Half-yearly Report

SVM UK EMERGING FUND PLC (the "Fund") HALF YEARLY REPORT (FOR THE SIX MONTHS TO 30 SEPTEMBER 2014) A copy of the Half Yearly Report can be downloaded from the Manager's website at www.svmonline.co.uk and a copy has also been submitted to the National Storage Mechanism and will shortly be available for inspection at www.morningstar.co.uk/uk/nsm. HIGHLIGHTS Net asset value return of -11.9% compared to a -1.5% return in the IMA UK All Companies Sector Average Index Weakness confined to first half of review period; portfolio restructuring helped progress in second half of the period Positive contributions from ITV, GVC Holdings and SSP Group New investments made in Compass Group and Close Brothers Group Portfolio emphasises consumer services, property and business services. Total Return Performance 6 months to 30 Year to 31 September 2014 March 2014 Net Asset Value total return -11.9% +37.2% Share Price total return -11.7% +34.3% Benchmark Index (IMA UK All Companies Sector -1.5% +17.1% Average Index since 1 October 2013*) *The benchmark index for the Fund was changed from 1 October 2013 prior to which the FTSE AIM Index was used. Interim Management Report CHAIRMAN'S STATEMENT Stockmarkets were volatile during the six months under review, with concern about UK interest rates and weaker real wage growth. Geopolitical developments were also unhelpful, with growth forecasts revised down for Europe and emerging markets. Over the six months, the Fund returned -11.9%, versus a return of -1.5% for the benchmark index, the IMA UK All Companies Sector Average. The weakness was confined to the first half of the period under review, during which some restructuring was made to the Fund's portfolio. This reduced exposure to cyclical sectors, and the new investments focused on liquid shares in more defensive sectors. This helped the Fund to make some progress in the second-half of the period, despite further market weakness. Against a background of material long term outperformance by small and medium sized companies over the FTSE 100, there have been periods of similar setbacks. The last reverse was in 2011 and 2008 before that. Each time small and medium sized companies have returned to favour. There were positive contributions over the period from gaming services group, GVC Holdings, ITV, and catering services business, SSP Group. ITV shares were also boosted by bid rumours, as US-based media group, Liberty Global, indicated intentions to expand in Europe. The main disappointments were in the consumer sectors and technology; WANdisco, ASOS and Supergroup. New investments were made in Compass Group and Close Brothers Group; with additions to Booker and SABMiller. Part of the investments in Ted Baker, WANdisco and Fusionex were sold to fund the new investments. The portfolio emphasises consumer sectors, property and business services. For the industrial businesses in the portfolio, the low oil price will help. The portfolio has no exposure to banks or utilities, and low exposure to mining, resources and energy. Dividends within the listed investments in the portfolio are growing. However, in line with the practice in previous years, no interim dividend will be paid. The investment objective of the Company is long term capital growth. Forecasts for UK growth have been revised down, but the UK will still be the strongest European economy this year, with growth also likely to continue ahead of the Eurozone over the next two years. Many UK-listed international companies are benefiting from the continuing US recovery, and the portfolio has exposure to this potential. Despite the weakness in Europe, the global economy continues to grow. Deflation remains a risk for the UK and other major economies. As a result, monetary stimulation is likely to continue, and we expect equities will benefit from this. The Fund remains fully invested, reflecting good potential for self-help in many portfolio companies. Peter Dicks Chairman 24 November 2014 INVESTMENT OBJECTIVE The investment objective of SVM UK Emerging Fund PLC (the "Fund") is long term growth from investments in smaller UK companies. Its aim is to outperform the IMA UK All Companies Sector Average Index on a total return basis. INVESTMENT POLICY The Fund aims to achieve its objective and to diversify risk by investing in shares and related instruments, controlled by a number of limits on exposures. Appropriate guidelines for the management of the investments, gearing and financial instruments have been established by the Board. Limits are expressed as percentages of shareholders' funds, measured at market value. This is an abridged version of the Fund's investment policy. The full investment policy can be found in the Strategic Report within the Annual Report & Accounts for the year ended 31 March 2014. FINANCIAL STATEMENTS Income Statement Six months to 30 Six months to 30 September 2014 September 2013 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Net gain/(loss) on investments at fair value through profit or - (547) (547) - 590 590 loss Income 55 - 55 52 - 52 Investment management fees - - - - - - Other expenses (28) (5) (33) (36) (4) (40) Gain/(loss) before finance costs 27 (552) (525) 16 586 602 and taxation Finance costs (4) - (4) (5) - (5) Gain/(loss) on ordinary 23 (552) (529) 11 586 597 activities before taxation - - - - - - Taxation Gain/(loss) attributable to 23 (552) (529) 11 586 597 ordinary shareholders Gain/(loss) per Ordinary Share 0.38p (9.19p) (8.81)p 0.18p 9.76p 9.94p Year ended 31 March 2014 (audited) Revenue Capital Total £'000 £'000 £'000 Net gain/(loss) on investments at - 1,205 1,205 fair value through profit or loss Income 83 - 83 Investment management fees - - - Other expenses (62) (11) (73) Gain/(loss) before finance costs 21 1,194 1,215 and taxation Finance costs (13) - (13) Gain/(loss) on ordinary activities 8 1,194 1,202 before taxation Taxation - - - Gain/(loss) attributable to 8 1,194 1,202 ordinary shareholders Gain/(loss) per Ordinary Share 0.14p 19.89p 20.03p Total column of this statement is the profit and loss account of the Fund. All revenue and capital items in this statement derive from continuing operations. A Statement of Total Recognised Gains and Losses is not required as all gains and losses of the Fund have been reflected in the above statement. Balance Sheet As at As at As at 30 31 30 September March September 2014 2014 2013 (unaudited) (audited) (unaudited) £'000 £'000 £'000 Fixed Assets Investments at fair value through profit or 3,690 4,421 3,732 loss Total Current Assets 283 106 355 Creditors: amounts falling due within one (63) (88) (253) year Net current assets 220 18 102 Total assets less current liabilities 3,910 4,439 3,834 Capital and Reserves 3,910 4,439 3,834 Equity shareholders' funds 3,910 4,439 3,834 Net asset value per Ordinary Share 65.12p 73.93p 63.84p Summarised Cash Flow Statement Six months to 30 Year to 31 Six months to 30 September March September 2014 2014 2013 £'000 £'000 £'000 (unaudited) (audited) (unaudited) Net cash (outflow)/inflow from (7) - (53) operating activities Taxation 7 - 2 Capital expenditure and 119 (115) 137 financial investment Finance Costs (4) (13) (5) Movement in cash in the period 115 (128) 81 Summarised Reconciliation of Movement in Shareholders' Funds For the period to 30 September 2014 Capital Share Share Special redemption Capital Revenue capital premium reserve reserve reserve reserve £'000 £'000 £'000 £'000 £'000 £'000 As at 1 April 2014 300 314 5,144 27 (733) (613) Gain/(Loss) attributable to - - - - (552) 23 shareholders As at 30 September 300 314 5,144 27 (1,285) (590) 2014 For the year to 31 March 2014 Capital Share Share Special redemption Capital Revenue capital Premium reserve reserve reserve reserve £'000 £'000 £'000 £'000 £'000 £'000 As at 1 April 2013 300 314 5,144 27 (1,927) (621) Gain/(Loss) attributable to - - - - 1,194 8 shareholders As at 31 March 2014 300 314 5,144 27 (733) (613) For the period to 30 September 2013 Capital Share Share Special redemption Capital Revenue capital Premium reserve reserve reserve reserve £'000 £'000 £'000 £'000 £'000 £'000 As at 1 April 2013 300 314 5,144 27 (1,927) (621) Gain/(Loss) attributable to - - - - 586 11 shareholders As at 30 September 300 314 5,144 27 (1,341) (610) 2013 Investment Portfolio % Ten largest Valuation % of Sector analysis as at 30 of Total investments as at 30 Net September 2014 (net Investments September 2014 £000 Assets exposure) Sector Stock ITV Television 185 4.7 Basic Materials 0.0 Unite Group 174 4.4 Industrials 20.1 Workspace Group 155 4.0 Oil and Gas 1.5 SSP Holdings 132 3.4 Consumer Goods 9.7 GVC Holdings 131 3.4 Consumer Services 42.1 Johnson Service Group 131 3.4 Healthcare 0.9 Grainger Trust 111 2.8 Telecoms 0.0 Claremont Partners 106 2.7 Technology 5.6 Ltd Playtech 101 2.6 Financials 20.1 Restaurant Group 98 2.5 Utilities 0.0 Ten largest 1,324 Total 100.0 investments 33.9 Other investments (47 2,366 60.5 holdings) Total investments 3,690 94.4 Net current assets 220 5.6 Net Assets 3,910 100.0 Risks and Uncertainties The principal risks facing the Fund relate to the investment in financial instruments and include market, liquidity, credit and interest rate risk. Additional risks faced by the Fund are investment strategy, share price discount, accounting, legal and regulatory, operational, corporate governance and shareholder relations, and financial. The Board seeks to mitigate and manage these risks through continuous review, policy setting and enforcement of contractual obligations. The Board receives both formal and informal reports from the Managers and third party service providers addressing these risks. An explanation of these risks and how they are mitigated is explained in the 2014 Annual Report, which is available on the Manager's website: www.svmonline.co.uk. These principal risks and uncertainties have not changed from those disclosed in the 2014 Annual Report. Directors' Responsibility Statement The Directors are responsible for preparing the Half Yearly Report in accordance with applicable law and regulations. The Directors confirm that to the best of their knowledge: the condensed set of financial statements, which have been prepared in accordance with the Accounting Standards Board's statement 'Half Yearly Financial Reports' on a going concern basis, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Fund; (ii) the Interim Management Report includes a fair review of the information required by the Disclosure and Transparency Rules DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and DTR 4.2.8R (disclosure of related party transactions and changes therein). (iii) No related party transactions have taken place during the first six months of the year that have materially affected the financial position of the Fund during the period and there have been no changes in the related party transactions described in the Annual Report & Accounts for the year end 31 March 2014 that could do so. The Half Yearly Financial Report has not been audited or reviewed by the Fund's auditors. By Order of the Board Peter Dicks Chairman 24 November 2014 Notes 1. The results have been prepared in accordance with UK Generally Accepted Accounting Practice ('GAAP') and the 2009 Statement of Recommended Practice ('SORP') issued by the Association of Investment Companies. These accounts have been prepared in accordance with the accounting policies used for the year ended 31 March 2014. 2. Returns per share Return per share is based on a weighted average of 6,005,000 (2013 - 6,005,000) ordinary shares in issue during the period. Total return per share is based on the total loss for the period of £529,000 (2013 - gain of £597,000). Capital return per share is based on the net loss for the period of £552,000 (2013 - gain of £586,000). Revenue return per share is based on the revenue gain after taxation for the period of £23,000 (2013 gain of £11,000). The number of shares in issue at 30 September 2014 was 6,005,000 (2013 - 6,005,000). 3. The Investment Managers have waived their fees for the periods to 30 September 2014 and 2013. 4. The above figures do not constitute full or statutory accounts in terms of Sections 434 and 435 of the Companies Act 2006. All information shown for the six months to 30 September 2014 is unaudited. The accounts for the year to 31 March 2014, on which the auditors issued an unqualified report, have been lodged with the Registrar of Companies and did not contain a statement required under Section 498 of the Companies Act 2006. The half yearly report will be available on the Managers' website: www.svmonline.co.uk. Copies are also available for inspection at 7 Castle Street, Edinburgh EH2 3AH, the registered office of the Fund. For further information, please contact: Colin McLean SVM Asset Management 0131 226 6699 Roland Cross Broadgate Mainland 0207 726 6111

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