK Focus Fund at launch and
has invested a further GBP1 million in the SVG UK Alpha Fund.

         The Strategic Recovery Fund

The Strategic  Recovery Fund, had a final close in January 2004 with commitments
totalling GBP15 million,  including a GBP7.4 million co-investment commitment by
SVG Capital plc. At May 31, 2006,  the fund had generated a net IRR of 46% since
launch,  after  realizing  its final  investments.  On April 26, 2006,  the fund
distributed the proceeds from the disposal of its final portfolio investment and
is now in the process of being  wound-up.  Following on from the success of this
fund, SVG is launching a successor fund, The Strategic Recovery Fund II.

         Outlook

The team has been quick to react to new changes in the marketplace and has built
a reputation for innovation and we are seeing the benefits of sound  structuring
and good investment selection.

The  private  equity team  committed  over  EUR830  million to new  partnerships
including  approximately  EUR380  million of  secondaries  during the year ended
December  31, 2005,  which  compares to a total of EUR125  million  committed in
2004. This substantial growth in investment rate has been accomplished at a time
of increasing competition for quality primary funds and tightening of prices for
secondaries. The public equity team has almost doubled funds under management in
the year and the team has expanded.

We are  planning  to  launch a number of new funds  during  the  course of 2006,
including  several feeder  vehicles into Permira's next fund,  Permira IV. These
vehicles will seek to provide investors with an attractive  structured access to
Permira IV.

                                       41

         Portfolio Review

Overall,  the operating  environment for the portfolio companies improved during
the year, with many portfolio companies  successfully growing earnings,  despite
concerns regarding a softening of consumer spending and rising commodity and oil
prices.  Again,  a focus on cash  generation  and debt  repayment had a positive
impact on valuations  and a number of the  portfolio  companies  have  undergone
recapitalizations during the year.

The  portfolio was very cash  generative,  with  distributions  from the private
equity portfolio  reaching  GBP285.8  million(3) during the year, double that of
2004  and well  ahead  of  total  calls  paid of  GBP89.1  million(4).  The exit
environment improved.  In particular,  the capital markets were favourable and a
significant  percentage of distributions were the result of recapitalizations or
successful IPOs and subsequent sales of quoted holdings.

The improved  operating  environment and positive earnings growth led to several
material  write-ups during the year,  including New Look,  Intelsat and debitel,
all of which underwent recapitalizations in the first half and have been written
up on an earnings basis.

The majority of the portfolio (38%) at the year-end continues to be valued on an
earnings  basis.  Given the  strong  performance  of the quoted  portfolio,  the
flotation of Premiere and  Inmarsat  and the sale of Memec to Avnet,  Inc.,  the
portfolio's  weighting to quoted  companies at December 31, 2005 was  relatively
high (35%),  despite the partial  realisations of a number of holdings in quoted
companies.  The  remainder of the  portfolio is either valued on a cost (20%) or
third-party basis (7%). Since the year-end a number of quoted holdings have been
sold and one portfolio company has had a successful IPO (Marazzi).  Allowing for
these  movements,  the  percentage of the portfolio  valued on a quoted basis is
expected to decrease.

In total there were 125  companies in the  portfolio  at December  31, 2005,  of
which the 20 largest underlying  companies represent 74% of the portfolio(5) and
61% of net assets.  The  portfolio is focused on four key sectors:  consumer and
leisure;  computer/other  electronics/communications;  medical and  health;  and
other  services,  which  together  make up 95% of the  portfolio.  European  and
multinational  companies continue to dominate the portfolio,  with the remainder
invested in North American or Asian
companies.

Overall,  foreign exchange  movements had a positive impact of GBP4.9 million on
the portfolio's sterling valuation as sterling's  strengthening against the euro
was more than offset by its 11% weakening against the US$.

         Portfolio changes

There  were a number  of  material  write-ups  over the 12 months  with  several
companies  moving  from cost to an  earnings,  quoted or  third-party  valuation
basis.   In   particular,   New  Look,   Intelsat  and  debitel  all   underwent
recapitalizations  and have been  written-up at December  2005,  adding  GBP69.0
million (47.0p) to the value of the portfolio during the year.


(3) Including GBP17.7 million of income

(4) Excluding GBP16.8 million investment in Strategic Equity Capital plc and
    Strategic Recovery Fund

(5) Gross investment portfolio of GBP739.8 million


                                       42

         Uplifts in valuation:

<TABLE>
<CAPTION>
Company                           December 31, 2005              December 31, 2004       Proceeds in      Change in year
                                          Valuation                      Valuation              year *
                                            GBP'000                        GBP'000           GBP'000             GBP'000
<S>                                          <C>                             <C>              <C>                 <C>
New Look                                     26,908                          20,292           22,030              28,646
debitel                                      19,209                          20,387           21,648              20,470
Intelsat                                     19,694                         **8,520            8,666              19,840
</TABLE>

* Including P123
** Investment in Intelsat was made in January 2005


There  were  several  other  smaller  write-ups,  predominantly  as a result  of
companies  moving from a cost to an earnings or third-party  basis for the first
time. The three most notable were Vendex, Marazzi and Ferretti.

Vendex is the  largest  non-food  retailer in the  Benelux  with market  leading
positions  in the  department  store,  DIY,  apparel  and  consumer  electronics
sectors. The company completed a sale and leaseback of its property portfolio in
the fourth quarter of 2005, returning approximately 65% of cost to investors. At
December  31,  2005,  SVG  Capital's  holding  in the  company  was valued on an
earnings basis at GBP16.6 million which, together with the value of the sale and
leaseback of its property  portfolio,  represents a GBP9.0 million (6.2p) uplift
to its December 2004 valuation.

Marazzi,  the world leader in design,  manufacturing  and sales of ceramic tiles
successfully  listed on the Italian Stock Exchange in February 2006, with shares
being  placed at EUR10.25  each.  Funds  advised by Permira  sold  approximately
two-thirds of their  shareholding  in the company at the flotation and the value
of this partial  realisation for SVG Capital was approximately  GBP14.8 million.
The December  2005  third-party  valuation  of GBP23.8  million  represents  the
approximate  cash proceeds from the partial  realization  and a discounted  post
flotation valuation of the remaining  shares(6).  This represents an approximate
uplift of GBP8.7 million (6.0p per share) to the December 2004 valuation.

Ferretti,  the world's  leading  producer of luxury  motor  yachts,  completed a
recapitalization  during  the  year,  returning  approximately  45% of  cost  to
investors. The value of this recapitalization for SVG Capital is GBP17.0 million
which,  together  with the  December  2005  valuation  of the company of GBP31.6
million,  represents  a  GBP7.7  million  (5.2p)  uplift  to the  December  2004
valuation.

         Uplifts in valuation:
<TABLE>
<CAPTION>
Company                           December 31, 2005              December 31, 2004       Proceeds in      Change in year
                                          Valuation                      Valuation              year *
                                            GBP'000                        GBP'000           GBP'000             GBP'000
<S>                                          <C>                             <C>              <C>                  <C>
Vendex                                       16,609                          20,100         **12,521               9,030
Marazzi                                      23,781                          15,772              740               8,749
Ferretti                                     31,596                          40,974         **17,065               7,687
</TABLE>

* Including P123
** Not distributed at December 31,2005


(6) At December 31, 2005 Marazzi was valued on a third-party basis and a
    discount of 25% has been applied to the remaining holding in the company.
    The IFRS value of this remaining holding at February 28, 2006 was GBP11.2
    million


                                       43

The portfolio also benefited from favourable equity capital markets and a number
of quoted portfolio  companies share prices have performed well during the year,
including Inmarsat, Avnet, Inc., austriamicrosystems and Washtec.

Inmarsat,  the  leading  provider  of global  mobile  satellite  communications,
floated on the London Stock  Exchange in June 2005,  with shares being placed at
245p. In October 2005, funds advised by Permira sold 40% of their holding in the
company  realizing  approximately  GBP11.8 million of value for SVG Capital.  At
December 31, 2005,  SVG  Capital's  remaining  holding in Inmarsat was valued at
GBP19.7 million.  This,  together with the proceeds from the partial realization
and the  redemption of GBP7.2  million of  shareholder  loans at the  flotation,
represents an uplift of GBP28.6 million (19.5p) to the December 2004 valuation.

Funds  advised  by  Permira  sold  their  holding  in the  global  semiconductor
distribution  company,  Memec, to the New York listed Avnet, Inc. in a stock and
cash  transaction  which  completed  in July 2005.  At December  31,  2005,  SVG
Capital's  holding in Avnet,  Inc. was valued at GBP53.2  million,  an uplift of
GBP28.2 million (19.2p) to the December 31, 2004 valuation of Memec.

         Uplifts in valuation:

<TABLE>
<CAPTION>
Company                           December 31, 2005              December 31, 2004     Proceeds in    Change in year
                                          Valuation                      Valuation            year *
                                            GBP'000                        GBP'000         GBP'000           GBP'000
<S>                                          <C>                             <C>              <C>                <C>
Inmarsat                                     19,710                          10,128         19,066           28,648
Avnet, Inc.                                  53,154                          29,721          4,763           28,196
austriamicrosystems                          21,637                          20,087         12,087           14,357
Washtec                                      12,482                           9,395          5,586            8,673
</TABLE>

* Including P123

Mark-downs  in the year  included  Premiere,  whose share price fell in December
2005 following the announcement of its loss of the TV rights for the 2007 German
football season.

         Mark-downs in valuation:

<TABLE>
<CAPTION>
Company                           December 31, 2005              December 31, 2004       Proceeds in      Change in year
                                          Valuation                      Valuation              year *
                                            GBP'000                        GBP'000           GBP'000             GBP'000
<S>                                          <C>                             <C>              <C>                  <C>
Premiere                                      7,588                         73,616            57,875              (8,153)
</TABLE>

* Including P123

         Realizations

The portfolio was very cash generative and distributions from the private equity
portfolio  totalled  GBP285.8  million(7)  for the  year,  double  that of 2004.
Approximately  37% of  these  were  a  result  of  recapitalizations,  with  the
remainder  being  made up of 19  full  and 30  partial  realizations.  With  the
exception of recapitalizations,  the most material distributions during the year
were the  partial  realizations  of  Premiere,  Inmarsat  (mentioned  above) and
austriamicrosystems.


(7) Including GBP17.7 million of income


                                       44

Funds advised by Permira sold  approximately 75% of their holding in Premiere in
two  tranches,  the first at the  flotation of the company in March 2005 and the
second in October 2005. In total,  the value of these two  realizations  for SVG
Capital was GBP57.9  million,  with its remaining  holding in Premiere valued at
GBP7.6 million at December 2005. This valuation,  together with the value of the
two partial  realizations,  represents  an  approximate  multiple of 5 times SVG
Capital's original investment cost.

Approximately 40% of SVG Capital's holdings in  austriamicrosystems,  the Zurich
listed  specialist  semiconductor  manufacturer,  was sold in November 2005. The
value of this  partial  realization  for SVG Capital was  approximately  GBP12.8
million.

Since the year-end, SVG Capital's holdings in Avnet, Inc., Washtec, Inmarsat and
austriamicrosystems  have been fully  realized.  The  respective  value of these
realizations for SVG Capital is expected to be GBP50.8 million, GBP16.0 million,
GBP20.8 million and GBP22.8 million.

         New investments

18 new and 29  follow-on  investments  were made during the year with a total of
GBP89.1  million(8) of calls paid. The larger new investments were Jet Aviation,
the Gala Group(9),  including a follow-on  investment to fund its acquisition of
Coral Eurobet, Cortefiel, SBS Broadcasting(10), and a new investment in TDC(11).

Jet  Aviation  was  founded in 1967 and is a leading  global  business  aviation
company  employing more than 3,500  personnel in over 60 facilities and stations
around the world. The company provides maintenance,  completions and engineering
services, fixed base operations and airline handling, along with aircraft sales,
charter and management on a global basis. In addition,  Jet Aviation operates an
aircraft management and charter fleet of more than 160 jets in Europe, Asia, the
Middle East and the US. SVG Capital's share of this investment is expected to be
approximately GBP14.5 million.

In August,  funds  advised by Permira  announced  an  agreement to buy an equity
stake in the Gala Group, one of the UK's largest gaming  companies.  The Group's
principal  business is its  operation  of 166 bingo  clubs and 30  casinos.  SVG
Capital's  share of this  investment  is  expected to be  approximately  GBP26.1
million.

Funds  advised by Permira have backed the GBP2.2  billion  acquisition  of Coral
Eurobet by one of their portfolio companies, Gala Group. The transaction creates
Europe's  pre-eminent  integrated  betting and gaming company with strong market
positions  in licensed  betting  offices,  bingo and casinos and a high  quality
multimedia  offer.  Coral  Eurobet  is one of the  leading  betting  and  gaming
operations in the world. After this follow-on investment, the total value of SVG
Capital's interest in Gala Group is approximately GBP42.8 million, making it SVG
Capital's third largest investment at December 31, 2005.

Cortefiel is the number two specialist  apparel retailer in Spain. It operates a
multi-format  network  with  three  main  concepts:  Cortefiel,  with 222 stores
primarily in the Iberian market offering casual wear for 30+; Springfield,  with
329 stores and 113 franchises  targeting the 18-30s and Women's Secret,  selling
underwear  through  169  stores  and 70  franchises.  Headquartered  in  Madrid,
Cortefiel,  employs around 10,000 people. SVG Capital's share of this investment
is expected to be up to approximately GBP17.6 million.


(8)  Excluding GBP16.8 million investment in Strategic Equity Capital plc and
     Strategic Recovery Fund

(9)  SVG Capital's follow-on investment in Gala of GBP17.1 million is uncalled

(10) SVG Capital's investment in SBS of GBP32.1 million was called in February
     2006

(11) SVG Capital's investment in TDC of GBP22.8 million was partially called in
     February 2006


                                       45

In August,  funds advised by Permira,  in partnership  with KKR,  announced that
they had entered  into a  definitive  agreement  with SBS  Broadcasting  for its
acquisition.  SBS  Broadcasting  is a European  commercial  television and radio
broadcasting  company with  operations  across Western and Central  Europe.  The
company  operates 16 television  stations,  21 premium pay channels and 11 radio
networks,  reaching 100 million people in nine countries. SVG Capital's share of
this investment is expected to be approximately GBP32.8 million.

TDC is a Danish-based  provider of  communications  solutions  with  significant
presence in selected markets in Northern and Central Europe. TDC is organised as
six  main  business  lines:  TDC  Solutions,   TDC  Mobile  International,   TDC
Switzerland,  TDC Cable TV, TDC Directories  and TDC Services.  Funds advised by
Permira,  alongside other private equity  investors,  backed a public to private
offer for this company in November 2005. SVG Capital's  share of this investment
is approximately GBP22.8 million.

         Valuation basis

The most  significant  change in the valuation basis analysis is the increase of
the  portfolio's  weighting to quoted holdings to 35%. In addition to the strong
performance of the quoted portfolio,  this increase is a result of the flotation
of  Premiere  and  Inmarsat,  the  sale of  Memec to  Avnet,  Inc.,  and the new
investment in TDC. The decrease in the portfolio's weighting to companies valued
on a  third-party  basis is a result of the flotation of Premiere in March 2005,
which was valued on a third-party basis at December 2004.

         Valuation analysis (% of Portfolio by value)

<TABLE>
<CAPTION>
                                 December 31, 2005   December 31, 2004 *
<S>                                            <C>                   <C>
Cost (12)                                       20                    23
Earnings                                        36                    39
Written down - earnings                          2                     3
Written down                                     0                     2
Third-party                                      7                    15
Quoted                                          35                    18
</TABLE>



         *   Restated for IFRS valuations.

Since the year end,  several of SVG Capital's  holdings in quoted companies have
been  fully  realized  and the  portfolio's  weighting  to quoted  companies  is
expected to fall to approximately 26%.

The average weighted  discounted  earnings  multiple used to value the portfolio
increased to 6.7 (December 2004: 6.6). This slight increase was  predominantly a
result of several  companies moving from a cost to an earnings  valuations basis
at slightly higher discounted earnings  multiples.  The average discount applied
to companies valued on an earnings basis was 33%.


(12) Investments are carried at cost where this represents the Directors' best
     estimate of fair value


                                       46

         Geographical and sector distribution (% of Portfolio by value)

There have been two small changes in the portfolio's geographical weighting with
an increase in its exposure to  companies  operating in the UK and a decrease in
its exposure to  multinational  companies.  These  changes are a  reflection  of
realizations and revaluations in the portfolio,  such as the recapitalization of
Cognis and  write-ups of  companies  such as New Look and the AA, which has been
written up on an earnings basis to GBP34.1 million.

<TABLE>
<CAPTION>
                                December 31, 2005   December 31, 2004*
<S>                                            <C>                  <C>
Multinational                                  21                   25
Continental Europe                             36                   36
UK                                             26                   21
North America                                   7                    8
Far East/Asia Pacific                          10                   10
</TABLE>



         *   Restated for IFRS valuations

There have been several changes to the portfolio's sector exposure,  the largest
of   which   is   the    increase   in   its    exposure    to    computer/other
electronics/communications sectors, a result of new investments such as Intelsat
and TDC, in addition to the uplifts in value of Avnet, Inc. and Inmarsat.


         Sector Analysis (% of Portfolio by value)
<TABLE>
<CAPTION>
                                                 December 31, 2005            December 31, 2004 *
<S>                                                             <C>                            <C>
Consumer and leisure                                            49                             49
Medical/health                                                  11                             12
Computer/other                                                  25                             16
electronics/communications
Chemicals                                                        1                              6
Industrial produces/services                                     3                              6
Other manufacturing                                              1                              3
Other services                                                  10                              8
</TABLE>

* Restated for IFRS valuations

Of the 49%  invested  in the  consumer  and  leisure  sector as a whole,  21% is
invested in  companies in the leisure  sector,  16% in retail  companies,  5% in
media companies and 7% in 'other consumer'.

         Portfolio maturity

The average  age of the  portfolio  at December  31, 2005 had fallen with 61% of
investments  held for less than three years; 47% being held for under two years;
and 22% held for less than a year.

                                       47

         Deal type

SVG Capital's  portfolio remains focused towards  Management  Buy-Outs/Ins (85%)
with a small exposure to Development  Capital (12%).  SVG Capital's  exposure to
early stage companies (3%) is entirely in the life sciences sectors.

         Fund commitments

At December 31, 2005, SVG Capital had GBP314.4  million of uncalled  commitments
to six private equity funds (December 2004: GBP411.4 million to seven funds). In
addition,  SVG Capital also had a GBP14.4 million  uncalled  commitment to P123;
and an uncalled commitment of GBP35.3 million to SVG Diamond.

On March 20,  2006,  SVG Capital  announced a  commitment  of EUR2.8  billion to
Permira IV. In addition,  since  December 31, 2005, the Company has made further
commitments of EUR72.5 million to SVG Diamond Holdings II Limited;  EUR5 million
to  Schroder  Private  Equity  Fund of Funds  III;  and $50  million  to SV Life
Sciences Fund IV.

                        Uncalled Fund Commitments at December 31, 2005

<TABLE>
<CAPTION>
Fund                                                         Amount                 Amount        SVG Capital uncalled
                                                             called               uncalled
                                                   (local currency)       (local currency)                 commitment*
                                                           millions               millions                GBP millions
<S>                                                           <C>                     <C>                         <C>
Permira Europe II                                          EUR565.0                EUR85.2                        58.5
Permira Europe III                                         EUR224.0               EUR284.0                       195.1
The Japan Fund IV                                        YEN4,423.6             YEN6,290.0                        31.0
SV Investments Fund I                                       US$52.6                US$10.6                         6.2
Schroder Ventures
International Life Sciences Fund II                         US$40.1                 US$6.6                         3.9
Schroder Ventures Life Sciences Fund III                    US$41.3                US$33.8                        19.7
P123                                                        EUR83.8                EUR21.0                        14.4
SVG Diamond                                                       -                EUR51.4                        35.3

Total                                                                                                            364.1
</TABLE>


*based on exchange rates at December 31, 2005.

                                       48

SVG  Capital's  return on its holdings of its private  equity  funds,  including
P123, is summarised below.

         Holdings of private equity funds - IFRS valuation basis

<TABLE>
<CAPTION>
                                                                                  Year to                     Year to
                                                                        December 31, 2005           December 31, 2004
                                                                                     GBPm                        GBPm
<S>                                                                                 <C>                         <C>
Opening valuation                                                                   714.1                       567.4
Calls payable                                                                        89.1                       159.5
Distributions receivable                                                         (268.1)*                     (143.9)

                                                                                    535.1                       583.0

Increase in value of portfolio                                                      135.1                       140.5
(Less)/plus foreign exchange movement                                                 4.9                       (9.4)

                                                                                    140.0                       131.1

Closing portfolio                                                                   675.1                       714.1
</TABLE>


* Not including GBP17.7 million of income

         Cash and marketable securities

At December  31, 2005,  SVG  Capital's  gross cash  balance of GBP205.0  million
(December 2004:  GBP25.1 million) was held principally in money market funds and
treasury bills.  Between the year-end and May 31, 2006, SVG Capital has received
further Fund distributions  totalling GBP175.1 million and paid calls of GBP94.5
million.  In  addition,  following  the  closing  of SVG  Diamond  II after  the
year-end,  SVG Capital received  approximately GBP37.2 million from the transfer
of warehoused funds to SVG Diamond II.

                                       49

INFORMATION FOR THE YEAR ENDED DECEMBER 31, 2004

         Portfolio Overview

The Company's net assets  increased by 20.0% to 558.2p per share (fully diluted)
in the 12 months to December 31, 2004,  comparing  favourably to public markets,
with the FTSE All-Share Index increasing by 9.2% over the same period.

This  performance was driven by a general  improvement in both the operating and
exit  environment  and by a  significant  increase  in  distributions  from  the
portfolio,  especially  from  recapitalizations,  which  together led to several
material increases in valuation.

         CEO's Operating Review

It has been over three years since the launch of SVG Capital's  fund  management
business,   SVG  Advisers.  In  that  time,  combined  third-party  funds  under
management and commitments have grown from zero to approximately  EUR1.5 billion
at December 31, 2004 and the business made a modest profit in 2004.

This successful growth has been achieved in a difficult fund raising environment
for  private  equity,  and the  team  has  reacted  quickly  to  changes  in the
marketplace.  Over this time, SVG Advisers has built a reputation for innovation
and for performance in all of its products.

The  business  now advises  four  private  equity  funds of funds and two public
equity funds.

         Private equity

The  Schroder  Private  Equity Fund of Funds I and II,  which are advised by SVG
Advisers,  reported  strong results for the year ended  December 31, 2004.  Both
funds of funds benefited from early realizations in their underlying portfolios,
and both were ahead of our expectations on cash generation. The Schroder Private
Equity Fund of Funds I, which closed in 2002 with commitments  totalling EUR242,
million was almost fully committed at December 31, 2004, with  commitments to 22
underlying  funds broadly split between the US and Europe.  Its successor  fund,
the Schroder  Private  Equity Fund of Funds II, closed in 2004 with  commitments
totalling  EUR285  million  and follows the same  investment  guidelines  as its
predecessor.

P123, the fund of Permira pan-European buy-out funds, in which SVG Capital has a
38% holding, benefited from significant cash distributions during the year. P123
closed in  December  2003 with  EUR167  million  of  commitments  from  external
investors,  EUR105 million of secondary assets in Permira Europe I and II and an
uncalled  commitment  to  Permira  Europe  III  of  EUR367  million.  Since  its
establishment,  distributions  and uplifts in value of portfolio  companies have
outweighed management fees, which given the size of P123's commitment to Permira
Europe III,  compared  to its  exposure  to the more cash  generative  secondary
assets (a ratio of over 3:1), is particularly encouraging.

In September  2004, we  successfully  closed SVG  Diamond(13),  a EUR400 million
Collateralised  Fund Obligation of private equity funds.  SVG Diamond  comprised
EUR260 million   of  investment   grade  bonds  and   preferred   equity  shares
representing commitments of EUR140 million at closing. SVG Diamond is one of the
few  investment  vehicles to have  successfully  raised  capital  from the fixed
income markets for investment in private equity, and is the first of its kind to
incorporate drawable equity,  reinvestment and over commitment  strategies.  Its
portfolio  will  include  both   secondary  and  primary   private  equity  fund
commitments,  predominantly focused on buy-outs in Western Europe and the US. On
closing,  SVG  Capital  had an  uncalled  commitment  of  EUR50  million  to the
preferred equity shares.


(13) SVG Diamond Private Equity plc and SVG Diamond Holdings Limited


                                       50

       Public equity

The two funds  launched by SVG Advisers'  public  equity team,  the SVG UK Focus
Fund (a Dublin listed Open-Ended  Investment Company) and The Strategic Recovery
Fund (a UK  Limited  Partnership)  performed  very  well  over  the  year,  both
significantly  outperforming  public  markets.  At December 31,  2004,  the team
advised  combined  commitments,  funds and segregated  mandates of approximately
GBP170 million, versus GBP41 million at the beginning of 2004.

The SVG UK Focus Fund  reported  an  increase  in net assets per share of 19.4%,
over the year to December 31, 2004. The fund was established in August 2003 with
net assets of GBP15.4 million, including a GBP7.6 million cornerstone investment
from SVG  Capital,  with the  objective  of  maximising  returns for  investors,
predominantly  through  capital  growth,  by investing in quoted  equities using
private equity techniques. At December 31, 2004, the fund held 34 investments in
a  variety  of  sectors  and had  grown  its  net  assets  over  the  year  from
GBP26.1 million to GBP90.6 million. Since our initial investment in the fund, in
August  2003,  SVG  Capital's   holding  has  appreciated  by  27.6%  to  GBP9.7
million(14), out-performing the FTSE All-Share by 9.0% over the same period.

The  Strategic  Recovery  Fund had a final  closing in  January  2004 with total
capital commitments of GBP15 million,  including an investment of GBP7.4 million
from SVG  Capital.  The fund was  established  with an  investment  objective of
investing in publicly listed UK companies that are undervalued and could benefit
from strategic,  operational or management  change.  Since its establishment the
fund has made five  investments  and at December 31, 2004  reported a net IRR of
68% on its called  capital,  a weighted  out-performance  of the FTSE  All-Share
(Total Return) Index of 56%.

         Outlook

The team has  doubled  since  SVG  Advisers  was  established  in 2001,  and the
business is well placed to capitalise on the  opportunities to create innovative
products for  investment in private equity or public equity using private equity
techniques.

         Portfolio Review

Over the  course  of 2004 the  operating  environment  for the  majority  of the
portfolio companies improved. Overall, increases in earnings and a focus on cash
flow  generation and debt repayment had a positive  impact on portfolio  company
valuations, despite a fall in the average weighted discounted earnings multiples
used to value the portfolio.  This, together with substantial cash distributions
and a number of  significant  valuation  write-ups,  resulted  in an increase of
20.0% in fully  diluted  net assets per share to 558.2p in the year to  December
31, 2004.


(14) at December 31, 2004 exchange rates


                                       51

An  improved  exit  environment  and an  increased  appetite  for  debt  amongst
institutional  investors  has led to an increase  in both sales and  refinancing
activity.  Distributions  during  the year  ended  December  31,  2004  totalled
GBP143.9  million,  a more than four-fold  increase on the previous year.  These
were split between sales and recapitalizations, with the latter representing 40%
of distributions.

The most significant  write-up at December 2004 was Premiere,  the German Pay-TV
company.  Premiere  successfully listed on the Frankfurt Stock Exchange in March
2005. At flotation,  funds  advised by Permira sold  approximately  50% of their
holding in the company  returning  GBP36.8 million to SVG Capital.  The December
2004  valuation of the company of  GBP73.6 million  represents the cash proceeds
and the post flotation  valuation of the remaining shares (after the application
of discounts).  This represents an approximate uplift of GBP59.3 million (42.5p)
to the December 2003 valuation of GBP14.3 million.

<TABLE>
<CAPTION>
Company                                           December 31, 2004               December 31, 2003    Change in year
                                                          Valuation                       Valuation           GBP'000
                                                            GBP'000                         GBP'000
<S>                                                          <C>                             <C>               <C>
Premiere                                                     73,616                          14,320            59,296
Cognis                                                       43,764                          19,023*           24,741
Travelodge & Little Chef                                     41,614                          31,179*           10,435
SEAT Pagine Gialle                                           38,169                          28,814*            9,355
Hogg Robinson                                                33,082                          24,716             8,366
Grammer                                                      16,954                           9,985             9,969
Inmarsat                                                     10,128                           6,031             4,097
</TABLE>

         *attributable value

While  recapitalizations  are  effectively  a return of cost,  allowing  private
equity  managers to return capital to investors  early in the investment  cycle,
several  recapitalizations,  together with improved operating performance,  have
resulted  in uplifts  in the value of a number of  portfolio  companies  held at
December 2004. The most significant of these was Cognis, the specialty chemicals
company,  which  returned a total of GBP49.3  million (or 1.6x cost) through two
recapitalizations,  the first in May and a further  one  after the  year-end  in
January 2005. At December 2004,  Cognis was valued at GBP43.8  million (of which
GBP30.2   million   represents   the  cash   proceeds   from  the  January  2005
recapitalization),  which  together  with  the  distribution  received  from the
recapitalization  in May,  represents  an  aggregate  uplift of GBP24.7  million
(17.7p) to the  December  2003  valuation.  In  addition  to Cognis,  Rodenstock
completed a recapitalization  towards the end of last year,  returning 1.7x cost
(GBP14.4  million)  and was  valued at  GBP4.4  million  at  December  2004,  an
aggregate uplift of GBP10.5 million (7.6p) to the December 2003 valuation.

         Significant realizations during the year include:

<TABLE>
<CAPTION>
                                                  Realization     31 December 2003                 Cost
                                                        value            Valuation
Company                                               GBP'000*             GBP'000              GBP'000
<S>                                                    <C>                   <C>                  <C>
Eyetech Pharmaceuticals                                14,067                2,451                2,373
SEAT Pagine Gialle                                     12,330                7,069                6,760
</TABLE>

* including P123

                                       52

A general  improvement in capital  markets over the twelve months  resulted in a
number of IPOs and disposals during the year. Eyetech Pharmaceuticals floated on
NASDAQ in January 2004 and by the year-end funds advised by SV Life Sciences had
realized  all of their  holding  in the  company.  SVG  Capital  received  total
proceeds of GBP14.1 million from this realization,  an uplift of GBP11.6 million
(8.3p) to the December  2003  valuation.  In addition,  in the first half of the
year funds advised by Permira sold 19% of their  holding in SEAT Pagine  Gialle,
at an  uplift  of  GBP5.6  million  (3.9p)  to the  attributable  December  2003
valuation.

The portfolio is relatively focused, with the 20 largest underlying companies at
December 31, 2004  representing 72% of gross assets. Of the 129 companies in the
portfolio,  44% have been  valued on an earnings  basis,  of which 3% are valued
below cost,  bringing the total percentage of the portfolio valued below cost to
5%.  Approximately  15% of the  portfolio  is valued on a quoted  basis with the
remainder  either valued at cost (24%) or on a third-party  basis (15%).  Taking
into account the  flotation  of Premiere in March 2005,  the  percentage  of the
portfolio  valued on a quoted basis will  increase,  with the  percentage of the
portfolio valued on a third-party basis decreasing.

The average  discounted  weighted  earnings multiple used to value the portfolio
fell during the year ended  December 31, 2004 from 8.6 to 6.6.  While this sharp
decrease was mainly influenced by the fall in semiconductor multiples,  weighted
discounted earnings multiples for non-semiconductor companies also fell from 6.6
to 6.4. For the year to December  31, 2004,  foreign  exchange  movements  had a
negative  impact on the  valuation  of the  portfolio  of  approximately  GBP9.4
million.

         Portfolio changes

Since  December  2003 there  have been a number of  changes  in the  portfolio's
valuation  profile,  with several  companies  moving from a cost to an earnings,
quoted basis or third party basis  valuation for the first time. The majority of
these  changes  were in the first  half of the year,  with only two  significant
changes in the second half,  Premiere,  which moved from a cost to a third-party
valuation basis and Inmarsat,  which moved from a cost to an earnings  valuation
basis.  During  2004,  Inmarsat  completed  two   recapitalizations,   returning
approximately  55% of the  cost of the  investment  and at  December  2004,  SVG
Capital's  holding  in  Inmarsat  was valued at  GBP10.1  million  (attributable
December 2003 valuation: GBP6.0 million).

         Valuation changes - positive

There have been several material positive valuation changes in the year, the two
most  significant  being the  specialty  chemicals  group  Cognis and the German
Pay-TV  company,  Premiere,  which together added GBP84.0 million (60.2p) to net
assets.  In addition to these,  the portfolio  also  benefited  from a number of
other uplifts in valuation, namely the revaluations of Travelodge & Little Chef,
SEAT Pagine Gialle, Hogg Robinson, Grammer, Inmarsat and Rodenstock.

Travelodge  & Little  Chef  completed  a sale and lease  back of a number of its
properties in the fourth  quarter of 2004 which has enabled the company to repay
some of its  acquisition  debt and return some of the cost of the  investment to
investors.  This,  together  with  the  improved  operating  performance  of the
company, has resulted in the company being written back up to cost, representing
an uplift of GBP10.4 million (7.5p) to the attributable December 2003 valuation.

                                       53

Approximately  19% of SVG  Capital's  holding in the  Italian  quoted  telephone
directories,  directory  assistance and business information company SEAT Pagine
Gialle was sold in the first half of 2004, at an  approximate  gross multiple of
two times original attributable cost (in local currency).  The increase in value
of this company at December  2004  reflects  the quoted  value of SVG  Capital's
remaining  holding (after the  application of discounts),  representing a GBP9.4
million (6.7p) uplift to the attributable December 2003 valuation.

As highlighted in the interim  accounts,  both  Rodenstock and Hogg Robinson are
performing  well and continue to increase  earnings.  In the case of Rodenstock,
the company's  performance has been stronger than  anticipated and in the fourth
quarter of 2004 the company  completed a  recapitalization  which  returned 1.7x
cost.  This return of capital  together  with the  revaluation  of Rodenstock at
December 2004 has led to an aggregate  uplift of GBP10.5  million  (7.6p) to its
December 2003 valuation.

On the back of improved  performance  and the acquisition of the business travel
operations of Kuoni Reisen  Holdings AG in the first half of 2004, Hogg Robinson
has been written up by GBP8.4 million  (6.0p) at December 2004. The  acquisition
of  Kuoni's  business  travel  operations  was  completed  without  the need for
additional equity from investors and has given Hogg Robinson's travel management
business a leading  position in the European market and access to the German and
Swiss business travel  markets.  Since the year end, the company has completed a
recapitalization, returning GBP14.7 million of cost to SVG Capital.

Grammer,  the German  manufacturer of truck, train and car seats was acquired by
funds advised by Permira in June 2001. The company is performing well, continues
to repay its  acquisition  debt and has been written up by GBP7.0 million (5.0p)
at December 2004.

         Valuations changes - negative

There were four  significant  write-downs  in the year ended  December 31, 2004:
Takko, Memec, austriamicrosystems and Holmes Place.

Takko has been  adversely  affected  by the  performance  of the  German  retail
market, which has been in decline since 2000. While the company has successfully
grown its store  portfolio,  increased  gross  margins  and reduced  costs,  its
operating  environment remains difficult and sales have been below expectations.
SVG Capital's  investment in Takko was initially  written down in June 2004. Due
to continued weak  performance,  the investment has been further written down to
GBP4.2 million (25% of cost in local  currency) at December 2004  representing a
write-down of GBP12.3 million (8.8p) to its December 2003 valuation.

The valuation of Memec has been written down by GBP12.2  million  (8.8p) against
the attributable December 2003 valuation to GBP29.7 million. This write-down has
been driven by comparable earnings multiples in the semiconductor  sector, which
fell sharply  during the year,  and the negative  impact of the weakening US$ on
the company's  valuation.  The company has increased  its sales  volumes,  grown
profitability  and completed a  recapitalisation  during the year which returned
approximately 20% of its cost to investors.

austriamicrosystems  floated on the SWX Swiss Exchange in May 2004,  with shares
being  placed at CHF 35 per share.  Funds  advised by Permira  sold 20% of their
holding in the company at the flotation  and the December 2004  valuation of the
company  is the  quoted  value of SVG  Capital's  remaining  holding  (after the
application of discounts). This valuation of GBP15.2 million,  together with the
cash proceeds received from the partial realizations  (GBP3.8 million) represent
an aggregate  write-down of GBP7.7 million (5.5p) to the December 2003 valuation
(GBP26.7 million). The underlying performance of the company remains strong, and
it recently reported strong growth in revenues and earnings.

                                       54

SVG  Capital's  investment  in Holmes Place has been written down on an earnings
basis to GBP6.6 million (December 2003: GBP13.0 million).  Competitive operating
conditions,  particularly in the UK,  continued to deteriorate in 2004 following
the investment in July
2003.

         Realizations

With the  exception of  recapitalizations,  which are a return of cost,  the two
most  significant  disposals  in the year were the full  realization  of Eyetech
Pharmaceuticals,  following  its  flotation  on NASDAQ in  January  2004 and the
partial  realization of SEAT Pagine Gialle.  The remainder of distributions were
made up by  smaller  realizations,  the  largest  two of which  were the  GBP5.9
million  distribution from the sale of the Japanese property  management company
Darwin, and the GBP4.7 million distribution from the sale of Physician Dialysis,
a US based dialysis company.

         New investments

There has been a pick up in the level of new  transactions  completed during the
year, with calls of GBP159.5  million being paid, a 44% increase on the previous
year. 11 new and 15 follow-on  investments  were made, of which seven feature in
the 20 largest  underlying  companies,  namely debitel,  New Look, the AA, Grand
Navi Veloci,  Vendex,  Dinosol Supermercados  (formerly Ahold Supermercados) and
Marazzi.

debitel is Europe's largest mobile phone service provider, offering a wide range
of telecommunications  products. The company is headquartered in Germany and has
over 10.2 million  customers and operates via a network of 5,000 retail partners
and 100 of its own shops.

New Look is a leading UK fashion  retailer  targeting the young  (15-44)  female
market.  The company was  established in 1969 and has grown to become one of the
UK's largest retailers of womenswear with around 4% of the UK womenswear market.
New Look has over 500 stores in the UK and around 200 stores in France  (trading
under the MIM brand).

The  AA has a  pre-eminent  position  in  the  roadside  services  market,  with
approximately  15 million  members,  providing both private and fleet  motorists
with breakdown cover across the UK. The business  comprises  roadside  recovery,
insurance,  personal loans, service centres, mobile tyre fitting, publishing and
driving  schools.  Its  financial  services  division  provides  motor  and home
insurance policies and a GBP1 billion loan book.

Grand Navi Veloci (GNV) is a leading  European  ferry  company,  with a fleet of
eight  ships.  Funds  advised by Permira and the  Grimaldi  family  announced an
agreement to acquire  71.3% of GNV and an  intention  to launch a public  tender
offer for the  remainder of the shares in the  company.,  which is listed on the
Milan Stock Exchange.  GNV owns the youngest ferry fleet in Europe. The first of
its eight  ships was  launched  in 1993,  while its two  largest and most recent
ships,  Superba and Suprema,  were launched in 2002 and 2003. The acquisition of
GNV will aid its development  plans, which involve developing the 'cruise-ferry'
concept,  and will combine passengers on cruise ships with the transportation of
cars and heavy goods vehicles.

                                       55

Vendex is the  largest  non-food  retailer in the  Benelux  with market  leading
positions  in the  department  store,  DIY,  apparel  and  consumer  electronics
sectors.  The company  trades from 15 stores  fascias and around 1,800  outlets,
employing  43,000  people.  Vendex has a diversified  portfolio of strong brands
with  most  of  the  company's  retail  formats  being  household  names  in the
Netherlands and Belgium.  The company owns a property portfolio consisting of 83
stores.

Dinosol  Supermercados  (formerly  Ahold  Supermercados)  operates 572 stores in
Spain and the  Canary  Islands,  trading  under a number  of  brands  including:
SuperSol,  HiperSol,  HiperDino, Netto and CashDiplo. The transaction represents
the first Spanish  transaction  by funds advised by Permira since Permira opened
an office in Madrid earlier last year.

Marazzi is the world's  largest  manufacturer  of ceramic tiles.  The company is
active in 130  countries and has over 4,000  employees and 18 plants  located in
Italy, Spain, France and the US with a new plant opening in Russia in 2005.

In August 2004, funds advised by Permira announced an investment in Intelsat,  a
leading global satellite  communications  company. This transaction closed after
the  year-end  and SVG  Capital's  share of this  investment  is  expected to be
approximately  GBP8.8 million.  Intelsat offers wholesale  internet,  broadcast,
telephony  and  corporate  network  solutions  to leading  service  providers in
approximately 200 countries and territories worldwide. Its global communications
network includes 28 geostationary satellites,  servicing more than 600 customers
around the  world,  including  internet  service  providers,  telecommunications
companies, broadcasters and corporate network service providers.

         Valuation basis (% of Portfolio by value)

<TABLE>
<CAPTION>
                                 December 31, 2004     December 31, 2003
<S>                                             <C>                   <C>
Cost                                            24                    21
Earnings                                        41                    43
W/down - earnings                                3                     8
W/down                                           2                    10
Third party                                     15                    10
Quoted                                          15                     8
</TABLE>


The majority of the portfolio  continues to be valued on an earnings basis.  The
percentage  of the  portfolio  valued below cost has decreased to 5% at December
31, 2004,  primarily as a result of the  revaluation of Travelodge & Little Chef
and the flotation of austriamicrosystems. The percentage of the portfolio valued
on a quoted  basis has  increased  to 15%, a result of the  change of  valuation
basis of SEAT Pagine  Gialle from a cost to a quoted basis and the  flotation of
austriamicrosystems.

The average discounted  earnings multiple used to value the portfolio  decreased
to 6.6 at  December  31, 2004  (December  2003:  8.6).  This  average  number is
influenced by the higher than average discounted earnings multiple used to value
semiconductor   companies,   ignoring  the  semiconductor   companies,   average
discounted  earnings  multiple for the  non-semiconductor  companies  was 6.4 at
December 31, 2004 (December 2003: 6.6).

At December 31, 2004,  the average  discount  applied to companies  valued on an
earnings basis was 29%, and 21% for quoted investments.

                                       56

         Geographical and sector distribution (% of Portfolio by value)

<TABLE>
<CAPTION>
                               December 31, 2004    December 31, 2003
<S>                                            <C>                  <C>
Multinational                                  26                   30
Continental Europe                             35                   30
UK                                             22                   19
North America                                   8                   10
Far East/Asia Pacific                           9                   11
</TABLE>

The only major change in the portfolio's  geographical  exposure is the increase
in its weighting to Continental  Europe,  which has increased to 35% as a result
of the revaluation of Premiere.

Due to the number of new investments in the consumer sector this represented 41%
of the portfolio at December 31, 2004. The decrease in the portfolio's weighting
to  medical  and  health  is a result of the sale of  Sirona,  Euro  Dental  and
Eyetech. The portfolio's exposure to computer/other electronics has decreased to
16% at December 31, 2004,  partly a reflection of the  revaluation  of Memec and
also in part due to investments in other sectors.

         Sector Analysis (% of Portfolio by value)
<TABLE>
<CAPTION>
                                                 December 31, 2004           December 31, 2003
<S>                                                             <C>                         <C>
Consumer                                                        41                          29
Medical/health                                                  11                          21
Computer/other electronics                                      16                          22
Chemicals                                                        6                           7
Industrial products/services                                     6                           7
Other manufacturing                                              3                           3
Other services                                                  17                          10
Construction                                                     0                           1
</TABLE>


         Portfolio maturity

The  average age of the  portfolio  at December  31, 2004  reduced,  with 58% of
investments  held for less than three  years,  43% held for under two years,  of
which 23% held for less than a year.

         Deal type

SVG  Capital's  portfolio  at December 31, 2004 was focused  towards  Management
Buy-Outs/Ins  (85%) with a small  exposure to  Development  Capital  (12%).  SVG
Capital's  exposure  to early  stage  companies  (3%) was  entirely  in the life
sciences sectors.

                                       57

         Fund commitments

At December 31, 2004, SVG Capital had GBP411.4  million of uncalled  commitments
to seven private equity funds (December 2003:  GBP557.5 million to 10 funds). In
addition,  SVG Capital had a GBP2.7 million uncalled commitment to The Strategic
Recovery Fund; a  GBP14.8 million  uncalled  commitment to P123, which is due in
October 2005; and an uncalled commitment of GBP35.6 million to SVG Diamond.

                        Uncalled Fund Commitments at December 31, 2004

<TABLE>
<CAPTION>
Fund                                                         Amount                 Amount        SVG Capital uncalled
                                                             called               uncalled
                                                   (local currency)       (local currency)                 commitment*
                                                           millions               millions                GBP millions
<S>                                                           <C>                    <C>                         <C>
Permira Europe III                                         EUR128.5               EUR379.5                       268.7
Permira Europe II                                          EUR565.0                EUR85.2                        60.3
The Japan Fund IV                                        YEN2,350.6             YEN8,363.0                        42.5
The Japan Venture Fund III                               YEN2,962.6               YEN142.4                         0.7
Schroder Ventures US Fund                                  US$60.0m                US$13.2                         6.9
Schroder Ventures
International Life Sciences Fund II                         US$67.7                US$14.0                         7.3
International Life Sciences Fund III                        US$27.0                US$48.0                        25.0
Strategic Recovery Fund                                      GBP4.7                 GBP2.7                         2.7
P123                                                        EUR83.8                EUR21.0                        14.8
SVG Diamond                                                       -                EUR50.3                        35.6

Total                                                                                                            464.5
</TABLE>

*based on exchange rates at December 31, 2004.


         Return on holdings of Funds
<TABLE>
<CAPTION>
                                                                                  Year to                     Year to
                                                                        December 31, 2004           December 31, 2003
                                                                                     GBPm                        GBPm
<S>                                                                                 <C>                         <C>
Opening valuation                                                                   560.3                       484.0
Calls payable                                                                       159.5                       110.7
Distributions receivable                                                          (143.9)                      (59.4)

                                                                                    575.9                       535.3

Increase in value of portfolio                                                      121.7                        21.4
(Less)/plus foreign exchange movement                                               (9.4)                         3.6

                                                                                    112.3                        25.0

Closing portfolio                                                                   688.2                       560.3
</TABLE>


         Cash and marketable securities

At December  31,  2004,  SVG  Capital's  gross cash  balance of GBP25.1  million
(December 2003:  GBP47.7 million) was held in a combination of bank deposits and
money market funds.

                                       58

B.       Liquidity and Capital Resources

You should read this section in conjunction with the selected financial data and
the consolidated  financial  statements and the accompanying  notes contained in
"Item 3. Key  Information  - Selected  Financial  Data" and "Item 17.  Financial
Statements,"  respectively,  of  this  annual  report.  Historical  results  and
percentage relationships set forth in these Items and this section should not be
taken as indicative of future operations of the Company.

As described  more fully in "Item 4.  Information on the Company," SVG Capital's
main  activity is to invest in private  equity Funds,  which  entails  providing
financial commitments that may be called by the General Partner of such Funds at
any time (see "Item 3. Risk Factors - Risks Relating to Capital Calls).

The Company  expects to finance its  commitments,  over the longer term,  out of
existing  financial  resources  and from  distributions  received  from its Fund
investments.  In addition,  the Company has a EUR600  million loan facility that
could be drawn on to meet commitments as they fall due.  Furthermore the Company
is expected to raise,  subject to completion of documentation,  a combination of
$170 million, EUR20 million and GBP7 million in 2006 through a private placement
of senior unsecured loan notes.

General

Please refer to "Item 5.  Operating  and  Financial  Review and  Prospects"  for
general  information  about  the  Company's  liquidity  and  capital  resources,
including  details  of  calls  paid  to  and  dispositions  received  from  Fund
investments.

         Recent Developments.

         Marazzi

Marazzi,  the world leader in design,  manufacturing  and sales of ceramic tiles
successfully  listed on the Italian Stock Exchange in February 2006, with shares
being  placed at EUR10.25  each.  Funds  advised by Permira  sold  approximately
two-thirds of their  shareholding  in the company at the flotation and the value
of this partial  realisation for SVG Capital was approximately  GBP20.9 million.
The December  2005  third-party  valuation  of GBP23.8  million  represents  the
approximate  cash proceeds from the partial  realization  and a discounted  post
flotation valuation of the remaining shares(15).  This represents an approximate
uplift of GBP14.8 million (10.0p per share) to the December 2004 valuation.


         SVG Diamond Holdings II Limited

In February 2006, SVG Diamond II  successfully  raised EUR500 million  through a
Collateralised  Fund  Obligation  ('CFO') of private  equity  funds,  comprising
EUR325   million  of  investment   grade  bonds  and  preferred   equity  shares
representing commitments of EUR175 million as at closing. A similar structure to
its award-winning  predecessor,  SVG Diamond II is a CFO of private equity funds
incorporating drawable equity,  reinvestment and over-commitment strategies. The
CFO will be focused  predominantly  on buy-outs in Western Europe and the US and
will have an  over-commitment  facility of 140%  (allowing  a target  investment
capacity of EUR700  million).  SVG Capital has a long-term  commitment  of EUR60
million to the preferred equity shares and a total initial commitment of EUR72.5
million.


(15) At December 31, 2005 Marazzi was valued on a third-party basis and a
     discount of 25% has been applied to the remaining holding in the company.
     The IFRS value of this remaining holding at February 28, 2006 was GBP11.2
     million



                                       59

         Inmarsat

In March 2006, the Company realized their remaining holding in Inmarsat, the LSE
quoted  provider  of  satellite   communication  services.  The  value  of  this
realization  for SVG Capital is expected to be  approximately  GBP10.6  million.
This realization,  together with the value of the partial realization in January
2006 (GBP10.2  million),  represents an uplift of GBP1.1  million  (0.8p) to the
December 2005 valuation of GBP19.7 million.

         austriamicrosystems

In   March   2006,   the   Company   realized   their   remaining   holding   in
austriamicrosystems,  the Zurich listed specialist  semiconductor  manufacturer.
The value of this  realization  for SVG Capital is expected to be  approximately
GBP22.8  million,  an uplift  of GBP1.2  million  (0.8p)  to the  December  2005
valuation of GBP21.6 million.

         Schroder Private Equity Fund of Funds III

Launched  in  September  2005,  SPEFOF III had a final  close in April 2006 with
total commitments of EUR422 million.  SVG Advisers is the investment  adviser to
SPEFOF  III.  Like its  predecessors,  the fund is  listed on the  Dublin  Stock
Exchange and has been structured to meet the requirements of both high-net-worth
individuals,  in  addition  to small and large  institutions.  The  Company  has
committed  EUR5  million to SPEFOF III, of which  EUR1.25  million was called in
April 2006.

         Platinum Trust

In April  2006,  following  a  reorganization,  the  Platinum  Trust  paid  cash
distributions  to SVG Capital plc of GBP29.0  million  and EUR12.6  million.  In
addition,  it made an  in-specie  distribution  of Fund  investments  valued  at
approximately GBP18.3 million.

         EEMS

In April 2006,  EEMS listed on the Italian Stock  Exchange with shares placed at
EUR8.20 per share,  capitalizing the company at EUR337 million. Funds advised by
Permira have sold  approximately 30% of their shareholding in the company at the
flotation.   The  value  of  this  partial   realization  for  SVG  Capital  was
approximately GBP5.5 million.

Following the flotation,  the IFRS value of SVG Capital's  remaining  holding in
EEMS is  GBP14.2  million(16).  This,  together  with the  value of the  partial
realization,  represents  an uplift of GBP7.4  million  (5.0 p per share - fully
diluted) to the December  2005  valuation of GBP12.3  million.  Funds advised by
Permira are subject to a 180 day lock-up  period in relation to their holding in
EEMS.

         Bond conversion

On May 22, 2006,  the Company  announced that it had exercised its right to call
for  redemption of the GBP49 million Bonds 2013 in issue and gave holders of the
Bonds 2013 the option to convert their holding into Ordinary Shares.  On June 7,
2006, a total of 10,208,327  Ordinary  Shares were allotted on conversion of all
the Bonds 2013 in issue.  On June 14,  2006,  the listing for the Bonds 2013 was
cancelled.


(16) As at June 26, 2006.


                                       60

         New Look

One of the leading UK fashion retailers  completed its second  recapitalization.
The value of this recapitalization for the Company is GBP18.9 million,  bringing
total proceeds back to investors to 2.1x original cost.

         AA
The UK's largest  roadside  recovery  business and one of the leading  insurance
brokers successfully completed a refinancing returning approximately 80% of cost
to  investors.  The value of this  recapitalization  for the  Company is GBP25.4
million, bringing total proceeds back to investors to 1.0x original cost.

         Vendex

The  largest  non-food  retailer in the Benelux  area  successfully  completed a
recapitalization  returning approximately 46% of cost to investors. The value of
this recapitalization for the Company is GBP8.8 million, which together with the
sale and leaseback  that was completed in November  2005,  brings total proceeds
back to investors to 1.1x original cost.

         GNV

A leading European ferry company, GNV recapitalized  returning approximately 35%
of cost to  investors.  The value of this  recapitalization  for the  Company is
GBP4.4 million (not distributed by the fund to date).

         GlycoFi

GlycoFi was purchased by Merck in June 2006.  The Company  received  proceeds of
GBP6.7  million from this sale, an uplift of 3.8p per share to the December 2005
valuation and a multiple of 9.0x cost.

         Rinat

Rinat was sold to Pfizer in April 2006. The Company received  proceeds of GBP4.5
million  from  this  sale,  an uplift  of 2.5p per  share to the  December  2005
valuation and a multiple of 6.0x cost.

         Aearo Technologies

Funds  advised  by  Permira  have  backed  the   management   buy-out  of  Aearo
Technologies,  Inc. The company is a global  leader in the  personal  protection
equipment industry,  competing primarily in the higher value added hearing, eye,
head, face, respiratory and fall protection market segments. The Company's share
of this investment is approximately GBP20.1 million.

         TDC

Following  the  tender  offer  for TDC,  a Danish  provider  of  communincations
solutions, the Company's share of this investment has increased to approximately
GBP49.5 million.

         Intelsat

Intelsat has completed the acquisition of PanAmSat  creating the world's largest
fixed satellite services provider.  This acquisition required no further funding
from investors.

         Senior Unsecured Notes

-See "Item 5. B. Liquidity and Capital  Resources - Potential Sources of Capital
- Senior Unsecured Notes" for further details.

                                       61

         Permira IV commitment

In  line  with  its  principal   investment   objective  of  achieving   capital
appreciation by investing in private equity funds that are managed or advised by
Permira,  SVG Capital has made a EUR2.8  billion  commitment  to Permira's  next
private  equity fund,  Permira IV. It is expected SVG  Capital's  commitment  to
Permira IV will be drawn down during the fund's six year Investment Period.

Permira IV will  focus on  investments  in  established  businesses,  capable of
performance  improvement and/or significant growth. The core focus will continue
to be  European  buy-out  opportunities,  in addition  Permira IV will  consider
opportunities  originated  by the  Permira  offices  in New York and Toyko  (the
former only in international as opposed to domestic US buy-outs).  Permira has a
sector-focused  approach to deal  initiation and selection and has  considerable
experience  in  investing  in  Consumer,  TMT  (technology,   media,  telecoms),
Chemicals and Industrial Products and Services sectors.

         Permira IV products

In addition to investing  directly in Permira IV, SVGA expects to launch various
products  providing  investors  with access to Permira IV.  These  products  are
expected to include Sapphire PCC Limited,  a feeder vehicle for Permira IV only;
P25,  which will invest in Permira  Europe III and Permira IV; and P1234,  which
will  invest in Permira  Europe I,  Permira  Europe II,  Permira  Europe III and
Permira IV.

Commitments and Contingencies

         Fund Commitments

The  Company's   total  uncalled   commitments   decreased  from   approximately
GBP464.5 million as of December 31, 2004 to approximately GBP364.1 million as of
December 31, 2005.  Further  details of the Company's  uncalled  commitments  at
December  31, 2005 are included in Note 17 in "Item 17.  Financial  Statements."
During  the  year  ended  December  31,  2005,  the  Company  made  no new  Fund
commitments.  During the year ended  December  31,  2004,  the  Company  made an
initial  commitment  of  EUR50  million  to SVG  Diamond  Holdings  Limited  and
increased its commitment to The Japan Fund IV by YEN6,966 billion to YEN10,713.6
billion.

Following  the year ended  December 31, 2005,  the Company made a commitment  of
EUR72.5  million to SVG Diamond  Holdings II Limited,  EUR5  million to Schroder
Private Equity Fund of Funds III and $50 million to SV Life Sciences Fund IV. As
outlined above, the Company also committed EUR2.8 billion to Permira IV.

         Share Repurchases

At the Annual General Meeting of the Company held on April 24, 2006, the Company
was authorised to purchase up to 19,268,983 Ordinary Shares (representing 14.99%
of the  Ordinary  Shares in issue as of March 20,  2006).  The minimum  purchase
price  authorized to be paid per Ordinary Share is GBP1.00 and the maximum price
is an amount equal to 105% of the average of the middle market quotations for an
Ordinary  Share  taken  from  the  Official  List  for the  five  business  days
immediately  preceding the purchase.  The Company has not yet used the authority
granted at the 2006 Annual General Meeting to purchase any Ordinary Shares.

                                       62

Potential Sources of Capital

         Subscription Agreement

On March 21, 2005 the Company  entered  into an  agreement  with PCL pursuant to
which the Company issued 6 million New Shares to PCL at a subscription  price of
600 pence per New Share.

The total  subscription  price paid by PCL to the Company under the Subscription
Agreement  was  GBP36.0  million.  This amount was paid upon  completion  of the
allotment of the New Shares to PCL.

PCL has agreed to a lock-up  in  respect  of the New Shares for the period  from
completion of the  Subscription  Agreement  until  termination  of the Operating
Agreement  (or, if earlier,  if the Permira  partner  appointed  to the Board is
removed  and,  save in certain  circumstances,  SVG  Capital  does not appoint a
Permira  partner  nominated  by PHL to the Board in his place within a specified
period). Accordingly,  subject to certain limited exceptions, PHL has agreed not
to dispose of any of its interest in the New Shares during this period.

         Borrowing Limitations and Policy

The Company's  Articles of Association  limit the Company's ability to borrow to
an amount equal to the Company's  "adjusted  capital and reserves" (as such term
is defined in the Company's Articles of Association) unless otherwise authorized
by an  ordinary  resolution  of  the  shareholders.  See  "Item  10.  Additional
Information - Memorandum and Articles of  Association - Borrowing  Powers" for a
summary of the relevant provisions of the Company's Articles of Association.  It
is intended that total borrowings less cash and cash equivalents will not exceed
40% of the Company's consolidated net assets.

         Senior Unsecured Notes

Subject to  documentation,  it is expected that the Company will issue the Notes
(defined  on page 27 hereof) on July 18,  2006.  The Notes are senior  unsecured
obligations of the Company and mature on July 18, 2013.

The  Series A and Series B Notes are Fixed  Rate  Notes.  The Series C Notes are
Floating  Rate Notes in respect of which the Company is expected to enter into a
swap  arrangement with The Royal Bank of Scotland plc that will fix the interest
rate payable to holders of such Series C Notes at 6.65%.

         Facility Agreement

On March 10, 2006, the Company, The Governor and Company of The Bank of Scotland
and The Royal Bank of Scotland plc entered into a new senior Facility  Agreement
to  permit  borrowings  of up to  EUR600  million.  The  Facility  Agreement  is
available for a five-year  period and is unsecured.  The Company is obligated to
pay,  on a  quarterly  basis,  an  annual  commitment  fee  on any  undrawn  and
uncancelled  amount  outstanding  from  time to  time  between  the  date of the
Facility  Agreement  and the  termination  date of the Facility  Agreement.  The
Company expensed a non-utilization  fee of approximately  GBP1.5 million for the
fiscal year ended  December 31, 2005. In addition,  the Company paid issue costs
of EUR3 million in March 2006 in relation to the Facility Agreement.

                                       63

The Facility  Agreement is a  multi-currency  revolving  loan  facility  with an
available  aggregate  principal  amount of up to EUR600  million.  The  Facility
Agreement is on normal commercial terms (including representations, undertakings
and events of default) and loans under the Facility  Agreement  bear interest at
the rate of LIBOR or, in relation to any loan in euro,  EURIBOR,  plus mandatory
costs,  if any, a margin of 1.25%  annually  (or 2.25%  annually if there is any
default in relation  to the payment of any sums due under the Finance  Documents
(as defined in the  Facility  Agreement)  has occurred or is  continuing)  and a
utilization  fee that  ranges  between  0. 25% - 0.50%  depending  on the amount
outstanding.  The Facility Agreement may be used to meet future Calls in respect
of the Company's existing holdings in immature Funds, to make new investments or
for general corporate purposes.

The Facility  Agreement also requires the Company to maintain  certain ratios of
borrowings  to assets and the margin  stated above is increased by 0.25% for any
interest period where the ratio of borrowings to assets exceeds 30%.

As of December  31,  2005,  EUR51.4  million  was  utilized  under the  Facility
Agreement by way of a guarantee to cover SVG  Capital's  uncalled  commitment to
SVG Diamond Holdings Limited. As of June 30, 2006, the amount utilized under the
Facility Agreement had increased to EUR125.3 million, as a result of a guarantee
over the Company's commitment to SVG Diamond Holdings II Limited,  following its
closing on  February  22,  2006.  See "Item 10. - Other  Information  - Material
Contracts" for more details about the Facility Agreement.

Issues of New Shares

At the April 24, 2006 Annual General  Meeting,  the Directors,  on behalf of the
Company,  were  authorized  to issue  relevant  securities  and to issue  equity
securities  as if the  pre-emption  provisions in Section 89(1) of the Companies
Act did not apply. The following authorities were approved at the April 24, 2006
Annual General Meeting in relation to the issue of shares:

1.      To issue relevant securities up to an aggregate nominal amount of (a)
        GBP1,285,455 (equivalent to 1% of the Company's issued ordinary share
        capital as of March 20, 2006) in connection with the Company's Executive
        Share Option Plan 2001; and (b) GBP42,848,529 (equivalent to one-third
        of the Company's issued ordinary share capital as of March 20, 2006),
        and

2.      To issue equity securities as if the preemption provisions in section
        89(1) of the Companies Act did not apply (a) up to an aggregate nominal
        amount of GBP1, 285,455 (equivalent to 1% of the Company's issued
        ordinary share capital as of March 20, 2006) in connection with the
        Company's Executive Share Option Plan 2001; (b) pursuant to rights
        issues and other preemptive issues; and (c) up to an aggregate nominal
        amount of GBP12,854,558 (equivalent to 10% of the Company's issued
        ordinary share capital as of March 20, 2006).

Refer  also to the  "Issue of New  Shares"  section  in "Item 5.  Operating  and
Financial  Review  and  Prospects"  and  the  description  of  the  Subscription
Agreement in "Item 10.  Additional  Information - Material  Contracts"  for more
information about the issue of 6 million shares to PCL on April 28, 2005.

                                       64

In addition, 10,208,327 new shares were issued in June 2006 on conversion of the
Bonds 2013 and a further  66,865 new shares have been  issued in 2006  following
the exercise of options over Ordinary Shares.

Dividend Policy

In order to comply with the current  conditions  for  approval as an  investment
trust for U.K.  tax  purposes,  the  Company is  prohibited  by its  Articles of
Association from  distributing as dividends any capital  surpluses  arising from
the sale or other  disposition of its  investments.  Accordingly,  any dividends
paid by the Company  will be funded out of its revenue  account.  The  Directors
expect the Company to make sufficient dividend payments to ensure the Company is
able to meet the current conditions for approval as an investment trust for U.K.
tax purposes.  The Company's  investment objective is one of capital growth, and
the Directors expect that any returns for holders of Ordinary Shares will derive
primarily from the capital  appreciation of the Ordinary Shares rather than from
the dividend income of the Ordinary Shares. Following the Annual General Meeting
in April 2006, the Directors  declared an interim dividend of 3.1p per share out
of available  profits for the year ended  December 31, 2005 in order to meet the
requirements  to ensure that the Company  continues to qualify as an  Investment
Trust.

The Company has been in compliance with its dividend policy since its inception.
See "Item 3. Key  Information - Selected  Financial Data - Dividend per Ordinary
Share  Information"  for  additional  information  about the Company's  dividend
payments.

Liquidity Requirements

The  Directors  believe  that  capital  resources  and  profits of the  Company,
together  with any new  issuances  of  Ordinary  Shares or  borrowings  that the
Directors deem necessary under the Facility Agreement or other issues of capital
or debt  instruments,  will be sufficient to fund the Company's  short-term  and
long-term  obligations  relating  to  commitments,  contingencies,  investments,
proposed  operations  and  required  cash  distributions  to the  holders of the
Ordinary  Shares.  See "Item 10.  Additional  Information  - Taxation - Dividend
Policy" for additional information about the Company's dividend payments.

Critical Accounting Policies

The  Directors  consider  that the Company's  only  critical  accounting  policy
relates to the valuation of investments as the Company's investment portfolio is
the most significant asset in its balance sheet and therefore  judgmental errors
in  applying   this  policy  could  have  a  material   impact  on  returns  and
shareholders'  funds. See Note 1 in "Item 17. Financial  Statements" for further
details on the Company's  accounting  policies.  The  valuation  policies of the
Company are consistent with the International Private Equity and Venture Capital
Valuation Guidelines  developed by the British Venture Capital Association,  the
European  Private  Equity &  Venture  Capital  Association  and the  Association
Francaise des  Investisseurs en Capital,  effective from January 1, 2005, and in
accordance  with IFRS.  The  guidelines  set out  recommendations,  intended  to
represent   current   best   practice.   Where  there  is  conflict   between  a
recommendation   contained  in  the  guidelines  and  the  requirements  of  any
applicable  laws,   regulations,   accounting  standard  or  generally  accepted
accounting principle, the latter requirements should take precedence.

                                       65

It is important to recognize the subjective  nature of private equity investment
valuation.  It is inherently  based on  forward-looking  estimates and judgments
about the underlying business itself, its market and the environment in which it
operates,  the  state of the  mergers  and  acquisitions  market,  stock  market
conditions  and other  factors.  As such,  while  valuations  do provide  useful
interim  indications of the progress of a particular  investment or portfolio of
investments,  ultimately it is not until  realization  that true  performance is
firmly apparent.

Investments  are  reported  at fair  value,  being the amount for which an asset
could be exchanged  between  knowledgeable,  willing  parties in an arm's length
transaction,  at the reporting date. In estimating fair value for an investment,
the  valuer  should  apply a  methodology  that is  appropriate  in light of the
nature,  facts and  circumstances  of the investment and its  materiality in the
context of the total investment portfolio and should use reasonable  assumptions
and estimates.

In determining the fair value of an investment,  the valuer should use judgement
and consider a variety of factors, including thespecific terms of the investment
which may impact its fair value. In this regard,  the valuer should consider the
substance of the investment, which takes precedence over the strict legal form.

Where the reporting currency of the Fund is different from the currency in which
the  investment  is  denominated,  translation  is done using the exchange  rate
prevailing at the reporting date.

To comply with IFRS,  marketability discounts should generally not be applied to
prices  quoted  on an  active  market.  The  Company  does not  therefore  apply
discounts to quoted stocks held within the portfolio,  even if there is a formal
restriction on trading in the relevant  securities or, for other reasons such as
the size of our investment,  there is a risk that the holding may not be able to
be  sold  immediately  at  the  prevailing   market  price.  This  represents  a
significant  departure to the way the Company  valued its  investments in quoted
private  equity  companies  prior to the adoption of IFRS,  which were typically
valued at a discount to the quoted market price.  As discussed in note 36 to the
financial  statements,  the  Company  also  considers  that this is now the most
appropriate  method of determining the fair value of quoted investments under US
GAAP.

There are no material  differences between the valuation policies adopted by the
Company and those applicable under US GAAP.

C.       Research and Development, Patents and Licenses, etc.

None.

D.       Trend Information

For additional  information  about the performance of the Company,  see "Item 5.
Operating and Financial Review and Prospects - Operating Results."

There is a large degree of uncertainty and risk involved in investing in private
equity,  as described more fully in "Item 3. Key Information - Risk Factors" and
Note 33 in "Item  17.  Financial  Information."  The  table  below  sets out the
Company's historic  performance from inception to December 31, 2005. As detailed
in "Item 10.  Additional  Information  - Material  Contracts,"  the  Company has
agreed that it should focus its future  investments  mainly on Permira Funds. As
such, and given that our largest  exposures  currently are to Permira Funds,  we
expect that the future  performance of the Company will be largely  dependent on
the  future  performance  of the  Permira  Funds  in  which  we  invest,  and in
particular on the performance of Permira IV.

                                       66

A summary of events since  December  31, 2005 is included in "Item 5.  Operating
and Financial Review and Prospects - Liquidity and Capital Resources" above. The
Company's share price at June 30, 2006 is 717.0p.

HISTORICAL RECORD TO 31 DECEMBER/30 JUNE*
<TABLE>
<CAPTION>
                                                                              Diluted      Price of    Share price
                                                            Shareholders'         NAV      ordinary       premium/
                                               Total assets        funds    per share        shares     (discount)
                                                    GBP'000      GBP'000        pence         pence              %
IFRS
<S>                                                 <C>          <C>            <C>           <C>              <C>
2005 (December)                                     955,398      902,357        667.8         716.5            7.3
2004 (December)                                     760,045      708,850        558.2         579.0            3.7

UK GAAP
2003 (December)                                     615,145      526,618        458.7         484.0            5.5
2002 (December)                                     502,746      463,192        445.8         379.0          (15.0)
2002 (June)                                         462,613      423,087        412.3         354.5          (14.0)
2001 (June)                                         417,260      416,872        407.6         393.0           (3.6)
2000 (June)                                         461,615      461,125        450.9         461.5            2.4
1999 (June)                                         333,630      322,485        325.9         262.5          (19.5)
1998 (June)                                         230,822      219,730        215.1         182.0          (15.4)
1997 (June)                                         207,655      182,548        189.2         174.5           (7.8)
1996 (launched 23 May 1996)                         240,733      186,493        193.3         200.0            3.5
</TABLE>

*The  Company  changed  its  financial  year-end  from June 30 to  December  31,
effective  from December 31, 2002.  Balance sheet data for December 2003 onwards
has been  calculated in accordance  with IFRS.  Earlier  periods are based on UK
GAAP as it existed on the relevant reporting dates and have not been restated in
accordance with IFRS.

E.       Off-Balance Sheet Arrangements

None

                                       67

F.       Tabular Disclosure of Contractual Arrangements

The Company  has  contractual  obligations  that  require it to provide  further
capital to certain Funds in which it has  invested.  An analysis of the uncalled
commitments  to these Funds at December  31, 2005 is shown  below.  The uncalled
commitments may be called, or not called, at any time until the termination date
of the Fund in accordance  with the Limited  Partnership  Agreement of such Fund
or, in the case of a company, its Articles of Association.

<TABLE>
<CAPTION>
                                                                            Fund         Amount             Uncalled
                                                                     Termination       uncalled          Commitment*
                                                                            Date         (local         (GBP million)
                                                                                      currency)
<S>                                                                          <C>           <C>                    <C>
Fund Commitments:
   Permira Europe II                                                        2010       EUR85.2m                 58.5
   Permira Europe III                                                       2013      EUR284.0m                195.1
   The Japan Venture Fund IV                                                2014    YEN6,290.0m                 31.0
   SV Investments Fund I                                                    2009         $10.6m                  6.2
   SV Life Sciences Fund II                                                 2009          $6.6m                  3.9
   SV Life Sciences Fund III                                                2013         $33.8m                 19.7
   P123                                                                     2005       EUR21.0m                 14.4
   SVG Diamond                                                              2026        EUR51.4                 35.3
   Total                                                                                                       364.1
</TABLE>

*      Based on exchange rates at December 31, 2005.

<TABLE>
<CAPTION>
                                                      Total    Less than     1-3 years      3-5 years   More than 5
                                                                  1 year          (GBP                        years*
                                                                              millions)
<S>                                                     <C>          <C>           <C>            <C>
Operating Lease Obligation:                             1.3          0.4           0.8            0.1            --

Bond Repayments:
   Subordinated Convertible         Bonds              49.0           --            --             --          49.0
2013**
Total                                                  50.3          0.4           0.8            0.1          49.0
</TABLE>

**       The Bonds 2013 were converted into Ordinary Shares in June 2006.

         Time periods calculated from the fiscal year ended December 31, 2005.

                                       68

Item 6.           DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A.       Directors and Senior Management

The descriptions of the Directors as at June 30, 2006 are shown below. There are
no family relationships between a Director and any other Director.

1 Nicholas Ferguson
Chairman (aged 57)
Nicholas Ferguson was appointed as a Director of the Company on 12 February 1996
and Chairman on 25 April 2005. He currently is the non-executive Chairman of SVG
Advisers  Limited,  was formerly the Chairman of Schroder  Ventures and has been
instrumental  in its development  since 1984. He is a non-executive  Director of
BSkyB plc.

2 Damon Buffini
Non-Executive Director (aged 44)
Damon  Buffini was  appointed as a Director of the Company on April 25, 2005. He
joined Permira in 1988. He became a partner in Permira in 1992, Managing Partner
of the UK in 1999 and  Managing  Partner in 2000.  He is Chairman  of  Permira's
operating  committee  and has worked on  numerous  buy-outs,  buy-ins and growth
capital transactions.

3 Francis Finlay
Non-Executive Director (aged 63)
Francis Finlay was appointed as a Director of the Company on October 1, 2004. He
is Chairman  and Chief  Executive  Officer of Clay Finlay Inc., a New York based
investment  management  firm with offices in London and Tokyo.  Other  corporate
directorships  include:  Scottish  Investment Trust plc, East Europe Development
Fund,  Blakeney  Investors,  Lebanon Holdings,  Bayer Allan Funds and Old Mutual
(US) Holdings.

4 Anthony Habgood
Non-Executive Director (aged 59)
Anthony  Habgood was appointed as a Director of the Company on February 12, 1996
and is Chairman of Bunzl plc and Chairman of Whitbread plc.

5 Edgar Koning
Non-Executive Director (aged 53)
Edgar Koning was appointed as a Director of the Company February 12, 1996 and is
Executive Vice  President  with AEGON  Nederland NV. He joined AEGON in 1981 and
has held various senior management positions in the Group.

6 Denis Raeburn
Non-Executive Director (aged 61)
Denis  Raeburn was  appointed  as a Director of the Company on June 25, 2001 and
was Managing  Director of the asset  management  company Global Asset Management
(GAM) between 1986 and 1999.

7 Charles Sinclair
Non-Executive Director (aged 58)
Charles  Sinclair was appointed as a Director of the Company on January 1, 2005.
He is Chief Executive of Daily Mail and General Trust plc. He is a non-executive
Director of Euromoney  Institutional  Investor PLC. He retired from the Board of
Reuters Group PLC in December 2005.

                                       69

8 Andrew Williams
Executive Director (aged 54)
Andrew Williams was appointed as a Director of the Company on May 3, 2002. He is
Chief Executive of SVG Advisers Limited, Managing Principal of SVG North America
Inc and a non-executive Director of CDC Group plc.

Andrew Williams is the only executive Director of the Company.

Damon Buffini will not participate in any decisions relating to commitments that
have  been or may be made by the SVG  Capital  Group  to any  Permira  Funds  or
Permira  Products.  See "Item 10 - Material  Contracts" for further  information
relating to the Company's relationship with Permira.

In accordance  with the  Company's  Articles of  Association,  Denis Raeburn and
Andrew  Williams  retired at the Annual  General  Meeting held on April 24, 2006
and, being eligible,  offered  themselves for re-election and were re-appointed.
Anthony  Habgood  and Edgar  Koning  retired  at the Annual  General  Meeting in
accordance with the Company's  policy on tenure that any Director who has served
on the Board for more than nine years will be subject to annual re-election and,
being eligible, offered themselves for re-election and were appointed.

Anthony Habgood and Edgar Koning have served as  non-executive  Directors of the
Company  for more  than  nine  years.  Anthony  Habgood  and  Edgar  Koning  are
considered to be independent in both  character and judgement.  Francis  Finlay,
Denis Raeburn and Charles Sinclair are also independent non-executive Directors.

Directors Interests

The Directors of the Company and their  beneficial  and family  interests in the
Company's share capital at June 30, 2006 are given below:


                                                             Ordinary Shares
                                                              of GBP1.00 each

<TABLE>
<CAPTION>
                                                                             At June 30, 2006
Beneficial
<S>                                                                                   <C>
N E H Ferguson*                                                                       551,507
D Buffini                                                                                 Nil
D F K Finlay                                                                          100,000
A J Habgood                                                                            66,666
E W Koning                                                                                Nil
D Raeburn                                                                             164,166
C Sinclair                                                                             67,062
A C Williams*                                                                          13,091

Non-Beneficial
N E H Ferguson                                                                         42,900
A J Habgood                                                                            12,500
C Sinclair                                                                              6,250
</TABLE>

* In addition,  Nicholas Ferguson and Andrew Williams have options over Ordinary
Shares, details of which are given on page 74.

                                       70

The Directors do not have service  contracts with the Company.  However,  Andrew
Williams is employed by Schroder  Investment  Management Limited and seconded to
the Company.  As part of the secondment  arrangements,  SVGA reimburse  Schroder
Investment  Management Limited for the salary,  bonus and other benefits paid by
Schroder Investment Management Limited to Andrew Williams.  Until his retirement
as an executive Director of the Company on April 25, 2005, Nicholas Ferguson was
also  employed by Schroder  Investment  Management  Limited and  seconded to the
Company.

Andrew Williams, Damon Buffini, and Nicholas Ferguson (along with members of Mr.
Ferguson's  family) each have an interest in the Carried  Interest in respect of
certain Funds.  Nicholas Ferguson and Andrew Williams have foregone a portion of
their entitlement to Carried Interest on existing Funds and any entitlement they
may have to Carried  Interest on Permira or Schroder  Ventures'  funds  launched
after  2001 in  return  for  share  options  granted  by the  Company  under the
Executive  Share  Option  Plan.  Damon  Buffini   participates  in  the  Permira
Co-Investment   Scheme,   Schroder  Ventures  Investments  Limited  and  Permira
Investments  Limited.  Nicholas Ferguson and Andrew Williams also participate in
the Schroder Ventures  Co-Investment  Scheme and Schroder  Ventures  Investments
Limited.  No other Director has any material interest in any other contract that
is significant to the Company's business.

B.       Compensation

Compensation of Directors

Each  non-executive  Director  is  paid  a fee  at the  rate  determined  by the
Directors,  subject to a cap on the total fees paid to  non-executive  Directors
under the Articles of  Association  of the Company  (excluding  amounts  payable
under other  provisions of the Articles).  The cap may be increased from time to
time as approved by an ordinary  resolution  of a majority of the holders of the
issued Ordinary Shares  represented at a  shareholders'  meeting.  At the Annual
General  Meeting  held on April 25,  2005 the  shareholders  passed an  ordinary
resolution  to  increase  the  aggregate  cap on  fees  paid to  Directors  from
GBP200,000 to GBP600,000.

                                       71

Current Remuneration

The  emoluments of the Directors in respect of the year ended  December 31, 2005
were as specified below:

<TABLE>
<CAPTION>
                                                                                            Total
                                                                                       Emoluments
                                                                                          year to
                                                    Salary    Benefits      Annual   December 31,
                                                    & fees     in kind     bonus**           2005
                                                   GBP'000     GBP'000     GBP'000        GBP'000
<S>                                                    <C>         <C>         <C>            <C>
Executive
A C Williams                                           297           1         550            848
Non-Executive
N E H Ferguson *                                       224           1         167            392
D Buffini                                               16           -           -             16
F Finlay                                                32           -           -             32
A J Habgood                                             36           -           -             36
E W Koning                                              24           -           -             24
J J McLachlan                                           46           -           -             46
D Raeburn                                               36           -           -             36
C Sinclair                                              35           -           -             35

Aggregate emoluments                                   746           2         717          1,465
</TABLE>

* Nicholas Ferguson retired as an executive  Director and became the Chairman of
the Company at the  conclusion of the Annual  General  Meeting held on April 25,
2005. His remuneration for the year ended December 31, 2005 includes  Chairman's
fees of GBP120,000.  He is currently  entitled to Chairman's  fees of GBP180,000
per annum.

** Bonuses  include  provision  for  amounts  accrued but not paid in each year.
Annual bonuses are awarded in respect of calendar years.

Each  Director  may  also  be  reimbursed  for  reasonable  travel,  hotel,  and
incidental expenses of attending meetings of the Directors,  as well as meetings
of committees of the Directors,  general  meetings of the Company,  or any other
meetings which, as a Director,  a particular member is entitled to attend.  Each
Director is paid all  expenses  incurred by him in the conduct of the  Company's
business or in the  discharge  of his duties as a  Director.  Any  Director  who
travels or resides abroad for any Company  purpose or performs  services  beyond
the  ordinary  duties of a Director may be paid such extra  remuneration  as the
Directors may determine in addition to any other remuneration from the Company.

The following  information  deals with the additional  remuneration  paid to the
Directors including the Company's current and former executive Directors for the
year  ended  December  31,  2005.  It  also  addresses  the  policy  for  future
remuneration of the Directors.

Pension arrangements

The  following  figures,  prepared in  accordance  with UK  legislation  and the
Listing Rules of the Financial  Services  Authority,  apply to Nicholas Ferguson
and Andrew Williams (who are members of Schroder's  Retirement  Benefits Scheme)
in respect of the year ended  December 31, 2005,  for which they were  executive
Directors  of the  Company.  No  pension  contributions  are  payable  by either
individual.

                                       72

Executive Directors' Pensions
<TABLE>
<CAPTION>
                                                                                                                  Transfer
                                                                                                                  value at
                                                                                                              December 31,
                                                                                                           2005 in respect
                                        Increase in                                 Increase                   of increase
                Accrued   Increase in       accrued      Accrued      Transfer   in transfer      Transfer      in accrued
             benefit at       accrued   benefit due   benefit at      value at     value net      value at         benefit
           December 31,   benefit due      to other December 31,  December 31, of director's  December 31,      (excluding
                   2004  to inflation       factors       2005++          2004 contributions        2005++      inflation)
                GBP'000       GBP'000       GBP'000      GBP'000       GBP'000       GBP'000       GBP'000         GBP'000
<S>                 <C>           <C>           <C>          <C>           <C>           <C>           <C>             <C>
N E H Ferguson +    115             1             1          117         1,737           629         2,366               9
A C Williams         93             3             6          102         1,197           350         1,547              97
</TABLE>

++ Or date of retirement, if earlier.

+ Nicholas Ferguson retired as an executive  Director and became the Chairman of
the Company at the  conclusion of the Annual  General  Meeting held on April 25,
2005.  The increase of GBP629,000 in the transfer  value arose because  Nicholas
Ferguson  ceased to accrue  pension  on April 30,  2005 and drew his  retirement
benefits from that date.

Transfer values are liabilities of the relevant pension fund rather than amounts
due to be paid to the executive Directors or liabilities of the Company.

Executive Share Option Plan

In May 2001, the shareholders approved the adoption of an Executive Share Option
Plan (the "Plan"). The Plan is administered by the Remuneration Committee of the
Directors and is eligible to the following persons:

1) Employees of the Company and its subsidiaries  (which, for purposes of Part D
of the Plan, includes joint ventures);

2) Directors of the Company and its  subsidiaries who work at least 25 hours per
week for any of the Company or its subsidiaries; and

3) Individuals seconded to the Company or its subsidiaries,

who are not within two years of their contractual retirement age and who are not
otherwise excluded by applicable law.

The Plan has a  10-year  term and the  number  of  Ordinary  Shares  issued  and
issuable  under the Plan may not exceed  10% of the  Company's  issued  Ordinary
Shares.  Exercise of the  options  typically  will be subject to vesting  over a
period of years and to  satisfaction of performance  targets  established by the
Remuneration  Committee.  As of December 31, 2005,  the total number of Ordinary
Shares  issued and issuable  (assuming the exercise of all options over Ordinary
Shares and the conversion of all convertible bonds) totaled 146,634,684 Ordinary
Shares.  As of June 30,  2005,  the total number of Ordinary  Shares  issued and
issuable  (assuming the exercise of all options)  totaled  147,360,105  Ordinary
Shares.

So as to link a significant  proportion of their  remuneration  to the long term
stock market  performance of the Company and to the achievement of predetermined
financial targets,  the interests of the Company's executive Directors and other
executives of the Group are aligned with shareholders'  through the operation of
the  Company's  Executive  Share  Option  Plan,  which  was  introduced  at  the
Extraordinary General Meeting held on May 3, 2001.

                                       73

Options will be granted  regularly to qualifying  employees and secondees of the
Group and the Committee  will  determine  grant levels,  taking into account the
development of the business and individual performance.

All options are granted at the prevailing market price around the time of grant.

It is intended that options will be granted  regularly to  qualifying  employees
and  secondees  and this policy has been  followed as of the date of this annual
report.  However,  the levels of such  grants will be at the  discretion  of the
Directors,  taking into account the  development  of the business and individual
performance.  All options are granted at  approximately  the  prevailing  market
price at the time of grant and the ability to exercise the options is subject to
the satisfaction of certain performance targets.

The  effective  annual cost to the Company of the Plan will depend  primarily on
the  growth of the net asset  value per  Ordinary  Share,  the number of options
granted and the dates of exercise of such options.

Options held by Directors over ordinary shares of the Company

The following Directors have been granted options over Ordinary Shares under the
Executive Share Option Plan:

<TABLE>
<CAPTION>
                   Shares                                        Shares
               underlying                                    underlying
               options at                                    options at
             December 31,     Options   Options    Options December 31,    Exercise              Exercise dates+
                     2004     granted exercised     lapsed         2005       price          Earliest           Latest
<S>                   <C>         <C>       <C>        <C>          <C>         <C>               <C>              <C>
N E H Ferguson    715,446           -         -          -      715,446     410.00p      June 21,2004*   June 20, 2011
                  357,724           -         -          -      357,724     410.00p     June 21, 2005*   June 20, 2011
                  404,484           -         -          -      404,484     334.50p     April 5, 2005*   April 4, 2012
                  349,840           -         -          -      349,840     392.75p    March 13, 2006   March 12, 2013
                  363,256           -         -          -      363,256     479.00p    March 12, 2007   March 11, 2014
                        -     250,704         -          -      250,704     564.00p    March 23, 2008   March 22, 2015

A C Williams      373,983           -         -          -      373,983     410.00p     June 21, 2004*   June 20, 2011
                  186,992           -         -          -      186,992     410.00p     June 21, 2005*   June 20, 2011
                  272,645           -         -          -      272,645     334.50p     April 5, 2005*   April 4, 2012
                  239,847           -         -          -      239,847     392.75p    March 13, 2006   March 12, 2013
                  248,851           -         -          -      248,851     479.00p    March 12, 2007   March 11, 2014
                        -     242,957         -          -      242,957     564.00p    March 23, 2008    March 22,2015

Total           3,513,068     493,661         -          -    4,006,729
</TABLE>

+ Options are exercisable subject to appropriate performance targets being met.
* Performance conditions have been met.

The Committee  intends to continue to set  appropriately  demanding  performance
targets on the exercise of options.  For options  granted in 2005, the target is
for growth in the  Company's  net asset value per  ordinary  share to exceed the
growth in the Retail Prices Index ("RPI") plus 4% per annum over the three years
from the date of grant. If the performance  target is not satisfied on the third
anniversary of the date of grant it will lapse (i.e.  there will be no retesting
of this performance  condition).  This change was introduced in 2005 in order to
reflect best  practice.  For the options  that were  granted in March 2004,  the
target is for growth in the  Company's  net asset  value per  ordinary  share to
exceed  the  growth in the RPI plus 4% per annum  over the three  years from the
date  of  grant.  If the  performance  target  is  not  satisfied  on the  third
anniversary of the date of grant, it may be re-tested every six months up to six
years  from  grant.  For  all  options  granted  up to the  end of  March  2003,
performance targets have been met. The performance of the net asset value of the
Company  has been  chosen  as the  target  in order to align  the  interests  of
executive Directors and other executives of the Group with

                                       74

shareholders' interests. External advisers will confirm the performance criteria
calculations for the Committee, which will be measured on a consistent basis.

The mid-market  price of shares at December 31, 2005 was 716.5p,  and the lowest
and highest market prices of shares during the year were 554.0p and 720.5p.

All  of  the  options  reflected  in  the  table  above  were  granted  for  nil
consideration.

The number of options in issue at  December  31,  2005 in respect of current and
former executive directors represented 3.1% (2004: 2.9%) of the Company's issued
share capital.

It is not  anticipated  that the value of shares  under  options  granted in any
financial year will, other than in exceptional  circumstances,  exceed two times
an individual's remuneration, including bonuses.



The Company has  established an employee  benefit trust to enable it to purchase
shares in the market to satisfy options exercised by employees of the Group. New
shares will be issued in respect of options  exercised by seconded  individuals.
The Board will  regularly  review the  benefit of using the trust to make market
purchases.

The  following  table  presents  information  with  respect to option  grants to
Directors of the Company under the Plan subsequent to December 31, 2005:

<TABLE>
<CAPTION>
          Director                  Shares           Grant Date      Exercise         Earliest           Latest
                                  Underlying                           Price       Exercise Date      Exercise Date
                                   Options
<S>                                  <C>                 <C>            <C>              <C>               <C>
A.C. Williams                      178,313         March 24, 2006     831.40p      March 24, 2009    March 23, 2016
</TABLE>

For options granted in 2006, the target is for growth in 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. If the performance target
is not  satisfied  on the third  anniversary  of the date of grant it will lapse
(i.e. there will be no retesting of this performance condition).

The Remuneration Committee (the "Committee")

The  Committee's  members  during the year  ended  December  31,  2005 were John
McLachlan  (Chairman,  until he  retired  on April  25,  2005),  Francis  Finlay
(Chairman  from  April  25,  2005),  Anthony  Habgood  and  Denis  Raeburn,  all
considered by the Board to be independent non-executive Directors.

The Committee  meets at least twice a year and invites  selected  executives and
advisers to attend as appropriate.  All members of the Committee attended all of
the  Committee  Meetings  held during the year,  and no member of the  Committee
participated in any discussions or decisions regarding his own remuneration.

The  Committee  is  responsible  for  determining  the  remuneration  policy for
executives, including executive Directors and the Chairman, of the SVG Group and
the  operation  of the  Company's  Executive  Share  Option  Plan.  Its terms of
reference  take into account the  provisions  of the Combined  Code on corporate
governance.  The Committee has appointed New Bridge Street  Consultants  LLP and
Towers Perrin,  independent remuneration  consultants,  to advise it. New Bridge
Street  Consultants  LLP also provides  advice on the operation of the Company's
share schemes.

                                       75

The terms of reference of the Committee are set out on page 82 and are available
on request from the Company Secretary.

Non-executive Directors

All  Directors  are  appointed  for an initial  term of three  years  subject to
election  at the first  Annual  General  Meeting  following  their  appointment.
Thereafter Directors retire by rotation at least every three years. The Chairman
meets with each  Director  before a Director is proposed for  re-election,  and,
subject to the evaluation of performance carried out each year, the Board agrees
whether it is  appropriate  for that Director to seek an additional  term.  When
recommending  whether an individual Director should seek re-election,  the Board
will take into account the provisions of the Combined  Code,  including the need
to refresh the Board and its committees.

A letter of  appointment  with the  Company  was issued to Charles  Sinclair  on
January 1, 2005, Damon Buffini on April 25, 2005 and Nicholas Ferguson on April
25, 2005,  following the latter's  appointment as Chairman,  each for an initial
period of three years with a minimum notice period of three months in writing by
either party. The same notice period applies to all Directors.

Remuneration  paid to  non-executive  Directors is  determined  by the Board and
reviewed  each  year.  When  considering  remuneration  levels,  the Board  will
consider,  amongst other things,  industry  practice and contribution to various
committees and time spent on the business of the Company.

Policy on the remuneration of the Directors

The  Committee's  aim is to ensure that  remuneration  packages  should attract,
retain and motivate senior executives (including executive directors) but should
avoid paying more than is necessary for this purpose.  Basic salaries are set on
this  basis and the  Committee  has due  regard to  competitive  market  data on
similar   positions  in  other  private  equity   organisations   and  financial
institutions (this is provided by Towers Perrin).  The Committee is sensitive to
wider issues  including pay and employment  conditions in the Group when setting
pay levels. No executive Director of the Company is involved in deciding his own
remuneration.

Andrew   Williams   is   the   only   executive   Director   of   the   Company.
Performance-related  elements of remuneration  form a significant  proportion of
the total remuneration package of any executive Director.

External appointments

The  Company  permits  executive  Directors  of the  Company  to accept  limited
non-executive directorships and other similar appointments,  it being recognized
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 the executive Directors.

Andrew   Williams  was,   throughout   the  year  ended  December  31,  2005,  a
non-executive  Director of CDC Group plc. Mr. Williams earned Directors' fees of
GBP26,000 for this appointment.

                                       76

Andrew  Williams is also a Director of various funds managed or advised by SVGIM
or SVGA.

Service contracts

Andrew Williams,  the only executive Director,  does not have a service contract
with the Company. He is employed by Schroder Investment Management Limited (SIM)
and is seconded to the Group.  His contract  with SIM provides for three months'
notice for termination and does not include liquidated damages provisions.

Mr  Williams'  contract  with SIM is dated  March 1, 2004.  It is the  Company's
policy to have regard to the duty of a departing  executive Director to mitigate
his loss when determining the level of any termination payment.

No other Director has a service contract with the Company.

Compensation of the Company Secretary

Schroder Investment  Management Limited, a subsidiary of Schroders plc, has been
appointed as the company secretary and provides  secretarial and  administrative
services to the Company.  The company  secretary's duties include monitoring the
ability of the Company to satisfy the  conditions  for approval as an investment
trust for U.K. tax purposes.

During the fiscal year ended  December 31, 2005,  total fees payable to Schroder
Investment  Management  Limited, in consideration of services it rendered to the
Company in the capacity of company secretary,  totalled GBP186,000, all of which
was  outstanding  at December 31, 2005. The  appointment of Schroder  Investment
Management  Limited as Company  Secretary  may be  terminated  upon four months'
prior written notice and immediately  upon the occurrence of certain  insolvency
events and other events of default.  Schroder Investment Management Limited also
provides taxation services to the Company.  Total fees payable for such services
during the fiscal year ended  December  31, 2005  totalled  GBP35,000,  of which
GBP26,000 was outstanding as of such date.

Schroder Investment Management Limited also facilitates investment trust dealing
services.  Total fees paid or payable to Lloyds TSB Registrars for such services
during the fiscal year ended December 31, 2005 totalled GBP5,000.

Schroder Investment Management Limited is also entitled to receive a fee for the
management of the Company's  fixed interest  portfolio from the Company based on
the average value of the Company's  month-end cash and fixed interest portfolio,
calculated at the rate of:

     o    0.10% per annum on the first GBP75 million of assets,
     o    0.05% per annum on the next GBP75 million, and
     o    0.03% per annum on the excess,

provided,  however, that the minimum annual fee shall not be less than GBP20,000
per year.  The total fees paid or  payable  for these  services  during the year
ended December 31, 2005 was GBP123,000, of which GBP34,000 was outstanding as of
December 31, 2005.

Compensation of Officers and Employees

                                       77

The Directors have appointed  Nicholas  Ferguson as Chairman and Andrew Williams
as an  Executive  Director.  SVG Capital plc  currently  has no other  Executive
officers or employees  (other than the company  secretary) and it is anticipated
that SVG Capital plc will have no other  employees  or officers  (other than the
company  secretary)  in the  future.  As of December  31,  2005,  the  Company's
subsidiaries,  SVGA and  SVGNA,  had an  aggregate  of 37  employees  and  three
secondees from Schroder Investment  Management Limited.  However,  the Directors
may from time to time appoint one or more  Directors to hold any  employment  or
executive office with SVG Capital plc (including that of managing  director) for
such period (subject to the provisions of the Companies Act) and upon such other
terms as the Directors may decide and may revoke or terminate any appointment so
made. A Director so appointed shall receive such remuneration (whether by way of
salary, commission,  participation in profits or otherwise) as the Directors may
decide either in addition to or in lieu of his remuneration as a Director.

C.       Board Practices

At every Annual General Meeting of the Company,  one-third of the Directors,  or
if their number is not three or any multiple of three then the number nearest to
and less than one third, who are subject to retirement by rotation,  will retire
by  rotation  and be  eligible  for  re-election.  The  Directors  who retire by
rotation on each  occasion  will be those who have been  longest in office since
their  appointment  but as between  persons who became or were last  reappointed
directors on the same day,  those to retire will be determined  by lot.  Anthony
Habgood,  Edgar Koning,  Denis Raeburn and Andrew Williams retired at the Annual
General Meeting on April 24, 2006, sought re-election and were re-elected.

The  Company's  Articles  of  Association  also  require  that a majority of the
Directors,  including the Chairman,  be independent of Schroder Ventures and the
Schroder Group.  For this purpose,  a Director is deemed to be  "independent" of
the Schroder Group unless (a) he is a director,  officer,  general  partner,  or
employee of a member of the Schroder Group or (b) a member of the Schroder Group
is connected with him within the meaning given to that expression by Section 346
of the Companies Act.  Francis  Finlay,  Anthony  Habgood,  Edgar Koning,  Denis
Raeburn and Charles Sinclair are independent for the purposes of the Articles of
Association.  Any decision of the  Directors  requires a simple  majority  vote;
however,  a majority of the  Directors  voting in favor of the decision  must be
independent Directors for the purposes of the Articles of Association

The Board  Committees  are outlined  below.  Also refer to Section A of "Item 6.
Directors, Senior Management and Employees" for additional information about the
Company's Directors,  and to Section B of "Item 6. Directors,  Senior Management
and Employees" for additional  information on the policy on the  remuneration of
Directors.

                                       78

         Audit Committee

         The members of the Committee as at December 31, 2005 were:

         Charles Sinclair (Chairman)
         Anthony Habgood
         Denis Raeburn

The Board  considers each member of the Committee to be  independent.  The Board
also  considers  that the  Chairman  of the  Committee  has recent and  relevant
financial experience.

Terms of reference

The  Company  established  an Audit  Committee  in 1996.  The role of the  Audit
Committee  is to ensure that the Company  maintains  the  highest  standards  of
integrity  in financial  reporting  and  internal  control.  A copy of the Audit
Committee  Charter is  available  on request  from the  Company  Secretary.  The
responsibilities of the Committee include the following:

Financial statements

(a) to monitor the integrity of the financial statements of the Company, and any
formal announcements relating to the Company's financial performance,  including
reviewing significant financial reporting judgements contained in such financial
statements or formal announcements;

(b) to review and, if appropriate,  recommend to the Board the Company's  annual
and interim reports;

Internal control

(c) to monitor  and  review  annually  whether an  internal  audit  function  is
required;

(d) to monitor the Company's  accounting and financial internal control systems,
and to  monitor  the  internal  control  systems  of  subsidiaries  and to  make
recommendations on any improvements to such systems;

(e) to monitor the Company's  procedures for ensuring compliance with regulatory
and financial  reporting  requirements and the Company's  relationship  with the
relevant regulatory authorities;

External audit and relationship with the external auditor

(f) to oversee and discuss any matters arising from any services provided to the
Company by the auditors, including the audit, and to discuss any recommendations
made by the  auditors,  and to serve as the entity to which the auditors  report
directly;

(g) to make  recommendations to the Board, for it to put to the shareholders for
their   approval  in  general   meeting,   in   relation  to  the   appointment,
re-appointment   and  removal  of  the  external  auditor  and  to  approve  the
remuneration and terms of engagement of the external auditor;

(h) to determine the  appropriate  funding,  to be provided by the Company,  for
payment of  compensation  to the auditors and any  independent  counsel or other
advisors employed by the Committee,  and payment of the ordinary  administrative
expenses of the Committee;

(i) to review and monitor the external  auditor's  independence  and objectivity
and the effectiveness of the audit process,  taking into consideration  relevant
UK professional and regulatory requirements;

                                       79

(j) to develop and implement policy on the engagement of the external auditor to
supply  non-audit  services,  taking  into  account  relevant  ethical  guidance
regarding the provision of non-audit  services by the external audit firm and to
report to the Board on any matters in respect of which the  Committee  considers
that action or improvement is needed and to make recommendations as to the steps
to be taken;

(k) to consider other topics, as requested and defined by the Board; and

(l) to  establish  procedures  for  the  receipt,  retention  and  treatment  of
complaints  received by the Company regarding  accounting,  internal  accounting
controls or auditing  matters,  and procedures for the  confidential,  anonymous
submission by employees of the Company of concerns regarding the same matters.

Report on the Committee's activities

To discharge its duties,  the Committee met on three  occasions  during 2005 and
considered the following:

-        the annual financial statements for 2004 and interim financial
         statements for 2005
-        the external auditors' interim and year-end reports and management
         letters
-        the effectiveness of the audit process
-        the independence and objectivity of the external auditor
-        pre-approval of non-audit services
-        the impact of the introduction of IFRS
-        revised Terms of reference

The Committee has also reviewed  arrangements for staff of subsidiaries to raise
concerns about possible improprieties relating to the Group's operations. A copy
of the full Terms and  Reference of the Audit  Committee is available on request
from the Company Secretary.

Attendance

         Each of the meetings held during 2005 were attended by all members of
         the Committee.

         Investment Committee

         The members of the Committee as at December 31, 2005 were:

         Nicholas Ferguson (Chairman)
         Francis Finlay
         Anthony Habgood
         Edgar Koning
         Denis Raeburn
         Charles Sinclair
         Andrew Williams

Terms of reference

The Company  established  an  Investment  Committee  in 1996. A copy of the full
Terms of Reference of the Investment  Committee is available on request from the
Company Secretary.

                                       80

         The responsibilities of the Committee include the following:

-        to review investment proposals for the Company;
-        to provide investment recommendations to the Board; and,
-        to implement the Board's decision as regards any investment

Report on the Committee's activities

To discharge its duties, the Committee met on several occasions during 2005, and
considered various investment proposals.

Attendance

         Each of the meetings held during 2005 were attended by all members of
         the Committee.

         Nominations Committee

         The members of the Committee as at December 31, 2005 were:

         Nicholas Ferguson (Chairman)
         Damon Buffini
         Francis Finlay
         Anthony Habgood
         Edgar Koning
         Denis Raeburn

         The Board considers a majority of the Committee to be independent.

Terms of reference

The  Company  established  a  Nominations  Committee  in  1999.  The role of the
Committee  is  to  consider  and  make  recommendations  to  the  Board  on  its
composition   and  balance  of  skills  and   experience,   and  on   individual
appointments, to lead the process and make recommendations to the Board.

         The responsibilities of the Committee include the following:

(a)      to evaluate the balance of skills, knowledge and experience of the
         Board of Directors and to prepare a description of the role and
         capabilities required for a particular appointment. In the case of the
         appointment of a Chairman, to prepare a job specification;
(b)      to select potential candidates to fill vacancies on the Board of
         Directors for recommendation to the Board;
(c)      to interview, or arrange for suitable Directors to interview,
         candidates for Directors;
(d)      to consider and, if appropriate, approve all outside appointments of
         executive Directors;
(e)      to review periodically the terms of appointment of the non-executive
         Directors; and
(f)      to consider whether a senior independent director should be appointed
         and, if appropriate, to identify and recommend to the Board suitable
         candidates for the role.

A formal  procedure  for the  appointment  of new  Directors is contained in the
Terms of  Reference  of the  Committee,  a full  copy of which is  available  on
request from the Company Secretary.

                                       81

Report on the Committee's activities

To discharge its duties,  the Committee met once during 2005 and  considered the
succession of the Chairman.

         All members of the Committee, except Mr McLachlan, attended this
         meeting.

         Remuneration Committee

         The members of the Committee as at December 31, 2005 were:

         Francis Finlay (Chairman)
         Anthony Habgood
         Denis Raeburn

         The Board considers each member of the Committee to be independent.

Terms of reference

The  Company  established  a  Remuneration  Committee  in 2001.  The role of the
Committee is to determine  the  remuneration  policy for  executives,  including
executive  directors,  of the SVG  Group  and  the  operation  of the  Company's
Executive  Share  Option  Plan.  A copy of the full  Terms of  Reference  of the
Remuneration Committee is available on request from the Company Secretary.

         The responsibilities of the Committee include the following:

(a)      to determine remuneration policy (including salaries, bonuses, pensions
         and other benefits) throughout the SVG Group, including:
         (i)      to recommend to the Board the remuneration and benefits of
                  executive Directors of SVG Capital;
         (ii)     to review the overall remuneration costs and budgets for
                  employees of the SVG Group;
         (iii)    to approve annual bonus plans and to review performance
                  against objectives;
         (iv)     to make proposals for the level of fees payable to
                  non-executive Directors; and
         (v)      to approve exit packages on an individual basis and to oversee
                  severance policy throughout the SVG Group.
(b)      to operate the Company's share option schemes and other incentive
         schemes (if any), including:
         (i)      to determine grants of options to be made to eligible
                  participants, including the setting any performance targets to
                  be met as a condition of the exercise of such options;
         (ii)     to liaise with the trustees of the employee trusts operating
                  in conjunction with the Company's share option schemes and
                  other incentive schemes (if any);
         (iii)    to make amendments to the terms of such schemes (subject to
                  the provisions of the schemes relating to amendment); and

                                       82

         (iv)     to agree, amend and approve all documents required in
                  connection with the grant of options under, or the operations
                  of, the Company's share option schemes, employee trusts and
                  other incentive schemes (if any), execution of all such
                  documents by any Director or the company secretary, or where
                  any documents are to be executed as a deed, by any two
                  Directors or any one Director and the company secretary.

Report on the Committee's activities

To discharge its duties,  the Committee  met on four  occasions  during 2005 and
considered the following:

-    evaluation of remuneration philosophy and the structure of incentivisation
     and retention of executive Directors and key staff;
-    approving the annual bonus plan proposals for recommendation to the Board;
-    approving appropriate targets and long term incentives for the executive
     Directors and key staff based on performance;
-    review of the composition of the Committee; and
-    review of the operation of the Company's share option schemes and approval
     of grant of options.

Attendance

         Each of the meetings held in 2005 were attended by all members of the
         Committee.

D.       Employees

As of December 31, 2005,  2004 and 2003,  respectively,  SVG Capital plc and its
subsidiaries employed 40, 32 and 28 employees,  including of which approximately
33, 27 and 23 were in the United Kingdom  (including 3, 4 and 4 seconded  staff)
and 7, 5 and 5_were in the United  States.  None of the employees is represented
by a labor union.

E.       Share Ownership

The following table presents the number of Ordinary Shares beneficially owned by
each Director or their families as of June 30, 2006:


<TABLE>
<CAPTION>
<S>                                                                   <C>
Name of Director                                          Ordinary Shares
D. Buffini                                                            Nil
N.E.H. Ferguson                                                   551,507
D.F.K. Finlay                                                     100,000
A.J. Habgood                                                       66,666
E.W. Koning                                                           Nil
D. Raeburn                                                        164,166
C. Sinclair                                                        67,062
A.C. Williams                                                      13,091
Total                                                             962,492
</TABLE>

                                       83

See "Item 6. Directors,  Senior  Management and Employees - Directors and Senior
Management - Directors  Interests" for further details of the share ownership of
the Directors of the Company.

See  "Item  6.  Directors,  Senior  Management  and  Employees  -  Compensation-
Executive Share Option Plan" for information  about the option  ownership of the
Directors of the Company under the Plan.

Employees of the SVGA Group are entitled to options over the Ordinary  Shares of
the  Company,  granted on a  discretionary  basis,  in  accordance  with the SVG
Capital plc Executive Share Option Plan 2001.

Item 7.           MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A.       Major Shareholders

The Company's issued share capital at December 31, 2005 consisted of 128,529,853
Ordinary  Shares,  par value  GBP1  each,  all of which  were  fully  paid as of
December 31,  2005.  Each  Ordinary  Share in issue ranks pari passu and has the
same voting rights as every other Ordinary Share.  The following  information is
presented,  to the  Company's  knowledge,  with respect to the  Company's  major
shareholders,  which means  shareholders that are the beneficial owners of 3% or
more of the Company's Ordinary Shares.

At June 30, 2006,  the Company's  issued share capital  consisted of 138,805,045
Ordinary Shares and the Company had been notified of the following  interests in
excess of 3% of the issued capital of the Company:


<TABLE>
<CAPTION>
                                                                # of Ordinary           % of Class
                                                                       Shares
<S>                                                                       <C>                  <C>
Schroders plc and its subsidiaries:
    --non beneficial, managed for clients                          24,065,714                17.34
    --beneficial                                                    7,113,449                 5.12
Aegon Investment Management BV*                                    24,603,665                17.73
Lansdowne Partners                                                  9,339,965                 6.73
Metropolitan Life Insurance Company                                 7,720,864                 5.56
Permira Capital Limited**                                           6,000,000                 4.32
Legal and General Group plc                                         4,259,354                 3.07
</TABLE>

*  Edgar  Koning  is  Executive  Vice  President  of  Aegon  Nederland  NV and a
non-executive Director of SVG Capital plc.

** Damon Buffini is Managing Partner of Permira and a non-executive  Director of
SVG Capital plc.

As of June 30, 2006, the Directors and their families were the beneficial owners
of an  aggregate  of  962,492  Ordinary  Shares  or  approximately  0.69% of all
Ordinary  Shares  outstanding  as of such  date.  Nicholas  Ferguson  and Andrew
Williams have also been granted options  representing  4,185,042 Ordinary Shares
or 3.0% of the total number of Ordinary Shares  outstanding as of such date. See
"Item 6 Directors,  Senior  Management  and Employees - Compensation - Executive
Share  Option Plan for  additional  information  on the share  ownership  of our
Directors."

The  Company  is not  directly  or  indirectly  owned or  controlled  by another
corporation or by any foreign government. There are no arrangements known to the
Company the operations

                                       84

of which may, at a date subsequent to the date of this annual report,  result in
a change of control of the Company.

Changes in Major Shareholder Ownership in Most Recent Three Years

In addition to the table shown above,  detailing  substantial share interests as
at the most  recent  practicable  date,  the  following  tables  illustrate  the
holdings of the Company's major shareholders during the last three years:

At March 20, 2006 the Company had been  notified of the  following  interests in
excess of 3% of the issued capital.

<TABLE>
<CAPTION>
<S>                                                                                           <C>                 <C>
                                                                                        Number of          Percentage
                                                                                  Ordinary Shares            of class
Schroders plc and its subsidiaries:
-     non beneficial, managed for clients                                              23,472,602                18.3
-     beneficial                                                                        7,113,449                 5.5
Aegon Investment Management BV                                                         24,603,665                19.1
Lansdowne Partners                                                                      9,339,965                 7.3
Permira Capital Limited                                                                 6,000,000                 4.7
Metropolitan Life Insurance Company                                                     5,012,531                 3.9
Morley Fund Management Limited                                                          4,107,340                 3.2
Legal & General                                                                         3,915,354                 3.0

At March 24, 2005 the Company had been  notified of the  following  interests in
excess of 3% of the issued capital.

                                                                                        Number of          Percentage
                                                                                  Ordinary Shares            of class
Schroders plc and its subsidiaries:
-     non beneficial, managed for clients                                              22,755,417               18.57
-     beneficial                                                                        7,113,449                5.80
Aegon Investment Management BV                                                         24,603,665               20.08
Lansdowne Partners                                                                      9,339,965                7.62
Metropolitan Life Insurance Company                                                     5,012,531                4.09
Morley Fund Management Limited                                                          4,107,340                3.35

At March 26, 2004 the Company had been  notified of the  following  interests in
excess of 3% of the issued capital.

                                                                                        Number of          Percentage
                                                                                  Ordinary Shares            of class
Schroders plc and its subsidiaries:
-     non beneficial, managed for clients                                              19,335,951               17.16
-     beneficial                                                                        7,113,449                6.31
Aegon Investment Management BV                                                         24,603,665               21.84
Lansdowne Partners                                                                      9,338,262                8.29
Morley Fund Management Limited                                                          3,861,340                3.43
Morgan Stanley Securities Limited                                                       3,543,595                3.15
</TABLE>

                                       85

At March 25, 2003 the Company had been  notified of the  following  interests in
excess of 3% of the issued capital.

<TABLE>
<CAPTION>
<S>                                                                                           <C>                 <C>
                                                                                        Number of          Percentage
                                                                                  Ordinary Shares            of class
Schroders plc and its subsidiaries:
-     non beneficial, managed for clients                                              16,622,251               16.23
-     beneficial                                                                        7,113,449                6.95
Aegon Investment Management BV                                                         22,403,665               21.88
Lansdowne Partners                                                                      5,758,162                5.62
Fidelity International Limited                                                          4,551,451                4.45

Record Ownership of the Ordinary Shares in the United States

At June 30, 2006,  the Company had been  notified of the  following  interest in
excess of 3% of the issued capital of the Company:

                                                                                        Number of          Percentage
                                                                                  Ordinary Shares            of class
Metropolitan Life Insurance Company                                                     7,720,864                5.56
</TABLE>

Based  solely on  the  records  of  the  Company's  registrar,  in  addition  to
notifications   received   from   shareholders,   the  Company   believes   that
approximately  5.6% of its Ordinary Shares are  beneficially  held in the United
States.  There are 2 record holders of Ordinary Shares in the United States.

Voting Rights of Major Shareholders

         The Company's major shareholders do not have different voting rights.

B.       Related Party Transactions

Except as disclosed herein, none of the Directors or their immediate families or
associates has any material interest, directly or indirectly, in any transaction
to  which  the  Company  or any of its  subsidiaries  is a party.  There  are no
outstanding loans or guarantees granted or provided by the Company to or for the
benefit of the Directors or their immediate families or associates.

Nicholas  Ferguson,  a  Director  and  the  Company's  Chairman,   is  also  the
non-executive  Chairman of the Board of SVGA, a wholly owned  subsidiary  of the
Company.  Andrew Williams, a Director, is Chief Executive Officer of SVGA. Damon
Buffini, a Director, is also Managing Partner of Permira.

Andrew Williams is employed by Schroder  Investment  Management  Limited ("SIM")
and seconded to the Company. As part of the secondment arrangements, SVG Capital
plc  reimburses  SIM for the salary,  bonus and other  benefits paid by Schroder
Investment  Management  Limited to Andrew  Williams.  Until his retirement as an
executive Director of the Company on April 25, 2005,  Nicholas Ferguson was also
employed by SIM and seconded to the Company.  SIM, a wholly owned  subsidiary of
Schroders plc, provides certain  administrative and secretarial  services to the
Company  in  exchange  for the fees  specified  in "Item  6.  Directors,  Senior
Management  and  Employees  -   Compensation  -  Compensation   of  the  Company
Secretary."

                                       86

Nicholas Ferguson  represents the Company on the advisory committees that advise
certain Funds.  In addition,  Nicholas  Ferguson and members of his family,  and
Andrew Williams are entitled to receive a specified percentage of the profits of
each Fund raised  before  January 1, 2001 when the returns to  investors in that
Fund  exceed  specified  performance   standards,   as  described  in  "Item  4.
Information  on the  Company  -  Business  Overview  -  Remuneration  -  Special
Allocation of Profits." Damon Buffini,  as a Permira  partner,  is entitled to a
percentage of the profits of each Permira Fund.

In  addition,  Damon  Buffini,  as a Permira  partner,  has an  interest  in the
Operating  Agreement with PHL and the  Subscription  Agreement with PCL, further
details  of which are set out in "Item 10.  Additional  Information  -  Material
Contracts".

As a result  of these  relationships,  these  Directors  may have  interests  in
transactions  between the Company and these  entities that may differ from those
of the holders of the Ordinary Shares.

On 8 May 2003, SVGA, a wholly owned  subsidiary of the Company,  assigned a debt
in respect of a future  revenue  stream for EUR2.28  million  due from  Schroder
Investment  Management  (Ireland)  Limited to the Company for  consideration  of
EUR2.28 million. The loan was fully repaid during the year.

In July 2005, the Company  invested GBP15 million  (representing a 21% interest)
in Strategic Equity Capital plc ("SEC"), a UK-listed investment trust managed by
SVGIM, a wholly-owned subsidiary of the Company. SVGIM earned management fees of
GBP0.2  million  (2004:  nil) during the year from SEC, of which GBP0.1  million
(2004: nil) was outstanding at the year-end.

In March 2006, the Company invested GBP1 million in the SVG UK Alpha Fund, which
is managed by SVGIM.

In March 2005, the Company  transferred  interests in some of its private equity
funds to SVG Diamond Holdings Limited ("Diamond I"), a fund in which the Company
holds a 36% equity interest and SVG Advisers Limited is the Investment  Adviser.
In  particular,  the Company  made full or partial  transfers  of the  following
funds: Permira UK III; Schroder Canadian Buy-Out Fund II; SV Life Sciences Fund;
SV Life  Sciences  Fund II;  and SV  Investments  Fund I.  These  funds were all
transferred at fair value, for total proceeds of GBP25 million.

The  Company  has  warehoused   various  private  equity  fund  investments  for
subsequent  transfer to Diamond I and SVG Diamond Holdings II Limited  ("Diamond
II").  The Company is a  significant  investor  in both these funds  (Diamond II
closed on 22 February  2006),  which are also  advised by SVGA,  a  wholly-owned
subsidiary of the Company.  All funds  warehoused by the Company were subject to
forward sale agreements whereby they would be transferred, subject to compliance
with the  investment  guidelines  of Diamond I and II, at cost plus an  interest
charge, based on 6 month Euribor plus a margin of 2% per annum.

During the year the Company made  primary  commitments  to four  private  equity
funds  that were  subsequently  transferred  to Diamond I. No calls were made on
these funds prior to transfer and therefore no consideration was involved.

The Company also made six primary  commitments to, and eight secondary purchases
of, private equity funds. The total cost of these fund  investments  amounted to
GBP40.6 million (2004:

                                       87

nil) at 31 December 2005.  Interest of GBP0.6 million (2004: nil) was accrued at
the year-end.  Diamond II closed on 22 February 2006 and the funds have now been
transferred.

During the year SVGA received EUR1.5 million of BBB-rated  Diamond I Loan Notes,
as part of its ongoing  investment  advisory fee arrangements.  These Notes were
purchased from SVGA by SVG Capital plc at par value on the date of issue, as the
holding of  investments is the main activity of the Company.  In addition,  SVGA
received  investment  advisory  fees in cash  during the year from  Diamond I of
EUR1.6 million (2004: nil).

Following the year-end,  the Company made a EUR5 million  commitment to Schroder
Private  Equity Fund of Funds III  ("SPEFoF  III"),  a fund in which SVGA is the
Investment Adviser.

At June 30,  2006,  the Company had uncalled  commitments  to Diamond I: EUR52.0
million; Diamond II: EUR73.2 million; and SPEFoF III: EUR3.75 million.

C.       Interests of Experts and Counsel

         Not applicable to this Form 20-F.

Item 8.           FINANCIAL INFORMATION

A.       Consolidated Statements and Other Financial Information

         See Item 17.

Legal and Arbitration Proceedings

Since  its  incorporation,  the  Company  has not been  engaged  in,  and is not
currently  engaged in, any litigation or arbitration  and no litigation or claim
is pending or threatened against the Company.  There are no material proceedings
to which a director,  officer or affiliate of the Company,  or any  associate of
any such director, officer or affiliate of the Company is a party adverse to the
Company or any of its  subsidiaries  or has a material  interest  adverse to the
Company or any of its subsidiaries.

Dividend Policy

For a description of the Company's  policy on dividend  distribution,  see "Item
10. Additional Information - Taxation - Dividend Policy."

B.       Significant Changes

         Permira IV commitment

See "Item 5. B. Liquidity and Capital Resources - Potential Sources of Capital -
Permira IV commitment".

         Facility Agreement

See "Item 5. B. Liquidity and Capital Resources - Potential Sources of Capital -
Facility Agreement".

                                       88

         Senior Unsecured Notes

See "Item 5. B. Liquidity and Capital Resources - Potential Sources of Capital -
Senior Unsecured Notes".

         Bond conversion

See "Item 5. B. Liquidity and Capital Resources - Potential Sources of Capital -
Bond conversion".

         Platinum Trust

See "Item 5. B. Liquidity and Capital Resources - Potential Sources of Capital -
Platinum Trust".

Except  as  disclosed  herein,  there  has  been no  significant  change  in our
financial  position  since  December  31,  2005,  the date of our  last  audited
financial statements.

Item 9.           THE OFFER AND LISTING

All portions of Item 9 other than Items 9.A.4 and 9.C are  inapplicable  to this
Form 20-F.

A.       Offer and Listing Details

Price Range of the Ordinary Shares

The  principal  trading  market  for the  Ordinary  Shares is the  London  Stock
Exchange.  The Ordinary  Shares were  admitted to the  Official  List on May 23,
1996. The following tables set forth the range of the high and low closing sales
prices of our common stock for the periods indicated:

         Five Most Recent Fiscal Years

<TABLE>
<CAPTION>
<S>                               <C>             <C>              <C>              <C>                <C>
                                 Year      Six Months             Year             Year               Year
                               Ended,          Ended,           Ended,           Ended,             Ended,
                              June 30     December 31      December 31      December 31        December 31
                                 2002            2002             2003             2004               2005
    High Market price          393.0p          379.0p           508.5p           579.0p             720.5p
    Low Market Price           296.5p          456.0p           379.0p           445.0p             554.0p
</TABLE>

                                       89

         Two Most Recent Fiscal Years

<TABLE>
<CAPTION>
<S>                                                         <C>                      <C>
                                              High Market Price         Low Market Price
    Fiscal Year Ended
    December 31, 2004
    First Quarter                                        497.8p                   445.0p
    Second Quarter                                       518.8p                   479.5p
    Third Quarter                                        524.3p                   505.0p
    Fourth Quarter                                       579.0p                   539.5p

    Fiscal Year Ended
    December 31, 2005
    First Quarter                                        614.0p                   554.0p
    Second Quarter                                       662.0p                   583.0p
    Third Quarter                                        710.5p                   661.0p
    Fourth Quarter                                       720.5p                   645.0p

         Most Recent Full Six Months

    Fiscal Year Ending                        High Market Price         Low Market Price
    December 31, 2006
    January 06                                           773.0p                   712.0p
    February 06                                          853.5p                   770.0p
    March 06                                             843.5p                   808.5p
    April 06                                             831.0p                   790.0p
    May 06                                               803.5p                   748.0p
    June 06                                              784.0p                   695.0p
</TABLE>

B.       Plan of Distribution

         Not applicable to this Form 20-F.

C.       Markets

No Trading Market for the Ordinary Shares in the United States

The Ordinary Shares are traded on the London Stock Exchange and are not, and are
not intended to be,  registered in the United States under the Securities Act or
the  securities  laws of any state.  The Ordinary  Shares will not be listed for
trading on any  securities  exchange in the United  States,  nor has the Company
registered its securities under the Exchange Act for the purpose of facilitating
such  secondary  market  trading  with respect to its  securities  in the United
States.  The  Company  has not  facilitated  and does not  intend,  directly  or
indirectly, to facilitate secondary market activity.  Therefore, the transfer of
the Ordinary  Shares in the United States is subject to  restrictions  which are
designed  to  prevent  the  development  of a  secondary  market  for any of the
Company's securities in the United States.

                                       90

D.       Selling Shareholders

         Not applicable to this Form 20-F.

E.       Dilution

         Not applicable to this Form 20-F.

F.       Expenses of the Issue

         Not applicable to this Form 20-F.

Item 10. ADDITIONAL INFORMATION

A.       Share Capital

         Not applicable to this Form 20-F.

B.       Memorandum and Articles of Association of SVG Capital plc

Set forth below is information concerning the Company's equity capital structure
and related  summary  information  concerning  provisions  of its  Memorandum of
Association and Articles of Association and applicable  English law. Since it is
a summary,  it does not contain all of the information  that may be important to
you, and the summary is qualified in its entirety by reference to the  Companies
Act  1985  and  the  Company's   Memorandum  of  Association   and  Articles  of
Association.  A copy of each of the  Company's  Memorandum  of  Association  and
Articles of  Association  has been filed as an exhibit to this annual  report on
Form 20-F.

The Company is incorporated  under the name SVG Capital plc and is registered in
England  and  Wales  with the  registered  number  3066856.  The  Memorandum  of
Association  states that the Company's  objects are, inter alia, to carry on the
business of an investment  trust company and to undertake all kinds of trust and
agency  business.  The  Company's  Memorandum  of  Association  and  Articles of
Association  allow  for a wide  range of  activities  by which to carry  out the
Company's objectives. See Exhibit 1.1, Memorandum of Association, Article 4(A).

Board of Directors

The Company's Articles of Association  provide that unless otherwise  determined
by ordinary  resolution,  the Board of Directors  shall consist of not less than
two nor more than nine members.

Except as noted  below,  the Board may at any time  appoint  any  person to be a
Director  either to fill a vacancy or as an additional  Director,  provided that
the number of  Directors  does not exceed  nine.  Any person so appointed by the
Board  shall hold  office  only  until the next  Annual  General  Meeting of the
Company at which he or she shall then be eligible for election by  shareholders,
but shall not be taken into account in  determining  the number of directors who
are to retire by rotation  at such  meeting as set out below.  See Exhibit  1.2,
Articles of Association, Part 2, Article 79.

                                       91

         Interested Director Transactions

Subject to certain  provisions  of the  Companies  Act  designed to enforce fair
dealing by directors and prevent their taking financial advantage,  and provided
that a Director  has  disclosed  to the  Directors  the nature and extent of any
interest, a Director:

     o    may be party to or otherwise interested in any contract, transaction,
          or arrangement with the Company or in which the Company is otherwise
          interested;

     o    may be a director or other officer of or employed by a party to any
          contract, transaction or arrangement with or otherwise interested in
          any corporate entity promoted by the Company or in which the Company
          is in any way interested; and

     o    may act in a professional capacity for the Company (other than as
          auditor) and be compensated therefore and shall not (unless otherwise
          agreed by him) be accountable to the Company for any benefit which he
          derives from any such contract, transaction or arrangement or from any
          such office or employment or from any interest in any such corporate
          body or for such compensation.

No contract,  transaction or arrangement in which a director has an interest may
be voided on the grounds of any such interest or benefit.

A Director  generally shall not vote on, or be counted in the quorum in relation
to, any  resolution  of the Board in respect of any  contract in which he has an
interest  which (taken  together with any interest of any person  connected with
him) is to his knowledge a material interest and, if he does, his vote shall not
be counted,  but this  prohibition  shall not apply to any resolution where that
material interest arises only from one or more of the following matters:

     o    The giving to him of any guarantee, indemnity or security in respect
          of money lent or obligations undertaken by him or by any other person
          at the Company's request or for the benefit of the Company or any of
          its subsidiaries,

     o    The giving to a third party of any guarantee, indemnity or security in
          respect of a debt or obligation of the Company or any of its
          subsidiaries for which he himself has assumed responsibility in whole
          or in part under a guarantee or indemnity or by the giving of
          security,

     o    Where the Company or any of its subsidiary undertakings are offering
          securities in which offer the Director is or may be entitled to
          participate as a holder of securities or in the underwriting or
          sub-underwriting of which the Director is to participate,

     o    Any contract in which he is interested by virtue of his interest in
          shares or debentures or other securities of the Company or any of its
          subsidiaries or by reason of any other interest in or through the
          Company or any of its subsidiaries,

     o    Any contract concerning any other company (not being a company in
          which the director and any persons connected with him owns 1% or more)
          in which he is interested directly or indirectly whether as an
          officer, shareholder, creditor or otherwise,

                                       92

     o    Any contract concerning the adoption, modification or operation of a
          pension fund or retirement, death or disability benefits scheme which
          relates both to directors and employees of the Company or of any of
          its subsidiaries and does not provide in respect of any director as
          such any privilege or advantage not accorded to the employees to whom
          the fund or scheme relates,

     o    Any contract for the benefit of employees of the Company or of any of
          its subsidiaries under which he benefits in a similar manner to the
          employees and which does not accord to any director as such any
          privilege or advantage not accorded to the employees to whom the
          contracts relates, and

     o    Any contract for the purchase or maintenance for any director or
          directors of insurance against any liability.

Where a company in which a director owns 1% or more is materially  interested in
a contract, he also shall be deemed materially interested in that contract.

The chairman of a Board meeting shall  determine any question that arises at the
meeting  regarding the  entitlement of any director  (other than the chairman of
the  meeting)  to vote or be counted in the quorum  with  respect to a vote on a
matter in which a Director may have a material  interest.  If any question shall
arise in respect of the chairman of the meeting,  the question  shall be decided
by a resolution of the Board (for which purpose the chairman shall be counted in
the quorum but shall not vote on the matter).

A Director who to his knowledge is in any way,  whether  directly or indirectly,
interested  in a  contract  with the  Company  shall  declare  the nature of his
interest at the meeting of the Board at which the question of entering  into the
contract  is first  taken  into  consideration,  if he knows his  interest  then
exists,  or in any other case at the first  meeting of the Board  after he knows
that he is or has become so  interested.  In order to be  effective,  the notice
must  either  be given at a  meeting  of the  Board or the  Director  must  take
reasonable  steps to assure  that it is  brought  up and read at the next  Board
meeting after it is given.

         See Exhibit 1.2, Articles of Association, Part 2, Article 92.

         Voting on Compensation

Each of the Directors  shall be paid a fee at such rate as may from time to time
be determined by the Board,  provided that that aggregate of all fees so paid to
Directors  (excluding amounts payable under any other provision of the Company's
Articles of  Association)  shall not exceed  GBP600,000 per annum or such higher
amount  as may  from  time to time be  decided  by  ordinary  resolution  of the
Company.

         Director Employment

The  Board  may from  time to time  appoint  one or more  Directors  to hold any
employment  or  executive  office with the Company  (including  that of managing
director) for such period  (subject to the  provisions of the Companies Act) and
upon such other  terms as the Board may decide and may revoke or  terminate  any
appointment  so made. A Director so appointed  shall  receive such  remuneration
(whether by way of salary, commission, participation in profits or otherwise) as
the Directors may decide either in addition to or in lieu of his remuneration as
a Director.

                                       93

         Borrowing Powers

Subject to the  limitations  noted below,  the Board may exercise all powers for
the  Company  to borrow  money,  to  mortgage  or charge  all or any part of the
undertakings,  property and assets (present and future) and uncalled  capital of
the Company,  and to issue debentures and other securities,  whether outright or
as collateral  security for any debt,  liability or obligation of the Company or
of any third  party.  The Board shall  restrict  the  Company's  borrowings  and
exercise all voting and other  rights,  powers or control or rights of influence
exercisable  by the  Company and any of its  subsidiaries  or in relation to the
Company's subsidiaries so that the aggregate amount of all money borrowed by the
Company  (excluding  borrowings  owed by the Company to any subsidiary or by any
subsidiary to the Company or another subsidiary) shall not at any time exceed an
amount equal to the adjusted  capital and reserves (as defined  therein)  unless
otherwise  authorized by ordinary  resolution of the  shareholders.  See Exhibit
1.2, Articles of Association, Part 1, Article 1(B).

         Retirement of Directors

No person may be disqualified  from being appointed a Director,  and no Director
is required to retire,  by reason only of the fact that he has  obtained the age
of 70 years or any other age. Where the Board convenes any shareholders' meeting
at which a Director will be proposed for appointment or reappointment who at the
date for which the  meeting is  convened  will be over the age of 70 years,  the
Board must give notice of his age in years in the notice  convening  the meeting
or in any document accompanying the notice, but the incidental omission to do so
shall not invalidate any proceedings or any appointment or reappointment of that
director at the  meeting.  See Exhibit  1.2,  Articles of  Association,  Part 1,
Article 1(I).

At  every  general  meeting  one-third  of the  directors  who  are  subject  to
retirement  by  rotation  (or, if their  number is not three or any  multiple of
three,  then the number  nearest to and less than  one-third)  shall retire from
office, provided that if there are fewer than three directors who are subject to
retirement by rotation they must all retire.

The  directors  to retire by rotation on each  occasion  shall be those who have
been longest in office since their last  appointment  or  reappointment  but, as
between persons who became or were last  reappointed  directors on the same day,
those to retire shall  (unless they  otherwise  agree) be determined by lot. The
directors to retire on each occasion  (both as to number and identity)  shall be
determined by the  composition of the Board at the start of business on the date
of the notice  convening  the Annual  General  Meeting and no director  shall be
required to retire or be relieved  from  retiring by reason of any change in the
number or  identity of the  directors  after that time on the date of the notice
but  before  the  close  of  the  meeting.  Retiring  directors  may  stand  for
re-election at the first succeeding annual general meeting of shareholders.  See
Exhibit 1.2, Articles of Association, Part 2, Articles 80 and 81.

         Requirements for Qualification

Directors  are not required to hold any Ordinary  Shares in order to qualify for
service as a  Director.  A Director  who is not a  shareholder  is  nevertheless
entitled  to attend  and  speak at  shareholders'  meetings.  See  Exhibit  1.2,
Articles of Association, Part 1, Article 1(G) and Part 2, Article 58.

                                       94

         Rights, Preferences and Restrictions of Ordinary Shares

Subject to any rights  conferred on the holders of any other  shares,  any share
may be issued with or have  attached to it such rights and  restrictions  as the
shareholders may by resolution  decide or, if no such resolution has been passed
or the  resolution  does not make specific  provision,  as the Board may decide.
Also,  any share may be issued which is to be  redeemed,  or is to be subject to
redemption  at the  Company's  option or that of the holder.  See  Exhibit  1.2,
Articles of Association, Part 2, Articles 5 and 6.

         Declaration of Dividends

Subject to the provisions of the Companies Act, the shareholders may by ordinary
resolution from time to time declare dividends in accordance with the respective
rights  of the  members  and  their  interests  in  the  profits  available  for
distribution,  but no dividend shall exceed the amount recommended by the Board.
No dividend shall be payable except out of the Company's profits  (excluding any
profits which under the  provisions  of the Articles  ought to be carried to the
credit of the  capital  reserve or  applied in  providing  the  depreciation  or
contingencies).  The Board shall  exercise all voting and other rights or powers
of control exercisable by the Company in relation to its subsidiary undertakings
so as to  secure  as  far as it  can  that  such  subsidiary  undertaking  shall
distribute  to the  Company  by way of  dividends  all  of  their  profits.  The
determination of the board as to the amount of profits at any time available for
distribution  by way of dividends is  conclusive.  See Exhibit 1.2,  Articles of
Association, Part 2, Article 112.

The Company has no further  obligation to send any check or warrant  through the
mail or employ any other means of payment for any dividend payable on any of its
shares  which is normally  paid in that manner on those  shares if the checks or
warrants  have been  returned  undelivered  or remain  uncashed or that means of
payment has failed either (i) with respect to at least two consecutive dividends
or (ii) with respect to one dividend if reasonable  enquiries thereafter fail to
establish any new address of the registered  holder. The Company may again begin
to send checks or  warrants  by any other  means if the holder or an  authorized
person  sends a request to the  Company in  writing to do so. See  Exhibit  1.2,
Articles of Association, Part 2, Article 118.

Any dividend  unclaimed  after a period of 12 years from the date when it became
due for payment shall be forfeited and shall revert to the Company.  The payment
by the Board of any unclaimed  dividend or other sum payable on or in respect of
a share  into a  separate  account  does not make the  Company a trustee of such
payment. See Exhibit 1.2, Articles of Association, Part 2, Article 119.

         Voting Rights

Each holder of Ordinary  Shares  entitled to vote on a matter is entitled to one
vote for each Ordinary  Share held in such holder's name on the record date. All
Directors  are  appointed for an initial term of three years subject to election
by  the  shareholders  at the  first  Annual  General  Meeting  following  their
appointment. Thereafter Directors retire by rotation at least every three years.

         Profit Sharing

         See "Declaration of Dividends," above.

                                       95

         Liquidation Rights

Upon liquidation,  the liquidator may, by special resolution of the shareholders
of the Company,  (i) divide among the  shareholders,  in kind,  the whole or any
part of the Company's assets (whether consisting of the same kind of property or
not) and, for that  purpose,  set such values as he deems fair upon any property
to be divided and determine how the division shall be carried out as between the
members of different  classes of members,  or (ii) vest the whole or any part of
the assets in trustees upon such trusts for the benefit of the contributories as
the  liquidator,  with  similar  shareholder  approval,  shall think fit, but no
shareholder  shall be  compelled to accept any shares or other assets upon which
there is any  liability.  See  Exhibit  1.2,  Articles of  Association,  Part 2,
Article 136.

         Capital Call Liability

Subject  to the terms of issue,  the Board may from time to time make calls upon
the members in respect of any monies unpaid on their shares  (whether on account
of the nominal  amount of the shares or by way of premium)  and not payable on a
date fixed by or in  accordance  with the terms of issue,  and each member shall
(subject to the Company's  serving upon him at least 14 days' notice  specifying
when and where  payment  is to be made) pay to the  Company as  required  by the
notice the amount  called on his shares.  A call may be revoked or  postponed as
the Board may decide.  A person upon whom a call is made shall remain liable for
all calls made upon him notwithstanding the subsequent transfer of the shares in
respect of which the call was made.  See Exhibit 1.2,  Articles of  Association,
Part 2, Article 20.

         Action Required to Alter Rights of Holders

All or any of the rights attached to any class of shares issued may from time to
time be varied  with the  consent  in  writing  of the  holders of not less than
three-fourths  in  nominal  value  of the  issued  shares  of that  class  or by
extraordinary  resolution  obtained at a separate general meeting of the holders
of those shares. See Exhibit 1.2, Articles of Association, Part 2, Article 8.

         Convocation of Shareholder Meetings and Conditions of Admission

Any general  meeting other than an Annual  General  Meeting is an  Extraordinary
General  Meeting,  and such  meeting may be convened  at the  discretion  of the
Board.  The Board shall convene general  meetings as Annual General  Meetings in
accordance  with the  requirements  of the  Companies  Acts.  See  Exhibit  1.2,
Articles of Association, Part 2, Articles 48-50.

         Limitations on Rights to Hold Shares

Upon  receiving  notice that any shares are or may be owned or held  directly or
beneficially  such that the aggregate  number of United  States  persons who are
holders or beneficial owners of the Company's shares or other securities and who
acquired  such shares from the Company or its agents or affiliates or any United
States resident  transferee of any direct purchaser,  is or may be more than 75,
the Board may  require  the  transfer  of such  shares  to a  non-United  States
resident transferee.  See Exhibit 1.2, Articles of Association,  Part 1, Article
1(k).

                                       96

         Alteration of Share Capital

The Company may from time to time by ordinary  resolution of the shareholders of
the Company (i) increase its share capital,  (ii)  consolidate and divide all or
any of its share capital into shares of larger amount than its existing  shares,
(iii)  subdivide  the  Company's  shares or any of them into  shares of  smaller
amount (as between the shares  resulting from the  subdivision,  any of them may
have any  preference or advantage or be subject to any  restriction  as compared
with the others as  determined by the Board) and (iv) cancel any shares that, at
the date of the passing of the  resolution,  have not been taken or agreed to be
taken by any person and diminish the amount of the  Company's  share  capital by
the amount of the shares so canceled.  See Exhibit 1.2, Articles of Association,
Part 2, Article 45.

C.       Material Contracts

Agreements with Permira

         Definitions

"Existing Fund Commitments" means all uncalled  commitments,  understandings and
other  arrangements  (whether or not legally  binding) made prior to the date of
the  Operating  Agreement by or on behalf of any member of the SVG Capital Group
to invest in any fund or product

"Japan  Fund" means any fund  managed or advised by MKS  Advisers  (or any other
member of the MKS group),  the principal  investment  policy of which is to make
private equity investments in Japan

"New Shares" means 6,000,000  Shares in the Company to be issued to PCL pursuant
to the Subscription Agreement

"P123" means the product known as P123 designed,  managed and advised by members
of the SVG  Capital  Group to  acquire,  whether  by  secondary  purchase  or as
subscriber,  limited  partner or other  capital  interests in all or some of the
Permira Europe Funds

"P1234" means the product or products to be  established  from time to time as a
successor to P123,  under whatever name or names and to be managed or advised by
members of the SVG  Capital  Group,  to  acquire  solely,  whether by  secondary
purchase or as subscriber,  limited partner or other capital interests in all or
some of the Permira Europe Funds and Permira V

"PCL" means Permira  Capital  Limited,  registered in Guernsey under  registered
number 42908.

"Permira"  or "Permira  Entities"  means the  international  network of entities
providing  management,  advisory or  consultancy  services to, or conducting the
business of designing,  managing or advising,  private equity and other funds or
products under the overall business name "Permira"

"Permira  Europe Funds" means  Permira Funds known as Permira  Europe I, Permira
Europe II, Permira Europe III and Permira IV

                                       97

"Permira  IV"  means  the  Permira  Fund to be  established  as a  follow  on or
successor fund to the Permira Fund known as Permira Europe III

"Permira V" means the fund to be established as a follow on or successor fund to
Permira IV

"Permira Funds" means those private equity funds or products  designed,  managed
or advised by any Permira  Entity  from time to time in respect of which  equity
funding is obtained,  or to be obtained, in whole or in part, from persons other
than Permira Entities (ignoring for this purpose certain preferential investors)

"Permira  Product"  means  any fund or  product  (excluding  Permira  Funds  but
including,  for the  avoidance  of doubt,  debt or  mezzanine  funds)  designed,
managed or advised by any Permira  Entity from time to time, in respect of which
equity funding is obtained, or to be obtained, in whole or in part, from persons
other than Permira  Entities  (ignoring  for this purpose  certain  preferential
investors)

"PHL" means Permira  Holdings  Limited,  registered in Guernsey under registered
number 40432.

"Sapphire" means the feeder vehicle designed by members of the SVG Capital Group
for investment in the Permira Fund known as Permira Europe II.

"Sapphire 4" means the feeder vehicle designed, managed or advised by members of
the SVG  Capital  Group as a  successor  to Sapphire  for  investment  solely in
Permira IV and/or Permira V.

"SVG Capital  Group" means SVG Capital plc and its  subsidiaries  and subsidiary
undertakings  (including for this purpose the Platinum Trust) from time to time,
or any of them

"SVG Products" means any private equity fund or product,  any structured fund or
product  or any  other  fund  or  product  for  quoted  or  unquoted  investment
(including,  without  limitation,  any fund of funds),  in each case  managed or
advised by any  member of the SVG  Capital  Group from time to time  (including,
without  limitation,  P123, P1234 and Sapphire 4) for so long as a member of the
SVG Capital Group is the adviser thereto or manager thereof

         Operating Agreement

On March 21, 2005 SVG Capital  entered  into an  agreement  with PHL pursuant to
which the  parties  agreed to a number of  undertakings.  On the same date,  SVG
Capital also entered into an agreement  with certain other  Permira  Entities in
which they gave similar undertakings to SVG Capital.

The Operating  Agreement  requires  that,  subject to the  exceptions set out in
paragraph  (ii)  below,  investments  made by the SVG  Capital  Group in private
equity funds and products for direct  investment  (not including funds of funds)
will be made in Permira Funds or Permira Products (or otherwise with the consent
of PHL).  Subject  thereto,  and to the limits described in paragraphs (iii) and
(iv)  below,  the SVG  Capital  Group  may  invest  in SVG  Products  and  other
non-Permira funds and products.

                                       98

         SVG Capital's principal undertakings

         The Company has agreed, inter alia, that:

(i) it, or another member of the SVG Capital Group, through direct investment or
through SVG  Products,  will,  subject to the cash flow  projections  of the SVG
Capital  Group at the  relevant  time,  due  diligence,  agreement  on terms and
approval  from the board of directors  of the Company or relevant  member of the
SVG Capital Group or SVG Product,  make contributions and commitments to Permira
IV. The Company also expects,  in a similar manner to that described  above,  to
make  contributions  and  commitments  to Permira V (when that fund is raised by
Permira);

(ii) save for the following:
(a) performing the commitments and contributions to SV Investment Fund II and SV
Life  Sciences  Fund IV described in the letter from the Chairman of SVG Capital
in Part I of this document;
(b) performing all other Existing Fund Commitments;
(c) making commitments and contributions to any Japan Fund; and
(d) the temporary  warehousing,  within certain  limits,  of investments for any
structured products designed by the SVG Capital Group prior to the final closing
of that structured product,

the Company  will not make,  and will  procure  that no other  member of the SVG
Capital Group makes,  any  investments  in private  equity funds or products for
direct  investment,  other  than  investments  made in  Permira  Funds,  Permira
Products  or with the  consent of PHL.  This  restriction  does not apply to SVG
Products,  which may  continue  to invest  in any funds and  products.  However,
neither the Company nor any other  member of the SVG Capital  Group will be able
to make  investments  in or  commitments  to any SVG Product that,  save for the
exceptions  referred to above,  makes  investments in any private equity fund or
product for direct investment other than in Permira Funds or Permira Products;

(iii)  it will  operate  with  the  intention  that,  following  the  making  of
commitments by SVG Capital or another member of the SVG Capital Group to Permira
IV, no more than 20 per cent.  of the gross assets and uncalled  commitments  of
the SVG  Capital  Group will be in SVG  Products or other  non-Permira  funds or
products  (subject  to  certain  limited  exceptions  such as Japan  Funds,  the
commitments and contributions to SV Investment Fund II and SV Life Sciences Fund
IV and temporary  warehousing  referred to above and Existing Fund Commitments);
and

(iv) once SVG  Capital or  another  member of the SVG  Capital  Group has made a
commitment  to  Permira  IV, no more than 25 per cent.  of the gross  assets and
uncalled  commitments  of the SVG  Capital  Group  (calculated  at the time each
relevant  investment is made) will be in SVG Products or other non-Permira funds
or products  (subject to certain  limited  exceptions  such as Japan Funds,  the
commitments and contributions to SV Investment Fund II and SV Life Sciences Fund
IV referred to above and Existing Fund Commitments).

         PHL's principal undertakings

PHL has agreed,  inter  alia,  that it will not permit any fund or product to be
established  using the name "Permira",  or provide any  information,  assistance
(including  by  acting as  general  partner)  or advice to any fund or  product,
unless:

                                       99

(a) that fund or  product  gives  advance  notice of the  launch of that fund or
product to SVG Capital and,  subject to agreement on terms and the compliance by
SVG  Capital  with  certain  procedural  matters  relating to the making of that
commitment,  accepts  any  commitment  that SVG  Capital,  any member of the SVG
Capital Group or any SVG Product wishes to make to that fund or product;

(b)  subject to certain  limited  exceptions,  SVG  Capital  has 'most  favoured
nation'  status in respect of the terms of  investment  in the relevant  fund or
product; and

(c) in  respect  of Permira IV and  Permira  V, SVG  Capital  has the right,  in
priority to Permira (save for certain limited  exceptions for Permira vehicles),
to design,  launch,  manage and advise structured equity products around Permira
IV and  Permira  V. PHL has also  agreed  to  provide  certain  information  and
assistance in respect of such SVG Products.

Certain  other  Permira  Entities  have also agreed not to provide  information,
assistance  (including by acting as a general  partner) or advice to any fund or
product unless the requirements described above are met.

PHL and certain other Permira Entities have also agreed not to set up a publicly
traded  permanent  capital vehicle except in certain very limited  circumstances
and, in any case, not to set up a publicly traded permanent capital vehicle that
competes with SVG Capital for investors.

         Permira director

SVG Capital  and PHL have  agreed  that PHL will have the right,  subject to the
fiduciary  duties  of the  Directors,  to have an  appropriate  Permira  partner
appointed to the Board whilst the Operating  Agreement remains in force. PHL has
nominated  Damon Buffini to be the first such Director and his  appointment as a
Director was approved at the AGM held on April 25, 2005.

         Term and termination

Subject to earlier  termination  in accordance  with the terms of the agreement,
the Operating Agreement will terminate on the date on which the first closing of
Permira V occurs if none of SVG  Capital,  any other  member of the SVG  Capital
Group or any SVG Product  makes any  commitment to Permira V or, if SVG Capital,
any other  member of the SVG Capital  Group or any SVG Product does so, the date
of final closing of that fund.  Permira V is currently  expected to be raised in
2011/2012.

Each of PHL and SVG Capital may terminate the Operating  Agreement if there is a
change of control of the other,  there is a material  breach of the agreement by
the other,  either  Permira  IV or  Permira V is not raised by agreed  long-stop
dates and in certain other specified circumstances.

         Subscription Agreement

On March 21, 2005 the Company  entered  into an  agreement  with PCL pursuant to
which the Company issued 6 million New Shares to PCL at a subscription  price of
600 pence per New Share.

                                      100

The total  subscription  price paid by PCL to the Company under the Subscription
Agreement  was  GBP36.0  million.  This amount was paid upon  completion  of the
allotment of the New Shares to PCL.

PCL has agreed to a lock-up  in  respect  of the New Shares for the period  from
completion of the  Subscription  Agreement  until  termination  of the Operating
Agreement  (or, if earlier,  if the Permira  partner  appointed  to the Board is
removed  and,  save in certain  circumstances,  SVG  Capital  does not appoint a
Permira  partner  nominated  by PHL to the Board in his place within a specified
period). Accordingly,  subject to certain limited exceptions, PHL has agreed not
to dispose of any of its interest in the New Shares during this period.

         Facility Agreement

The Company, The Governor and Company of The Bank of Scotland and The Royal Bank
of Scotland plc entered into the Facility Agreement on March 10, 2006.

Please see "Item 5 - Operating  and  Financial  Review and Prospects - Liquidity
and Capital  Resources - Facility  Agreement"  for a description of the Facility
Agreement.

         Unsecured Loan Notes

It is anticipated that the Company will enter into a Note Purchase  Agreement in
respect  of the issue of the Notes in July  2006.  See "Item 5 -  Operating  and
Financial  Review and  Prospects - Liquidity  and Capital  Resources - Unsecured
Loan Notes".

Except as disclosed in this Item,  there are no material  contracts  (other than
contracts entered into in the ordinary course of business, including commitments
to Funds)  which  have been  entered  into by the  Company  within the two years
immediately preceding the date of this document and there are no other contracts
(other than contracts  entered into in the ordinary course of business)  entered
into by the Company which contain any provision  under which the Company has any
obligation  or  entitlement  which is material to the Company as of December 31,
2005.

D.       Exchange Controls

Limitations  Imposed  by the Laws of the  United  Kingdom.  While  there  are no
governmental  laws,  decrees or  regulations in the United Kingdom that directly
restrict the export or import of capital  (including  foreign exchange controls)
or that  affect the  remittance  of  dividends,  interest  or other  payments to
non-resident holders of the Company's securities, certain transactions involving
the issue or  transfer of shares or  debentures  of foreign  subsidiaries  of UK
companies require the consent of the UK Treasury. The laws of the United Kingdom
do not impose any  limitations on the right of non-resident or foreign owners to
hold or vote in connection with the Company's securities.

Limitations  Imposed by the Company's  Charter Documents and the Trust Deed. The
Ordinary  Shares were offered in the United States pursuant to an exemption from
registration under Section 4(2) of the Securities Act,  Regulation D thereunder,
and exemptions under applicable state laws. Accordingly,  all share certificates
initially  issued  to  U.S.   investors  bear  appropriate   legends  addressing
restrictions on transfer.  These restrictions include a limitation on the number
of U.S. persons who have acquired  securities of the Company from the Company

                                      101

or its  agents or  affiliates  ("Direct  Purchasers")  or who are U.S.  resident
transferees of Direct Purchasers to no more than 75.

The Company  also will have the right to require the transfer of  securities  to
the extent  necessary  to  maintain  at 75 or fewer the  number of U.S.  persons
beneficially  owning its securities who acquired such securities either from the
Company or its agents or affiliates or from any U.S. resident transferee of such
Direct Purchasers.  In addition,  the Company will have the right to require the
transfer of its securities if the Directors become aware that the securities may
be held or owned by any person or persons whose holding or ownership  might,  in
the determination of the Board:

(i) cause a pecuniary or tax  disadvantage to the Company or any other holder of
Company securities; or

(ii) require a  registration  of the Company as an investment  company under the
Investment Company Act.

Further,  the  Company's  Memorandum  of  Association  requires the Directors to
direct the transfer of the  Company's  securities  if they become aware that the
securities  may be held or owned by a pension or other  benefit  plan subject to
Title I of the United States Employee Retirement Income Security Act of 1974, as
amended ("ERISA") and in the opinion of the Directors,  the Company's assets may
be considered  "plan  assets"  within the meaning of  regulations  adopted under
ERISA.

The  Company  has not  registered  under the  Exchange  Act for the  purpose  of
facilitating  secondary  market  trading with respect to its  securities  in the
United  States,  and the Company  does not intend,  directly or  indirectly,  to
facilitate such secondary market activity.

E.       Taxation

         Investment Trust Status.


The current  conditions for a company to be approved by H.M. Revenue and Customs
as an investment  trust are set forth in Section 842. In order to be approved as
an  investment  trust for U.K.  tax  purposes,  the Company must comply with the
following  conditions  throughout  each of the  accounting  periods for which it
seeks such approval:

(i) the Company must not be a close company as defined for U.K. tax purposes;

(ii) the Company must be resident in the U.K. for U.K. tax purposes;

(iii) the Company's income must consist wholly or mainly of "eligible investment
income," meaning, in the context of the Company, that its income must be derived
wholly or mainly from shares or securities;

(iv) the Company  must not acquire  shares or  securities  in any one company if
such shares or securities  (taken together) would represent more than 15% of the
Company's  investments  by value at the time of  acquisition.  For this purpose,
unit trusts will normally be treated as companies and units therein as shares of
such  companies.  There are also special  rules under which all of the Company's
holdings of shares or  securities  in a group (as  defined  for the  purposes of
Section 842) will be aggregated  and treated as one holding in a single  company
for the purposes of this  condition.  Further,  if the  Company's  interest in a
company  or group  increases  due to  additional  investment  being made in that
company or in any member of that

                                      102

group,  the entire  interest will be treated as having been acquired at the time
of the increased investment for the purposes of satisfying the above condition;

(v) the shares making up the Company's  ordinary share capital must be listed in
the Official List and admitted to trading on the LSE;

(vi) the distribution as dividends of surpluses  arising from the realization of
investments  must be  prohibited  by the  Company's  memorandum  or  Articles of
Association; and

(vii) The  Company  must not  retain  more than 15% of its  eligible  investment
income,  meaning in the context of the Company the income it derives from shares
and securities.

Whether or not the Company is approved  in respect of an  accounting  period can
only be  determined  retrospectively.  There can be no guarantee in advance that
the Company will be approved in respect of any accounting  period.  In the event
the Company is not approved as an investment trust for U.K. tax purposes,  there
would be no direct U.K.  tax  consequences  to  investors  in the  Company.  The
consequence  for the Company itself,  however,  would be that it would be liable
for U.K. corporation tax on its realized capital gains.

The last accounting period for which the Company has been treated as approved by
H.M. Revenue and Customs as an investment  trust is the accounting  period ended
on December 31, 2004.  The Directors  believe that the actions which the Company
has already taken,  and those which it proposes to take,  should together enable
the Company to continue to satisfy the  conditions of Section 842 for accounting
periods  commencing  after  December 31, 2004.  See "Item 4.  Information on the
Company - Business Overview."

The  Company  will not be  liable  for U.K.  corporation  tax on  capital  gains
realized during any accounting  period for which it is approved as an investment
trust.  However,  the  Company  will be liable for U.K.  corporation  tax on its
income  in each of its  accounting  periods.  Certain  investments  in  Investee
Companies will be held by the Company through Delaware limited partnerships.  As
long as H.M. Revenue and Customs  maintains its current view, the disposition of
Investee Companies held though Delaware limited  partnerships  should be treated
as giving  rise to  proceeds of a capital  nature.  There can be no  assurances,
however,  that H.M.  Revenue  and  Customs  will not change its view of Delaware
limited  partnerships,  which could cause the Company to be treated as realizing
income  (rather than capital  proceeds)  upon a realization of an interest in an
Investee Company which is so held.

         Income and Capital Gains Recognition.

It is intended that the Company's  income will be derived mainly from shares and
securities.  A significant  portion of the Company's income and capital gains is
expected to derive from future  distributions  in respect of its  investments in
the Funds. The Company will account for such  distributions by references to the
underlying source of such distributions. The Directors expect that distributions
to the Company in respect of its investments will consist principally of the net
proceeds of realizations of investments held by the Funds and,  therefore,  will
be treated as capital gains rather than as ordinary income.

Distributions  receivable by the Company which arise from  dividends,  interest,
and other revenue items  received by the Funds will be credited to the Company's
revenue account when such income  distributions are declared.  Investment income
arising from  directly  held  investments  of the Company  will,  in the case of
dividends,  be  included  as  revenue  in the  period  in which the due date for
payment of the  dividend  arises and, in the case of interest  income,  together
with interest payable and all other revenue expenses,  be treated on an accruals
basis.

                                      103

The proceeds,  net of costs, from any realization of the Company's  investments,
including  distributions  to it in respect of its  investments  which arise from
realizations of investments held by the Funds, will be credited,  when declared,
to a non-distributable capital reserve.

         Dividend Policy.

In order to comply with the current  conditions  for  approval as an  investment
trust for U.K.  tax  purposes,  the  Company is  prohibited  by its  Articles of
Association from  distributing as dividends any capital  surpluses  arising from
the  realization  of its  investments.  Accordingly,  any dividends  paid by the
Company  will be funded out of its  revenue  account.  It is  intended  that the
Company will make sufficient dividend payments to ensure that it is able to meet
the  current  conditions  for  approval  as an  investment  trust  for U.K.  tax
purposes.  The  Directors  expect that any  returns for holders of the  Ordinary
Shares  will derive  primarily  from the capital  appreciation  of the  Ordinary
Shares rather than from their dividend income.

         Tax Treaty Between the United Kingdom and the United States.

A U.S. investor in Ordinary Shares that is a U.S. Holder (as defined below under
"United  States  Taxation")  entitled  to the  benefits of the double tax treaty
between the U.S. and the U.K. (the "Treaty") and that does not hold the Ordinary
Shares as part of a permanent  establishment  located in the United Kingdom will
be entitled to certain  benefits under the Treaty with respect to the receipt of
dividends on the Ordinary  Shares.  Capital gains realized on the disposition of
such a U.S. investor's investments in the Ordinary Shares will not be subject to
tax in the U.K.  While the  Treaty  allows the  United  Kingdom to tax  dividend
distributions  paid to U.S.  Holders,  the Treaty  limits to 15% the rate of tax
that may apply to such  distributions.  The Company is not currently required to
withhold at source any amount in respect of UK tax from any distribution paid by
the Company.

United States Taxation

         General

The following is a statement of material U.S. federal income tax  considerations
for investors in Ordinary Shares that are U.S. Holders, as defined below, and is
based upon the Internal  Revenue Code of 1986,  as amended  (the  "Code"),  U.S.
Treasury regulations promulgated under the Code, and judicial and administrative
interpretations  thereof, all as of the date hereof and all of which are subject
to change,  possibly with retroactive  effect. This summary does not discuss all
aspects of U.S.  federal  income  taxation  that may be important to  particular
investors  in  light  of  their  individual  investment  circumstances,  such as
investors  subject to  special  tax rules,  including:  financial  institutions,
insurance companies, regulated investment companies, broker-dealers,  tax-exempt
organizations,  persons subject to the alternative  minimum tax, former citizens
or long-term  residents of the United  States,  persons that will hold  Ordinary
Shares as part of a straddle,  hedge, conversion, or constructive sale, or other
integrated  transaction  for U.S.  federal  income tax  purposes  or that have a
functional currency other than the U.S. dollar, or holders of 10% or more of the
Ordinary Shares, by vote or value, all of which may be subject to tax rules that
differ significantly from those summarized below. In addition, this summary does
not  discuss any  foreign,  or U.S.  state or local,  tax  considerations.  This
summary  assumes  that  investors  will hold their  Ordinary  Shares as "capital
assets" within the meaning of Section 1221 of the Code. Investors should consult
their own tax advisors  regarding the U.S. federal,  state and local, as well as
foreign,  income and other tax  considerations of the purchase,  ownership,  and
disposition of Ordinary Shares.

                                      104

For purposes of this summary,  a "U.S. Holder" is a beneficial owner of Ordinary
Shares that is, for U.S. federal income tax purposes, (i) an individual who is a
citizen or resident of the United States,  (ii) a  corporation,  or other entity
that is taxable as a  corporation,  created or  organized  under the laws of the
United States or any state or political  subdivision of the United States, (iii)
an estate the income of which is  includible  in gross  income for U.S.  federal
income tax purposes regardless of its source, or (iv) a trust the administration
of which is subject to the primary  supervision  of a court in the United States
and for  which  one or more U.S.  persons  have the  authority  to  control  all
substantial  decisions,  or which  has a valid  election  in effect  under  U.S.
Treasury  regulations  to be treated as a U.S.  person.  If a partnership  holds
Ordinary  Shares,  the U.S.  federal  income  tax  treatment  of a partner  will
generally  depend  upon the  status of the  partner  and the  activities  of the
partnership.  Partners of partnerships  that hold Ordinary Shares should consult
their own tax advisors.

         Taxation of Dividends

Subject to the discussion  under "Passive  Foreign  Investment  Company  Status"
below,  distributions to U.S.  Holders will constitute  dividend income for U.S.
federal income tax purposes to the extent such  distributions  are made from the
Company's  current  or  accumulated  earnings  and  profits,  as  determined  in
accordance  with  U.S.  federal  income  tax  principles.   Notwithstanding  the
foregoing,  the Company does not intend to maintain calculations of its earnings
and profits,  as determined for U.S. federal income tax purposes.  Consequently,
any  distributions  generally  will be  reported  as  dividend  income  for U.S.
information  reporting  purposes.  Such  dividends  will not be eligible for the
dividends-received  deduction otherwise allowed to U.S.  corporations in respect
of dividends received from other U.S. corporations.  For taxable years beginning
before  January  1,  2011,   dividends   received  from  a  "qualified   foreign
corporation"  by a U.S.  Holder who is an individual  are eligible for a maximum
U.S.  federal  income  tax rate of 15%  provided  that  certain  holding  period
requirements  are met. The amount of any dividend will be the U.S.  dollar value
of the British pounds sterling received,  determined at the spot British pound /
U.S.  dollar  exchange rate on the date such  distribution  is includible in the
income of the U.S.  Holder,  regardless of whether the  distribution  is in fact
converted  into U.S.  dollars at that time. Any gain or loss  recognized  upon a
subsequent  sale  or  conversion  of  pounds  sterling  for a  different  amount
generally will be U.S. source ordinary income or loss.

Subject to the discussion  under "Passive  Foreign  Investment  Company  Status"
below, to the extent that the amount of any  distribution  exceeds the Company's
current and  accumulated  earnings  and profits,  it will be treated  first as a
tax-free  return of the U.S.  Holder's tax basis in its  Ordinary  Shares to the
extent  thereof,  and then as  capital  gain.  The  Company  does  not  maintain
calculations of earnings and profits in accordance with U.S.  federal income tax
principles.  Dividends  paid  by the  Company  will  constitute  foreign  source
dividend income for U.S. federal income tax purposes, which may be relevant to a
U.S.  Holder in calculating  such holder's  foreign tax credit  limitation  with
respect to foreign taxes paid or accrued by such U.S. Holder.  The limitation on
foreign  taxes  eligible  for credit is  calculated  separately  with respect to
specific classes of income.  For this purpose,  dividends paid by the Company in
taxable  years  beginning  before  January 1, 2007 will  generally  be "passive"
income or, in the case of certain  holders,  "financial  services"  income,  and
dividends  paid in  taxable  years  beginning  after  December  31,  2006  will,
depending on a holder's circumstances, be "passive" or "general" income.

                                      105

         Taxation on Sale, Exchange or Other Disposition of Ordinary Shares

Subject to the discussion  under "Passive  Foreign  Investment  Company  Status"
below, a U.S. Holder will recognize capital gain or loss for U.S. federal income
tax purposes on a sale,  exchange or other  disposition of Ordinary Shares equal
to the difference  between the U.S.  dollar value of the amount realized and the
U.S.  Holder's  adjusted  basis  (determined  in U.S.  dollars) in the  Ordinary
Shares. A U.S.  Holder's adjusted basis in the Ordinary Shares will generally be
equal to the U.S.  dollar  cost of the  Ordinary  Shares and reduced by the U.S.
dollar amount of any  distribution  that is treated as a return of capital.  Any
such gain or loss will generally be from sources within the United States. Under
U.S.  federal income tax law,  capital gains may be taxed at lower U.S.  federal
income tax rates than ordinary income for certain  non-corporate  U.S.  Holders.
The deductibility of capital losses is subject to limitations.

Any gain or loss resulting from currency exchange fluctuations during the period
from  the  date  of the  receipt  of  proceeds  from  sale,  exchange  or  other
disposition  to the date such  proceeds  are  converted  into U.S.  dollars will
generally be treated as U.S. source ordinary income or loss.

         Passive Foreign Investment Company Status

In general,  a non-U.S.  corporation  such as the  Company  will be treated as a
passive foreign investment company ("PFIC") for U.S. federal income tax purposes
if at least 75% of its gross income for the taxable year is passive income or at
least 50% of the value,  determined on the basis of a quarterly average,  of its
assets produce or are held for the production of passive  income.  A corporation
that owns  (directly  or  indirectly)  at least  25% (by  value) of the stock of
another  corporation  takes into  account its  proportionate  share of the owned
corporation's assets and income in applying the PFIC asset and income tests. The
Company believes that it was a PFIC for its taxable year ended December 31, 2005
and expects to be classified as a PFIC for the foreseeable future.

Under the PFIC rules,  unless a U.S.  Holder makes a  "mark-to-market  election"
(which may have its own adverse tax consequences),  as described below, the U.S.
Holder will be subject to special,  generally  adverse tax rules with respect to
any gain  realized  by the U.S.  Holder  on the  sale or  other  disposition  of
Ordinary Shares and any "excess distribution" made by the Company (generally any
distributions  to a U.S. Holder during a single taxable year that exceed 125% of
the  "average  annual  distribution"  received by such U.S.  Holder in the three
preceding years (or the U.S. Holder's holding period, if shorter)).  Under these
rules,  (i) any excess  distribution or gain will be allocated  ratably over the
U.S.  Holder's holding period,  (ii) the amount allocated to the taxable year in
which the U.S. Holder realizes the excess  distribution or gain will be taxed as
ordinary  income,  (iii) the amount  allocated to each prior year,  with certain
exceptions,  will be subject to tax in that prior year at the highest applicable
tax rate for such year,  and (iv) the interest  charge  generally  applicable to
underpayments  of tax will be imposed in respect of the tax attributable to each
such year.

Furthermore,  if the Company is a PFIC, then a U.S. Holder may be subject to the
foregoing  rules as if the U.S.  Holder owned its  pro rata  share of any of the
Company's   direct  or  indirect   corporations   that  are  themselves   PFICs.
Accordingly,  a U.S. Holder may be subject to tax under the excess  distribution
rules with respect to  distributions  to the Company by, and dispositions by the
Company of stock of, any direct or indirect  PFIC stock held by the Company,  as
if  the  U.S.  Holder  received  directly  its  pro rata  share  of  either  the
distribution or

                                      106

proceeds from such  disposition.  U.S. Holders should consult their tax advisors
on the potential application of the indirect PFIC rules to them.

Pursuant to the specific  provisions of the excess  distribution  rules,  a U.S.
Holder may also  recognize  gain if the Ordinary  Shares are pledged as security
for a loan or are  transferred  by gift or death.  A U.S.  Holder that  acquires
Ordinary Shares from a decedent  generally will not receive a "stepped-up"  fair
market value basis in such Ordinary  Shares unless all of the gain is recognized
to the decedent pursuant to the specific  provisions of the excess  distribution
rules but,  instead,  will receive a tax basis equal to the decedent's basis, if
lower.

The tax  consequences  described above may generally be avoided if a U.S. Holder
is eligible for and timely makes a  mark-to-market  election with respect to its
Ordinary  Shares  provided that the Ordinary Shares meet certain minimum trading
requirements.  The mark-to-market  election is made on IRS Form 8621 and applies
to all Ordinary  Shares  owned or  subsequently  acquired by the  electing  U.S.
Holder.  The election is effective for the taxable year for which it is made and
all subsequent  years,  unless the Ordinary  Shares cease to meet the applicable
trading  requirements,  the IRS consents to its revocation or the Company ceases
to be a PFIC with respect to the U.S. Holder. The excess  distribution rules, as
specially  modified by a coordination  rule, may apply to the first taxable year
in which a  mark-to-market  election is  effective if the Company was a PFIC for
any taxable year,  prior to such first taxable  year,  during the U.S.  Holder's
holding period in the Ordinary Shares. U.S. Holders should consult their own tax
advisors as to whether a mark-to-market  election is available in respect of the
Ordinary Shares.

If a  mark-to-market  election  is  made  and for so  long  as the  election  is
effective,  the electing U.S.  Holder will include as ordinary  income each year
the excess,  if any, of the fair market value of its Ordinary  Shares at the end
of the  taxable  year over its  adjusted  basis in its  Ordinary  Shares.  These
amounts of  ordinary  income will not be eligible  for the  favorable  tax rates
applicable to qualified  dividend  income or long-term  capital gains.  The U.S.
Holder will also be allowed to take an  ordinary  loss in respect of the excess,
if any,  of the  adjusted  basis of its  Ordinary  Shares over their fair market
value at the end of the  taxable  year (but only to the extent of the net amount
of previously included income as a result of the mark-to-market  election).  The
U.S.  Holder's basis in its Ordinary Shares will be adjusted to reflect any such
income or loss amounts. Gain on the sale or other disposition of Ordinary Shares
will be treated as ordinary  income.  Any loss  recognized  on the sale or other
disposition of Ordinary Shares in excess of any prior unreversed  mark-to-market
inclusions will be subject to the rules generally  applicable to losses provided
elsewhere in the Code.

Whether or not a U.S. Holder makes a mark-to-market  election with regard to the
Ordinary Shares, dividends that a U.S. Holder receives from the Company will not
constitute  qualified  dividend  income if the  Company is a PFIC  either in the
taxable year of the distribution or the preceding taxable year.

A  U.S.   Holder  that  acquires   Ordinary  Shares  from  a  decedent  where  a
mark-to-market  election with respect to the Ordinary Shares was in effect as of
the date of the decedent's death will be subject to special,  generally  adverse
rules for purposes of determining  the basis of the Ordinary Shares in the hands
of the acquiring U.S. Holder.

Whether or not a  mark-to-market  election is made, a U.S.  Holder of PFIC stock
must annually file IRS Form 8621.

                                      107

The Company does not currently intend to provide the information necessary for a
U.S.  Holder to make a  "qualified  electing  fund"  election  with  respect  to
Ordinary Shares.

The PFIC rules are very  complex.  U.S.  Holders  should  consult  their own tax
advisors  concerning the status of the Company as a PFIC, the application of the
PFIC rules to them and the relative  economic and U.S. federal income tax merits
of a mark-to-market election, if available, with respect to the Ordinary Shares.

         Information Reporting and Backup Withholding

U.S. Holders that are "exempt recipients" (such as corporations)  generally will
not be subject to U.S. backup withholding tax and related information  reporting
requirements on dividend  payments on, and the proceeds from the disposition of,
Ordinary Shares unless, when required,  they fail to demonstrate their status as
exempt recipients.  Other U.S. Holders (including individuals) generally will be
subject to U.S.  backup  withholding  tax at the  applicable  statutory  rate on
dividend  payments on, and the proceeds from the disposition of, Ordinary Shares
if they fail to furnish a correct  taxpayer  identification  number or otherwise
fail to comply with  applicable  backup  withholding  requirements.  In general,
information  reporting  may apply to payments of dividends  on, and the proceeds
from the  disposition of, Ordinary Shares to a U.S. Holder that is not an exempt
recipient.

The backup  withholding tax is not an additional tax. Amounts withheld under the
backup  withholding  rules may be credited  against a  beneficial  owner's  U.S.
federal  income tax liability,  and the beneficial  owner may obtain a refund of
any excess amounts withheld by filing a claim for refund with the IRS.


F.       Dividends and Paying Agents

         Not applicable to this Form 20-F.

G.       Statement by Experts

         Not applicable to this Form 20-F.

H.       Documents on Display

It is possible to read and copy  documents  referred to in this annual report on
Form 20-F that have been filed with the SEC at the SEC's public  reference  room
located at 100 F Street,  N.E., Room 1580,  Washington,  D.C. 20549. Please call
the SEC at 1-800-SEC-0330 for further  information on the public reference rooms
and their copy  charges.  The  Company's SEC filings since May 22, 2002 are also
publicly available through the SEC's website located at http://www.sec.gov.


I.       Subsidiary Information

         Not applicable to this Form 20-F.

                                      108

Item 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
                  MARKET RISK

A summary of the main risks  faced by the  Company are shown in Note 33 in "Item
17.  Financial  Statements."  In  addition,  the  Company  has  carried out some
sensitivity  analyses in respect of its exposure to  valuation  risk and foreign
exchange risk, as set out below.

         Valuation risk

The Company's principal  investment objective is to achieve capital appreciation
by investing in private equity funds.  These  investments are designated as fair
value through profit and loss, with  unrealized  gains or losses reported in the
income statement. "Item 5. Operating and Financial Review and Prospects"

The  risks  faced  by the  Company  are  more  fully  discussed  in "Item 3. Key
Information  - Risk  Factors".  It  should  be  noted,  however,  that  a  large
proportion  of the  underlying  investee  companies  are expected to be unquoted
investments  and therefore the valuation of such companies  involves  exercising
judgement (see "Item 5. Operating and Financial Review and Prospects - Liquidity
and Capital Resources - Critical Accounting Policies").

At December  31,  2005,  the value of private  equity  funds and  co-investments
amounted to GBP675.1 million (2004:  GBP714.1  million),  out of total assets of
GBP955.4 million (2004:  GBP760.0 million). As such, changes in the valuation of
investee  companies  will have a significant  impact on the overall value of the
Company.

A sensitivity  analysis has been  performed on the  valuations of the 20 largest
investee  companies,  which had a combined  valuation  at  December  31, 2005 of
GBP550.2  million  or 81.5% of the  private  equity  portfolio  (2004:  GBP544.9
million or 76.3%), the results of which are set out in the table below:

<TABLE>
<CAPTION>
<S>                                                                  <C>                 <C>                     <C>
                                                                                Hypothetical            Hypothetical
                                                              Fair value          fair value              fair value
                                                                               (10% uplift)*           (10% w/down)*
                                                                 GBP'000             GBP'000                 GBP'000
December 31, 2005
Valuation of 20 largest investments                              550,201             633,445                 466,523
Change in valuation                                                                   +15.5%                  -15.2%

December 31, 2004
Valuation of 20 largest investments                              544,935             619,996                 473,349
Change in valuation                                                                   +13.8%                  -13.1%
</TABLE>

* All  investments  are  included  in the balance  sheet at fair  value.  Quoted
companies  are valued  based on market  prices and  recently  acquired  unquoted
investments may be carried at cost. For such investments,  a 10% movement in the
valuation basis will have a 10% impact on fair value.  For unquoted  investments
valued on a different  basis,  such as  earnings-related,  a 10% movement in the
earnings of the investee company will not necessarily  result in a 10% change in
fair value, because of other factors such as gearing.

                                      109

         Currency risk

As explained in note 33 of the financial  statements,  the Company is exposed to
currency  risk as a  significant  proportion  of its assets are  denominated  in
foreign currency.

A  sensitivity  analysis  has been  performed  on the  effect of  exchange  rate
fluctuations on the valuation of the 20 largest investee companies,  the results
of which are set out in the table below:

<TABLE>
<CAPTION>
<S>                                                                  <C>                 <C>                     <C>
                                                                                Hypothetical            Hypothetical
                                                              Fair value          fair value              fair value
                                                                                        (10%     (10% appreciation)*
                                                                              depreciation)*
                                                                 GBP'000             GBP'000                 GBP'000
December 31, 2005
Valuation of 20 largest investments                              550,201             591,346                 509,056
Change in valuation                                                                    +7.5%                   -7.5%

December 31, 2004
Valuation of 20 largest investments                              544,935             586,731                 503,139
Change in valuation                                                                    +7.7%                   -7.7%
</TABLE>

* For the  purposes of this  analysis,  depreciation  means a 10%  weakening  of
sterling relative to other currencies and appreciation means a 10% strengthening
of sterling relative to other currencies.

In addition to fund  investments,  the Company is also exposed to currency  risk
through its holdings of cash and cash  equivalents,  which  amounted to GBP205.0
million at December 31, 2005 (2004: GBP25.1 million).

A  sensitivity  analysis  has been  performed  on the effect of  exchange  reate
fluctuations  on the  valuations  of cash and cash  equivalents,  the results of
which are set out in the table below:

<TABLE>
<CAPTION>
<S>                                                                  <C>                 <C>                     <C>
                                                                                Hypothetical            Hypothetical
                                                              Fair value               value                   value
                                                                                        (10%     (10% appreciation)*
                                                                              depreciation)*
                                                                 GBP'000             GBP'000                 GBP'000
December 31, 2005
Cash and cash equivalents                                        205,006             221,244                 188,767
Change in value                                                                        +7.9%                   -7.9%

December 31, 2004
Cash and cash equivalents                                         25,148              25,497                  24,798
Change in value                                                                        +1.4%                   -1.4%
</TABLE>

* For the  purposes of this  analysis,  depreciation  means a 10%  weakening  of
sterling relative to other currencies and appreciation means a 10% strengthening
of sterling relative to other currencies.

The  Company's  exposure to currency  risk has  increased as cash  balances have
grown because the majority of its cash balances are now held in euro-denominated
treasury  bills. A breakdown of the Company's cash balances by currency is shown
in note 36 to the financial statements.

                                      110

         Interest rate risk

As explained in note 33 of the financial  statements,  the Company is exposed to
interest  rate  risk as it  earns  interest  on its  holdings  of cash  and cash
equivalents.  Conversely, the Company is expected to issue as series of Bonds in
July 2006 (see "Item 5. B. Liquidity and Capital  Resources - Potential  Sources
of Capital - Senior  Unsecured  Notes") and has  increased  its loan facility to
EUR600  miilion  (see "Item 5. B.  Liquidity  and Capital  Resources - Potential
Sources of Capital - Facility Agreement").  Interest rate risk on the Bonds will
be  mitigated as they are expected to be  predominantly  fixed-rate  and, in the
case of  floating-rate  notes,  the Company will enter into a suitable  interest
rate swap.

It should be noted,  however, that the Company's primary objective is to achieve
capital  returns  and,  as such,  the main  exposure  to  interest  rate risk is
indirect,  through its impact on the  valuations  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 also have an important  role in the ability of
private equity funds to secure profitable deals, as many transactions are partly
financed by debt.

Item 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

         Not applicable to this Form 20-F.

PART II

Item 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

None.

Item 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY
                  HOLDERS AND USE OF PROCEEDS
None.

Item 15. CONTROLS AND PROCEDURES

The Board of directors is responsible for the Group's system of internal control
that is designed to facilitate  effective and efficient operations and to ensure
the quality of internal and external  reporting and compliance  with  applicable
laws and regulations. In devising internal controls, the Board has regard to the
nature and extent of the risk, the likelihood of it  crystallizing  and the cost
of  controls.  A system of  internal  control is  designed  to  manage,  but not
eliminate,  the risk of  failure  to achieve  business  objectives  and can only
provide  reasonable,  and not absolute,  assurance  against the risk of material
misstatement,  fraud or  losses.  The Board has  established  a process  for the
identification,  evaluation and management of the significant risks faced by the
Group, which operated throughout the year ended December 31, 2005 and to date in
2006. The Board has adopted a risk map that  identifies  significant  strategic,
investment-related,  operational  and service  provider  risks and a  monitoring
system to ensure that risk  management  and all aspects of internal  control are
reviewed on a regular basis.

The Board believes that the key risks  identified and the  implementation  of an
on-going system to identify,  evaluate and manage these risks are based upon and
relevant to the Group's  business as an  investment  trust.  The  on-going  risk
assessment  includes  consideration  of the scope and  quality of the systems of
internal  control  adopted  by major  service  providers,  and  ensures  regular
communication  of the results of monitoring  by third parties to the Board,  the

                                      111

incidence  of  significant   control  failings  or  weaknesses  that  have  been
identified  at any time and the extent to which they have resulted in unforeseen
outcomes  or  contingencies  that  may have a  material  impact  on the  Group's
performance or condition.

         (a) Disclosure controls and procedures

Our principal  executive officer and principal  financial officer have conducted
an evaluation of the effectiveness of our disclosure  controls and procedures as
of  the  end of the  period  covered  by  this  annual  report.  Based  on  that
evaluation,  the principal  executive  officer and principal  financial  officer
concluded  that such  controls and  procedures  were  adequate and  effective to
ensure  that  material   information   regarding  our  company,   including  our
consolidated  subsidiaries,  was made known to such  officers  by others  within
those entities, for the period for which this annual report was being prepared.

         (b) Changes in internal control over financial reporting

There have not been  significant  changes in the Group's  internal  control over
financial  reporting  that  occurred  during the period  covered by this  annual
report that have  materially  affected,  or are reasonably  likely to materially
affect, the Group's internal control over financial reporting.

Item 16. [RESERVED]

Item 16A.         AUDIT COMMITTEE FINANCIAL EXPERT

Our  board of  directors  has  determined  that C.  Sinclair,  a member  and the
Chairman of the Audit Committee,  is the audit committee  financial expert.  The
Board  is  satisfied  that he has  recent  and  relevant  financial  experience.
Although  the Board has  determined  that Mr.  Sinclair  is an 'Audit  Committee
Financial Expert' and is independent, each as defined in the SEC rules under the
US  Securities  Exchange  Act of 1934 and related  guidance,  the members of the
Audit  Committee are selected with a view to the expertise and experience of the
Audit Committee as a whole,  and the Audit  Committee  reports to the Board as a
single entity.  The designation of a director as an 'Audit  Committee  Financial
Expert' does not impose on such  director any duties,  obligations  or liability
that are greater  than the duties,  obligations  and  liability  imposed on such
director as a member of the Audit  Committee  and Board in the absence of such a
designation.  Nor does the  designation  of a  director  as an 'Audit  Committee
Financial  Expert'  affect the duties,  obligations  or  liability  of any other
member of the Board. Mr. Sinclair meets the independence  criteria applicable to
audit  committee  members  under the  listing  standards  of the New York  Stock
Exchange.

Item 16B.         CODE OF ETHICS

The Company has adopted a Code of Ethics  that is  applicable  to our  principal
executive officer,  principal financial officer and all Directors and Executives
employed by subsidiaries of the Company. A copy is available on request from the
Company  Secretary at the  following  address:  Schroder  Investment  Management
Limited, 31 Gresham Street, London, EC2V 7QA, United Kingdom. The information is
also published on the Company's website - www.svgcapital.com.

                                      112

Item 16C.         PRINCIPAL ACCOUNTANT FEES AND SERVICES

         Our principal independent auditor is Ernst & Young LLP.

Fees and Services

During the years ended  December 31, 2004 and  December  31,  2005,  we paid the
following fees for professional services to Ernst & Young:

<TABLE>
<CAPTION>
                                                                   Year Ended              Year Ended
                                                               December 31, 2005        December 31, 2004
                                                                              (GBP in thousands)
<S>                                                                   <C>                     <C>
      Audit Fees                                                      188                      95
      Audit-Related Fees                                               --                      --
      Tax Fees                                                         8                       12
      All Other Fees                                                   --                      --
      Total                                                           196                      107
</TABLE>

Tax  Services  have  been  provided  by Ernst & Young  LLP to the US  subsidiary
companies.

Other Services have not been provided by Ernst & Young LLP.

Our  Audit  Committee  is  responsible  for  the  oversight  of our  independent
auditor's  work. Our Audit  Committee's  policy is to pre-approve  all audit and
non-audit  services provided by Ernst & Young.  These services may include audit
services, audit-related services and other services, as described above. In such
an event, the Audit Committee sets forth its pre-approval in detail, listing the
particular  services or  categories  of  services  which are  pre-approved,  and
setting forth a specific  budget for such services.  Additional  services may be
pre-approved on an individual basis.

In the fiscal year ended December 31, 2005, our Audit Committee pre-approved all
audit and non-audit services provided by Ernst & Young LLP.

Item 16D.         EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES.

Not applicable.

                                      113

Item 16E.         PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED
                  PURCHASERS

The Directors  have not used the authority  given to them at the Annual  General
Meeting of the Company  held on April 25, 2005 to purchase  any of the  ordinary
shares of the Company.

The total number of shares in issue on March 20, 2006 was 128,545,588 shares. To
provide maximum flexibility,  the Directors renewed the authority to purchase up
to 14.99% of the share capital in issue on March 20, 2006 at the Annual  General
Meeting on April 24, 2006.

This  authority  will lapse at the  conclusion of the Company's  Annual  General
Meeting in 2007, unless renewed earlier.

As at June 30, 2006,  the Company held no shares in treasury.  Accordingly,  the
percentage  figures in this and other  sections of the report are all calculated
exclusive of treasury shares.

                                      114





                                    PART III


Item 17. FINANCIAL STATEMENTS

The financial  statements required by Item 17, together with the report of Ernst
& Young thereon, are included as follows on Pages F1 through F34 of this report:


<TABLE>
<CAPTION>
<S>                                                                                                     <C>
Report of independent registered public accounting firm                                                 F-1

Consolidated income statement for the years ended December 31, 2005 and  December 31, 2004              F-2

Consolidated statement of changes in equity for the years ended December 31, 2005 and  December 31,     F-3
2004

Consolidated balance sheets at  December 31, 2005 and December 31, 2004                                 F-4

Consolidated cash flow statements for the years ended December 31, 2005 and December 31, 2004           F-5

Notes to the accounts                                                                                   F-6
</TABLE>


Item 18. FINANCIAL STATEMENTS

         Not applicable to this Form 20-F.

Item 19. EXHIBITS

         The following exhibits are filed as a part of this annual report:


<TABLE>
<CAPTION>
<S>                                                      <C>                                                <C>
Exhibit                                             Exhibit Name
Number


1.1             Memorandum of Association                                                                    *

1.2             Articles of Association, as adopted on December 5, 2000                                     ***

4.1             Facility Agreement, dated March 10, 2006, between the Company,  The Governor and           Filed
                Company of The Bank of Scotland and The Royal Bank of Scotland plc                        herewith

4.2             The Executive Share Option Plan                                                              **

4.3             Operating Agreement, dated March 21, 2005, between the Company and Permira Holdings         ***
                Limited and the Company and certain other Permira Entities

4.4             Subscription Agreement, dated March 21, 2005, between the Company and Permira               ***
                Capital Limited

8.1             List of Subsidiaries of the Company                                                          **

11.1            The Company's Code of Ethics                                                               Filed
                                                                                                          herewith

12.1            Certification of Chief Executive Officer pursuant to SEC Rule 13a-14(a)                    Filed
                                                                                                          herewith

12.2            Certification of Chief Financial Officer pursuant to SEC Rule 13a-14(a)                    Filed
                                                                                                          herewith

13.1            Certification of Chief Executive Officer pursuant to SEC Rule 13a-14(b)                  Furnished
                                                                                                          herewith

                                      115




13.2            Certification of Chief Financial Officer pursuant to SEC Rule 13a-14(b)                  Furnished
                                                                                                          herewith
</TABLE>



*  Incorporated  herein by reference to the Company's 2000 annual report on Form
20-F, filed with the Commission on January 16, 2001

** Incorporated  herein by reference to the Company's 2001 annual report on Form
20-F, filed with the Commission on November 8, 2001

*** Incorporated herein by reference to the Company's 2004 annual report on Form
20-F, filed with the Commission on July 15, 2005

                                      116





                                   SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing
on Form 20-F and that it has duly caused and authorized the  undersigned to sign
this annual report on its behalf.

                  SVG CAPITAL PLC
                  (Registrant)


                                    By:  /s/ John Spedding
                                           John Spedding, for and on behalf of
                                           Schroder Investment
                                           Management Limited, Secretaries


Date: July 14, 2006








                                       F1
SVG Capital plc
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To: The Directors
     SVG Capital plc

We have  audited  the  Consolidated  Balance  Sheets  of SVG  Capital  plc as of
December 31, 2005 and 2004, and the related  Consolidated  Statements of Income,
Changes in Equity  and Cash Flows for each of the two years in the period  ended
December 31, 2005 and 2004. These financial statements are the responsibility of
the Company's  management.  Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free from material  misstatement.  We were not engaged to perform
an audit of the Company's internal control over financial reporting.  Our audits
included  consideration of internal control over financial  reporting as a basis
for designing audit  procedures that are appropriate in the  circumstances,  but
not for the  purpose  of  expressing  an  opinion  on the  effectiveness  of the
Company's internal control over financial reporting.  Accordingly, we express no
such  opinion.  An audit also  includes  examining,  on a test  basis,  evidence
supporting the amounts and  disclosures in the financial  statements,  assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial  statements  presentation.  We believe that our
audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the consolidated financial position of SVG Capital plc at
December 31, 2005 and 2004, and the  consolidated  results of its operations and
its  consolidated  cash  flows  for each of the two  years in the  period  ended
December 31, 2005 and 2004 in conformity with International  Financial Reporting
Standards as adopted by the European Union which differ in certain respects from
United States generally accepted accounting  principles (see Note 36 of Notes to
the Accounts).

Ernst & Young LLP
London, England
March 20, 2006, except for
Note 36 - Differences Between IFRS and
United States Generally Accepted Accounting Principles,
as to which the date is
July 14, 2006


                                       F1

SVG Capital plc
CONSOLIDATED INCOME STATEMENT (Incorporating The Revenue Account)


<TABLE>
<CAPTION>
<S>                               <C>          <C>        <C>            <C>           <C>        <C>            <C>
                                                  For the year ended                     For the year ended
                                                  December 31, 2005                      December 31, 2004
                                             Revenue  Capital                        Revenue  Capital
                                              return      return        Total         return      return       Total
                                 Notes       GBP'000     GBP'000      GBP'000        GBP'000     GBP'000     GBP'000
Gains on investments - gains
on fair value through profit
and loss                                           -     142,451      142,451              -     134,799     134,799
Exchange (losses)/gains on
other items                                     (63)         994          931           (75)         112          37
------------------------------ -------- ------------- ----------- ------------ -------------- ----------- -----------
                                                (63)     143,445      143,382           (75)     134,911     134,386
------------------------------ -------- ------------- ----------- ------------ -------------- ----------- -----------
Operating income
Investment income                    4        21,314           -       21,314          2,212           -       2,212
Other operating income               4        12,054           -       12,054          8,959           -       8,959
------------------------------ -------- ------------- ----------- ------------ -------------- ----------- -----------
Total operating income                        33,368           -       33,368         11,171           -      11,171
------------------------------ -------- ------------- ----------- ------------ -------------- ----------- -----------
Operating expenses
Administrative expenses              5      (14,079)           -     (14,079)       (10,839)           -    (10,839)
Other operating expenses                           -       (517)        (517)              -       (928)       (928)
------------------------------ -------- ------------- ----------- ------------ -------------- ----------- -----------
Total expenses                              (14,079)       (517)     (14,596)       (10,839)       (928)    (11,767)
------------------------------ -------- ------------- ----------- ------------ -------------- ----------- -----------
Operating profit/(loss)                       19,289       (517)       18,772            332       (928)       (596)
Finance costs                       11       (4,588)           -      (4,588)        (5,402)           -     (5,402)
------------------------------ -------- ------------- ----------- ------------ -------------- ----------- -----------
Profit/(loss) before tax                      14,638     142,928      157,566        (5,145)     133,983     128,838
Tax                                 10         (328)       (527)        (855)             72           -          72
------------------------------ -------- ------------- ----------- ------------ -------------- ----------- -----------
Profit/(loss) for the year                    14,310     142,401      156,711        (5,073)     133,983     128,910
------------------------------ -------- ------------- ----------- ------------ -------------- ----------- -----------
Attributable to: Equity                       14,300     142,274      156,574        (5,075)     133,899     128,824
holders of the parent
Minority interest                                 10         127          137              2          84          86
------------------------------ -------- ------------- ----------- ------------ -------------- ----------- -----------

Earnings per ordinary share
From continuing activities
Basic                               13                                 123.7p                                 113.7p
------------------------------ -------- ------------- ----------- ------------ -------------- ----------- -----------
Diluted                             13                                 113.7p                                  97.8p
------------------------------ -------- ------------- ----------- ------------ -------------- ----------- -----------
</TABLE>


The total  columns of this  statement  represents  the income  statement  of the
Group,  prepared in accordance with International  Financial Reporting Standards
as adopted by the European Union. The  supplementary  revenue return and capital
return columns are both prepared under guidance  published by the Association of
Investment  Trust  Companies.  All  items in the  above  statement  derive  from
continuing operations.

                                       F2

SVG Capital plc
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY


<TABLE>
<CAPTION>
<S>                               <C>        <C>          <C>         <C>       <C>            <C>      <C>           <C>        <C>
                                Share      Share      Revenue     Capital     Share          Other     Total     Minority      Total
                                                                             option       reserves    equity
                              capital     premium     reserve     reserve   reserve                  holders     interest
                              GBP'000     GBP'000     GBP'000     GBP'000   GBP'000        GBP'000   GBP'000      GBP'000   GBP'000
For the year ended
December 31, 2005
Profit for the year                 -           -      14,300     142,274         -            -     156,574        137     156,711
Issue of share options              -           -           -           -     1,425            -       1,425          -       1,425
Issue of shares via
placing                         6,000      30,000           -           -         -            -      36,000          -      36,000
Issue costs                         -       (492)           -           -         -            -       (492)          -       (492)
--------------------------- ---------- ----------- ----------- ----------- --------- ------------ ----------- ---------- -----------
Changes in equity for the
year ended
December 31, 2005               6,000      29,508      14,300     142,274     1,425            -     193,507        137     193,644
Balance at
December 31, 2004             122,530      72,622    (13,201)     422,945     1,250      102,704     708,850        505     709,355
--------------------------- ---------- ----------- ----------- ----------- --------- ------------ ----------- ---------- -----------
Balance at                    128,530     102,130       1,099     565,219     2,675      102,704     902,357        642     902,999
December 31, 2005
--------------------------- ---------- ----------- ----------- ----------- --------- ------------ ----------- ---------- -----------

For the year ended
December 31, 2004
Profit for the period               -           -     (5,075)     133,899         -            -     128,824         86     128,910
Issue of share options              -           -           -           -       907            -         907          -         907
Issue of shares on
conversion of bonds             9,875      29,508           -           -         -      (7,333)      32,050          -      32,050
--------------------------- ---------- ----------- ----------- ----------- --------- ------------ ----------- ---------- -----------
Changes in equity for the
year ended
December 31, 2004               9,875      29,508     (5,075)     133,899       907      (7,333)     161,781         86     161,867
Balance at
December 31, 2003             112,655      43,114     (8,126)     289,046       343      110,037     547,069        419     547,488
--------------------------- ---------- ----------- ----------- ----------- --------- ------------ ----------- ---------- -----------
Balance at                    122,530      72,622    (13,201)     422,945     1,250      102,704     708,850        505     709,355
December 31, 2004
--------------------------- ---------- ----------- ----------- ----------- --------- ------------ ----------- ---------- -----------
</TABLE>

                                       F3


SVG Capital plc

CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
<S>                                                                 <C>                    <C>                      <C>
                                                                  Notes                   As at                   As at
                                                                                    December 31,            December 31,
                                                                                           2005                    2004
                                                                                        GBP'000                 GBP'000
------------------------------------------------------- ---------------- ----------------------- -----------------------
Non-current assets
Investments designated as fair value through profit
and loss                                                             15                 703,725                 729,272
Property, plant and equipment                                        14                   1,099                   1,161
Deferred tax asset                                                                           38                      74
------------------------------------------------------- ---------------- ----------------------- -----------------------
                                                                                        704,862                 730,507
------------------------------------------------------- ---------------- ----------------------- -----------------------
Current assets
Financial assets                                                     17                  40,565                       -
Other receivables                                                    17                   4,965                   4,390
Cash and cash equivalents                                            17                 205,006                  25,148
------------------------------------------------------- ---------------- ----------------------- -----------------------
                                                                                        250,536                  29,538
------------------------------------------------------- ---------------- ----------------------- -----------------------
Total assets                                                                            955,398                 760,045
------------------------------------------------------- ---------------- ----------------------- -----------------------
Current liabilities
Other payables                                                       18                 (8,152)                 (7,763)
Tax payable                                                          18                    (42)                       -
------------------------------------------------------- ---------------- ----------------------- -----------------------
                                                                                        (8,194)                 (7,763)
------------------------------------------------------- ---------------- ----------------------- -----------------------
Total assets less current liabilities                                                   947,204                 752,282
------------------------------------------------------- ---------------- ----------------------- -----------------------
Non-current liabilities
Convertible loan notes                                               19                (42,989)                (42,374)
Deferred staff compensation                                          19                   (689)                   (553)
Deferred tax liability                                               19                   (527)                       -
------------------------------------------------------- ---------------- ----------------------- -----------------------
                                                                                       (44,205)                (42,927)
------------------------------------------------------- ---------------- ----------------------- -----------------------
Net assets                                                                              902,999                 709,355
------------------------------------------------------- ---------------- ----------------------- -----------------------
Equity
Called up share capital                                              21                 128,530                 122,530
Share premium account                                                22                 102,130                  72,622
Capital redemption reserve                                           23                   3,204                   3,204
Share purchase reserve                                               24                  92,054                  92,054
Share option reserve                                                 25                   2,675                   1,250
Convertible loan notes - equity                                      26                   7,446                   7,446
Capital reserve                                                      27                 565,219                 422,945
Revenue reserve                                                      28                   1,099                (13,201)
------------------------------------------------------- ---------------- ----------------------- -----------------------
Capital and reserves attributable to equity holders                                     902,357                 708,850
of the parent
Minority interest                                                                           642                     505
------------------------------------------------------- ---------------- ----------------------- -----------------------
Total equity                                                                            902,999                 709,355
------------------------------------------------------- ---------------- ----------------------- -----------------------
Net asset value per ordinary share
From continuing activities
- basic                                                              29                  702.1p                  578.5p
- diluted                                                            29                  667.8p                  558.2p
------------------------------------------------------- ---------------- ----------------------- -----------------------
</TABLE>


                                       F4


SVG Capital plc

CONSOLIDATED CASH FLOW STATEMENT
<TABLE>
<CAPTION>
<S>                                                                      <C>           <C>                <C>
                                                                                 For the year      For the year
                                                                                        ended             ended
                                                                                 December 31,      December 31,
                                                                                         2005              2004
                                                                       Notes          GBP'000           GBP'000
-------------------------------------------------------------------- -------- ---------------- -----------------
Interest income                                                                         3,583             1,293
Other income                                                                           29,659            11,537
Expenses                                                                             (13,507)          (10,262)
Interest paid                                                                         (3,357)           (5,223)
Tax paid                                                                                (244)              (31)
-------------------------------------------------------------------- -------- ---------------- -----------------
Net cash from/(used in) operating activities                              30           16,134           (2,686)
-------------------------------------------------------------------- -------- ---------------- -----------------
Investing activities
Capital distributions from public equity funds                                          6,674             1,394
Capital distributions from private equity funds                                       268,113           143,924
Purchases of public equity funds/other investments                                   (17,672)           (4,699)
Calls paid to private equity funds                                                   (89,117)         (159,477)
Purchase of warehoused funds                                                         (39,016)                 -
Purchases of property, plant and equipment                                              (131)           (1,004)
-------------------------------------------------------------------- -------- ---------------- -----------------
Net cash from/(used) in investing activities                                          128,851          (19,862)
-------------------------------------------------------------------- -------- ---------------- -----------------
Financing
Share placing                                                                          36,000                 -
Issue and listing costs of ordinary shares                                              (510)               (9)
-------------------------------------------------------------------- -------- ---------------- -----------------
Net cash from/(used in) financing activities                                           35,490               (9)
-------------------------------------------------------------------- -------- ---------------- -----------------
Net increase/(decrease) in cash and cash equivalents                                  180,475          (22,557)
Cash and cash equivalents at beginning of year                                         25,148            47,668
Effect of foreign exchange rates on cash and cash equivalents                           (617)                37
-------------------------------------------------------------------- -------- ---------------- -----------------
Cash and cash equivalents at end of year                                              205,006            25,148
-------------------------------------------------------------------- -------- ---------------- -----------------
</TABLE>

                                       F5



SVG Capital plc
------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS (continued)

1         Accounting policies

          Basis of accounting
          The  financial  statements  of the  Company  and the  Group  have been
          prepared  in  accordance  with   International   Financial   Reporting
          Standards,  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  European  Union  ("EU")  and as
          applied in accordance  with the  provisions of the Companies Act 1985.
          The  disclosures  required by IFRS 1 concerning the transition from UK
          GAAP to IFRS are given in note 2 and note 34.

          International  Financial  Reporting  Standards  as  adopted  by the EU
          differ in certain  respects  from  International  Financial  Reporting
          Standards as issued by the  International  Accounting  Standards Board
          ("IASB").  However,  the  consolidated  financial  statements  for the
          periods  presented  would  be no  different  had the  Company  applied
          International  Financial  Reporting  Standards  as issued by the IASB.
          References  to "IFRS"  hereafter  should be construed as references to
          International Financial Reporting Standards as adopted by the EU.

          The principal  accounting  policies  adopted are set out below.  Where
          presentational  guidance  set  out in  the  Statement  of  Recommended
          Practice  ("SORP") for investment  trusts issued by the Association of
          Investment  Trusts  ("AITC") in January  2005 is  consistent  with the
          requirements of IFRS, the financial statements have been prepared on a
          basis compliant with the SORP.

          The Group  financial  statements  are  presented  in Sterling  and all
          values are rounded to the nearest  thousand  pounds  (GBP'000)  except
          when otherwise indicated.

          Basis of consolidation
          The  consolidated   financial  statements  incorporate  the  financial
          statements  of the Company and all entities  controlled by the Company
          (its subsidiaries), together, the "Group

          Control  is  achieved  where the  Company  has the power to govern the
          financial and operating policies of an investee entity so as to obtain
          benefits from its activities.

          Financial  statements of all Group companies are prepared for the same
          reporting period.

          The  interest of  minority  shareholders  is stated at the  minority's
          proportion   of  the  fair  values  of  the  assets  and   liabilities
          recognized.  Subsequently, minority interests represent the portion of
          profit or loss and net assets in subsidiaries  that is not held by the
          Group and are presented  separately in the income statement and within
          equity in the  consolidated  balance  sheet,  separately  from  parent
          shareholders'  equity.  However, any losses applicable to the minority
          interest in excess of the minority  interest are allocated against the
          interests of the parent.

          The  results of  subsidiaries  acquired or disposed of during the year
          are included in the  consolidated  income statement from the effective
          date  of  acquisition  or up to the  effective  date of  disposal,  as
          appropriate.

          Where necessary,  adjustments are made to the financial  statements of
          subsidiaries  to bring  the  accounting  policies  used into line with
          those used by the group.

          All  intra-group  transactions,  balances,  income  and  expenses  are
          eliminated on consolidation.

          Presentation of income statement
          In order to better  reflect  the  activities  of an  investment  trust
          company  and  in  accordance   with  guidance   issued  by  the  AITC,
          supplementary  information which analyses the income statement between
          items of a revenue and capital nature has been presented alongside the
          income  statement.  In accordance  with the  Company's  status as a UK
          investment  company under  section 266 of the Companies Act 1985,  net
          capital returns may not be distributed by way of dividend.

          Financial instruments
          Financial  assets and  financial  liabilities  are  recognized  on the
          Group's   balance  sheet  when  the  group  becomes  a  party  to  the
          contractual  provisions  of  the  instrument.   Financial  assets  are
          derecognized  when the  Company's  contractual  right to the cash flow
          from the asset expires or  substantially  all the risks and rewards of
          ownership are transferred. Financial liabilities are derecognized when
          the  contractual  obligation  is  discharged,  with  gains and  losses
          recognized in the income account.


                                       F6

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

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

          Financial  assets  designated as fair value through profit or loss are
          measured  at  subsequent  reporting  dates at fair  value,  which  for
          investment  funds is at their net asset  value based on the fair value
          of the underlying investments.

          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
          recognized valuation  methodologies,  in accordance with International
          Private Equity and Venture Capital ("IPEVC") Valuation Guidelines. New
          investments are initially carried at cost, for a limited period, being
          the price of the most recent  investment in the  investee.  This is in
          accordance  with IPEVC  Guidelines  as the cost of recent  investments
          will generally  provide a good indication of fair value. Fair value is
          the   amount   for  which  an  asset   could  be   exchanged   between
          knowledgeable, willing parties in an arm's length transaction.

          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.

          Current financial assets
          Financial  assets  purchased  with a view to  subsequent  resale to an
          associated  entity  ("warehoused  investments")  are  carried  at fair
          value, being the proposed transfer price of the asset, and included in
          current assets.

          Investments in subsidiaries
          In its  separate  financial  statements  the  Company  recognizes  its
          investment  in  subsidiaries  at  cost,  unless  they  are  investment
          vehicles, in which case they are included at fair value.

          Investments in associates
          In accordance with IAS 28  "Investments  in Associates",  the standard
          does not apply to  investments  held in associates by venture  capital
          organisations  that are  designated as fair value  through  profit and
          loss.  Such  investments  are measured at fair value,  with changes in
          fair  value  recognized  in profit or loss in the period in which they
          occur.

          An  associate  is an entity  over which the group 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.

          Bank borrowings
          Interest-bearing  bank  loans  and  overdrafts  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 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.

          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 carrying
          amount to maturity of the liability component is measured at amortised
          cost.

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

                                       F7

          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 2005.

          The cost of equity-settled  share-based payments with employees of the
          Group are  measured at fair value at the date of grant and  recognized
          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  recognized in the
          consolidated  income statement,  with a corresponding entry in equity.
          No expense is recognized in the  Company's  income  statement as there
          are no options issued in  consideration  for the provision of employee
          services to the Company.

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

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

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

          The  Company's  revenue and capital  gains are  expected to be derived
          primarily from future distributions in respect of its holdings in fund
          investments.

          The Company  will account for such  distributions  by reference to the
          underlying  source of the  distribution.  Realized  profits on capital
          distributions  which arise from the realisation of investments  within
          the funds will be  credited to the income  statement  and taken to the
          Company's capital reserve.  Income  distributions  will be credited to
          the income statement and taken to the Company's revenue reserve.

          Management  and  advisory  fee income are accrued  over the period for
          which the service is provided.

          Leasing
          Leases are  classified  as finance  leases  whenever  the terms of the
          lease transfer substantially all the risks and rewards of ownership to
          the lessee. All other leases are classified as operating leases.

          The group as lessee
          Rentals  payable  under  operating  leases are  charged to income on a
          straight-line basis over the term of the relevant lease.

          Benefits  received  and  receivable  as an  incentive to enter into an
          operating  lease are also  spread on a  straight-line  basis  over the
          lease term.

          Borrowing costs
          Borrowing  costs are  recognized  in  profit or loss in the  period in
          which they are incurred.  All borrowing costs are charged  directly to
          revenue and are  classified  within  operating  activities in the cash
          flow statement.

          Retirement benefit costs
          Payments  to  defined  contribution  retirement  benefit  schemes  are
          charged as an expense as they fall due. The costs  relating to defined
          benefit  schemes  are  accounted  for in the same  way as for  defined
          contribution  schemes  where the group is unable to identify its share
          of the underlying  performance and financial position of the plan with
          sufficient reliability for accounting purposes.  Such situations arise
          where the  contributions  payable by the Group are set in terms of the
          scheme as a whole and, as such,  there is no  consistent  and reliable
          basis for allocating the Group's obligations, plan assets, or costs.

                                       F8


          Other employee benefits
          Employee  entitlements to annual leave are recognized when they accrue
          to  employees.  A provision is made for the  estimated  liability  for
          annual  leave as a result of services  rendered by employees up to the
          balance sheet date.

          Foreign currencies
          The   functional   currency  of  the   Company  is  pounds   sterling.
          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 net profit or loss for the period.

          On  consolidation,  the assets and liabilities of the group's overseas
          operations are translated at exchange rates  prevailing on the balance
          sheet date.  Income and expense  items are  translated  at the average
          exchange  rates  for  the  period  unless   exchange  rates  fluctuate
          significantly. Exchange differences arising, if any, are classified as
          equity  and  transferred  to the  group's  translation  reserve.  Such
          translation differences are recognized as income or as expenses in the
          period in which the operation is disposed of.

          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 842 Income and
          Corporation  Taxes Act 1988 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
          recognized  for all taxable  temporary  differences  and  deferred tax
          assets are  recognized  to the extent that it is probable that taxable
          profits  will  be  available   against  which   deductible   temporary
          differences  can be  utilized.  Such  assets and  liabilities  are not
          recognized  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  recognized  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 realized.
          Deferred  tax is charged or credited in the income  statement,  except
          when it relates to items  charged or credited  directly to equity,  in
          which case the deferred tax is also dealt with in equity.

          Property, plant and equipment
          Fixtures  and   equipment  are  stated  at  cost,   including   direct
          acquisition  costs,  less accumulated  depreciation and any recognized
          impairment loss.

          Depreciation  is  charged  so as to write off the cost less  estimated
          residual value of assets over their estimated useful lives,  using the
          straight-line method, on the following bases:

          Telecommunications and office equipment     10% - 20%
          Leasehold improvements                      10%
          Computer equipment                          20% - 33%

          The gain or loss arising on the disposal or  retirement of an asset is
          determined  as the  difference  between  the  sales  proceeds  and the
          carrying amount of the asset and is recognized in income.

          The carrying values of property,  plant and equipment are reviewed for
          impairment  when events or  circumstances  indicate the carrying value
          may not be recoverable.

                                       F9

          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  Company  has   classified   short-term   bank  deposits,
          investments  in money market funds and  short-dated  treasury bills as
          cash equivalents.

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

<TABLE>
<CAPTION>
<S>          <C>                                                                                                  <C>
                                                                                                    Effective date, periods
                                                                                                                 commencing
International Financial Reporting Standards (IFRS)
IFRS 1       Amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards and
             IFRS 6 Exploration for and Evaluation of Mineral Resources                                     January 1, 2006
IFRS 4       Amendments to International Financial Reporting Standards IAS 39 Financial Instruments:
             Recognition and Measurement IFRS 4 Insurance Contracts Financial Guarantee Contracts           January 1, 2006
IFRS 6       IFRS 6 Exploration for and Evaluation of Mineral Resource                                      January 1, 2006
IFRS 6       Amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards and
             IFRS 6 Exploration for and Evaluation of Mineral Resources                                     January 1, 2006
IFRS 7       IFRS 7 Financial Instruments: Disclosure                                                       January 1, 2007

International Accounting Standards (IAS)
IAS 1        Amendments to IAS 1 Presentation of Financial Statements Capital Disclosures                   January 1, 2007
IAS 19       Amendment to IAS 19 Employee Benefits Actuarial Gains and Losses, Group Plans
             and Disclosures                                                                                January 1, 2006
IAS 21       Amendment to IAS 21 The Effects of Changes in Foreign Exchange Rates Net Investment
             in a Foreign Operation                                                                         January 1, 2006
IAS 39       Amendment to IAS 39 Financial Instruments: Recognition and Measurement Cash Flow
             Hedge Accounting of Forecast Intragroup Transactions                                           January 1, 2006
IAS 39       Amendments to International Financial Reporting Standards IAS 39 Financial Instruments:
             Recognition and Measurement IFRS 4 Insurance Contracts Financial Guarantee Contracts           January 1, 2006

International Financial Reporting Interpretations Committee (IFRIC)
IFRIC 4      Determining whether an Arrangement contains a Lease                                            January 1, 2006
IFRIC 5      Rights to Interests arising from Decommissioning, Restoration and Environmental
             Rehabilitation Funds Incorporating an Amendment to IAS 39 Financial Instruments
             Recognition and Measurement                                                                    January 1, 2006
IFRIC 6      Liabilities arising from Participating in a Specific Market - Waste Electrical and Electronic
             Equipment                                                                                     December 1, 2005
IFRIC 7      Applying the Restatement Approach under IAS 29 Financial Reporting in
             Hyperinflationary Economies                                                                      March 1, 2006
IFRIC 8      Scope of IFRS                                                                                      May 1, 2006
IFRIC 9      Reassessment of Embedded Derivatives                                                              June 1, 2006

             The Directors do not anticipate that the adoption of these standards and interpretations will have a
             material impact on the Group's financial statements in the period of initial application.
</TABLE>


2         IFRS restatement

          Basis of preparation

          The  restatement  has been prepared on the basis of all IFRS currently
          issued by the International  Accounting  Standards Board effective for
          2005  reporting  and adopted by the  European  Union.  The Company has
          prepared  its  restatements  based on a  transition  date to IFRS of 1
          January 2004. The Company has not relied on any exemptions detailed in
          IFRS 1.

         Major differences between UK GAAP and IFRS
         a)    Under  IAS  39  -   'Financial   instruments:   recognition   and
               measurement';   quoted   investments   previously   reported   at
               mid-market  value are now shown at bid  price and  classified  as
               'investments  held at fair value  through  profit  and loss'.  In
               addition,  marketability  discounts  previously applied to quoted
               valuations  are no longer  applied.  The effects of these changes
               are  recorded in the Income  Statements  and are included in note
               34.

                                      F10

          b)   Under  IAS  39  -  'Financial  instruments:  recognition  and
               measurement';  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 carrying amount to maturity
               of the  liability  component is measured at amortized  cost.  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 and are  included in
               note 34.

         c)    Under IFRS 2 - 'Share-based  Payment'; the Group has to recognize
               a charge to income in respect  of the fair  value of  outstanding
               share options  granted to employees  after 7 November  2002.  The
               fair  value  has  been  calculated  using  a  Stochastic   option
               valuation  model  and is  charged  to  income  over the  relevant
               vesting  periods,  adjusted to reflect actual and expected levels
               of vesting.  The total costs of these options are recorded in the
               Income Statements and are included in note 34.

         d)    There are other reclassifications in accordance with IAS 1 -
               'Presentation of Financial Statements'.

3         Business segments

          For  management  purposes,  the group is currently  organized into the
          following principal activities:

          Investing activities
          SVG Capital's  investment objective is to achieve capital appreciation
          by investing  principally  in private equity funds that are managed or
          advised by Permira,  one of Europe's  leading private equity firms. 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.   Investing  activities  are
          undertaken by SVG Capital plc and The Platinum Trust.

          Investment management and advisory services
          To complement this investment  objective and create capital and income
          for the  Company,  its fund  advisory  business  structures,  markets,
          manages and advises  products for  investment in private equity and in
          public equity using private equity techniques.

          These  activities  are  undertaken  by  SVG  Advisers   Limited,   SVG
          Investment  Managers Limited,  SVG Advisers Inc. and SVG North America
          Inc. Segment  information about these business activities is presented
          below.

<TABLE>
<CAPTION>
<S>                                                  <C>           <C>           <C>       <C>               <C>           <C>
                                               For the year ended December 31, 2005      For the year ended December 31, 2004
                                                               Investment                                Investment
                                                               management                            management and
                                                             and advisory              Investing           advisory
                                                 Investing       services       Total  activities          services        Total
                                                activities
Group                                              GBP'000        GBP'000     GBP'000     GBP'000           GBP'000      GBP'000
--------------------------------------------- ------------- -------------- ----------- ----------- ----------------- ------------
Total operating income                              22,574         10,794      33,368       2,545             8,626       11,171
Share option costs                                       -        (1,425)     (1,425)           -             (907)        (907)
Other administrative expenses                      (1,919)       (10,735)    (12,654)     (1,530)           (8,402)      (9,932)
Other operating expenses                             (517)              -       (517)       (928)                 -        (928)
--------------------------------------------- ------------- -------------- ----------- ----------- ----------------- ------------
Operating profit/(loss)                             20,138        (1,366)      18,772          87             (683)        (596)
Finance costs                                      (4,588)              -     (4,588)     (5,402)                 -      (5,402)
Gains on fair value through profit and loss        142,439             12     142,451     134,798                 1      134,799
Exchange gains/(losses)                                997           (66)         931         188             (151)           37
--------------------------------------------- ------------- -------------- ----------- ----------- ----------------- ------------
Profit before tax                                  158,986        (1,420)     157,566     129,671             (833)      128,838
--------------------------------------------- ------------- -------------- ----------- ----------- ----------------- ------------
Total assets                                       945,672          9,726     955,398     752,558             7,487      760,045
Total liabilities                                 (45,620)        (6,779)    (52,399)    (45,644)           (5,046)     (50,690)
--------------------------------------------- ------------- -------------- ----------- ----------- ----------------- ------------
Net assets                                         900,052          2,947     902,999     706,914             2,441      709,355
--------------------------------------------- ------------- -------------- ----------- ----------- ----------------- ------------

Income arises mainly from UK operations.  A geographical analysis of investments is included in note 16.
</TABLE>

                                      F11

4.   REVENUE
<TABLE>
<CAPTION>
<S>                                                                                             <C>               <C>
                                                                                              For the          For the
                                                                                           year ended       year ended
                                                                                         December 31,     December 31,
                                                                                                 2005             2004
                                                                                              GBP'000          GBP'000
------------------------------------------------------------------------------------ ----------------- ----------------
Investment income:
Income from money market instruments                                                            2,999            1,092
Income from Funds and co-investments                                                           17,724            1,120
Interest on warehoused funds                                                                      591                -
Other operating income:
Income from investment advisory services                                                       10,603            8,550
Other interest receivable and other income                                                      1,451              409
------------------------------------------------------------------------------------ ----------------- ----------------
                                                                                               33,368           11,171
------------------------------------------------------------------------------------ ----------------- ----------------
Represented by:
Interest                                                                                        4,842            1,501
Income from investment advisory services                                                       10,603            8,550
Income from funds and co-investments                                                           17,724            1,120
Other income                                                                                      199                -
------------------------------------------------------------------------------------ ----------------- ----------------
                                                                                               33,368           11,171
------------------------------------------------------------------------------------ ----------------- ----------------
Income arises mainly from UK assets or operations.



5.  ADMINISTRATIVE EXPENSES                                                                          For the          For the
                                                                                                  year ended       year ended
                                                                                                December 31,     December 31,
                                                                                                        2005             2004
                                                                                                     GBP'000          GBP'000
Fees payable to Schroder Investment Management Ltd                                                       388              451
Directors' remuneration                                                                                1,465            1,800
Share option costs (note 21)                                                                           1,425              907
Staff costs (note 7)                                                                                   7,561            5,201
Depreciation (note 14)                                                                                   193              161
General expenses                                                                                       2,851            2,212
Auditors' remuneration
- Statutory audit fees                                                                                   183               91
- Regulatory reporting                                                                                     5                4
- Other assurance services                                                                                 -                -
- Other services                                                                                           8               12
------------------------------------------------------------------------------------------ ------------------ ----------------
                                                                                                      14,079           10,839
------------------------------------------------------------------------------------------ ------------------ ----------------

The Company has no employees (2004: nil). The directors are the only key management personnel of the Company.
Their remuneration is discussed in more detail in the Remuneration Report. Directors of the Company received
remuneration of GBP1,120,000 in respect of their services to SVG Advisers Limited, a wholly-owned subsidiary.

Statutory audit fees include costs relating to the filing of returns with the US Securities and Exchange
Commission.
</TABLE>

                                      F12

6.   DIRECTORS' REMUNERATION

<TABLE>
<CAPTION>
<S>                                                                                              <C>               <C>
                                                                                               For the           For the
                                                                                            year ended        year ended
                                                                                          December 31,      December 31,
                                                                                                  2005              2004
                                                                                               GBP'000           GBP'000

NEH Ferguson +                                                                                     392               814
D Buffini                                                                                           16                 -
F Finlay                                                                                            32                 9
CJ Govett                                                                                            -                21
AJ Habgood                                                                                          36                30
EW Koning                                                                                           24                26
JJ McLachlan                                                                                        46                75
D Raeburn                                                                                           36                30
C Sinclair                                                                                          35                 -
AF Sykes                                                                                             -                 6
AC Williams                                                                                        848               789
-------------------------------------------------------------------------------------- ---------------- -----------------
                                                                                                 1,465             1,800
-------------------------------------------------------------------------------------- ---------------- -----------------

+ Nicholas Ferguson retired as an executive director and became the Chairman of the Company at the conclusion of
the Annual General Meeting held on April 25, 2005. He is currently entitled to Chairman's fees of GBP180,000 per
annum. His remuneration for the year ended December 31, 2005 includes Chairman's fees of GBP120,000.


7.   STAFF COSTS
                                                                                       For the year         For the year
                                                                                              ended                ended
                                                                                       December 31,          December 31
                                                                                               2005                 2004
                                                                                              GBP'000                GBP'000
Salaries and other remuneration                                                               5,485                4,135
Social security costs                                                                           694                  646
Pension costs (note 8)                                                                        1,382                  420
--------------------------------------------------------------------------------- ------------------ --------------------
                                                                                              7,561                5,201
--------------------------------------------------------------------------------- ------------------ --------------------

The Company has no employees. The average number of employees employed by Group undertakings was:

                                                                                             Number               Number
Full-time employees                                                                              32                   24
Seconded staff                                                                                    3                    4
--------------------------------------------------------------------------------- ------------------ --------------------
                                                                                                 35                   28
--------------------------------------------------------------------------------- ------------------ --------------------
</TABLE>

                                      F13


8.   PENSION COSTS
<TABLE>
<CAPTION>
<S>                                                                                           <C>                   <C>

The charge for pension costs comprises:                                                     For the              For the
                                                                                        year  ended          year  ended
                                                                                       December 31,         December 31,
                                                                                               2005                 2004
                                                                                            GBP'000              GBP'000
Defined benefit schemes                                                                       1,118                  172
Money purchase schemes                                                                          264                  248
----------------------------------------------------------- ---------------------------------------- --------------------
                                                                                              1,382                  420
----------------------------------------------------------- ---------------------------------------- --------------------
</TABLE>

The Group does not participate in a SVG Group pension  scheme.  Costs in respect
of defined  benefit  schemes relate to payments due to the Schroders  Retirement
Benefits  Scheme  ("the  Scheme") in respect of four  employees,  including  the
Company's  executive  Directors,  seconded from Schroder  Investment  Management
Limited to SVG  Advisers  Limited  ("SVGA"),  a wholly owned  subsidiary  of SVG
Capital plc. SVGA and the Scheme's trustees,  taking advice from the independent
actuaries, agree the contributions.

In accordance with IAS 19, the Scheme is accounted for as a defined contribution
scheme on the basis  that the Group is unable to readily  identify  its share of
the underlying assets and liabilities of the Scheme at the balance sheet date as
there is no consistent and reliable basis for allocating the  obligations,  plan
assets and costs to the Group.  The Scheme had 419 active members in the defined
benefit section at December 31, 2005 and the accounts of Schroders plc disclosed
a net  pension  deficit in respect of the Scheme of GBP8.8  million,  calculated
under IAS 19 based on  interim  valuations  prepared  by  independent  qualified
actuaries.


9   OPERATIONS IN THE YEAR

          There is a large degree of uncertainty  and risk involved in investing
          in private  equity and the  results of the Group and the  Company  are
          primarily  dependent  on the  performance  of its private  equity fund
          investments.  During  the  year  ended  December  31,  2005,  gains on
          investments amounted to GBP142.5 million (2004:  GBP134.8 million) for
          the Group.

          As detailed  in note 33, the  Company has agreed that it should  focus
          its future  investments  mainly on Permira  Funds.  As such, and given
          that our largest  exposures  currently are to Permira Funds, we expect
          that the future  performance of the Company will be largely  dependent
          on the future performance of the Permira Funds in which we invest.


                                      F14

10.   TAXATION
<TABLE>
<CAPTION>
<S>                                                                                                 <C>              <C>
                                                                                                 For the          For the
(a) The charge/(credit) for taxation for the period is made up as follows:                    year ended       year ended
                                                                                            December 31,     December 31,
                                                                                                    2005             2004
                                                                                                  GBP000           GBP000
Current Tax
Corporation tax                                                                                       42                -
Double taxation relief                                                                                 -                -
---------------------------------------------------------------------------------------- ---------------- ----------------
                                                                                                      42                -
Income tax suffered by the venture funds                                                               9                -
Overseas tax                                                                                          (3)               2
Prior year adjustment                                                                                318              (74)
---------------------------------------------------------------------------------------- ---------------- ----------------
Total current tax (note 10(b))                                                                       366              (72)
---------------------------------------------------------------------------------------- ---------------- ----------------
Deferred Tax
Deferred tax                                                                                         563                -
Prior year adjustment                                                                                (74)               -
---------------------------------------------------------------------------------------- ---------------- ----------------
Total deferred tax (note 19)                                                                         489                -
---------------------------------------------------------------------------------------- ---------------- ----------------
                                                                                                     855              (72)
Total tax charge/(credit)
---------------------------------------------------------------------------------------- ---------------- ----------------
</TABLE>

There are no profits  chargeable to corporation tax in the current year.  Excess
management  expenses  relating  to  the  private  equity  fund  investments  are
available  to set  against  the  taxable  income of the  Company.  These  excess
management  expenses are included  within the investments in private equity fund
investments  in the balance  sheet of the Company and are not  reflected  in the
Company's revenue account. If in a future year in relation to the private equity
fund investments,  income exceeds expenses, the taxation charge to the Company's
revenue  account will include tax on this excess with a suitable  note by way of
explanation.

(b) Factors affecting current tax charge/(credit) for the period:
The tax assessed for the period is lower than the standard  rate of  corporation
tax in the UK for a large company (30%).  The differences  are explained  below:

<TABLE>
<CAPTION>
<S>                                                                                                <C>              <C>
                                                                                                 For the          For the
                                                                                              year ended       year ended
                                                                                            December 31,     December 31,
                                                                                                    2005             2004
                                                                                                  GBP000           GBP000
Profit before tax                                                                                157,566          128,838
---------------------------------------------------------------------------------------- ---------------- ----------------
Corporation tax at 30%                                                                            47,270           38,651
Effects of:
Non-taxable capital gains                                                                       (43,034)         (40,474)
Non deductible expenses                                                                              191              286
Difference between accounting and taxable income from funds                                      (2,354)              786
Losses brought forward utilized in the year                                                      (2,443)              (5)
Depreciation of items not eligible for capital allowances                                              8                -
Restriction to current tax re prior year adjustments                                                    -              25
Income of subsidiary not taxable                                                                    (315)            (57)
Income taxable at higher rates                                                                         3                -
UK income tax                                                                                          9                -
Prior year adjustments re overseas tax                                                                11             (74)
Prior year adjustments re UK corporation tax                                                         244                -
Marginal relief - UK smaller companies rate of tax                                                    (9)               -
Temporary differences arising in the period on which deferred tax is not recognized                   315             518
Options costs temporarily disallowed in the period on which deferred tax is not                       427             272
recognized
Overseas deferred tax                                                                                 527               -
Foreign exchange on consolidation                                                                       5               -
---------------------------------------------------------------------------------------- ---------------- ----------------
Total tax charge/(credit) for the year (note 10(a))                                                   855             (72)
---------------------------------------------------------------------------------------- ---------------- ----------------
</TABLE>

                                      F15

11.   INTEREST PAYABLE AND SIMILAR CHARGES
<TABLE>
<CAPTION>
<S>                                                                                            <C>                   <C>
                                                                                            For the               For the
                                                                                         year ended            year ended
                                                                                       December 31,          December 31,
                                                                                               2005                  2004
                                                                                            GBP'000               GBP'000

Convertible loan note interest                                                                2,199                 3,787
Amortization of issue and listing costs plus premium to redemption                              615                   129
reconvertibles
Loan facility finance costs                                                                   1,541                 1,202
Amortization of loan facility issue costs                                                       233                   237
Other interest                                                                                    -                    47
--------------------------------------------------------------------- ------------------------------ ---------------------
                                                                                              4,588                 5,402
--------------------------------------------------------------------- ------------------------------ ---------------------
</TABLE>

12.   DIVIDENDS

The Company has a retained  revenue  reserve  equivalent  to 3.1p per share.  In
order to maintain  investment  trust status,  the Directors intend to declare an
interim  dividend of 3.1p per share out of available  profits for the year ended
December 31, 2005, following the Annual General Meeting in April 2006.

13.    EARNINGS PER SHARE

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

<TABLE>
<CAPTION>
<S>                                                                                             <C>                 <C>
                                                                                   For the year ended    For the year ended
                                                                                    December 31, 2005     December 31, 2004
                                                                                              GBP'000               GBP'000
------------------------------------------------------------------------------ ----------------------- ---------------------
Earnings for the purposes of basic earnings per share being net                               156,574               128,824
Effect of dilutive potential ordinary shares:
Interest on convertible loan notes (net of tax)                                                 1,970                 2,072
------------------------------------------------------------------------------ ----------------------- ---------------------
Earnings for the purposes of diluted earnings per share                                       158,544               130,896
------------------------------------------------------------------------------ ----------------------- ---------------------
                                                                                               Number                Number
------------------------------------------------------------------------------ ----------------------- ---------------------
Number of shares
Weighted average number of ordinary shares for the purposes of basic                      126,590,127           113,329,674
earnings per share
Effect of dilutive potential ordinary shares:
Share options                                                                               2,599,452             1,151,085
Convertible loan notes                                                                     10,208,333            19,408,520
------------------------------------------------------------------------------ ----------------------- ---------------------
Weighted average number of ordinary shares for the purposes of diluted                    139,397,912           133,889,279
earnings per share
------------------------------------------------------------------------------ ----------------------- ---------------------
Earnings per share
Basic                                                                                          123.7p                113.7p
------------------------------------------------------------------------------ ----------------------- ---------------------
Diluted                                                                                        113.7p                 97.8p
------------------------------------------------------------------------------ ----------------------- ---------------------
</TABLE>

                                      F16


14.   PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
<S>                                                       <C>           <C>          <C>          <C>           <C>

                                                                   For the year ended December 31, 2005
                                                                                 Telecomm-
                                                      Leasehold                 unications
                                                       Improve-      Computer   and Office
                                                          ments     equipment    equipment         Art         Total
                                                        GBP'000       GBP'000      GBP'000     GBP'000       GBP'000
 Cost
 At January 1, 2005                                         586           507          308          37         1,438
 Additions                                                   11           105           10           -           126
 Disposals                                                    -          (44)            -           -          (44)
 Exchange translation                                         1             7            3           -            11
-------------------------------------------------- ------------- ------------- ------------ ----------- -------------
 At December 31, 2005                                       598           575          321          37         1,531
-------------------------------------------------- ------------- ------------- ------------ ----------- -------------
 Depreciation
 At January 1, 2005                                          39           194           44           -           277
 Charge for the year                                         60            94           39           -           193
 Disposals                                                    -          (44)            -           -          (44)
 Exchange translation                                         1             4            1           -             6
-------------------------------------------------- ------------- ------------- ------------ ----------- -------------
 At December 31, 2005                                       100           248           84           -           432
-------------------------------------------------- ------------- ------------- ------------ ----------- -------------
 Net Book Value
-------------------------------------------------- ------------- ------------- ------------ ----------- -------------
 At January 1, 2005                                         547           313          264          37         1,161
-------------------------------------------------- ------------- ------------- ------------ ----------- -------------
 At December 31, 2005                                       498           327          237          37         1,099
-------------------------------------------------- ------------- ------------- ------------ ----------- -------------

                                                                 For the year ended December 31, 2004
                                                                                 Telecomm-
                                                      Leasehold                 unications
                                                       Improve-      Computer   and Office
                                                          ments     equipment    equipment         Art         Total
                                                         GBP000        GBP000       GBP000      GBP000        GBP000
 Cost
 At January 1, 2004                                         150           353          100           -           603
 Additions                                                  577           159          231          37         1,004
 Disposals                                                (140)           (2)         (22)           -         (164)
 Exchange translation                                       (1)           (3)          (1)           -           (5)
-------------------------------------------------- ------------- ------------- ------------ ----------- -------------
 At December 31, 2004                                       586           507          308          37         1,438
-------------------------------------------------- ------------- ------------- ------------ ----------- -------------
 Depreciation
 At January 1, 2004                                          65            99           40           -           204
 Charge for the year                                         47            99           15           -           161
 Disposals                                                 (73)           (2)         (11)           -          (86)
 Exchange translation
                                                              -           (2)            -           -           (2)
-------------------------------------------------- ------------- ------------- ------------ ----------- -------------
 At December 31, 2004                                        39           194           44           -           277
-------------------------------------------------- ------------- ------------- ------------ ----------- -------------
 Net Book Value
-------------------------------------------------- ------------- ------------- ------------ ----------- -------------
 At January 1, 2004                                          85           254           60           -           399
-------------------------------------------------- ------------- ------------- ------------ ----------- -------------
 At December 31, 2004                                       547           313          264          37         1,161
-------------------------------------------------- ------------- ------------- ------------ ----------- -------------
</TABLE>

                                      F17


15.      INVESTMENTS
<TABLE>
<CAPTION>
<S>                                                                     <C>                <C>              <C>
                                                                   For the year ended December 31, 2005
                                                                Private equity     Public equity
                                                                     funds and   funds and other          Total
Fair value through profit or loss assets                        co-investments       investments      portfolio
                                                                        GBP000            GBP000         GBP000
 Valuation brought forward                                             714,093            15,179        729,272
 Calls and purchases payable                                            89,117            17,672        106,789
 Distributions and sales receivable                                   (268,113)           (6,674)      (274,787)
 Gains on investments                                                  139,985             2,466        142,451
------------------------------------------------------------ ------------------ ----------------- --------------
 Valuation carried forward                                             675,082            28,643        703,725
------------------------------------------------------------ ------------------ ----------------- --------------

                                                                    For the year ended December 31, 2004
                                                                Private equity     Public equity
                                                                     funds and   funds and other          Total
                                                                co-investments       investments      portfolio
                                                                        GBP000            GBP000         GBP000
 Valuation brought forward                                             567,431             8,184        575,615
 Calls and purchases payable                                           159,477             4,699        164,176
 Distributions and sales receivable                                   (143,924)           (1,394)      (145,318)
 Gains on investments                                                   131,109             3,690        134,799
------------------------------------------------------------ ------------------ ----------------- --------------
 Valuation carried forward                                             714,093            15,179        729,272
------------------------------------------------------------ ------------------ ----------------- --------------
</TABLE>
                                      F18


16.   GEOGRAPHICAL ANALYSIS OF INVESTMENTS
<TABLE>
<CAPTION>
<S>                                                                                         <C>                    <C>

                                                                             At December 31, 2005    At December 31, 2004
                                                                                           GBP000                 GBP000
Private equity funds and co-investments
Europe                                                                                    520,433                 556,576
---------------------------------------------------------------------------- --------------------- -----------------------
Total Europe                                                                              520,433                 556,576
---------------------------------------------------------------------------- --------------------- -----------------------
Asia
Asia Pacific                                                                               55,813                  50,898
Japan                                                                                      30,160                  23,752
---------------------------------------------------------------------------- --------------------- -----------------------
Total Asia                                                                                 85,973                  74,650
---------------------------------------------------------------------------- --------------------- -----------------------
North America
Canada                                                                                      4,196                  11,537
United States*                                                                             64,480                  71,330
---------------------------------------------------------------------------- --------------------- -----------------------
Total Americas                                                                             68,676                  82,867
---------------------------------------------------------------------------- --------------------- -----------------------
Total private equity funds and co-investments                                             675,082                 714,093
---------------------------------------------------------------------------- --------------------- -----------------------

Public equity funds (UK investment focus):
Strategic Equity Capital plc                                                               14,775                       -
SVG UK Focus Fund                                                                          11,041                   9,724
Strategic Recovery Fund                                                                     1,968                   5,455
---------------------------------------------------------------------------- --------------------- -----------------------
Total UK listed equity funds                                                               27,784                  15,179
---------------------------------------------------------------------------- --------------------- -----------------------
Other investments                                                                             859                       -
---------------------------------------------------------------------------- --------------------- -----------------------
Total investment portfolio                                                                703,725                 729,272
---------------------------------------------------------------------------- --------------------- -----------------------
</TABLE>

* SV Life  Sciences  Funds II and SV Life  Sciences  Fund III have been included
within the United States.  SVG Diamond has been split equally between Europe and
the United States.

Allocations are based on the expected geographical focus of the funds.

All private  equity funds held by the Group are unlisted.  However,  some of the
underlying  companies held within those funds are listed.  Included in the value
of total private equity funds and  co-investments  of  GBP675,082,000  are gross
valuations of listed investments amounting to GBP257,504,000 (December 31, 2004:
GBP130,362,000).

Significant interests in investment funds
Details of  investments in which the Group has an interest of 10% or more of any
class of  share/units  are detailed in the list of  investments  on pages F21 to
F23. All of these private  equity funds are managed or advised by Permira or the
old SV network.

In addition,  SVG Capital has a 7% interest in the I Class units of SVG UK Focus
Fund, a Dublin-listed OEIC managed by SVG Investment Managers Limited, and a 21%
interest in Strategic  Equity Capital plc, a UK-listed  investment trust managed
by SVG Investment Managers Limited.

                                      F19

16.    GEOGRAPHICAL ANALYSIS OF INVESTMENTS (continued)

Significant interests in investment funds

Details of the Group's  investments,  as at December 31, 2005,  are shown in the
list of investments below. All of these funds are managed or advised by Schroder
Ventures or Permira. In addition, as at December 31, 2005, the Group had a 13.8%
interest in the I Class units of SVG UK Focus Fund, a Dublin-listed OEIC managed
by SVG Investment Management Limited.

<TABLE>
<CAPTION>
<S>                                                                       <C>          <C>         <C>              <C>         <C>
                                                                                                     SVG  Value of SVG
                                                                      Original    Capital's    Capital's SVG Capital's
                                                                          Year   life (years) holding in       holding    net assets
                                                                        formed                 the fund
                                                                                                        %        GBP000           %
           ASIA

           Asia Pacific Trust
           Formed to invest in equity and near-equity investments
           in the high growth economies of the Asia Pacific
           region. This trust has been in liquidation since 1998.         1990            8*          6.4           825          0.1

           Asia Pacific Fund II
           Established to make equity and near-equity investments
           in buy-outs, buy-ins, development capital businesses
           and turnarounds, principally in the Asia Pacific region
           with an emphasis on Australia, China, Hong King, India
           Indonesia, Malaysia, Singapore and Thailand.                   1994           10*         14.0         6,408         0.7

           Schroder Ventures Asia Pacific Fund
           Established to make equity or near equity investments
           in companies that have significant exposure to the Asia
           Pacific region.  The fund focuses principally on
           management buy-outs and buy-ins, financial acquisitions
           and larger development capital opportunities.                  1999            10         29.9        45,343         5.0

           Co-investments with Asia Pacific Fund II and Schroder
           Ventures Asia Pacific Fund                                                                             3,237         0.4
           The Japan Venture Fund III
           Established to invest directly or indirectly in equity
           and near equity investment in a diversified portfolio
           of early stage, or development capital investments in
           leveraged and management buy-outs and buy-ins
           principally in Japan.                                          1997            10         20.3           641         0.1
           The Japan Fund IV
           Established to invest in buy-out transactions in Japan
           across a range of industries and sectors.                      2004            10         27.2        29,519         3.3
           --------------------------------------------------------- ---------- ------------- ------------ --------------- --------
           TOTAL ASIA                                                                                           85,973          9.6
           --------------------------------------------------------- ---------- ------------- ------------ --------------- --------
</TABLE>

                                      F20


16.  GEOGRAPHICAL ANALYSIS OF INVESTMENTS (continued)
<TABLE>
<CAPTION>
<S>                                                      <C>         <C>            <C>               <C>               <C>
                                                                Original       SVG Capital's     Value of SVG           SVG
                                                          Year      life      holding in the        Capital's     Capital's
                                                        formed     (years)              fund          holding    net assets
                                                                                           %           GBP000             %
EUROPE

Permira Europe I
The first $1 billion fund raised for private equity
investment in Europe focusing on large and
medium-sized leveraged buy-out opportunities.             1997          10              13.5           13,034           1.4


Permira Europe II
Formed as the successor to Permira Europe I, the
fund focuses on European buy-outs and buy-ins, in
addition to growth capital investments.                   2000          10              19.7          253,687          28.1


Permira Europe III
Formed as the successor to Permira Europe II, the
fund focuses on buy-outs/ins and growth capital
investments in European businesses or global
businesses with a strong European presence.               2003          10              10.3          159,564          17.7

P123
A fund of Permira pan-European buy-out funds, with
interests in Permira Europe I, II and III.                2003          15              38.6           80,762           8.9


Permira German Buy-Outs
Established to invest in buy-outs of companies in
Germany and some of its neighboring countries.            1986         10*              29.7           10,171           1.1


Permira Italy II
Established  to make equity and near-equity
investments in buy-outs and  buy-ins, including
development capital businesses, principally in
Italy.                                                    1993         10*              21.0            1,562           0.2

Permira UK III
Established as Permira's third buy-out fund in the
United Kingdom to invest in equity and near-equity
investments in buy-outs, buy-ins, development
capital businesses and turnarounds                        1993         10*               0.3               55           0.0


Permira UK Venture III
Established to invest in a diversified portfolio of
venture or development capital businesses and
buy-outs principally in the United Kingdom.               1990         10*               8.7              120           0.0


Permira UK Venture IV
Established to follow the policies of the
fully invested Permira UK Venture III.                    1995         10*               4.2              962           0.1

SVG Diamond Holdings**
A EUR400 million Collateralised Fund Obligation of
private equity funds.  SVG Diamond comprised EUR260
million investment grade bonds and preferred equity
shares representing commitments of EUR140 million at
closing.                                                  2004          22              35.7            1,031           0.1
----------------------------------------------------- --------- ----------- ----------------- ---------------- -------------
TOTAL EUROPE                                                                                          520,948         57.6
----------------------------------------------------- --------- ----------- ----------------- ---------------- -------------


                                      F21

16.  GEOGRAPHICAL ANALYSIS OF INVESTMENTS (continued)
                                                                               SVG Capital's
                                                                                  holding in     Value of SVG           SVG
                                                   Year formed      Original        the fund        Capital's     Capital's
                                                                life (years)                          holding    net assets
                                                                                           %             GBP000             %
NORTH AMERICA

Schroder Canadian Buy-Out Fund III
Established to invest pricipally in buy-outs,
buy-ins, leveraged build-ups and development
capital opportunities in Canada.                          2000            10            26.6            1,177           0.1

Co-investments with Schroder Canadian Buy-Out
Fund III and SV Investments Fund I                                                                      5,177           0.6

SV Life Sciences Fund II
Formerly known as  Schroder Ventures
International Life Sciences Fund II.  SV Life
Sciences Fund II invests in a diversified
portfolio of life sciences companies
principally in the United States and Europe.
The majority of these investments will be in
early stage opportunities.                                1999            10            16.7           20,344           2.2

SV Life Sciences Fund III
Formerly known as International Life Sciences
Fund III.  The successor to SV Life Sciences
Fund II, established to invest in a diversified
portfolio of life sciences companies
principally in the United States and Europe.
The majority of these investments will be early
stage opportunities.                                      2002            10            19.1           19,787           2.2

SV Investments Fund I
Established to invest in larger development
capital and mid-sized buy-outs in the United
States, with a particular focus on media,
telecommunications and technology sectors.                1999            10            25.9           21,676           2.4
------------------------------------------------- ------------- ------------- --------------- ---------------- -------------
TOTAL NORTH AMERICA                                                                                    68,161           7.5
------------------------------------------------- ------------- ------------- --------------- ---------------- -------------
TOTAL PRIVATE EQUITY FUNDS AND CO-INVESTMENTs                                                         675,082          74.7
Public equity funds and other investments                                                              28,643           3.2
------------------------------------------------- ------------- ------------- --------------- ---------------- -------------
TOTAL INVESTMENT PORTFOLIO                                                                            703,725          77.9
Other assets less total liabilities                                                                    199,274          22.1
------------------------------------------------- ------------- ------------- --------------- ---------------- -------------
TOTAL NET ASSETS                                                                                      902,999         100.0
------------------------------------------------- ------------- ------------- --------------- ---------------- -------------
*    The lives of these funds have been extended.
**   SVG Diamond has been included but actually invests in Europe and the US.
</TABLE>

                                      F21

<TABLE>
<CAPTION>
<S>                                                                             <C>                               <C>
17.   CURRENT ASSETS                                                December 31, 2005                   December 31, 2004
Financial Assets                                                              GBP'000                             GBP'000
----------------------------------------------------- -------------------------------- -----------------------------------
Warehoused fund investments *                                                  40,565                                   -
----------------------------------------------------- -------------------------------- -----------------------------------
                                                                               40,565                                   -
----------------------------------------------------- -------------------------------- -----------------------------------
*   Further details on warehoused fund investments are included in note 32.  Further calls and distributions in
    respect of warehoused funds have been made following the year-end.

                                                                    December 31, 2005                   December 31, 2004
Other receivables                                                             GBP'000                             GBP'000
----------------------------------------------------- -------------------------------- -----------------------------------
Amounts falling due within one year:
Amounts owed by group undertakings                                                  -                                   -
Interest receivable                                                             1,803                                 461
Prepayments and other debtors                                                   1,524                               1,570
Accrued investment advisory fee income                                          1,638                               2,359
----------------------------------------------------- -------------------------------- -----------------------------------
                                                                                4,965                               4,390
----------------------------------------------------- -------------------------------- -----------------------------------

                                                                    December 31, 2005                   December 31, 2004
Cash and cash equivalents                                                     GBP'000                             GBP'000
----------------------------------------------------- -------------------------------- -----------------------------------
Bank balances and short-term deposits                                          36,978                              14,161
Money market funds                                                             40,713                              10,987
Treasury bills                                                                127,315                                   -
----------------------------------------------------- -------------------------------- -----------------------------------
                                                                              205,006                              25,148
----------------------------------------------------- -------------------------------- -----------------------------------

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. Short-term deposits are
typically made for periods of between one week and three months, earning interest at the respective short-term
deposit rates. Treasury bills earn a yield to redemption.

18.   CURRENT LIABILITIES                                           December 31, 2005                   December 31, 2004
                                                                              GBP'000                              GBP000
Interest payable and similar charges                                              684                                 301
Other creditors and accruals                                                    7,468                               7,462
----------------------------------------------------- -------------------------------- -----------------------------------
                                                                                8,152                               7,763
----------------------------------------------------- -------------------------------- -----------------------------------
</TABLE>

Borrowings

SVG Capital plc has a EUR285 million  (GBP195.8  million) loan facility with The
Royal Bank of Scotland plc and The Governor and Company of The Bank of Scotland.
No  drawdowns  were made under the facility  during the year ended  December 31,
2005, although EUR51.4 million (GBP35.3 million) was effectively utilized by way
of a guarantee  over SVG Capital's  commitment to SVG Diamond  Holdings  Limited
(note 20).

On March 10, 2006,  SVG Capital plc agreed a new loan  facility for a maximum of
EUR600  million  (GBP412.3  million) with The Royal Bank of Scotland plc and The
Governor and Company of The Bank of Scotland.


                                      F23



18.  CURRENT LIABILITIES (continued)
<TABLE>
<CAPTION>
<S>                                                                                 <C>                           <C>
Tax payable
                                                                         December 31, 2005              December 31, 2004
                                                                                   GBP'000                        GBP000
Current tax liability - corporation tax
Balance brought forward                                                                  -                              -
Corporation tax charged to income statement (note 10(a))                                42                              -
--------------------------------------------------------------- --------------------------- ------------------------------
Balance carried forward                                                                 42                              -
--------------------------------------------------------------- --------------------------- ------------------------------

19.   NON-CURRENT LIABILITIES                                            December 31, 2005              December 31, 2004
                                                                                                               (restated)
                                                                                   GBP'000                         GBP000
4.5% Subordinated Convertible Bonds 2013 - Nominal                                  49,000                         49,000
Unamortized premium, issue and listing costs                                       (6,011)                        (6,626)
--------------------------------------------------------------- --------------------------- ------------------------------
Convertible loan notes                                                              42,989                         42,374
Deferred staff compensation                                                            689                            553
Deferred tax liability                                                                 527                              -
--------------------------------------------------------------- --------------------------- ------------------------------
                                                                                    44,205                         42,927
--------------------------------------------------------------- --------------------------- ------------------------------
</TABLE>

Non-current  liabilities  include GBP49.0  million nominal of 4.5%  Subordinated
Convertible  loan  notes,  which were issued in 4 tranches in 2003 and mature on
May 21, 2013. These bonds are convertible,  at any time, into ordinary shares at
a conversion  price of 480p per share. The Company may redeem some or all of the
Bonds 2013 at their principal  amount  together with accrued  interest if at any
time on or after May 21 2006,  the average of the market  price of the  Ordinary
Shares over a 20 consecutive day trading period is equal to or greater than 130%
of the  conversion  price.  The share price was 716.5p per share at December 31,
2005, equivalent to 149% of the conversion price.

Issue costs and premium are charged to the revenue  account over the term of the
capital instrument.

The loan  notes  were  split on issue  into a  liability  element  and an equity
component,  representing  the fair value of the  embedded  option to convert the
liability into the equity of the Group, as follows:
<TABLE>
<CAPTION>
<S>                                                                                                                <C>
Separation at issue date
--------------------------------------------------------------------------------- ----------------------------------------
                                                                                                              Company and
                                                                                                                    Group
--------------------------------------------------------------------------------- ----------------------------------------
                                                                                                                   GBP000
Net issue proceeds of convertible loan notes                                                                       48,911
Equity component (note 26)                                                                                        (7,446)
--------------------------------------------------------------------------------- ----------------------------------------
Liability component at the date of issue                                                                           41,465
--------------------------------------------------------------------------------- ----------------------------------------
</TABLE>

The convertible  bonds are listed on the London Stock Exchange.  On December 31,
2005, the closing  bid-offer spread was 148.999p to 149.001p for the 2013 Bonds.
This equates to a fair valuation of GBP73.0 million (2004:  GBP62.0 million) for
the 2013 Bonds in issue.

Deferred  staff  compensation  relates to obligations in respect of SVG Advisers
Inc. under a Supplemental Executive Retirement Plan.

Deferred tax is calculated in full on temporary  differences under the liability
method using a tax rate of 30% (2004:  30%). The deferred tax liability  relates
entirely to overseas tax expected to be payable in respect of one of our private
equity funds.

A deferred tax asset of GBP38,000 has been recognized in respect of US taxation.

A deferred  tax asset of GBP11.4  million  (2004  GBP10.5  million) has not been
recognized as it is not certain that there will be sufficient taxable profits to
enable  the asset to be  utilised.  The  excess  management  expenses  and other
temporary  differences  to which this  unrecognized  asset relates are available
indefinitely for offset against future taxable profits.

                                      F24


20.  CAPITAL COMMITMENTS AND CONTINGENCIES

At December 31, 2005 the Group had uncalled commitments to its fund investments
as follows:
<TABLE>
<CAPTION>
<S>                                                                                 <C>              <C>                <C>
                                                                                   2005             2005               2004
                                                                                 Amount         Uncalled           Uncalled
                                                                               uncalled      commitment*         Commitment
                                                                       (local currency)      GBP million        GBP million
Permira Europe II                                                              EUR85.2m             58.5               60.3
Permira Europe III                                                            EUR284.0m            195.1              268.7
P123                                                                           EUR21.0m             14.4               14.8
SV Investments Fund I                                                          US$10.6m              6.2                6.9
SV Life Sciences Fund II                                                        US$6.6m              3.9                7.3
SV Life Sciences Fund III                                                      US$33.8m             19.7               25.0
SVG Diamond Holdings Limited                                                   EUR51.4m             35.3               35.6
The Japan Venture Fund III                                                            -                -                0.7
The Japan Fund IV                                                           YEN6,290.0m             31.0               42.5
The Strategic Recovery Fund                                                           -                -                2.7
-------------------------------------------------------------------- ------------------- ---------------- ------------------
Total                                                                                              364.1              464.5
-------------------------------------------------------------------- ------------------- ---------------- ------------------
* based on exchange rates at December 31, 2005
</TABLE>

For the year ended December 31, 2005, SVG Capital plc guaranteed  drawings taken
out by Platinum Trust under the EUR285 million loan facility with The Royal Bank
of Scotland plc and The  Governor and Company of The Bank of Scotland  (GBP195.8
million, translated at the balance sheet date). To date, Platinum Trust has made
no drawings under the facility and the guarantee is no longer  applicable  under
the new facility  (see note 18). SVG Capital plc also uses the loan  facility to
guarantee its uncalled commitment to SVG Diamond Holdings Limited.

Operating leases
The Group has the following obligations under operating leases:
<TABLE>
<CAPTION>
<S>                                                                <C>                   <C>                <C>             <C>
                                                                <1 year            1-5 years            >5 years          Total
                                                                GBP'000               GBP'000            GBP'000        GBP'000
As at December 31, 2005                                             400                   900                  -          1,300
Operating lease obligation
------------------------------------------- ---------------------------- --------------------- ------------------ --------------
As at December 31, 2004                                             100                 1,200                100          1,400
Operating lease obligation
------------------------------------------- ---------------------------- --------------------- ------------------ --------------
</TABLE>

21.  SHARE CAPITAL
<TABLE>
<CAPTION>
<S>                                                                                            <C>                      <C>
                                                                                  For the year ended     For the year ended
                                                                                   December 31, 2005      December 31, 2004
                                                                                              GBP000                 GBP000
Authorized:
Opening and closing balance of 200,000 ordinary shares with a nominal value                  200,000                200,000
of GBP1.00 each
------------------------------------------------------------------------------- --------------------- ----------------------
Allotted, called up and fully paid:
Opening balance of 122,529,853 ordinary shares of GBP1.00 each                               122,530                112,655
Issue of ordinary shares on conversion of bonds                                                    -                  9,875
Placing of new ordinary shares                                                                 6,000                      -
------------------------------------------------------------------------------- --------------------- ----------------------
Closing balance of 128,529,853 ordinary shares of GBP1.00 each                               128,530                122,530
------------------------------------------------------------------------------- --------------------- ----------------------
</TABLE>


Issue of shares

On March 21, 2005, the Company entered into an Operating  Agreement with Permira
Holdings  Limited  ('PHL') and a  Subscription  Agreement  with Permira  Capital
Limited  ('PCL').  Both of  these  agreements  were  approved  by the  Company's
shareholders at the Annual General Meeting held on April 25, 2005.

                                      F25

As part of these  arrangements,  on April 28, 2005 the Company  issued 6 million
New  Shares to PCL at a  subscription  price of 600 pence per  share.  The total
subscription  price paid by PCL to the Company under the Subscription  Agreement
was GBP36.0  million.  This amount was paid upon  completion of the allotment of
shares to PCL.


21.  SHARE CAPITAL (continued)

On December 6, 2004, the Company issued 9,874,679  ordinary shares on conversion
of GBP39.4 million nominal of the 2011 convertible bonds.

Options over ordinary shares

During the year ended December 31, 2005,  1,147,108  options were granted (2004:
1,327,094).  No options were exercised during the year and 11,666 (2004: 14,674)
lapsed.

At December 31,  2005,  7,896,498  (2004:  6,761,056)  options to subscribe  for
ordinary shares were outstanding, as detailed below:


<TABLE>
<CAPTION>
<S>                   <C>                    <C>            <C>            <C>                 <C>                    <C>
Issue date                        Options granted       Options        Options     Exercise price
                          Latest      in the year     exercised         lapsed                           December 31 2005
                   exercise date                    in the year    in the year          per share         Number in issue

June 2001         June 2011                     -             -              -            410.00p               2,798,773
June 2001         June 2011                     -             -              -            405.50p                  28,359
April 2002        April 2012                    -             -              -            335.00p                  14,476
April 2002        April 2012                    -             -              -            334.50p               1,333,476
March 2003        March 2013                    -             -              -            397.50p                  18,616
March 2003        March 2013                    -             -              -            392.75p               1,183,570
October 2003      October 2013                  -             -          4,969            493.00p                  51,723
March 2004        March 2014                    -             -            861             479.0p               1,292,882
March 2004        March 2014                    -             -              -             492.0p                  33,351
March 2005        March 2015            1,117,696             -          5,836             564.0p               1,111,860
March 2005        March 2015               29,412             -              -             569.5p                  29,412
----------------- --------------- ---------------- ------------- -------------- ------------------ -----------------------
                                        1,147,108             -         11,666                                  7,896,498
----------------- --------------- ---------------- ------------- -------------- ------------------ -----------------------

Issue date                        Options granted       Options        Options     Exercise price
                          Latest      in the year     exercised         lapsed                          December 31, 2004
                   exercise date                    in the year    in the year          per share         Number in issue

June 2001         June 2011                     -             -              -            410.00p               2,798,773
June 2001         June 2011                     -             -              -            405.50p                  28,359
April 2002        April 2012                    -             -              -            335.00p                  14,476
April 2002        April 2012                    -             -              -            334.50p               1,333,476
March 2003        March 2013                    -             -              -            397.50p                  18,616
March 2003        March 2013                    -             -              -            392.75p               1,183,570
October 2003      October 2013                  -             -          4,969            493.00p                  56,692
March 2004        March 2014                    -             -            861             479.0p               1,293,743
March 2004        March 2014                    -             -              -             492.0p                  33,351
March 2005        March 2015            1,117,696             -          5,836             564.0p                       -
March 2005        March 2015               29,412             -              -             569.5p                       -
----------------- --------------- ---------------- ------------- -------------- ------------------ -----------------------
                                        1,147,108             -         11,666                                  6,761,056
----------------- --------------- ---------------- ------------- -------------- ------------------ -----------------------
</TABLE>

For all options in issue, the performance  target is for growth in the Company's
net asset  value per  ordinary  share to exceed the growth in the Retail  Prices
Index plus 4% per annum over the 3 years from the date of grant.

The  performance  target has been met for all options issued by the end of March
2003.

                                      F26

For options issued in October 2003 and March 2004, if the performance  target is
not met on the 3rd  anniversary of the grant date, they may be re-tested every 6
months up to 6 years from grant.




21.  SHARE CAPITAL (continued)


For the options  issued in March 2005, if the  performance  target is not met on
the 3rd  anniversary  of the grant  date,  they  lapse  (i.e.  there  will be no
re-testing of the performance condition).

Share-based payments

The  weighted  average  fair value of options  granted  during the year was 162p
(2004:  147p).  The range of  exercise  prices for  options  outstanding  at the
year-end was 334.5p to 569.5p  (2004:  334.5p to 493.0p).  The weighted  average
exercise  price of options in issue at the year end was 492.1p  (2004:  402.5p).
All options in issue will be equity-settled.

The  mid-market  price of shares at  December  31, 2005 was 716.5p and the range
during the year was 554.0p to 720.5p.

The fair value of  equity-settled  share options  granted 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  following  table  lists the  inputs to the model  used for the years  ended
December 31, 2005 and December 31, 2004.

<TABLE>
<CAPTION>
<S>                                                                                      <C>               <C>
------------------------------------------------------------------------ -------------------- ------------------
                                                                                        2005               2004
------------------------------------------------------------------------ -------------------- ------------------
Dividend yield (%)                                                                         0                  0
Expected share price volatility (%)                                                       19                 21
Historical volatility (%)                                                                 19                 21
Risk-free interest rate (%)                                                              4.8                4.5
Expected life of options (years)                                                         5.7                5.7
Weighted average share price (pence)                                                     570                492
------------------------------------------------------------------------ -------------------- ------------------
</TABLE>

The  expected  life of the  options  is  based  on  historical  data  and is 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 grant were  incorporated  into the  measurement of
fair value.


22.  SHARE PREMIUM ACCOUNT
<TABLE>
<CAPTION>
<S>                                                                                 <C>                     <C>
                                                                        For the year ended    For the year ended
                                                                         December 31, 2005     December 31, 2004
                                                                                   GBP'000               GBP'000

Balance brought forward                                                             72,622                43,114
Premium on shares issued on conversion of bonds                                          -                29,508
Premium on issue of shares via placing                                              29,508                     -
-------------------------------------------------------------------- ---------------------- ---------------------
Balance carried forward                                                            102,130                72,622
-------------------------------------------------------------------- ---------------------- ---------------------


23.      CAPITAL REDEMPTION RESERVE
                                                                        For the year ended    For the year ended
                                                                         December 31, 2005     December 31, 2004
                                                                                   GBP'000               GBP'000
------------------------------------------------------------------- ----------------------- ---------------------
Balance brought forward and carried forward                                          3,204                 3,204
------------------------------------------------------------------- ----------------------- ---------------------

                                      F27


24.   SHARE PURCHASE RESERVE
                                                                        For the year ended             For the year ended
                                                                         December 31, 2005              December 31, 2004
                                                                                   GBP'000                       GBP'000
--------------------------------------------------------------- --------------------------- ------------------------------
Balance brought forward and carried forward                                         92,054                         92,054
--------------------------------------------------------------- --------------------------- ------------------------------

25.   SHARE OPTION RESERVE                                               December 31, 2005              December 31, 2004
                                                                                   GBP'000                          GBP'000
Balance brought forward                                                              1,250                            343
Fair value charge re options issued                                                  1,425                            907
--------------------------------------------------------------- --------------------------- ------------------------------
Balance carried forward                                                              2,675                          1,250
--------------------------------------------------------------- --------------------------- ------------------------------

The Group's share option reserve represents the fair value amounts in respect of options issued that have been
charged through the income statement of SVG Advisers Limited.

26.   CONVERTIBLE LOANS - EQUITY                                         December 31, 2005              December 31, 2004
                                                                                   GBP'000                        GBP'000
Balance brought forward                                                              7,446                         14,779
Released on conversion of bonds                                                          -                        (7,333)
--------------------------------------------------------------- --------------------------- ------------------------------
Balance carried forward                                                              7,446                          7,446
--------------------------------------------------------------- --------------------------- ------------------------------

This reserve represents the equity component of the convertible loan notes detailed in note 19.

27.   CAPITAL RESERVES                                                   December 31, 2005              December 31, 2004
                                                                                   GBP'000                        GBP'000
Balance brought forward                                                            422,945                        289,046
Profit for the year                                                                142,274                        133,899
--------------------------------------------------------------- --------------------------- ------------------------------
Balance carried forward                                                            565,219                        422,945
--------------------------------------------------------------- --------------------------- ------------------------------

This reserve represents cumulative capital profits. As an investment trust (defined by the Income and Corporation
Taxes Act 1988), the Company is prohibited by its articles of association from distributing as dividend any
surpluses arising from the realisation of investments.

28.  REVENUE RESERVE                                                     December 31, 2005              December 31, 2004
                                                                                   GBP'000                       GBP'000

Balance brought forward                                                           (13,201)                        (8,126)
Profit/(loss) for the year                                                          14,300                        (5,075)
--------------------------------------------------------------- --------------------------- ------------------------------
Balance carried forward                                                              1,099                       (13,201)
--------------------------------------------------------------- --------------------------- ------------------------------

As an investment  company  (defined by the Companies Act 1985, as amended),  the
Company's revenue reserve represents its profits available for distribution.

                                      F28


29.  NET ASSET VALUE PER ORDINARY SHARE                                  December 31, 2005              December 31, 2004
                                                                                   GBP'000                        GBP'000
Basic                                                                               702.1p                         578.5p
--------------------------------------------------------------- --------------------------- ------------------------------
Diluted                                                                             667.8p                         558.2p
--------------------------------------------------------------- --------------------------- ------------------------------
</TABLE>

Calculation  of the net asset  values  per  share are based on Group net  assets
attributable  to equity  shareholders  of  GBP902,357,000  (December  31,  2004:
GBP708,850,000),  and on 128,529,853  (December 31, 2004:  122,529,853) ordinary
shares in issue at the year end.

The Group diluted net asset values per share assume the GBP49.0  million nominal
2013  convertible  bonds are  converted at the balance sheet date at an exercise
price of 480p into  10,208,333  new shares  (December 31, 2004:  10,208,333  new
shares),  removing debt of GBP42,989,000 (2004:  GBP42,374,000) from the balance
sheet.

The Group  diluted net asset  values per share also  assume  that share  options
(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
7,896,498  ordinary shares (December 31, 2004:  6,761,056) for  consideration of
GBP33,871,000 (December 31, 2004: GBP27,462,000).

Therefore,  the  calculation of the diluted net asset values per share are based
on Group net  assets  attributable  to  equity  shareholders  of  GBP979,217,000
(December  31,  2004:  GBP778,686,000),   and  on  146,634,684  ordinary  shares
(December 31, 2004: 139,499,242) in issue at the year end.

30.   RECONCILIATION OF OPERATING PROFIT/(LOSS) TO NET CASH FROM OPERATING
      ACTIVITIES

<TABLE>
<CAPTION>
<S>                                                                                           <C>                     <C>
                                                                                       Year ended     Year ended December
                                                                                December 31, 2005                31, 2004
                                                                                          GBP'000                 GBP'000
Operating profit/(loss)                                                                    18,772                   (596)
Adjustments for:
Depreciation of property, plant and equipment                                                 193                      78
Share option expense                                                                        1,425                     907
-------------------------------------------------------------------------- ----------------------- -----------------------
Operating cash flows before movements in working capital                                   20,390                     389
(Increase)/decrease in receivables                                                          (813)                   1,448
Increase/(decrease) in payables                                                               158                     731
-------------------------------------------------------------------------- ----------------------- -----------------------
Cash generated by operations                                                               19,735                   2,568
Taxes (paid)/recovered                                                                      (244)                    (31)
Interest paid                                                                             (3,357)                 (5,223)
-------------------------------------------------------------------------- ----------------------- -----------------------
Net cash from/(used) in operating activities                                               16,134                 (2,686)
-------------------------------------------------------------------------- ----------------------- -----------------------

Purchases and sales of investments are considered to be investing activities rather than operating activities.
</TABLE>


                                      F29



31.    ANALYSIS OF CHANGES IN NET DEBT
<TABLE>
<CAPTION>
<S>                                                                       <C>            <C>           <C>           <C>
For the year ended December 31, 2005                                  Cash and    Short-term     Long-term     Net cash/
                                                              cash equivalents          debt          debt        (debt)
Group                                                                   GBP000        GBP000        GBP000        GBP000
------------------------------------------------------------ ------------------ ------------- ------------- -------------
Balance brought forward                                                 25,148             -      (42,374)      (17,226)
Foreign exchange movements                                               (617)             -             -         (617)
Debt conversion                                                              -             -             -             -
Amortization of issue and listing costs and convertible
premium to redemption                                                        -             -         (615)         (615)
Cash flow                                                              180,475             -             -       180,475
------------------------------------------------------------ ------------------ ------------- ------------- -------------
Balance carried forward                                                205,006             -      (42,989)       162,017
------------------------------------------------------------ ------------------ ------------- ------------- -------------


For the year ended December 31, 2004                                  Cash and    Short-term     Long-term     Net cash/
                                                              cash equivalents          debt          debt        (debt)
Group                                                                   GBP000        GBP000        GBP000        GBP000
------------------------------------------------------------ ------------------ ------------- ------------- -------------
Balance brought forward                                                 47,668             -      (74,312)      (26,644)
Foreign exchange movements                                                  37             -             -            37
Debt conversion                                                              -             -        32,067        32,067
Amortization of issue and listing costs and convertible
premium to redemption                                                        -             -         (129)         (129)
Cash flow                                                             (22,557)             -             -      (22,557)
------------------------------------------------------------ ------------------ ------------- ------------- -------------
Balance carried forward                                                 25,148             -      (42,374)      (17,226)
------------------------------------------------------------ ------------------ ------------- ------------- -------------
</TABLE>
                                      F30



32.    RELATED PARTY TRANSACTIONS

Nicholas  Ferguson  is a member of the  Advisory  Committees  of  certain of the
Permira funds in which the Company invests.

Nicholas Ferguson and members of his family and Andrew Williams have an interest
in the Carried  Interest in respect of certain  private  equity funds.  With the
introduction of the Executive Share Option Plan in May 2001,  Nicholas  Ferguson
and Andrew Williams gave up a portion of their  entitlement to Carried  Interest
on existing  private equity funds and any  entitlement  they may have to Carried
Interest on certain private equity funds launched after 2001 in return for share
options granted by the Company under the Executive  Share Option Plan.  Nicholas
Ferguson  and  Andrew  Williams  also  participate  in  the  Schroder   Ventures
Co-Investment  Scheme  and  Schroder  Ventures  Investments  Limited.  They have
received no new carried interest  allocations and made no new commitments  since
they joined SVG Capital in 2001.

Damon Buffini has a material  interest in contracts  entered into by the Company
with  Permira  during  the year as more  fully  described  in the  Report of the
Directors.

No other  Director  has any  material  interest  in any other  contract  that is
significant to the Company's business.

The Directors are the only key management  personnel of the Company.  Details of
their remuneration are included in the Remuneration Report.

On May 8, 2003, SVG Advisers Limited ("SVGA"),  a wholly owned subsidiary of SVG
Capital plc,  assigned a debt in respect of a future  revenue stream for EUR2.28
million due from Schroder Investment Management (Ireland) Limited to SVG Capital
plc for  consideration of EUR2.28 million.  The loan was fully repaid during the
year.

In July 2005, the Company  invested GBP15 million  (representing a 21% interest)
in Strategic  Equity  Capital plc, a UK-listed  investment  trust managed by SVG
Investment Managers Limited ("SVG IM"), a wholly-owned subsidiary of SVG Capital
plc. SVG IM earned management fees of GBP0.2 million (2004: nil) during the year
from  Strategic  Equity  Capital plc, of which GBP0.1  million  (2004:  nil) was
outstanding at the year-end.

In March 2005, the Company  transferred  interests in some of its private equity
funds to SVG Diamond Holdings Limited ("Diamond I"), a fund in which the Company
holds a 36% equity interest and SVG Advisers Limited is the Investment  Adviser.
In  particular,  the Company  made full or partial  transfers  of the  following
funds: Permira UK III; Schroder Canadian Buy-Out Fund II; SV Life Sciences Fund;
SV Life  Sciences  Fund II;  and SV  Investments  Fund I.  These  funds were all
transferred at fair value, for total proceeds of GBP25 million.

The  Company  has  warehoused   various  private  equity  fund  investments  for
subsequent  transfer to Diamond I and SVG Diamond Holdings II Limited  ("Diamond
II"). SVG Capital plc is a significant  investor in both these funds (Diamond II
closed on February 22,  2006),  which are also  advised by SVGA, a  wholly-owned
subsidiary. All funds warehoused by SVG Capital plc were subject to forward sale
agreements  whereby they would be  transferred,  subject to compliance  with the
investment  guidelines  of  Diamond I and II, at cost plus an  interest  charge,
based on 6 month Euribor plus a margin of 2% per annum.

During the year the Company made  primary  commitments  to four  private  equity
funds  that were  subsequently  transferred  to Diamond I. No calls were made on
these funds prior to transfer and therefore no consideration was involved.

The Company also made six primary  commitments to, and eight secondary purchases
of, private equity funds. The total cost of these fund  investments  amounted to
GBP40.6 million (2004:  nil) at December 31, 2005 (note 17).  Interest of GBP0.6
million (2004:  nil) was accrued at the year-end.  Diamond II closed on February
22, 2006 and the funds are in the process of being transferred.

During the year SVGA received EUR1.5 million of BBB-rated  Diamond I Loan Notes,
as part of its ongoing  investment  advisory fee arrangements.  These Notes were
purchased from SVGA by SVG Capital plc at par value on the date of issue, as the
holding of investments is the main activity of the parent company.  In addition,
SVGA received investment advisory fees in cash during the year from Diamond I of
EUR1.6 million (2004: nil).

At December 31, 2005, the Company had an uncalled  commitment of EUR51.4 million
(2004: EUR50.3 million) to Diamond I (note 20).

There were no dividends paid by subsidiaries during the year (2004: none).

                                      F31

33.      RISK

Financial instruments and risk profile

The Company's principal  investment objective is to achieve capital appreciation
by investing primarily in an international  portfolio of buy-out and development
capital  funds,  which are managed or advised by  Schroder  Ventures or Permira.
These investments are typically illiquid.  In addition,  the Company holds money
market  instruments,  cash and  short-term  deposits  and various  items such as
debtors and creditors that arise directly from its  operations.  These financial
instruments held by the Company are generally liquid.

The  holding  of  securities,  investing  activities  and  associated  financing
undertaken  pursuant to this objective  involves certain inherent risks.  Events
may occur that would result in either a reduction in the Company's net assets or
a reduction of revenue profits available for dividend.

As an investment trust, the Company invests in securities for the long term. The
Company has not taken out any derivatives contracts to date.

Financial instruments

(a) Financial assets of the Group

<TABLE>
<CAPTION>
<S>                                                <C>          <C>            <C>          <C>
                                               Floating       Fixed    Non-interest       Total
                                                   rate        rate         bearing
                                                 GBP000      GBP000          GBP000       GBP000
Currency denomination of assets at
December 31, 2005:
Sterling                                         45,191           -          41,456      86,647
Euro                                             31,553     127,315         520,164     679,032
US dollar                                           922           -         153,279     154,201
Japanese yen                                          -           -          30,160      30,160
Canadian dollar                                      25           -           4,196       4,221
------------------------------------------- ------------ ----------- --------------- -----------
                                                 77,691     127,315         749,255     954,261
------------------------------------------- ------------ ----------- --------------- -----------


                                               Floating       Fixed    Non-interest       Total
                                                   rate        rate         bearing
                                                 GBP000      GBP000          GBP000      GBP000
Currency denomination of assets at
December 31, 2004:
Sterling                                         23,814           -          24,899      48,713
Euro                                              1,306           -         551,096     552,402
US dollar                                            12           -         122,228     122,240
Japanese yen                                          -           -          23,752      23,752
Canadian dollar                                      16           -          11,687      11,703
------------------------------------------- ------------ ----------- --------------- -----------
                                                 25,148           -         733,662     758,810
------------------------------------------- ------------ ----------- --------------- -----------
</TABLE>

Non-interest  bearing assets represent the Funds and  co-investments,  and other
short-term  debtors.  Floating  rate  financial  assets  consist  of  short-term
deposits and money market funds.  Fixed rate financial assets comprise  Treasury
Bills, which have a known yield to redemption. All financial assets are included
at fair value.

                                      F32

33.      RISK (continued)

(b) Financial liabilities of the Group

The  Company  issued  GBP49.0  million  nominal  of 10  year  4.5%  Subordinated
Convertible Bonds in the year ended December 31, 2003. The Company does not have
any other borrowings at the balance sheet date, although it does have in place a
loan  facility of EUR285  million  with The Royal Bank of  Scotland  plc and The
Governor and Company of The Bank of Scotland.

The 2013  Bonds are  included  in the  balance  sheet at GBP43.0  million.  This
compares to a fair value estimate of GBP73.0 million (note 19).

The main risk  arising from the  Company's  financial  instruments  is valuation
risk.  The Board  reviews and agrees policy for managing this risk as summarised
below. This policy has remained substantially  unchanged since the launch of the
Company.

Currency risk

The  Company is exposed to  currency  risk  directly  since the  majority of its
assets and liabilities  are  denominated in foreign  currency and their sterling
value can be significantly  affected by movements in foreign exchange rates. The
Company does not normally hedge against foreign currency movements affecting the
value of its investments,  but takes account of this risk when making investment
decisions.  At December 31, 2005 the Company had a EUR285  million loan facility
which, if drawn,  would act as a hedge against the currency risk on the value of
its euro-denominated  assets. Following the year-end, the facility was increased
to EUR600 million.

Interest rate risk

The Company's  revenue will be affected by changes in prevailing  interest rates
since  the  majority  of  its  income  ordinarily   derives  from  money  market
instruments and bank deposit interest. It also pays interest on short-term loans
that may be taken out from time to time.  The effect of interest rate changes on
the valuation of  investments  and debt forms part of valuation  risk,  which is
considered separately below.

At December 31, 2005, the Company held  investments in money market funds valued
at GBP40.7 million (2004:  GBP11.0  million),  earning interest at market rates.
The money  market  funds were  redeemable  on less than 24 hours  notice.  Other
floating rate financial assets comprised cash at bank or short-term deposits.

At December 31, 2005, the Company held investments in short-dated treasury bills
valued at GBP127.3 million (2004:  nil),  earning interest at a weighted average
rate of 2.1%. The treasury bills had maturity dates ranging from January 5, 2006
to February 23, 2006.

Valuation/market price risk

The Company's exposure to valuation risk comprises mainly movements in the value
of its  underlying  investments.  A breakdown of the Fund  portfolio is given on
pages F21 to F23. In accordance with the Company's accounting policies,  set out
on pages F6 to F11, all underlying  investments  are valued at fair value by the
Directors  in  accordance  with the  current  International  Private  Equity and
Venture Capital Valuation  Guidelines  ("IPEVC").  The IPEVC guidelines  contain
detailed  methodology setting out best practice with respect to valuing unquoted
investments.  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 investments, the majority of which are unquoted, and
the effect  changes in exchange  rates may have in the  sterling  value of these
investments.   Development-stage   equity  investments  and  early-stage  equity
investments,  by their  nature,  involve  uncertainty  as to the ultimate  value
likely to be realized  on the  disposal of those  investments,  particularly  as
their unquoted nature means that a ready market may not exist for them.

The  Company's  sensitivity  to  valuation  risk will be  affected by changes in
levels of borrowing  and  liquidity,  as approved by the Board.  At December 31,
2005, a 10% movement in the valuation of the Group's  investments  designated as
fair value  through  profit and loss,  would  result in a 8% change in net asset
value per share.

The Board manages valuation risk by reviewing and approving the valuation of the
private equity fund portfolio.

                                      F33



33.      RISK (continued)

Commitment/liquidity risk

The nature of investing in buy-out and development  capital funds entails making
significant  financial  commitments,  as shown in note 20. At December 31, 2005,
the Group had  significant  uncalled  commitments  of  GBP364.1  million  (2004:
GBP464.5  million),  compared to its consolidated net assets of GBP903.0 million
(2004: GBP709.4 million).  Following the year-end, the Company made a commitment
of EUR2.8 billion to Permira's next private equity fund, Permira IV.

It is  anticipated  that over the  longer  term,  and in  normal  circumstances,
commitments  would be financed by  distributions  received on the realization of
existing investments.  In addition, the Group had a EUR285 million loan facility
at the year-end that could be drawn on to meet  commitments as they fall due. In
order to support the Company's  proposed  commitment to Permira IV, the Board is
considering funding options,  including increasing its current bank facility and
issuing long-term debt (see note 18). However,  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  under the  relevant  Fund,  it will  suffer a  resultant  dilution  in
interest and possibly the compulsory sale of its interest.

The Board manages liquidity risk by regularly  reviewing cash flow forecasts and
available  funding options.  Commitments to fund investments are reviewed by the
Investment Committee and approved by the Board.

Holdings risk

In certain  circumstances,  the  Company may wish to  transfer  its  holdings in
particular  Funds.  In a majority of the Funds in which the Company will invest,
the general partner,  trustee or manager has the ultimate right, similar to that
exercizable by a board of a private company,  to refuse to register the transfer
of an interest.  While the Company has no reason to believe that any request for
the transfer of an interest would be refused,  it is of course  conceivable that
the general partner's,  trustee's or manager's  overriding  fiduciary duty could
result in its  refusing  to  register  a  particular  transfer  proposed  by the
Company.

Concentration risk

The Directors believe that the diversified nature of the Company's portfolio and
the number of underlying  investments  in the Funds  reduces the risks  normally
associated  with  making  investments  in the buy-out  and  development  capital
markets.  However,  it should be noted that the Company  intends to focus future
investments  on a  smaller  number  of  private  equity  managers,  particularly
Permira.  As outlined  in note 9, the future  performance  of the  Company  will
therefore be largely dependent on the future performance of the Permira Funds in
which we invest. The Directors believe that this represents an opportunity,  but
investors  should also be aware that  greater  concentration  of the  investment
portfolio also presents a risk.

Following a review of its future  investment  policy during the year,  the Board
concluded that the Company's core focus should remain on  international  private
equity and,  within that, its primary focus should be on Europe and, to a lesser
extent,  Japan. While the Company will continue to have valuable  commitments in
the US in smaller company buy-outs and in the life sciences  sectors,  the Board
believes  that the buy-out  markets of Europe and Japan will  provide  excellent
investment opportunities over the next five to ten years.

Within  these two  markets the Board has decided to  concentrate  the  Company's
investments with our existing, highly rated investment advisers, Permira and MKS
Advisers.  SVG Capital plc has therefore  entered into  agreements  with Permira
(approved by shareholders on April 25, 2005), which give the Company full access
to the next two funds which Permira is expected to raise, Permira IV and Permira
V, and which strengthen the Company's long-standing relationship with Permira.

                                      F34


34.      EXPLANATION OF TRANSITION TO IFRS (GROUP)

The  reconciliations  of equity at January 1, 2004 (date of  transition to IFRS)
and at December  31, 2004 (date of last UK GAAP  financial  statements)  and the
reconciliation of profit for 2004 are required by IFRS 1 First-time  adoption of
International Financial Reporting Standards in the year of transition.

Reconciliation of Group equity at January 1, 2004 (date of transition to IFRS)

<TABLE>
<CAPTION>
<S>                                                         <C>             <C>             <C>         <C>
-------------------------------------------------- -------------- --------------- ------------- -----------------------------------
                                                                     IFRS format       UK GAAP
                                                                     adjustments       in IFRS
                                                         UK GAAP            only        format
                                                         GBP'000         GBP'000       GBP'000
-------------------------------------------------- -------------- --------------- ------------- -----------------------------------
Fixed Assets                                                                                    Non-current assets
Tangible fixed assets                                        399               -           399  Property, plant and equipment
-------------------------------------------------- --------------
Fixed asset investments
Funds and co-investments                                 560,287       (560,287)
Listed UK equities                                         8,184         (8,184)
Money market instruments                                  41,877        (41,877)
                                                                         568,471       568,471  Investments designated as fair
                                                                                                value through profit and loss
-------------------------------------------------- -------------- --------------- ------------- -----------------------------------
                                                         610,348        (41,877)       568,870
-------------------------------------------------- -------------- --------------- ------------- -----------------------------------
Current assets                                                                                  Current assets
Debtors                                                    6,718               -         6,718  Other receivables
Cash at bank                                               5,791          41,877        47,668  Cash and cash equivalents
-------------------------------------------------- -------------- --------------- ------------- -----------------------------------
                                                          12,509          41,877        54,386
-------------------------------------------------- -------------- --------------- ------------- -----------------------------------
                                                                               -       623,256  Total assets
Current liabilities                                                                             Current liabilities
Creditors: amounts falling due within one year           (8,111)               -       (8,111)  Other payables
-------------------------------------------------- --------------
Net current assets                                         4,398
-------------------------------------------------- -------------- --------------- ------------- -----------------------------------
Total assets less current liabilities                    615,145               -       615,145  Total assets less current
                                                                                                liabilities
                                                                                                Non-current liabilities
Creditors: due after more than one year                 (88,108)          88,108
                                                                        (87,619)      (87,619)  Convertible loan notes
                                                                           (489)         (489)  Deferred staff compensation
Minority interest - non-equity                             (100)             100
Minority interest - equity                                 (319)             319
-------------------------------------------------- -------------- --------------- ------------- -----------------------------------
Net assets                                               526,618             419       527,037  Net assets
-------------------------------------------------- -------------- --------------- ------------- -----------------------------------

Capital and reserves                                                                            Equity
Called up share capital                                  112,655               -       112,655  Called up share capital
Share premium account                                     43,114               -        43,114  Share premium account
Capital redemption reserve                                 3,204               -         3,204  Capital redemption reserve
Share purchase reserve                                    92,054               -        92,054  Share purchase reserve
Capital reserve                                          281,902               -       281,902  Capital reserve
Revenue reserve                                          (6,311)               -       (6,311)  Revenue reserve
                                                                                       526,618  Equity attributable to equity
                                                                                                holders of the parent
                                                                             419           419  Minority interest
-------------------------------------------------- -------------- --------------- ------------- -----------------------------------
Equity shareholders' funds                               526,618             419       527,037  Total equity
-------------------------------------------------- -------------- --------------- ------------- -----------------------------------

Net asset value per ordinary share
- undiluted                                               467.5p               -        467.5p
- diluted                                                 458.7p               -        458.7p
-------------------------------------------------- -------------- --------------- ------------- -----------------------------------
</TABLE>

Notes to the reclassification of Group equity at January 1, 2004

(a)   Fixed asset investments, other than money market instruments, have been
      reclassified as investments designated as fair value through profit and
      loss under IFRS.
(b)   The definition of gross cash differs between UK GAAP and IFRS. Under UK
      GAAP cash comprises cash on hand and only demand deposits. IFRS includes
      short-term highly liquid investments, i.e. those that can be turned
      into cash with insignificant changes in value, within cash equivalents.
      Consequently, investments in money market instruments have been
      reclassified as cash equivalents under IFRS.

                                      F35


34.      EXPLANATION OF TRANSITION TO IFRS (GROUP) (continued)

Reconciliation of Group equity at January 1, 2004 (date of transition to IFRS)

<TABLE>
<CAPTION>
<S>                                                                                  <C>               <C>            <C>
------------------------------------------------------------------------ ------------------ ----------------- --------------
                                                                           UK GAAP in IFRS           UK GAAP
                                                                                    format       Adjustments           IFRS
                                                                                   GBP'000           GBP'000        GBP'000
------------------------------------------------------------------------ ------------------ ----------------- --------------
Non-current assets
Property, plant and equipment                                                          399                 -            399
Investments designated as fair value through profit and loss                       568,471             7,144        575,615
                                                                         ------------------                   --------------
                                                                                   568,870                          576,014
                                                                         ------------------                   --------------
Current assets
Other receivables                                                                    6,718                 -          6,718
Cash and cash equivalents                                                           47,668                 -         47,668
                                                                         ------------------                   --------------
                                                                                    54,386                           54,386
                                                                         ------------------                   --------------
Total assets                                                                       623,256                          630,400
Current liabilities
Other payables                                                                     (8,111)                 -        (8,111)
                                                                         ------------------                   --------------
Total assets less current liabilities                                              615,145                          622,289
Non-current liabilities
Convertible loan notes                                                            (87,619)            13,307       (74,312)
Deferred staff compensation                                                          (489)                 -          (489)
------------------------------------------------------------------------ ------------------ ----------------- --------------
Net assets                                                                         527,037            20,451        547,488
------------------------------------------------------------------------ ------------------ ----------------- --------------
Equity
Called up share capital                                                            112,655                 -        112,655
Share premium account                                                               43,114                 -         43,114
Capital redemption reserve                                                           3,204                 -          3,204
Share purchase reserve                                                              92,054                 -         92,054
Share option reserve                                                                     -               343            343
Convertible loan notes - equity                                                          -            14,779         14,779
Capital reserve                                                                    281,902             7,144        289,046
Revenue reserve                                                                    (6,311)           (1,815)        (8,126)
                                                                         ------------------                   --------------
Equity attributable to equity holders of the parent                                526,618                          547,069
Minority interest                                                                      419                 -            419
------------------------------------------------------------------------ ------------------ ----------------- --------------
Total equity                                                                       527,037            20,451        547,488
------------------------------------------------------------------------ ------------------ ----------------- --------------
Net asset value per ordinary share
- undiluted                                                                         467.5p             18.1p         485.6p
- diluted                                                                           458.7p              6.3p         465.0p
------------------------------------------------------------------------ ------------------ ----------------- --------------
</TABLE>

Notes to the reconciliation of Group equity at January 1, 2004

     (a) The valuation of  investments  designated as fair value through  profit
     and loss has increased, mainly due to the adjustment of fund valuations for
     the removal of discounts  previously  applied to quoted  companies  held in
     fund  investments.  This treatment is in accordance  with IAS 39 'Financial
     instruments: recognition and measurement'.

     (b) The 'embedded option' elements of the Company's  convertible loan notes
     have been transferred to equity.  The equity component has been measured at
     the date of issue. The remaining  liability  represents the carrying amount
     to maturity of a 'straight  bond' with a 4.5% coupon and maturity  dates of
     2011 and 2013,  measured at  amortized  cost using the  effective  interest
     method. This treatment is in accordance with IAS 39 'Financial  instruments
     recognition and measurement'. (c) A charge to profit and loss has been made
     in respect of the value of share options  issued since November 7, 2002 for
     the relevant  period to December 31, 2003.  This treatment is in accordance
     with IFRS 2 'Share-based Payment'.

                                      F35

34.      EXPLANATION OF TRANSITION TO IFRS (GROUP)

Reconciliation  of Group  equity  at  December  31,  2004  (date of last UK GAAP
financial statements)

<TABLE>
<CAPTION>
<S>                                                       <C>             <C>             <C>        <C>
-------------------------------------------------- -------------- --------------- ------------- -----------------------------------
                                                                     IFRS format       UK GAAP
                                                                     adjustments       in IFRS
                                                         UK GAAP            only        format
                                                         GBP'000         GBP'000       GBP'000
-------------------------------------------------- -------------- --------------- ------------- -----------------------------------
Fixed Assets                                                                                    Non-current assets
Tangible fixed assets                                      1,161               -         1,161  Property, plant and equipment
-------------------------------------------------- --------------
Fixed asset investments
Funds and co-investments                                 688,198       (688,198)
Listed UK equities                                        15,179        (15,179)
Money market instruments                                  10,987        (10,987)
                                                                         703,377       703,377  Investments designated as fair
                                                                                                value through profit and loss
                                                                              74            74  Deferred tax asset
-------------------------------------------------- -------------- --------------- ------------- -----------------------------------
                                                         714,364        (10,913)       704,612
-------------------------------------------------- -------------- --------------- ------------- -----------------------------------
Current assets                                                                                  Current assets
Debtors                                                    4,390               -         4,390  Other receivables
Cash at bank                                              14,161          10,987        25,148  Cash and cash equivalents
-------------------------------------------------- -------------- --------------- ------------- -----------------------------------
                                                          18,551          10,987        29,538
-------------------------------------------------- -------------- --------------- ------------- -----------------------------------
                                                                              74       734,150  Total assets
Current liabilities                                                                             Current liabilities
Creditors: amounts falling due within one year           (7,763)               -       (7,763)  Other payables
-------------------------------------------------- --------------
Net current assets                                        10,788
-------------------------------------------------- --------------
Debtors: amounts falling due after more than one
year                                                          74            (74)
-------------------------------------------------- -------------- --------------- ------------- -----------------------------------
Total assets less current liabilities                    726,387               -       726,387  Total assets less current
                                                                                                liabilities
                                                                                                Non-current liabilities
Creditors: due after more than one year                 (49,479)          49,479
                                                                        (48,926)      (48,926)  Convertible loan notes
                                                                           (553)         (553)  Deferred staff compensation
Minority interest - non-equity                             (100)             100
Minority interest - equity                                 (405)             405
-------------------------------------------------- -------------- --------------- ------------- -----------------------------------
Net assets                                               676,403             505       676,908  Net assets
-------------------------------------------------- -------------- --------------- ------------- -----------------------------------
Capital and reserves                                                                            Equity
Called up share capital                                  122,530               -       122,530  Called up share capital
Share premium account                                     72,622               -        72,622  Share premium account
Capital redemption reserve                                 3,204               -         3,204  Capital redemption reserve
Share purchase reserve                                    92,054               -        92,054  Share purchase reserve
Capital reserve                                          397,050               -       397,050  Capital reserve
Revenue reserve                                         (11,057)               -      (11,057)  Revenue reserve
                                                                                  ------------- -----------------------------------
                                                                                       676,403  Equity attributable to equity
                                                                                                holders of the parent
                                                                             505           505  Minority interest
-------------------------------------------------- -------------- --------------- ------------- -----------------------------------
Equity shareholders' funds                               676,403             505       676,908  Total equity
-------------------------------------------------- -------------- --------------- ------------- -----------------------------------
Net asset value per ordinary share
- undiluted                                               552.0p               -        552.0p
- diluted                                                 539.7p               -        539.7p
-------------------------------------------------- -------------- --------------- ------------- -----------------------------------
</TABLE>

Notes to the reclassification of Group equity at December 31, 2004

     (a) Fixed asset investments, other than money market instruments, have been
     reclassified  as  investments  designated as fair value through  profit and
     loss under IFRS.

     (b) The definition of gross cash differs between UK GAAP and IFRS. Under UK
     GAAP cash  comprises cash on hand and only demand  deposits.  IFRS includes
     short-term  highly liquid  investments,  i.e. those that can be turned into
     cash  with  insignificant   changes  in  value,  within  cash  equivalents.
     Consequently,   investments   in  money   market   instruments   have  been
     reclassified as cash equivalents under IFRS.

                                      F36


34.      EXPLANATION OF TRANSITION TO IFRS (GROUP) (continued)

Reconciliation  of Group  equity  at  December  31,  2004  (date of last UK GAAP
financial statements)
<TABLE>
<CAPTION>
<S>                                                                                  <C>               <C>             <C>
------------------------------------------------------------------------ ------------------ ----------------- --------------
                                                                           UK GAAP in IFRS           UK GAAP
                                                                                    format       Adjustments           IFRS
                                                                                   GBP'000           GBP'000        GBP'000
------------------------------------------------------------------------ ------------------ ----------------- --------------
Non-current assets
Property, plant and equipment                                                        1,161                 -          1,161
Investments designated as fair value through profit and loss                       703,377            25,895        729,272
Deferred tax asset                                                                      74                 -             74
                                                                         ------------------                   --------------
                                                                                   704,612                          730,507
                                                                         ------------------                   --------------
Current assets
Other receivables                                                                    4,390                 -          4,390
Cash and cash equivalents                                                           25,148                 -         25,148
                                                                         ------------------                   --------------
                                                                                    29,538                           29,538
                                                                         ------------------                   --------------
Total assets                                                                       734,150                          760,045
Current liabilities
Other payables                                                                     (7,763)                 -        (7,763)
                                                                         ------------------                   --------------
Total assets less current liabilities                                              726,387                          752,282
Non-current liabilities
Convertible loan notes                                                            (48,926)             6,552       (42,374)
Deferred staff compensation                                                          (553)                 -          (553)
------------------------------------------------------------------------ ------------------ ----------------- --------------
Net assets                                                                         676,908            32,447        709,355
------------------------------------------------------------------------ ------------------ ----------------- --------------
Equity
Called up share capital                                                            122,530                 -        122,530
Share premium account                                                               72,622                 -         72,622
Capital redemption reserve                                                           3,204                 -          3,204
Share purchase reserve                                                              92,054                 -         92,054
Share option reserve                                                                     -             1,250          1,250
Convertible loan notes - equity                                                          -             7,446          7,446
Capital reserve                                                                    397,050            25,895        422,945
Revenue reserve                                                                   (11,057)           (2,144)       (13,201)
                                                                         ------------------                   --------------
Equity attributable to equity holders of the parent                                676,403                          708,850
Minority interest                                                                      505                 -            505

------------------------------------------------------------------------ ------------------ ----------------- --------------
Total equity                                                                       676,908            32,447        709,355
------------------------------------------------------------------------ ------------------ ----------------- --------------

Net asset value per ordinary share
- undiluted                                                                         552.0p             26.5p         578.5p
- diluted                                                                           539.7p             18.5p         558.2p
------------------------------------------------------------------------ ------------------ ----------------- --------------
</TABLE>

Notes to the reconciliation of Group equity at December 31, 2004

     (a) The valuation of  investments  designated as fair value through  profit
     and loss has increased, mainly due to the adjustment of fund valuations for
     the removal of discounts  previously  applied to quoted  companies  held in
     fund  investments.  This treatment is in accordance  with IAS 39 'Financial
     instruments: recognition and measurement'.

     (b) The 'embedded option' elements of the Company's  convertible loan notes
     have been transferred to equity.  The equity component has been measured at
     the date of issue. The remaining  liability  represents the carrying amount
     to maturity of a 'straight  bond' with a 4.5% coupon and maturity  dates of
     2013,  measured at amortized cost using the effective interest method. This
     treatment is in accordance with IAS 39 'Financial  instruments  recognition
     and measurement'.

     (c) A charge to profit  and loss has been made in  respect  of the value of
     share  options  issued since  November 7, 2002 for the  relevant  period to
     December 31, 2004. This treatment is in accordance with IFRS 2 'Share-based
     Payment'.


                                      F37


34.      EXPLANATION OF TRANSITION TO IFRS (GROUP) (continued)

Reconciliation of Group profit for the year ended December 31, 2004
<TABLE>
<CAPTION>
<S>                                                                                   <C>                <C>           <C>
------------------------------------------------------------------------ ------------------ ----------------- --------------
                                                                                                        IFRS
                                                                                   UK GAAP       Adjustments           IFRS
                                                                                   GBP'000           GBP'000        GBP'000
------------------------------------------------------------------------ ------------------ ----------------- --------------
Gains on investments - gains on fair value through profit and loss                 116,130            18,669        134,799
Exchange (losses)/gains on liquid assets                                              (45)                82             37
------------------------------------------------------------------------ ------------------ ----------------- --------------
                                                                                   116,085            18,751        134,836
------------------------------------------------------------------------ ------------------ ----------------- --------------
Operating income
Investment income                                                                    2,212                 -          2,212
Other operating income                                                               8,959                 -          8,959
------------------------------------------------------------------------ ------------------ ----------------- --------------
                                                                                    11,171                 -         11,171
------------------------------------------------------------------------ ------------------ ----------------- --------------
Operating expenses
Administrative expenses                                                            (9,932)             (907)       (10,839)
Other operating expenses                                                             (928)                 -          (928)
------------------------------------------------------------------------ ------------------ ----------------- --------------
                                                                                  (10,860)             (907)       (11,767)
------------------------------------------------------------------------ ------------------ ----------------- --------------
Operating profit/(loss)                                                                311             (907)          (596)
Finance costs                                                                      (5,980)               578        (5,402)
------------------------------------------------------------------------ ------------------ ----------------- --------------
Profit before tax                                                                  110,416            18,422        128,838
Tax                                                                                     72                 -             72
------------------------------------------------------------------------ ------------------ ----------------- --------------
Profit for the year                                                                110,488            18,422        128,910
------------------------------------------------------------------------ ------------------ ----------------- --------------
</TABLE>

Notes to the reconciliation of Group profit for the year ended December 31, 2004

     (a) Gains on fair value  through  profit and loss  increased as a result of
     the removal of discounts  previously  applied to quoted  companies  held in
     fund investments. The portfolio had a higher exposure to quoted investments
     at December 31, 2004 than at December 31, 2003.

     (b) A charge to profit  and loss has been made in  respect  of the value of
     share options.

     (c) A net credit adjustment to profit and loss has been made for a reversal
     of previous charges  amortized in respect of the 2011 Bonds following their
     conversion in December 2004, which outweighs the additional interest charge
     in respect of the 2013 Bonds using the effective interest method.

Explanation  of material  adjustments  to the Group cash flow  statement for the
year ended December 31, 2004 The  transition  from UK GAAP to IFRS has no effect
upon the  reported  cash  flows  generated  by the  Group.  The IFRS  cash  flow
statement is presented in a different  format from that  required  under UK GAAP
with  cash  flows  split  into  three   categories  of  activities  -  operating
activities, investing activities and financing activities. The reconciling items
between the UK GAAP presentation and the IFRS presentation have no net impact on
the cash flows generated.

In  preparing  the cash flow  statement  under IFRS,  cash and cash  equivalents
include cash at bank and in hand, highly liquid interest bearing securities with
original maturities of three months or less, and bank overdrafts.  Under UK GAAP
highly  liquid  interest   bearing   securities  were  not  classified  as  cash
equivalents.

                                      F39


35.      TEN LARGEST FUND INVESTMENTS
<TABLE>
<CAPTION>
<S>                                                                          <C>                <C>             <C>
------------------------------------------------ ---------------------------------- ---------------- ---------------
                                                                          Manager/             2005            2004
                                                                           Adviser            GBP'000      (restated)
                                                                                                             GBP'000
------------------------------------------------ ---------------------------------- ---------------- ---------------
Permira Europe II                                                          Permira          253,687         371,992
Permira Europe III                                                         Permira          159,564          80,893
P123                                                                          SVGA           80,762          63,888
Schroder Ventures Asia Pacific Fund                      Symphony Capital Partners           45,343          32,322
The Japan Fund IV                                                   MKS Consulting           29,519          13,996
SV Investments Fund I                                       SV Investment Partners           21,676          27,370
SV Life Sciences Fund II                                 SV Life Sciences Advisers           20,344          30,135
SV Life Sciences Fund III                                SV Life Sciences Advisers           19,787          11,136
Strategic Equity Capital plc                                                SVG IM           14,775               -
Permira Europe I                                                           Permira           13,034          22,207
------------------------------------------------ ---------------------------------- ---------------- ---------------
                                                                                            658,491         653,939
------------------------------------------------ ---------------------------------- ---------------- ---------------
</TABLE>

                                      F40

36.  DIFFERENCES BETWEEN INTERNATIONAL  FINANCIAL REPORTING STANDARDS AND UNITED
     STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

The group's  consolidated  accounts are prepared in accordance with IFRS,  which
differ from United States generally accepted accounting  principles ("US GAAP").
The significant differences applicable to the Group are summarized below:

Unamortized issue costs
Under IFRS,  unamortized  issue costs are disclosed net against the liability to
which they relate.  Under US GAAP,  unamortized costs are shown as an asset. The
increase in debtors and long-term  creditors  that would result from applying US
GAAP  amounts  to  GBP65,000  for  the  year  ended  December  31,  2005  (2004:
GBP74,000), with no change to shareholders' equity.

Share-based employee compensation expense
Under IFRS,  the  Company is  required to measure the cost of employee  services
received in exchange for an award of equity  instruments based on the grant-date
fair value of the award.

Under US GAAP,  the  Company  has  elected to account  for these  options  under
Accounting  Principles  Board  Opinion  No.  25 under  which  the plan  would be
regarded as variable.  As a result,  expenses have been calculated  based on the
intrinsic  value of the options at the balance  sheet dates and the  differences
arising  from  adopting   different   valuation   bases  are  presented  in  the
reconciliation of profit under IFRS and US GAAP.

Had  compensation  expense for such options been determined  consistent with the
fair  value  method   prescribed  by  SFAS  123,   Accounting  for   Stock-Based
Compenstion,  using the Stochastic model, the Company's pro-forma net profit and
earnings and diluted earnings per share would have been:

<TABLE>
<CAPTION>
<S>                                                                                             <C>                <C>
                                                                                         For the year      For the year
                                                                                       ended December    ended December
                                                                                             31, 2005          31, 2004
                                                                                               GBP000            GBP000
Profit after tax and minority interest as adjusted to comply with US GAAP                     169,289           103,638

Reversal of share -based employee compensation expense as reported                             15,211             6,764
Share-based employee compensation expense under fair value based method                       (1,647)           (1,863)
------------------------------------------------------------------------------------ ----------------- -----------------
Pro forma net profit                                                                          182,853           108,539
------------------------------------------------------------------------------------ ----------------- -----------------
Earnings per share - pro forma                                                                 144.4p             95.8p
------------------------------------------------------------------------------------ ----------------- -----------------
Diluted earnings per share - pro forma                                                         131.2p             82.6p
------------------------------------------------------------------------------------ ----------------- -----------------
</TABLE>

Convertible bonds
Under IAS 39 - 'Financial instruments: recognition and measurement'; 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 carrying amount to maturity of the liability
component is measured at amortized cost. The difference  between the proceeds of
issue of the convertible loan notes and the fair value assigned to the liability
component, representing the embedded option to convert the liability into equity
of the Company, is included in equity.

Under US GAAP, such convertible  bonds are treated as a liability only, not as a
mixture of debt and equity.

                                      F41

36.    DIFFERENCES  BETWEEN  INTERNATIONAL  FINANCIAL  REPORTING STANDARDS AND
       UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (CONTINUED)

Revaluation  of quoted  investments  classified as fair value through profit and
loss  Under  IAS 39 -  'Financial  instruments:  recognition  and  measurement',
marketability  discounts are not applied to quoted  investments when determining
fair values.

Previuosly  under  US  GAAP,  the  Company  applied   blockage   discounts  when
determining the fair values of certain quoted investments in accordance with the
guidance  provided by the AICPA  Investment  Companies  Guide ("the Gude").  The
Company is allowed to apply blockage  discounts when determining the fair values
of certain quoted  investments  since this was the Company's policy prior to the
financial year ended June, 30 1999. The Guide however requires that if a company
does not meet the criteria to apply  blockage  discounts when  determining  fair
values of certain  types of  investments,  that where  available,  quoted market
prices are to be used when  determining fair values of quoted  investments.  The
Company  believes  that the use of quoted  market  prices  is a more  preferable
method for quoted  investments.  Therefore,  on  January  1, 2005,  the  Company
amended its valuation policy to adopt the use, of where available, quoted market
prices when determining fair values of quoted  investments.  The Company changed
its  accounting  policy under US GAAP because it believes the new policy results
in a more comparable measure of fair value,  aligning it with industry peers and
current best practice.

As a consequence of this change in accounting  principle,  the cumulative effect
on period prior to adoption has been shown as a cumulative effect of a change in
accounting principle in the reconciliation of profit for the year ended December
31,  2005.  The effect of the  change was to  increase  profit  from  continuing
operations in that year by GBP25,895,000 (or 20.4p per share and 18.6p per share
on a diluted  basis).  The pro  forma  effect  of the  change on the year  ended
December  31,  2004  was to  increase  profit  from  continuing  opertations  by
GBP18,751,000 (or 16.5p per share and 14.0p per share on a diluted basis).

                                      F42

36.  DIFFERENCES BETWEEN INTERNATIONAL  FINANCIAL REPORTING STANDARDS AND UNITED
     STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (CONTINUED)


Minority interests
Under US GAAP, minority interests are treated as liabilities, whereas under IFRS
they are treated as part of equity.

Reconciliation of Profit
The following is a summary of the  significant  adjustments  to profit after tax
attributable  to equity  holders of the parent company that would be required if
US GAAP were to be applied instead of IFRS:

<TABLE>
<CAPTION>
<S>                                                                                     <C>                    <C>
                                                                          For the year ended    For the year ended
                                                                           December 31, 2005     December 31, 2004
Consolidated income statement                                                         GBP000                GBP000
Capital returns                                                                      142,401               133,983
Revenue returns                                                                       14,310               (5,073)
---------------------------------------------------------------------- ---------------------- ---------------------
Profit after tax as reported under IFRS                                              156,711               128,910
Minority interest                                                                      (137)                  (86)
---------------------------------------------------------------------- ---------------------- ---------------------
Profit after tax attributable to equity holders of the parent                        156,574               128,824
company as reported under IFRS
Adjustments:
Revaluation of quoted investments                                                          -              (18,751)
Convertible bonds                                                                        606                 (578)
Share-based employee compensation expense                                           (13,786)               (5,857)
---------------------------------------------------------------------- ---------------------- ---------------------
Profit after tax and minority interest as adjusted to comply with US                 143,394               103,638
GAAP before the cumulative effect of change in accounting principle

Revaluation of quoted investments                                                     25,895                     -
---------------------------------------------------------------------- ---------------------- ---------------------
Profit after tax and minority interest as adjusted to comply with US
GAAP after the cumulative effect of change in accounting principle
                                                                                     169,289               103,638
---------------------------------------------------------------------- ---------------------- ---------------------
Earnings per share calculated on US GAAP profit shown above before
the cumulative effect of the change in accounting principle

Basic earnings per share                                                              113.3p                 91.4p

Diluted earnings per share                                                            104.3p                 79.0p

Earnings per share calculated on US GAAP profit shown above after
the cumulative effect of the change in accounting principle

Basic earnings per share                                                              133.7p                 91.4p

Diluted earnings per share                                                            122.9p                 79.0p
---------------------------------------------------------------------- ---------------------- ---------------------

There are no tax effects resulting from the reconciliation of profits to US GAAP.
</TABLE>


                                      F43



36.  DIFFERENCES BETWEEN INTERNATIONAL  FINANCIAL REPORTING STANDARDS AND UNITED
     STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (CONTINUED)

On January 1, 2005 the Company changed its valuation policy to a more preferable
policy for the valuation of investments in certain  quoted  investments  (Please
see "Revaluation of quoted  investments  classified as fair value through profit
and loss note above").

Had this  valuation  policy been in place  previous to this date,  the pro forma
effects on the Company's profit after tax and (loss)/earnings per share adjusted
for US GAAP would have been as follows:


<TABLE>
<CAPTION>
<S>     <C>    <C>    <C>    <C>    <C>    <C>
Pro forma profit disclosure                                                                     For the year ended
                                                                                                 December 31, 2004
                                                                                                           GBP'000
Profit after taxation as adjusted for US GAAP before the cumulative effect of change in
accounting principle                                                                                       103,368
Gain on change of fair value of investments (please refer to "Revaluation of quoted                         18,751
investments classified as fair value through profit and loss" above)
Pro forma net(loss)/profit for US GAAP                                                                     122,389
Pro forma net(loss)/earnings per ordinary share as adjusted for US GAAP after the change in
accounting principle                                                                                        108.0p
Pro forma diluted net(loss)/earnings per ordinary share as adjusted for US GAAP after the
change in accounting principle                                                                               93.0p
</TABLE>


Consolidated shareholders' equity
The following is a summary of the significant  adjustments to  consolidated  net
assets that would be required if US GAAP were to be applied instead of IFRS:

<TABLE>
<CAPTION>
<S>                                                                                    <C>                     <C>
                                                                          December 31, 2005      December 31, 2004
                                                                                     GBP000                 GBP000
Capital and reserves attributable to equity holders of the parent                    902,357               708,850
company as reported under IFRS
Minority interest                                                                        642                   505
---------------------------------------------------------------------- ---------------------- ---------------------
Total equity as reported under IFRS                                                  902,999               709,355
Adjustments:
Revaluation of quoted investments                                                          -              (25,895)
Convertible bonds: treatment of option element under IFRS                            (5,946)               (6,552)
Reclassification of minority interest                                                  (642)                 (505)
---------------------------------------------------------------------- ---------------------- ---------------------
Shareholders' funds as adjusted to comply with US GAAP                               896,411               676,403
---------------------------------------------------------------------- ---------------------- ---------------------
Net assets per share calculated on US GAAP shareholders' funds shown                  697.4p                552.0p
above
---------------------------------------------------------------------- ---------------------- ---------------------
</TABLE>

                                      F44


36.  DIFFERENCES BETWEEN INTERNATIONAL  FINANCIAL REPORTING STANDARDS AND UNITED
     STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (CONTINUED)

Additional disclosures under US GAAP:

Under US GAAP, realized and unrealized profits are disclosed  separately.  Gains
on  investments  treated as gains on fair value through profit and loss amounted
to GBP160.7  million for the year ended  December 31, 2005 (year ended  December
31, 2004: GBP123.7 million) and are analyzed below:

<TABLE>
<CAPTION>
<S>                                                                                     <C>                    <C>
                                                                          For the year ended    For the year ended
                                                                           December 31, 2005     December 31, 2004
                                                                                      GBP000                GBP000
Realized profits on investments                                                       31,201                19,479
Unrealized profits on investments                                                    129,493               104,221
---------------------------------------------------------------------- ---------------------- ---------------------
Gains on investments - gains on fair value through profit and loss                   160,694               123,700
as adjusted to accord with US GAAP
---------------------------------------------------------------------- ---------------------- ---------------------

Local currency balances of cash and cash equivalents:
                                                                           December 31, 2005      December 31, 2004
Cash and cash equivalents                                                             GBP000                GBP000
Denominated in:
- sterling  (2005: GBP42,618,000; 2004: GBP21,651,000)                                42,618                 21,651
- euro  (2005: EUR233,448,000; 2004: EUR3,620,000)                                   160,401                  2,563
- US dollars  (2005: $3,369,000; 2004: $1,762,000)                                     1,962                    918
- Canadian dollars  (2005: C$49,000; 2004: C$36,000)                                      25                     16
------------------------------------------------------------------------------------------------------------------
Total cash and cash equivalents                                                      205,006                 25,148
------------------------------------------------------------------------------------------------------------------
Local currency equivalents in parenthesis.
</TABLE>


                                      F45


36.  DIFFERENCES BETWEEN INTERNATIONAL  FINANCIAL REPORTING STANDARDS AND UNITED
     STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (CONTINUED)

Changes to accounting standards

FAS 123(R): Share-Based Payment

In December 2004, the FASB issued  Statement of Financial  Accounting  Standards
("SFAS") No. 123 (revised  2004),  "Share-Based  Payments" or SFAS 123(R).  This
statement  eliminates  the  option  to apply  the  intrinsic  value  measurement
provisions of Accounting  Principles  Board ("APB") Opinion No. 25,  "Accounting
for Stock Issued to Employees" to stock compensation awards issued to employees.
Rather,  SFAS 123(R) requires companies to measure the cost of employee services
received in exchange for an award of equity  instruments based on the grant-date
fair value of the award.  That cost will be  recognized  over the period  during
which an employee is  required to provide  services in exchange  for the award -
the requisite  service period (usually the vesting period).  SFAS 123(R) applies
to all awards granted after the required  effective date and to awards modified,
repurchased, or cancelled after that date. SFAS 123(R) will be effective for the
Company's fiscal year beginning January 1, 2006.

SFAS 123(R) permits public companies to adopt its requirements  using one of two
methods:  (1) a  "modified  prospective"  method in which  compensation  cost is
recognized  beginning with the effective date (a) based on the  requirements  of
SFAS 123(R) for all  share-based  payments  granted after the effective date and
(b) based on the  requirements  of SFAS 123 for all awards  granted to employees
prior to the effective date of SFAS 123(R) that remain unvested on the effective
date or (2) a "modified retrospective" method which includes the requirements of
the modified  prospective  method  described above, but also permits entities to
restate based on the amounts  previously  recognized under SFAS 123 for purposes
of pro forma  disclosures  either (a) all prior  periods  presented or (b) prior
interim  periods  of the year of  adoption.  The  Company  expects to adopt SFAS
123(R) effective January 1, 2006 under the modified-prospective method.

As  permitted  by SFAS 123,  the  Company  currently  accounts  for  share-based
payments to employees  using APB 25's  intrinsic  value method.  The adoption of
SFAS 123(R)'s fair value method will have an impact on our result of operations,
although it is not expected to have a material  impact on our overall  financial
position. We are currently analyzing the effects of the new standard and can not
currently  quantify the impact that adoption of the standard is expected to have
on the financial statements.

SOP 03-03: Accounting for Certain Loans or Debt Securities Acquired in a
Transfer

The Statement of Position 03-03 (SOP 03-03) addresses accounting for differences
between the contractual  cash flows and cash flows expected to be collected from
an  investor's  initial  investment  in loans or debt  securities  acquired in a
transfer if those  differences are  attributable to credit quality.  This SOP is
effective for loans acquired in fiscal years beginning after December 15, 2004.

The Group adopted this SOP from January 1, 2005. Adoption did not have an impact
on the Group's results of operations or financial  condition as determined under
US GAAP for the year ended December 31, 2005.

SFAS 154: Accounting Changes and Error Corrections

In May  2005,  the FASB  issued  SFAS no.  154,  'Accounting  Changes  and Error
Corrections'  Statement  (SFAS  154).  SFAS 154  replaces  APB 20 and SFAS 3 and
changes  the  requirements  for the  accounting  and  reporting  of a change  in
accounting  principle.  This  statement  applies  to all  voluntary  changes  in
accounting  principle,  and  requires  the  retrospective  application  to prior
periods' financial statements of such changes.

SFAS 154 also requires that a change in depreciation,  amortisation or depletion
method  for  long-lived  non-financial  assets be  accounted  for as a change in
accounting  estimate  affected  by a change in  accounting  principle.  SFAS 154
carries  forward  without  change the guidance in Opinion 20 for  reporting  the
correction of an error in previously issued financial statements.

The statement is effective for accounting  changes and correction of errors made
in fiscal years beginning after December 15, 2005.


                                      F46


36.  DIFFERENCES BETWEEN INTERNATIONAL FINANCIAL REPORTING STANDARDS AND UNITED
     STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (CONTINUED)

SFAS 155: Accounting for Certain Hybrid Financial Instruments

In February 2006, the FASB issued SFAS No. 155,  'Accounting  for Certain Hybrid
Financial  Instruments'  (SFAS 155), an amendment of SFAS 140 and SFAS 133. SFAS
155 permits  election to measure any hybrid  financial  instrument at fair value
(with changes in fair value  recognised  in earnings) if the hybrid  instruments
contains  an  embedded  derivative  that  would  otherwise  be  required  to  be
bifurcated and accounted for separately  under SFAS 133. The election to measure
the hybrid instrument at fair value is made on an instrument-by-instrument basis
and is irreversible.

The Statement will be effective for all instruments acquired, issued, or subject
to a remeasurement event occuring after the beginning of fiscal years that begin
after September 15, 2006, with earlier adoption permitted as of the beginning of
the Group's 2006 fiscal year, provided that financial statements for any interim
period of that fiscal year have not been issued.

It is not  anticipated  that  this will have a  material  impact on the  Group's
results.

SFAS 156: Accounting for Servicing of Financial Assets

In March  2006,  the FASB  issued  SFAS  No.156  'Accounting  for  Servicing  of
Financial Assets - an amendment of FASB Statement No. 140' (SFAS1 156).

SFAS 156 addresses the  recognition  and  measurement  of separately  recognised
servicing  assets and liabilities and provides an approach to obtain  hedge-like
(offset) accounting.  The standard also: clarifies when an obligation to service
financial  assets  should  be  separately  recognised  as a  servicing  asset or
liability;  requires fair value measurement for these assets and liabilities, if
practicable;  permits fair value or amortisation  for subsequent  measurement of
these assets and liabilities; and permits a servicer using derivatives to offset
servicing  risk to measure both the derivative  and related  servicing  asset or
liability at fair value.

It is not  anticipated  that  this will have a  material  impact on the  Group's
results.

                                      F47

<TABLE>
<CAPTION>
<S>             <C>                                                                                        <C>
Exhibit         Exhibit Name
Number


1.1             Memorandum of Association                                                                     *

1.2             Articles of Association, as adopted on December 5, 2000                                     ***

4.1             Facility Agreement, dated March 10, 2006, between the Company,  The Governor and           Filed
                Company of The Bank of Scotland and The Royal Bank of Scotland plc                        herewith

4.2             The Executive Share Option Plan                                                              **

4.3             Operating Agreement, dated March 21, 2005, between the Company and Permira Holdings         ***
                Limited and the Company and certain other Permira Entities

4.4             Subscription Agreement, dated March 21, 2005, between the Company and Permira               ***
                Capital Limited

8.1             List of Subsidiaries of the Company                                                          **

11.1            The Company's Code of Ethics                                                               Filed
                                                                                                          herewith

12.1            Certification of Chief Executive Officer pursuant to SEC Rule 13a-14(a)                    Filed
                                                                                                          herewith

12.2            Certification of Chief Financial Officer pursuant to SEC Rule 13a-14(a)                    Filed
                                                                                                          herewith

13.1            Certification of Chief Executive Officer pursuant to SEC Rule 13a-14(b)                  Furnished
                                                                                                          herewith

13.2            Certification of Chief Financial Officer pursuant to SEC Rule 13a-14(b)                  Furnished
                                                                                                          herewith

 * Incorporated herein by reference to the Company's 2000 annual report on Form 20-F, filed with the Commission on
                                                  January 16, 2001

 ** Incorporated herein by reference to the Company's 2001 annual report on Form 20-F, filed with the Commission on
                                                  November 8, 2001

*** Incorporated herein by reference to the Company's 2004 annual report on Form 20-F, filed with the Commission on
                                                   July 15, 2005

</TABLE>