Annual Financial Report

RNS Number : 9760X

CVC Credit Partners European OpsLtd

27 February 2017

FOR IMMEDIATE RELEASE

RELEASED BY BNP PARIBAS SECURITIES SERVICES S.C.A., JERSEY BRANCH FINAL RESULTS ANNOUNCEMENT

THE BOARD OF DIRECTORS OF CVC CREDIT PARTNERS EUROPEAN OPPORTUNITIES LIMITED ANNOUNCE FINAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2016

strategic report

financial highlights and performance summary

Financial highlights

Contractual Quarterly Tenders

During the year CVC Credit Partners European Opportunities Limited (the "Company") completed the following Contractual Quarterly Tenders. On the settlement date the tendered shares were transferred to the Company's name and held in treasury.

Settlement date	Euro ordinary shares tendered	Sterling ordinary shares tendered
12 February 2016	29,210,354	262,055
13 May 2016	118,000	9,966,666
12 August 2016	27,426,944	7,786,215
14 November 2016	7,128,382	39,612,080

Number of shares in issue as at 31 December 2016:

128,961,584 Euro ordinary shares ("Euro Shares")¹ (31 December 2015: 195,451,704 Euro Shares)¹

214,849,319 Sterling ordinary shares ("Sterling Shares")² (31 December 2015: 270,529,508 Sterling Shares)²

Market capitalisation as at 31 December 2016:

Euro Share class: €132,830,432 (31 December 2015: €197,406,221)

Sterling Share class: £220,220,552 (31 December 2015: £273,234,803)

Performance summary

			As at 31 December 2016	As at 31 December 2015

Net asset value per Euro Share			€1.0541	€1.0257
Euro Share price (bid price)³			€1.0300	€1.0100
Net asset value per Sterling Share			£1.0696	£1.0352
Sterling Share price (bid price)³			£1.0250	£1.0100

Period highs and lows	2016	2016	2015	2015
	High	Low	High	Low

Net asset value per Euro Share	€1.0541	€0.9788	€1.0540	€1.0104
Euro Share price (bid price) ³	€1.0300	€0.9400	€1.0550	€1.0000
Net asset value per Sterling Share	£1.0696	£0.9875	£1.0597	£1.0139
Sterling Share price (bid price) ³	£1.0375	£0.9525	£1.0650	£1.0050

Net Asset Value Total Return vs benchmark

Net Asset Value ("NAV") total return⁴ increased by 22.03% for Euro Shares and 23.70% for Sterling Shares from inception. NAV total return is net of issue costs and includes dividends. Any dividends received by a shareholder are assumed to have been reinvested in the Company's assets.

Ongoing charge

The ongoing charge reflects those expenses of a type which are likely to recur in the foreseeable future and which relate to the operation of the Company excluding the costs of acquisition / disposal of investments, finance charges, gains / (losses) arising on investments and ordinary shares.

The ongoing charge is a measure, expressed as a percentage of NAV, based on actual costs incurred in the year as being the best estimate of future costs excluding any non-recurring fees in accordance with the Association of Investment Companies ("AIC") methodology divided by the average NAV of the Company during the year. The ongoing charge for the year ended 31 December 2016 was 1.21%⁶ (2015: 1.21%⁶).

Dividend history

	Ex-dividend date	Payment date

Euro - €0.01 per Euro Share	29/01/2014	14/02/2014
Sterling - £0.01 per Sterling Share	29/01/2014	14/02/2014

Euro - €0.025 per Euro Share	25/06/2014	22/07/2014
Sterling - £0.025 per Sterling Share	25/06/2014	22/07/2014

Euro - €0.025 per Euro Share	05/02/2015	20/02/2015
Sterling - £0.025 per Sterling Share	05/02/2015	20/02/2015

Euro - €0.025 per Euro Share	09/07/2015	07/08/2015
Sterling - £0.025 per Sterling Share	09/07/2015	07/08/2015

Euro - €0.025 per Euro Share	04/02/2016	26/02/2016
Sterling - £0.025 per Sterling Share	04/02/2016	26/02/2016

Euro - €0.025 per Euro Share	14/07/2016	05/08/2016
Sterling - £0.025 per Sterling Share	14/07/2016	05/08/2016

Euro - €0.0125 per Euro Share⁷	03/11/2016	25/11/2016
Sterling - £0.0125 per Sterling Share⁷	03/11/2016	25/11/2016

Please refer to note 16 for further information subsequent to the reporting year.

¹ - Excludes 98,187,170 (2015: 34,303,490) Euro Shares held as treasury shares

² - Excludes 58,001,488 (2015: 374,472) Sterling Shares held as treasury shares

³ - Source: Bloomberg

⁴ - Sources: BNP Paribas Securities Services, Bloomberg

⁵ - Source: CVC Credit Partners

⁶ - The Company's ongoing charge includes the sum of €4,874,903 (2015: €6,568,273) which represents the Company's pro rated share of the CVC European Credit Opportunities S.à r.l. (the "Investment Vehicle") management fee and excludes regulatory and professional fees of €100,537 (2015: €132,450) recharged to the Corporate Services Manager. Please refer to note 4 for more detail regarding recharged fees to the Corporate Services Manager.

⁷ - On 19 September 2016 the Company resolved to amend its dividend policy such that the Company would pay dividends on a quarterly basis rather than on a semi-annual basis.

chairman's statement

Introduction

I am pleased to report on a strong performance by the Company for the year ended 31 December 2016. As shareholders will know from our regular monthly newsletters, the Euro and Sterling class net asset values per share increased by 9.29% and 9.80% respectively over the period, such performance lying within the total return target of 8% to 12% set by the Company at IPO. A detailed analysis of the performance of the Investment Vehicle's portfolio is set out in the Investment Vehicle Manager's report on pages 15 to 18 and thus does not warrant repetition here, but it is particularly pleasing to note that the strategy of applying the Investment Vehicle's funds broadly equally between performing credit and credit opportunity sub-classes delivered both attractive and diversified returns.

Performance in context

Geopolitical events in developed markets took centre stage in 2016; the long term repercussions of which will likely remain unclear for the foreseeable future. The decision by the UK to leave the European Union will inevitably have an effect on the construction of the Investment Vehicle's portfolio in the future, given the strategic focus on the region, as there will clearly be both geographical and sectoral winners and losers at issuer. However, to date, given the resilience of UK economic statistics and the gradual emergence of the continental European economies from the fear of deflation, effects on the longer term performance of issuers have not yet revealed themselves. Across the region as a whole, the general economic tone is certainly brighter than at this time last year and that was reflected in tightening credit spreads as the year progressed. Positive spillover effects from the election of Donald Trump and the ensuing anticipation of fiscal expansion in the US gave European credit markets a further push into the year end. Thus, we enter 2017 with a stronger economic backdrop across our chosen markets than for some time, giving comfort that defaults in sub-investment grade credit are likely to remain benign. We anticipate limits to the progress of populism in the core EU nations and an increasing divergence in both short and long term rates between the US on the one hand, and the EU (including the UK for now, albeit for different reasons) on the other hand. Top risks to our base case include surprises in EU elections, the ever-present threat of terrorist atrocities and shock effects from unpredictable pronouncements emanating from the White House.

We believe that the combination of factors discussed above offer the Investment Vehicle Manager continuing opportunities to generate attractive returns from both performing credit and credit opportunity positions.

Corporate activities

The Company's capital base has again reduced this year as certain investors have taken advantage of the Company's quarterly tender programme to either rotate out of the asset class or otherwise to withdraw from exposure to listed funds such as the Company. There has also been an increase in arbitrage in the Company's stock between market price and tender terms, for which the tender was not designed. Additionally, it has been the view of the Directors for some time that the Company's quarterly tender programme has offered those investors seeking exit a more attractive balance of risk and opportunity than those taking a longer term view, and thus we are proposing in the Company's Annual General Meeting circular, issued concurrently with these audited financial statements, some changes to the terms of the tender programme. In summary, our proposals would have the effect, over the next two calendar quarters, of requiring shareholders to hold their shares for approximately six months before they are able to tender them validly for repurchase by the Company. Alongside these changes, the circular has also been amended so as to seek to impose a permanent levy of 1% of the IPO placing price per share in respect of all future tenders. The proposals are set out in more detail in the circular. The Company has announced an investor call to take place on 2 March 2017 at 12 noon UK time, principally for the purpose of reporting on the performance of the Company during 2016. However, the call will also be for interested parties to raise any queries that they may have concerning the proposed changes to the tender programme.

Dividend yield

During the year, and in common with many of our peers, we have moved to a quarterly dividend schedule. We have continued to pay dividends at the annual well established rate of 5 Euro-cents / 5 pence per share in the aggregate and expect to continue to do so.

Other matters

As always, I would like to thank my fellow Directors, the portfolio management team at CVC Credit Partners Investment Management Limited, our advisors and investment bankers for their support and wise counsel, and I would also like to extend thanks to all of our shareholders for your continuing commitment to the Company.

Richard Boléat

Chairman

27 February 2017

Executive summary

This Executive Summary is designed to provide information about the Company's business and results for the year ended 31 December 2016. It should be read in conjunction with the Chairman's Statement above and the Investment Vehicle Manager's report which gives a detailed review of investment activities for the year and an outlook for the future.

Corporate summary

The Company is a closed-ended investment company limited by shares, registered and incorporated in Jersey under the Companies (Jersey) Law 1991 on 20 March 2013, with registration number 112635. The Company's share capital is denominated in Euro and Sterling and consists of Euro Shares and Sterling Shares. The Company's Euro and Sterling Shares are listed on the Official List of the UK Listing Authority and admitted to trading on the Main Market of the London Stock Exchange. As at 31 December 2016, the Company's issued share capital comprised of 128,961,584 Euro Shares, 214,849,319 Sterling Shares and two management shares (with no par value or voting rights). The Company also held 98,187,170 Euro Shares and 58,001,488 Sterling Shares in treasury.

The Company is self-managed and the Directors have invested the proceeds from its share issues into Compartment A (the "Compartment") of an existing European credit opportunities investment vehicle, CVC European Credit Opportunities S.à r.l. (the "Investment Vehicle"), managed by CVC Credit Partners Investment Management Limited (the "Investment Vehicle Manager").

The Company is a member of the AIC and is regulated by the Jersey Financial Services Commission.

Significant events during the year ended 31 December 2016

Contractual quarterly tenders

The Company completed the following tenders under its Contractual Quarterly Tender mechanism during the year ended 31 December 2016. All of the shares tendered were transferred into the Company's name and held in treasury.

On 12 February 2016, 29,210,354 Euro Shares and 262,055 Sterling Shares were tendered under the Company's December 2015 tender at a price of €1.0107 and £1.0202 per share respectively.

On 13 May 2016, 118,000 Euro Shares and 9,966,666 Sterling Shares were tendered under the Company's March 2016 tender at a price of €0.9868 and £0.9969 per share respectively.

On 12 August 2016, 27,426,944 Euro Shares and 7,786,215 Sterling Shares were tendered under the Company's June 2016 tender at a price of €1.0099 and £1.0225 per share respectively.

On 14 November 2016, 7,128,382 Euro Shares and 39,612,080 Sterling Shares were tendered under the Company's September 2016 tender at a price of €1.0195 and £1.0349 respectively.

Please refer to note 7 for detail on PEC quarterly tenders and monthly conversions and note 13 for detail on ordinary share monthly conversions that occurred during the year ended 31 December 2016.

Company investment objective

The Company's investment objective is to provide shareholders with regular income returns and capital appreciation from a diversified portfolio of predominantly sub-investment grade debt instruments.

Company asset allocation

The Company's investment policy is to invest predominantly in companies domiciled, or with material operations, in Western Europe across various industries. The Company's investments are focused on senior secured obligations of such companies but investments are also made across the capital structure of such borrowers.

The Company pursues its investment policy by investing net placing proceeds from share issues in the Investment Vehicle.

The investment policy of the Investment Vehicle is subject to the following limits (the "investment limits"):

• A minimum of 50 per cent. of the Investment Vehicle's gross assets will be invested in senior secured obligations (which, for the purposes of this investment limit will include cash and cash equivalents).

• A minimum of 70 per cent. of the Investment Vehicle's gross assets will be invested in obligations of companies/borrowers domiciled, or with material operations, in Western Europe.

• A maximum of 7.5 per cent. of the Investment Vehicle's gross assets will be invested at any given time in obligations of a single borrower subject to a single exception at any one time permitting investment of up to 15 per cent. in order to participate in a loan to a single borrower, provided the exposure is sold down to a maximum of 7.5 per cent. within 12 months of acquisition.

• A maximum of 7.5 per cent. of the Investment Vehicle's gross assets will be invested in credit loan obligation securities, with no primary investments permitted to be made in CVC Credit Partners managed structured finance transactions.

• A maximum of 25 per cent. of the Investment Vehicle's gross assets will be invested in CVC Capital Portfolio Company debt obligations calculated as invested cost as a percentage of the Investment Vehicles gross assets.

The Investment Vehicle is permitted to borrow up to an amount equal to 100 per cent of the NAV of the Investment Vehicle at the time of borrowing (the "borrowing limit").

General

The investment objective and investment policy of the Investment Vehicle are consistent with the investment objective and investment policy of the Company. In the event that changes are made to the investment objective or investment policy of either entity (including the investment limits and/or the borrowing limit) the procedures set out in the section below entitled "Material changes to the investment objective and policy of the Company or the Investment Vehicle" will apply.

Company borrowing limit

The Company does not have any borrowings but may borrow up to 15 per cent. of the NAV of the Company for the sole purpose of purchasing or redeeming its own shares otherwise than pursuant to Contractual Quarterly Tenders.

Material changes to the investment objective and policy of the Company or the Investment Vehicle

The Company receives periodic updates from the Investment Vehicle. Should these updates advise any changes (material or otherwise) to the Investment Vehicle's investment objective, investment policy, investment limits and/or borrowing limit then the Directors will seek shareholder approval of any changes which are either material in their own right or, when viewed as a whole, together with previous non-material changes, constitute a material change from the published investment objective or policy of the Company.

If shareholders do not approve the change in investment objective or investment policy of the Company such that it is once again materially consistent with that of the Investment Vehicle (including the Investment Limits and/or the Borrowing Limit), the Directors will redeem the Company's investment in the Investment Vehicle as soon as reasonably practicable. The Directors do not currently intend to propose any material changes to the Company's investment objective or investment policy, other than in unforeseen circumstances such as to match any changes made to the Investment Vehicle's investment objective or investment policy. As required by the Listing Rules, any material change to the investment policy of the Company would be made only with the approval of shareholders.

Investment Strategy and approach

The Company gave effect to its investment policy by subscribing for Preferred Equity Certificates, (the "PEC's"), Series 4 and 5, issued by the Investment Vehicle. Series 4 and 5 PECs are denominated in Euro and Sterling respectively and are income distributing.

The Investment Vehicle Manager's investment strategy for the Investment Vehicle is to make loan or bond investments in companies based on detailed fundamental analysis of the operations and market position of each company and its capital structure.

The Investment Vehicle invests in the debt of larger companies which offer a number of differing characteristics relative to the broader market, including but not limited to:

(i) larger, more defensive market positions;

(ii) access to broader management talent;

(iii) multinational operations which may reduce individual customer, sector or geographic risk and provide diverse cashflow;

(iv) working capital and capital expenditure which can be managed in the event of a slowdown in economic growth; and

(v) wider access to both debt and equity capital markets.

Based on the market opportunity and relative value, the Investment Vehicle invests in a range of different credit instruments across the capital structure of target companies (including but not limited to senior secured, second lien and mezzanine loans and senior secured, unsecured and subordinated bonds).

Assets are sourced in both the new issue and secondary markets, using the sourcing networks of the Investment Vehicle Manager and CVC Group generally.

The Investment Vehicle Manager's access to deals is supported by the network of contacts and relationships of its leadership team and investment professionals, as well as the strong positioning of the CVC Group in the European leveraged finance markets.

The Investment Vehicle Manager analyses the risk of credit loss for each investment on the basis it will be held to maturity but takes an active approach to the sale of investments once the investment thesis has been realised.

The liquidity terms of the Investment Vehicle are also an important factor considered in determining the composition of the Investment Vehicle portfolio.

Further information in respect to the Investment Vehicle portfolio and performance as at 31 December 2016, can be found in the Investment Vehicle Manager report which is incorporated within this annual financial report.

Key Performance Indicators (KPIs)

The Board meets regularly to review performance and risk against a number of key measures.

Returns and NAV total return

The Board reviews and compares, at each meeting, the NAV and share price of the Company. The Directors regard the Company's NAV total return as being the overall measure of value delivered to shareholders over the long term. Total return reflects both NAV growth of the Company and also dividends paid to shareholders. The Company is targeting a NAV total return of 8%-12% per annum over the medium term.

The NAV total return for Euro Shares and Sterling Shares increased by 22.03% and 23.70% respectively from inception. The Euro Shares and Sterling Shares NAV total return for the year ended 31 December 2016 was 9.29% (2015: 5.08%) and 9.80% (2015: 5.62%) respectively.

Dividend

The Company is targeting annual dividends of around €0.05 and £0.05 per Euro and Sterling Share respectively.

As a result of the Company amending the frequency of its dividend payments to a quarterly basis rather than a semi-annual basis during the year, shareholders received an additional €0.0125 and £0.0125 dividend per Euro and Sterling Share respectively. For the year ended 31 December 2016, total dividends of €0.0625 and £0.0625 (2015: €0.05 and £0.05) per Euro and Sterling Share respectively were paid. Please refer above for the dividend history from inception.

Diversification

The Directors review the geographical, industry, asset and currency diversification of the underlying Investment Vehicle to ensure that holdings are in line with the prospectus and also to monitor the diversification risk of the underlying portfolio.

Please refer to note 7 and the Investment Vehicle Manager's Report for analysis of the Investment Vehicle portfolio and note 8 for further details regarding the Investment Vehicle investment limits and risk diversification policies.

Premium / discount

The Directors review the trading prices of the Company's shares and compare them against their NAV to assess volatility in the discount or premium of the NAVs to their share prices at each monthly Board meeting. As at the year ended 31 December 2016, the Company's discount to NAV per Euro and Sterling Share was 2.3% and 4.2% respectively.

Please refer to the Financial Highlights and Performance Summary for NAV and share price analysis.

Share class disparity

The Directors review the NAV and the share price of both share classes on a weekly basis to assess and understand any price disparity between both classes.

Please refer to the Financial Highlights and Performance Summary for NAV and share price analysis.

Principal risks and uncertainties

When considering the total return of the Company, the Directors take account of the risk which has been taken in order to achieve that return. The Directors have carried out a robust assessment of the principal risks facing the Company including those which would threaten its business model, future performance, solvency or liquidity. An overview of this is set out below:

Supply and demand

The value of the investments in which the Company indirectly invests are affected by the supply of primary and secondary issuers on the one hand and the continued demand for such instruments from market participants on the other. A change in the supply of or demand for the underlying investment may affect the performance of the Company.

Investment portfolio concentration

Risk is concentrated in sub investment grade European corporate issuers and therefore credit risk is greater than would be the case with investments in investment grade issuers.

It is important to note that the investment objective and investment policy of the Investment Vehicle is in line with that of the Company.

While the Company and Investment Vehicle do not include any specific limits placed on exposures to any industry sector, the Company and Investment Vehicle do have investment limits and risk diversification policies in place to mitigate market and concentration risk. Please refer to note 8 for further details and above for portfolio statistics of the investment portfolio held in the underlying Investment Vehicle.

Liquidity

The Company is subject to a number of liquidity constraints as follows:

The PECs in which the Company invests are not traded on a stock exchange. The Company relies on the redemption mechanisms offered by the Investment Vehicle in order to realise its investment and on that mechanism operating in a timely manner.

The Investment Vehicle's underlying investments are not traded on a stock exchange. Investments are bought and sold by market participants on a bilateral basis and any reduction in liquidity caused by a reduction of demand can have a negative impact on the Company's ability to conduct its Contractual Quarterly Tenders. Please refer to note 8 for further details.

Foreign exchange risk

Foreign exchange risk is the risk that the values of the Company's and Investment Vehicle's assets and liabilities are adversely affected by changes in the values of foreign currencies by reference to the Company's base currency, the Euro.

The effects of foreign exchange risk at the Investment Vehicle level is actively managed by the board of the Investment Vehicle and its advisors through hedging arrangements as detailed in note 8.6. The Board monitors the NAV per share divergence between the Sterling and Euro share classes in order to identify the impacts of flow through foreign exchange risk and is satisfied that the divergence has remained at reasonable levels throughout the year. The Company itself has not entered into any foreign exchange hedging arrangements during the year.

Macro-economic factors

Adverse macro-economic conditions may have an adverse effect on the performance of the Investment Vehicle's underlying assets and on the ability of underlying borrowers to service their debt obligations.

Capital management risks

Shareholders may seek to redeem their shareholdings using the Contractual Quarterly Tender facility, subject to restrictions as detailed in note 13, which could result in the NAV of the Company falling below €75 million and as such trigger the requirement for Directors to convene an extraordinary general meeting and propose an ordinary resolution that the Company continues its business as a closed-ended investment company. There is a risk that a continuation resolution will not be passed which could result in the redemption by the Company of its entire holding in the Investment Vehicle and payment of termination fees as set out in the Prospectus. The Board monitors the NAV of the Company and is satisfied that the NAV of the Company remains significantly above the €75 million threshold.

Principal risks relating to an investment in the shares of the Company

Please refer below for details of the principal risks relating to an investment in the shares of the Company.

Shareholders have no right to have their shares redeemed or repurchased by the Company

As the Company is a closed-ended vehicle, there is no right or entitlement attaching to any shares that allows them to be redeemed or repurchased by the Company at the option of the shareholder. By contrast, holders of the Investment Vehicle PECs, have a right to redeem their PECs pursuant to the Investment Vehicle's quarterly redemption facility. The Company has, therefore, established the Contractual Quarterly Tender facility which is subject to annual shareholder approval and the restrictions as discussed further below and in note 13.

Contractual Quarterly Tenders are subject to certain restrictions and so shareholders should not have an expectation that all or any of the shares they make available for sale to the Company will be purchased through the Contractual Quarterly Tender facility

There is no guarantee that shareholders will vote to renew the Contractual Quarterly Tender facility. For this reason and the additional restrictions discussed in note 13, shareholders should note that they are subject to additional liquidity restrictions when compared to direct investors in the Investment Vehicle. Accordingly there is a risk that such other direct investors in the Investment Vehicle may be able to realise their investment sooner than the shareholders, which may adversely affect the Company's business, financial condition, results of operations, NAV and/or the market price of the Shares.

The Shares in the Company may trade at a discount to the NAV per Share of the relevant class of shares and shareholders may be unable to realise their Shares on the market at the NAV per Share or at any other price.

The Shares may trade at a discount to the NAV per share of the relevant class of shares for a variety of reasons, including due to market or economic conditions. While the Company intends to use the Contractual Quarterly Tender facility as a means to mitigate any discount to the NAV per share, there is no guarantee that it will be successful and the Directors accept no responsibility for any failure of the Contractual Quarterly Tender facility to effect a reduction in any discount.

Environmental and social issues

The Company is a closed-ended investment company which has no employees and so its own direct environmental impact is minimal. The Board notes that the companies in which the Investment Vehicle invests will have a social and environmental impact over which the Company has no control. The Board, the majority of whom are based in Jersey, have held all their board meetings in the Channel Islands and therefore the Company's greenhouse gas emissions and environmental footprint are negligible.

Board diversity

The Board has due regard for the benefits of experience and diversity in its membership, including gender, and strives to meet the right balance of individuals who have the knowledge and skillset to maximise shareholder return while mitigating the risk exposure of the Company. The Board is made up of three male Directors, details of which are shown above. All have held the position of Director since incorporation. Further information about the Board's policy on diversity is contained within the Directors and Corporate Governance Report.

The Company has no employees and therefore there is nothing further to report in respect of gender representation within the Company.

Life of the Company

The Company has an indefinite life. In accordance with the Articles, the Directors are required to propose an Ordinary Resolution that the Company continues its business as a closed-ended investment company (the "Continuation Resolution") if the following occur:

(i) the Company NAV falls below €75 million; or

(ii) the Directors are required to convene "class closure meetings" for all of the classes of Shares in issue if a share class is delisted for any reason, or, if in any rolling 12 month period, the average daily closing market price (as derived from the market data published by Bloomberg or any successor market data service thereto) of any class of Shares during such 12 month period is 10 per cent. or more below the average NAV per Share (calculated inclusive of current year income).

If a Continuation Resolution is not passed, the Directors are required to put forward proposals within six months for the reconstruction or reorganisation of the Company to the shareholders for their approval.

These proposals may or may not involve winding up the Company and, accordingly, failure to pass the Continuation Resolution will not necessarily result in the winding up of the Company. A failure to pass a Continuation Resolution may result in the redemption by the Company of its entire holding of PECs and would trigger the payment of the termination fees being the cost and expenses of, and incidental to, the termination of the Company depending on the timing and reason for termination.

Future strategy

The Board continues to believe that the investment strategy and policy adopted by the Investment Vehicle is appropriate for and is capable of meeting the Company's objectives.

The overall strategy remains unchanged and it is the Board's assessment that the Investment Vehicle Manager's resources are appropriate to properly manage the Investment Vehicle's portfolio in the current and anticipated investment environment.

Please refer to the Investment Vehicle Manager's report for detail regarding performance to date of the Investment Vehicle's investments and the main trends and factors likely to affect the future development, performance and position of those investments.

Going concern

Under the Listing Rules, AIC Code of Corporate Governance ("AIC Code") and applicable regulations, the Directors are required to satisfy themselves that it is reasonable to assume that the Company is a going concern from date of approval of the financial statements.

After reviewing the Company's budget and cash flow forecast for the next financial year, the Directors are satisfied that, at the time of approving the financial statements, no material uncertainties exist that may cast significant doubt concerning the Company's ability to continue for a period of at least twelve months from the date of approval of the financial statements. The Directors consider it is appropriate to adopt the going concern basis in preparing the financial statements.

Viability statement

Under the AIC Code, the Directors are required to make a "viability statement" which explains how they have assessed the prospects of the Company, over what period they have done so and why they consider that period to be appropriate, taking into account the Company's current position and principal risks. The principal risks faced by the Company are described above.

The prospects of the Company are driven by its investment objectives, investment policy and investment strategy as summarised above, and also by the conditions existing in the markets in which the Company's shares trade and in which the Investment Vehicle invests and financial markets generally.

In assessing the prospects of the Company, the Directors have, in addition to taking into account the principal risks facing the Company, taken into account the Company's current financial position which has included a robust process encompassing an examination of the:

(i) Investment Vehicle Manager's view of the investment opportunity and the conditions existing in the markets in which the Investment Vehicle is exposed and financial markets generally, including scenario analysis, stress tests and volatility and return comparisons;

(ii) liquidity and fundamental prospects of the underlying positions of the Investment Vehicle;

(iii) extent to which the Company directly or indirectly uses gearing;

(iv) liquidity of the PECs in which the Company invests, and;

(v) impact on the Company's viability under scenarios stemming from the application of the Contractual Quarterly Tender facility.

Based on the results of their assessment process the Directors have concluded that a period of three years from the date of this statement is an appropriate period over which to assess the prospects of the Company. This period was chosen by the Director's as it falls within the minimum period suggested by the results of the Director's assessment process. The Directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due within at least this period of assessment.

This Strategic Report was approved by the Board of Directors on 27 February 2017 and signed on its behalf by:

Richard Boléat Mark Tucker

Chairman Audit Committee Chairman

Board members

All the Directors are non-executive.

CHAIRMAN

Richard Michael Boléat, aged 53 (independent). Appointed 20 March 2013.

Richard qualified as a Chartered Accountant with Coopers & Lybrand in the United Kingdom in 1987 and subsequently worked in the Middle East, Africa and the United Kingdom for a number of commercial and financial services groups, during which time he acted as a buy-side high yield credit analyst for an Arabian investment bank.

From 1996 he was a Principal of Channel House, a Jersey based financial services group, which was acquired by Capita Group plc in September 2005 and led their financial services client practice in Jersey until September 2007.

He currently acts as a non-executive director of a number of substantial collective investment and investment management entities and is active in a number of asset classes including global macro, super-senior corporate CDS, long/short equity, fund of funds and EM real estate. He presently acts as Chairman of Yatra Capital Limited, which is listed on Euronext, and Funding Circle SME Income Fund Limited which is listed on the London Stock Exchange. He is personally regulated by the Jersey Financial Services Commission in the conduct of financial services business and is a member of the Alternative Investment Management Association (AIMA), the International Corporate Governance Network and the European Corporate Governance Institute.

Directors

Mark Richard Tucker, aged 54 (independent). Appointed 20 March 2013.

In 1997 Mark joined Arborhedge Investments, Inc. (formally HFR Investments, Inc.) a Chicago based, boutique broker dealer specialising in the placement of hedge fund interests to institutions globally. Mark served as the President and Chief Executive Officer of Arborhedge until his return to Jersey in 2002, after which he remained a director and shareholder until 2012. Previously, Mark held a variety of retail and private banking roles in Jersey with both HSBC and Cater Allen Bank.

In 1988 Mark relocated first to London, where he joined GNI Limited in a financial futures business development role, and later to New York where he was responsible for the alternative investment program of Gresham Asset Management, Inc. and later for the asset allocation and manager selection activities of Mitsui & Company.

Mark is personally regulated by the Jersey Financial Services Commission in the conduct of financial services business, and he is an Associate of the Chartered Institute of Bankers, a Chartered Fellow of the Chartered Institute for Securities and Investment and a member of the Institute of Directors. Mark also serves as a non-executive director to several other offshore structures.

David Alan Wood, aged 62. Appointed 20 March 2013.

David was a founding partner of CVC Cordatus (a predecessor to CVC Credit Partners Group) in 2006, but retired in April 2012. He was a member of CVC Credit Partners Advisory Board until April 2015. With 36 years of industry experience, David joined from Deutsche Bank where he was Co-Head of European Leveraged Finance. Prior to this, he was a Managing Director at JP Morgan/Chase Manhattan where he worked in leveraged finance and corporate banking. Mr Wood continues to sit on the CVC Credit Partners Conflicts Committee.

investment vehicle manager's report

Summary

The Investment Vehicle Manager is pleased with the portfolio performance for the year ended 31 December 2016. Each strategy has performed to expectations and the Investment Vehicle Manager remains optimistic with regards to the growing opportunity within the performing credit and credit opportunities segments of the portfolio given the continued flow of assets seen across the desk.

Portfolio

As at 31 December 2016 the Investment Vehicle portfolio was invested in-line with the investment policy, was diversified with 67 (2015: 64) issuers¹ across 24 (2015: 22) different industries and 16 (2015: 13) different countries, and had exposure of no more than 3.7% (2015: 4.1%) to any single issuer.

Portfolio statistics²

	As at 31 December 2016	As at 31 December 2015
Percentage of Portfolio in Floating Rate Assets	88.6%	82.4%
Percentage of Portfolio in Fixed Rate Assets	11.4%	17.6%
Weighted Average Price³	91.8	89.2
Yield to Maturity	7.4%	8.6%
Current Yield	6.7%	6.0%
Weighted Average Fixed Rate Coupon	7.3%	7.0%
Weighted Average Floating Rate plus Margin	5.0%	5.1%

5 Largest Issuers as at 31 December 2016
Issuer	% of Gross Assets	Industry	Country
Ambac	3.7	Finance	U.S.
Consolis	3.4	Buildings & Real Estate	France
Dell	3.2	Electronics	U.S.
Numericable	3.2	Broadcasting & Entertainment	France
FCC	2.9	Buildings & Real Estate	Spain

5 Largest Issuers as at 31 December 2015
Issuer	% of Gross Assets	Industry	Country
Icopal	4.1	Buildings & Real Estate	Denmark
RAC	3.5	Automobile	UK
Cortefiel	3.2	Retail Store	Spain
Zodiac	3.1	Leisure	France
Viridian	3.0	Utilities	Ireland

5 Largest Industry Positions as at 31 December 2016¹	%
Finance	11.4%
Electronics	10.3%
Retail Store	9.4%
Buildings & Real Estate	8.6%
Broadcasting & Entertainment	7.5%

5 Largest Industry Positions as at 31 December 2015¹	%
Buildings & Real Estate	11.2%
Finance	10.0%
Broadcasting & Entertainment	9.8%
Leisure, Amusement, Motion Pictures, Entertainment	8.8%
Retail Store	8.0%

Geographical Breakdown by issuer country¹	As at 31 December 2016	As at 31 December 2015
France	24.5%	22.3%
U.S.	23.6%	8.2%
UK	11.8%	19.5%
Spain	10.1%	14.7%
Germany	6.2%	2.7%
Luxembourg	5.1%	5.2%
Netherlands	4.2%	-
Sweden	1.7%	8.4%
Denmark	1.5%	6.4%
Ireland	0.8%	3.9%
Other	10.5%	8.7%

Currency Breakdown	As at 31 December 2016	As at 31 December 2015
EUR	55.7%	57.5%
USD	30.2%	17.1%
GBP	14.1%	24.5%
NOK	-	0.8%
Other	-	0.1%

Asset Breakdown	As at 31 December 2016	As at 31 December 2015
Loans (1st Lien)	57.2%	50.0%
Senior Secured Bonds	13.1%	10.5%
Loans (2nd Lien)	9.7%	5.7%
Structured	5.2%	5.8%
Cash	5.2%	16.1%
PIK	5.1%	6.3%
Senior Unsecured Bonds	3.3%	5.1%
Other	4.4%	2.5%
Shorts	-3.2%	-2.0%

¹Excludes 18 (2015: 20) structured finance positions.

²Note: All metrics exclude cash unless otherwise stated.

³Average market price of the portfolio weighted against the size of each position.

Performance

As at the end of December 2016, floating rate instruments comprised 88.6% of the portfolio. Current gross yield of the asset pool at year-end was 6.7%.

The Investment Vehicle Manager was pleased with the performance through 2016. The portfolio's total return (net of fees, including dividends reinvested) was 9.3% to Euro investors and 9.8% to Sterling investors. For the same period, the Credit Suisse Western European HY Index hedged to Euro returned 9.6% and the Credit Suisse Western ELLI hedged to Euro returned 6.5%.

Through Q3 2016 the portfolio opportunistically participated in new issue primary and actively managed exposures in the performing segment to take advantage of the strong market technical. In advance of year end, and mindful of the U.S. presidential election, the Investment Vehicle Manager sought to reduce NAV volatility within the Credit Opportunities segment of the portfolio and increase exposure to assets where pre year-end events were expected to crystallise and drive performance.

The Core Income segment of the portfolio delivered 4.2% to gross portfolio performance. The Credit Opportunities segment of the portfolio delivered a gross 7.7% return, which equates to a 16% to gross portfolio performance contribution based on a 47% average allocation of the portfolio.

Market review and outlook

European leveraged loan market

H2 2016 saw volatile levels of issuance, peaking at €9.5bn in November, and bottoming out at €3.0bn in August. Leveraged loan volume during H2 2016 totalled €40.2bn and averaged €6.7bn per month - 31% up on H1 2016.^a

It was encouraging that the European loan market continued to expand as sponsors favoured the flexibility and less onerous public disclosure requirements of the loan product versus high-yield bonds. This flexibility, and the increase in demand by CLO / institutional managers allowed for an acceleration in repricing and a small increase in leverage activity.

Repricing activity in the final half of 2016 tightened the single-B average YTM, which was at 4.5% on a rolling 3 month basis, and was the lowest level seen since Q1 2014. As yields continued to tighten, senior leverage for all new European transactions increased, reaching 4.5x through the 1st lien debt - the highest this measure had reached since hitting 4.6x in 2007. The trend is also upward for total leverage as total debt-to-EBITDA has been steadily increasing since 2009 from 4.1x to 4.9x.^b

ELLI loan default rates remained in range and closed the year at 2.40%, slightly higher than the 2.12% at the end of 2015.^c

High yield bond market

HY new issue volume continued its underwhelming trend in 2016, with €10.2bn of paper hitting the market in Q4 (c. 50% of the €18.8bn issued in Q3). Full-year volume of €53bn marked a 17% decline on 2015, and was the second consecutive annual decline. The favourable technical, and inflows through the quarter (€1.4bn through Q4, according to JPM) tightened single-B YTM to 6.1%, versus 6.3% at the end of Q3, and 6.9% at the end of 2015.^b

Market opportunity in credit opportunities strategy

Looking ahead to 2017 the Investment Vehicle Manager is optimistic about opportunities in the credit markets. The extreme FX fluctuations and the movements in commodity prices in 2016 presented significant opportunities for the Credit Opportunities strategy. The Investment Vehicle Manager believes that pockets of volatility and regulatory changes, expected to emerge in 2017 due to the changing geopolitical landscape, will support its very healthy pipeline. Examples of opportunity-inducing events include:

- National elections in France, Germany and the Netherlands;

- Monetary and fiscal policy changes in key economies, including the U.S., China, Japan and Europe;

- The potential introduction of trade tariffs on imports into the U.S;

- Revocation of British access to the European free market post-Brexit; and

- Uncertainty around the sustainability of Italy's public debt.

Of particular concern in the Brexit negotiations is freedom of movement and whether European workers will be entitled to live and work in the UK after the event. Deprivation of this could result in labour shortages hitting, in particular, the hospitality, manufacturing and admin/support industries, each of which have 10%+ of their workforce made up of persons born outside of Great Britain but in the wider European Union.

In the Credit Opportunities space, the Investment Vehicle Manager continues to evaluate credits in the energy space, particularly in Europe where subsidies for renewable energy production and infrastructure have been reigned in. Attention will also be given to assets in the retail, shipping and the U.S. healthcare markets, where fluctuating oil prices and changing regulatory regimes should contribute to the asset flow.

Whilst the Investment Vehicle Manager is of the belief that defaults may take longer to materialise in the current climate, acknowledgement is given to the Fed's interest rate rise in December 2016 and the consequences this may have for over-levered credits. By taking advantage of the CVC global network, the Investment Vehicle Manager expects to be able to identify investment opportunities and deploy additional capital both from recapitalisations outside of technical defaults, and by stepping in at the front end of restructurings.

Sources

^a S&P Global Market Intelligence

^b S&P Global Market Intelligence - LCD European Quarterly

^c S&P LCD data

Conclusion

The portfolio has once again outperformed broader market indices despite significant market volatility caused by various factors such as the effects of Brexit and the U.S. election. The combination of performing credit providing stable yield exposure alongside the higher yielding Credit Opportunities strategy provides a balanced portfolio risk profile in differing market environments.

Political uncertainty is set to continue in 2017, with the start of Brexit negotiations, elections in France, Germany and the Netherlands, and the potential for early elections in Italy. Investors will also be waiting to see how U.S. economic and foreign policy changes under President Trump. Despite the risks, our core scenario is that global growth and inflation pick up next year. Within our asset class, we expect European leveraged loans and high yield debt to outperform, as stronger growth should support corporate earnings while the ECB remains accommodative (although perhaps on a lower basis) throughout the year.

Going into H1 2017, the Investment Vehicle Manager continues to focus on maintaining a low NAV volatility, actively allocating to performing assets as new issue volume is expected to remain strong supported by Sponsor liquidity, a continued stimulus from the ECB while seeking to maintain asset allocations in the Credit Opportunities segment of the portfolio.

CVC Credit Partners Investment Management Limited

Investment Vehicle Manager

Jonathan Bowers Andrew Davies

Senior Portfolio Manager Portfolio Manager

The indices referred to herein (including the Credit Suisse Western European HY Index hedged to Euro and the Credit Suisse Western ELLI hedged to Euro) are widely recognised, unmanaged indices of market activity and have been included as general indicators of market performance. There are significant differences between the types of investments made or expected to be made by the Investment Vehicle and the investments covered by the indices, and the methodology for calculating returns. For example, the Credit Suisse Western European HY Index is designed as an objective proxy for the investable universe of the Western European high yield debt market. Additionally, the Credit Suisse Western ELLI is designed to mirror the investable universe of the Western European leveraged loan market where the loans eligible for inclusion must be denominated in US$ or Western European currencies and must have a minimum outstanding amount of 100m (in local currency). In contrast, CVC Credit Partners may have discretion whether to reinvest such payments during any relevant commitment period. Moreover, coupon payments received by the Investment Vehicle after the expiration of any commitment period typically will not be reinvested. It should not be assumed that the Investment Vehicle will invest in any specific equity or debt investments, such as those that comprise the indices, nor should it be understood that there will be a correlation between the Investment Vehicle's returns and those of the indices. It should not be assumed that correlations to the indices based on historical returns will persist in the future. No representation is made that the Investment Vehicle will replicate the performance of any of the indices. The indices are included for general, background informational purposes only and recipients should use their own judgment to appropriately weight or discount their relevance to the Investment Vehicle .

DIRECTORS' and corporate goverNance REPORT

The Directors present the Annual Financial Report for the Company for the year ended 31 December 2016. The results for the year are set out in these accounts.

Statement as to disclosure of information to the auditor

The Directors who held office at the date of approval of this Directors' Report confirm that, so far as they are each aware, there is no relevant audit information of which the Company's auditors are unaware and that they have taken the steps that they ought to have taken as Directors to make themselves aware of any relevant audit information and to establish that the Company's auditors are aware of that information.

Director interests

Information for each Director is shown above.

No Director has any other interest in any contract to which the Company is a party and no Director has held or holds any management or ordinary shares in the Company.

Financial risk management objectives and policies

The Board is responsible for the Company's system of risk management and internal control and meets regularly in the form of monthly Board meetings to assess the effectiveness of such controls in managing and mitigating risk.

The Board confirms that it has reviewed the effectiveness of the Company's system of risk management and internal control for the year ended 31 December 2016, and to the date of approval of this Annual Financial Report. The Board has taken into consideration the Financial Reporting Council (FRC), "Guidance on Risk Management, Internal Control and Related Financial and Business Reporting" to ensure that the Company's system of risk management and internal control is designed and operated effectively, in line with best practice guidance provided by the FRC.

The key financial risks that the Directors believe the Company is exposed to include credit risk, liquidity risk, market risk, interest rate risk, foreign currency risk and valuation risk. Please refer to note 8 for reference to financial risk management disclosures, which explains in further detail the above risk exposures and the policies and procedures in place to monitor and mitigate these risks.

The Administrator has established an internal control framework to provide reasonable but not absolute assurance on the effectiveness of the internal controls operated on behalf of its clients. The effectiveness of these controls is assessed by the compliance and risk departments on an on-going basis and by periodic review by external parties. The Compliance Officer presents an assessment of their review to the Board in line with the compliance monitoring program on a quarterly basis.

Fair, balanced and understandable

In assessing the overall fairness, balance and understandability of the Annual Financial Report and Accounts the Board has performed a comprehensive review to ensure consistency and overall balance.

Borrowing limits

The Company does not have any external borrowings. The Directors may, if they feel it is in the best interests of the Company, borrow funds subject to the appropriate resolutions of shareholders.

Greenhouse gas emissions

Please refer to the Strategic Report - "Environmental and social issues" for disclosure regarding greenhouse gas emissions.

Acquisition of own shares

The Board has the authority to purchase its own shares under the terms and conditions of the Contractual Quarterly Tender facility as summarised in note 13. Details of the shares tendered and repurchased under the Contractual Quarterly Tender facility during the year are given in the Strategic Report.

Shareholders' interests

As at 31 December 2016, the Company had been notified in accordance with Chapter 5 of the Disclosure Guidance and Transparency Rules ("DTR's") (which covers the acquisition and disposal of major shareholdings and voting rights), of the following shareholders that had an interest of greater than 5% in the Company's issued share capital.

	Percentage of total voting rights (%)
Investec Wealth & Investment Limited	9.34
Architas Multi-Manager Limited	5.67
Baillie Gifford & Co	5.06

Between 31 December 2016 and 27 February 2017, no additional notifications were received.

Independent Auditor

Ernst & Young LLP, have indicated their willingness to continue in office as auditor and a resolution proposing their re-appointment and to authorise the Directors to determine their remuneration will be proposed at the forthcoming Annual General Meeting.

Events after the reporting date

The Directors are not aware of any developments that might have a significant effect on the operations of the Company in subsequent financial periods not already disclosed in this report or the attached financial statements.

Corporate governance statement

a) Corporate governance codes

The Code of Corporate Governance issued by the Association of Investment Companies in February 2015 (AIC Code) provides specific corporate governance guidelines to investment companies.

The Board considers that reporting against the principles and recommendations of the AIC Code and by reference to the AIC Guide (which incorporates the UK Code), will enable shareholders to make a comprehensive assessment of the Company's governance principles.

The AIC Code requires listed companies to disclose how they have applied the principles and complied with the provisions of the UK Corporate Governance Code (UK Code) as issued by the Financial Reporting Council.

The FRC has confirmed that AIC member companies who report against the AIC Code and who follow the AIC Guide will be meeting obligations in relation to the UK Code, paragraph 9.8.6 of the Listing rules and associated disclosure requirements of the DTRs.

Copies of the AIC Code, the AIC Guide and the UK Code can be found on the respective organisations' web sites www.theaic.co.uk and www.frc.org.uk.

b) Statement of compliance

The AIC Code comprises 21 principles and the Directors believe that during the period under review they have complied with all of the recommendations of the AIC Code and the relevant provisions of the UK Code insofar as they apply to the Company's business except as set out below:

- The role of the Chief Executive;

- The appointment of a Senior Independent Director;

- Executive directors' remuneration;

- The need for an internal audit function; and

- The board should agree policies with the manager covering key operational issues.

For the reasons set out in the AIC Guide, and as explained in the UK Code, the Board considers these provisions are not relevant to the position of the Company, being a self-managed investment company. In particular, all of the Company's day-to-day administrative functions are outsourced to third parties. As a result, the Company has no executive directors, direct employees or internal operations. The Company has therefore not reported further in respect of these provisions.

As a self-managed investment company the Company does not have a manager and for this reason the Board considers that the AIC Code principle 16 is not relevant to the Company.

Mark Tucker, as the Chairman of the Audit Committee acts as a channel of communication for shareholders in the event that a shareholder's contact with the Chairman of the Company fails to satisfactorily resolve a concern. On this basis the Board believes that Mark Tucker already fulfils the role of a Senior Independent Director.

The Company complies with the corporate governance statement requirements pursuant to DTRs by virtue of the information included within this corporate governance statement.

c) The Board

The Board

The Board, appointed on 20 March 2013, consists of three Directors, all of whom are independent of the Investment Vehicle Manager. The Directors are:

- Richard Michael Boléat (Independent Chairman)

- Mark Richard Tucker (Independent Director)

- David Alan Wood (Independent Director)

Richard Boléat and Mark Tucker are resident in Jersey, David Wood is resident in the UK. Please refer above for biographies of each Director which demonstrates their professional knowledge and experience.

Directors' duties and responsibilities

As a self-managed investment company, the Board is responsible for all decision making.

The Board meets periodically throughout the year and monitors the Company's share price and NAV on a timely basis and holds regular discussions with the Investment Vehicle Manager to discuss performance of the Investment Vehicle portfolio, whilst considering ways in which future share price and overall performance can be enhanced. The Board is responsible for the safeguarding of the assets of the Company and taking reasonable steps for the prevention and detection of fraud and other irregularities. The Investment Vehicle Manager, together with the Company Secretary, also ensure that all Directors receive, in a timely manner, all relevant management, regulatory and financial information relating to the Company and the Investment Vehicle portfolio. Directors unable to attend a Board meeting are provided with the Board papers and can discuss issues arising in the meeting with the Chairman or another Director.

Individual Directors may, at the expense of the Company, seek independent professional advice on any matter that concerns them in the furtherance of their duties.

Board and Committees

The Board has established one committee, the Audit Committee. The Board had established a Risk Management Committee which it dissolved during the year for reasons discussed below. The Board considers that it is not necessary to establish a separate Remuneration or Nomination Committee.

Audit Committee

The Board has established an Audit Committee, which operates within clearly defined terms of reference and duties. The terms of reference of the Audit Committee are available on the Company's website. Meetings of the Audit Committee are held at least three times a year at appropriate times in the reporting and audit cycle and otherwise as required.

The Audit Committee membership comprises all Directors. The Chairman of the Board is a member of this Committee but he does not chair it. His membership of the Audit Committee is considered appropriate given that he is a Fellow of the Institute of Chartered Accountants in England and Wales and also has extensive knowledge of the financial services industry.

Mark Tucker is the Chairman of the Audit Committee.

The report on the role and activities of this Committee and its relationship with the external auditors is set out in the Report of the Audit Committee.

Risk Management Committee

The Board had appointed a Risk Management Committee as part of its risk management system, which operated within clearly defined terms of reference and duties. The Risk Management Committee membership comprised all Directors. The Chairman was also the chair of this Committee.

The main roles of the Risk Management Committee were to assess the principal risks and uncertainties facing the Company that the Board have identified as detailed above, and record and monitor the position of such risks on a periodic basis, any mitigating factors of such risks and the controls implemented by the Committee to mitigate such risks. This analysis is performed as part of the business risk assessment (the "BRA").

The Committee was also responsible for the oversight of the operational activity including working capital, corporate governance of the Company and monitoring the regulatory requirements applicable to the Company under its AIFMD registrations in various jurisdictions and periodic review of the Investment Vehicle Manager's procedures for undertaking investment decisions to ensure decisions are consistent with the approved investment policy and strategies of the Company. The Committee also examined the valuation of the Company investments periodically throughout the year.

Further to the implementation of EU Regulation No 596/2014 on Market Abuse ("MAR") on 3 July 2016, the Board concluded that it would be more appropriate to hold monthly Board meetings to fulfil the above detailed roles and functions and the new requirements imposed by MAR. Accordingly the Risk Management Committee was formally dissolved.

Attendance at scheduled meetings of the Board and its committees

Directors	Board Quarterly		Board Ad hoc		Audit Committee		Risk Management Committee
	Total	Attended	Total	Attended	Total	Attended	Total	Attended
Richard Boléat	4	4	21	19	3	3	7	7
Mark Tucker	4	4	21	20	3	3	7	7
David Wood	4	4	21	15	3	3	7	7

The Committees report to the Board as part of a separate agenda item, on the activity of the Committee and matters of particular relevance to the Board in the conduct of their work.

Directors retirement and rotation

The AIC guide states that all non-executive Directors should be submitted for re-election by shareholders at regular intervals and that nomination for re-election should not be assumed but be based on disclosed procedures and continued satisfactory performance. The articles of association state that at each Annual General Meeting (AGM) of the Company, any Director:

(i) Who has been appointed by the Board since the last AGM;

(ii) Who held office at the time of the two preceding AGMs and who did not retire at either of them; or

(iii) Who has been a Director for a continuous period of 9 years or more at the date of the AGM;

shall retire from office and may offer himself for election or re-election by the members.

Based on the above and reflecting best practice, the Directors have adopted a policy whereby all Directors will stand for re-election at each AGM, including the forthcoming AGM to be held on 3 April 2017.

The Board considers that there is a balance of skills and experience within the Board and each of the Directors contributes effectively.

Board independence, composition and tenure

The Chairman, Richard Boléat, was independent of the Investment Vehicle Manager at the time of his appointment and remains so. The Chairman is responsible for the leadership of the Board and ensuring its effectiveness in all aspects of its role.

The Chairman and all Directors are considered independent of the Investment Vehicle Manager. David Wood was a founding partner of CVC Cordatus (a predecessor to CVC Credit Partners Group) but retired in April 2012. He was a member of CVC Credit Partners Advisory Board, which is an advisory body established to comment on strategic plans, budgets and markets, until April 2015. Mr Wood continues to sit on the CVC Credit Partners Conflicts Committee. For reasons as detailed above he is independent.

The Directors consider that there are no factors, as set out in principle 1 or 2 of the AIC Code, which compromise the Chairman's or other Directors' independence and that they all contribute to the affairs of the Company in an adequate manner. The Board reviews the independence of all Directors annually. The Company Secretary, BNP Paribas Securities Services S.C.A., Jersey Branch through its representative acts as Secretary to the Board and Audit Committee and in doing so it: assists the Chairman in ensuring that all Directors have full and timely access to all relevant documentation; organises induction of any new Directors; is responsible for ensuring that the correct Board procedures are followed; and advises the Board on corporate governance matters.

The Board is made up of three male Directors. The Board supports the recommendations of the Davies Report (available at www.gov.uk) and believes in and values the importance of diversity, including gender, to the effective functioning of the Board. The Board, however, does not consider it appropriate or in the interest of the Company and its Shareholders to set prescriptive targets for gender or other diversity on the Board. Any future appointments would be primarily based on merit of skills, experience and knowledge.

The Board considers that boards of investment companies are more likely to benefit from a long association with a company in that they will experience a number of investment cycles. The Board does not consider that length of service necessarily compromises the independence or effectiveness of each individual Director and accordingly does not have a formal policy requiring that Directors should stand down after a fixed period.

The Company is committed to ensuring that any vacancies arising are filled by the most qualified candidates who have complementary skills or who possess the skills and experience which fill any gaps in the Board's knowledge or experience.

The Board considers that, due to its size, it would be unnecessarily burdensome to establish a separate Nomination or Remuneration Committee. The Board as a whole nominates candidates for the Board and, subject to there being no conflicts of interest, all Directors are entitled to vote on candidates for the appointment of any new Directors.

Directors professional development

The Board believes that keeping up-to-date with key investment industry developments is essential for the Directors to maintain and enhance their effectiveness.

Current Directors and newly appointed Directors, if applicable, are given the opportunity to discuss training and development needs and are expected to take responsibility for identifying their training needs and to take steps to ensure that they are adequately informed about the Company and their responsibilities as a Director. The Chairman is responsible for agreeing and reviewing with each Director their training and development needs.

When a new Director is appointed to the Board, they will be provided with all relevant information regarding the Company and their duties and responsibilities as a Director. In addition, a new Director will also spend time with representatives of the Investment Vehicle Manager in order to learn more about their processes and procedures.

The Board is confident that all its members have the knowledge, ability and experience to perform the functions required of a Director of the Company.

Director's remuneration and annual evaluation of the Board and that of its Audit Committee and individual Directors

The Board periodically reviews the fees paid to the Directors and compares these with the fees paid by listed companies generally.

An annual evaluation of the Board, Audit Committee and Directors is undertaken considering the balance of skills, experience, independence and knowledge, its diversity, including gender, how the Board works together as a unit, and other factors relevant to its effectiveness. The evaluation also considers the Board's performance, constitution and terms of reference to ensure that it is operating effectively. At least every three years the board evaluation is externally facilitated. In 2014 a full external review was undertaken by Trust Associates and in 2016 an external interim review was undertaken. The next full external review will take place in 2017.

During the year Trust Associates were engaged to perform an interim evaluation on the effectiveness of the Board. The evaluation report provided by Trust Associates noted that David Wood could be considered independent on the basis his employment with CVC, from which he retired in April 2012, falls outside a three year scope since employment, as recommended by principle 2 of the AIC code, and if his appointment on the CVC Independent Sub Committee is not deemed to be material. The Board discussed Mr Wood's independence with regard to the AIC's guidance on this matter and concluded that Mr Wood is independent. No other significant recommendations were made which were required to be bought to the attention of shareholders.

Details of the remuneration arrangements for the Board and Audit Committee can be found in the Directors' Remuneration Report and in note 5 of the financial statements.

d) Board meetings and relations with the Investment Vehicle Manager

Primary focus

The Board meets regularly throughout the year and a representative of the Investment Vehicle Manager is in attendance at all times when the Board meets to review the performance of the Company's investments.

As the Company is self-managed, the Chairman assumes the responsibility of ensuring that relevant financial information, including Investment Vehicle investment portfolio analysis and financial plans, including budgets and forecasts, are available to the Board and discussed at Board meetings. The Chairman encourages open debate to foster a supportive and co-operative approach for all participants.

The Board applies its primary focus on the following:

- investment performance, ensuring that the investment objective and strategy of the Company are met;

- ensuring investment holdings are in line with the Company's prospectus;

- review and monitoring financial risk management and operating cash flows, including cash flow forecasts and budgets of the Company; and

- review and monitoring of the key risks to which the Company is exposed as set out in the Strategic Report.

At each relevant meeting the Board undertakes reviews of key investment and financial data, transactions and performance comparisons, share price and NAV performance, marketing and shareholder communication strategies, peer group information and industry issues.

Review of NAV and share price of each share class

The Directors review the trading price of the Company's shares and compare them against their NAV to assess volatility in the discount or premium of the NAVs to their share prices.

Overall strategy

The Board meets regularly to discuss and consider the investment objective, policy and approach of the Company to ensure sufficient attention is given to overall strategy of the Company.

The Board considers whether the investment policy continues to meet the Company's objectives. The Board believes that the overall strategy of the Company remains appropriate.

Monitoring and evaluation of service providers

The Board reviews the performance of the Company's third-party service providers together with their anti-bribery and corruption policies to ensure that they comply with the Bribery Act 2010 and the Corruption (Jersey) Law 2006 and ensure their continued competitiveness and effectiveness and ensure that performance is satisfactory and in accordance with the terms and conditions of the respective appointments.

As part of the Board's ongoing evaluation of third party service providers, it considers and reviews on a periodic basis contractual arrangements with the major service suppliers of the Company.

The Directors have adopted a procedure whereby they are required to report any potential acts of bribery and corruption in respect of the Company that come to their attention to the Company's Compliance Officer.

e) Shareholder communications

Shareholder profile and communication

An analysis of the substantial shareholders of the Company's shares is provided to the Directors on a quarterly basis.

The Board views shareholder relations and communications as high priority which ensures that the Directors have an understanding of the views of shareholders about the Company. It has, since admission, sought engagement with investors. Where appropriate the Chairman and other Directors are available for discussion about governance and strategy with major shareholders and the Chairman ensures communication of shareholders' expressed views to the Board. Shareholders wishing to communicate with the Chairman, or any Director, may do so by writing to the Company, for the attention of the Company Secretary, at the Registered Office. The Directors welcome the views of all Shareholders and place considerable importance upon them.

The main method of communication with shareholders is through the half year and annual financial report which aims to give shareholders a clear and transparent understanding of the Company's objectives, strategy and results. This information is supplemented by the publication of the weekly estimated and monthly NAV of the Company's Euro Shares and Sterling Shares on the London Stock Exchange via a Regulatory Information Service.

During the course of the year the Company's website (www.ccpeol.com) was redesigned. It is regularly updated with monthly factsheets and provides further information about the Company, including the Company's financial reports and announcements. The maintenance and integrity of the Company website is the responsibility of the Directors. Legislation in Jersey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. Uncertainty regarding legal requirements is compounded as information published on the internet is accessible in many countries with different legal requirements relating to the preparation and dissemination of financial statements.

The Board believes that the AGM provides an appropriate forum for investors to communicate with the Board, and encourages participation. The AGM will be attended by at least the Chairman of the Audit Committee. There is an opportunity for individual shareholders to question the Directors at the AGM. It is the intention of the Board that the Notice of the AGM and related papers will be sent to shareholders at least 20 workings days before that meeting.

The Board has also instigated a programme of quarterly investor calls, to allow investors and other interested parties to receive an update on the previous quarter's performance and market conditions. It also provides a forum for questions to be posed to the Chairman and key individuals within the Investment Vehicle Manager.

Other communications

All substantive communications regarding any major corporate issues are discussed by the Board taking into account representations from the Investment Vehicle Manager, the Auditor, legal advisers, corporate brokers and the Company Secretary.

Alternative Investment Fund Manager Directive (AIFMD)

The Company (which is a non-EU AIF for the purposes of the AIFM Directive and related regimes in EEA member states) is a self-managed fund and therefore acts as the Alternative Investment Fund Manager ("AIFM") of the Company. The Company is authorised as an Alternative Investment Fund Services Business as defined under Article 2(11) of the Financial Services (Jersey) Law, 1998 and as such, fulfils the role of Alternative Investment Fund Manager.

During 2014, the Company registered with the Jersey Financial Services Commission, being the Company's competent regulatory authority, as a self-managed non-EU Alternative Investment Fund (AIF), and has registered with the UK Financial Conduct Authority, under the relevant national private placement regime ("NPPRs").

In 2015, the Company registered with the Finnish Financial Supervisory Authority, Belgium Financial Services and Markets Authority, Danish Finanstilsynet, Luxembourg Commission de Surveillance du Secteur Finacier and Swedish Finansinspektionen, under the relevant NPPRs of each jurisdiction.

As the Company is non-EU domiciled no depositary has been appointed in line with the AIFM Directive, however BNP Paribas Securities Services S.C.A., Jersey Branch has been appointed to act as custodian.

Information relating to the current risk profile of the Company and the risk management systems employed by the Company to manage those risks, as required under paragraph 4(c) of Article 23 of the AIFM Directive, is set out in note 8 - Financial Risk Management. Please refer above for the Board's assessment of the principal risks and uncertainties facing the Company.

Table of AIFM remuneration

The total fees paid to the Board by the Company is disclosed within the Directors' remuneration report and disclosed in note 5.

Article 22(2)(e) and 22(2)(f) of the AIFM Directive is not deemed applicable as the AIFM has no staff. No other remuneration costs have been incurred with the exception of those costs incurred by the Board as referenced above.

This Directors' and Corporate Governance Report was approved by the Board of Directors on 27 February 2017 and signed on its behalf by:

Richard Boléat Mark Tucker

Chairman Audit Committee Chairman

REPORT OF THE AUDIT COMMITTEE

Report of the Audit Committee

The Board has appointed an Audit Committee which operates within clearly defined Terms of Reference.

The Audit Committee comprises all of the Directors. All of the Audit Committee's members have recent and relevant financial experience and one is a Fellow of the Institute of Chartered Accountants in England and Wales. Biographical information pertaining to the members of the Audit Committee can be found in the section of this Annual Financial Report entitled, "Board Members".

Role of the Audit Committee

The main role and responsibilities of the Audit Committee are to protect the interests of the Company's shareholders regarding the integrity of the half-yearly financial report and the annual financial report of the Company. It also manages the Company's relationship with the external Auditor.

The Audit Committee's main functions are:

- to consider and make recommendations to the Board in relation to the appointment, re-appointment and removal of the external Auditors and to negotiate their remuneration and terms of engagement on audit and non-audit work;

- to meet regularly with the external Auditor in order to review their proposed audit programme of work and the subsequent Audit Report and to assess the effectiveness of the audit process and the level of fees paid in respect of audit and non-audit work;

- to annually assess the external Auditor's independence, objectivity, effectiveness, resources and expertise;

- to review and monitor the fairness and balance of the financial statements of the Company including its half-year financial statements and annual financial reports to shareholders; and

- to advise the Board on whether the Committee believes the annual report and accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's performance, position, business model and strategy.

The Audit Committee's Terms of Reference are published on the Company's website at www.ccpeol.com.

Internal Controls

The Board is responsible for ensuring that suitable systems of risk management and internal control are implemented by the third-party service providers to the Company. The Directors have reviewed the BNP Paribas Securities Services ISAE 3402 report (on the description of controls placed in operation, their design and operating effectiveness for the period from 1 October 2015 to 30 September 2016) on Fund Administration and Middle Office Outsourcing, and are pleased to note that no significant issues were identified.

In accordance with the FRC's Internal Control: Guidance to Directors, and the FRC's Guidance on Audit Committees, the Board confirms that there is an on-going process for identifying, evaluating and managing the significant internal control risks faced by the Company.

As the Company does not have any employees it does not have a "whistle blowing" policy in place. The Company delegates its day to day administrative operations to third-party providers who are monitored by the Board and who report on their policies and procedures to the Board. Accordingly, the Board believes an internal audit function is not required.

In 2016, the Audit Committee met on three occasions and the members' attendance record can be found on above.

Significant risks in relation to the financial statements

The Audit Committee views the title to and the existence of the Company's investments as significant issues.

Procedures to confirm the Company's title to and the existence of the Company's investments are embedded within the Company's share issuance, monthly conversion and quarterly tender process. Accordingly, the Company's title to and existence of the Company's investments were confirmed by the Board on several occasions throughout the year. Additionally, the procedures employed by the Auditors, described in the external audit process below, are viewed by the Audit Committee as being appropriate and sufficiently robust to identify weaknesses in the Company's claim to its investments and to gain sufficient assurance of the existence of the Company investments.

The risk of misstatement due to errors in the valuation of the Company's investments is an issue of significance to the Audit Committee. The Audit Committee is pleased to report that the Board meets each month to examine the valuation of the Company investments amongst other items. Additionally, the Audit Committee interviewed the Investment Vehicle Manager's auditor in order to review their proposed audit program of work to assess the effectiveness of the audit process. A representative of the Auditor also attended this meeting. This meeting preceded a review by the Audit Committee of documentary evidence which allowed it to gain assurances as to the appropriateness and robustness of the valuation methodology applied by the Investment Vehicle to its underlying portfolio assets and hence to the Company's investments in the Investment Vehicle.

External audit process

The Company's external Auditor is Ernst & Young LLP which were appointed on the 19 August 2013.

The Audit Committee met with the Auditor prior to the commencement of the audit and agreed an audit plan that would adopt a risk based approach. The Audit Committee and the Auditor agreed that a significant portion of the Audit effort would include an examination of the title to and the existence of the Company investments and an examination of the procedures in place at the Administrator and at the Investment Vehicle Manager in respect of the valuation of the Company investments and the underlying portfolio assets respectively.

Upon completion of the audit, the Audit Committee discussed with the Auditor the effectiveness of the audit and considered the Auditor's independence from the Company since their appointment and throughout the audit process.

The Audit Committee concluded that the audit had been effective on the grounds that it documented a robust process that was seen to test: the title to and existence of the Company investments; the underlying security position valuations used by the Investment Vehicle at year end; and the Administrator's reconciliation of foreign currency translations into Euro, being the presentation and functional currency of the Company.

During the year ended 31 December 2016, in addition to the audit services in respect to the audit of the Company's Annual Financial Report, the auditor provided non-audit services in respect of the review of the Company's Half Yearly Financial Report for the six months ended 30 June 2016, and provided advice and assistance in respect of the returns required to be filed under the Reporting Fund Scheme.

The Audit Committee has discussed the report provided by the Auditors and the Audit Committee is satisfied as to the independence of the Auditor.

The Committee has reviewed Ernst & Young's independence policies and procedures and considers that they are fit for purpose.

The fees for the year-end audit were €61,200 (2015: €61,200) and fees for the half year review were €10,200 (2015: €10,200). The fees for non-audit services for the year ended 31 December 2016 were €nil (2015: €nil).

Appointment and independence

The Committee considers the reappointment of the external auditor, including the rotation of the audit engagement partner, each year. The external auditor is required to rotate the audit engagement partner responsible for the Company audit every five years. The current lead audit engagement partner has been in place for four years.

The Committee reviews the objectivity and effectiveness of the audit process on an annual basis and considers whether the Company should put the audit engagement out to tender. Having considered the need to tender the position for the current year, the Committee has provided the Board with its recommendation to the shareholders on the reappointment of Ernst & Young LLP as external auditor for the year ending 31 December 2017.

Accordingly, a resolution proposing the reappointment of Ernst & Young LLP as the Company's Auditor will be put to the shareholders at the AGM. There are no contractual obligations restricting the Committee's choice of external auditor and we do not indemnify our external auditor.

The Committee continues to consider the audit tendering provisions outlined in the revised UK Code.

For and on behalf of the Audit Committee

Mark Tucker

Audit Committee Chairman

27 February 2017

Directors' Statement of Responsibilities

The Directors are responsible for preparing the Annual Financial Report and financial statements in accordance with applicable Jersey law and International Financial Reporting Standards as adopted by the European Union (IFRSs).

Jersey Law requires the Directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Company at the end of the year and of the profit or loss of the Company for that year.

In preparing these financial statements, the Directors should:

· select suitable accounting policies and apply them consistently;

· make judgments and estimates that are reasonable;

· 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 that disclose, with reasonable accuracy at any time, the financial position of the Company and enable them to ensure that the financial statements comply with the Companies (Jersey) Law 1991. 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 to the best of their knowledge that:

· the financial statements, which have been prepared in accordance with IFRS, give a true and fair view of the assets, liabilities, financial position and profit of the Company;

· the Chairman's Statement includes a fair review of the information required by DTR 4.1.8 (indication of important events up to 31 December 2016 and a description of principal risks and uncertainties);

· the Chairman's Statement includes a fair review of the information required by DTR 4.1.9 and 4.1.10 (analysis of the development and performance of the Company aided by the use of key performance indicators; and where appropriate information relating to environmental factors);

· the Chairman's Statement includes a fair review of the information required by DTR 4.1.11 (disclosure of important events that have occurred after 31 December 2016; future developments; financial risk management objectives and policies and Company exposure to price, credit, liquidly and cash flow risk); and

· the Annual Report and financial statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the company's performance, position, business model and strategy.

Richard Boléat Mark Tucker

Chairman Audit Committee Chairman

27 February 2017

directors' Remuneration report

Annual remuneration statement

This report meets the relevant rules of the Listing Rules of the Financial Conduct Authority and the AIC Code and describes how the Board has applied the principles relating to Directors' remuneration. The Board has not established a separate Remuneration Committee.

Changes to the Board

There were no changes to the Board during the year. In accordance with Company policy all Directors will stand for reappointment at the forthcoming Annual General Meeting to be held on the 3 April 2017.

Table of Directors' Remuneration

Component	Director	Annual Rate (£)	Purpose of reward
Annual fee	All Directors: Richard Boléat (Chairman) Mark Tucker David Wood	65,000 43,750 42,500	For commitment as Directors
Additional fee	Chairman of the Audit Committee: Mark Tucker	6,250	For additional responsibilities and time commitment
Expenses		Ad hoc	Reimbursement of expenses paid

No other remuneration or compensation was paid or is payable by the Company during the period to any of the Directors. There has been no change to the Company's remuneration policy as detailed below.

The Company has no employees. Accordingly, there are no differences in policy on the remuneration of Directors and the remuneration of employees.

No Director is entitled to receive any remuneration which is performance-related.

Remuneration policy

The determination of the Directors' fees is a matter for the Board. The Board considers the remuneration policy annually to ensure that it remains appropriately positioned. Directors will review the fees paid to the boards of directors of similar companies. No Director is to be involved in decisions relating to his own remuneration.

The Company's policy is for the Directors to be remunerated in the form of fees, payable quarterly in advance. No Director has any entitlement to a pension, and the Company has not awarded any share options or long-term performance incentives to any of the Directors.

Directors are authorised to claim reasonable expenses from the Company in relation to the performance of their duties.

The Company's policy is that the fees payable to the Directors should reflect the time spent by the Board on the Company's affairs and the responsibilities borne by the Directors and should be sufficient to enable high calibre candidates to be recruited. The policy is for the Chairman of the Board and Chairman of the Audit Committee to be paid a higher fee than the other Directors in recognition of their more onerous roles and more time spent. The Board may amend the level of remuneration paid within the limits of the Company's Articles of Association.

The Company's Articles of Association limit the aggregate fees payable to the Directors to a total of €500,000 per annum.

Service contracts and policy on payment of loss of office

Directors have agreed letters of appointment with the Company. No Director has a service contract with the Company and Directors' appointments may be terminated at any time by one month's written notice with no compensation payable at termination upon leaving office for whatever reason.

Directors' performance is reviewed during an annual evaluation. This evaluation is undertaken by an external third party at least once every three years. The next full external review will take place in 2017.

Dates of letters of appointment

Directors	Effective Date
Richard Boléat		20 March 2013
Mark Tucker		20 March 2013
David Wood		20 March 2013

Director interests

No Director has any other interest in any contract to which the Company is a party and no Director has held or holds any management or ordinary shares in the Company. Information of each Director is shown above.

Statement of consideration of shareholder views

An ordinary resolution to ratify the Directors' remuneration report will be proposed at the Annual General Meeting on 3 April 2017.

Richard Boléat

Chairman

27 February 2017

Statement of comprehensive income

For the year from 1 January 2016 to 31 December 2016

		Year ended 31 December 2016	Year ended 31 December 2015
		Total	Total
	Notes	€	€
Income
Investment income	3	32,040,989	30,617,994
Net gains on investments held at fair value through profit or loss	7	9,756,573	2,808,420
Foreign exchange (loss)/gain on investments held at fair value through profit or loss	7	(51,620,198)	17,996,595
Foreign exchange gain/(loss) on ordinary shares	13	51,647,281	(18,011,497)
Other net foreign currency exchange (losses)/gains through profit and loss		(80,464)	10,065
		41,744,181	33,421,577
Expenses
Operating expenses	4	(921,011)	(967,077)
Partial termination fee	10	(1,553,559)	(575,243)

Profit before finance costs and taxation		39,269,611	31,879,257
Bank charges		(5,563)	(2,806)
Share issue finance costs	4	-	(213,792)
Finance costs - dividend payment	13	(28,509,678)	(29,503,494)

Profit before taxation		10,754,370	2,159,165
Taxation		-	-

Increase in net assets attributable to shareholders from operations		10,754,370	2,159,165


Earnings per Euro Share	13	€0.026960	€0.004436

Earnings per Sterling Share (Sterling equivalent)	13	£0.019545	£0.003216

All items in the above statement are derived from continuing operations.

The Company has no items of other comprehensive income, and therefore the increase in net assets attributable to ordinary shareholders for the year is also the total comprehensive income.

The notes form an integral part of these financial statements.

statement of financial position

As at 31 December 2016

		31 December 2016	31 December 2015
	Notes	€	€
Assets
Cash and cash equivalents	9	1,567,742	1,484,546
Other receivables	6	-	7,748
Prepayments		50,185	39,162
Financial investments held at fair value through profit or loss	7	404,603,610	579,495,831
Total assets		406,221,537	581,027,287

Liabilities
Payables	10	(695,258)	(784,794)
Total liabilities		(695,258)	(784,794)

Net assets attributable to Shareholders	14	405,526,279	580,242,493

The financial statements were approved by the Board of Directors on 27 February 2017 and signed on its behalf by:

Richard Boléat Mark Tucker

Chairman Director

The notes form an integral part of these financial statements.

statement of changes in net assets

For the year ended 31 December 2016

		Net assets attributable to Shareholders
		2016
	Notes	€
As at 1 January 2016		580,242,493
Subscriptions arising from conversion of ordinary shares	13	4,352,504
Redemption of ordinary shares	13	(138,175,807)
Increase in net assets attributable to shareholders from operations		10,754,370
Net foreign currency exchange loss on opening shares and shares issued during the year	13	(51,647,281)
As at 31 December 2016		405,526,279

For the year ended 31 December 2015

		Net assets attributable to Shareholders
		2015
	Notes	€
As at 1 January 2015		568,829,019
Issuance and subscriptions arising from conversion of shares	13	32,964,653
Redemption of ordinary shares	13	(41,721,841)
Decrease in net assets attributable to shareholders from operations		2,159,165
Net foreign currency exchange loss on opening shares and shares issued during the year	13	18,011,497
As at 31 December 2015		580,242,493

The notes form an integral part of these financial statements.

statement of cash flows

For the year ended 31 December 2016

	Notes	Year ended 31 December 2016	Year ended 31 December 2015
		€	€
Cash inflow from operating activities

Profit from ordinary activities after taxation		10,754,370	2,159,165

Adjustments to reconcile profit before tax to net cash flows:

Net (gain) on investments held at fair value through profit or loss	7	(9,756,573)	(2,808,420)
Foreign exchange loss/(gain) on investments held at fair value through profit or loss	7	51,620,198	(17,996,595)
Foreign currency exchange (gain)/loss on ordinary shares		(51,647,281)	18,011,497
Bank charges		5,563	2,806
Finance costs - dividend payment		28,509,678	29,503,494
		29,485,955	28,871,947
Changes in working capital
(Increase)/decrease in receivables and prepayments		(3,275)	47,866
(Decrease)/increase in payables		(89,536)	611,990
Cash provided by operations		29,393,144	29,531,803

Purchase of investments (PECs)		(4,350,437)	(33,009,799)
Proceeds from redemption of investments (PECs)		137,379,033	42,538,395
Net cash provided by operating activities		162,421,740	39,060,399

Financing activities
Proceeds from issuance and subscriptions arising from conversion of ordinary shares		4,352,504	32,964,653
Payments from redemption of ordinary shares		(138,175,807)	(41,721,841)
Dividend paid		(28,509,678)	(29,503,494)
Bank charges paid		(5,563)	(2,806)
Net cash used in financing activities		(162,338,544)	(38,263,488)

Net increase in cash and cash equivalents in the year		83,196	796,911
Cash and cash equivalents at beginning of the year		1,484,546	687,635

Cash and cash equivalents at the end of the year	9	1,567,742	1,484,546

The notes form an integral part of these financial statements.

NOTES TO THE FINANCIAL STATEMENTS

1. General information

The Company was incorporated on 20 March 2013 and is registered in Jersey as a closed-ended investment company. It listed its Euro Shares and Sterling Shares on the London Stock Exchange on 25 June 2013.

The Company's registered office address is Liberté House, 19-23 La Motte Street, St Helier, Jersey, JE2 4SY.

2. Accounting policies

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to the years presented.

2.1 Basis of preparation

(a) Statement of Compliance

The financial statements of the Company have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union which comprise standards and interpretations approved by the International Accounting Standards Board (IASB) together with the interpretations of the International Accounting Standards and Standing Interpretations Committee as approved by the International Accounting Standards Committee (IASC) which remain in effect. The financial statements give a true and fair view of the Company's affairs and comply with the requirements of the Companies (Jersey) Law 1991.

The liquidity method of preparation is followed. Please refer to 8.2 for maturity profiles.

(b) Basis of measurement

These financial statements have been prepared on the historical cost basis except for the revaluation of financial assets designated at fair value through profit or loss and ordinary shares that are held at amortised cost being the amount they can be redeemed at.

The Company's functional currency is the Euro, which is the currency of the primary economic environment in which it operates. The Company's performance is evaluated and its liquidity is managed in Euros. Therefore the Euro is considered as the currency that most faithfully represents the economic effects of the underlying transactions, events and conditions. The financial statements are presented in Euros, except where otherwise indicated.

(d) Critical accounting estimates and judgments

The preparation of financial statements in conformity with IFRS, requires the Company to make judgements, estimates and assumptions that affect items reported in the Statement of Financial Position and Statement of Comprehensive Income and the disclosure of contingent assets and liabilities at the date of the financial statements. It also requires management to exercise its judgement in the process of applying the Company's accounting policies.

Although these judgements, estimates and assumptions are based on best knowledge of current facts, circumstances and, to some extent, future events and actions, the actual results may ultimately differ from those estimates, possibly significantly. Valuation of financial assets is considered a significant estimate and is monitored by the Audit Committee to ensure that judgements, estimates and assumptions made and methodologies applied are appropriate and in accordance with IFRS 13 - Fair Value Measurement ("IFRS 13"). Please refer to note 2.3(c) for detail regarding fair value estimation of financial assets and note 7 for IFRS 13 disclosures.

As outlined above in note 2.1(c) the Directors have used their judgement to determine that the Company's presentational and functional currency is Euro.

(e) New standards, amendments and interpretations

Standards, amendments and interpretations to existing standards that become effective in future accounting periods and have not been adopted by the Company;

International Financial Reporting Standards (IFRS)	Effective for periods beginning on or after
· IFRS 9 - Financial Instruments: Classification and Measurement	1 January 2018
· IFRS 15 - Revenue from Contracts with Customers	1 January 2018
· Amendment to IAS 7 - Statement of Cash Flows - amendments as a result of the Disclosure initiative (not yet EU endorsed)	1 January 2017

The Directors have not yet fully assessed the impact these new standards and amendments will have.

2.2 Foreign currency translations

Transactions in foreign currencies are translated to Euro at the foreign exchange average rate ruling over the financial period. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated to Euro at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the Statement of Comprehensive Income.

Foreign currency transaction gains and losses on financial instruments classified as at fair value through profit or loss are included in profit and loss on the Statement of Comprehensive Income as part of the 'Foreign exchange gain / (loss) on investments held at fair value through profit and loss'.

2.3 Financial instruments

Financial assets

(a) Classification

The Company classifies its investments as financial assets held at fair value through profit or loss. These are financial instruments held for investment purposes. Financial assets also include cash and cash equivalents as well as other receivables which are measured at amortised cost.

Financial assets designated at fair value through profit or loss at inception

Financial assets designated at fair value through profit or loss at inception are financial instruments that are not classified as held for trading but are managed, and their performance is evaluated on a fair value basis in accordance with the Company's documented investment strategy.

The Company's policy requires the Investment Vehicle Manager and the Board to evaluate the information about these financial assets on a fair value basis together with other related financial information.

(b) Recognition, measurement and derecognition

Purchases and sales of investments are recognised on the trade date - the date on which the Company commits to purchase or sell the investment. Financial assets at fair value through profit or loss are measured initially and subsequently at fair value. Transaction costs are expensed as incurred and movements in fair value are recorded in the Statement of Comprehensive Income.

Financial assets are derecognised when the rights to receive cash flows from the investments have expired or the Company has transferred substantially all risks and rewards of ownership.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The Company holds PECs issued by the Investment Vehicle. These investments are not listed or quoted on any securities exchange and are not traded regularly and on this basis no active market exists.

The Company relies on the board of the Investment Vehicle making fair value estimates of an equivalent basis to those that would be made under IFRS. As at 31 December 2016, the Audit Committee reviewed documentary evidence of the valuation of Investment Vehicle investments and scrutinised fair value estimates used to gain assurances as to the appropriateness and robustness of the valuation methodology applied by the Investment Vehicle to its underlying portfolio assets and hence to the Company investments in the Investment Vehicle. The Directors then incorporated those fair value estimates into the Company's Statement of Financial Position.

(d) Valuation process

The Directors have interviewed representatives of the Investment Vehicle Manager in order to verify for themselves the composition of the NAV of the PECs as of the balance sheet date.

The Directors are in ongoing communications with the Investment Vehicle Manager and hold meetings on a timely basis to discuss performance of the Investment Vehicle and its underlying portfolio and in addition review monthly investment performance reports. The Directors analyse the Investment Vehicle portfolio in terms of both investment mix and fair value hierarchy and consider the impact on the valuation at both the PECs and Investment Vehicle portfolio of general credit conditions and more specifically credit events in the European corporate environment.

PECs

The PECs are valued by the Directors, taking into consideration a range of factors including the audited NAV of the Investment Vehicle and other relevant available information, including the review of available financial and trading information of the Investment Vehicle and of its underlying portfolio, price of recent transactions of PECs redeemed and advice received from the Investment Vehicle Manager and such other factors as the Directors, in their sole discretion, deem relevant in considering a positive or negative adjustment to the valuation.

The estimated fair values may differ from the values that would have been realised had a ready market existed and the difference could be material.

The fair value of the investment is reassessed on an ongoing basis by the Board.

Investment Vehicle Portfolio

The Directors also discuss the Investment Vehicle Manager's monthly valuation process, to understand the methodology regarding valuation of Level 3 debt securities and collateralised loan obligations (CLOs) held at the Investment Vehicle portfolio, which includes discussion on the assumptions used and significant fair value changes during the year.

Investments in CLOs are primarily valued based on the bid price as provided by a third party pricing service, and may be amended following consideration of the Net Assets Value (NAV) published by the administrator of the CLOs. Furthermore, such a NAV is adjusted when necessary, to reflect the effect of the time passed since the calculation date, liquidity risk, limitations on redemptions and other factors. Depending on the fair value level of a CLO's assets and liabilities and on the adjustments needed to the NAV published by that CLO, the Compartment Investment Vehicle board classify the fair value of these investments as Level 3.

Investments in debt securities for which limited broker quotes and for which no other evidence of liquidity exists are classified as Level 3. These are then valued by considering in detail the limited broker quotes available for evidence of outliers (which may skew the average) which if existent are then removed, and then by considering the range of the remaining quotes. If there are no broker quotes, the Investment Vehicle Manager produces a pricing memorandum for the Compartment drawing on the International Private Equity Valuation guidelines, which is discussed, reviewed and accepted by the board of the Investment Vehicle and the independent service provider.

If the Investment Vehicle Manager and the relevant independent service provider have difficulty in establishing an agreed upon valuation for an asset, they will discuss and agree alternative valuation methods.

Financial liabilities

(e) Classification

As disclosed in note 2.6, the Company classifies its ordinary shares as financial liabilities held at amortised cost. Financial liabilities also include payables which are also held at amortised cost.

(f) Recognition, measurement and derecognition

Financial liabilities are recognised initially at fair value plus any directly attributable incremental costs of acquisition or issue and are subsequently carried at amortised cost. Financial liabilities are derecognised when the obligation specified in the contract is discharged, cancelled or expires.

Ordinary shares are carried at amortised cost being the carrying amount of ordinary share value at which investors have the opportunity to partially tender their shareholding in accordance with the Company's Quarterly Contractual Tender facility.

Gains and losses are recognised in profit or loss when the liabilities are derecognised.

2.4 Operating expenses

Operating expenses are recognised on an accruals basis and are recognised in the Statement of Comprehensive Income.

2.5 Dividends payable

Dividends are recognised as finance costs in the Statement of Comprehensive Income and are accrued when there is an obligation.

2.6 Ordinary shares

In accordance with IAS 32 - Financial Instruments: Presentation ("IAS 32"), the ordinary shares are classified as a financial liability rather than equity due to the redemption mechanism of the ordinary shares, in addition to there being two share classes which have different characteristics. Please refer to note 13 for further details.

2.7 Management shares

The management shares are the most subordinate share class and therefore these are classified as equity.

2.8 Interest income and expenses

Interest income and expenses are recognised in the Statement of Comprehensive Income on an accruals basis at the effective interest rate.

2.9 Cash and cash equivalents

Cash and cash equivalents include cash in hand and deposits held at call with banks. Cash equivalents are short term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value.

2.10 Segmental reporting

The Directors view the operations of the Company as one operating segment, being the investment business. All significant operating decisions are based upon analysis of the Company's investments as one segment. The financial results from this segment are equivalent to the financial results of the Company as a whole.

Major customers

The Company regards the Investment Vehicle as a major customer as revenue received from the PECs held is greater than 10% of total revenue. Please refer to note 3 for details of income received from the PECs.

2.11 Contingent liabilities and provisions

A contingent liability is a possible obligation depending on whether some uncertain future event occurs; or a present obligation but payment is not probable or the amount cannot be measured reliably. A provision is recognised when:

- the Company has a present legal or constructive obligation as a result of past events;

- it is probable that an outflow of resources will be required to settle the obligation; and

- the amount has been reliably estimated.

2.12 Taxation

Profits arising in the Company for the 2016 year of assessment will be subject to Jersey tax at the standard corporate income tax rate of 0% (2015: 0%).

2.13 Capital risk management

The Board defines capital as financial resources available to the Company. The Company's capital as at 31 December 2016 comprises its stated capital and accumulated reserves at a total of €405,526,279 (2015: €580,242,493).

The Company's objectives when managing capital are to:

- safeguard the Company's ability to continue as a going concern;

- provide returns for Shareholders; and

- maintain an optimal capital structure to minimise the cost of capital.

The Board monitors the capital adequacy of the Company on an on-going basis and the Company's objectives regarding capital management have been met. The Company has no imposed capital requirements.

3. Investment income	Year ended 31 December 2016	Year ended 31 December 2015
	€	€
Investment income	31,939,795	30,478,459
Interest income	657	-
Other income	100,537	139,535
Total investment income	32,040,989	30,617,994

Other income of €100,537 (2015: €132,450) relates to income receivable from CVC Credit Partners Investment Services Management Limited ("the Corporate Services Manager") for reimbursement of share issue costs and AIFMD marketing legal costs paid by the Company on behalf of the Corporate Services Manager. Please refer to note 4.

4. Operating expenses	Year ended 31 December 2016	Year ended 31 December 2015
	€	€
Administration fees	155,718	162,691
Directors' fees (see note 5)	191,938	246,969
Regulatory fees (*)	52,706	83,514
Audit fees	61,200	61,200
Non-audit fees - interim review services	10,200	10,200
Non-audit fees - other services	4,458	-
Professional fees (*)	204,670	189,666
Brokerage fees	58,268	70,627
Registrar fees	83,624	77,495
Sundry expenses	98,229	64,715
Total operating expenses	921,011	967,077

(*) Note that €nil (2015: €30,110) of regulatory fees and €100,537 (2015: €102,340) of professional fees relate to share issue costs, AIFMD marketing legal costs and set up costs paid by the Company on behalf of the Corporate Services Manager. Total expenses of €100,537 (2015: €132,450), have been recharged to the Corporate Services Manager.

Non-audit fees - other services of €4,458 (2015: €nil) relate to advice and assistance provided in respect of the returns required to be filed under the Reporting Fund Scheme.

The costs and expenses of the placing attributable to the Company have been expensed in the Statement of Comprehensive Income and amounted to a total of €nil (2015: €213,792).

On the 7 November 2013, the Company signed an agreement with the Administrator to provide administrative, compliance oversight and company secretarial services to the Company. Under the administration agreement, the Administrator will be entitled to an annual fixed fee of £95,000. These fees are to be paid monthly in arrears. Ad hoc other administration services are chargeable on a time cost basis.

In December 2016, the Company signed a new administration fee schedule. With effect from 1 January 2017, the Administrator will be entitled to an annual fixed fee of £106,000. Administration fees continue to be paid monthly in arrears and any ad hoc other administration services are charged on a time cost basis.

In its role as custodian, the Administrator is entitled to a fee payable by the Company on a transaction by transaction and asset by asset basis. In addition, the Company will reimburse the Administrator for any out of pocket expenses.

5. Directors' fees and interests

During the period ended 30 June 2015, the Directors of the Company were remunerated for their services at a fee of £35,000 per annum (£50,000 for the Chairman). The Chairman of the Audit Committee receives an additional £5,000 for his services in this role.

With effect from 1 July 2015, Director fees were increased as follows:

Richard Boleat (Chairman): £65,000 per annum

Mark Tucker: £50,000 per annum (inclusive of £6,250 for his service as Audit Committee Chairman)

David Wood: £42,500 per annum

The Company has no employees.

During the year ended 31 December 2016, the Directors did not receive any one off payments in addition to their annual remuneration (2015: £37,500 one off payment as a result of the additional work arising out of AIFMD, supplementary prospectuses and carrying out more work than initially anticipated (Richard Boléat: £15,000, Mark Tucker: £12,500 and David Wood: £10,000)).

Director's fees payable as at 31 December 2016 were €nil (2015: €nil).

None of the Directors hold shares in the Company.

No pension contributions were payable in respect of any of the Directors.

Until April 2015 David Wood was a member of the CVC Credit Partners Advisory Board, which is an advisory body established to comment on strategic plans, budgets and markets. Mr Wood has several investments in a number of CVC entities.

CVC Credit Partners Group has established an independent sub-committee (the "Independent Sub-committee") of independent directors drawn from its group board and the boards of certain of its funds and investment vehicles for the purpose of providing review and guidance to the relevant investment committee with respect to any situation where there is the potential for (or perception of) a material conflict of interest.

The Independent Sub-committee currently consists of two independent directors from CVC Investment Services' board of directors (being Douglas Maccabe and Stephen Linney), and David Wood. Any such conflict is required to be presented to the Independent Sub-committee by the relevant portfolio manager and, if necessary, CVC Credit Partners Group's chief executive officer and/or chief investment officer.

6. Other receivables

	31 December 2016	31 December 2015
	€	€
Receivable from Corporate Services Manager	-	7,748
Total other receivables	-	7,748

Receivable balance due from Corporate Services Manager relates to costs incurred in respect to AIFMD matters concerning marketing in Europe and share issue costs paid by the Company which are due to be reimbursed to the Company. Prior year receivable of €7,748 was fully recovered during the year.

7. Financial Investments held at fair value through profit or loss

	31 December 2016	31 December 2015
	€	€

PECs - Unquoted investment	404,603,610	579,495,831

During the year the Company subscribed for nil (2015: 12,158,322) Euro and nil (2015: 12,141,488) Sterling Preferred Equity Certificates ("PECs") issued by the Investment Vehicle.

During the year 3,448,301.83 (2015: 1,794,572.23) Euro PECs were converted into 2,584,326.95 (2015: 1,265,599.36) Sterling PECs and 656,205.39 (2015: 900,655.72) Sterling PECs were converted into 866,070.85 (2015: 1,221,521.69) Euro PECs as part of the monthly share conversion process. 63,439,573.00 (2015: 37,186,412.00) Euro and 57,227,653.00 (2015: 364,635.00) Sterling PECs were redeemed as part of the Quarterly Contractual Tender.

As at the year ended 31 December 2016, the Company held 127,715,466.04 Euro and 213,014,064.66 Sterling PECs (2015: 193,737,270.02 Euro and 268,313,596.10 Sterling PECs). Please refer below for reconciliation of PECs from 1 January 2015:

Compartment A

Date	Transaction type	Euro PECs	Sterling PECs
As at 1 January 2015		219,338,410.11	256,171,799.60
28/01/2015	Quarterly tender	-	(18,761.00)
30/01/2015	Monthly conversion	513,214.14	(396,712.77)
19/03/2015	PEC subscription	8,758,399.31	12,141,487.86
26/06/2015	Monthly conversion	(194,835.18)	139,456.04
01/07/2015	Quarterly tender	-	(345,873.00)
30/07/2015	Monthly conversion	449,254.81	(316,401.91)
28/08/2015	Monthly conversion	(939,172.71)	660,694.70
30/09/2015	Monthly conversion	259,026.32	(187,522.29)
01/10/2015	Quarterly tender	(37,186,412.00)	(1.00)
27/11/2015	Monthly conversion	(412,765.53)	292,882.71
27/11/2015	Monthly conversion	26.42	(18.75)
17/12/2015	PEC subscription	3,399,923.14	-
30/12/2015	Monthly conversion	(247,798.81)	172,565.91
As at 31 December 2015		193,737,270.02	268,313,596.10
01/01/2016	Quarterly tender	(29,012,049.00)	(260,363.00)
29/01/2016	Monthly conversion	(2,577,193.91)	1,881,536.18
29/01/2016	Monthly conversion	29,750.49	(21,719.99)
29/02/2016	Monthly conversion	693,049.73	(523,882.33)
29/02/2016	Monthly conversion	(371,578.48)	280,879.41
31/03/2016	Monthly conversion	139,917.80	(108,067.57)
01/04/2016	Quarterly tender	(117,208.00)	(9,896,222.00)
29/04/2016	Monthly conversion	(151,348.76)	118,697.71
30/06/2016	Monthly conversion	3,352.83	(2,535.50)
01/07/2016	Quarterly tender	(27,230,253.00)	(7,727,865.00)
30/09/2016	Monthly conversion	(3,425.89)	2,871.51
01/10/2016	Quarterly tender	(7,080,063.00)	(39,343,203.00)
30/11/2016	Monthly conversion	(247,583.95)	218,994.10
30/12/2016	Monthly conversion	(97,170.84)	81,348.04
As at 31 December 2016		127,715,466.04	213,014,064.66

The Investment Vehicle's investment objective is to provide investors with regular income returns and capital appreciation from a diversified portfolio of sub-investment grade debt instruments. The Company is entitled to receive income distributions every quarter, which will equate to not less than 75% of the net income derived from the Company's investment in the Investment Vehicle.

The Investment Vehicle Manager pursues the Investment Vehicle's investment policy subject to the Investment Vehicle's Investment Limits and Borrowing Limit as explained in the Executive Summary.

Fair value hierarchy

IFRS 13 'Fair Value Measurement' requires an analysis of investments valued at fair value based on the reliability and significance of information used to measure their fair value.

The Company categorises its financial assets according to the following fair value hierarchy detailed in IFRS 13, that reflects the significance of the inputs used in determining their fair values:

Level 1: Quoted market price (unadjusted) in an active market for an identical instrument;

Level 2: Valuation techniques based on observable inputs, either directly (i.e., as prices) or indirectly (i.e., derived from prices). This category includes instruments valued using: quoted market prices in active markets for similar instruments; quoted prices for identical or similar instruments in markets that are considered less than active; or other valuation techniques where all significant inputs are directly or indirectly observable from market data; and

Level 3: Valuation techniques using significant unobservable inputs. This category includes all instruments where the valuation technique includes inputs not based on observable data and the unobservable variable inputs have a significant effect on the instrument's valuation. This category includes instruments that are valued based on quoted prices for similar instruments where significant unobservable adjustments or assumptions are required to reflect differences between the instruments.


	Level 1	Level 2	Level 3	31 December 2016
	€	€	€	€
Financial assets
Financial investments held at fair value through profit and loss	-	-	404,603,610	404,603,610

Financial liabilities
Ordinary shares (*)	391,171,161	-	-	391,171,161

	Level 1	Level 2	Level 3	31 December 2015
	€	€	€	€
Financial assets
Financial investments held at fair value through profit and loss	-	-	579,495,831	579,495,831

Financial liabilities
Ordinary shares (*)	567,912,614	-	-	567,912,614

* - Please note for disclosure purposes only, ordinary shares have been disclosed at fair value using the quoted price in accordance with IFRS 13. As disclosed in note 2.3, the Company classifies its ordinary shares as financial liabilities held at amortised cost.

Level 3 reconciliation - Compartment A PECs

The following table shows a reconciliation of all movements in the fair value of financial instruments categorised within Level 3 between the beginning and the end of the reporting period.

			31 December 2016
			€
Balance as at 1 January 2016			579,495,831
Purchases of investments (PECs)			-
Subscriptions arising from conversion of investments (PECs)			4,350,437
Redemption proceeds arising from conversion of investments (PECs)			(4,405,259)
Redemption proceeds arising from quarterly tenders of investments (PECs)			(132,973,774)
Net gains on investments held at fair value			9,756,573
Foreign exchange loss on investments held at fair value			(51,620,198)
Balance as at 31 December 2016			404,603,610

Change in unrealised gain / (loss) related to investments still held at the year ended 31 December 2016			9,140,977

During 2016, there were no reclassifications between levels of the fair value hierarchy.

			31 December 2015
			€
Balance as at 1 January 2015			568,219,412
Purchases of investments (PECs)			29,636,533
Subscriptions arising from conversion of investments (PECs)			3,373,266
Redemption proceeds arising from conversion of investments (PECs)			(3,422,148)
Redemption proceeds arising from quarterly tenders of investments (PECs)			(39,116,247)
Net gains on investments held at fair value			2,808,420
Foreign exchange gain on investments held at fair value			17,996,595
Balance as at 31 December 2015			579,495,831

Change in unrealised gain / (loss) related to investments still held at year ended 31 December 2015			1,818,991

During 2015, there were no reclassifications between levels of the fair value hierarchy.

Quantitative information of significant unobservable inputs - Level 3 - PECs

Description	31 December 2016	Valuation technique	Unobservable input	Range (weighted average)
	€

PECs	404,603,610	Adjusted net asset value	Discount for lack of liquidity	0-3%
			Net asset value	1.19 (*)

Description	31 December 2015	Valuation technique	Unobservable input	Range (weighted average)
	€

PECs	579,495,831	Adjusted net asset value	Discount for lack of liquidity	0-3%
			Net asset value	1.25 (*)

The Board believes that it is appropriate to measure the PECs at the NAV of the investments held at the Investment Vehicle, adjusted for discount for lack of liquidity.

(*) NAV of the Investment Vehicle attributable per PEC unit.

Sensitivity analysis to significant changes in unobservable inputs within Level 3 hierarchy - Level 3 - PECs

The significant unobservable inputs used in the fair value measurement categorised within Level 3 of the fair value hierarchy together with a quantitative sensitivity analysis as at 31 December 2016 and comparative are as shown below:

As at 31 December 2016

Description

Input

Sensitivity used

Effect on fair value

€

PECs

Discount of lack of liquidity

12,138,108

As at 31 December 2015

Description

Input

Sensitivity used

Effect on fair value

€

PECs

Discount of lack of liquidity

17,384,875

Please refer to note 2.3 for valuation methodology of PECs.

The following tables detail the investment holding of the Company at the Investment Vehicle level, categorising these assets according to the fair value hierarchy in accordance with IFRS 13 and detailing the quantitative information of significant unobservable inputs of the Level 3 investments held. The below disclosure has been included to provide an insight to Shareholders, of the asset class mix held by the Investment Vehicle portfolio. It is important to note that as at 31 December 2016, the Company held a 82.7% (2015: 88.3%) interest in the PECs issued by the Investment Vehicle. The below disclosure has not been apportioned according to the Company's PEC holding, as the Board believes to do so would be misleading and not an accurate representation of the Company's investment in the Investment Vehicle.

The below information regarding the financial assets at fair value through profit or loss for the Investment Vehicle has been included for disclosure purposes only.

Financial assets and liabilities at fair value through profit or loss - (for Investment Vehicle)


31 December 2016
	Level 1	Level 2	Level 3	€
Financial assets	€000	€000	€000	€000
Interest bearing securities
Corporate bonds and debt instruments	119,779	437,389	45,418	602,586
Collateralised loan obligations (including Asset Backed Securities)	-	-	34,121	34,121
Equities and warrants
Equities and warrants	2,498	-	139	2,637
Derivatives financial instruments
Forward currency contracts	-	2,021	-	2,021
Total	122,277	439,410	79,678	641,365
Financial liabilities
Corporate bonds and debt instruments sold short	19,186	2,007	-	21,193
Forward currency contracts	-	7,383	-	7,383
Loans and borrowings measured at amortised cost¹	-	153,155	-	153,155
Other financial liabilities measured at amortised cost¹	-	53,217	-	53,217
Preferred equity certificates	-	540,723	-	540,723
Total	19,186	756,485	-	775,671

¹- As at 31 December 2016, there is collateral of €9 million in cash with Sumitomo Mitsui Banking Corporation ("SMBC") and assets with a market value of €208.2 million.

Financial assets and liabilities at fair value through profit or loss - (for Investment Vehicle)
31 December 2015
	Level 1	Level 2	Level 3	€
Financial assets	€000	€000	€000	€000
Interest bearing securities
Corporate bonds and debt instruments	144,690	442,525	99,573	686,788
Collaterised loan obligations (including Asset Backed Securities)	-	-	49,672	49,672
Equities and warrants
Equities and warrants	-	-	60	60
Derivatives financial instruments
Forward currency contracts	-	6,081	-	6,081
Total	144,690	448,606	149,305	742,601
Financial liabilities
Corporate bonds and debt instruments sold short	16,329	1,313	-	17,642
Forward currency contracts	-	13,788	-	13,788
Loans and borrowings measured at amortised cost²	-	152,769	-	152,769
Other financial liabilities measured at amortised cost²	-	44,270	-	44,270
Preferred equity certificates	-	694,104	-	694,104
Total	16,329	906,244	-	922,573

²- As at 31 December 2015, there was collateral of €3 million in cash with SMBC and assets with a market value of €216.9m.

Transfers between Level 2 and Level 3 (for Investment Vehicle)

During 2016, following further developments in the liquidity of certain debt securities, investments of the Compartment with a value of €4.8 million (2015: €10.6 million) were reclassified from Level 2 to Level 3 and there was reclassification from Level 3 to Level 2 of €27.3 million (2015: €8.1 million). Any transfers between levels of the fair value hierarchy, are deemed to have occurred at the beginning of the reporting period.

Level 3 reconciliation - (for Investment Vehicle)

The following table shows a reconciliation of all movements in the fair value of financial instruments categorised within Level 3 between the beginning and the end of the reporting period.

	Debt securities	CLOs (including Asset Backed Securities)	Equities and Warrants	31 December 2016 Total
	€000	€000	€000	€000
Balance as at 31 December 2015	99,573	49,672	60	149,305
Total gains and losses in profit or loss in the year	7,494	(368)	31	7,157
Purchases / subscriptions	73,274	3,258	48	76,580
Sales / redemptions	(112,428)	(18,441)	-	(130,869)
Transfers into / (out of) Level 3	(22,495)	-	-	(22,495)
Balances as at 31 December 2016	45,418	34,121	139	79,678

Total unrealised gains and losses at December 31, 2016 included in profit or loss for assets held at the end of the year	789	(1,482)	91	(602)


	Debt securities	CLOs (including Asset Backed Securities)	Equities and Warrants	31 December 2015 Total
	€000	€000	€000	€000
Balance as at 1 January 2015	74,603	40,424	172	115,199
Total gains and losses in profit or loss in the year	2,981	(2,833)	(112)	36
Purchases / subscriptions	115,985	25,646	-	141,631
Sales / redemptions	(96,486)	(13,565)	-	(110,051)
Transfers into / (out of) Level 3	2,490	-	-	2,490
Balances as at 31 December 2015	99,573	49,672	60	149,305

Total unrealised gains and losses at December 31, 2015 included in profit or loss for assets held at the end of the year	2,032	(1,114)	-	918

Quantitative information of significant unobservable inputs - Level 3 - (in Investment Vehicle)

Description	2016	Valuation technique	Unobservable input	Range (weighted average)
	€000

Collaterised loan obligations (including Asset Backed Securities)	34,121	Broker quotes / other methods	Specific valuation of the industry: expert valuation	n/a

Corporate bonds and debt instruments	45,418	Broker quotes / Market multiples / Discounted Cash Flow	Cost of market transactions / Multiple of listed companies / management information	n/a

Description	2015	Valuation technique	Unobservable input	Range (weighted average)
	€000

Collaterised loan obligations (including Asset Backed Securities)	49,672	Broker quotes	Broker quotes	n/a

Corporate bonds and debt instruments	99,573	Broker quotes	Broker quotes	n/a

The Investment Vehicle board of directors and Investment Vehicle Manager have valued the CLO positions at bid-price as at 31 December 2016 as they believe this is the most appropriate value for these positions. The Investment Vehicle board of directors and Investment Vehicle Manager believe that where certain credit facilities are classified as Level 3 due to limited number of broker quotes, there is still sufficient supporting evidence of liquidity to value these at an undiscounted bid price.

Sensitivity analysis to significant changes in unobservable inputs within Level 3 hierarchy - Level 3 - (for Investment Vehicle)

The significant unobservable inputs used in the fair value measurement categorized within Level 3 of the fair value hierarchy together with a quantitative sensitivity analysis are as shown below:

As at 31 December 2016

Description	Input	Sensitivity used	Effect on fair value €000
Collateralised loan obligations (including Asset Backed Securities)	Discount to broker quotes / valuation method	20%	6,824
Corporate bonds and Debt instruments	Discount to broker quotes / valuation method	10%	4,542

As at 31 December 2015

Description	Input	Sensitivity used	Effect on fair value €000
Collateralised loan obligations (including Asset Backed Securities)	Discount to broker quotes	20%	9,934
Corporate bonds and Debt instruments	Discount to broker quotes	10%	9,957

8. Financial risk management

The main risks arising from the Company's financial instruments are credit risk, liquidity risk, market risk, interest rate risk, valuation risk and foreign currency risk.

8.1 Credit risk

Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Company. The Board has in place monitoring procedures in respect of counterparty risk which is reviewed on an ongoing basis.

The Company's credit risk is attributable to its investments at fair value through profit and loss, cash and cash equivalents and interest and other receivables.

In the opinion of the Board, the carrying amounts of financial assets best represent the maximum credit risk exposure at the balance sheet date. At the reporting date, the Company's financial assets exposed to credit risk amounted to the following:

	31 December 2016	31 December 2015
	€	€
Financial investments held at fair value through profit and loss	404,603,610	579,495,831
Cash and cash equivalents	1,567,742	1,484,546
Other receivables	-	7,748
Total assets	406,171,352	580,988,125

All cash is placed with BNP Paribas Securities Services S.C.A., Jersey Branch.

BNP Paribas Securities Services S.C.A, is a wholly owned subsidiary of BNP Paribas Securities Services S.A. which is publicly traded and a constituent of the S&P 500 Index with a long standing credit rating of A-1 from Standard & Poor's.

The credit risk associated with debtors is limited to other receivables. Credit risk is mitigated by the Company's policy to only undertake significant transactions with leading commercial counterparties.

The Company is exposed to credit risks associated with the investments held in the Compartment at the Investment Vehicle. These credit risks include (among others): (i) the possibility that earnings of the issuer may be insufficient to meet its debt service obligations; (ii) the issuer's assets declining in value; and (iii) the declining creditworthiness, default and potential for insolvency of the issuer during periods of rising interest rates and economic downturn. An economic downturn and/or rising interest rates could severely disrupt the market for the Investments and adversely affect the value of the Investments and the ability of the issuers thereof to repay principal and interest. In turn, this may adversely affect the performance of the Investment Vehicle and, by extension, the Company's business, financial condition, results of operations, NAV and/or the market price of the ordinary shares.

The Board discuss and closely monitor with the Investment Vehicle Manager the creditworthiness of the Company's Compartment's counterparties (e.g. banks, money market funds and the issuers of the debt securities) by a combination of reviewing their credit ratings, financial statements and press releases on a ongoing basis to mitigate credit risk.

8.2 Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulties in realising assets or otherwise raising funds to meet financial commitments. Given that the PECs are not traded on a stock exchange, the Company relies on the redemption mechanism provided by the Investment Vehicle in order to realise its investments in the Investment Vehicle, and on mechanisms operating in accordance with their contracted terms. The Company does not have any control over the redemption mechanism operated by the Investment Vehicle.

Please refer to "Principal risks and uncertainties" and note 13 - "Ordinary shares" for detail regarding the election to tender available to ordinary shareholders and applicable restrictions.

The Company may redeem PECs in accordance with its contracted rights. However, if the Investment Vehicle receives applications to redeem Investment Vehicle Interests in respect of any redemption date and it determines (in its sole judgment) that there is insufficient liquidity to make redemptions without prejudicing existing investors in the Investment Vehicle, then the Investment Vehicle is entitled to suspend or scale down the redemption requests on a pro rata basis so as to carry out only such redemptions which will meet this criterion.

As such, in circumstances where the Company wishes to redeem part or all of its holdings in the Investment Vehicle, it may not be able to achieve this on a single redemption date. This may also result in restrictions on the Company's ability to complete or to conduct Contractual Quarterly Tenders.

In certain circumstances, whether prior to or following a NAV determination date, (being the quarterly Investment Vehicle valuation date), where the valuation or realisation of the investments becomes excessively risky or impossible, the Investment Vehicle directors may, by resolution and on the advice of the Investment Vehicle Manager, suspend all calculations, payments and redemptions of the outstanding Investment Vehicle Interests (including the Company is Investment Vehicle Interests).

In the event of a material adverse event occurring in relation to the Investment Vehicle or the market generally, the ability of the Company to realise its investment and prevent the possibility of further losses could, therefore, be limited by its restricted ability to realise its investment in the Investment Vehicle. This delay could materially affect the value of the PECs and the timing of when the Company is able to realise its investments in the Investment Vehicle, which may adversely affect the Company's business, financial condition, results of operations, NAV and/or the market price of the ordinary shares.

The table below shows the residual contractual maturity of the financial liabilities as at 31 December 2016:

	Less than 1 year	1 to 5 years	More than 5 years	Total
	€	€	€	€
Financial liabilities (*)
Payables	(695,258)	-	-	(695,258)
Ordinary shares	-	-	(405,526,279)	(405,526,279)
Total undiscounted financial liabilities	(695,258)	-	(405,526,279)	(406,221,537)

The table below shows the residual contractual maturity of the financial liabilities as at 31 December 2015:

	Less than 1 year	1 to 5 years	More than 5 years	Total
	€	€	€	€
Financial liabilities (*)
Payables	(784,794)	-	-	(784,794)
Ordinary shares	-	-	(580,242,493)	(580,242,493)
Total undiscounted financial liabilities	(784,794)	-	(580,242,493)	(581,027,287)

(*) - The Company has not classified the ordinary shares into maturity bands as the Board has determined that to do so would be misleading. Details of the Company's financial liabilities in relation to the ordinary shares are set out in note 13.

In the ordinary course of business the Directors expect the Company's Contractual Quarterly Tenders to be funded by redemptions from the Investment Vehicle.

8.3 Market risk

Market risk is the risk that the Company's performance will be adversely affected by changes in the markets in which it invests. The Company holds a single investment in the form of PECs in the Investment Vehicle which is the main driver of the Company's performance.

At the PEC level, the performance is driven by the underlying portfolio of the Investment Vehicle and therefore consideration of the market risks to which the Company is exposed should be taken.

The Investment Vehicle is required to hold at least 70 per cent. of its gross assets in companies domiciled or with material operations in Western Europe. As such, the Company and the Investment Vehicle could be particularly exposed to any deterioration in the current European economic climate.

In addition, the Investment Vehicle does not have any restrictions on the amount of investments it can make in a single industry. As such, any significant event which affects a specific industry in which the Investment Vehicle Portfolio has a significant holding could materially and adversely affect the performance of the Investment Vehicle and, by extension, the Company's ordinary shares.

Continued or recurring market deterioration may materially adversely affect the ability of an issuer whose debt obligations form part of the Investment Vehicle portfolio to service its debts or refinance its outstanding debt. Further, such financial market disruptions may have a negative effect on the valuations of the Investment Vehicle investments (and, by extension, on the NAV and/or the market price of the Company's ordinary shares), and on liquidity events involving such Investment Vehicle investments. In the future, non-performing assets in the Investment Vehicle's portfolio will cause the value of the Investment Vehicle's portfolio to decrease (and, by extension, the NAV and/or the market price of the Company's ordinary shares to decrease). Adverse economic conditions may also decrease the value of any security obtained in relation to any of the Investment Vehicle investments.

To mitigate market risk, the Board meet on a monthly basis and receive appropriate updates from the Investment Vehicle Manager to assist them in monitoring the performance of the Investment Vehicle portfolio including concentration of industry and geographical risk and compliance with the stated investment strategy and policy.

Please refer below for sensitivity analysis on the impact on the profit and loss account and NAV of the Company, if the fair value of the PECs at the year-end increased or decreased by 5%:

Current value	2016	Increase by 5%	Decrease by 5%
	Total
Euro PECs	€135,547,745	€6,777,387	€(6,777,387)
Sterling PECs (Euro equivalent)	€269,055,865	€13,452,793	€(13,452,793)
Investments held at fair value through profit or loss	€404,603,610	€20,230,180	€(20,230,180)

Sterling PECs	£229,354,587	£11,467,729	£(11,467,729)

Current value	2015	Increase by 5%	Decrease by 5%
	Total
Euro PECs	€200,159,660	€10,007,983	€(10,007,983)
Sterling PECs (Euro equivalent)	€379,336,171	€18,966,809	€(18,966,809)
Investments held at fair value through profit or loss	€579,495,831	€28,974,792	€(28,974,792)

Sterling PECs	£279,746,438	£13,987,322	£(13,987,322)

The above calculations are based on the investment valuation at the balance sheet date and are not representative of the period as a whole, and may not be reflective of future market conditions.

8.4 Interest rate risk

Interest rate movements affect the fair value of investments in fixed interest rate securities and floating rate loans and on the level of income receivable on cash deposits.

The majority of the Company's interest rate exposure arises in the fair value of the underlying Investment Vehicle portfolio which is largely invested in the debt securities of companies predominantly in, or with material operations in Western Europe. Most of these investments in debt securities carry various interest rates and maturity dates. Interest rate risk on fixed interest instruments is considered to be part of market risk on fair value as disclosed above and is monitored by the Board on a monthly basis.

In addition, as at 31 December 2016, the Company was exposed to interest rate risk exposure arising on debt security positions sold short of €21.2 million (2015: €17.6 million) and loan and borrowings of €153.2 million (2015: €152.2 million) held by the Investment Vehicle. Please refer to note 7 for details of financial asset and liability positions of the Investment Vehicle as at 31 December 2016.

The Company invests in the PECs which are non-interest bearing through the issue of non-interest bearing ordinary shares.

The following table details the Company's exposure to interest rate risks.

	2016	2016	2016
	Interest bearing (*)	Non-interest bearing	Total
	€	€	€
Assets
Investments held at fair value through profit or loss	-	404,603,610	404,603,610
Cash and cash equivalents	1,567,742	-	1,567,742
Other receivables and prepayments	-	50,185	50,185
Total assets	1,567,742	404,653,795	406,221,537

Liabilities
Ordinary shares	-	(405,526,279)	(405,526,279)
Payables	-	(695,258)	(695,258)
Total liabilities	-	(406,221,537)	(406,221,537)
Total interest sensitivity gap	1,567,742	(1,567,742)	-

* - floating rate and due within 1 month

	2015	2015	2015
	Interest bearing (*)	Non-interest bearing	Total
	€	€	€
Assets
Investments held at fair value through profit or loss	-	579,495,831	579,495,831
Cash and cash equivalents	1,484,546	-	1,484,546
Other receivables and prepayments	-	46,910	46,910
Total assets	1,484,546	579,542,741	581,027,287

Liabilities
Ordinary shares	-	(580,242,493)	(580,242,493)
Payables	-	(784,794)	(784,794)
Total liabilities	-	(581,027,287)	(581,027,287)
Total interest sensitivity gap	1,484,546	(1,484,546)	-

* - floating rate and due within 1 month

8.5 Valuation risk

Valuation risk is the risk that the valuation of the Company's investments in the Investment Vehicle, and accordingly the periodic calculation of the NAV of the Company's Sterling and Euro Shares, does not reflect the true value of the Investment Vehicle's underlying investment portfolio.

The Investment Vehicle's portfolio may at any given time include securities or other financial instruments or obligations which are very thinly traded, for which no market exists or which are restricted as to their transferability under applicable securities laws. These investments may be extremely difficult to value accurately.

Further, because of overall size or concentration in particular markets of positions held by the Investment Vehicle, the value of its investments at which they can be liquidated may differ, sometimes significantly, from their carrying values. Third party pricing information may not be available for certain positions held by the Investment Vehicle. Investments held by the Investment Vehicle may trade with significant bid-ask spreads. The Investment Vehicle is entitled to rely, without independent investigation, upon pricing information and valuations furnished to the Investment Vehicle by third parties, including pricing services and valuation sources. Absent bad faith or manifest error, valuation determinations in accordance with the Investment Vehicle's valuation policy will be conclusive and binding. In light of the foregoing, there is a risk that an Investment Vehicle interest holder, such as the Company, which redeems all or part of its investment while the Investment Vehicle holds such investments, could be paid an amount less than it would otherwise be paid if the actual value of the Investment Vehicle's investment was higher than the value designated for that Investment by the Investment Vehicle. Similarly, there is a risk that a redeeming Investment Vehicle interest holder might, in effect, be overpaid at the time of the applicable redemption if the actual value of the Investment Vehicle's investment was lower than the value designated for that Investment by the Investment Vehicle, in which case the value of the Investment Vehicle interests to the remaining Investment Vehicle interest holders would be reduced.

The board of the Investment Vehicle monitors and reviews the PEC valuation process on an on-going basis and the Board of the Company monitors and reviews the Company's NAV production process on an ongoing basis.

8.6 Foreign currency risk

Foreign currency risk is the risk that the values of the Company's assets and liabilities are adversely affected by changes in the values of foreign currencies by reference to the Company's base currency.

The base currency of the Company and the Investment Vehicle is the Euro. Certain of the Investment Vehicle's assets are typically invested in securities and other investments which are denominated in other currencies. Accordingly, the Investment Vehicle is subject to foreign currency exchange risks and the value of its assets may be affected by fluctuations in foreign currency exchange rates. The Investment Vehicle uses a third party professional foreign exchange manager to fully hedge the foreign currency exposures to which it is exposed. However, it may not be possible for the Investment Vehicle to hedge against a particular change or event at an acceptable price or at all. In addition, there can be no assurance that any attempt to hedge against a particular change or event would be successful, and any such hedging failure could materially and adversely affect the performance of the Investment Vehicle and, by extension, the Company's business, financial condition, results of operations, NAV and/or the market price of the ordinary shares.

Subscription monies for Sterling Shares have been used to fund subscriptions for Sterling-denominated PECs and such monies may then be converted to Euro for operating purposes. The holders of Sterling Shares will therefore be subject to the foreign currency fluctuations between Sterling and Euro. Although the Investment Vehicle has in place a hedging programme, there is no guarantee that any such hedging arrangements will be successful. In addition, the costs and any benefit of hedging such foreign currency exposure will be allocated solely to the Sterling-denominated PECs (and, as a consequence, to the Sterling Shares).

This may result in variations between the NAV per Share of the Euro Shares and the Sterling Shares, and so in variations between the market prices of Euro Shares and the Sterling Shares.

The following table provides an indication of the foreign exchange exposure as at 31 December 2016:

Currency exposure	2016	2016	2016	2016
	Investments	Cash	Other net current assets / (liabilities)	Total
	€	€	€	€
Euro	135,547,745	502,021	(108,184)	135,941,582
Sterling	269,055,865	1,065,721	(536,889)	269,584,697
Total	404,603,610	1,567,742	(645,073)	405,526,279

The following analysis demonstrates the impact of a 15% movement in the exchange rate against the Euro on the net assets attributable to ordinary shareholders, with all other variables held constant.

	Change in exchange rate (***)	Effect on net assets attributable to ordinary shareholders
31 December 2016	Increase/(decrease)	Increase/(decrease)
		€
Sterling	15% / (15%)	40,437,705 / (40,437,705)

(***) 15% has been assessed at 31 December 2016 as a reasonably possible movement in currency rate sensitivity over the year. It is not intended to illustrate a remote, worst case or stress test scenario.

The following table provides an indication of the foreign exchange exposure as at 31 December 2015:

Currency exposure	2015	2015	2015	2015
	Investments	Cash	Other net current assets / (liabilities)	Total
	€	€	€	€
Euro	200,159,660	939,797	(617,077)	200,482,380
Sterling	379,336,171	544,749	(120,807)	379,760,113
Total	579,495,831	1,484,546	(737,884)	580,242,493

The following analysis demonstrates the impact of a 10% movement in the exchange rate against the Euro on the net assets attributable to ordinary shareholders, with all other variables held constant.

	Change in exchange rate (****)	Effect on net assets attributable to ordinary shareholders
31 December 2015	Increase/(decrease)	Increase/(decrease)
		€
Sterling	10% / (10%)	37,976,011 / (37,976,011)

(****) 10% has been assessed at 31 December 2015 as a reasonably possible movement in currency rate sensitivity over the year. It is not intended to illustrate a remote, worst case or stress test scenario.

The Board regularly monitors and reviews its currency transactions on an on-going basis.

9. Cash and cash equivalents

	31 December 2016	31 December 2015
	€	€
Total cash and cash equivalents	1,567,742	1,484,546

10. Payables

	31 December 2016	31 December 2015
	€	€
Administration fees	(21,829)	(65,964)
Auditors' fees	(71,400)	(61,200)
Partial termination fee payable	(535,973)	(575,243)
Other payables	(66,056)	(82,387)
Total payables	(695,258)	(784,794)

Partial termination fee expense of €1,553,559 (2015: €575,243) was incurred during the year, of which €535,973 (2015: €575,243) is payable to the Corporate Services Manager as at 31 December 2016. In the case of any shareholder tendering shares through a Contractual Quarterly Tender in years 1 to 5 following the IPO, the Company becomes liable to pay a partial termination fee to the Corporate Services Manager and records an expense in terms of the prospectus. A fee is built into the tender price in years 1 to 5 following the IPO of the Contractual Quarterly Tender facility to cover this partial termination fee.

11. Contingent liabilities and commitments

As at 31 December 2016, the Company had no contingent liabilities or commitments (2015: nil).

12. Stated capital

	Number of shares	Stated capital	Number of shares	Stated capital
	31 December 2016	31 December 2016	31 December 2015	31 December 2015
		€		€
Management shares	2	-	2	-

Management shares

Management shares are non-redeemable, have no par value and no voting rights, and also no profit allocated to them for the earnings per share calculation.

13. Ordinary shares

	Number of shares¹	Stated capital	Number of shares¹	Stated capital
	31 December 2016	31 December 2016	31 December 2015	31 December 2015
		€		€
Euro Shares	128,961,584	129,701,374	195,451,704	196,974,859
Sterling Shares	214,849,319	253,661,597	270,529,508	371,858,696
Total	343,810,903	383,362,971	465,981,212	568,833,555

¹ - Excludes 98,187,170 (2015: 34,303,490) Euro Shares 58,001,488 (2015: 374,472) Sterling Shares held as treasury shares.

	31 December 2016 Total
	€
Balances as at 1 January 2016	568,833,555
Issue of shares	-
Subscriptions arising from conversion of shares	4,352,504
Redemption payments arising from conversion of shares	(4,407,326)
Redemption payments arising from quarterly tenders of shares	(133,768,481)
Foreign currency exchange loss on shares	(51,647,281)
Balances as at 31 December 2016	383,362,971

	31 December 2015 Total
	€
Balances as at 1 January 2015	559,579,246
Issue of shares	29,848,993
Subscriptions arising from conversion of shares	3,115,660
Redemption payments arising from conversion of shares	(3,164,861)
Redemption payments arising from quarterly tenders of shares	(38,556,980)
Foreign currency exchange loss on shares	18,011,497
Balances as at 31 December 2015	568,833,555

Ordinary shares

The Company has two classes of ordinary shares, being Euro Shares and Sterling Shares.

The Company completed the following tenders under its Contractual Quarterly Tender mechanism during the year ended 31 December 2016. All the shares tendered were transferred into the Company's name and held in treasury.

On 12 February 2016, 29,210,354 Euro Shares and 262,055 Sterling Shares were tendered in line with the Company's December 2015 Contractual Quarterly Tender mechanism.

On 13 May 2016, 118,000 Euro Shares and 9,966,666 Sterling Shares were tendered in line with the Company's March 2016 Contractual Quarterly Tender mechanism.

On 12 August 2016, 27,426,944 Euro Shares and 7,786,215 Sterling Shares were tendered in line with the Company's June 2016 Contractual Quarterly Tender mechanism.

On 14 November 2016, 7,128,382 Euro Shares and 39,612,080 Sterling Shares were tendered in line with the Company's September 2016 Contractual Quarterly Tender mechanism.

Each Euro Share holds 1 voting right, and each Sterling Share holds 1.17 voting rights.

Voluntary conversion

The Company offers a monthly conversion facility pursuant to which holders of ordinary shares of one class may convert such shares into ordinary shares of any other class, subject to considerations as detailed in the Articles.

Such conversion will be effected on the basis of the ratio of the NAV per class to be converted (calculated in Euro less the costs of effecting such conversion and adjusting any currency hedging arrangements and taking account of dividends resolved to be paid), to the NAV per class of the shares into which they will be converted (also calculated in Euro), in each case on the relevant conversion calculation date being the first business day of the month. During the year 3,479,320 (2015: 1,810,146) Euro Shares were converted into 2,608,457 (2015: 1,276,518) Sterling Shares and 661,630 (2015: 907,557) Sterling Shares were converted into 872,880 (2015: 1,229,993) Euro Shares.

As at 31 December 2016, the Company had 227,148,754 (inclusive of 98,187,170 treasury shares) (2015: 229,755,194 (inclusive of 34,303,490 treasury shares)) Euro Shares and 272,850,807 (inclusive of 58,001,488 treasury shares) (2015: 270,903,980 (inclusive of 374,472 treasury shares)) Sterling Shares.

Dividend

The ordinary shares of each class carry the right to receive all income of the Company attributable to such class of ordinary share, and to participate in any distribution of such income made by the Company and within each such class such income shall be divided pari passu among the Shareholders in proportion to the shareholdings of that class.

On the 19 September 2016, the Company resolved to amend its dividend policy from a semi-annual to a quarterly basis. Please refer below for amounts recognised as dividend distributions to ordinary shareholders in the year ended 31 December 2016 and 31 December 2015 respectively.

	Ex-dividend date	Payment date	£ equivalent	€

Euro - €0.025 per share²	05/02/2015	20/02/2015	-	5,543,704
Sterling - £0.025 per share²	05/02/2015	20/02/2015	6,446,910	8,892,868

Euro - €0.025 per share²	09/07/2015	07/08/2015	-	5,759,385
Sterling - £0.025 per share²	09/07/2015	07/08/2015	6,747,526	9,307,537

Euro - €0.025 per share¹	04/02/2016	26/02/2016	-	4,091,783
Sterling - £0.025 per share¹	04/02/2016	26/02/2016	6,803,607	8,328,976

Euro - €0.025 per share¹	14/07/2016	08/05/2016	-	3,411,039
Sterling - £0.025 per share¹	14/07/2016	08/05/2016	6,353,879	7,778,419

Euro - €0.0125 per share¹	03/11/2016	25/11/2016	-	1,616,371
Sterling - £0.0125 per share¹	03/11/2016	25/11/2016	2,681,825	3,283,090

¹- Recognised in the year ended 31 December 2016 ²- Recognised in the year ended 31 December 2015

Please refer to note 16 for further information subsequent to the reporting period.

Contractual Quarterly Tender facility

As the Company has been established as a closed-ended vehicle, there is no right or entitlement attaching to the ordinary shares that allows them to be redeemed or repurchased by the Company at the option of the Shareholder. The Company has, however, established a Contractual Quarterly Tender facility that enables Shareholders to tender their shares in the Company in accordance with a stated contracted mechanism.

The Directors believe that the Company's Contractual Quarterly Tender mechanism should provide Shareholders with additional liquidity when compared with other listed closed-ended investment companies.

The offer of Contractual Quarterly Tenders will be subject to annual Shareholder approval and subject to the terms, conditions and restrictions as set out in the prospectus. The Company will be subject to annual Shareholder approval to tender each quarter for up to 24.99 per cent. of the shares in issue at the relevant quarter record date, (being the date on which the number of shares then in issue will be recorded for the purposes of determining the restrictions), subject to a maximum annual limit of 50 per cent. of the shares in issue.

However, it is important to note that Contractual Quarterly Tenders, if made, are contingent upon certain factors including, but not limited to, the Company's ability to finance tender purchases through submitting redemption requests to the Investment Vehicle to redeem a pro rata amount of Company Investment Vehicle Interests.

Factors, including restrictions at the Investment Vehicle level on the amount of PECs which can be redeemed, may mean that sufficient Company Investment Vehicle Interests cannot be redeemed and, consequently, tender purchases in any given quarter may be scaled back on a pro rata basis.

Shareholders should therefore have no expectation of being able to tender their shares to the Company successfully on a quarterly basis.

In addition to the Contractual Quarterly Tender facility, the Directors may seek Shareholder approval to grant them the power to make ad hoc market purchases of Shares. If such authority is sought and subsequently granted, the Directors will have complete discretion as to the timing, price and volume of shares to be purchased. Shareholders should not place any reliance on the willingness of the Directors so to act.

In the absence of the availability of the Contractual Quarterly Tender facility Shareholders wishing to realise their investment in the Company will be required to dispose of their shares on the stock market.

Accordingly, Shareholders' ability to realise their investment at any particular price and/or time may be dependent on the existence of a liquid market in the shares.

Liquidity risks associated with the Contractual Quarterly Tender facility are set out in note 8.2.

During the year 63,883,680 (2015: 37,446,615) Euro Shares and 57,627,016 (2015: 367,071) Sterling Shares were redeemed as part of the Contractual Quarterly Tender facility and held by the Company in the form of treasury shares. Treasury shares do not carry any right to attend or vote at any general meeting of the Company. In addition, the Contractual Quarterly Tenders and the voluntary conversion facility are not available in respect of treasury shares.

As at 31 December 2016, 98,187,170 (34,303,490) Euro Shares and 58,001,488 (2015: 374,472) Sterling Shares are held as treasury shares.

Earnings per share

	31 December 2016	31 December 2016	31 December 2015	31 December 2015
	£ equivalent	€	£ equivalent	€
Euro Shares
Increase / (decrease) in net assets for the year	-	4,002,149	-	972,278
Results per share	-	0.026960	-	0.004436

Sterling Shares
Increase / (decrease) in net assets for the year	4,895,042	6,752,221	860,437	1,186,887
Results per share	0.019545	0.026960	0.003216	0.004436

Earnings per share has been calculated on a weighted average basis. The weighted average number of ordinary shares held during the year ended 31 December 2016 was 398,905,448 (2015: 486,694,439), comprising 148,452,091 (2015: 219,159,888) Euro Shares and 250,453,357 (2015: 267,534,551) Sterling Shares.

14. Net asset value per share

	31 December 2016	31 December 2016	31 December 2015	31 December 2015
	£ equivalent	€	£ equivalent	€

Euro Shares
Net asset value	-	135,941,582	-	200,482,379
Net asset value per share	-	1.0541	-	1.0257

Sterling Shares
Net asset value	229,805,385	269,584,697	280,059,081	379,760,114
Net asset value per share	1.0696	1.2548	1.0352	1.4038

15. Related Party Disclosure

All transactions between related parties were conducted on terms equivalent to those prevailing in an arm's length transaction.

The Directors are entitled to remuneration for their services. Please refer to note 5 for further detail.

16. Material events after the Statement of Financial Position date

Management has evaluated subsequent events for the Company through 27 February 2017, the date the financial statements were available to be issued, and concluded there are no material events that require disclosure or adjustment of the financial statements other than those listed below:

On 25 January 2017, the Company declared a dividend of €0.0125 per Euro Share and £0.0125 per Sterling Share. A dividend of €0.0125 per Euro class and £0.0125 per Sterling class will be paid to Shareholders on the register as at 24 February 2017.

On 9 February 2017, the Company announced it had received applications from Shareholders to tender 5,543,631 Euro Shares and 6,965,652 Sterling Shares under the March 2017 Contractual Quarterly Tender.

On 13 February 2017, the December 2016 Contractual Quarterly Tender completed with 6,270,498 Euro Shares and 7,972,725 Sterling Shares being repurchased and transferred into the Company's name and held as treasury shares.

17. Controlling party

In the Directors' opinion, the Company has no ultimate controlling party.

Company information


Registered Office		Advocates to the Company
Liberté House		(as to Jersey law)
19-23 La Motte Street St Helier, Jersey JE4 5RL		Bedell Cristin 26 New Street St Helier, Jersey JE2 3RA

Investment Vehicle Manager		Custodian
CVC Credit Partners Investment Management Limited		BNP Paribas Securities Services S.C.A., Jersey Branch
111 Strand, London WC2R 0AG		19-23 La Motte Street St Helier, Jersey JE4 5RL

Corporate Services Manager		Auditor
CVC Credit Partners Investment Services Management Limited		Ernst & Young LLP 25 Churchill Place
22-24 Seale Street, St. Helier, Jersey JE2 3QG		London E14 5EY

Corporate Brokers		Administrator and Company Secretary
Goldman Sachs International Peterborough Court, 133 Fleet Street		BNP Paribas Securities Services S.C.A., Jersey Branch
London EC4A 5ER		19-23 La Motte Street St Helier, Jersey JE2 4SY
Winterflood Securities Limited The Atrium Building Cannon Bridge House 25 Dowgate Hill London EC4R 2GA		BNP Paribas Securities Services S.C.A. Jersey Branch is regulated by the Jersey Financial Services Commission.
		Registrar and Receiving Agent
Solicitors to the Company (as to English law and U.S. securities law)		Computershare Investor Services (Jersey) Limited
Paul Hastings LLP Ten Bishops Square Eighth Floor London E1 6EG		Queensway House Hilgrove Street St Helier Jersey JE1 1ES

Enquiries:

CVC Credit Partners European Opportunities Limited - Richard Boléat, Chairman

Tel: +44 (0) 1534 625522

BNP Paribas Securities Services S.C.A., Jersey Branch - Company Secretary

Tel: +44 (0) 1534 813800

A copy of the Company's Annual Financial Report will be available shortly from the Company Secretary, (BNP Paribas Securities Services S.C.A., Jersey Branch, 19-23 La Motte Street, St Helier, Jersey, JE2 4SY), or will be circulated on the Company's website (www.ccpeol.com).

Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.

CVC Credit Partners European Opportunities Limited is regulated by the Jersey Financial Services Commission.

A copy of this announcement is and will be available, subject to certain restrictions relating to persons resident in restricted jurisdictions for inspection on the Company's web site at www.ccpeol.com.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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