Apax Global Alpha Regulatory News (APAX)

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Apax Global Alpha Limited

Annual Report and Accounts 2016

Delivering sustainable value in volatile markets

Introduction

Apax Global Alpha Limited is in a unique position to offer its shareholders exclusive exposure to both Apax Partners Private Equity funds and a tailored mix of Derived Investments.

Overview

Apax Global Alpha Limited ("AGA", "Apax Global Alpha" or the "Company") is a closed-ended investment company that invests in a diversified portfolio of private equity funds and Derived Investments identified as a result of the private equity activities of Apax Partners LLP ("Apax Partners" or "Apax"). The Company was admitted to trading on the Main Market of the London Stock Exchange on 15 June 2015.

Objective

The Company's investment objective is to provide shareholders with capital appreciation from its investment portfolio and regular dividends. The Company is targeting an annualised Total NAV Return across economic cycles of 12-15%, net of fees and expenses. The Company aims to pay an annualised dividend yield of 5% of Net Asset Value ("NAV") per annum.

Expertise

The Investment Adviser, Apax Partners LLP, is a leading global private equity advisory firm. It has more than 30 years experience investing in Private Equity. Apax Partners has raised and advised funds that total over €40bn in aggregate as at 31 December 2016. Apax Partners advises on investments globally in companies across four sectors: Tech & Telco, Services, Healthcare and Consumer. 

Our business

Company overview

AGA provides investors with access to the investment expertise of Apax Partners, a leading global private equity advisory firm. It aims to provide long-term, superior returns to shareholders through its diversified portfolio of Private Equity Investments, as well as Derived Investments in debt and equity.

 "AGA is focused on delivering and sustaining value against a backdrop of volatile markets"

Tim Breedon CBE

Chairman

Our portfolio

AGA's portfolio is balanced across asset types, geographies and sectors. Private Equity represents 55% of the Invested Portfolio and Derived Investments the remaining 45%. AGA invests on a global basis and across Apax Partners' four sectors of expertise. The portfolio is currently overweight in North America and Tech & Telco as this is where the best investment opportunities have arisen for the Company in the past.

Invested Portfolio

Highlights 2016

Financial

1. Adjusted NAV is calculated by deducting the estimated performance fee reserve from period-end NAV.

2. Total NAV Return for the year means the movement in the Adjusted NAV per share over the period plus any dividends paid.

For details of calculations used please see the Glossary.

Our track record

3. Total NAV Return for the year, for the Company, means the movement in the Adjusted NAV per share over the period plus any dividends paid.

4. Total Return for Private Equity and Derived Investments is calculated by taking the Adjusted NAV for the respective portfolio at the end of the year, adding back disposals, income and realised movements divided by the Adjusted NAV of the respective portfolio at the end of the year together with additions.

01 Strategic Report

AGA's business model provides shareholders with unique exposure to four key sectors where long-term superior gains can be achieved through Apax Partners' ability to invest "ahead of the curve".

Chairman's statement

It is my pleasure to present AGA's 2016 full-year results. Both the Private Equity and Derived Investment portfolios performed more strongly in the second half of the year after performance was held back in the first half by negative fair value movements in a small number of positions. AGA's ability to create value during times of volatility reinforces our belief that it represents an attractive long-term investment for our shareholders.

Tim Breedon CBEChairman

This annual report covers AGA's performance in 2016, a year that witnessed a number of tumultuous economic and political events which affected global markets. Performance was largely flat during the first six months; however it improved during H2 2016 resulting in a Total NAV Return of 6.6% (after expenses) for the year as a whole.

The Private Equity and Derived Investment portfolios contributed broadly equally to performance, with annual Total Returns of 6.6% and 6.0% respectively. The Investment Manager's portfolio overview which you can find on page 28 of this report discusses the year's performance in detail, explaining that the majority of the portfolio's positions are delivering robust performance; however, this has been partially offset by negative fair value movements relating to a small number of investments in both Private Equity and Derived Investments. AGA's performance in 2016 also benefited from the portfolio's exposure to investments denominated in US dollars.

During the year, Adjusted NAV per share grew 1.6% to €1.91. In pound sterling terms however, it increased 18.1% from £ 1.38 to £1.63 over the same period, reflecting the substantial decline in its value against the euro.

AGA made two dividend payments during the year, consistent with one of its strategic objectives, distributing a total of £37.5m or 7.64 pence per share to shareholders during the year.

Impact of recent geo-political events

During 2016 the unexpected outcome of the Brexit referendum led to short-term volatility in equity and debt markets, whilst the pound sterling depreciated sharply against major currencies. It is likely that the prospects for the UK economy have been weakened by Brexit, at least until there is clarity around future trade agreements with the European Union and other countries. AGA has a direct exposure to the UK of around 3% of its Invested Portfolio. It is therefore relatively insulated from any Brexit related volatility affecting sterling or the UK market.

Donald Trump was elected as the 45th President of the United States on 8 November 2016. Given the Republican majority in both houses of Congress, President Trump's agenda, although still not clearly outlined, has a high likelihood of implementation. US fiscal expansion through additional sovereign borrowing coupled with tax cuts and protectionist measures are likely to lead to an increase in real GDP growth accompanied by higher inflation, interest rate hikes and US dollar appreciation.

In the "Investment Manager's market review and outlook" section, the Investment Manager explores the implications of these events in detail.

Funding and commitments

During the first half of 2016, the Company committed approximately $350m to Apax IX ("AIX") the new $9bn private equity fund launched by Apax Partners. This commitment enabled AGA to continue its strategy of providing shareholders with access to private equity investments advised by Apax Partners.

AIX had its final close on 20 December 2016 and has already announced its first two investments.

The Board approved an amendment to the terms of the Company's existing revolving credit facility, resulting in an increase in the maximum borrowing limit from €90m to €140m, and a three-year extension. This was considered prudent in light of the increasing size of AGA's investment portfolio and the commitment to AIX.

For more information on fund commitments, please see page 30.

First lock-up release

On 15 June 2016, the first anniversary of the Company's IPO, approximately 7.5% of AGA's ordinary shares held by Future Fund, former Apax executives and the Apax Foundation were released from lock-up. This first tranche represented around 37m shares or 20% of the shares held by these investors at the time of the IPO. The staggered release of shares is designed to ensure former employees of AGA's Investment Adviser remain committed to the success of AGA over the long term, whilst allowing the free float of AGA shares to increase over time.

AGA and its corporate broker facilitated and offered a process for the market placement of shares to those shareholders coming out of lock-up. Only 2.5m shares were sold by shareholders through this placement process, a clear indication that AGA continues to be regarded as an attractive value proposition by its pre-IPO shareholders.

The Board is considering making a similar mechanism available to its pre-IPO shareholders at future lock-up release dates.

Board and Committee changes

On 1 July 2016, Sarah Evans was appointed as a Non-Executive Director to the Board of AGA, replacing Steve Le Page who resigned from his post as both Non-Executive Director and Chairman of the Audit Committee. Susie Farnon, an existing Director, became Chairman of the Audit Committee on the same date. On 18 November 2016, the Board appointed Susie Farnon a Senior Independent Director ("SID").

For more information on Board and Committee membership and Director profiles, please visit:www.apaxglobalalpha.com/corporate-governance/the-board/

Dividend

In line with AGA's dividend policy, the Board has approved a final dividend in respect of the financial period to 31 December 2016, of 4.13 pence per share, using the closing exchange rate on 28 February 2017. The dividend is equal to 2.5% of AGA's euro NAV at 31 December 2016, equivalent to 4.84 euro cents. The dividend will be paid on 4 April 2017 to members on the register on 17 March 2017. The shares will be marked ex-dividend on 16 March 2017.

Outlook

Although the macroeconomic backdrop in the US and most of Europe remains sound, the next year is set to witness continued geo-political and economic uncertainty. Asset values remain elevated and, in this market environment, having a broad-based portfolio and access to an investment process which can successfully identify and exploit opportunities through deep sector insight and transformational ownership will be an important factor in enabling the Company to achieve its target 12-15% annualised Total NAV Return across economic cycles.

Tim Breedon CBEChairman6 March 2017

Business model in action - selected case studies

Tech & Telco - Private Equity

Duck Creek

Duck Creek is a leading provider of modern software technology to the Property and Casualty ("P&C") insurance carrier market.

Apax VIII acquired a 60% stake in Duck Creek in August 2016 forming a joint venture with Accenture. The transaction was valued at a discount to competitors. Duck Creek was carved out of Accenture, where it was considered to be a non-core asset whilst the Investment Adviser believed that the historic ownership structure was constraining growth of Duck Creek.

P&C insurance software is in the midst of a transition from legacy solutions to modern systems, and is a business critical administration system. The market penetration of modern systems is currently less than 30%, therefore Duck Creek has significant room to increase its already high revenue growth. With an independent management team the company will be able to accelerate growth through a software focused go-to-market strategy and accretive M&A.

Since investment, Apax VIII has supported Duck Creek in merging with Agencyport, a leader in digital insurance agent portals, and acquiring Yodil, a leading provider in insurance data management and business intelligence. The Fund has also recruited key additions to the board and management team and helped expand the system integrator network. The Investment Adviser's Operational Excellence Practice ("OEP") was key in successfully completing the carve-out process.

Investment details

Tech & Telco - Derived Investments

Vertafore

Vertafore is a leading provider of software to P&C insurance brokers (Brokerage Management Systems), offering a full range of products across all market segments.

The Investment Adviser has acquired a deep understanding of the Brokerage Management Systems space through Apax Europe VII's investment in Hub International and Apax VIII's investment in Assured Partners. Additionally, the Investment Adviser had in the past completed prior due diligence of Vertafore and other players in this space, as potential investments for the Apax Funds.

The Investment Adviser viewed Vertafore as a stable, recession-resistant asset with a number of key attractions as a debt investment. The business delivers a mission critical product that represents a small part of the customers' cost base, affording Vertafore considerable pricing power. Vertafore has also maintained strong recurring revenue and retention rates amongst its customer base, with low customer concentration. These translate into a business with a strong cash flow profile.

Investment details

Services - Private Equity

Boats Group

Boats Group operates a prominent digital classifieds marketplace for recreational marine vehicles and provides marketing software solutions to its broker and dealer customers. Core websites include BoatTrader.com, YachtWorld.com and Boats.com.

Boats Group is a market leader in a winner-takes -most environment, with its marketplaces estimated to drive over 30% of recreational marine dealership leads. It also provides operationally critical products to dealerships: multiple listing service, customer relationship management, inventory management tools; and a transactional database. In addition, its digital business model results in high cash conversion.

Boats Group is the Apax Funds' sixth investment in the digital classifieds sub-sector, and as such the Adviser is well placed to help create significant near-term value by implementing industry best practices. The OEP has identified multiple operational levers to drive mid to long -term growth by delivering increased consumer usage and greater yield from brokers, dealers; and OEMs.

AIX, with the OEP's guidance, successfully supported key management recruitment and identified strategic initiatives to be implemented to drive both short and long term growth.

Investment details

Services - Derived Investments

Cholamandalam

Cholamandalam ("Chola") is a top Indian non- bank financial company, focused on the commercial vehicle ("CV"), loan against property and SME financing segments.

AGA invested €3.9m in early 2014. Later that year, the Investment Adviser was invited to evaluate a primary equity raise into Chola, which due to its size and structure, met the investment objectives of the Apax Funds. Apax VIII invested €79.4m into Chola.

At entry, the CV market had declined for c.20 months, however, the Investment Adviser recognised that the market was set to recover. Chola maintained asset quality despite market declines, expanded its branch network, and diversified into new product categories. It also had multiple levers to improve profitability, realise operating efficiencies, improve cost of funds, and increase securitisation.

This investment thesis played out: the CV market had a strong recovery, Chola continued to venture into new products; and expanded net interest margin and return on assets. As a result, the company's valuation re -rated from c.2.0x at entry to 3.0x price to book. Incremental returns reduced, making an exit for AGA attractive. AGA (together with AVIII on a pro rata basis) sold c.65% of its stake in 2016 and remainder in January 2017.

Investment details

1 Solely represents return to AGA from its Derived Equity Investment, and excludes returns from AGA's exposure via its commitment to Apax VIII

Healthcare - Private Equity

Invent Neuraxpharm

Invent-Neuraxpharm ("Invent Neurax") is a major specialty generic pharmaceutical company focused on treatments for central nervous system ("CNS") disorders.

Invent Neurax was formed from the merger of Invent Farma and Neuraxpharm, both acquired by Apax VIII in August 2016. Invent Farma has a top CNS products sales force in Spain and Neuraxpharm is the leading German CNS-focused generics company.

The generic/off-patent pharmaceutical market has strong tailwinds in Western Europe, driven by an ageing population, increasing demand for healthcare, and cost saving efforts switching from higher-priced originator products. Invent Neurax also benefits from strong brand recognition and the general desire among CNS doctors and patients to avoid brand switching during the typically long treatment duration.

Apax VIII acquired Invent Farma and Neuraxpharm at attractive valuations, and their combination creates the opportunity to realise substantial synergies and develop a platform to build a pan-European leader. Since entry, the OEP has worked with management to implement the integration and cost savings plans. The Investment Adviser has supported the evaluation of potential M&A targets.

Investment details

Healthcare - Derived Investments

Physiotherapy Associates

Physiotherapy Associates ("Physio") is a physical therapy provider with clinics across the US and a diversified payer mix. The US represents a highly fragmented, large and growing market. The sub-sector has strong tailwinds, including an ageing and active population, a stable regulatory environment, and physical therapy seen as a cost effective alternative to surgery.

The Investment Adviser gained insight into the sector through the Apax Funds' due diligence of other opportunities in the space and related sub-sectors (e.g. workers' compensation). During 2013, Physio went through pre -packaged bankruptcy after revenue recognition irregularities were identified. The Investment Adviser accurately assessed the quality of the business due to its sub-sector expertise, familiarity with the business model and experience of the new management's integrity (the Investment Adviser knew the new CFO).

AGA participated in the original syndication in 2015 investing €8.8m. In 2016, a strategic player acquired Physio, triggering a repayment due to change of control.

Investment details

Consumer - Private Equity

Idealista

Idealista is the operator of idealista.com, the key online real estate classifieds advertising marketplace in Spain. Idealista also operates challenger real estate classified marketplaces in Italy, launched in 2007, and in Portugal, launched in 2014.

Idealista has proven itself to be a highly resilient business, as it has grown revenue and profitability during the recent Spanish real estate crisis. The business has strong brand awareness and maintains high-quality traffic to its sites.

Apax VIII acquired Idealista at a compelling forward entry multiple given its high growth. At the time of investment, the Investment Adviser expected the Spanish real estate market to rebound, which would allow Idealista to grow revenues and capture increased agency spend. In addition, the Investment Adviser, with the assistance of the OEP and Ed Williams (founder of Rightmove, Chairman at Auto Trader and now non -executive director at Idealista) is supporting Idealista to incorporate international best practices in pricing sophistication and value messaging, driving average revenue per account growth further. Idealista is the Apax Funds' fifth digital classifieds investment.

Since entry Apax Funds have led various operational improvement initiatives, most significantly a detailed review of pricing architecture and value messaging. In addition it has provided M&A support to evaluate strategic acquisitions.

Investment details

Consumer - Derived Investments

Advantage Sales & Marketing

Advantage Sales & Marketing ("ASM") is a significant sales and marketing agency ("SMA") in the US, providing outsourced sales and marketing services to manufacturers, suppliers and producers of consumer packaged goods.

ASM was previously an Apax Europe VII portfolio company. Leveraging the experience from this investment and prior market due diligence, the Investment Adviser identified the SMA industry as an attractive sub-sector that operates as a stable duopoly with limited cyclicality and consistent secular growth.

The Apax Funds sold ASM to funds advised by Leonard Green and CVC in July 2014. When the debt was syndicated in the market, the Investment Adviser assessed the opportunity from a debt perspective and identified the second lien debt as providing an attractive risk return profile due to high cash flow generation and favourable sub -sector trends. AGA invested during the original syndication and later in the secondary market at a similar price following strong operational performance.

Investment details

Our strategic objectives

AGA typically invests in Apax Partners' four core industry sectors - Tech & Telco, Services, Healthcare and Consumer - and utilises Apax Partners' global footprint. The Investment Manager leverages Apax Partners' extensive investment expertise gained through its core private equity business.

Risk management framework and principal risks

The Board has developed a system of risk management policies, procedures and controls, and maintains oversight through regular reviews by the Board and the Audit Committee.

The risk governance framework is designed to identify, evaluate and mitigate the risks identified by the Board as being of significant relevance to the Company in view of its risk profile and the risk appetite. The underlying process aims to understand and mitigate, rather than eliminate, the risks and, therefore, can only provide reasonable and not absolute assurance against loss.

The Board regularly reviews a register of principal risks and uncertainties (the "Risk Register") maintained on behalf of the Board by the Company Secretary.

The Risk Register serves as a detailed assessment undertaken by the Board of the Company's exposure to risks based within three core categories: financial risks, strategic and business risks, and operating risks.

Ownership and governance

As a collective investment company with an investment portfolio comprising financial assets, the principal risks associated with the Company's business largely relate to market risk, portfolio risk, currency risk and liquidity risk.

While the Board remains ultimately responsible for the identification and assessment of risk, as well as implementing and monitoring procedures to control such risks, and reviewing the same on a regular basis, the Board naturally places reliance on key service providers, to whom it has delegated aspects of the day-to-day management of the Company. This includes the design and implementation of controls over specific risks including portfolio risk, currency and liquidity risk, and, additionally, operating risk.

The Board undertakes an annual review of its risk appetite, considering recommendations from the Audit Committee and key service providers responsible for implementing the controls related to certain risks identified by the Board, as noted above.

Investment performance

In accordance with the investment management agreement between the Company and the Investment Manager, responsibility for delivering investment performance in line with the Company's strategic and business objectives, as well as remaining within the parameters of the risk appetite, is delegated to the Investment Manager.

Specific investment decisions are taken by the Investment Manager within parameters of authority approved by the Board, while separate risk functions within the Investment Manager support decision-making, review and challenge.

Risk assessment

In assessing each category of risk, the Board considers systemic and unsystemic risks and the control framework established to reduce the likelihood and impact (together with the "residual risk rating") of individual inherent risks. The Board does not consider political risk in isolation but incorporates it in consideration of principal risks. The Board is not, practically, in a position to consider every risk; however where possible, it identifies and assesses remote and emerging risks which may have a significant consequence or may not be manageable within the control environment.

In considering the framework around the policies and procedures adopted to reduce the potential impact of individual inherent risks, the Board specifically considers the nature, scale and complexity of the Company, its investment objectives and strategy, and the role of the key service providers, such as the Investment Manager, Company Secretary and Registrar.

The wider control environment of the Company is maintained through the policies and procedures adopted by the Investment Manager, Company Secretary and Registrar. The Board considers these policies and procedures in its assessment of individual risks. The Board seeks periodic assurance from such service providers on their control environments and, based on such assurances, will assess the suitability, adequacy and relevance of those policies and procedures. The principal risks and uncertainties in relation to strategic and business risk, operational risk and financial risk are reviewed by the Board and Audit Committee on a quarterly basis and a detailed review is undertaken on at least an annual basis.

Individual risks are assessed based on the likelihood of occurrence and their consequential impact. For avoidance of doubt, likelihood and consequence are assessed after taking into account the mitigating effect of the control framework. Risks are then ranked in order of residual risk rating likelihood and then consequence. Judgement is applied in determining which risks rank above the others where such risks have the same residual risk rating, likelihood and consequence.

The Board recognises that it has limited control over many of the risks it faces, such as macro-economic events and the complex regulatory environment, and it periodically reviews the potential impact of such ongoing risks on the business and actively considers them in its decision making.

Principal risks

The Board has overall accountability that risk is effectively managed within the Company. The Audit Committee has undertaken an exercise to identify, assess and manage the risk within the Company. The principal risks identified have been assessed based on residual likelihood and consequence and are summarised on the heat map in the annual report on page 17.

The Company's principal risks are split between three main risk categories; financial risks; strategic and business risks; and operating risks. Assessment of these risks has been summarised in the table below:

Sustainability

How the Investment Adviser thinks about corporate social responsibility ("CSR")

Why the Investment Adviser is committed to delivering value sustainably

The Investment Adviser ("IA") believes that a focus on sustainable investing can lower risk and enhance financial returns for the funds that it advises, while creating a net benefit for society. Sustainable investing is an integral part of the IA's approach and is fully embedded in their investment process. But the IA also considers CSR to be more than just the investment approach and separately considers how CSR impacts the manner in which it operates and how it impacts its core values. This embedded approach drives a culture that continually assesses the impact of CSR within its work.

From a practical perspective the ability of the IA to assess and influence CSR matters in portfolio investments differs between Private Equity Investments and Derived Investments. This is because Private Equity Investments are characterised by longer hold periods and, often, controlling stakes, whereas Derived Investments tend to be shorter hold periods and non-control positions. Whilst this can limit the ability of the IA to influence CSR initiatives within the Derived Investments, the IA remains focused on CSR and considers this as part of the overall investment thesis and does not turn a blind eye to matters that are evident at the time of assessing the investment. Private Equity Investments allow the IA greater time and ability to influence an investment in order to create value via CSR initiatives (details of the approach are outlined below). In addition, Derived Investments in an existing Private Equity Fund investment also benefit from this approach.

Sustainable investing framework

Since the adoption of the Principles for Responsible Investment ("PRI") in 2011 the IA has developed a robust set of processes culminating in a comprehensive sustainability programme which is embedded in the life cycle of a business in which the Apax Funds invest. A distinctive feature of the IA's sustainability programme is the annual collection of approximately 100 Environmental, Social and Governance (ESG) related KPIs from the Apax Private Equity Funds' underlying portfolio companies. These KPIs are an invaluable tool in driving measurable progress in the overall ESG footprint of these Funds and also in creating value through dedicated ESG programmes at the individual portfolio company level. In recognition of its ESG leadership the IA was selected as the winner of the BVCA 2015 Responsible Investment Awards both for its ESG framework and for its engagement on ESG matters with private equity portfolio companies.

Modern slavery

Given the nature of its advisory business, the IA believes there is a very low risk of slavery or human trafficking in connection with its activities or those of its portfolio companies. It is committed to implementing and enforcing effective systems and controls to safeguard against slavery and human trafficking taking place in its business or supply chains. Specifically the IA looks to ensure that its global team receives training to understand the risks of modern slavery and it will include anti-slavery and human trafficking measures in its Global Business Standards. For further details, please see full statement on the IA's website at: http://www.apax.com/media/620781/UK-Modern-Slavery-and-Human-Trafficking-Statement-approved-.pdf

Integration of the sustainability framework into the investment process

For further details and the IA's latest Sustainability report,please refer to: http://www.apax.com/media/630397/Sustainablilty-Report-4th-Edition.pdf 

Sustainable investing in action1:

Environmental impact of the Apax Funds portfolio

Across the Apax Funds portfolio, there are a number of initiatives in place that reduce complexity, waste and energy consumption. These initiatives range from reducing electricity usage via replacing traditional light bulbs to LED, reducing paper usage by setting default double - sided printing in all of the offices; and reducing water usage by investing in low flow fixtures, auto shut off faucets and other water reducing features.

A few examples are set out below:

Energy

Full Beauty Brands has reduced total electricity consumption by 37% since 2008 and has a large number of initiatives lined up in order to achieve further energy reductions. In 2016 the company installed conveyer sleep mode in their Indianapolis distribution centre. In 2017 the company will replace 34 400-watt parking lot pole lights with 150-watt LED's in their El Paso customer care centre and they will add stock floor HVAC units to their energy management systems in the Indianapolis distribution centre.

Paper

Cole Haan continue to recycle all cardboard coming into their Greenland facility and in the last five months of 2015 recycled 378 tons of cardboard out of Greenland. The company has been working with a new vendor to roll out comingled recycling in the Greenland distribution centre since the summer 2016.

Social impact of the Apax Funds portfolio

The Apax Funds portfolio companies have put in place many initiatives to make an impact on their workforce by conducting regular employee surveys, implementing improved training programmes and putting in place career development practices.

In addition, the portfolio companies make an impact on the communities in which they operate through their community engagement. A few examples of each are set out below:

Employee engagement and talent management 

Exact set out on a journey to better facilitate talent management in 2015. Managers have participated in talent review sessions focused on identifying talent, building the talent pipeline and assessing bench strength for leadership roles.

These discussions are based on a methodical approach and will continue in the years to come to ensure that the identification, growth and retention of talent become engrained in the organisational and leadership culture. Talent reviews will enable the company to better understand specific development needs and target development initiatives. The appetite for development continued in 2015, 468 employees participated in a total of 62 skills training sessions. The number of completed skills training sessions increased by 30% compared to 2014. Exact Insight, the Exact onboarding programme, was attended by 308 new joiners globally, 70 of which joined the company in Kuala Lumpur, 37 in the US and 201 in Europe. The total number of completed training courses was 8,304, with 3,189 obtained certificates. Compared to 2014 this means an increase of 33% and 16% respectively.

Community

Acelity supports local San Antonio organisations like Inspire U, the San Antonio Children's Hospital and local veteran service organisations like Wish for our Heroes. Nationally, the company is focused on making a greater impact in the lives of families facing serious health issues, the military and their families, and those affected by disaster. Acelity supports the American Diabetes Association and breast cancer awareness organisations to help patients and families navigating through serious health challenges. Due to its strong relationships across the continuum of care, Acelity quickly responded with product donations and customer support to help restore the lives of people impacted by global tragic disasters in areas like San Bernardino, Paris and Brussels. Acelity also provides its V.A.C. Therapy free of charge to more than 8,000 uninsured, low income patients each year as part of the Acelity Charity Care Programme.

Governance impact of the Apax Funds portfolio

Governance is a key area of focus for the Apax Funds portfolio companies and they are encouraged to focus on continuous improvement of their governance practices from the start of the Apax Funds investment with a particular emphasis on anti-corruption practices and establishing robust codes of conduct. Likewise, supply chain improvements are a key focus area for portfolio companies with exposure to supply chain risk.

A number of examples of improvements are outlined below:

Corporate governance improvements

EVRY works actively to combat all forms of corruption. E-learning programmes and training courses are organised to ensure employees are trained to act in accordance with the Group's guidelines on accepting gifts, travel and other benefits or activities, with training also provided on how to distance oneself from all forms of bribery and corruption. Employees in doubt about whether a particular situation or gift is permissible are also able to seek guidance from the company's compliance unit. EVRY has well-established 'whistle-blower' arrangements as well as procedures for dealing with suspected corruption at its businesses.

Supply chain improvements

Cole Haan has become a member of Social Accountability International ("SAI") and is working with SAI to transition their programme to one that works with their supply chain partners to continuously improve the supply chain. The company is also working with SAI to re-position its Code of Conduct and develop their own audit standards.

1 All information based on responses from Apax Funds portfolio companies for the year ended 31 December 2015

Investment Manager's market review and outlook

The global market environment has changed substantially during the year. Over the next four pages, the Investment Manager reviews the key drivers such as the outcome of the US presidential election, UK's Brexit referendum, rebounding commodity prices and emerging market economies facing depressed currencies.

2016 market review

What a year! The beginning saw the extension of the stressed market conditions for both equities and debt that dominated the latter part of 2015. The early months of 2016 were driven by ongoing fears related to China and commodity prices, weighing many equity markets down. Similarly, junior debt markets froze in North America - new issues subsided and pricing levels of debt suffered. This however allowed AGA to take advantage of depressed valuations, making a number of acquisitions in its Derived Investments portfolio. Towards the end of Q1 and into Q2, markets rebounded and reached new heights before the Brexit referendum. Its outcome was confounding, causing the pound sterling to nose -dive 11% at one point. Once the initial shock was digested, equity markets regained lost ground quickly and have performed strongly since. This course was unaltered by the second major unexpected political event of 2016. In the US presidential elections the candidate deemed the "outsider" by financial markets won.

Immediately after the result became apparent, Asian stock markets dropped pronouncedly but only for a few hours. Pretty quickly - just as after Brexit - global markets took a different view. The President-elect's likely policies of fiscal expansion through tax cuts and public investment programmes were well received by investors and a year-end rally led to new record highs in the US and strong performance in Europe (see Fig. 1).

Private equity market valuations have benefited from these strong public equity markets, and are currently close to at all-time high valuation multiples for buyouts in the developed world (see Fig. 2).

Whilst valuation levels are high and now exceed those of the 2006/2007 period, leverage levels and interest rates in 2016 were lower. Both result in generally lower interest burdens to private equity companies today than a decade ago. Clearly this picture will change when rates rise again - as they have started to more recently in the US.

In contrast, emerging equity markets performance in 2016 was mixed. Stock exchange indices have generally suffered from President Trump's protectionist rhetoric and some capital flight effects in connection with that have taken their toll. The US dollar has gained ground relative to most currencies and likely future rate rises suggest that there is more to come. This may further fuel "hot money" flows from the emerging markets towards the developed parts of the world.

2017 outlook

Brexit and the outcome of the US presidential election will distinctly change the investment landscape going forward. Therefore, it is worthwhile discussing the possible implications of these events in a little more detail.

Brexit

We touched upon Brexit's implications in our interim report but an update on our views is merited here. The UK government has become clearer on what strategies it wants to pursue, and we believe that what is generally called a "hard Brexit" is now the base case scenario. First, the UK's stated political priorities of controlling immigration and exiting the supervision of the European Court system are recognised as incompatible with Single Market participation. Second, the Brexit process is designed in such a way that a "hard Brexit" becomes the default should an alternative agreement not be reached within a very short time frame (formally two years but in practice much less). The requirement for a negotiated exit to be approved is very demanding, especially as unanimity is required within the remaining 27 EU member states and the process also involves EU institutions such as the EU Commission and the EU Parliament.

In our view, Single Market participation has had significant advantages for the UK in the past and present. Losing these advantages will have negative economic impacts both in the EU and in the UK, but in our view the UK will pay the (far) higher price. A "hard Brexit" is likely to require significant and costly adjustments in a variety of UK sectors (most notably in banking and auto). The macroeconomic consequences could be significant, and the political reaction to them will likely be "throwing money at the problem", in turn causing budgetary and FX issues. In our view, UK equity and FX markets are not yet fully pricing in these consequences, opening up a scenario of a market correction in the next 12-18 months. Before such a correction happens, our approach to investment opportunities in the UK remains cautious, focusing on opportunities that already provide clear value opportunities today.

US under a Trump administration

On 8 November 2016, Donald Trump was elected as the 45th President of the United States. As already mentioned, despite the outcome coming as a surprise to many, US and European equity markets have rallied since the announcement and the US fixed income market has lost ground. Capital markets in the emerging world have been hit with corrections in FX, equities and debt.

While not all elements of President Trump's agenda are yet clear, and the odds are that there will be quite a few surprises, the fact that the Senate and the House of Representatives remain in Republican hands suggests that whatever agenda materialises, it will have a strong likelihood of being implemented. What are we expecting?

First, there will be a shift from a monetary to a fiscal dominated economic strategy, including tax cuts and infrastructure spending programmes. Such policies will likely lead to a short to mid- term stimulus and an increase in the budget deficit. An initial real GDP boost is to be expected, but then also is an increase in inflation. Additional sovereign borrowing will put further pressure on rates and an appreciation of the US dollar due to "hot money" flows, in particular from emerging markets. Second, more domestic oriented policies are likely. On the one hand, this could mean increases in tariffs and focus on domestic production in (core) industries, on the other hand it will put more limits on immigration. Limiting cheap imports and the labour supply will add to inflation, and a stronger US dollar will mean trouble for export oriented US businesses.

What implications does this have for private equity investing? The likely economic policies under a Trump administration have both positive and negative effects. Obviously, a short-term boost to real GDP is a good thing for existing portfolio companies in the US (and elsewhere). The attraction of aggressive fiscal policy, from a politician's view, is that the benefits come quickly, but that costs from increased government borrowing will be borne by someone in the future. In the same vein, from a private equity fund's perspective, the cost of inflation is limited but the benefits to headline returns are obvious and the current portfolio and future investments will benefit from lower corporate tax rates. The longer-term cost of inflation and increased sovereign debt are a few years out. Similarly, while mercantilist policies may appeal to parts of the current electorate, the long-term costs of trade restrictions are significant and are likely to be felt by the actors in a post-President Trump world.

There are some less obvious effects of fiscal expansion as well. For example, a lower corporate tax rate actually decreases the beneficial effect of interest deductibility. Consequently, in bidding for assets against strategic acquirers, private equity funds may actually experience a relative reduction in competitiveness. An increase in interest rates is also more of an issue for highly levered entities. Cash flow headroom of future buyouts are likely to decline, increasing the level of financial risk. After years of low interest rates when the margin for error was large, the future will require more diligence in determining the optimal financial structure.

Overall, we believe that US policies in the coming years will favour cyclical and domestically-oriented businesses. On the flip side, companies from Europe and the emerging markets selling into the US could suffer from a protectionist US administration.

Investment approach in the current market environment

Starting with the geographic dimension, the following chart shows key geographies where the Investment Adviser usually evaluates equity investment opportunities in which the Apax Funds invest. The country's valuation multiple is compared to GDP growth. Clearly, abstracting from all other dimensions, the further to the right and down a country is positioned, the better value one should find there.

As discussed in previous reports, the Investment Adviser believes that there is good value in Israel, and the Apax Funds are currently looking at a number of attractive opportunities there. So far in 2017, AMI's acquisition of Ten Petroleum, Israel's largest discount gas station operator, has been announced. The Apax Funds expect to be able to complete additional Israeli investments, both for AIX and AMI, throughout the year.

China also stands out from the chart below with high growth rates and low valuation levels however, caution is in order. First, the low public equity valuations are driven by many state-owned enterprises (SOEs) whose growth and debt levels may be less attractive than the macro view suggests. Second, the statistical methodologies behind the growth rates can be misleading. Third, Chinese growth has been and still is fuelled by ever increasing public and private debt levels. A reversal of debt trends will eventually have to happen and may cause friction that leads to market and macro corrections. Fourth, uncertainties surrounding President Trump's policy towards China represents economic risks which we believe are larger to China than to the US. Consequently, we are more cautious about China than the chart below may suggest. At the same time, we also note that the digital economy in China is booming and that companies in the sector are sometimes valued at discounts to similar businesses in the western markets, despite higher sector growth. AGA will continue to exploit these valuation differences through exposure to carefully selected Derived Equity Investments.

Staying in the emerging markets, the diagram shows that India and Brazil are very much at the opposite ends of the spectrum of growth-valuation combinations. Both appear, in our view, investable albeit with very different hypotheses. India, on the one hand, is the economy with the highest growth expectations but also with high valuation levels. Consequently, we believe that temporary valuation troughs and niches could offer interesting acquisition opportunities. Brazil, on the other hand, has just gone through its most pronounced recession in recent history.

While it has not re-emerged from contraction yet, we believe that there are some rays of light here at the end of the tunnel (and we hope it is not another oncoming train). Our belief is driven by positive political developments and also observations in the Apax Funds portfolio which are suggesting an improvement in economic activity.

Turning to the western economies and tackling North America first: while we have argued, for some time now, that fears of deflation were overblown and that the health of the US economy was better than its reputation, we believe that under a Trump administration even a small risk of a recession in the short and medium term has diminished. The expected fiscal stimulus is likely to be effective at least for a while and real and nominal GDP growth are likely to accelerate, with the latter accelerating more than the former. New public equity market peaks in the US clearly reflect this view and obvious value opportunities remain hard to find. The Apax Funds strategy in the US remains focused on micro-situations where value creation can be achieved through company transformation whilst retaining price discipline. In Europe the landscape is more heterogeneous. Germany and Central Europe, Spain and the Nordics all have positive macro trends and valuation levels are not unduly elevated. The Apax Funds have taken advantage of this: three out of six acquisitions announced in 2016 were made in these regions. In our view, the problem-child in Europe from an economic perspective could become the UK in the wake of Brexit. As laid out earlier, odds for a "hard Brexit" are high, and the implications for the UK's economy are not good. In addition, there are some political risks ahead in Europe such as the Dutch, French and German elections in 2017, which could create market and economic risks.

Asset classes

From an asset class perspective, we believe that the most notable changes going forward will affect debt. The outcome of the US presidential election has already had a pronounced effect on US fixed rate debt, beginning with sovereign and investment grade. The Federal Reserve has begun with rate increases and they are likely to continue. Fixed income securities with high ratings are likely to remain under pressure in the near future.

The effects have not yet been felt in the more junior market yet - in fact, high yield and junior loan markets in the US strengthened towards the end of 2016, as a fiscal impulse is likely to keep default rates low. However, going forward increasing rates and rising inflation are likely to affect valuation levels in high yield. Floating rate (junior) credit appears the most attractive debt segment in our view, and margins may actually continue to compress further - the proposition of loans relative to high yield remains attractive. On the other side of the pond, monetary policy in the Eurozone will likely continue to remain supportive, and if in doubt, we prefer US to European credit. AGA has so far not invested in emerging markets debt and we do not expect to change that in the foreseeable future.

We believe that equity investments on the margin appear more attractive than investments in debt, and loan investments remain more attractive than public debt investments, both because of more attractive margins and their protection against rate rises. A fiscal stimulus in the US, with lower corporate tax rates should support rising corporate profits. While this impulse should also be good for exporters in Europe and the emerging markets, there will likely be negative implications due to protectionist trade policies of a Trump administration. We continue to believe that India offers a broader range of attractive investment opportunities than China.

Sectors

In a world of fiscal stimulus, more cyclical assets could be a better choice than the more resilient and stable classes. For AGA's and the Apax Funds' focus sectors of Tech & Telco, Services, Healthcare and Consumer, this suggests the following:

· In Tech & Telco, the systems, software and IT services segments are likely to benefit more than infrastructure-like areas such as telecoms operators

· In Services, financial and industrial services appear more attractive to companies with non-cyclical, recurring revenue business models

· In Healthcare, depressed valuation levels in segments such as pharmaceuticals could allow for interesting opportunities; and

· In Consumer, we may eventually see a rebound in some apparel segments (apparel being one of the most troubled spaces in the past decade).

The accelerated trend towards digitisation and migration to online, by consumers and businesses, are an overarching theme layered over the above sector themes. While valuations generally reflect this trend and are high in this space, there are always niches of value if one can be agnostic between geographies - an important feature of AGA.

Most of the market themes discussed above are policy and macro-oriented. However, the investment strategy followed by AGA and the Apax Funds that AGA invests in are micro-oriented. AGA and the Apax Funds invest in businesses following an approach to:

· focus on early value creation by identifying and improving under-managed businesses, consolidating fragmented markets or digitally transforming businesses/markets;

· relentlessly look for attractive entry multiple and "buying right" opportunities, consciously avoiding the temptation of cheap and high levels of debt; and

· act on the belief that a geographically flexible investment strategy leads to better risk-adjusted returns in particular in an era of substantial political change globally.

Thus, while the macro perspective is important as a backdrop to any transaction, we believe that the changes in any political agenda are likely to be less important for AGA's investment strategy than for others.

Portfolio overview and performance

Adjusted NAV in 2016 grew from €923.6m to €938.7m, a Total NAV Return of 6.6% including dividends paid. Over the next twelve pages, the Investment Manager reviews AGA's portfolio and performance

Portfolio overview

AGA's strategy is to invest around half its portfolio in Private Equity through primary and secondary commitments in Apax Funds and the other half in Derived Investments. Derived Investments are typically identified as a result of the core private equity research carried out by Apax Partners - our Investment Adviser. Derived Investments are primarily investments in debt and listed equities which do not fit the mandate or investment criteria of the Apax Funds, yet represent an attractive investment opportunity. AGA therefore is in a unique position to offer its shareholders exclusive exposure to both Apax Partners Private Equity Funds and a tailored mix of Derived Investments. The investments are expected to continue to be approximately equally split between Private Equity and Derived Investments over time, although this mix will fluctuate due to market conditions and other factors.

At 31 December 2016, the portfolio was slightly overweight in Private Equity. This represented 55% of the Invested Portfolio and Derived Investments represented 45%. Of the 32 companies in the Derived Investments portfolio, 15 (47%) are also portfolio companies of the Apax Funds.

AGA primarily invests in the Investment Adviser's four key sectors: Tech & Telco, Services, Healthcare and Consumer. Tech & Telco currently has the largest portfolio weight, accounting for 37% of the Invested Portfolio.

AGA also follows a global strategy; however to date it is most heavily weighted in North American investments. These are currently 55% of the Invested Portfolio at year end. This is a reflection of where the most attractive investment opportunities for the Company have been identified in the past. Over time, we expect the portfolio to be more balanced between North America and Europe. To this end, Europe's share of the Invested Portfolio has increased slightly to 31% over the year.

Investments in India represented 8% of the Invested Portfolio at 31 December 2016, down from 9% at the end of 2015. This decrease is due to exits in both the Private Equity and Derived Investment portfolios. China's share of the Invested Portfolio decreased slightly to 2%.

Only 3% of AGA's portfolio is directly invested in the UK. Whilst the exposure to UK based companies is limited, we have started to take advantage of value opportunities by adding two new positions to the UK portfolio bringing the total number up to five.

NAV development and performance

1. Total value movement calculated by taking unrealised and realised movements, FX and income earned during the year. Total value gains shows the positive contributors and total value losses shows the negative contributors.

2. Expenses and other consists of expenses of €10.9m, increase in performance fee of €0.4m offset by FX gains earned on cash of €2.4m.

At the end of 2016, Adjusted NAV, which includes a pro forma performance fee reserve calculated on a liquidation basis (see note 11 in the notes to the financial statements), was €938.7m, up from €923.6m at 31 December 2015. As shown in the chart to the right AGA paid out a total of €45.9m through two semi - annual dividends, representing 2.5% of 31 December 2015 and 30 June 2016 euro NAV respectively. This is in line with its key objective to return value to shareholders in the form of regular dividends.

Across the Invested Portfolio, investments with positive fair value movements contributed total value gains of €101.9m offset by total value losses of €32.0m (€4.7m in Private Equity and €27.3m in Derived Investments).

In the Private Equity portfolio GlobalLogic, Azelis and Assured Partners were the three best performing portfolio companies. GlobalLogic's valuation has increased primarily due to continued and rapid expansion, both through M&A and organic growth. Azelis's valuation benefited from higher valuation multiples in the public markets for its sector as well as growth in both revenue and EBITDA. Assured Partners completed a number of M&A transactions during the year.

Turning to the Derived Investments portfolio, 69% of positions (by number), across both Derived Debt and Listed Equity, saw gains during the year, adding €61.6m to AGA's Adjusted NAV. The top three contributors were investments in Chola, Ellucian and Acelity. Chola's share price rose after continued end-market recovery and increased profitability. The price of Ellucian's senior unsecured notes increased significantly on the back of strong operational performance. Acelity's second lien notes traded up after the company announced in December that it was selling its Lifecell business unit, indicating that the notes would be repaid.

Unrealised losses in the Private Equity portfolio were limited to €4.7m whilst the Derived Investment portfolio saw negative valuation movements of €19.9m in Derived Debt and €7.4m in Derived Equity during the year. AGA's direct and indirect investments in Answers, Full Beauty and Rue21 made the largest negative contribution to performance in 2016 affecting both Private Equity and Derived Investments.

The investment in Answers was impaired due to the Answers.com division losing significant share in the social content market. The US apparel retail market, in which Full Beauty and Rue21 operate, has seen continued weakness throughout 2016 and these conditions had a negative impact on the valuation of AGA's positions in these businesses.

On a per share basis, Adjusted NAV was €1.91 at 31 December 2016, increasing from € 1.88 at 31 December 2015. On a pound sterling basis, Adjusted NAV per share rose from £1.38 to £1.63 in the same time frame. Total NAV Return since December 2015 was 6.6%, in euro terms, driven by strong performance during the second half of the year of 7.2%.

3 Represents the aggregate valuation of AGA's exposure through its Private Equity and Derived Investments at year end, excluding realisations.

Portfolio composition: Private Equity

Through its commitments to the Apax Funds, AGA has exposure to Private Equity Investments in a range of companies. These portfolio company participations represented a total NAV of €498.8m at 31 December 2016. 

Although the investments have been made over a decade, due to AGA's large exposure to Apax VIII ("AVIII"), over half of the portfolio stems from post 2014 vintages. The majority of these investments are yet to complete their value creation phase and therefore continue to have NAV expansion potential. At 31 December 2016, AGA had made investments in, and commitments to, five Apax Funds. 

Apax Europe VI ("AEVI") and Apax Europe VII ("AEVII") are fully invested and are focused on realising the remaining investments, either through the public market or in private transactions.

AVIII is a dual currency fund consisting of a euro and a US dollar tranche, in both of which AGA has invested. At the reporting date, AVIII is close to being fully invested, with the fund's total investments to date representing c.96% of its committed capital. AVIII will likely reserve the remaining investable capital for future follow-on investments into the existing portfolio. The fund has already started to realise early winners in its portfolio and remains focused on continued value generation across the unrealised investments.

AIX and AMI Opportunities Fund ("AMI") are both in their investment period. AIX, which held a final close in December 2016, completed its first investment and announced another before the end of the year, which once finalised, will bring total investments to 8% of committed capital. AMI had closed two investments at 31 December 2016 and announced a third in January 2017. Once the fund completes the third investment, total investments will equal 19% of the committed capital.

AIX has not yet made a capital call on its limited partners, including AGA. Investments made by AIX have so far been bridge-financed through its capital call facility however it is expected that AIX will call capital from its limited partners during the first half of 2017. 

1 Includes AGA's exposure to AEVII as a limited partner, valued at €43.7m, and through its carried interest holdings, valued at €19.6m. The carried interest holdings were acquired through a €10.5m investment in 2015.

NAV development

During 2016, NAV attributable to the Private Equity portfolio increased from €473.6m to €498.8m, up 5.3%; whereas Adjusted NAV increased from €469.4m to €494.1m. The Apax Funds drew € 58.4m from AGA, of which € 15.2m were prior distributions recalled, and returned €68.8m. Unrealised gains were €26.3m, whilst FX gains were €9.3m in the year. 

Investment performance

The Private Equity portfolio produced a return of 6.6% during 2016. Currency exposure had a positive impact of 1.7% on this like -for-like performance. Twelve portfolio companies were fully or partially exited and there were three successfully completed recapitalisations. This resulted in AGA receiving €68.8m as distributions from AVIII, AMI, AEVII, and AEVI. In 2016, eight full exits were realised at a cost weighted average Multiple of Invested Capital ("MOIC") of 4.7x to the Apax Funds. Including the performance of the four partially exited investments, the cost weighted average MOIC was 3.7x to the Apax Funds.

Operating performance

The Apax Funds' underlying portfolio companies demonstrated robust operational performance during 2016. This is demonstrated by the Last Twelve Months ("LTM") EBITDA growth1 of 9.8% on average, which compares to year-over-year 9.0% LTM EBITDA growth1 at 31 December 2015. Therefore, portfolio operational growth is marginally accelerating on the LTM EBITDA1 level. Approximately 30% of the underlying portfolio companies saw negative LTM EBITDA growth1 over the year. In these cases, the Investment Adviser is actively involved in supporting and identifying improvement opportunities.

Average portfolio revenue growth was 6.1% during the year. This was lower than last year as it was significantly affected in the short term by the addition of new portfolio companies. The value creation strategies of these new additions will materialise over time.

Valuation multiples at which the portfolio companies are held in the Apax Funds increased from 12.4x LTM EBITDA1 to 12.9x LTM EBITDA1 between 31 December 2015 and 31 December 2016, reflecting largely increasing public market multiples used to value the Private Equity portfolio. 

The average leverage level of portfolio companies in the Private Equity portfolio was 4.4x LTM EBITDA1 at 31 December 2016, down from 4.6x LTM EBITDA1 at 31 December 2015. This change reflects successful deleveraging by portfolio companies, but also includes the change due to exits and additions to the underlying portfolio. It is noteworthy however, that the portfolio has been able to de-lever to this extent given that a number of portfolio companies made use of additional leverage to finance M&A activity during the period. We consider the leverage level of the portfolio companies in the Private Equity portfolio to be appropriate.

1 Represents the weighted average of the respective metrics across the underlying portfolio companies, current per the indicated date, using latest available information.

2 Represents investments and full and partial exits during the year ending at the indicated date.

Investment activity: Private Equity

New investments in 2016

The Apax Funds in which AGA is invested, closed five new investments during 2016.

· Take-private by AVIII of Engineering, a leading Italian IT services provider. The company has a strong footprint in public administration and healthcare, utilities and finance sectors. It was acquired at an attractive entry valuation with the investment thesis based on assisting the company to expand into new products and services as well as internationally, to optimise the company's balance sheet and improve its operations. AGA's indirect NAV exposure to Engineering is €19.7m.

· Carve-out by AVIII of Becton Dickinson's Respiratory Solutions Business, a market leading global respiratory medical device company, to form a 50:50 joint venture, known as Vyaire Medical between the Apax Funds and Becton Dickinson with Apax Funds control. The investment thesis was based on multiple value drivers: margin expansion under a new and independent management team, opportunities to further internationalise the business, and accretive M&A. AGA's indirect NAV exposure to Vyaire Medical is €14.5m.

· Carve-out by AVIII of Duck Creek, a leading provider of insurance software to the property and casualty market primarily for policy claims, billing and rating. The Apax Funds acquired a 60% stake in a joint venture with Accenture. The investment thesis sees the company benefiting from independent management focusing on growth through M&A and improving the sales and marketing strategy. AGA's indirect NAV exposure to Duck Creek is €14.2m.

· In a step towards consolidation of the European generic space, AVIII combined two assets being Invent Farma, a leading Spanish generics pharmaceutical player, and Neuraxpharm, a prominent German generics business. AGA's indirect NAV exposure to Invent-Neurax is €19.1m.

· Carve-out by AIX of Boats Group, which operates leading digital classified marketplaces for recreational marine vehicles. This is the Apax Funds' sixth investment in the digital classified sector. The investment thesis is based on implementing global best practices in product/user experience, traffic generation, as well as capitalising on an expected digital transformation in the recreational marine industry. AGA's indirect NAV exposure to Boats Group is €7.5m.

In addition, AIX announced the acquisition of a majority position, due to close in 2017, in Unilabs, a leading pan-European medical diagnostics company. AEVI will retain its existing minority stake initially acquired in 2007. The Apax Funds will continue to support the incumbent management team to take advantage of a strong market outlook, and the new ownership structure allows Unilabs to actively pursue its M&A strategy.

Full and partial exits in 2016

During 2016 the following portfolio companies were fully or partially sold by the Apax Funds or they completed successful refinancings. The returns to the Apax Funds are quoted with the relevant Apax Fund and initial investment year shown in parentheses below:

· King (AEVI, 2005), a global interactive entertainment company focused on mobile consumers, was sold to a strategic acquirer for a return of 93.0x MOIC (including prior dividends) and 57% IRR. Value was created by supporting the business' unprecedented growth, with noted guidance from the Investment Adviser's Operational Excellence Practice, especially ahead of its IPO.

· Rhiag (AVIII and AEVII, 2013) a leading distributor of auto parts in Italy and in Central and Eastern Europe, was sold to a strategic acquirer for a return of 3.2x MOIC and 71% IRR. These returns were achieved by strong EBITDA growth, accretive M&A and multiple expansion.

· Auto Trader (AEVII, 2007), a leading online auto classifieds portal was fully exited via the public markets following a successful IPO in 2015. Return, including prior recapitalisations and secondary sales via the public markets, amounted to 4.6x MOIC and 26% IRR. The key driver of investment performance was the transformation of Auto Trader from a print publisher into an online business with a significant presence on mobile devices, which enabled the company to grow rapidly and achieve a valuation multiple re-rating.

· Tommy Hilfiger China (AEVI, 2011), a former joint venture operator of the Tommy Hilfiger brand in China, was sold to a strategic acquirer for a total MOIC of 169.4x and 67% IRR. Key to achieving these returns was recruiting a high-calibre management team who were supported by the Investment Adviser to develop one of the fastest growing fashion brands in China.

· Sisal (AEVI, 2006), an Italian gaming and payments operator, was sold to a financial acquirer for a total MOIC of 0.1x. Under the ownership of Apax Funds and other co-investors, Sisal was transformed from a lottery player into a retail conglomerate diversified across payment services, online, sport betting and lotteries. Over this period, profitability more than doubled and the company successfully increased market share in its key markets. However returns were reduced by significant multiple contraction over the hold period due to geo-political factors and changes in the regulatory environment.

· Plantasjen (AEVII, 2007), the largest garden superstore chain in the Nordic region, was sold to a financial acquirer. During 2008 the investment was marked at nil as a consequence of the global financial crisis and poor Scandinavian retailing market conditions. A strategic review by the Investment Adviser, led to management changes, store re-formatting and streamlining the product offering, enabling an exit valuation of 0.7x MOIC to be achieved.

· Trader Corporation (AEVII and AEVI, 2011), a Canadian digital automotive marketplace and software solutions provider, was sold to a financial acquirer for a total MOIC of 3.2x and 26% IRR. Key to these returns were the repositioning and strengthening of its consumer brand and marketing approach, and the introduction of new marketplace products and marketing software solutions.

· Epicor (AEVII and AEVI, 2011), a provider of business software to mid-market companies, was sold to a financial acquirer for a total MOIC of 4.4x and 43% IRR (including prior realisations). The investment thesis was to combine two businesses: Epicor Software and Activant Solutions. By purchasing both at attractive valuations, the opportunity was created for margin improvement and consolidation in a fragmented market. A series of value creating initiatives including accretive acquisitions were executed, margins improved, and investments in next generation products were carried out by Epicor.

· Chola (AVIII, 2014), a leading non-bank financial company focused on the Commercial Vehicle (CV) financing and Loan Against Property segments, was partially exited via the public markets during 2016. In early 2017 the investment was fully exited. Shares were sold on a pro rata basis between the Apax Funds and AGA, which also held a direct stake in Chola as a Derived Equity Investment. Approximately 65% of the shares were sold during 2016 with the remaining 35% sold in early 2017. Returns were driven by a combination of recovery in the CV cycle, foray into new lending products, benign rate cycle and strong execution. Total realised return is 2.7x MOIC, 54.3% IRR including the January 2017 realisation.

· Ascential (AEVII, 2008), an international business-to-business media company, was successfully listed in London in February 2016. The issue price corresponded to a return of 1.1x on total invested capital. The Investment Adviser put in place a number of transformative initiatives prior to the IPO. The OEP provided considerable support to the business. During the year, the Apax Funds were able to sell c.70% of their holdings, retaining c.15% ownership of the company at 31 December 2016.

· Capio (AEVI, 2006), a pan-European hospital and healthcare services operator, was partially exited via the public markets during March and September 2016 following a listing in Sweden in 2015. The Apax Funds fully exited the remaining 8% stake they held at 31 December 2016, in February 2017 generating MOIC of 1.6x and 6% IRR.

· Garda (AVIII, 2012), a provider of cash logistics services in North America and physical security services globally, was partially realised through the sale of a minority stake to a financial acquirer. Including prior realisations, at December 2016 Garda's valuation represented a MOIC of 2.4x and 31% IRR.

· GlobalLogic (AVIII, 2013), a pure-play outsourced product development provider, completed the refinancing of its capital structure, returning a dividend to AVIII. In early 2017, AVIII announced the partial sale of a minority position in GlobalLogic to a financial acquirer. GlobalLogic has been transformed under AVIII's ownership through a high quality management team, investment in sales and marketing, a focus on large customers and digital transformation. At December 2016, the Apax Funds' investment was valued at a MOIC of 5.1x (including proceeds from the recapitalisation).

· Evry (AVIII, 2015), a Scandinavian provider of IT services, completed a refinancing of its capital structure during the year, which resulted in a distribution of a dividend to the Apax Funds returning c.0.5x of invested capital.

· Ideal Protein (AVIII, 2015), a comprehensive weight loss solutions provider targeting the clinic market in the US and Canada, executed a refinancing in 2016 on the back of strong organic performance with proceeds used to fund a dividend to the Apax Funds returning c.0.8x of invested capital.

Portfolio composition: Derived Investments 

At 31 December 2016, the Derived Investments portfolio valuation was €412.8m with €127.9m held in 15 listed equity investments and €284.9m in 18 debt positions across 17 companies. 15 of these companies are also represented in the Apax Funds, hence AGA also has an exposure to these on the Private Equity side of the portfolio. Equities comprised 31% and debt investments 69% of the Derived Investments portfolio. All except €3.3m is invested in the Investment Adviser's four focus sectors with the Tech & Telco sector representing the highest portfolio weight, accounting for 35% of the Derived Investments portfolio.

Derived Debt Investments

At year end, 86% of AGA's Derived Debt Investments were made in US dollar denominated instruments. Over the past two years, due to diverging central bank policies, North American debt markets have offered more attractive opportunities on an absolute and relative basis compared to Europe. This continues to be reflected in the current portfolio composition. Maturities of Derived Debt Investments vary between 2020 and 2024 with 71% being of a floating rate nature, allowing interest rate sensitivity of the longer-dated maturities to be largely mitigated. 

Derived Equity Investments

At 31 December 2016, €54.7m (or 13% of the Derived Investments) was invested in emerging markets listed equities (China and India). Equity in emerging markets offers an attractive opportunity for AGA as the Investment Adviser's insight can help identify opportunities where companies receive less analyst coverage either due to size or competitive positioning. Chinese exposure in Derived Investments is c.3% of the Derived Investments portfolio. The remaining part of the Derived Equity portfolio is invested in the United States, UK and the Rest of Europe.

NAV development

The Derived Investments portfolio had an Adjusted NAV of €406.2m at 31 December 2016, down from €432.4m, a reduction of 6.1%. In the year, €83.5m was invested in Derived Debt and €90.5m was invested in Derived Equity. Realisations were €139.9m for Derived Debt Investments and €64.2m for Derived Equity Investments. Derived Debt Investments generated an unrealised loss of €21.0m (or -4.9% of Derived Investment NAV since 31 December 2015) as a result of six positions with negative like-for-like performance off-setting positive performance from the remainder of the Derived Debt portfolio. Unrealised gains in Derived Equities were €3.4m in the year, and FX gains across both Derived Debt and Derived Equity resulted in an increase of €12.7m to the Derived Investments NAV during 2016. 

Investment performance

The Derived Investments portfolio had a like-for-like positive performance of 6.0% in the year ended 31 December 2016 with unrealised losses in the Derived Debt offset by strong interest income totalling €31.1m. The underperforming Derived Debt Investments either have oil and gas exposure (one position) or operate in the digital, tech, and retail space (five positions). Eight Derived Equity positions were fully realised generating a total gross IRR of 10.0%. Eight Derived Debt positions were either repaid or sold during the same year: collectively these positions generated a gross IRR of 15.4%. The majority of Derived Debt Investments are denominated in US dollars.

Over the year, currency exposure had a positive impact on total performance of 2.1%. Derived Investments, most importantly investments in Derived Debt, continue to be a significant component of the ongoing investment income. At 31 December 2016, the average interest income yield on Derived Debt Investments was 9.6%.

Operating performance

Average LTM EBITDA growth at 31 December 2016 was 2.7% for Derived Debt Investments due to seven portfolio companies showing a negative LTM EBTIDA trajectory in 2016. The remaining ten portfolio companies grew their EBITDA at levels between 2.0% and 28.8%. Average LTM earnings growth of the Derived Equity Investments portfolio strengthened to 32.0% thanks to new additions, the largest being Palo Alto. One portfolio company out of 15 equity investments showed a negative LTM earnings growth trend with the remaining 14 growing their earnings at levels between 5.4% and 108.8%. The Investment Manager is monitoring those companies where current operating performance is lagging expectations. Where a Derived Debt Investment is made in a portfolio company in the Apax Funds, the Investment Adviser (via its mandate in relation to Apax Funds) is also actively involved in supporting and identifying improvement opportunities.

1 GAV weighted average yield to maturity ("YTM") of the Derived Debt Investments

2 GAV weighted average of the current full year income (annual/clean price at date indicated) for each position in Derived Debt Investments

3 GAV weighted average of the latest available year-over-year LTM EBITDA growth of Derived Debt Investments

4 GAV weighted average of the latest available year-over-year LTM earnings growth of Derived Equity Investments

5 GAV weighted average price earnings multiples of Derived Equity Investments

Investment activity: Derived Investments

New investments in 2016

In a volatile investment environment, the Investment Manager continued to seek attractive investment opportunities, and AGA completed the following new Investments:

· An investment of €0.2m in Edelweiss, a listed Indian Financial Services company. The company had significantly transformed its business model over the last three years into a higher quality segment but the share price had not yet reflected this. As the Investment Manager was not able to build a meaningful position at an attractive price, the position was sold shortly after the initial investment in July 2016.

· A debt investment of €26.5m in Ellucian, a US software company in the education sector. The Investment Adviser was familiar with the sub-sector Ellucian is operating in. As the debt traded off, the Investment Manager felt that the investment offered an attractive relative value compared with peers.

· As part of a market sell-off during Q1 2016, the cybersecurity segment was trading at a significant discount to its underlying growth profile. As a result, AGA deployed €11.7m in Sophos, €5.3m in Fortinet and €12.3m in Palo Alto listed equity stakes.

· A debt investment of €0.8m in Cole Haan, an American designer and retailer of premium men's and women's footwear, apparel and accessories. Cole Haan is also a current private equity investment of Apax VIII. The debt investment's purchase price offered attractive risk adjusted returns.

· A €9.1m investment in Take Solutions, a listed Indian software and services provider predominantly to Life Sciences companies. The Investment Manager believed the business to be at an inflection point, as it is refocusing on managing data in the attractive clinical trial process space.

· A debt investment of €9.0m in Vertafore, a US provider of software to P&C insurance brokers, a sub-sector that the Investment Adviser is familiar with.

· AGA had invested in Acelity second lien notes in 2015, which were repaid during the year as part of a refinancing. AGA invested €26.7m in the syndication of new notes that were issued.

· AGA's subsidiary PCV Group invested in Unilabs PIK notes in 2013, which were repaid during the year, following strong underlying performance of the business. AGA invested €20.5m in newly issued PIK notes together with other investors.

· AGA acquired €4.9m of shares in Geometric, an engineering services business. In April 2016, HCL Technologies, an Indian IT Services provider, announced the acquisition of a portion of Geometric, that would result in shareholders of Geometric receiving shares in HCL Technologies as consideration once complete. The price at which AGA acquired Geometric shares, implied a discount to HCL Technologies' traded price, which at the time was at a discount to historical multiples. The Investment Adviser is well acquainted with the Indian IT Services sector.

Exits in 2016

During 2016, the following Derived Investments were fully realised. The initial investment date is shown in parentheses:

· The first lien investment in Exact (2015), a Netherlands based ERP software company. The first lien loan has traded up to levels from which the incremental return was below AGA's target return. With this divestment, AGA realised an IRR of 5.9%.

· The equity position in Greene King, a listed UK pub company. AGA's subsidiary PCV Group originally invested in Spirit (2014) at what the Investment Manager believed to be an attractive entry multiple compared to peers and operational upside. After AGA's investment, the company was acquired by Greene King via a share-for-share exchange. AGA sold its position when the Investment Manager believed the synergies of the merger as well as expected future growth were fully priced in. The investment generated an IRR of 49.1%.

· The equity investment in Karur Vysara Bank (2014), one of India's oldest private banks, was sold in H1 2016 generating an 8.6% IRR.

· The second lien debt investment in Physiotherapy Associates (2015), a US network of physiotherapists, was repaid as a result of the sale of the company. The investment generated an IRR of 14.9%.

· The equity investment in Sinopharm (2015), a Chinese medical distribution network and retailer, as the original trade thesis of multiple expansion had played out . The investment generated a 20.8% IRR.

· The equity investment in Zhaopin (2014), a Chinese career platform as the discount to peers had traded away. The investment generated an IRR of 35.8%.

· The equity investment in LIC (2014), one of India's largest housing finance companies. AGA sold its entire position once the Investment Manager viewed the incremental returns as unattractive, generating an IRR of 29.8%.

· The equity investment in Alkem Laboratories (2015), an Indian domestic market pharmaceutical company. AGA invested in the December 2015 IPO and the stock performed well post IPO. AGA sold its entire position once the Investment Manager viewed the expected incremental return as unattractive, generating an IRR of 57.9%.

· Digital whiteboards supplier Smart Technologies (2011), an investment by AGA's predecessor PCV. At the time of AGA's IPO, the stake had already been written down to €2.4m. The market in which the business operated was significantly disrupted by more modern technologies such as tablets in recent years, impacting valuations. The stake held by AGA was sold at a loss of €1.2m compared to the valuation at the time of the AGA IPO, as part of a strategic take-over of Smart. The investment generated an IRR of -33.7% since inception.

· The equity investment in Hinduja Global Solutions ("HGS", 2015), an Indian provider of business process management services. It became apparent that it would be very difficult for HGS to achieve its original investment thesis, and the Investment Manager took the decision to crystallise the loss on this position. The investment generated an IRR of -31.7%.

· The second lien debt investment in Berlin Packaging (2014), a distributor of rigid packaging in North America serving customers globally, was sold after the notes traded up to levels where the incremental return to be generated from holding them appeared less attractive. The investment generated an IRR of 21.7%.

· The second lien debt investment in Peak10 (2014), a provider of cloud solutions, data centre space and network services. As this industry carries the risk of being disrupted by large cloud players, the Investment Manager took the decision to exit from the position. The investment generated an IRR of 14.8%.

· The first lien notes investment in Hema (2014), a Dutch discount general merchandise retailer. New management started to implement a turnaround in the business causing the bonds to trade up. The investment generated an IRR of 9.2%.

· The second lien term loan investment in Compuware (2014), an IT Operations Management software provider. Following successful realisation of projected cost savings and continued stable cash generation, the price traded up. However the Investment Manager viewed the businesses' future outlook more cautiously and decided to exit. The investment generated an IRR of 21.1%.

· Chola (2014), a leading non bank financial company focused on the Commercial Vehicle (CV) financing and Loan Against Property (LAP) segments, was partially exited via the public markets during 2016 and in early 2017 was fully exited generating an IRR of 80.4% for AGA. Shares were sold on a pro rata basis between AGA and the Apax Funds, which also held a direct stake in Chola as a Private Equity Investment. Approximately 65% of the shares were sold during 2016 with the remaining 35% sold in early 2017.

Top ten Private Equity Investments

AGA's indirect exposure at 31 December 2016

Top ten Derived Investments

At 31 December 2016

1 AGA is actively looking to increase its exposure to this recently acquired position.

02 Governance Report

AGA meets the requirements of the AIC Code, against which the Board reports. More information on the Company's governance can be found in this section.

Chairman's governance overview

AGA embraces the governance requirements of a public company and recognises the importance of sound corporate governance.

Tim Breedon CBE

Chairman

Overview

The Directors recognise the importance of sound corporate governance. The Directors have adopted the Association of Investment Companies ("AIC") Code of Corporate Governance (the "AIC Code"). The AIC represents closed-ended investment companies whose shares are traded on public markets. The purpose of the AIC Code is to provide a framework of best practice in respect of the governance of investment companies.

A copy of the AIC Code is available on the AIC's website at: www.theaic.co.uk

Corporate Governance Statement

Compliance with the AIC Code and UK Code

The Board considers that by reporting under the principles and recommendations of the AIC Code, and by reference to the AIC Guide, it provides better and more relevant information to its shareholders.

Compliance with the principles and recommendations of the AIC Code enables the Directors to satisfy in full the requirement to comply with the UK Corporate Governance Code ("UK Code").

Compliance with the Guernsey Financial Services Commission ("GFSC") Finance Sector Code of Corporate Governance ("GFSC Code")

The Company is subject to, and complies with, the GFSC Code, which applies to all companies that hold a licence from the GFSC under the regulatory laws or which are registered or authorised as collective investment schemes in Guernsey. As the Company reports against the AIC Code, it is deemed to meet the requirements of the GFSC Code.

Statement of independence

The AIC Code recommends that at least half the board of directors of a UK-listed company, excluding the chairman, should comprise non-executive directors determined by the board to be independent in character and judgement and free from relationships or circumstances that may affect, or could appear to affect, the directors' judgement.

In addition to this provision, a majority of the board of directors should be independent of the Investment Manager.

Independence is determined by ensuring that, apart from receiving their fees for acting as directors or owning shares, Non-Executive Directors do not have any other material relationships with, nor derive additional remuneration from, or as a result of transactions with, the company, its promoters, its management or its partners, which in the judgement of the board may affect, or could appear to affect, the independence of their judgement.

The Company complies with the recommendations regarding Board composition, in that the Board of Directors comprises entirely of independent Non-Executive Directors and the Directors are of the opinion that the terms of the relationship agreements with the Company's Investment Manager, Apax Guernsey Managers Limited, will enable the Company to carry on its business independently.

The AIC Code also recommends that the Chairman of the Board of Directors should meet certain independence criteria as set out in the AIC Code on appointment.

This requirement has also been met.

I am pleased to confirm that I was independent on appointment, and remain so to date following the first evaluation of the Board and its Committees conducted in 2016, further information of which is available on page 47.

Explanation as to exceptions

In the context of the nature, scale and complexity of the Company, certain recommendations of the AIC Code have not been deemed appropriate to the governance framework of the Company; an explanation of which is set out as follows:

· Provisions relating to the role of the Chief Executive, Executive Directors' remuneration, and the need for an internal audit function are not relevant to the position of AGA, being an externally-managed investment company. In particular, all of the Company's day-to-day management and administrative functions are outsourced to third-parties. As a result, the Company has no Executive Directors, employees or internal control functions. The Company has therefore not reported further in respect of these provisions. These are re-assessed on an annual basis.

· The Company has not established a separate Remuneration Committee as it has no executive officers and the Board is satisfied that any relevant issues that arise can be properly considered by the Board or by the shareholders at AGMs. The Board as a whole considers matters relating to the Directors' remuneration. An external assessment of Directors' remuneration has not been undertaken. The Company's policy is that the fees payable to the Directors should reflect the time spent by the Directors on the Company's affairs and the responsibilities borne by the Directors and be sufficient to attract, retain and motivate Directors of a quality required to run the Company successfully.

· The Board also fulfils the functions of a Management Engagement Committee, regularly reviewing the performance of the Investment Manager and relevant fee arrangements.

· The Board has not established a separate Nomination Committee as it considers this to be unnecessary given the scale and nature of the Company's activities.

· The Board has not adopted a formal policy on diversity, as set out in DTR 7.2.8A. The Board has implemented a board management policy (referred to throughout this section) which includes consideration of relevant issues relating to diversity. As a result, and in view of the nature, scale and complexity of the Company, the Board do not consider a specific policy with respect to diversity to be necessary at this time. Diversity of the Board is further considered on at least an annual basis through the Board evaluation process.

Our Board of Directors

The Company has a strong, independent Board of experienced Non-Executive Directors.

The Directors, all of whom are non-executive and considered independent for the purposes of Chapter 15 of the Listing Rules, are responsible for the determination of the investment policy of the Company and have overall responsibility for overseeing the Company's activities.

Biographies of the Board of Directors, including details of their relevant experience, are available on page 44 and the Company's website at: https://www.apaxglobalalpha.com/corporate-governance/the-board/ 

The Investment Manager

The Company entered into an Investment Management Agreement with AGML to manage, on a discretionary basis, the investments of the Company.

AGML is responsible for the implementation of the investment policy of the Company and has overall responsibility for overseeing the investment management services provided to the Company.

AGML reports to the Board at each quarterly Board meeting regarding the performance of the Company's investment portfolio, which provides the Board with an opportunity to review and discuss the implementation of the investment policy of the Company. In addition, the Board attends regular meetings with AGML in order to receive a detailed overview of the performance of the underlying investments and portfolio outlook.

The AGA Board has reviewed and evaluated the performance of AGML during the year to 31 December 2016 and has determined that it is in the interests of the shareholders to continue with their appointment as Investment Manager.

Biographies of the Directors of AGML are available on page 46 and the Company's website at: www.apaxglobalalpha.com/corporate-governance/the-manager 

The Investment Adviser and AGA Investment Committee

AGML, in turn, draws on the resources and expertise of Apax Partners for investment advice through an Investment Advisory Agreement and the AGA Investment Committee. The AGA Investment Committee is composed of several senior team members from Apax Partners.

Biographies of the members of the AGA Investment Committee are available on page 45 and the Company's website at: www.apaxglobalalpha.com/corporate-governance/the-investment-adviser/ 

Culture and approach

The Board is committed to a culture of openness, dialogue and accountability to shareholders and will not only report regularly but also ensure that they are available for effective engagement, whether at the AGM, or other investor relations activities. Apax Partners on behalf of AGA manages a programme of meetings with investors during each of the financial reporting cycles throughout the year.

Contact details for shareholder queries can be found on page 86.

AGM

Finally, my Board colleagues and I look forward to meeting shareholders at our second AGM to be held on Tuesday, 18 April 2017 at 11:00 (UK Time) at the offices of Aztec Group, East Wing, Trafalgar Court, Les Banques, St Peter Port, Guernsey, Channel Islands, GY1 3PP.

The notice, agenda and form of proxy have been circulated to shareholders, will be made available on the UK National Storage Mechanism and are available on the Company's website at: www.apaxglobalalpha.com/corporate-governance/annual-general-meeting/ 

Shareholders who wish to attend the AGM in person should inform the Company Secretary by email at AGA-admin@aztecgroup.co.uk.

Tim Breedon CBE

Chairman

6 March 2017

Leadership and effectiveness

AGA Board of Directors

Tim Breedon CBE

Chairman

Tim Breedon is a Non-Executive Director of Barclays plc. Tim worked for the Legal & General Group plc for 25 years, most recently as Group Chief Executive between 2006 and 2012.

He was a Director of the Association of British Insurers "ABI", and also served as its Chairman between 2010 and 2012. He served as Chairman of the UK government's non-bank lending task-force, an industry-led task-force that looked at the structural and behavioural barriers to the development of alternative debt markets in the UK. He was previously lead Non-Executive Director of the Ministry of Justice between 2012 and 2015.

Tim was formerly a Director of the Financial Reporting Council and was on the Board of the Investment Management Association. He has over 25 years of experience in financial services and has extensive knowledge and experience of regulatory and government relationships. He brings to the Board experience in asset management and knowledge of leading a major financial services company.

Tim holds an MSc in Business Administration from the London Business School and is a graduate of Oxford University.

Tim joined the AGA Board on 28 April 2015.

Susie Farnon

Non-Executive Director

Susie Farnon is a Chartered Accountant. Susie was a Banking and Finance Partner with KPMG Channel Islands from 1990 until 2001 and was Head of Audit at KPMG Channel Islands from 1999 until 2001. She served as President of the Guernsey Society of Chartered and Certified Accountants, as a member of The States of Guernsey Audit Commission and as a Commissioner of the Guernsey Financial Services Commission.

Susie is currently a Non-Executive Director of Ravenscroft Limited, HICL Infrastructure Fund, Standard Life Investments Property & Income Trust Limited, Breedon Group plc and Threadneedle UK Select Trust Limited.

On 1 July 2016, Susie was appointed as Chairman of the Audit Committee and on 18 November 2016 was appointed as Senior Independent Director of the Board.

Susie joined the AGA Board on 22 July 2015.

Chris Ambler

Non-Executive Director

Chris Ambler has been the Chief Executive of Jersey Electricity plc since 1 October 2008.

He has experience in a number of senior positions in the global industrial, energy and materials sectors working for major corporations including ICI/Zeneca, The BOC Group and Centrica/ British Gas, as well as in strategic consulting roles.

He is a director on other boards, including a Non-Executive Director of Foresight Solar Fund Limited, a listed fund on the London Stock Exchange.

Chris is a Chartered Director, Chartered Engineer and a Member of the Institution of Mechanical Engineers. He holds a First Class Honours Degree from Queens' College, Cambridge and an MBA from INSEAD.

Chris joined the AGA Board on 28 April 2015.

Sarah Evans

Non-Executive Director

Sarah Evans is a Non-Executive Director of Real Estate Credit Investments PCC Limited, NB Distressed Debt Investment Fund Limited, Ruffer Investment Company Limited, HICL Infrastructure Company Limited and Crystal Amber Fund Limited. She is also a member of the Institute of Directors and a Director of the UK Investment Companies' trade body, The Association of Investment Companies.

Sarah spent over six years with the Barclays Bank plc group from 1994 to 2001. During that time she was a Treasury Director and, from 1996 to 1998, she was Finance Director of Barclays Mercantile. Prior to joining Barclays, Sarah ran her own consultancy business advising financial institutions on all aspects of securitisation. From 1982 to 1988 she was with Kleinwort Benson, latterly as head of group finance.

Sarah is a Chartered Accountant and a graduate of Oxford University.

On 1 July 2016, Steve Le Page stepped down and Sarah Evans was appointed as a Non-Executive Director to the Board of AGA.

The Directors are responsible for the determination of the investment policy of the Company and have overall responsibility for overseeing the performance of the Investment Manager and the Company's activities. The Directors, all of whom are non-executive and considered independent for the purposes of Chapter 15 of the Listing Rules, are listed above.

AGA Investment Committee

Andrew Sillitoe

Co-CEO\Apax Partners

Andrew Sillitoe is co-CEO of Apax Partners and a partner in its Tech & Telco team. Andrew is also a member of the Apax Partners' Executive, Investment and Approval Committees. He joined the firm in 1998 and has focused on the Tech & Telco sectors in that time. Andrew has been involved in a number of deals, including Orange, TIVIT, TDC, Intelsat, Inmarsat and King Digital Entertainment PLC.

Prior to joining Apax Partners, Andrew was a consultant at LEK where he advised clients on acquisitions in a number of sectors.

Andrew holds an MA in Politics, Philosophy and Economics from Oxford University and an MBA from INSEAD.

Mitch Truwit

Co-CEO\Apax Partners

Mitch Truwit is co-CEO of Apax Partners and a partner in its Services team. He is also a member of the Apax Partners Executive and Investment Committees and a Trustee of the Apax Foundation. Since joining Apax Partners in 2006 Mitch has been involved in a number of transactions including HUB International, Advantage Sales and Marketing, Bankrate, Dealer.com, Trader Canada, Garda and Answers.

Prior to joining Apax Partners in 2006, Mitch was the President and CEO of Orbitz Worldwide, a subsidiary of Travelport, between 2005 and 2006, and was the Executive Vice President and Chief Operating Officer of priceline.com between 2001 and 2005.

Mitch is a graduate of Vassar College where he received a BA in Political Science. He also has an MBA from Harvard Business School.

Nico Hansen

CIO\Apax Partners

Nico Hansen is a partner at Apax Partners, is a member of its Investment Committee and chairs its Approval Committee. Nico originally joined Apax Partners in 2000, specialising in the Tech & Telco sector. He has both led and participated in a number of key deals including Kabel Deutschland, Sulo, Versatel, Bezeq, Capio, Tnuva, HUB International and Trizetto.

Prior to joining Apax Partners, Nico was a consultant with McKinsey & Company where he specialised in advising clients in the telecom sector.

Nico holds a PhD in Economics from the University of Bonn and an MA in Economics from the University of Göttingen.

Ralf Gruss

COO\Apax Partners

Ralf Gruss is Chief Operating Officer of Apax Partners and a partner at Apax. He is a former member of the Apax Partners Services team. Ralf has been involved in a number of deals, including Kabel Deutschland, LR Health and Beauty Systems and IFCO Systems.

Ralf originally joined Apax Partners in 2000. Prior to joining Apax Partners, he was a consultant with Arthur D. Little International Inc., where he specialised in advising clients in the financial services sector.

Ralf holds a diploma in Industrial Engineering and Business Administration from the Technical University in Karlsruhe. He also studied at the University of Massachusetts and the London School of Economics.

John Megrue

Chairman\Apax

Partners US

John Megrue is Chairman of Apax Partners US. He is a member of the Apax Partners Investment and Approval Committees.

John originally joined Apax Partners in 1988 and rejoined in 2005 from Saunders, Karp & Megrue. Prior to Saunders, Karp & Megrue, John served as Vice President and Principal at Patricof & Co (an Apax Partners predecessor), where he specialised in buyouts and late stage growth financings.

John is a graduate of Cornell University, where he received a BSc in Mechanical Engineering. He received his MBA from the Wharton School of the University of Pennsylvania.

Investment Manager Board of Directors

Paul Meader

Director

Paul Meader has acted as non-executive director of several insurers, London and Euronext listed investment companies, funds and fund managers in real estate, private equity, hedge funds, debt, structured product and multi-asset funds. He is a senior investment professional with 28 years of multi-jurisdictional experience, 14 years of which were at chief executive level.

Paul was head of portfolio management at Collins Stewart (now Canaccord Genuity) between 2010 and 2013 and was the Chief Executive of Corazon Capital Group from 2002 to 2010. Paul was Managing Director at Rothschild Bank Switzerland C.I. Limited from 1996 to 2002 and previously worked for Matheson Investment Management, Ulster Bank, Aetna Investment Management and Midland Montagu (now HSBC).

Paul is a graduate of Oxford University where he received an MA (Hons) in Geography. He is also a Chartered Fellow of the Chartered Institute of Securities and Investment.

Martin Halusa

Director

Martin Halusa was Chairman of Apax Partners from January 2014 to March 2016, after ten years as Chief Executive Officer of the firm (2003-2013).

In 1990, he co-founded Apax Partners in Germany as Managing Director. His investment experience has been primarily in the telecommunications and service industries.

He began his career at The Boston Consulting Group "BCG" in Germany, and left as a Partner and Vice President of BCG Worldwide in 1986. He joined Daniel Swarovski Corporation, Austria's largest private industrial company, first as President of Swarovski Inc (US) and later as Director of the International Holding in Zurich.

A graduate of Georgetown University, Martin received his MBA from the Harvard Business School and his PhD in Economics from the Leopold-Franzens University in Innsbruck.

Andrew Guille

Director

Andrew Guille is a director of Apax Partners Guernsey Limited.

Andrew has held directorships of regulated financial services businesses since 1989 and has worked for more than 13 years in the private equity industry. Andrew has been employed in the finance industry for over 30 years, with his early career spent in retail and institutional funds, trust and company administration, treasury and securities processing.

Andrew is a Chartered Fellow of the Chartered Institute for Securities and Investment, a qualified banker (ACIB), and he also holds the Institute of Directors' Diploma in Company Direction.

Mark Despres

Director

Mark Despres is a Director of Apax Guernsey Managers Limited.

Mark has been employed in the wealth management industry in both Guernsey and London for over 16 years, principally as an investment manager to a number of listed funds (both open and closed ended), institutional and private client portfolios.

Mark holds a first class honours degree in Mathematics from Royal Holloway University of London, and is a member of the Chartered Institute for Securities & Investment.

Board composition and roles

The Board of the Company is composed of four Non-Executive Directors. The Board considers that the range and experience of its members is sufficient to fulfil its role effectively and provide the required level of leadership, governance and assurance.

The terms and conditions of appointment for Non-Executive Directors are outlined in their letters of appointment, and are available for inspection at the Company's registered office during normal business hours and at the AGM for 15 minutes prior to and during the meeting.

Chairman of the Board of Directors

Tim Breedon fulfils the role of independent Non-Executive Chairman of the Board of Directors.

There have been no significant changes to the external commitments of the Chairman during the year.

The Chairman is responsible for the leadership of the Board, the creation of conditions necessary for overall Board and individual Director effectiveness and ensuring a sound framework of corporate governance, which includes a channel for shareholder communication.

The responsibilities of the Chairman include, but are not limited to:

· chairing the Board and general meetings of the Company, including setting the agenda of such meetings;

· promoting the highest standards of integrity, probity and corporate governance throughout the Company, and in particular at Board level;

· ensuring that the Board receives accurate, timely and clear information;

· ensuring effective communication with shareholders of the Company;

· facilitating the effectiveness of the contributions and constructive relationships between the Directors of the Company;

· ensuring that any incoming Directors of the Company participate in a full, formal and tailored induction programme; and

· ensuring that the performance of the Board, its Committees and individual Directors is evaluated at least once a year.

Chairman of the Audit Committee

Susie Farnon fulfils the role of Chairman of the Audit Committee.

The Audit Committee is appointed under terms of reference from the Board of Directors available on the Company's website at: www.apaxglobalalpha.com/corporate-governance/documents 

Overall responsibility for the Company's risk management and control systems lies with the Board.

The Chairman of the Audit Committee is appointed by the Board of Directors. The role and responsibility of the Chairman of the Audit Committee is to set the agenda for meetings of the Audit Committee and, in doing so, take responsibility for ensuring that the Audit Committee fulfils its duties under its terms of reference. These include, but are not limited to:

· external audit, audit planning and review;

· preparation, review and integrity of financial information;

· internal control and financial risk management systems;

· whistleblowing;

· compliance; and

· fraud.

The Audit Committee does not fulfil the role of a risk committee with regard to investment risk management systems.

Non-Executive Directors

Tim Breedon, Sarah Evans, Susie Farnon and Chris Ambler each fulfil the roles and responsibilities of Non-Executive Directors, as set out in their appointment letters.

The Non-Executive Directors have a responsibility to ensure that they allocate sufficient time to the Company to perform their responsibilities effectively. Accordingly, Non-Executive Directors are required to make sufficient effort to attend Board or Committee meetings, to disclose other significant commitments to the Board before accepting such commitments and to inform the

Board of any subsequent changes.

Shareholders are provided with the opportunity to re-elect the Non-Executive Directors on an annual basis at the AGM of the Company and to review their remuneration in doing so.

The role of the Non -Executive Directors includes, but is not limited to:

· constructively challenging and developing proposals on strategy;

· appointing service providers based on agreed goals and objectives;

· monitoring the performance of service providers; and

· satisfying themselves of the integrity of the financial information and that financial controls and systems of risk management are robust and defensible.

Senior Independent Director

Susie Farnon fulfils the role of Senior Independent Director ("SID").

The position of SID provides shareholders with someone to whom they can turn if they have concerns which they cannot address through the normal channels, for example with the Chairman, and is available as an intermediary between fellow Directors and the Chairman. The role serves as an important check and balance in the governance process. They also serve as a sounding board for the Chairman.

The role of the SID includes, but is not limited to:

· providing a sounding board for the Chairman and serving as an intermediary for the other Directors when necessary;

· being available to shareholders if they have concerns which contact through the normal channels of Chairman, Chief Executive (if one is appointed) or other Executive Directors (if any are appointed) has failed to resolve or for which such contact is inappropriate;

· attend sufficient meetings with a range of major shareholders to listen to their views in order to help develop a balanced understanding of the issues and concerns of major shareholders;

· meet with the other Non-Executive Directors at least annually to appraise the Chairman's performance (taking into account the views of the Executive Directors, if any are appointed) and on such other occasions as that may be deemed appropriate;

· take responsibility for the orderly succession process for the Chairman, as appropriate; and

· maintain Board and Company stability during times of crisis and conflict.

Governance framework

Governance systems

The Board has considered the recommendations of the AIC Code and has adopted various policies, procedures and control systems; a summary of each of these is available on the Company's website at: www.apaxglobalalpha.com/corporate-governance/documents 

In summary, these principally include:

· a schedule of matters reserved for the Board, which includes but is not limited to:

- Strategy and management;

- Structure and capital;

- Financial reporting and controls;

- Internal controls;

- Contracts and expenditure;

- Board membership and other appointments;

- Corporate governance matters; and

- Policies and codes.

· a Board management policy, which includes but is not limited to:

- Succession planning

- Director induction and training; and

- Board evaluation.

· a conflicts of interests policy;

· a disclosure panel policy;

· an anti-bribery and corruption policy;

· a share dealing code;

· an insider dealing and market abuse policy; and

· a policy on the provision of non-audit services.

Board requirement and diversity policy

The Board has not established a formal policy on diversity given the relative size of the Board and will keep this matter under review as is deemed appropriate by the Board, collectively.

The Board is pleased to report that composition of the Board as to male and female Directors is equally proportioned.

The Board aims to ensure that director recruitment and appointment is conducted in a manner which is transparent, engaged and open. In particular, the Board will encourage healthy debate on the identity, skills and experience of a Board candidate. In summary, the Board's policy on recruitment includes, but is not limited to:

· recruiting the best available candidate, considering specific criteria determined by the Board. However, ultimately a candidate's appointment will be based on merit and the Board shall endeavour to appoint the candidate who offers the best possible blend of technical ability and strategic/cultural fit;

· encouraging transparency from candidates with regard to time commitment during the recruitment process and conflicts of interests. The Board may also encourage candidates to undertake their own due diligence on the Company during the recruitment process and will remain transparent and open in such an event;

· searching for a new candidate as swiftly as possible, in view of any pressing regulatory and/or shareholder timeframes. However, the Board will not make decisions in haste and will not make an appointment which is not relevant or of value to the Company and its shareholders; and

· agreeing a shortlist of candidates, considering the views of the Company's advisers and (where applicable) shareholders, considering open advertising and/or the use of a recruitment consultant as necessary, as well as conducting thorough interviews inclusive of the Board as a whole.

Administrator and secretary

The Company has appointed Aztec Financial Services (Guernsey) Limited ("Aztec Group") as Administrator and Company Secretary of the Company.

The Administrator is responsible for the Company's general administrative

requirements such as the calculation of the Net Asset Value and Net Asset Value per share and maintenance of the Company's accounting and statutory records.

The Administrator may delegate certain accounting and bookkeeping services to Apax Partners Fund Services Limited or other such parties and/or group entities, as directed by the Company. The Administrator is licensed by the GFSC under the Protection of Investors (Bailiwick of Guernsey) Law to act as ''designated administrator'' under that law and provide administrative services to closed-ended investment funds.

In fulfilling the role of Company Secretary, Aztec Group has due regard to the provisions of the GFSC Code and the AIC Code and statutory requirements in this respect.

Registrar

Capita Registrars (Guernsey) Limited has been appointed as registrar of the Company. The Registrar is licensed by the GFSC under the POI Law to provide registrar services to closed-ended investment funds.

Information and support

The Board ensures that it receives, in a timely manner, information of an appropriate quality to enable it to adequately discharge its responsibilities. Papers are provided to the Directors in advance of the relevant Board or Committee meeting to enable them to make further enquiries about any matters prior to the meeting, should they so wish. This also allows Directors who are unable to attend to submit views in advance of the meeting.

The Company Secretary takes responsibility for the distribution of Board papers and aims to circulate such papers at least five working days prior to Board or Committee meetings. The Board has adopted electronic board pack software which aids in the efficiency and adequacy of delivery of Board papers.

Frequency and attendance at Board and Committee meetings

The Board aims to meet formally at least four times a year and has met seven times in the year from 1 January 2016 to 31 December 2016.

The Audit Committee aims to meet formally at least four times a year as appropriate in terms of the financial cycle of the Company and has met eight times in the year from 1 January 2016 to 31 December 2016.

The Board will appoint committees of the Board on occasion to deal with specific operational matters; these committees are not established under separate terms of reference as their appointment is conditional upon terms resolved by the Board in formal Board meetings and authority conferred to such committees will expire upon the due completion of the duty for which it has been appointed. Such committees are referred to as Other Committee meetings.

A summary of the Directors' attendance at meetings to which they were eligible to attend is provided below. Eligibility to attend the relevant meetings is shown in brackets.

1. Other Committees refer to those committees of the Board appointed on an ad hoc basis to consider specific matters.

2. Tim Breedon has attended five Audit Committee meetings at the invitation of the Chairman of the Audit Committee. For the avoidance of doubt, Tim Breedon is not a member of the Audit Committee and attended such meetings exclusive of the quorum or right to vote at such meetings.

3. Sarah Evans was appointed as a Director and a member of the Audit Committee on 1 July 2016, from which time she was eligible to attend two Board meeting and three Audit Committee meetings.

4. Steve Le Page resigned as a Director and Chairman of the Audit Committee on 1 July 2016, up to which time he was eligible to attend five Board meetings and five Audit Committee meetings.

Board focus - what the Board has done

Maintaining sound governance

The Board has maintained under review the ever-changing regulatory and corporate governance environment and, in particular, has conducted an annual review of the Company's key policy documents as to insider dealing and market abuse, in light of the introduction of the EU Market Abuse Regulations effective 3 July 2016.

The Board has kept under review the implementation of the EU Packaged Retail and Insurance-based Investment Products directive and will seek to comply as appropriate, including making available a Key Information Document available to shareholders on the Company's website, following its implementation, which has been indicated to be after 1 January 2018.

The Board has also conducted an annual review of key service providers, being the Investment Manager, Administrator/ Company Secretary, Registrar and Jefferies International Limited, as corporate broker to the Company.

The Board is pleased to report that such evaluation, which has included an assessment of internal control systems, was positive and the Board will continue its engagement with these key service providers.

Strategy and performance monitoring

The Board has been pursuing the investment strategy of the Company during the year through the discretionary management arrangements with AGML as reflected in the Investment Manager's report on page 24.

The Investment Manager operates under guidelines from the Board, and as set out in the Investment Management Agreement, as to the monitoring of the performance of the investment portfolio, associated risks and reporting to the Board in each of these areas. The Board keeps under regular review the performance of the investment portfolio through quarterly reporting and regular dialogue with the Investment Manager.

Apax Fund IX investment and revolving credit facility

As announced to the market in February 2016, the Board is pleased to have completed a commitment of approximately $350m to the Apax IX private equity fund, split equally between the euro and US dollar tranches of the fund. Further details of this investment are available on page 30.

The Board is also pleased to have secured an amended and restated agreement to the revolving credit facility with Lloyds Bank plc increasing the funds available for drawdown from €90m to €140m, with an extension to the maturity date to three years from 4 February 2016. The margin has also increased from 200 bps to 210 bps (over Euribor or Libor depending on the currency drawn). Further details of the terms of the revolving credit facility are available on page 77.

First anniversary of the lock-up release

In line with the Company's prospectus, certain existing and former Apax employees acquired shares in the Company under a share -for-share exchange agreement at IPO. As a result of this, those shareholders were subject to certain lock-up arrangements in respect of the shares issued to them for a period of either five or ten years. In the case of shares subject to a five - year lock-up period, on 15 June 2016 20% of those shares were released from the lock-up arrangements.

The Board was engaged with the corporate broker through the process of facilitating a placing of the Company's shares for those locked-up shareholders who wished to sell their shares following the first release from lock-up on 15 June 2016.

Board calendar and focus for 2017 - what the Board plans to do

In order to position AGA to enable it to deliver on its objectives, the Board has set out the key activities that need to be achieved through 2017. An annual plan and budget has been agreed that includes enhancements to financial reporting and the Company website. These will be monitored during the year and appropriate action taken to drive these initiatives forward.

Board evaluation and re-election of Directors

In accordance with the Board management policy, the Board is pleased to report completion of its first evaluation exercise for the year ended 31 December 2016, conducted internally through a process managed between the Chairman and the Company Secretary.

An internal evaluation of the Board as a whole, the Directors as individuals and the Audit Committee was undertaken. An evaluation of the Chairman was conducted by the Chairman of the Audit Committee, in the absence of a Senior Independent Director at the time of evaluation.

No material matters were observed during the internal evaluation process and each of the Non-Executive Directors were deemed to remain independent and independent of the Investment Manager.

Election and re-election of Directors at the 2017 AGM

Sarah Evans was appointed to the Board of Directors and as a member of the Audit Committee on 1 July 2016.

Neither an external search consultancy nor open advertising was used. Sarah was appointed from a short list of suitably-qualified candidates through an interview process involving both the Chairman and each of the Directors of the Board.

Sarah was appointed to add to the breadth of experience and skills of the Board, in addition to filling a vacancy following the resignation of Steve Le Page on 1 July 2016. In accordance with the Company's Articles of Incorporation and the principles of the AIC Code, all Directors of the Company will offer themselves for election or re-election at the 2017 AGM.

Following the successful evaluation of the Board as noted above, it is proposed to shareholders that each of Tim Breedon, Susie Farnon, Chris Ambler and Sarah Evans are re-elected as Non-Executive Directors at the 2017 AGM.

Audit Committee report

The scope of the Committee with respect to internal control does not include controls around risk arising from the Company's investment portfolio. Such risks are overseen directly by the Board, which sets policies in this area to govern the day-to- day management of these risks by the Investment Manager.

The main areas of activity for the Audit Committee have been:

· developing and implementing a policy on the supply of non-audit services by the external auditors, which has taken into account ethical guidance, and keeping that policy under review;

· conducting an annual review of the performance of the external auditor, which has included a general review of the co-ordination of the external audit function with the activities of the Company, any appropriate internal controls, the suitability and independence of the external auditor;

· considering those areas of judgement or estimation arising from the application of International Financial Reporting Standards to the Company's activities and documenting the rationale for the decisions made and estimation techniques selected;

· taking the lead on reviewing, developing and implementing a revised control framework with the assitance of the Investment Manager and the Company Secretary;

· meeting with the external auditors, KPMG Channel Islands Limited ("KPMG"), to review and discuss their independence, objectivity and proposed scope of work for their review of the interim report and their audit of this annual report and accounts;

· meeting with the Company's principal service providers to review the controls and procedures operated by them to ensure that the Company's operational risks are properly managed and that its financial reporting is complete, accurate and reliable; and

· reviewing in detail the content of this annual report, the work of the service providers in producing it and the results of the external audit.

Susie Farnon

Audit Committee Chairman

6 March 2017

Membership and attendance

The Audit Committee membership currently consists of Susie Farnon, Chris Ambler and Sarah Evans.

A summary of meetings held during the year and attendance at those meetings is available on page 49.

Role of the Audit Committee

The Audit Committee is appointed under terms of reference from the Board of Directors, available on the Company's website at: www.apaxglobalalpha.com/corporate-governance/documents

Review of areas for judgement or estimation

The Audit Committee has determined that the key area for judgement and estimation is the fair value of the Company's investment portfolio for reporting purposes. For investments not traded in an active market, the fair value is determined by using valuation techniques and methodologies, as deemed appropriate by the Investment Manager. These assumptions may differ from actual results in the future. The Audit Committee has also considered the calculation of the performance fee to be an area of judgement given the complexity of the calculation. Please see further details and considerations of the Committee below.

Valuation of investments

The valuation of investments is a significant area of judgement in the preparation of the financial statements and performance reporting and represents a particular focus for the Audit Committee.

The majority of Derived Equity Investments held by the Company, and certain of the investments underlying the Company's Private Equity positions are quoted, leaving the focus on the other Private Equity and Derived Debt Investments.

At each quarterly valuation point, and particularly at the year end, members of the Audit Committee have reviewed the detailed valuation schedules prepared by the Investment Manager for the unquoted investments underlying the Private Equity positions. Discussions were also held with the Investment Manager and the external auditors (in respect of the year end valuation only). The aim of these reviews and discussions was to ensure as far as possible, that the valuations were prepared in line with the valuation process and methodology set out in the Company's accounting policies. No material discrepancies were identified.

The valuation of the Derived Debt Investments has been reviewed by the external auditors who have reported to the Committee and the Board on whether, in their opinion, the valuations used are reasonable and in accordance with the stated accounting policies.

The valuation of the Company's investment portfolio remains a significant area of judgement and of estimation, but the Audit Committee is satisfied that it is reasonable overall and has been prepared in accordance with the Company's stated accounting policies.

Performance fee

The detailed basis for calculation and settlement of the performance fee due to the Investment Manager is set out in the Company's prospectus, and is summarised in the notes to the financial statements. Although this fee may not always be material in amount to the financial performance or position of the Company, its calculation is complex, and because it is due to the Investment Manager, the Audit Committee consider it to be material by nature.

The Audit Committee has commissioned a specific report on the calculation of the fee provided for in these financial statements and of the amount to be settled during the current period. This report has not identified any significant issues.

External audit

KPMG has been the Company's external auditor since 2015. During the year, and up to the date of this report, the Audit Committee has met formally with the external auditors, KPMG, on four occasions and in addition, the Chairman of the Audit Committee has met them informally on three further occasions. These informal meetings have been held to ensure the Chairman is kept up to date with the progress of their work and that their formal reporting meets the Audit Committee's needs.

The formal meetings included detailed reviews of the proposed scope of the work to be performed by the auditors in their review of the Company's report for the period to 30 June 2016 and in their audit for the year ended 31 December 2016. They also included detailed reviews of the results of this work, their findings and observations. I am pleased to report that there are no matters arising which should be brought to the attention of shareholders.

The Audit Committee has also reviewed KPMG's report on their own independence and objectivity, including their team structure for the audit of the Company and of the underlying Apax Funds, and the level of non-audit services provided by them. In addition the Audit Committee assessed the effectiveness of KPMG.

The Audit Committee has concluded that the external auditors are independent and objective, carry out their work to a high standard and provide concise and useful reporting. Accordingly, the Audit Committee has recommended to the Board that KPMG be put forward to shareholders for re-appointment at the next AGM.

The Company has a policy in place to ensure the independence and integrity of the external auditor, where non-audit services are to be provided by the external auditors. In the first instance, all non-audit services require pre-approval of the Chairman of the Audit Committee and/or the Chairman of the Board of Directors. Full consideration of the financial and other implications on the independence of the auditors arising from any such engagement are considered before proceeding.

Risk management, internal controls and corporate risks

An outline of the risk management framework and principal risks is provided on page 16.

During the year, the Audit Committee has taken the lead on reviewing, developing and implementing a revised risk control framework with the assistance of the Investment Manager and the Company Secretary, which was subsequently reviewed and approved by the Board.

As part of this process, the Audit Committee has kept and continues to keep under review financial and operational risk, which includes reviewing, testing and obtaining assurances from key service providers in respect of the controls to which they are determined to be responsible. The Audit Committee have not identified any areas of concern as a result.

Service providers

The Audit Committee has met regularly with the key service providers (besides KPMG) involved in the preparation of the Company's reporting to its shareholders and in the operation of controls on its behalf, the Administrator and sub-administrator, both of whom have attended each formal Audit Committee meeting as well as other informal meetings. Through these meetings, supported by review and challenge of supporting documentation, the Audit Committee has satisfied itself, as far as is possible in the circumstances of a Company with outsourced functions, that financial and operational risks facing the Company are appropriately managed and controlled.

Adjusted and unadjusted differences in the financial statements

The external auditors, KPMG, have reported to the Audit Committee that they found one reportable difference during the course of their audit work. The difference arose in an area of judgement, was immaterial and was not indicative of control deficiencies.

Whistle-blowing

The Company does not have any employees. Each of the service providers has whistle-blowing policies in place.

Anti-bribery and corruption

The Company has a zero-tolerance approach to bribery and corruption, in line with the UK Bribery Act 2010. An anti-bribery and corruption policy has been adopted and is kept under review.

Annual report

The Audit Committee members have each reviewed this annual report and earlier drafts of it in detail, comparing its content with their own knowledge of the Company, reporting requirements and shareholder expectations. Formal meetings of the Audit Committee have also reviewed the report and its content and have received reports and explanations from the Company's service providers about the content and the financial results. The Audit Committee has concluded that the annual report, taken as a whole, is fair, balanced and understandable, and that the Board can reasonably and with justification make the Statement of Directors' Responsibilities on page 56.

Shareholder relations

Shareholder communication

The Directors place a great deal of importance on communication with shareholders. The interim report and accounts, annual report and financial statements are distributed to shareholders and to other parties who have an interest in the Company's performance.

Shareholders may obtain up to date information on the Company through the Company's website at: www.apaxglobalalpha.com 

The Notice of the AGM is sent out at least 21 working days in advance of the meeting. All shareholders have the opportunity to put questions to the Board or Investment Manager, either formally at the Company's AGM, informally following the meeting or in writing at any time during the year via the Company Secretary.

The Company Secretary is available to answer general shareholder queries at any time throughout the year and may be contacted by email at AGA-admin@aztecgroup.co.uk.

The Board recognises and supports the investor relations activities which include close engagement with shareholders. On a quarterly basis the Company provides a performance update presentation and holds a conference call for analysts and investors. The Board receives regular reports and updates from the investor relations team and the corporate broker. Details of investor meetings can be found on the Results and Publications page of the Investor Information section of the Company's website at: www.apaxglobalalpha.com/shareholder-information/results-and-publications 

The Company has continued to build a dialogue with its shareholders. As part of this, Apax Partners provide an investor relations service to support communications with investors. Apax Partners maintain a programme of meetings between senior management of Apax Partners on behalf of AGA, and institutional investors, fund managers and equity analysts. Issues discussed at investor presentations and meetings cover investment strategy and financial performance of AGA.

To give all shareholders access to the Company's announcements, all material information reported via the London Stock Exchange's regulatory news service is published on the Company's website at: www.apaxglobalalpha.com/shareholder-information/announcements 

AGA has hosted conference calls to support the release of its interim and quarterly results. An investor presentation will also be held for the full- year results. Details will be published on the London Stock Exchange. These events are made available to the market, subject to relevant marketing restrictions in certain jurisdictions, with the facility for all listeners to ask questions, as well as having a permanent replay facility, and a full transcript is published on the Company's website.

The AGM

Following feedback from shareholders after the first AGM held on 8 April 2016 the Board has included, as a standard resolution for each annual general meeting, an ordinary resolution to approve the Company's dividend policy as set out on page 12 of the Company's prospectus dated 22 May 2015.

Details of the next AGM are available on page 89.

Remuneration report

Introduction

Provisions relating to Executive Directors' remuneration are not deemed relevant to AGA, being an externally managed investment company, with a Board comprised wholly of Non-Executive Directors.

In particular, the Company's day -to-day management and administrative functions are outsourced to third parties. As a result, the Company has no Executive Directors, employees or internal operations. The Company has therefore not reported further in respect of these provisions.

Remuneration report

The Directors who served in the period from 1 January 2016 to 31 December 2016 (with the exception of Sarah Evans who was appointed on 1 July 2016 and Steve Le Page who resigned on that same date) received the fees detailed in the table below.

No taxable benefits were paid to Directors in respect of this period and no remuneration above that was paid to the Directors for their services. Remuneration paid reflects the duties and responsibilities of the Directors and the value of their time. No element of the Director's remuneration is performance related.

Fees are pro-rated where an appointment takes place during a financial year. None of the fees disclosed below were payable to third parties by the Company. Chris Ambler is obliged to pay 20% of the fee he receives from the Company for his services as a Non-Executive Director to a third party, being a company to which he is appointed as an executive director. The Directors are entitled to be reasonably reimbursed for expenses incurred in the exercise of their duties as Directors. Expenses paid to the Directors are also listed in the table below.

Directors' fees and expenses

1. Sarah Evans' directorship fees relate to the period from appointment (1 July 2016) to 31 December 2016.

2. Steve Le Page's directorship fees relate to the period from 1 January 2016 to the date of resignation (1 July 2016).

Directors' holdings at 31 December 2016

1. Sarah Evans' husband, Huw Evans, a person closely associated to Sarah as defined under the EU Market Abuse Regulations, holds 20,000 shares in the Company.

Directors' report

Directors' report

The Directors submit their annual report together with the audited financial statements of the Company for the year ended 31 December 2016.

The Company's registered office and principal place of business is: East Wing, Trafalgar Court, Les Banques St Peter Port, Guernsey, GY1 3PP.

Listing on the London Stock Exchange

On 15 June 2015, the entire issued ordinary share capital of the Company was admitted to the Premium Listing segment of the Official List of the Financial Conduct Authority and to unconditional trading on the London Stock Exchange's Main Market for listed securities.

Dividend

The Directors have approved a dividend of 4.13p as a final dividend in respect of the financial period ended 31 December 2016. An interim dividend of 3.95p was paid on 14 September 2016 (2015: 3.69p).

Board of Directors

Biographies of the Board of Directors, including details of their relevant experience, are available on the Company's website at: https://www.apaxglobalalpha.com/corporate-governance/the-board/ 

The Non-Executive Directors do not have service agreements.

Powers of Directors

The business of the Company is managed by the Directors who may exercise all the powers of the Company, subject to any relevant legislation, any directions given by the Company by passing a special resolution and to the Company's Articles of Incorporation (the "Articles"). The Articles, for example, contain specific provisions concerning the Company's power to borrow money and issue shares.

Appointment and removal of Directors

Rules relating to the appointment and removal of the Directors are contained within the Company's Articles of Incorporation.

Amendment of Articles of Incorporation

The Company may only make amendments to the Articles of Incorporation of the Company by way of special resolution of the shareholders, in accordance with The Companies (Guernsey) Law, 2008, as amended.

Employees

The Company does not have any direct employees.

Political donations and expenditure

The Company has made no political donations in the period since incorporation or since admission.

Share capital

As at the date of this report, the Company had an issued share capital of €873.8m. The rights attaching to the shares are set out in the Articles of Incorporation. There are no restrictions on the transfer of ordinary shares in the capital of the Company other than those which may be imposed by law from time to time. There are no special control rights in relation to the Company's shares and the Company is not aware of any agreements between holders of securities that may result in restrictions on the transfer of securities or on voting rights, except for the lock-ups agreed at the time of admission as set out in the prospectus.

In accordance with the Disclosure and Transparency Rules, Board members and certain employees of the Company's service providers are required to seek approval to deal in the Company's shares.

Allotment of shares and pre-emption rights

Details of the Company's ability to allot shares and pre-emption rights are included in the Articles of Incorporation which can be found in full on the Company's website at: www.apaxglobalalpha.com/corporate-governance/documents

Voting rights

In a general meeting of the Company, on a show of hands, every member who is present in person or by proxy and entitled to vote shall have one vote. On a poll, every member who is present in person or by proxy shall have one vote for every share of which they are the holder.

Restrictions on voting

Unless the Directors otherwise determine, a shareholder shall not be entitled to vote either personally or by proxy:

· if any call or other sum currently payable to the Company in respect of that share remains unpaid; or

· having been duly served with a notice requiring the disclosure of a member's interests and given under article 10 of the Articles of Incorporation of the Company, and has failed to do so within 14 days, in a case where the shares in question represent at least 0.25% of the number of shares in issue of the class of shares concerned, or within 28 days, in any other case, from the date of such notice.

Directors' interests in shares

The Directors' share interests in the Company are detailed on page 53.

Material interests in shares

The Company has been notified in accordance with DTR 5 of the Disclosure and Transparency Rules of the interests in its issued ordinary shares as at 31 December 2016 detailed in the table opposite.

Significant agreements

The following agreements are considered to be significant to the Company:

· AGML as Investment Manager under the terms of the Investment Management Agreement;

· Aztec Group as Administrator, Company Secretary and Depositary under the Administration Agreement and Depositary Agreement;

· Capita as Registrar under the Registration Agreement;

· Jefferies International as corporate broker; and

· KPMG as appointed external auditors.

Compensation for loss of office

There are no agreements between the Company and its Directors providing for compensation for loss of office that occurs as a result of change of control.

Disclosures required under Listing Rule 9.8.4R

There are no disclosures required under Listing Rule section 9.8.4R.

Events after the reporting period

The Audit Committee noted that there was one post-balance sheet event:

· on 7 March 2016, the Board of Directors approved a dividend of 4.13p per share in respect of the financial period ended 31 December 2016.

Going concern

After making enquiries and given the nature of the Company and its investments, the Directors, after due consideration, conclude that the Company should be able to continue for the foreseeable future. In reaching this conclusion the Board is mindful of the nature of the Company's assets, and considers that adverse investment performance should not have a material impact on the Company's ability to meet its liabilities as they fall due. Accordingly, they are satisfied that it is appropriate to adopt the going concern basis in preparing these financial statements.

Disclosure of information to the auditor

Having made enquiries of fellow Directors and key service providers, each of the Directors confirms that:

· to the best of their knowledge and belief, there is no relevant audit information of which the Company's auditor is unaware; and

· they have taken all the steps a director might reasonably be expected to have taken to be aware of relevant audit information and to establish that the Company's auditor is aware of that information.

Re-appointment of auditor

Resolutions for the re-appointment of KPMG Channel Islands Limited as the auditor of the Company and to authorise the Directors to determine its remuneration are to be proposed at the AGM.

AGM

Details of the next AGM are available on page 89.

The Directors' Report has been approved by the Board and is signed on its behalf by:

Tim Breedon CBE

Chairman

6 March 2017

Table of shareholders over 5% at 31 December 2016

1. No par value

2. Held by the PCV cell within this protected cell company

Statement of Directors' responsibilities

Annual report and financial statements

The financial statements are required by law to give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.

In preparing these financial statements, the Directors are required to:

· select suitable accounting policies and apply them consistently;

· make judgements and estimates that are reasonable and prudent;

· state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

· prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping proper accounting records, which disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies (Guernsey) Law, 2008 (as amended). They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities.

The Directors confirm that they have complied with the above requirements in preparing the financial statements and that to the best of their knowledge and belief. During the course of this assessment, the Directors have received input from the Audit Committee, the Investment Manager, the Investment Adviser, the Company Secretary and Administrator that:

· this annual report includes a fair review of the development and performance of the business and the position of the Company together with a description of the principal risks and uncertainties that the Company faces;

· the financial statements, prepared in accordance with IFRS adopted by the EU, give a true and fair view of the assets, liabilities, financial position and results of the Company, taken as a whole, as required by DTR 4.1.6, and are in compliance with the requirements set out in the Companies (Guernsey) Law 2008 as amended;

· the annual report includes a fair review of the information required by DTR 4.1.8R and DTR 4.1.11R, which provides an indication of important events and a description of principal risks and uncertainties which face the Company;

· the Investment Manager's report, together with the Directors' report and Chairman's statement, includes a fair review of the information required by DTR 4.1.12R; and

· the annual report and financial statements, taken as a whole, provide the information necessary to assess the Company's position and performance, business model and strategy and is fair, balanced and understandable.

Signed on behalf of the Board of Directors

Tim Breedon CBE

Chairman

6 March 2017

Signed on behalf of the Audit Committee

Susie Farnon

Chairman of the Audit Committee

6 March 2017

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in Guernsey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Viability statement

As stated on page 14, the investment objective of the Company is to provide shareholders with capital appreciation from its investment portfolio and regular dividends. The Company's investment performance depends upon the performance of its portfolio of Private Equity and Derived Investments. The Directors, in assessing the viability of the Company, have paid particular attention to the risks faced by the Company in seeking to achieve its stated objectives, which are set out on page 16. The Board has established a risk management framework within which the Investment Manager operates and which is intended to identify, measure, monitor, report and, where appropriate, mitigate the risks to the Company's investment objective. The Board does not consider the other risks faced by the Company to be principal risks, as defined in the UK Code.

The Directors confirm that their assessment of the principal risks facing the Company was robust and in doing so they have considered models projecting future cash flows during the three years to 31 December 2019. These models have also been stress tested to reflect the impact on the portfolio of some plausible but severe scenarios similar to those experienced by investment markets in the past. The projections consider cash balances, covenants, limits, the split of the investment portfolio in addition to investment policy. The stress testing examines the potential impact of the principal risks occurring individually and together.

These projections are based on the Investment Manager's expectations of future investment performance, income and costs. The viability assessment covers a period of three years, which reflects the average holding period of Derived Investments and the expected period between the launch of new funds by Apax Partners.

The Company also has access to a significant credit facility to enable it to manage cash demands without resorting to urgent sales of its less liquid portfolio assets; currently the Company has not drawn on this facility. Diversification of the portfolio, split between Private Equity and Derived Investments, also helps the Company withstand risks it is most likely to meet.

The continuation of the Company in its present form is dependent on the Investment Management Agreement ("IMA") with the Investment Manager remaining in place. The Directors note that the IMA with the Investment Manager is terminable with a minimum of one year's notice by either party. The Directors have no current reason to assume that either the Company or the Investment Manager would serve notice of termination of the IMA during the three-year period covered by this viability statement. The initial term of the IMA is six years and shall automatically continue unless the Investment Manager or the Company (by special resolution) serves notice electing to terminate at the expiry of the initial term. The earliest termination would

be 15 June 2020. The Articles require that the Directors put a discontinuation resolution to the AGM of the Company to be held in 2018. However, the Directors have reasonable grounds to believe that it is unlikely that the extraordinary resolution would be passed so early in the life of the Company, and so for the purposes of the viability assessment they have assumed that it will not do so.

The Directors, having duly considered the risks facing the Company, their mitigation and the cash flow modelling, have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the three-year period of their assessment.

For more information on how AGA is satisfied with its ability to operate as a going concern, see page 55.

03 Financial statements

AGA prepares its financial statements in accordance with International Financial Reporting Standards and applicable law, on a going concern basis.

Independent auditor's report to the members of Apax Global Alpha Limited

Opinions on the financial statements

We have audited the financial statements of Apax Global Alpha Limited (the "Company") for the year ended 31 December 2016 which comprise the statement of financial position, the statement of profit and loss and other comprehensive income, the statement of changes in equity, the statement of cash flows and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards as adopted by the European Union ("EU").

In our opinion, the financial statements:

· give a true and fair view of the state of the Company's affairs as at 31 December 2016 and of its total comprehensive income for the year ended 31 December 2016;

· have been properly prepared in accordance with International Financial Reporting Standards as adopted by the EU; and

· comply with the Companies (Guernsey) Law, 2008.

Our assessment of risks of material misstatement

The risks of material misstatement detailed in this section of this report are those risks that we have deemed, in our professional judgement, to have had the greatest effect on: the overall audit strategy; the allocation of resources in our audit; and directing the efforts of the engagement team. Our audit procedures relating to these risks were designed in the context of our audit of the financial statements as a whole. Our opinion on the financial statements is not modified with respect to any of these risks, and we do not express an opinion on these individual risks. In arriving at our audit opinion above on the financial statements, the risk of material misstatement that had the greatest effect on our audit was as follows:

Valuation of investments (€911,554,082)

Refer to page 50 of the Audit Committee Report, note 2 (Use of estimates and judgements), note 3 (Subsequent measurement of financial instruments), note 4 (Critical accounting estimates and judgements), note 8c (Investments held at fair value through profit or loss) and note 14 (Fair value estimation).

The risk - As at 31 December 2016 the Company had invested 96% of its net assets in Derived Investments (debt and listed equities) and investments in Private Equity funds. As described in the Audit Committee Report on page 50, the valuation of the Company's investments, given that it represents the majority of the Company's net assets, is a significant area of our audit. The Company's holdings in unquoted debt investments (representing 23% of net assets) and quoted debt investments (representing 7% of net assets) are valued based upon models that take into account the factors relevant to each investment and use relevant third party market data where available.

The Company will utilise the resources of Apax Guernsey Managers Limited (the "Investment Manager") and Apax Partners LLP (the "Investment Advisor"), to augment its own fair value analysis of investments in debt instruments to determine the most appropriate fair value for such assets. The Company's holdings in listed equity investments (representing 13% of net assets) are valued based upon market bid prices as at 31 December 2016 or such last traded price depending upon the convention of the exchange on which the investment is quoted. The Company's holdings in Private Equity Investments (representing 53% of net assets) are valued as at the Company's attributable portion of the Net Asset Value of the Private Equity funds, as determined by the general partners of such funds, adjusted as considered necessary by the Company's Board of Directors, including any adjustment necessary for carried interest. The general partners consider the International Private Equity and Venture Capital Valuation guidelines when valuing the private equity funds, which involves the use of significant judgement.

Our response - Our audit procedures with respect to the Company's valuation of investments included, but were not limited to: testing the design and implementation of the controls in relation to the valuation of both Derived and Private Equity Investments and evaluating the appropriateness of the valuation of such investments. We used our own financial instrument valuation specialist to validate the pricing of the derived investments, including an assessment of both the methodology and conclusions drawn by the Investment Manager on the corporate debt portfolio and also the trading volumes behind the prices of the listed equity portfolio. For Private Equity Investments we obtained audited financial statements, where possible, and capital statements from the Private Equity funds to verify the Net Asset Values and considered the composition of the underlying portfolios and their valuation. We considered any accounting policy discrepancies which may require the Net Asset Value to be adjusted in respect of Private Equity Investments. We attended the fair market valuation committee meeting held, assessing the methodology applied to the valuation of the portfolios and the challenge process applied by the Investment Manager.

We also considered the Company's disclosures (see note 2 and note 4) in relation to the use of estimates and judgements regarding the fair value of investments and the Company's investment valuation policies adopted and fair value disclosures in note 3, note 8c and note 14 for compliance with International Financial Reporting Standards as adopted by the EU.

Our application of materiality and an overview of the scope of our audit

Materiality is a term used to describe the acceptable level of precision in financial statements. Auditing standards describe a misstatement or an omission as "material" if it could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. The auditor has to apply judgement in identifying whether a misstatement or omission is material and to do so the auditor identifies a monetary amount as "materiality for the financial statements as a whole".

The materiality for the financial statements as a whole was set at €36,180,000. This has been calculated using a benchmark of the Company's Net Asset Value (of which it represents approximately 4%) which we believe is the most appropriate benchmark as Net Asset Value is considered to be one of the principal considerations for members of the Company in assessing the financial performance of the Company.

We agreed with the Audit Committee to report to it all corrected and uncorrected audit misstatements we identified through our audit with a value in excess of € 1,809,000, in addition to other audit misstatements below that threshold that we believe warranted reporting on qualitative grounds.

Our audit of the Company was undertaken to the materiality level specified above, which has informed our identification of significant risks of material misstatement and the associated audit procedures performed in those areas as detailed above. The audit was performed at the offices of the sub-administrator.

Whilst the audit process is designed to provide reasonable assurance of identifying material misstatements or omissions it is not guaranteed to do so. Rather we plan the audit to determine the extent of testing needed to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements does not exceed materiality for the financial statements as a whole. This testing requires us to conduct significant depth of work on a broad range of assets, liabilities, income and expense as well as devoting significant time of the most experienced members of the audit team, in particular the Responsible Individual, to subjective areas of the accounting and reporting process.

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Board of Directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Disclosures of principal risks

Based on the knowledge we acquired during our audit, we have nothing material to add or draw attention to in relation to:

· the Directors' viability statement on page 57, concerning the principal risks, their management, and, based on that, the Directors' assessment and expectations of the Company's continuing in operation over the three years to 31 December 2019; or

· the disclosures in note 2 of the financial statements concerning the use of the going concern basis of accounting.

Matters on which we are required to report by exception

Under International Standards on Auditing (ISAs) (UK and Ireland) we are required to report to you if, based on the knowledge we acquired during our audit, we have identified other information in the Annual Report that contains a material inconsistency with either that knowledge or the financial statements, a material misstatement of fact, or that is otherwise misleading.

In particular, we are required to report to you if:

· we have identified material inconsistencies between the knowledge we acquired during our audit and the Directors' statement that they consider that the Annual Report and financial statements taken as a whole is fair, balanced and understandable and provides the information necessary for members to assess the Company's performance, business model and strategy; or the

· Audit Committee Report does not appropriately address matters communicated by us to the Audit Committee.

Under the Companies (Guernsey) Law, 2008, we are required to report to you if, in our opinion:

· the Company has not kept proper accounting records; or

· the financial statements are not in agreement with the accounting records; or

· we have not received all the information and explanations, which to the best of our knowledge and belief are necessary for the purpose of our audit.

Under the Listing Rules we are required to review the part of the Corporate Governance Statement on page 42 relating to the Company's compliance with the eleven provisions of the UK Corporate Governance Code specified for our review. We have nothing to report in respect of the above responsibilities.

Scope of report and responsibilities

The purpose of this report and restrictions on its use by persons other than the Company's members as a body.

This report is made solely to the Company's members, as a body, in accordance with section 262 of the Companies (Guernsey) Law, 2008 and, in respect of any further matters on which we have agreed to report, on terms we have agreed with the Company. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditor

As explained more fully in the Directors' Responsibility Statement set out on page 56, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit, and express an opinion on, the financial statements in accordance with applicable law and ISAs (UK and Ireland). Those standards require us to comply with the UK Ethical Standards for Auditors.

Neale D Jehan

For and on behalf of

KPMG Channel Islands Limited

Chartered Accountants and Recognised Auditors

Glategny Court

St Peter Port

Guernsey GY1 1WR

Channel Islands

6 March 2017

Statement of financial position

At 31 December 2016

On behalf of the Board of Directors

Tim Breedon

Chairman

6 March 2017

Susie Farnon

Chairman of the Audit Committee

6 March 2017

1. The sterling equivalent has been calculated based on the GBP/EUR exchange rate at 31 December 2016 and 31 December 2015 respectively.

2. Adjusted NAV is the NAV net of the share-based payment performance fee reserve. Adjusted NAV per share is calculated by dividing the Adjusted NAV by the total number of shares.

The accompanying notes form an integral part of these financial statements.

Statement of profit or loss and other comprehensive income

For the year ended 31 December 2016

The accompanying notes form an integral part of these financial statements.

1. The Adjusted earnings per share has been calculated based on the profit attributable to ordinary shareholders adjusted for the total accrued performance fee at 31 December 2016 and 31 December 2015 respectively as per note 16 and the weighted average number of ordinary shares.

Statement of changes in equity

For the year ended 31 December 2016

The accompanying notes form an integral part of these financial statements.

Statement of cash flows

For the year ended 31 December 2016