Final Results

DRAFT 2 PRESS RELEASE 23 May 2007 SVM UK EMERGING FUND PLC RESULTS FOR THE YEAR ENDED 31 MARCH 2007 Key Points * The Fund's net asset value increased by 28.6% to 63.57 pence per share, compared to a decline of 3.7% in the FTSE AIM market. The share price rose by 38.9%. * Since the Fund's change of investment objective 2½ years ago, the asset value has increased by 97.6% against a benchmark rise of 26.9%. * The discount narrowed dramatically from 9.0% at the end of March 2006 to 1.7% as at 31 March 2007. * 545,000 shares were issued in March 2007 at a small premium to meet investor demand. * By being benchmark aware rather than attempting to replicate sector weightings, the Fund has demonstrated less volatility than the AIM Index. * The Fund has largely steered clear of new issues, preferring to concentrate on companies that have been listed for some time. The benefits of a longer term emphasis should produce a portfolio with more favourable risk reward characteristics. Ends For further information, please contact: Donald Robertson SVM Asset Management 0131 226 6699 Roland Cross Broadgate Marketing 020 7726 6111 SVM UK EMERGING FUND PLC RESULTS FOR THE YEAR ENDED 31 MARCH 2007 Commenting on the results, Chairman, Peter Dicks, said: I am delighted to report that the Fund had another successful period for the year to 31 March 2007, continuing on from the out-performance which started with its change of investment objective in September 2004. The Fund's net asset value increased by 28.6% to 63.57 pence per share, compared to a decline of 3.7% in the FTSE AIM Index, the Fund's benchmark. The share price rose by 38.9% in the period. Since the Fund's change of investment objective two and a half years ago, the asset value has increased by 97.6% against a benchmark rise of 26.9%. I am particularly pleased to report that the discount narrowed dramatically from 9.0% at the end of March 2006 to 1.7% as at 31 March 2007. Indeed for part of the year, the shares traded at a premium to asset value. Due to investor demand, the opportunity was taken in March 2007 to issue a further 545,000 shares (approximately 10% of the issued share capital) at a premium slightly in excess of 2%. The intention is to issue further shares at appropriate levels to shareholders that are deemed to be long term holders. Portfolio The Fund has a concentrated portfolio of approximately forty stocks, five of which are OFEX companies, four unlisted and the balance being listed on AIM. Throughout the year, the Fund maintained a weighting of in excess of 80% in companies listed on AIM with slightly less than 6% in OFEX companies, the Fund's previous principal focus. The Fund is managed on a more absolute basis and many of the holdings could be categorised as special situations. As such, by being benchmark aware rather than attempting to replicate sector weightings, the Fund has demonstrated less volatility than both the AIM Index or indeed the broader market, represented by the FTSE All Share Index. The Managers believe that this approach gives the potential of both relative out-performance and absolute gains. Although individual investment risk is higher, this can be mitigated through a diversified portfolio. There is always a trade off between holding a broadly diversified portfolio which will demonstrate benchmark type returns against holding relatively few large positions with the potential of strong performance. The Managers favour the latter approach. Review of the year Although the economic backdrop has been favourable for equities, the AIM market has not benefited to the same extent as the main market. There is no single reason for the relative weakness, more a combination of a number of factors. The glut of questionable new issues, the demise of the internet gaming sector and perceived regulatory concerns have been particularly unhelpful. However, the AIM market continued to be the market of choice for small companies globally. With over 1,700 companies capitalised in aggregate at in excess of £ 75bn, there is no shortage of investment opportunities, however one has to be careful as a substantial number of these companies offer limited attractions. Unlike a number of competitors, the Fund has largely steered clear of new issues, preferring to concentrate on companies that have been listed for some time. Undoubtedly, short term profits have been foregone with this philosophy, however the benefits of a longer term emphasis should produce a portfolio with more favourable risk reward characteristics. Generally, institutional investors have been net sellers of AIM companies, principally for liquidity reasons which has allowed the Fund to invest at attractive levels. The underlying companies appear to have done nothing wrong other than being small. This is an opportunity as many of the Fund's investments are growing faster with more earnings stability and visibility than a number of their larger competitors. A good case in point is AT Communications which is profitable, paying a dividend, with sustainable above average growth rates trading at a low single figure multiple. The risk reward from such an investment makes it a compelling buy. In addition, companies seeking further funding in order to achieve profitability has been a fruitful area. Typically, investors can command an attractive discount for these primary issues. Outlook It is now four years since the market nadir of March 2003. Markets have rallied strongly globally and it is slightly surprising that smaller companies have not performed better. It is likely that corrections, similar to those experienced last May and in February this year, will become more common and more extreme. Notwithstanding this, the Fund continues to demonstrate above average performance with lower volatility. With the Fund concentrated on a number of special situations and invested in companies that exhibit higher than average growth potential but are still modestly valued, the Board and the Managers believe that the Fund should extend the recent out-performance and is well placed to deliver on its objective of long term capital growth. Peter Dicks Chairman 23 May 2007 Summarised Income Statement (unaudited) Year to 31 March 2007 Year to 31 March 2006 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Gains on - 866 866 - 875 875 investments at fair value through profit or loss Income 5 - 5 3 - 3 Investment - - - - - - management fees Other expenses (54) (8) (62) (60) (8) (68) ------- ------- ------- ------- ------- ------- Return before (49) 858 809 (57) 867 810 interest and taxation Bank overdraft (33) - (33) (28) - (28) interest ------- ------- ------- ------- ------- ------- Transfer (from) / (82) 858 776 (85) 867 782 to reserves ------ ------- ------- ------- -------- ------- Return per (1.49p) 15.61p 14.12p (1.56p) 15.88p 14.32p ordinary share Summarised Balance Sheet As at As at (unaudited) 31 March 31 March 2007 2006 £'000 £'000 Investments at fair value through 3,712 2,616 profit or loss Net current assets 105 84 ------- ------- Total assets less current 3,817 2,700 liabilities ------- ------- Equity shareholders' funds 3,817 2,700 ------- ------- Net asset value per ordinary 63.57p 49.45p share Summarised Cash Flow Statement (unaudited) Year to Year to 31 March 31 March 2007 2006 £'000 £'000 Net cash outflow from operating (54) (47) activities Financing - share issue 341 - Returns on investment and (33) (28) servicing of finance Capital expenditure and financial (307) 263 investment ------- ------- (Decrease) / increase in cash (53) 188 ------- ------- Summarised Reconciliation of Movement in Shareholders Funds (unaudited) For the year to 31 March 2007 Share Share Special Capital Capital Capital Revenue capital premium reserve redemption reserve reserve reserve reserve realised unrealised £'000 £'000 £'000 £'000 £'000 £'000 £'000 As at 1 April 273 - 5,144 27 (1,345) (1,179) (220) 2006 Realised gain on - - - - 457 - - sale of investments Transaction costs - - - - (8) - - Movement in - - - - - 409 - unrealised appreciation on investments Return on - - - - - - (82) ordinary activities after taxation Share issue 27 314 - - - - - ------- ------- ------- ------- ------- ------- ------- As at 31 March 300 314 5,144 27 (896) (770) (302) 2007 ------- ------- ------- ------- ------- ------- ------- For the year to 31 March 2006 Share Share Special Capital Capital Capital Revenue capital premium reserve redemption reserve reserve reserve reserve realised unrealised £'000 £'000 £'000 £'000 £'000 £'000 £'000 As at 1 April 273 - 5,144 27 (803) (2,588) (135) 2005 Realised gain on - - - - (534) - - sale of investments Transaction costs - - - - (8) - - Movement in - - - - - 1,409 - unrealised appreciation on investments Return on - - - - - - (85) ordinary activities after taxation ------- ------- ------- ------- ------- ------- ------- As at 31 March 273 - 5,144 27 (1,345) (1,179) (220) 2006 ------- ------- ------- ------- ------- ------- ------- Notes 1. The results have been prepared in accordance with applicable accounting standards and the 2005 Statement of Recommended Practice (SORP) issued by the Association of Investment Companies. These accounts have been prepared in accordance with prior year accounting policies. 2. Return per share is based on a weighted average of 5,497,329 (2006 - 5,460,000) ordinary shares in issue during the year. Total return per share is based on the total return for the year of £776,000 (2006 - £782,000). Capital return per share is based on net gains during the year of £858,000 (2006 - £867,000). Revenue return per share is based on the revenue loss after taxation for the year of £82,000 (2006 - £85,000). The number of shares in issue at 31 March 2007 was 6,005,000 (2006 - 5,460,000). 3. Due to the size of the Company, the Investment Managers have waived their fees for the year to 31 March 2006 and 2007. 4. The above figures do not constitute full accounts in terms of Section 240 of the Companies Act 1985 and based on the accounts for the year to 31 March 2007, which are at present unaudited. The accounts for the year to 31 March 2006, on which the auditors issued an unqualified report under Section 235 of the Companies Act 2005, have been lodged with the Registrar of Companies and did not contain a statement required under Section 237(2) or (3) of the Companies Act 1985. The annual report and accounts will be mailed to shareholders and will be lodged with the Registrar of Companies towards the end of May 2007. Copies will be available for inspection at 7 Castle Street, Edinburgh EH2 3AH, the registered office of the Company.

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