Final Results

PRESS RELEASE 19 June 2006 SVM UK EMERGING FUND PLC RESULTS FOR THE YEAR ENDED 31 MARCH 2006 Key Points * Net asset value has risen 40.8% in the year to 31 March 2006, compared to a gain of 11.0% for the AIM Index * Net asset value per ordinary share is 49.45p * Portfolio now has over 80% exposure to AIM listed companies, reflecting the new investment stance 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 2006 Commenting on the results, Chairman, Peter Dicks, said: Review of the year I am delighted to report that the Fund had a successful period for the year to 31 March 2006. The Fund's net asset value increased by 40.8% to 49.45 pence per share, compared to a gain of 11.0% in the FTSE AIM Index, the Fund's benchmark. Since the Fund's change of investment objective in September 2004, the asset value has increased by 64.1% against a benchmark rise of 39.5%. As intimated previously, the investment remit now encourages the Managers to invest the Fund principally in companies listed on the Alternative Investment Market (AIM) but also have up to 20% of the Fund invested in other securities and instruments. Due to the popularity of the AIM market since its nadir in 2003, this stance has served the Fund well. The restructuring of the portfolio is virtually complete with over 80% of the Fund now invested in a range of AIM companies. The Fund has positions in approximately forty companies across a wide range of industries. Although there have been a recent deluge of new issues, the Managers prefer to concentrate on existing more mature businesses. Undoubtedly, short term profits have been foregone with this philosophy, however the benefits of a longer term emphasis will produce a portfolio with more favourable risk reward characteristics. The Fund still retains a small number of legacy OFEX holdings purchased prior to the remit change; the majority have either been realised during the year or have been promoted on to AIM. Companies in the latter category have seen greater liquidity in their shares and are now easier to realise, where appropriate. In addition, the Fund held as part of the original portfolio a number of unlisted investments from early on in its life. Two companies have survived the adverse conditions experienced post 2001. Although both appear to be trading well, it is unlikely that either will have a material impact on the portfolio and exit opportunities are being sought. Accounting Standards The Company prepares its financial statements under UK Generally Accepted Accounting Practice and the AITC's 2005 Statement of Recommended Practice. Your Board, following discussions with the Secretaries and the auditors, resolved not to adopt International Financial Reporting Standards (IFRS). In your Board's view, there would be no material change in the financial results and position of the Fund were it to adopt IFRS. The Board will, of course, keep this matter under review. However, these financial statements do incorporate three new accounting standards that were released by the UK Accounting Standards Board: Financial Reporting Standards (FRS) 21 `Events after the Balance Sheet Date', FRS 25 `Financial Instruments: Disclosure and Presentation' and FRS 26 `Financial Instruments: Measurement'. The principal one is the change in valuation of the Fund's fixed asset investments. Where previously investments were valued on a middle market basis, investments are now valued on a bid basis. Comparative figures for 2005 have been restated to reflect the adoption of these standards. Further information regarding these accounting treatments is provided in the notes to the financial statements. Outlook Although it is pleasing to note that stockmarkets have recovered from the post bubble corrections experienced at the beginning of this decade, it would be unwise to expect markets to continue to perform as strongly going forward. However, the Fund is positioned across a number of sectors which are well placed to benefit from the favourable economic conditions. The portfolio is invested in companies that exhibit higher than average growth potential and are still modestly valued. The Board and the Managers believe that the Fund, with its focus on UK smaller companies, should extend the recent out-performance and is well placed to deliver long term capital growth. Peter Dicks Chairman 16 June 2006 Summarised Unaudited Income Statement Year to 31 March 2006 Year to 31 March 2005 (restated) Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Net loss on sale - (534) (534) - (308) (308) of investments Movement in - 1,409 1,409 - 417 417 unrealised depreciation on investments ------- ------- ------- ------- ------- ------- Gains /(losses) - 875 875 - 109 109 on investments Income 3 - 3 2 - 2 Investment - - - - - - management fees Other expenses (60) (8) (68) (66) (9) (75) ------- ------- ------- ------- ------- ------- Return before (57) 867 810 (64) 100 36 interest and taxation Bank overdraft (28) - (28) (1) - (1) interest ------- ------- ------- ------- ------- ------- Transfer (from) / (85) 867 782 (65) 100 35 to reserves ------ ------- ------- ------- -------- ------- Return per (1.56p) 15.88p 14.32p (1.19p) 1.83p 0.64p ordinary share As at As at 31 March 31 March 2006 2005 (restated) £'000 £'000 Unaudited Balance Sheet Investments at fair value through 2,616 2,030 profit or loss Net current assets /(liabilities) 84 (112) ------- ------- Equity shareholders' funds 2,700 1,918 ------- ------- Net asset value per ordinary share 49.45p 35.13p Summarised Unaudited Cash Flow Statement Net cash outflow from operating (47) (68) activities Returns on investment and servicing (28) (1) of finance Capital expenditure and financial 263 (103) investment ------- ------- Increase / (decrease) in cash 188 (172) ------- ------- 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 Trust Companies. In addition, these results incorporate three changes to accounting practices: Financial Reporting Standards (FRS) 21 `Events after the Balance Sheet Date', FRS 25 `Financial Instruments: Disclosure and Presentation' and FRS 26 `Financial Instruments: Measurement'. In accordance with FRS26, the fixed asset investments are categorized as "fair value through profit or loss". Comparative figures have been restated to reflect the above changes. 2. Return per share is based on a weighted average of 5,460,000 (2005 - same) ordinary shares in issue during the year. Total return per share is based on the total return for the year of £782,000 (2005 - £35,000). Capital return per share is based on net gains during the year of £867,000 (2005 - £100,000). Revenue return per share is based on the revenue loss after taxation for the year of £85,000 (2005 - £65,000). The number of shares in issue at 31 March 2006 was 5,460,000 (2005 - same). 3. Due to the size of the Company, the Investment Managers waived their fees for the year to 31 March 2005 and 2006. 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 2006, which are at present unaudited. The accounts for the year to 31 March 2005, on which the auditors issued an unqualified report, have been lodged with the Registrar of Companies. The annual report and accounts will be mailed to shareholders and will be lodged with the Registrar of Companies during June 2006. Copies will be available for inspection at 7 Castle Street, Edinburgh EH2 3AH, the registered office of the Company.

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