Kalle, headquartered in Wiesbaden, Germany, is one of the top global producers of ar tif icial casings for sausages, with strong market positions in the viscose, textile and plastic product segments. Silverfleet Capital invested in Kalle in September 2009, in one of the largest German buyouts of that year, with the objective of developing the company both organically and through buy & build. Since then Kalle

and Silverfleet Capital had together reviewed a number of acquisition opportunities in different countries but the ideal target was proving elusive until John Lample, head of Kalle’s US operation, suggested an approach to California-based Jif-Pak.Read more page 3

Spring 2011 www.silverfleetcapital.com

2010 was Silverfleet Capital’s 25th year in the private equity business and we marked that anniversary in the best possible way, by closing transactions. We made two new investments, Schneider Group and Office, which took our current fund up to being 30% invested. In addition, our portfolio company Kalle completed a significant bolt-on acquisition in the form of Jif-Pak Manufacturing Inc. Meanwhile in France, our Paris team realised our investment in Histoire d’Or, generating a three times money return from our 100th exit since 1990. In this annual review we look at each of those deals in more depth as well as looking forward to 2011 and what the current year may bring.

2010 Highlights

• €140 million invested in 2 new portfolio companies, Schneider Group and Office

• Current fund 30% invested with all companies trading at or ahead of plan

• Kalle executes on buy & build strategy with Jif-Pak bolt-on

• Histoire d’Or becomes 100th exit since 1990 generating 3x money return

Silverfleet Capital marks its 25th year with four deals

Silverfleet Capital puts best foot forward in Office buyout

Schneider Group is a leading German B2C (Business-to-Consumer) and B2B (Business-to-Business) distribution company with a focus on Germany, Austria and Switzerland. As a significant proportion of the sales of the B2C brands are already made over the internet, Silverfleet Capital saw the opportunity to accelerate the transformation of the company from a catalogue driven business into an online retailer. Read more page 3

Silverfleet Capital cuts a deal for Schneider Group California dreamin’ becomes reality for Kalle

An ambitious buy & build programme paid off for Silverfleet Capital in our 100th exit since 1990, when in October we sold our investment in Histoire d’Or, generating a return of three times money and an IRR of 27%.

Histoire d’Or is France’s leading independent jewellery chain. It retails gold, silver and costume jewellery as well as watches via a network of stores, the majority of which are located in shopping centres throughout France. In March 2006, when Silverfleet Capital acquired the company alongside management, Histoire d’Or was operating 124 stores of which only four were based outside of France. Initially the expansion plan focused on the domestic French market, but further stores were added in Belgium and Italy, bringing the total in 2010 to over 200. Read more page 2

Histoire d’Or turns into a pot of gold

In the end it all happened very fast. Silverfleet Capital’s team took only three weeks from being granted exclusivity to sign, close and fund the acquisition of Office. However, the first meeting with Brian McCluskey, the CEO of Office, took place over two years earlier and in the intervening period we stayed in contact with him and tracked the remarkable development of one of Britain’s most successful retail companies.

Office is the UK’s leading young fashion footwear retailer, offering

a product range that is mid-priced and affordable. The business sells men’s, women’s and sport footwear and has a broad range of third party brands such as ‘Converse’, ‘UGG’, ‘Adidas’, ‘Nike’, ‘Vans’ and ‘Supra’ which it sells alongside its own brands – ‘Office’, ‘Ffor’ and ‘Poste’.

Office earns its credibility by consistently identifying key fashion trends and making sure that the ranges it retails anticipate the demands of the company’s target market of 15-35 year olds. Read more page 2

In 2006 when we invested in the tertiary buyout of Histoire d’Or we believed that it still had the potential for further significant growth by focusing on rolling out stores in shopping centres in France and then in neighbouring European markets. Within 18 months of our investment, 44 new stores had been added to the French portfolio, 17 of which came through the acquisition of the Charles d’Orville chain. Thereafter an average of seven stores per year were either acquired or opened in France. In October 2007 Histoire d’Or’s franchisee in Belgium was also acquired, adding a further eight stores.

After careful analysis and investigation, it was decided that Italy was also an attractive market for Histoire d’Or to operate in under its existing brand. The first Italian store was opened in Naples in 2007, and

three years later the company trades from 11 locations.

We ensured that this buy & build plan was implemented by making several individually modest-sized acquisitions at attractive purchase prices and then quickly integrating them. It was supported by a measured roll-out of new stores, particularly into the Italian market, which was then new to Histoire d’Or. As a consequence, when the jewellery market started to experience difficult trading conditions in late 2008, Histoire d’Or was both financially strong and well controlled managerially, allowing the company to withstand the downturn relatively comfortably.

By October 2010, when Silverfleet Capital sold its investment, Histoire d’Or had more than 200 stores and was operating successfully in France, Italy, Belgium and Portugal. For the financial year ending September

2010 the company achieved sales of €192 million and an EBITDA of €46 million, representing increases of around 70% on the levels at the time of our investment. At our exit the company provided a strong platform for further acquisitions both in France, and elsewhere in Europe, which was fully reflected in the price that was achieved.

Highlight – Silverfleet Capital

UK fashion footwear retailer Office is a perfect fit for Silverfleet Capital

Office, the UK-based footwear retailer, was Silverfleet Capital’s second purchase of the year. Gareth Whiley, the Silverfleet Capital partner who led the transaction, said: “Office is a great business with a management team that really understands what its customer wants. The stores are a destination for anyone looking for fashionable shoes – men or women, from designer look to sports.”

Office first opened in 1981 and has since grown to 75 stand-alone stores in the United Kingdom and the Republic of Ireland and 46 concessions in House of Fraser, Topshop, Harvey Nichols and Selfridges. In addition it has a high-growth internet business. Sales in the year to January 2010 were £146m, an increase of over 12% on the preceding year and produced an EBITDA of £18.5m. In the current

financial year to January 2011, Office has continued to perform strongly with sales on a year to date basis having increased by 16%.

As well as continuing strong growth from its existing stores, we see considerable further rollout opportunity and significant potential from an enhanced web-shop. Further international expansion is also a real possibility at the right time, based

on the strong relationships that Office has with its principal suppliers and building on our own extensive international experience.

Office has a number of other key features which make it an attractive investment for Silverfleet Capital. The business’s range of both third-party brands and own brands gives it not only a defensible offering but also good profit margins.

3x money from ambitious buy & build and rollout plan

“Silverfleet Capital demonstrated their knowledge of, and commitment to, growing this business in a dynamic manner.”

Brian McCluskey, CEO of Office

“Silverfleet Capital has enabled us to become the undisputed leader in jewellery in France.”

Eric Belmonte, CEO of Histoire d’Or

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Highlight – Silverfleet Capital

Silverfleet Capital to support Schneider Group’s e-tailing ambitions

Kalle nets Jif-Pak Manufacturing IncEstablished in Vista, California, in 1990, Jif-Pak Manufacturing Inc. is a producer of innovative meat nettings and casings used principally in the production of cooked hams. Jif-Pak’s research and development team has created many ground-breaking products that increase the efficiency and level of automation used by its clients in the meat and poultry processing industries.

The business operates from offices and a 75,000 square-foot manufacturing facility near San Diego, California and supplies innovative products to many of the largest meat

and poultry product manufacturers in the USA and around the world. Casing-Net, Ultra-Kote, Spice-Kote and Flavor-Kote are some of the key trademarks under which Jif-Pak currently sells its products.

Neil Mintz, the owner and son of the founder, was not looking to sell the business but the attraction of the larger potential market, especially in Europe, into which Kalle could sell Jif-Pak’s newest products, was key to the tie-up between the two companies.

As Kalle had traded very successfully since the Silverfleet Capital led buyout

in 2009, the company was able to fund the transaction from a combination of cash and an additional US Dollar debt tranche of $39m, which Silverfleet Capital was heavily involved in negotiating. In the last few days of 2010 the Californian dream became real for Kalle as a deal was signed and closed.

The acquisition of Jif-Pak broadens Kalle’s product range and significantly increases the scale of Kalle’s operations in the USA whilst enhancing Kalle’s claim to be the most innovative casing and netting manufacturer in the world.

“We acquire with Jif-Pak a company which fits ideally with Kalle.”

Dr. Walter Niederstätter, CEO of Kalle

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“Silverfleet Capital has shown a comprehensive and impressive knowledge of our market.”

Carsten Muuß, CEO of Schneider Group

Schneider Group, based near Hamburg, was acquired by Silverfleet Capital in November 2010. The Group had sales in the year ended December 2010 of €250 million which generated an EBITDA of €30 million.

The traditional part of Schneider Group is a B2B business providing promotional gifts alongside other related products. These are sold via catalogues which are distributed to around two million small and medium sized companies across Germany.

The B2B operations are strongly cash-generative and this cash has historically been used to develop the faster growing B2C part of the company.

The two main B2C businesses ‘Impressionen’ and ‘Conley’s’, launched in 1995 and 1996 respectively, are fashion and lifestyle orientated, marketing brands such as ‘True Religion’ and ‘Belstaff’ as well as ‘Boss’ and ‘Tommy Hilfiger’ alongside Schneider Group’s in-house designed collections.

More recently the company has launched the brand ‘Discovery’ which is aimed at a younger customer group. It has also launched several web-only shops such as www.gingar.de and www.fashmob.de aimed at similar target markets.

These developments illustrate the ambitions that Schneider Group has in e-tailing and we expect the already significant level of internet sales to rise rapidly in the coming years.

Silverfleet Capital Partners LLP is a limited liability partnership registered in England number OC321508; authorised and regulated by the Financial Services Authority. A list of the members of Silverfleet Capital Partners LLP is open to inspection at 1 New Fetter Lane, London EC4A 1HH, its principal place of business and registered office. Copyright © 2011 Silverfleet Capital Partners. All rights reserved.

Silverfleet Capital offices

United Kingdom 1 New Fetter Lane, London EC4A 1HH T +44 20 7822 1000

France 46 avenue Kléber, 75116 Paris T +33 1 56 89 14 14

Germany Oberanger 28, D-80331 München T +49 89 238896-0

United States 225 West Wacker Drive, Suite 1200, Chicago IL 60606 T +1 312 634 2561

www.silverfleetcapital.com

Highlight – Silverfleet Capital

€4.6 billion returned to Silverfleet Capital’s investors since 1990

“2.3x money from 100 exited investments is a track-record we are justifiably proud of.”

Kay Ashton, Partner

2011 and beyondPredicting the future is never easy and this is particularly true at the beginning of 2011. Uncertain times are generally periods of opportunity and therefore this is good news for Silverfleet Capital.

There seems to be sufficient optimism in the M&A market for sellers to put businesses up for sale, alongside sufficient uncertainty about the economic outlook in many countries for the level of lending and the prices being paid for companies to remain relatively sensible. Clearly this will not apply to all assets all the time but the mid-market has demonstrated that it is deep enough for careful buyers to find good businesses to acquire at fair prices and this has been our experience in 2010.

However, generating an attractive investment return is now more

than ever based on working with management teams to enhance the performance of their businesses. In businesses that trade directly with the end consumer the power of the internet is evident. Customers of all ages are increasingly willing to order online from the best websites they can find, regardless of national borders. This is accelerating the pace of change and presenting opportunities and challenges for our portfolio companies.

We will continue to look for buy & build opportunities in which to invest the balance of our current fund and further bolt-ons. As ever, our focus will be on developing not only bigger companies but also better, more innovative ones which succeed by delivering enhanced value to their customers.

“Generating an attractive return is all about working with management to enhance the performance of the business.”

Neil MacDougall, Managing Partner

The successful exit of Histoire d’Or in October 2010 was another milestone for Silverfleet Capital in several ways. This was our 100th exit since 1990, allowing us to return a further €220 million to our investors and bringing the total returned to them over that period to €4.6 billion. This represents a multiple of 2.3x the total cost of those 100 investments which is a track record that we feel justifiably proud of.

Other recent exits which have helped to generate these returns to our investors include two exits that completed in 2008, namely TMF which generated proceeds of €360 million (6.2x cost) and Jost which generated €240 million (3.2x cost). Looking back a bit further, Phadia generated a very healthy €530 million (4.8x cost) in 2007 while Astron produced €400 million (5.4x cost) in 2006.

A common feature of all these companies was that during the period that we were shareholders they had successfully completed at least one, and in some cases such as

TMF many more, significant follow-on acquisitions which contributed to the overall investment return. In other words they are all examples of successful buy & build investments.

2010 has seen the return of portfolio add-on activity with Kalle’s acquisition of Jif-Pak which was completed using only surplus cash and an additional $39 million debt facility. The Jif-Pak acquisition also illustrates some of the key parameters of what we think make successful bolt-on acquisitions.

The most important feature is that Jif-Pak has excellent proprietary technology so not only does Kalle now have a broader product range but the deal also brings know-how to the group. In addition the transaction was not auctioned but resulted from Kalle contacting the owners and both parties recognising the benefits of combining the two businesses.

In an era where buy & build has become an ubiquitous expression we continue to emphasise the importance of making sure add-ons are done in the right way for the right reasons.