Half-yearly Report

PRESS RELEASE 19 November 2007 SVM UK EMERGING FUND plc Unaudited results for the six months to 30 September 2007 KEY POINTS * Net asset value rose by 12.5% to 71.51p as at 30 September 2007, compared to a fall of 1.9% in the FTSE AIM Index, the company's benchmark index. * Net asset value up 122% against rises of 24% in AIM Index and 61% in FTSE All Share Index since remit changed in September 2004. * Concentrated portfolio of special situations with heavy AIM exposure. Residual legacy holding reduced to minimal levels. * Financial and property exposures sold in advance of the August correction. Additions made in resources and consumer service companies. For further information, please contact: Donald Robertson SVM Asset Management 0131 226 6699 Roland Cross Broadgate 020 7726 6111 SVM UK EMERGING FUND PLC Chairman's Statement Unaudited results for the six months to 30 September 2007 Commenting on the results for the six months to 30 September, Chairman, Peter Dicks, said: "I am pleased to report that the last six month's asset value and share price performance have been positive both on a relative and absolute basis. The Fund's asset value rose 12.5% over the six months against the benchmark, FTSE AIM Index, which fell 1.9% and the broader market, FTSE All Share index, rise of only 2.7%. The Fund's share price performed much better, rising 27.2%. The end of September is the third anniversary of the change of investment remit and I am pleased to report that the asset value has increased by 122% against the rises of 24% in the AIM Index and 61% in the FTSE All Share Index. Although equity markets in general have been broadly positive, 2007 has repeated what can broadly be categorised as a `small companies effect', namely small companies out-performed in the first part of the year only to underperform over the summer and rally towards the end of the year. In addition, following the US induced correction in August, there was a perceived flight to quality which many took to mean large companies. The Managers believe that this is perverse as the level of risk, especially financial, in small companies can be much lower as they are typically less leveraged. The Fund continues to be concentrated on a relatively small number of special situations. There are thirty five companies in the portfolio with approximately 90% invested in AIM companies. The balance is spread equally between unquoted investments and a small number of residual companies still quoted on the junior PLUS markets. In terms of sectors, the Fund continues to be heavily exposed to resources (both basic material and oil & gas), consumer services and healthcare. The Fund's exposure to financials and property were disposed of well in advance of the August correction. The Managers continue to shun new issues, preferring to support more seasoned investments with greater visibility. In addition, there are more attractive returns available from existing investments that require follow-on capital in order to reach profitability or fulfil their objectives. Not only are the discounts more attractive, there is less competition and this gives a more attractive risk reward profile. The major acquisitions in the period were in Maghreb Minerals (lead/zinc exploration company), BetBrokers (UK's first brokerage / clearing house for the sports betting industry) and Sports Media Group which recently acquired the Sport range of newspapers. The Board and the Managers believe that the Fund should continue to extend the recent out-performance and is well placed to deliver long term capital growth." Peter Dicks Chairman 19 November 2007 Summarised Income Statement (unaudited) Six months to 30 September Six months to 30 September 2007 2006 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Gains on sale of - 321 321 - 183 183 investments Movement in unrealised - 207 207 - (69) (69) depreciation -------- -------- -------- -------- -------- -------- Gains on investments - 528 528 - 114 114 Income 9 - 9 3 - 3 Investment management fees - - - - - - Other expenses (35) (4) (39) (20) (4) (24) -------- -------- -------- -------- -------- -------- Return before (26) 524 498 (17) 110 93 interest and taxation Bank overdraft (21) - (21) (18) - (18) interest -------- -------- -------- -------- -------- -------- Transfer to / (from) (47) 524 477 (35) 110 75 reserves -------- -------- -------- -------- -------- -------- Return per ordinary (0.78p) 8.72p 7.94p (0.65p) 2.01p 1.36p Share Balance Sheet As at As at (unaudited) 30 September 30 September 2007 2006 £'000 £'000 Investments at fair value through 4,383 2,645 profit or loss Net current (liabilities) / assets (89) 130 --------- --------- Equity shareholders' funds 4,294 2,775 --------- --------- Net asset value per ordinary share 71.51p 50.82p Summarised Cash Flow Statement 6 months to 6 months to (unaudited) 30 September 30 September 2007 2006 £'000 £'000 Net cash flow from operating activities (86) (42) Capital expenditure and financial (22) 131 investment Servicing of finance (21) (18) -------- -------- Movement in cash (129) 71 -------- -------- Summarised Reconciliation of Movement in Shareholders Funds (unaudited) For the period to 30 September 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 2007 300 314 5,144 27 (896) (770) (302) Realised gain on - - - - 321 - - sale of investments Transaction costs - - - - (4) - - Movement in - - - - - 207 - unrealised appreciation on investments Return on ordinary - - - - - - (47) activities after taxation ------- ------- ------- ------- ------- ------- ------- As at 30 September 300 314 5,144 27 (579) (563) (349) 2007 ------- ------- ------- ------- ------- ------- ------- For the period to 30 September 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 2006 273 - 5,144 27 (1,345) (1,179) (220) Realised gain on - - - - 183 - - sale of investments Transaction costs - - - - (4) - - Movement in - - - - - (69) - unrealised appreciation on investments Return on ordinary - - - - - - (35) activities after taxation ------- ------- ------- ------- ------- ------- ------- As at 30 September 273 - 5,144 27 (1,166) (1,248) (255) 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 6,005,000 (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 £477,000 (2006 - £75,000). Capital return per share is based on net gains during the year of £524,000 (2006 - £110,000). Revenue return per share is based on the revenue loss after taxation for the year of £47,000 (2006 - £35,000). The number of shares in issue at 30 September 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 30 September 2006 and 2007. 4. The above figures do not constitute full accounts in terms of Section 240 of the Companies Act 1985. The accounts for the year to 31 March 2007, 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 interim report will be mailed to shareholders towards the end of November 2007. Copies will be available for inspection at 7 Castle Street, Edinburgh EH2 3AH, the registered office of the Company and will be available on the Managers' website: svmonline.co.uk.

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